Portfolio Budget Statements 2009-10

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 2008-09 estimated actual results are used as the comparative year in the analysis.

Budgeted Agency Income Statement

IBA is budgeting for an operating result of $2.1 million in 2009-10, compared to an estimated actual for 2008-09 of $54.3 million. There are significant changes in revenue and expenses across the two financial years. They are:

Revenue in 2009-10 has reduced by $25.8 million against 2008-09, driven primarily by the following:
- drop in interest rates resulting in significantly lower interest income of $10.0 million
- IBA regularly re-values its concessional rate loan portfolio against market rates of interest as mandated by the accounting standards (AASB 139), and the resultant discount is debited to the income statement as a non-cash item. However, with a significant drop in interest rates in 2008-09, this has resulted in a writeback of earlier year discounts of $15.0 million, with a credit to the income statement.
There has been an overall increase in total expenses of $26.4 million driven by:
- an increase of $12.5 million for Concessional Loan Discount, being the discount on revaluation of the concessional rate loan portfolio, as per AASB 139
- an increase in grants of $11.0 million.

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Budgeted Agency Balance Sheet

Budgeted net assets for 2009-10 of $1,024.9 million represents an increase of $35.3 million over estimated actual for 2008-09, primarily due to:

continuing capital injections from Government of $33.2 million
accumulated surpluses increase by $2.1 million due to the budgeted 2009-10 operating surplus.

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

IBA continues to reinvest dividend receipts into investments in 2008-09 and 2009-10. Lending activity has decreased with new loans decreasing from $121.0 million to $100.8 million. 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 $35.3 million due to an additional equity injection of $33.2 million and the inclusion of the budgeted net operating result of $2.1 million.

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3.2.3: Budgeted financial statements tables

Table 3.2.1: Budgeted departmental income statement (for the period ended 30 June)
	Estimated actual 2008-09 $'000	Budget estimate 2009-10 $'000	Forward estimate 2010-11 $'000	Forward estimate 2011-12 $'000	Forward estimate 2012-13 $'000
INCOME
Revenue
Revenues from Government	37,402	38,840	38,902	39,615	39,584
Goods and services	12,009	11,836	8,380	10,530	12,649
Interest	46,458	36,417	39,705	41,807	42,912
Dividends	12,874	11,000	11,550	12,474	13,472
Unwind Concessional Loan Discount	15,000	-	-	-	-
Rents	1,345	1,100	1,100	1,100	1,100
*Total revenue*	125,088	99,193	99,637	105,526	109,717
Gains
Sale of assets	-	-	-	-	-
*Total gains*	-	-	-	-	-
Total income	125,088	99,193	99,637	105,526	109,717
EXPENSE
Employees	23,489	27,651	28,448	29,530	30,481
Suppliers	31,356	30,627	25,848	28,074	29,393
Grants	9,010	20,769	18,540	18,857	19,157
Depreciation and amortisation	1,211	1,528	1,312	608	417
Finance costs	89	63	63	63	63
Write-down of assets and impairment of assets	5,589	4,000	901	844	792
Concessional Loan Discount	-	12,500	17,000	18,579	18,836
*Total expenses*	70,744	97,138	92,112	96,555	99,139
Surplus (deficit) attributable to the Australian Government	54,344	2,055	7,525	8,971	10,578

Prepared on Australian Accounting Standards basis

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Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)
	Estimated actual 2008-09 $'000	Budget estimate 2009-10 $'000	Forward estimate 2010-11 $'000	Forward estimate 2011-12 $'000	Forward estimate 2012-13 $'000
ASSETS
Financial assets
Cash and equivalents	58,698	66,829	79,959	91,804	101,670
Receivables	545,831	562,610	572,993	584,222	599,317
Investments acounted for using the equity method	29,386	29,386	29,386	29,386	29,386
Other investments	353,972	364,972	364,972	364,972	364,972
*Total financial assets*	987,887	1,023,797	1,047,310	1,070,384	1,095,345
Non-financial assets
Land and buildings	756	479	202	-	-
Infrastructure, plant and equipment	1,808	1,817	940	884	201
Investment properties	18,638	19,038	19,038	19,038	19,038
Intangibles	668	551	145	-	-
Other	108	108	108	108	108
*Total non-financial assets*	21,978	21,993	20,433	20,030	19,347
Total assets	1,009,865	1,045,790	1,067,743	1,090,414	1,114,692
LIABILITIES
Provisions
Employees	6,046	6,746	7,474	7,474	7,474
Other	8,342	8,342	8,342	8,342	8,342
*Total provisions*	14,388	15,088	15,816	15,816	15,816
Payables
Suppliers	4,837	4,837	4,837	4,837	4,837
Other	1,010	1,010	1,010	1,010	1,010
*Total payables*	5,847	5,847	5,847	5,847	5,847
Total liabilities	20,235	20,935	21,663	21,663	21,663
Net assets	989,630	1,024,855	1,046,080	1,068,751	1,093,029
EQUITY*
Parent entity interest
Contributed equity	728,504	761,674	775,374	789,074	802,774
Reserves	21,576	21,576	21,576	21,576	21,576
Retained surpluses or accumulated deficits	239,550	241,605	249,130	258,101	268,679
*Total parent entity interest*	989,630	1,024,855	1,046,080	1,068,751	1,093,029
Total equity	989,630	1,024,855	1,046,080	1,068,751	1,093,029
Current assets	284,255	298,526	312,954	326,231	337,967
Non-current assets	725,609	747,324	755,110	764,814	777,716
Current liabilities	5,847	5,847	5,847	5,847	5,847
Non-current liabilities	14,388	15,088	15,816	15,816	15,816

Prepared on Australian Accounting Standards basis

*Note: 'equity' is the residual interest in assets after deduction of liabilities.

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Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)
	Estimated actual 2008-09 $'000	Budget estimate 2009-10 $'000	Forward estimate 2010-11 $'000	Forward estimate 2011-12 $'000	Forward estimate 2012-13 $'000
OPERATING ACTIVITIES
Cash received
Goods and services	12,009	11,836	8,380	10,530	12,649
Appropriations	37,402	38,840	38,902	39,615	39,584
Interest	46,458	36,417	39,705	41,807	42,912
Dividends	26,681	11,000	11,550	12,474	13,472
Other	1,345	1,100	1,100	1,100	1,100
*Total cash received*	123,895	99,193	99,637	105,526	109,717
Cash used
Employees	22,816	26,951	27,720	29,530	30,480
Suppliers	58,900	30,691	25,911	28,137	29,457
Grants	9,010	20,769	18,540	18,857	19,157
*Total cash used*	90,726	78,411	72,171	76,524	79,094
Net cash from or (used by) operating activities	33,169	20,782	27,466	29,002	30,623
INVESTING ACTIVITIES
Cash received
Proceeds from the sales of PPE	3,978	-	248	-	266
Investments	-	20,000	30,000	30,000	30,000
Repayments of loans made	72,920	67,521	75,116	75,748	71,677
*Total cash received*	76,898	87,521	105,364	105,748	101,943
Cash used
Purchase of property, plant and equipment	-	1,542	-	205	-
Purchase of investments	28,000	31,000	30,000	30,000	30,000
Loans made	121,200	100,800	103,400	106,400	106,400
*Total cash used*	149,200	133,342	133,400	136,605	136,400
Net cash from or (used by) investing activities	(72,302)	(45,821)	(28,036)	(30,857)	(34,457)
FINANCING ACTIVITIES
Cash received
Appropriations - contributed equity	41,508	33,170	13,700	13,700	13,700
*Total cash received*	41,508	33,170	13,700	13,700	13,700
Net cash from or (used by) financing activities	41,508	33,170	13,700	13,700	13,700
Net increase or (decrease) in cash held	2,375	8,131	13,130	11,845	9,866
Cash at the beginning of the reporting period	56,323	58,698	66,829	79,959	91,804
Cash at the end of the reporting period	58,698	66,829	79,959	91,804	101,670

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Table 3.2.4: Departmental statement of changes in equity-summary of movement
(Budget year 2009-10)
	Accumulated results $'000	Asset revaluation reserve $'000	Other reserves $'000	Contributed equity/capital $'000	Total equity $'000
Opening balance as at 1 July 2009
Balance carried forward from previous period	239,550	21,576		728,504	989,630
Opening balance adjustment	-	-	-	-	-
*Adjusted opening balance*	239,550	21,576	-	728,504	989,630
Income and expense
Income and expenses recognised directly in equity:	-	-	-	-	-
Gain/loss on revaluation of property	-	-	-	-	-
*Sub-total income and expense*	-	-	-	-	-
Net operating result	2,055	-	-	-	2,055
*Total income and expenses recognised directly in equity*	2,055	-	-	-	2,055
Transactions with owners
Contribution by owners
Appropriation (equity injection)	-	-	-	33,170	33,170
Other:	-	-	-	-	-
Restructuring	-	-	-	-	-
*Sub-total transactions with owners*	-	-	-	33,170	33,170
Transfers between equity components	-	-	-	-	-
Estimated closing balance as at 30 June 2010	241,605	21,576	-	761,674	1,024,855

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Table 3.2.5: Departmental capital budget statement
('000)	2008-09 Revised budget	2009-10 Budget	2010-11 Forward Year 1	2011-12 Forward Year 2	2012-13 Forward Year 3
CAPITAL APPROPRIATIONS
Total equity injections	41,508	33,170	13,700	13,700	13,700
*Total capital appropriations*	41,508	33,170	13,700	13,700	13,700
Represented by:
Other	41,508	33,170	13,700	13,700	13,700
*Total represented by*	41,508	33,170	13,700	13,700	13,700
PURCHASE OF NON-FINANCIAL ASSETS
Funded internally by Departmental resources	-	1,542	-	205	-
Total	-	1,542	-	205	-

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Table 3.2.6: Statement of Asset Movements - Departmental
	Land $'000	Other Infrastructure, Plant&Equipment $'000	Investment Property $'000	Intangibles $'000	Other Non-financial Assets $'000	Total $'000
as at 1 July 2009
Gross book value	1,340	2,884	18,638	1,062	108	24,032
Accumulated depreciation/amortisation	583	1,076	-	395	-	2,054
Opening net book balance	757	1,808	18,638	667	108	21,978
CAPITAL ASSET ADDITIONS
Estimated expenditure on new or replacement assets
by purchase or internally developed	-	792	400	350	-	1,542
Sub-total	-	792	400	350	-	1,542
Other Movements
Depreciation/amortisation expense	278	783	-	466	-	1,527
as at 30 June 2010
Gross book value	1,340	3,676	19,038	1,412	108	25,574
Accumulated depreciation/amortisation	861	1,859	-	861	-	3,581
Closing net book balance	479	1,817	19,038	551	108	21,993

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:

on an accrual accounting basis
in compliance with Australian Accounting Standards and Australian Equivalents to International Financial Reporting Standards (AEIFRS) and other authoritative pronouncements of the Australian Accounting Standards Boards and the Consensus Views of the Urgent Issues Group.

Revenue from government

Represents appropriation from Government to Indigenous Business Australia 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.

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Concessional Loan discount

IBA continues to designate its loan portfolio at fair value through profit and loss 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 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 re-valued assets, 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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