Annual Report for the year ended 30 June 2002
Departmental operations (continued)
Notes to the financial statements
For the year ended 30 June 2002
Note 1: Budget composition
| Note | 30/6/2002 Budget Forecasts $000 | 30/6/2002 Supp. estimates changes $000 |
30/6/2002 Budget total $000 |
|
|---|---|---|---|---|
| Revenue | ||||
| Crown | 2 | 8,321 | (218) | 8,103 |
| Other | 3 | - | 1,114 | 1,114 |
| Interest | 5 | 30 | (15) | 15 |
| Total revenue | 8,351 | 881 | 9,232 | |
| Expenditure | ||||
| Personnel costs | 6 | 4,371 | - | 4,371 |
| Operating costs | 7 | 3,329 | 1,027 | 4,356 |
| Depreciation | 8 | 481 | (131) | 350 |
| Capital charge | 9 | 140 | - | 140 |
| Total expenses | 8,321 | 896 | 9,217 | |
| Net operating surplus | 30 | (15) | 15 |
Note 2: Revenue - Crown
This is revenue earned for the supply of outputs to the Crown.
Note 3: Other revenue
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
30/6/2002 Main estimates $000 |
30/6/2002 Supp. estimates $000 |
|
|---|---|---|---|---|
| Defence Quarterly magazine |
1 | - | - | - |
| Net gain on sale of assets (Note 4) | 8 | 8 | - | - |
| New Zealand Defence Force for initial project costs | - | 1,073 | - | 1,114 |
| Other | 2 | - | - | - |
| Total other revenue | 11 | 1,081 | - | 1,114 |
Note 4: Gain on sale of fixed assets
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
|
|---|---|---|
| Motor vehicles |
(7) | - |
| Computer equipment | 15 | 5 |
| Office furniture |
- | 3 |
| Net gain on sale of assets | 8 | 8 |
Note 5: Interest revenue
The Ministry invested surplus cash with New Zealand Debt Management Office (NZDMO) and earned interest at variable rates. The term deposit facility was terminated from 1 November 2001.
Note 6: Personnel costs
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
30/6/2002 Main estimates $000 |
30/6/2002 Supp. estimates $000 |
|
|---|---|---|---|---|
| Salaries and wages |
3,842 | 3,686 | 4,368 | 4,368 |
| Retirement and resigning leave |
1 | 30 | 3 | 3 |
| Total personnel costs | 3,843 | 3,716 | 4,371 | 4,371 |
Note 7: Operating costs
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
30/6/2002 Main estimates $000 |
30/6/2002 Supp. estimates $000 |
|
|---|---|---|---|---|
| Consultancy | 12 | 177 | 173 | 173 |
| Professional services | 190 | 217 | - | 217 |
| Audit fees to auditors for audit of the financial statements | 70 | 75 | 70 | 75 |
| Share of New Zealand Defence Force costs for maintaining services | 515 | 534 | 521 | 521 |
| Grants and contributions |
208 | 77 | 98 | 92 |
| Inventory items |
335 | 185 | - | 265 |
| General maintenance and servicing |
230 | 110 | 141 | 140 |
| Travel and related costs |
267 | 314 | 389 | 390 |
| Courses, conferences and exhibitions |
115 | 136 | 152 | 152 |
| Rental of premises |
675 | 722 | 765 | 765 |
| Initial projects costs |
||||
| C-130 aircraft life of type study |
362 | 1,068 | - | 1,114 |
| Joint command and control system |
- | 55 | - | - |
| Light operational vehicles |
- | 24 | 268 | 50 |
| New naval ships |
- | 19 | - | - |
| Other |
- | 14 | - | - |
| Other operating costs | 495 | 562 | 752 | 402 |
| Total operating costs | 3,474 | 4,289 | 3,329 | 4,356 |
Note 8: Depreciation
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
30/6/2002 Main estimates $000 |
30/6/2002 Supp. estimates $000 |
|
|---|---|---|---|---|
| Leasehold improvements |
109 | 56 | 164 | 98 |
| Office and computer equipment |
104 | 80 | 164 | 99 |
| Motor vehicles | 9 | 1 | 16 | 16 |
| Other assets | 137 | 158 | 137 | 137 |
| Total depreciation charge | 359 | 295 | 481 | 350 |
Note 9: Capital charge
The Ministry pays a capital charge to the Crown on its average taxpayers' funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2002 was 9 percent (30 June 2001 = 10 percent).
Note 10: Short-term deposits
The term deposit facility with New Zealand Debt Management Office (NZDMO) was terminated from 1 November 2001.
| Counterparty | Interest Rate | Term | 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
|---|---|---|---|---|
| NZDMO | 4.938% | 7 Days | 2,000 | - |
| Total short-term deposits | 2,000 | - |
Note 11: Debtors and receivables
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
|
|---|---|---|
| Sundry debtors
- department |
12 | 1,276 |
| Sundry debtors - non department | 42 | 10 |
| Total debtors and receivables | 54 | 1,286 |
Note 12: Fixed assets
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
|
|---|---|---|
| Leasehold improvements |
||
| At cost | 396 | 491 |
| Accumulated depreciation | (177) | (234) |
| Leasehold improvements - net book value | 219 | 257 |
| Office and computer equipment |
||
| At cost |
753 | 793 |
| Accumulated depreciation |
(621) | (682) |
| Office and computer equipment - net book value | 132 | 111 |
| Office furniture |
||
| At cost |
262 | 262 |
| Accumulated depreciation |
(262) | (262) |
| Office furniture - net book value | - | - |
| Motor vehicles |
||
| At cost |
28 | - |
| Accumulated depreciation |
(12) | - |
| Motor vehicles - net book value | 16 | - |
| Other assets |
||
| At cost |
732 | 895 |
| Accumulated depreciation |
(439) | (597) |
| Other assets - net book value | 293 | 298 |
| Total fixed assets |
||
| At cost |
2,171 | 2,441 |
| Accumulated depreciation |
(1,511) | (1,775) |
| Total carrying amount of property, plant and equipment | 660 | 666 |
Note 13: Creditors and payables
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
|
|---|---|---|
| Sundry creditors |
341 | 75 |
| Accrued expenses |
166 | 744 |
| GST payable |
75 | 215 |
| Total creditors and payables | 582 | 1,034 |
Note 14: Provision for employee entitlements
| 30/6/2001 Actual $000 | 30/6/2002 Actual $000 |
|
|---|---|---|
| Current liabilities |
||
| Annual leave |
209 | 187 |
| Total current portion |
209 | 187 |
| Non current liabilities |
||
| Long service, retirement and resigning leave |
136 | 166 |
| Total non-current portion |
136 | 166 |
| Total provision for employee entitlements | 345 | 353 |
Note 15: Contingent assets
The Ministry does not have any contingent assets as at 30 June 2002 (30 June 2001 = nil).
Contingent liabilities are separately disclosed in the Statement of Contingent Liabilities.
Note 16: Financial instruments
The Ministry is party to financial instrument arrangements as part of its everyday operations. These include instruments such as bank balances, investments, accounts receivable, and accounts payable.
Credit Risk
In the normal course of its business, the Ministry incurs credit risk from trade debtors, and transactions with financial institutions and the New Zealand Debt Management Office (NZDMO).
The Ministry does not require any collateral or security to support financial instruments with financial institutions that the Ministry deals with, or with the NZDMO, as these entities have high credit ratings. For its other financial instruments, the Ministry does not have significant concentrations of credit risk.
Fair Value
The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.
Currency Risk and Interest Rate Risk
Currency risk is the risk that debtors and creditors due in foreign currency will fluctuate because of foreign exchange rates. The Ministry uses forward contracts to manage foreign exchange exposures.
The Ministry has no significant exposure to interest rate risk on its financial instruments.
All interest earned on short-term deposits with the NZDMO are returned to the Crown as part of the surplus repayable to the Crown.
Foreign Exchange Contracts (Departmental)
The Ministry had departmental foreign exchange contracts with a face value of $1.862 million at 30 June 2002. (30 June 2001 = nil.)
Note 17: 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 transactions with other Government Departments, Crown agencies and state-owned enterprises. These transactions are not considered to be related party transactions.
Note 18: Major budget variations
The major variations from the prospective financial information previously published in the Departmental Forecast Report are:
Statement of Financial Performance
- Revenue Other was increased by $1,114,000 to fund a C130 aircraft Life of Type Study to be paid for by New Zealand Defence Force.
- Estimated Operating costs were increased by the same amount to make the Life of Type Study fiscally neutral to Vote Defence.
- Personnel costs were below budget by $655,000 because of lower staff levels throughout the financial year.
Statement of Financial Position (and Cash Flows)
- Debtors and receivables were considerably higher than forecast because the C130 aircraft Life of Type Study was unpaid by New Zealand Defence Force at balance date.
- Creditors and payables were greater than forecast because of a higher level of accrued expenses, and a larger liability for GST at balance date.
