Annual Report for the year ended 30 June 2004
Part 3: Departmental financial statements (continued)
Notes to the financial statements
For the year ended 30 June 2004
Note 1: Budget composition
| Note | 30/6/2004 Main estimates $000 | 30/6/2004 Supp. estimates changes $000 |
30/6/2004 Budget total $000 |
|
|---|---|---|---|---|
| Revenue | ||||
| Crown | 2 | 8,053 | 133 | 8,186 |
| Other | 3 | 1,866 | 1,411 | 3,277 |
| Total revenue | 9,919 | 1,544 | 11,463 | |
| Expenditure | ||||
| Personnel costs | 5 | 4,347 | 174 | 4,521 |
| Operating costs | 6 | 5,200 | 1,319 | 6,519 |
| Depreciation | 7 | 240 | 51 | 291 |
| Capital charge | 8 | 132 | - | 132 |
| Total expenses | 9,919 | 1,544 | 11,463 | |
| Net operating surplus | - | - | - |
Note 2: Revenue - Crown
This is revenue earned for the supply of outputs to the Crown.
Note 3: Other revenue
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
30/6/2004 Main estimates $000 |
30/6/2004 Supp. estimates $000 |
|
|---|---|---|---|---|
| Defence capability and resourcing review |
- | 44 | - | 356 |
| Employer superannuation subsidy recovered | - | 9 | - | - |
| New Zealand Defence Force for initial project costs |
4,338 | 1,723 | 1,866 | 2,921 |
| Total other revenue | 4,338 | 1,776 | 1,866 | 3,277 |
Note 4: Interest revenue
The Ministry invests foreign currency cash held prior to making payments with financial institutions that the Ministry deals with. All interest earned on short-term deposits is returned to the Crown.
Note 5: Personnel costs
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
30/6/2004 Main estimates $000 |
30/6/2004 Supp. estimates $000 |
|
|---|---|---|---|---|
| Salaries and wages |
3,921 | 4,374 | 4,309 | 4,483 |
| Retirement and resigning leave |
26 | 33 | 38 | 38 |
| Total personnel costs | 3,947 | 4,407 | 4,347 | 4,521 |
Note 6: Operating costs
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
30/6/2004 Main estimates $000 |
30/6/2004 Supp. estimates $000 |
|
|---|---|---|---|---|
| Consultancy | - | 136 | 185 | 185 |
| Professional services | 20 | 64 | 177 | 177 |
| Audit fees for financial statements | 70 | 75 | 70 | 70 |
| Fees to auditors for other services |
30 | 12 | 5 | 5 |
| Share of New Zealand Defence Force costs for maintaining services | 595 | 677 | 681 | 681 |
| Grants and contributions |
76 | 71 | 116 | 116 |
| Inventory items |
142 | 41 | 60 | 60 |
| General maintenance and servicing |
102 | 54 | 127 | 127 |
| Travel and related costs |
305 | 268 | 444 | 444 |
| Courses, conferences and exhibitions |
98 | 117 | 121 | 121 |
| Rental of premises |
722 | 856 | 860 | 819 |
| Initial projects costs |
||||
| C-130 aircraft life of type study |
1,428 | - | - | - |
| Joint command and control system |
1,260 | 532 | 945 | 565 |
| Light operational vehicles |
199 | 208 | - | 140 |
| New naval ships |
856 | 457 | 551 | 1,227 |
| P-3 mission system upgrade |
64 | 175 | 185 | 305 |
| C-130 aircraft life extension |
34 | 146 | 185 | 335 |
| Replacement jet aircraft |
682 | 11 | - | - |
| Air defence system |
- | 50 | - | 116 |
| Helicopter replacement study |
- | 119 | - | 176 |
| Medium range anti-armour weapon |
- | 33 | - | - |
| Automatic grenade launcher | - | - | - | 57 |
| Other operating costs | 618 | 553 | 488 | 793 |
| Total operating costs | 7,301 | 4,655 | 5,200 | 6,519 |
Note 7: Depreciation
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
30/6/2004 Main estimates $000 |
30/6/2004 Supp. estimates $000 |
|
|---|---|---|---|---|
| Leasehold improvements |
89 | 84 | 90 | 90 |
| Office and computer equipment |
67 | 126 | - | 51 |
| Other assets | 75 | 76 | 150 | 150 |
| Total depreciation charge | 231 | 286 | 240 | 291 |
Note 8: 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 2004 was 8.5 percent (30 June 2003 = 8.5 percent).
Note 9: Debtors and receivables
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
|
|---|---|---|
| Sundry debtors
- department |
1,789 | 194 |
| Sundry debtors - non department | 19 | 15 |
| Total debtors and receivables | 1,808 | 209 |
Note 10: Property, plant and equipment
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
|
|---|---|---|
| Leasehold improvements |
||
| At cost | 511 | 511 |
| Accumulated depreciation | (322) | (406) |
| Leasehold improvements - net book value | 189 | 105 |
| Office and computer equipment |
||
| At cost |
837 | 1,272 |
| Accumulated depreciation |
(749) | (876) |
| Office and computer equipment - net book value | 88 | 396 |
| Office furniture |
||
| At cost |
262 | 262 |
| Accumulated depreciation |
(262) | (262) |
| Office furniture - net book value | - | - |
| Other assets |
||
| At cost |
925 | 925 |
| Accumulated depreciation |
(673) | (749) |
| Other assets - net book value | 252 | 176 |
| Total property, plant and equipment |
||
| At cost |
2,535 | 2,970 |
| Accumulated depreciation |
(2,006) | (2,293) |
| Total carrying amount of property, plant and equipment | 529 | 677 |
Note 11: Creditors and payables
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
|
|---|---|---|
| Trade creditors |
1,080 | 267 |
| Accrued expenses |
578 | 17 |
| GST payable |
139 | 42 |
| Total creditors and payables | 1,797 | 326 |
Note 12: Provision for employee entitlements
| 30/6/2003 Actual $000 | 30/6/2004 Actual $000 |
|
|---|---|---|
| Current liabilities |
||
| Annual leave |
223 | 261 |
| Total current portion |
223 | 261 |
| Non current liabilities |
||
| Long service, retirement and resigning leave |
138 | 160 |
| Total non-current portion |
138 | 160 |
| Total provision for employee entitlements | 361 | 421 |
Note 13: 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 are returned to the Crown as part of the surplus repayable to the Crown.
Foreign exchange contracts (departmental)
The Ministry had no departmental foreign exchange contracts as at 30 June 2004. (30 June 2003 = Nil.)
Note 14: 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 on an arms length basis. Where these parties are acting in the course of normal dealings with the Ministry, related party disclosures have not been made for transactions of this nature.
Note 15: Major budget variations
The major variations from the prospective financial information previously published in the 2004 Statement of Intent are:
Total vote
Vote Defence was increased by $1,544,000 (GST inclusive) for:
|
$ |
|
|---|---|---|
| Defence Capability and Resourcing Review | 489,000 | |
| Pre-acquisition costs of new projects | 1,055,000 | |
| Total | 1,544,000 |
Statement of financial performance
- Operating costs were increased $1,319,000 of which $1,055,000 was to meet pre-acquisition costs of new projects being developed. These pre-acquisition costs are recovered from New Zealand Defence Force through Revenue Other and are fiscally neutral to Vote Defence. The projects in 2003/2004 were:
- Joint command and control system
- Replacement helicopter capability
- New naval ships
- P-3 Orion aircraft mission system upgrade
- Direct fire support weapon
- C-130 Hercules aircraft mission system upgrade
- Light operational vehicles
- Air defence system
- Revenue Other was increased $1,411,000 of which $1,055,000 was for pre-acquisition costs from New Zealand Defence Force. The balance of $356,000 was for recoveries associated with the Defence Capability and Resourcing Review.
Statement of financial position (and cash flows)
- Debtors and receivables were higher than forecast because of initial project costs unpaid by New Zealand Defence Force at balance date.
