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Note 2: Revenue Crown

Actual
2011/12
$000

 

Actual
2012/13
$000

-

Policy advice and related outputs multi class output appropriation

28,751

1,113

Search and rescue activity coordination PLA

1,135

-

Fuel excise duty refund administration

429

593

Land transport revenue forecasting and strategy

-

619

Governance and performance advice for Crown agencies

-

28,046

Policy advice

-

30,371

Total revenue Crown

30,315

Note 3: Revenue from fees

Actual
2011/12
$000

 

Actual
2012/13
$000

16,329

Road user charges collection, investigation and enforcement

-

1,000

Land transport revenue forecasting and strategy

-

429

Fuel excise duty refund administration

-

17,758

Total revenue from fees

-

Road user charges (RUC) collection, investigation and enforcement activity is now the responsibility of the NZ Transport Agency and so is no longer a departmental output expense.

The other two output classes had been funded from fee income from other activities. As part of the review of the RUC regime, Cabinet agreed that the costs of these were to be met in future from the National Land Transport Fund but in the interim the Crown would meet the cost. Thus the revenue for these has been re-categorised as Revenue Crown for 2012/13.

Note 4: Other revenue

Actual
2011/12
$000

 

Actual
2012/13
$000

234

Other recoveries

246

103

From Crown entities

45

413

From other departments

-

750

Total other revenue

291

Note 5: Contractual payments to crown entities

Actual
2011/12
$000

 

Actual
2012/13
$000

 

NZ Transport Agency:

 

848

For rules programme activity

899

429

For fuel excise duty refund administration activity

429

16,329

For road user charges collection, investigation and enforcement activity

-

1,493

Civil Aviation Authority: for rules programme activity and other costs

1,200

750

Maritime NZ: for rules programme activity and other costs

899

19,849

Total contractual payments to Crown entities

3,427

Note 6: Personnel expenses

Actual
2011/12
$000

 

Actual
2012/13
$000

16,431

Salary and wages

14,348

569

Employer contributions to defined contribution schemes

512

(108)

Annual leave

1

(8)

Long service leave

11

334

Retirement leave

185

-

Sick leave

1

247

Other personnel costs

446

17,465

Total personnel expenses

15,504

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

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 2013 was 8% (2012: 8%).

Note 8: Other operating expenses

Actual
2011/12
$000

 

Actual
2012/13
$000

5,279

Professional and specialist services

5,847

1,857

Other operating expenses

2,037

1,533

Operating lease payments

1,440

1,559

Computer bureau and software licence fees

802

137

Advertising and publicity

174

76

Fee to Audit NZ for the financial statement audit

76

-

Fee to Audit NZ for project assurance services

9

6

Net loss on property, plant and equipment

-

10,447

Total other operating expenses

10,385

 Note 9: Equity

Actual
2011/12
$000

 

Actual
2012/13
$000

 

Taxpayers funds

 

2,355

Balance at 1 July

2,355

-

Capital withdrawal

(408)

2,355

Balance at 30 June

1,947

 

Property revaluation reserves

 

761

Balance at 1 July and 30 June

761

3,116

Total equity

2,708

The capital withdrawal represents the value of the Crash Analysis System’s hardware and software assets. These assets were transferred to New Zealand Transport Agency on 1 July 2012 (notes 11 and 12).

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

Note 10: Debtors, prepayments and other receivables

Actual
2011/12
$000

 

Actual
2012/13
$000

2,660

Due from the Crown

-

(32)

GST refund / (payable)

113

82

Other receivables

15

2,710

Total debtors, prepayments and other receivables

128

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.

Note 11: Property, plant and equipment

 

Leasehold improvements
$000

Plant and equipment
$000

Milford Sound/ Piopiotahi Aerodrome
$000

Furniture and fittings
$000

Total
$000

Cost or valuation

         

Balance at 1 July 2011

2,170

1,897

1,345

843

6,255

Additions

-

129

-

13

142

Disposals

-

(544)

-

(14)

(558)

Balance at 30 June 2012

2,170

1,482

1,345

842

5,839

Balance at 1 July 2012

2,170

1,482

1,345

842

5,839

Additions

-

145

-

-

145

Disposals

-

(364)

-

-

(364)

Balance at 30 June 2013

2,170

1,263

1,345

842

5,620

Accumulated depreciation

         

Balance at 1 July 2011

1,116

1,377

36

490

3,019

Depreciation expense

217

172

29

82

500

Disposals

-

(543)

-

(9)

(552)

Balance at 30 June 2012

1,333

1,006

65

563

2,967

Balance at 1 July 2012

1,333

1,006

65

563

2,967

Depreciation expense

217

141

28

80

466

Disposals

-

(282)

-

-

(282)

Balance at 30 June 2013

1,550

865

93

643

3,151

Carrying amounts

         

At 1 July 2011

1,054

520

1,309

353

3,236

At 30 June and 1 July 2012

837

476

1,280

279

2,872

At 30 June 2013

620

398

1,252

199

2,469

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 12: Intangible assets

 

Crash analysis system
$000

Other software
$000

Total
$000

Cost

     

Balance at 1 July 2011

408

1,476

1,884

Additions

-

129

129

Balance at 30 June 2012

408

1,605

2,013

Balance at 1 July 2012

408

1,605

2,013

Additions

-

99

99

Disposals

(408)

(54)

(462)

Balance at 30 June 2013

-

1,650

1,650

Accumulated depreciation

     

Balance at 1 July 2011

408

921

1,329

Amortisation expense

-

302

302

Balance at 30 June 2012

408

1,223

1,631

Balance at 1 July 2012

408

1,223

1,631

Amortisation expense

-

247

247

Disposals

(408)

(54)

(462)

Balance at 30 June 2013

-

1,416

1,416

Carrying amounts

     

At 1 July 2011

-

555

555

At 30 June and 1 July 2012

-

382

382

At 30 June 2013

-

234

234

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

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

Note 13: Creditors and other payables

Actual
2011/12
$000

 

Actual
2012/13
$000

3,428

Accrued expenses

783

539

Trade creditors

924

3,967

Total creditors and other payables

1,707

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

Note 14: Employee entitlements

Actual
2011/12
$000

 

Actual
2012/13
$000

 

Current liabilities

 

364

Accrued salary

375

917

Annual leave

916

117

Long service leave

106

69

Retirement leave

79

31

Sick leave

32

1,498

Total of current portion

1,508

 

Non-current liabilities

 

138

Long service leave

161

812

Retirement leave

988

950

Total of non-current portion

1,149

2,448

Total provision for employee entitlements

2,657

Accrued salary arises from the fortnightly paydays not equating to the year end. Days owed at 30 June 2013:7 (2012:7).

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

Long service and retirement leave obligations are determined on an actuarial basis using a number of assumptions. Two of the key assumptions are the discount rate and the salary inflation factor. Any changes in these assumptions 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 $96,000 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 $116,000 higher/lower.

Note 15: Provision for lease make-good

Actual
2011/12
$000

 

Actual
2012/13
$000

593

Balance at 1 July

660

67

Discount unwind (Finance cost)

24

660

Balance at 30 June

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 these leases, which impacts on the timing of expected cash outflows.

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

Note 16: Reconciliation of the net surplus in the statement of comprehensive income with net cash flows from operating activites in the statement of cash flows for the year ended 30 June 2013

Actual
2011/12
$000

 

Actual
2012/13
$000

-

Net surplus

320

 

Add non-cash items

 

500

Depreciation of property, plant and equipment

466

302

Amortisation of intangible assets

247

6

Loss on disposal of assets

-

808

Total of non-cash items

713

 

Add/(deduct) movements in working capital items

 

29

(Increase)/decrease in prepayments

-

(482)

(Increase)/decrease in debtors and other receivables

2,581

719

Increase/(decrease) in payables and provisions

(2,236)

245

Increase/(decrease) in employee entitlements

209

511

Net movements in working capital items

554

1,319

Net cash flows from operating activities

1,587

Note 17: 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 13.

Actual
2011/12
$000

 

Actual
2012/13
$000

3,967

Less than 6 months (note 13)

1,707

-

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 interest-bearing financial instruments and so has no exposure to interest rate risk.

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 does not enter into foreign exchange forward contracts and so has no exposure to this risk.

Note 18: 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
2011/12
$000

 

Actual
2012/13
$000

 

Loans and receivables

 

4,227

Cash and cash equivalents

5,200

2,710

Debtors, prepayments and other receivables (note 10)

128

 

Financial liabilities measured at amortised cost

 

3,967

Creditors and other payables (note 13)

1,707

Note 19: 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 $30.3 million (2012: $30.4 million) and $nil from fees (2012: $17.8 million), for specific purposes as set out in the scopes of the relevant government appropriations.

Revenue was received from other entities controlled by the Crown as described in note 4, 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 2013 totalled $0.5 million (2012: $0.4 million) - electricity from Genesis Energy $0.04 million (2012: $0.05 million), air travel from Air New Zealand $0.4 million (2012: $0.3 million) and postal services from New Zealand Post $0.01 million (2012: $0.01 million).

The Ministry also purchases transport outputs from other transport entities controlled by the Crown. These transactions are detailed in note 5 of these financial statements.

Transactions with key management personnel

During 2012/13 and 2011/12, the Ministry did not enter into any transactions with key management personnel or their close families.

Key management personnel compensation

Actual
2011/12
$000

 

Actual
2012/13
$000

1,576

Salaries and other short-term employee benefits

1,659

100

Termination benefits

-

1,676

Total key management personnel compensation

1,659

At 30 June 2013, key management personnel includes the Chief Executive and the five members (2012: five members) of the senior management team who report directly to him, as well as the Minister and Associate Minister of Transport.

Key management personnel compensation excludes the remuneration and other benefits that the Minister and the Associate Minister of Transport receive. The Minister’s and Associate’s remuneration and other benefits are not received only for their roles as members of key management personnel of the Ministry. Their remuneration and other benefits are set by the Remuneration Authority under the Civil List Act 1979 and are paid under Permanent Legislative Authority, and not paid by the Ministry of Transport.

Note 20: 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.

Note 21: Major changes to the departmental output budgets

Changes were made to the Ministry’s output class structure in 2012/13 as referred to in the Statement of objectives and service performance section. A multi class output appropriation entitled Policy advice and related outputs was established which has four output components namely, Policy advice, Governance and performance advice for Crown agencies, Ministerial servicing and Clifford Bay ferry terminal - facilitation of procurement.

Minor changes were made to the Ministry’s departmental output budgets for the year 2012/13 by way of the Supplementary Estimates. Explanations for the changes were outlined in the 2012/13 Supplementary Estimates (page 738 onwards). The net changes appear in the following table:

Appropriations for departmental output expenses

Main Estimates
$000

Supplementary Estimates
$000

Cumulative Vote
$000

Policy advice and related outputs – multi class output appropriation

30,806

(317)

30,489

Fuel excise duty refund administration

429

-

429

Milford Sound/ Piopiotahi Aerodrome operation and administration

223

32

255

Search and rescue activity coordination PLA

1,136

-

1,136

Total departmental appropriations

32,594

(285)

32,309

The total departmental output expenses were reduced during the year. The Ministry also made fiscally neutral adjustments between outputs to reflect the costs of work being done. The overall reduction was minimal and explained below:

  • an increase of $105,000 – funding was increased to reflect additional third party revenue earned

  • a reduction of $390,000 – funding was reprioritised to non-departmental outputs that needed additional funding.

Note 22: 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 2013 are:

Statement of comprehensive income

Revenue Crown

The actual revenue Crown figure was $1.7 million below the Supplementary Estimates. This amount was not drawn because it was not required to fund expenditure.

Expenditure

Personnel expenditure was $1.9 million below the Supplementary Estimates due to high turnover and vacancies.

Statement of financial position

Current Assets

Cash and cash equivalents was $0.7 million higher than the Supplementary Estimates due to liabilities being higher than anticipated.

Current Liabilities

Current liabilities are $0.3 million higher than the Supplementary Estimates because the provision to repay surplus was not anticipated.

Note 23: Events after balance sheet dates

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 2013.

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