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Note 2: Revenue Crown

 

Actual
2009/10
$000
Actual
2010/11
$000
27,199 Policy Advice 29,424
2,315 Sector leadership and support -
615 Land transport revenue forecasting and strategy 565
- Governance and performance advice and support 1,742
- Search and rescue activity coordination PLA 1,134
30,129 Total revenue Crown 32,865

Note 3: Revenue from fees

Actual
2009/10
$000
Actual
2010/11
$000
17,344 Road user charges and collection, investigation and enforcement 17,344
1,000 Land transport revenue forecasting and strategy 1,000
429 Refund of fuel excise duty 429
18,773 Total revenue from fees 18,773

Note 4: Other revenue

Actual
2009/10
$000
Actual
2010/11
$000
625 From other departments 392
89 From Crown entities 194
96 Other recoveries 248
810 Total other revenue 834

Note 5: Contractual payments to Crown entities

Actual
2009/10
$000
Actual
2010/11
$000
  NZ Transport Agency:  
17,344    For road user charges collection, investigation and enforcement activity 17,344
813    For rules programme activity 800
429    For refund of fuel excise duty activity 429
1,541 Civil Aviation Authority for rules programme activity and other costs 1,665
710 Maritime New Zealand for rules programme activity and other costs 930
20,837 Total contractual payments to Crown entities 21,168

Note 6: Personnel expenses

Actual
2009/10
$000
Actual
2010/11
$000
16,423 Salary and wages 16,956
489 Employer contributions to defined contribution schemes 596
207 Annual leave 37
11 Long service leave 17
(12) Retirement leave 219
31 Sick leave -
259 Other personnel costs 386
17,408 Total personnel costs 18,211

 

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

Note 7: Other operating expenses

Actual
2009/10
$000
Actual
2010/11
$000
4,947 Professional and specialist services 6,791
2,014 Other operating expenses 1,953
1,565 Operating lease payments 1,544
1,581 Computer bureau and software licence fees 1,548
244 Advertising and publicity 92
71 Audit fees for the financial statement audit 74
10,422 Total other operating expenses 12,002

Note 8: 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 2011 was 7.5 percent (2010: 7.5 percent).

Note 9: Taxpayers' funds

Actual
2009/10
$000
Actual
2010/11
$000
  General funds  
2,381 Balance at 1 July 2,355
- Net surplus/(deficit) -
(26) Capital withdrawal -
2,355 Balance at 30 June 2,355
  Revaluation reserve-aerodrome  
603 Balance at 1 July 761
158 Revaluation gains -
761 Balance at 30 June 761
3,116 Total taypayers' funds 3,116

An amount of $26,000 was repaid to the Crown in 2009/10 as the Ministry's contribution towards the funding of the Identity Verification Services.

Note 10: Debtors, prepayments and other receivables

Actual
2009/10
$000
Actual
2010/11
$000
3,206 Due from the Crown 2,103
- Prepayments 29
248 Other receivables 157
3,454 Total debtors, prepayments and other receivables 2,289

The Ministry is owed money by the Crown, as Crown revenue is only drawn down as required.

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

Leashold
improvements
$000
Plant and
equipment
$000
Milford Sound/
Piopiotahi
Aerodrome
$000
Furniture
and
fittings
$000
Total
$000
Cost or valuation          
Balance at 1 July 2009 2,170 1,670 1,032 839 5,711
Additions - 191 190 4 385
Net increase in revaluation - - 123 - 123
Disposals - (317) - - (317)
Balance at 30 June 2010 2,170 1,544 1,345 843 5,902
Balance at 1 July 2010 2,170 1,544 1,345 843 5,902
Additions - 353 - - 353
Balance at 30 June 2011 2,170 1,897 1,345 843 6,255
Accumulated depreciation          
Balance at 1 July 2009 682 1,324 29 327 2,362
Depreciation expense 217 193 13 82 505
Reverse accumulated depreciation on revaluation - - (35) - (35)
Disposals - (317) - - (317)
Balance at 30 June 2010 899 1,200 7 409 2,515
Balance at 1 July 2010 899 1,200 7 409 2,515
Depreciation expense 217 177 29 81 504
Balance at 30 June 2011 1,116 1,377 36 490 3,019
Carrying amounts          
At 1 July 2009 1,488 346 1,003 512 3,349
at 30 June and 1 July 2010 1,271 344 1,338 434 3,387
At 30 June 2011 1,054 520 1,309 353 3,236

Milford Sound/Piopiotahi Aerodrome was valued at 31 March 2010 by an independent valuer, G.Hughson (BE,MIPENZ), of Maunsell Ltd.

The total fair value of the aerodrome at that date was $1.3 million resulting in a gain on revaluation of $0.158 million. The net increase in revaluation was $0.123 million after setting off the reversal of accumulated depreciation on the date of valuation of $0.035 million.

Note 12: Intangible assets

Crash analysis
system
$000
Other software
$000
Total
$000
Cost      
Balance at 1 July 2009 408 1,132 1,540
Additions - 133 133
Balance at 30 June 2010 408 1,265 1,673
Balance at 1 July 2010 408 1,265 1,673
Additions - 347 347
Disposals - (136) (136)
Balance at 30 June 201 408 1,476 1,884
Accumulated depreciation      
Balance at 1 July 2009 408 428 836
Amortisation expense - 297 297
Balance at 30 June 2010 408 725 1,133
Balance at 1 July 2010 408 725 1,133
Amortisation expense - 332 332
Disposals - (136) (136)
Balance at 30 June 2011 408 921 1,329
Carrying amounts      
At 1 July 2009 - 704 704
At 30 June and 1 July 2010 - 540 540
At 30 June 2011 - 555 555

There are no restrictions over the title of the Ministry's intangible assets pledged as security for liabilities.

Note 13: Finance cost

Actual
2009/10
$000
Actual
2010/11
$000
20 Discount unwind on provisions (note 16) 21
20 Total finance cost 21

Note 14: Creditors and other payables

Actual
2009/10
$000
Actual
2010/11
$000
3,230 Accrued expenses 2,036
741 Trade creditors 1,352
371 GST payable 296
4,342 Total creditors and other payables 3,684

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.

Note 15: Employee entitlements

Actual
2009/10
$000
Actual
2010/11
$000
  Current liabilities  
987 Annual leave 1,024
112 Long service leave 115
26 Retirement leave 11
31 Sick leave 31
1,156 Total of current portion 1,181
  Non-current liabilities  
134 Long service leave 148
304 Retirement leave 537
438 Total of non-current portion 685
1,594 Total provision for employee entitlements 1,866

The present values of the long service and retirement leave obligations depend on a number of factors that are determined on an actuarial basis using a number of assumptions. Two key assumptions used in calculating this liability 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 one percent from the Ministry's estimates, with all other factors held constant, the estimated carrying amount of the liability would be $57,000 higher/lower.

If the inflation factor were to differ by one percent from the Ministry's estimates, with all other factors held constant, the estimated carrying amount of the liability would be $71,000 higher/lower.

Note 16: Provision for lease make-good

Actual
2009/10
$000
Actual
2010/11
$000
552 Balance at 1 July 572
20 Discount unwind (note 13) 21
572 Balance at 30 June 593

In respect of its leased premises, the Ministry is required, at the expiry of the lease term, 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.

Note 17: Reconciliation of the net surplus in the statement of comprehensive income with net cash flows from operating activities in the statement of cash flows for the year ended 30 June 2011

Actual
2009/10
$000
Actual
2010/11
$000
- Net surplus -
  Add non-cash items  
505 Depreciation of property, plant and equipment 504
297 Amortisation of intangible assets 332
802 Total of non-cash items 836
  Add/(deduct) movements in working capital items  
- (Increase)/decrease in prepayments (29)
(625) (Increase)/decrease in debtors and other receivables 1,194
2,093 Increase/(decrease) in payables and provisions (637)
171 Increase/(decrease) in employee entitlements 272
1,639 Net movements in working capital items 800
2,441 Net cash flows from operating activities 1,636

Note 18: 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 drawdowns 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 14.

Actual
2009/10
$000
Actual
2010/11
$000
4,342 Less than 6 months 3,684
- 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.

Note 19: 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
2009/10
$000
Actual
2010/11
$000
  Loans and receivables  
2,155 Cash and cash equivalents 3,117
3,454 Debtors, prepayments ad other receivables (note 10) 2,289
  Financial liabilities measured at amortised cost  
4,342 Creditors and other payables (note 14) 3,684

Note 20: 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 $32.9 million (2010: $30.1 million) and from fees of $18.8 million (2010: $18.8 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 4. 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 2011 totalled $0.5 million (2010: $0.3 million). These purchases included the purchase of electricity from Genesis Energy $0.05 million (2010: $0.04 million), air travel from Air New Zealand $0.4 million (2010: $0.3 million) and postal services from New Zealand Post $0.01 million (2010: $ nil).

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 2010/11, the Ministry did not enter into any transactions with key management personnel or their close families.

During early 2009/10, the Ministry did employ a close family member of a key management member. The terms and conditions of those arrangements were no more favourable than the Ministry would have adopted if there were no relationship to key management personnel. The key management member concerned left the Ministry during 2009/10.

Key management personnel compensation

Actual
2009/10
$000
Actual
2010/11
$000
1,420 Salaries and other short-term employee benefits 1,474
- Other long-term benefits -
- Termination benefits -
1,420 Total key management personnel compensation 1,474

At 30 June 2011, key management personnel include the Chief Executive and the five members (2010: five members) of the senior management team.

Key management personnel compensation excludes the remuneration and other benefits 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.

The increase in the cost is mainly due to staff movements during the year.

Note 21: Capital management

The Ministry’s capital is its equity (or taxpayers’ funds), which comprise general funds and 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 22: Major changes to the departmental output budgets

Changes were made to the Ministry’s departmental output budgets for the year 2010/11 by way of the Supplementary Estimates. The net changes appear in the following table.

Main
Estimates
$000
Supplementary
Estimates
$000
Cumulative
Vote
$000
Appropriations for departmental output expenses      
Policy advice 29,782 302 30,084
Road user charges collection, investigation and enforcement 17,344 974 18,318
Governance and performance advice and support 2,000 (250) 1,750
Land transport revenue forecasting and strategy 1,000 950 1,950
Refund of fuel excise duty 429 - 429
Airport operation and administration 200 70 270
Search and rescue activity coordination PLA - 1,136 1,136
Total departmental appropriations 50,755 3,182 53,937

Explanations for the major changes were outlined in the 2010/11 Supplementary Estimates (page 870 onwards).

The total departmental appropriations increased for a number of reasons, the most significant being:

  • a carry forward of $0.88 million from 2009/10 — revenue Crown
  • funding of $0.97 million for system improvements to the road user charges system — revenue from fees
  • funding of $0.88 million for search and rescue activities — revenue from fees
  • other revenue of $0.37 million from cost recoveries — other revenue

The Search and Rescue appropriation was established during the year to fund the activities of the Search and Rescue Secretariat which is housed within the Ministry. This activity was previously part of Policy advice but a new appropriation was created due to a new funding regime and some additional funding was allocated to the department to reflect where work was being managed.

The increase to road user charges collection, investigation and enforcement reflects the second bullet noted above.

The other changes mainly reflect adjustments to reflect the costs of work being done.

Note 23: 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 2011 are:

Statement of comprehensive income

The actual revenue Crown figure was $0.4 million below the Supplementary Estimates figure, because the amount was not required to fund expenditure.

The actual revenue from fees was $0.97 million below the Supplementary Estimates because the system development work, that was the reason for the increase in funding, was postponed to 2011/12.

The actual other revenue figure was $0.08 million below the Supplementary Estimates due to lower airport revenue. The drop in airport revenue is mainly due to the effects of the recession, a fall in tourists visiting the South Island after the earthquake, and the weather conditions.

Other operating expenses increased to reflect the additional revenue available. Actual expenditure was less than this, as some projects were delayed. Requests to carry forward $1.3 million to 2011/12 have been made.

Statement of financial position (and cash flows)

The actual cash and cash equivalents balance was $0.83 million more than the Supplementary Estimates mainly due to the movement in current assets and current liabilities.

The actual debtors, prepayments and other receivables balance was $0.33 million over the Supplementary Estimates mainly because the balance due from the Crown exceeded budget.

Note 24: 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 2011.


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