Financial Statements - About the ABCabout.abc.net.au/wp-content/uploads/2012/06/AnnualReport... · 2014-07-28 · Financial Statements ABC FINANCIAL STATEMENTS 141 Statement by Directors

Financial Statements

ABC FINANCIAL STATEMENTS 141

Statement by Directors and Chief Financial Officer 142

Income Statement 143

Balance Sheet 144

Statement of Changes in Equity 145

Cash Flow Statement 146

Schedule of Commitments 147

Schedule of Contingencies 148

1. Summary of Significant Accounting Policies 149

2. Expenses and Revenues 159

3. Revenue from Government 160

4. Revenue from Independent Sources 160

5. Expenses 161

6. Financial Assets 163

7. Non-Financial Assets 164

8. Payables 168

9. Interest Bearing Liabilities 168

10. Provisions 169

11. Cash Flow Statement Reconciliation 169

12. Financial Instruments 170

13. Contingent Liabilities 175

14. Directors’ Remuneration 176

15. Related Party Disclosures 176

16. Officers’ Remuneration 177

17. Auditor’s Remuneration 177

18. Assets Held in Trust 177

19. Correction of Error 178

20. Controlled Entities 178

21. Reporting by Outcomes 179

22. Appropriations 180

142 ABC FINANCIAL STATEMENTS

Statement by Directors and Chief Financial OfficerIn our opinion, the attached financial statements for the year ended 30 June 2008 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister’s Orders (FMOs) made under the Commonwealth Authorities and Companies Act 1997.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Broadcasting Corporation will be able to pay its debts as and when they become due and payable.

This statement is made in accordance with a resolution of the Directors.

Maurice Newman AC Mark Scott David Pendleton Chairman Managing Director Chief Financial Officer 30 July 2008 30 July 2008 30 July 2008

Income Statementfor the year ended 30 June 2008


2008 2007 Note $’000 $’000

INCOMERevenue from government 3 833 963 809 532Goods and services 4A 176 142 150 389Interest 4B 13 295 11 563Other revenues 4C 34 790 23 254

Total income 1 058 190 994 738

EXPENSESEmployee benefits 5A 391 006 352 766Suppliers 5B 444 644 404 526Depreciation and amortisation 5C 66 488 65 636Program amortisation 5D 130 296 133 218Finance costs 5E 5 673 6 874Net foreign exchange loss 5F 935 736Write-down and impairment of assets 5G 3 284 5 211Net loss from disposal of assets 5H 3 651 7 492

Total expenses 1 045 977 976 459

SURPLUS 12 213 18 279

The above statement should be read in conjunction with the accompanying notes.

Balance Sheetas at 30 June 2008


2008 2007 Note $’000 $’000

ASSETS Financial assets Cash and cash equivalents 6A 5 897 3 456Receivables 6B 152 096 137 908Accrued revenue 6C 11 541 10 277

Total financial assets 169 534 151 641

Non-financial assets Land and buildings 7A 677 903 512 149Infrastructure, plant and equipment 7B 274 011 268 266Intangibles 7C 15 685 12 234Inventories 7D 88 306 84 076Other non-financial assets 7E 14 721 17 874Assets classified as held for sale – at carrying value 7F 15 000 –

Total non-financial assets 1 085 626 894 599

Total assets 1 255 160 1 046 240

LIABILITIES Payables Suppliers 8A 68 757 60 211Other 8B 9 030 5 395

Total payables 77 787 65 606

Interest bearing liabilities Loans 9A 80 000 102 000

Total interest bearing liabilities 80 000 102 000

Provisions Employees 10A 130 295 118 881

Total provisions 130 295 118 881

Total liabilities 288 082 286 487

NET ASSETS 967 078 759 753

EQUITY Contributed equity 133 152 128 135Reserves 556 763 366 668Retained surplus 277 163 264 950

Total equity 967 078 759 753

Current assets 276 332 244 513Non-current assets 978 828 801 727Current liabilities 174 080 150 428Non-current liabilities 114 002 136 059


Statement of Changes in Equityfor the year ended 30 June 2008


Asset Contributed Retained revaluation Other Total equity / capital surplus reserve reserves equity

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance as at 1 July 128 135 120 295 264 950 255 113 366 708 366 708 ( 40) 38 759 753 742 154

Adjustment for errors – – – (8 442) – – – – – (8 442)

Adjusted opening balance 128 135 120 295 264 950 246 671 366 708 366 708 ( 40) 38 759 753 733 712

Income and expense Cash flow hedges gain/(loss) taken to equity – – – – – – 18 ( 78) 18 ( 78)

Income and expenses recognised directly in equity – – – – – – 18 ( 78) 18 ( 78)

Surplus for period – – 12 213 18 279 – – – – 12 213 18 279

Total income and expenses – – 12 213 18 279 – – 18 ( 78) 12 231 18 201

Net revaluation in land and buildings – – – – 190 077 – – – 190 077 –

Transactions with owner Distributions to owner Return of capital: Digital transmission (7 733) (6 410) – – – – – – (7 733) (6 410)

Contributions by owner Appropriations: Equity injection 12 750 14 250 – – – – – – 12 750 14 250

Transactions with owner 5 017 7 840 – – – – – – 5 017 7 840

Closing balance as at 30 June 133 152 128 135 277 163 264 950 556 785 366 708 ( 22) ( 40) 967 078 759 753


Cash Flow Statementfor the year ended 30 June 2008


2008 2007 Note $’000 $’000

Inflows (Outflows) OPERATING ACTIVITIES Cash received Appropriations 833 963 809 532 Goods and services 148 564 109 542 Interest 13 215 11 473 Net GST received 30 162 31 434 Other 29 290 23 254

Total cash received 1 055 194 985 235

Cash used Employees (379 592) (350 473)Suppliers (569 373) (521 194)Finance costs (5 690) (6 865)

Total cash used (954 655) (878 532)

Net cash from operating activities 11 100 539 106 703

INVESTING ACTIVITIES Cash received Proceeds from sale of property, plant and equipment 302 177

Total cash received 302 177

Cash used Purchase of property, plant and equipment (71 669) (84 461)Bills of exchange and promissory notes (9 748) (12 298)

Total cash used (81 417) (96 759)

Net cash used by investing activities (81 115) (96 582)

FINANCING ACTIVITIES Cash received Appropriations – contributed equity 12 750 14 250

Total cash received 12 750 14 250

Cash used Repayment of debt (22 000) (20 000)Return of capital (7 733) (6 410)

Total cash used (29 733) (26 410)

Net cash used by financing activities (16 983) (12 160)

Net increase/(decrease) in cash and cash equivalents 2 441 (2 039)

Cash and cash equivalents at beginning of reporting period 3 456 5 495

Cash and cash equivalents at end of reporting period 6A 5 897 3 456


Schedule of Commitmentsas at 30 June 2008


2008 2007 $’000 $’000

BY TYPECapital commitmentsBuildings 215 2 344 Infrastructure, plant and equipment (1) 12 079 9 745

Total capital commitments 12 294 12 089

Other commitments Operating leases (2) 35 889 36 029 GST payable on commitments 10 341 9 579 Other payables (3) 1 167 088 1 150 416

Total other commitments 1 213 318 1 196 024

Commitments receivable GST recoverable on commitments (107 274) (107 617)Other receivables (4) (285 793) (356 358)

Total commitments receivable (393 067) (463 975)

Net commitments by type 832 545 744 138

BY MATURITY Capital commitments One year or less 10 187 11 731 From one to five years 2 107 358

Total capital commitments 12 294 12 089

Operating lease commitments One year or less 16 538 15 413 From one to five years 19 143 20 025 Over five years 208 591

Total operating lease commitments 35 889 36 029

GST and other payable commitments One year or less 256 243 237 282 From one to five years 459 729 502 984 Over five years 461 457 419 729

Total GST and other payable commitments 1 177 429 1 159 995

Commitments receivable One year or less (171 790) (141 739)From one to five years (164 736) (264 655)Over five years (56 541) (57 581)

Total commitments receivable (393 067) (463 975)

Net commitments by maturity 832 545 744 138

1. Outstanding contractual commitments associated with the purchase of infrastructure, plant and equipment, including communications upgrades and technical equipment fit out.

2. Operating leases included are effectively non-cancellable and comprise:

Nature of Lease General description of leasing arrangement

• Motor vehicles – business – Fully maintained operating lease over 24/36 months and/or 40 000/60 000km; and senior executive no contingent rentals; no renewal or purchase options available.

• PC leasing – Includes specific equipment covering hardware, operating system and maintenance of hardware; operating lease over 36 months; no renewal or purchase options available.

• Property leases – office – Lease payments subject to increase in accordance with CPI or other and business premises agreed increment; initial period of lease ranges from 1 year to 8 years; options to extend in accordance with lease.

3. Other payables commitments are covered by agreements and are associated with the supply of transmission services, satellite services, purchase of programs and program rights.

4. Other receivables comprise analog transmission, royalties, co-production commitments, resource hire, content licensing, media development support initiatives, contract revenue and grants. No commitments to cover digital transmission funding have been included.


Schedule of Contingenciesas at 30 June 2008


2008 2007 Note $’000 $’000

Contingent liabilities – guarantees Balance from previous period 1 010 960 Net change during the year 140 50

Total contingent liabilities – guarantees 13 1 150 1 010

Details of each class of contingent liabilities and assets, including those not disclosed above because they cannot be quantified or are considered remote, are shown in note 13: Contingent Liabilities.

The above schedule should be read in conjunction with the accompanying notes.

Notes to and Forming Part of the Financial Statementsfor the year ended 30 June 2008


1. Summary of Significant Accounting PoliciesThe principal accounting policies adopted in preparing the financial statements of the Australian Broadcasting Corporation (the “Corporation” or “ABC”) are stated to assist in a general understanding of these financial statements.

The financial report of the Australian Broadcasting Corporation for the year ended 30 June 2008 was authorised for issue by the Directors on 30 July 2008.

1.1 Basis of AccountingThe financial statements and notes are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997 and are a General Purpose Financial Report.

The financial statements and notes have been prepared in accordance with:

• FMOs for reporting periods ending on or after 1 July 2007;

• Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The Corporation’s Income Statement, Balance Sheet and Statement of Changes in Equity have been prepared on an accruals basis and are in accordance with the historical cost convention, except for certain assets and liabilities, which, as noted, are at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial report is presented in Australian dollars and values are rounded to the nearest thousand dollars unless disclosure of the full amount is specifically required.

Unless alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are recognised in the Corporation’s Balance Sheet when and only when it is probable that future economic benefits will flow to the Corporation and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under agreements equally proportionately unperformed are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies (other than unquantifiable or remote contingencies, which are reported at note 13: Contingent Liabilities).

Unless alternative treatment is specifically required by an accounting standard, revenues, gains and expenses are recognised in the Corporation’s Income Statement when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

1.2 Significant Accounting Judgements, Estimates and AssumptionsSignificant Accounting JudgementsIn the process of applying the accounting policies, the Corporation has taken the fair value of land and buildings to be the market value of similar properties as determined by an independent valuer.

Significant Accounting Estimates and AssumptionsNo accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.

1.3 Statement of ComplianceAustralian Accounting Standards require a statement of compliance with International Financial Reporting Standards (IFRS) to be made where the financial report complies with these standards. Some Australian equivalents to IFRS and other Australian Accounting Standards contain requirements specific to not-for-profit entities that are inconsistent with IFRS requirements. The Corporation is a not-for-profit entity and has applied these requirements, so it cannot make this statement.

Adoption of new Australian Accounting Standard requirementsNo accounting standard has been adopted earlier than the application date as stated in the standard.

The following adopted requirements have affected the amounts reported in the current or prior periods or are estimated to have a financial effect in future reporting periods.



1. Summary of Significant Accounting Policies continued

1.3 Statement of Compliance continued

Adoption of new Australian Accounting Standard requirements continuedAASB 7 Financial Instruments: Disclosures The standard is effective for reporting periods beginning on or after 1 January 2007 and amends the disclosure requirements for financial instruments. In general, AASB 7 requires greater disclosure than that previously required. Associated with the introduction of AASB 7, a number of accounting standards were amended to reference the new standard or remove the present disclosure requirements through AASB 2005-10: Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 and AASB 1038]. These changes have no financial impact but may affect the disclosure presented in future financial reports.

AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments The amendment removed some specific Australian disclosure requirements and reinstated accounting options available in the International equivalent, which were removed from the Australian equivalent.

The FMOs do not allow use of these options.

AASB 1048 Interpretation and Application of Standards This standard ensures compliance with new and revised Interpretations including, Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities, Interpretation 12 Service Concession Arrangements, Interpretation 13 Customer Loyalty Programmes, Interpretation 14 AASB 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction and Interpretation 113 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. The requirements of Interpretation 13 are relevant to the Corporation and have been outlined separately.

AASB 2007-7 Amendments to Australian Accounting Standards The amendment made editorial style changes to several Australian Accounting Standards, removed the encouragement to apply a particular cash flow format and removed superseded guidance within AASB 4.

Future Australian Accounting Standard requirementsThe following new standards, amendments to standards or interpretations have been issued by the Australian Accounting Standards Board but are effective for future reporting periods. It is estimated that the impact of adopting these pronouncements when effective will have no material financial impact on future reporting periods.

AASB 101 Presentation of Financial Statements This standard is applicable to annual reporting periods beginning on or after 1 January 2009. This standard introduces the notion of a ‘complete set of financial statements’, which amends the structure and includes replacing the balance sheet with a statement of financial position and replacing the income statement with a statement of comprehensive income. The statement of comprehensive income will include all income and expense items, including those previously recognised in equity, such as asset revaluation increments. As a result of this standard, AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101 was also issued and applies to reporting periods beginning on or after 1 January 2009.

AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 This amendment removes the option of expensing borrowing costs related to qualifying assets. This Standard is applicable to annual reporting periods beginning on or after 1 January 2009.

AASB Interpretation 13 Customer Loyalty Programmes The Interpretation provides guidance on accounting for customer loyalty programs. It discusses credits granted to customers as part of a sales transaction and which, subject to meeting any further qualifying conditions, the customers can redeem in the future for free or discounted goods or services. This Interpretation is applicable to annual reporting periods beginning on or after 1 July 2008.

This interpretation will affect all applicable ABC Shop sales transactions from 1 July 2008. The effect of this will be a reduction in revenue recognised in the income statement and the recognition of a liability in the balance sheet for the equivalent monetary value of the loyalty points awarded.




1.3 Statement of Compliance continued

OtherAs a result of a review of AAS 27 Financial Reporting by Local Governments, AAS 29 Financial Reporting by Government Departments and AAS 31 Financial Reporting by Governments, AASB 1004 Contributions, AASB 1050 Administered Items, AASB 1052 Disaggregated Disclosures, AASB 1049 Financial Reporting of General Government Sectors by Governments, AASB 2007-9 Amendments to Australian Accounting Standards arising from the review of AAS 27, 29 and 31 and Interpretation 1038 were issued.

1.4 TaxationThe Corporation is not subject to income tax pursuant to Section 71 of the Australian Broadcasting Corporation Act 1983.

The Corporation’s controlled entities, Music Choice Australia Pty Ltd and The News Channel Pty Limited, while subject to income tax, have been inactive since the year ended 30 June 2000 up to and including 30 June 2008.

Goods and Services TaxRevenues, gains, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the revenue or expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST receivable from the ATO is included as a financial asset in the Balance Sheet while any net amount of GST payable to the ATO is included as a liability in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a net basis. The GST components arising from investing and financing activities which are recoverable from, or payable to the ATO are classified as operating cashflows.

Commitments and contingencies are disclosed on a gross basis. GST commitments recoverable from, or payable to, the ATO are disclosed.

1.5 Foreign Currency TransactionsThe functional and presentation currency of the Corporation is Australian dollars ($).

The Corporation enters into foreign currency hedging arrangements to protect its purchasing power in relation to foreign currency exposures.

Revenues and expenditures denominated in foreign currencies are converted to Australian dollars at the exchange rates prevailing at the date of the transaction, or at the hedged rate.

All gains and losses are taken to profit or loss with the exception of forward exchange contracts that are classified as cash flow hedges used to hedge highly probable transactions. Gains and losses on cash flow hedges held at balance date are taken to equity.

All monetary foreign currency balances are converted to Australian dollars at the exchange rate prevailing at balance date. Monetary assets and liabilities of overseas branches and amounts payable to or by the Corporation in foreign currencies are translated into Australian dollars at the applicable exchange rate at balance date.

1.6 DerivativesThe Corporation uses forward currency contracts to hedge its risks associated with foreign currency fluctuations.

Forward currency contracts are initially recognised at fair value on the date on which the contract is entered into and are subsequently revalued to fair value. Forward currency contracts are carried as assets when their net fair value is positive and as liabilities when their fair value is negative.




1.6 Derivatives continued

Any gains or losses arising from hedges in the fair value of forward currency contracts, except for those that qualify as cash flow hedges, are taken directly to profit or loss for the year.

For the purpose of hedge accounting, the Corporation’s hedges are classified as cash flow hedges when they hedge exposure to variability in cash flows that is attributable either to a particular risk associated with a recognised asset or liability or to a highly probable forecast transaction. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit.

At the inception of a hedge relationship, the Corporation formally designates and documents the hedge relationship to which the Corporation wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Corporation will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flow attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

The effective portion of the gain or loss on the cash flow hedge is recognised directly in equity, while the ineffective portion is recognised in profit or loss.

Amounts taken to equity are transferred to the Income Statement when the hedged transaction affects profit or loss, such as when hedged income or expenses are recognised or when a forecast sale or purchase occurs. When the hedged item is the cost of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the Income Statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to the Income Statement.

1.7 Reporting by Outcomes and SegmentsA comparison by outcomes specified in the Appropriation Acts relevant to the Corporation is presented in note 21: Reporting by Outcomes. Any intra-government costs are eliminated in calculating the actual budget outcome for the Government overall.

The Corporation principally provides a national television and radio service within the broadcasting industry. It is therefore considered for segmental reporting to operate predominantly in one industry and in one geographical area, Australia.

1.8 Revenue and GainsRevenue from the sale of goods is recognised when:

• the risks and rewards of ownership have been transferred to the buyer;

• the seller retains no managerial involvement nor effective control over the goods;

• the revenue and transaction costs incurred can be reliably measured; and

• it is probable that the economic benefit associated with the transaction will flow to the Corporation.

Revenue from the sale of goods and services is recognised at fair value of the consideration received net of the amount of the GST upon delivery of the goods and services to customers.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. Revenue is recognised when:

• the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and

• the probable economic benefits with the transaction will flow to the Corporation.




1.8 Revenue and Gains continued

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Credit sales are on normal commercial terms.

Receivables for goods and sales, which have 30 day terms, are recognised at the nominal amounts due less any provision for bad and doubtful debts. Collectability of debts is reviewed at the balance date. Provisions are made when the collectability of the debt is no longer probable and when there is objective evidence that the Corporation will not be able to collect the receivable.

Interest revenue is recognised using the effective interest method.

Revenues from GovernmentAmounts appropriated for Departmental output appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned.

Appropriations receivable are recognised at their nominal amounts.

Subsidies, grants, sponsorships and donations are recognised on receipt unless paid to the Corporation for a specific purpose where recognition of revenue will be recognised in accordance with the agreement.

Sale of AssetsGains from disposal of non-current assets are recognised when control of the asset has passed to the buyer.

1.9 GrantsThe Corporation receives grant monies from time to time.

Most grant agreements require the Corporation to perform services or provide facilities, or to meet eligibility criteria. A liability in respect of unearned revenues is recognised to the extent the services or facilities have not been provided or eligibility criteria have not been met.

1.10 Bills of ExchangePremiums or discounts are amortised through the Income Statement each year from the date of purchase so that investments attain their redemption value by maturity date and income is recognised on an effective yield basis.

Any profits or losses arising from the disposal prior to maturity are taken to the Income Statement in the period in which they are realised. These assets are intended to be held to maturity and are carried at cost adjusted for discounts and premiums.

1.11 Employee BenefitsBenefitsLiabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for short-term employee benefits (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

All other employee benefit liabilities are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.




1.11 Employee Benefits continued

LeaveThe liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration, including the employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave for the Corporation has been determined by reference to the work of an actuary, Professional Financial Consulting Pty Ltd. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

The liability for long service leave represents the present value of the estimated future cash outflows to be made by the Corporation resulting from employees’ services provided up to the balance date.

SuperannuationEmployees are members of the Commonwealth Superannuation Scheme (CSS), Public Sector Superannuation Scheme (PSS), the Public Sector Superannuation Accumulation Plan Scheme (PSSap) or another non-Commonwealth Superannuation (ARIA) fund.

The CSS and PSS are defined benefit schemes for the Commonwealth. The PSSap and ARIA are defined contribution schemes.

The liability for superannuation benefits is recognised in the financial statements of the Commonwealth and is settled by the Commonwealth in due course.

The Corporation makes employer contributions to the Commonwealth at rates determined by the Commonwealth to be sufficient to meet the cost to the Commonwealth of the superannuation entitlements of the employees.

1.12 LeasesA distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased assets.

Lease incentives taking the form of ‘free’ leasehold improvements and rent holidays are recognised as liabilities. These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability.

1.13 Borrowing CostsAll borrowing costs are expensed as incurred.

1.14 Cash and Cash EquivalentsCash and cash equivalents in the Balance Sheet comprise cash at bank and on hand and short-term deposits with an original maturity of three months or less. Cash and cash equivalents are recognised at their nominal amounts.

1.15 Repairs and MaintenanceMaintenance, repair expenses and minor renewals which do not constitute an upgrading or enhancement of equipment are expensed as incurred.




1.16 Transactions by the Commonwealth as OwnerAppropriationsParliament appropriates monies to the Corporation as revenue appropriations, as loan appropriations and as equity injections.

The full amount of appropriations for departmental outputs for the year is recognised as revenue.

Equity InjectionsAmounts appropriated by the Parliament as equity injections are recognised as ‘contributed equity’ in accordance with the FMOs.

Other Distributions to OwnersThe FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend.

1.17 Financial Risk ManagementThe Corporation’s activities expose it to normal commercial financial risk. As a result of the nature of the Corporation’s business and its internal and Australian Government policies dealing with the management of financial risk, the Corporation’s exposure to market, credit, liquidity, cash flow and fair value interest risk is considered to be low.

1.18 InvestmentsInvestments are measured at their fair value.

1.19 Recognition of Financial Assets and Financial LiabilitiesInvestments comprising bills of exchange and negotiable certificates of deposit are initially recognised at cost and are classified as held to maturity. Cash and receivables are recognised at cost.

As required by AASB 7 Financial Instruments: Disclosures, forward foreign exchange contracts are deemed as held for trading. Gains and losses on these items held for trading are recognised in the Income Statement except if they are classified as a cash flow hedge where they are recognised in equity.

Financial assets have been assessed for indicators of impairment (refer note 1.20: Impairment of Financial Assets).

1.20 Impairment of Financial AssetsFinancial assets are assessed for indicators of impairment at each balance date.

Financial assets carried at cost which are not held to generate net cash inflows, are assessed for indicators of impairment. If such indicators are found to exist, the recoverable amount of the assets are estimated and compared to the assets carrying amount and, if less, reduced to the carrying amount. The reduction is shown as an impairment loss.

The Corporation conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.

There were no indicators of impairment identified at balance date.

1.21 ReceivablesReceivables are carried at nominal amounts due less allowance for losses on receivables.

Trade debtors are normally settled within 30 days unless otherwise agreed and are carried at amounts due.

The Corporation makes a specific provision for debts considered doubtful by conducting a detailed review of material debtors, making an assessment of the probability of recovery of those debts and taking into account past bad debts experience. Bad debts are written off when identified.




1.22 Trade Creditors and Other PayablesTrade creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods and services have been received (irrespective of having been invoiced).

Settlement is on normal commercial terms.

1.23 Contingent Liabilities and Contingent AssetsContingent liabilities and assets are not recognised in the Balance Sheet but are disclosed in the relevant schedule and note 13: Contingent Liabilities. They may arise from uncertainty as to the existence of a liability or asset, or represent an existing liability or asset in respect of which settlement is not probable or the amount cannot be reliably measured. Remote contingencies are part of this disclosure. Where settlement becomes probable, a liability or asset is recognised. A liability or asset is recognised when its existence is confirmed by a future event, settlement becomes probable (virtually certain for assets) or reliable measurement becomes possible.

1.24 Acquisition of AssetsAssets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets at their fair value at the date of acquisition.

1.25 Property (Land and Buildings), Infrastructure, Plant and EquipmentAsset Recognition ThresholdPurchases of property, infrastructure, plant and equipment are recognised initially at cost in the Balance Sheet. Purchases costing less than $2 000 are expensed in the year of acquisition except where they form part of a project or group of similar items which are significant in total.

Basis of RevaluationLand, buildings, infrastructure, plant and equipment are carried at fair value, being revalued with sufficient frequency such that the carrying amount of each asset is not materially different, at reporting date, from its fair value.

Fair values for each class of asset are determined as shown below.

Asset Class Fair Value Measured at: Land Market selling price Buildings Depreciated replacement cost Infrastructure, plant and equipment Depreciated replacement cost

Following initial recognition at cost, property, infrastructure, plant and equipment are carried at fair value less accumulated depreciation and accumulated impairment losses.

Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially vary, with the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through profit and loss. Revaluation decrements for a class of assets are recognised directly through profit and loss except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.




1.25 Property (Land and Buildings), Infrastructure, Plant and Equipment continued

Assets that are surplus to requirements are measured at their net realisable value.

Formal valuations are carried out by an independent qualified valuer.

DepreciationDepreciable property, infrastructure, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives using the straight-line method of depreciation. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation rates (useful lives) and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2008 2007 Buildings on freehold land 50 years 50 years Leasehold improvements 5 to 99 years 5 to 99 years Infrastructure, plant and equipment 3 to 15 years 3 to 15 years

The aggregate amount of depreciation and amortisation allocated for each class of asset during the reporting period is disclosed in note 5C: Depreciation and amortisation.

Assets Held for SaleAssets held for sale are stated in the Balance Sheet at the lower of carrying value or fair value less costs to sell.

1.26 Impairment of Non-Current AssetsAll non-current assets except:

• inventories;

• assets arising from employee benefits;

• financial assets that are within the scope of AASB 7 Financial Instruments: Disclosure;

• non-current assets (or disposal groups) classified as held for sale in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations;

are subject to an assessment as to indicators of impairment.

At the reporting date, the Corporation has assessed whether there are any indications that assets may be impaired. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

Recoverable amount is the greater of fair value less costs to sell and the value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the Corporation were deprived of the asset, its value in use is taken to be its depreciated replacement cost.


1.27 IntangiblesThe Corporation’s intangibles comprise software for internal use. These assets are initially recognised at cost and amortised.

These are assessed for indications of impairment. The carrying amount of impaired assets are written down to the higher of its net market selling price or depreciated replacement cost.


Intangibles are amortised on a straight-line basis over anticipated useful lives between 3-6 years (2007:3-6 years).




1.28 InventoriesInventories held for resale are valued at the lower of cost and net realisable value. Inventories not held for resale are valued at the lower of cost, adjusted for any loss in service potential, based on the existence of a current replacement cost that is lower than the original acquisition cost or other subsequent carrying amount. Television programs are produced for domestic transmission and include direct salaries and expenses and production overheads allocated on a usage basis to the program. Production overheads not allocated to programs are expensed in the period in which they are incurred.

Produced Programs External contributions received in respect of co-production of television programs are offset against production costs which are recorded as Inventories in the Balance Sheet.

The cost of produced television program inventory is amortised as follows:• News, Current Affairs and Live Programs – 100% on first screening;• Factual and Entertainment programs based on current topics – 100% on first screening;• Children’s, Education and Movies – straight line over three years from completion of production;• All other programs not covered above – 90% first screening and 10% second screening or in third

year; and• Programs not shown within three years of completion or purchase to be amortised 100% in year three.

The costs of programs produced for Radio are expensed as incurred. Such programs are normally broadcast soon after production, stock on hand at any time being minimal.

Purchased ProgramsPurchased program inventory is amortised in accordance with the policy noted above or over the rights period of the contract (whichever is lesser).

Subsequent sales of residual rights are recognised in the period in which they occur.

Write-down of Merchandise InventoryThe amount of any write-down of inventories to net realisable value and all losses of inventory are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories arising from an increase in the net realisable value, will be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Write-down of Inventory Held for DistributionWhen inventories held for distribution are distributed, the carrying amount of those inventories are recognised as an expense. The amount of any write-down of inventories for loss of service potential and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories arising from a reversal of the circumstances that gave rise to the loss of service potential will be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.29 LoansLoans from government and bank loans are recognised at their principal amounts. Interest is expensed as it accrues.

Loans are classified as non-trading liabilities and measured at amortised cost using the effective interest rate method.

Loans are classified as current liabilities unless the Corporation has the unconditional right to defer settlement for at least 12 months after the balance sheet date.

1.30 ProvisionsProvisions are recognised when the Corporation has a present legal or constructive obligation as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.



2. Expenses and Revenues 2008 2007 Note $’000 $’000

ExpensesEmployee benefits 5A 391 006 352 766 Artist fees 5 093 4 875 Auditor’s remuneration 251 246 Communications 22 831 20 361 Computer costs 9 914 10 100 Consultants and contract labour 25 583 22 234 Depreciation and amortisation 5C 66 488 65 636 Freight 1 714 1 732 Finance costs 5E 5 673 6 874 Legal costs 4 260 3 760 Net loss from disposal of assets 5H 3 651 7 492 Net foreign exchange loss – non-speculative 5F 935 736 Materials and minor items 11 983 10 978 Merchandising and promotion 105 329 90 840 Transmission services 137 284 129 284 Operating leases and occupancy 25 320 21 425 Program amortisation 5D 130 296 133 218 Program rights 11 511 11 088 Repairs, maintenance and hire 20 321 17 757 Satellite and transmission 31 973 31 466 Travel 19 071 16 681 Video production services 4 023 3 499 Workers compensation premiums 2 120 3 239 Incidentals 6 063 4 961 Write-down and impairment of assets 5G 3 284 5 211

Total expenses 1 045 977 976 459

Revenues from independent sources Co-production contributions 1 686 657 Interest 4B 13 295 11 563 Insurance settlement 4C 10 400 ( 14)Merchandising 90 636 82 219 Program sales 6 502 4 259 Rent and hire of facilities 11 725 9 072 Royalties 62 144 50 567 Subsidies, grants and contract revenue 4C 20 906 20 043 Technology sales 3 449 3 615 Other 4C 3 484 3 225

Total revenues from independent sources 224 227 185 206

Total revenues from Government 3 833 963 809 532

Total income 1 058 190 994 738

Operating surplus 12 213 18 279



3. Revenue from Government 2008 2007 $’000 $’000

3A Appropriations – Outcome 1 666 586 651 825

3B Appropriations – transmission revenue Outcome 2 – satellite and analog transmission 87 317 83 126 Outcome 3 – digital transmission (a) 80 060 74 581

Total appropriations – transmission revenue 167 377 157 707

Total revenue from Government 833 963 809 532

(a) The Corporation returned $7 733 000 (2007 $6 410 000) of previous years’ appropriation as a repayment of capital.

4. Revenue from Independent Sources 2008 2007 Note $’000 $’000

4A Goods and services Goods 159 281 137 045 Services 16 861 13 344

Total goods and services 176 142 150 389

Cost of sales of goods 92 912 88 645

4B InterestDeposits 1 132 949 Bills receivable 12 163 10 614

Total interest 12 13 295 11 563

4C Other revenuesSubsidies, grants and contract revenue 20 906 20 043 Insurance settlement 10 400 ( 14)Other 3 484 3 225

Total other revenues 34 790 23 254



5. Expenses 2008 2007 Note $’000 $’000

5A Employee benefits Wages and salaries 284 750 262 639 Superannuation 48 621 44 749 Leave and other entitlements 45 102 34 668 Separation and redundancy 2 871 1 603 Other employee benefits 9 662 9 107

Total employee benefits 391 006 352 766

5B Suppliers Supply of goods and services 425 109 385 299 Operating lease rentals 17 415 15 988 Workers’ compensation premiums 2 120 3 239

Total suppliers 444 644 404 526

5C Depreciation and amortisation Land and buildings 20 782 21 807 Leasehold improvements 2 563 2 240 Infrastructure, plant and equipment 40 128 38 066 Intangibles 3 015 3 523

Total depreciation and amortisation 66 488 65 636

5D Program amortisation Purchased 45 866 44 276 Produced 84 430 88 942

Total program amortisation 130 296 133 218

5E Finance costs Loans 5 673 6 874

Total finance costs 12 5 673 6 874

5F Net foreign exchange loss Non-speculative 935 736

Total net foreign exchange loss 935 736



5. Expenses continued

2008 2007 $’000 $’000

5G Write-down and impairment of assets Financial assets Receivables 944 1 832 Non-financial assets Land and buildings 447 – Infrastructure, plant and equipment 14 73 Inventory held for sale 1 879 3 306

Total write-down and impairment of assets 3 284 5 211

5H Net loss from disposal of assets Land and buildings Total proceeds from disposal – – Net book value of assets disposed 475 25 Cost of disposal – –

Net loss from disposal of land and buildings 475 25

Infrastructure, plant and equipment Total proceeds from disposal ( 302) ( 177)Net book value of assets disposed 3 223 7 420 Cost of disposal 39 41

Net loss from disposal of infrastructure, plant and equipment 2 960 7 284

Intangibles Total proceeds from disposal – – Net book value of assets disposed 216 183 Cost of disposal – –

Net loss from disposal of intangibles 216 183

Total proceeds from disposal ( 302) ( 177)Total value of assets disposed 3 953 7 669

Net loss from disposal of assets 3 651 7 492



6. Financial Assets 2008 2007 Note $’000 $’000

6A Cash and cash equivalents Cash at bank and on hand 5 897 3 456

Total cash and cash equivalents 12 5 897 3 456

6B Receivables Goods and services Goods and services 13 956 12 920 Less: Allowance for doubtful debts ( 180) ( 307)

Net goods and services receivables 12 13 776 12 613

Other receivables Bills of exchange and other investments 12 124 142 114 394 Net GST receivable 12 6 652 4 227 Other receivables 12 7 526 6 674

Total other receivables 138 320 125 295

Total receivables (net) 152 096 137 908

Receivables are carried at amortised cost and are categorised as follows:Current 151 319 136 981 Non-current 777 927

Total receivables (net) 152 096 137 908

Receivables (gross) are aged as follows: Not Overdue 146 284 133 847 Overdue by: – less than 30 days 4 134 1 112 – 30 to 60 days 901 604 – 61 to 90 days 175 568 – more than 90 days 782 2 084

Total receivables (gross) 152 276 138 215

Reconciliation of the allowance for doubtful debts Opening balance ( 307) ( 198)Amounts written off 190 113 Amounts recovered and reversed 4 17 Net increase recognised in operating surplus ( 67) ( 239)

Closing balance ( 180) ( 307)

The allowance for doubtful debts relates only to debts that are aged more than 90 days.

6C Accrued revenue Goods and services 11 240 10 056 Interest receivable 301 221

Total accrued revenue 12 11 541 10 277

Accrued revenue are all current assets.



7. Non-Financial Assets 2008 2007 $’000 $’000

7A Land and buildings Freehold land Fair value (a) 183 611 155 870

Total freehold land 183 611 155 870

Buildings on freehold land Fair value (a) 460 468 615 881 Accumulated depreciation – (284 536)

Total buildings on freehold land 460 468 331 345

Leasehold land Fair value (a) 3 062 3 086 Accumulated amortisation – ( 163)

Total leasehold land 3 062 2 923

Leasehold buildings Fair value (b) 12 291 9 377 Accumulated amortisation – (1 734)

Total leasehold buildings 12 291 7 643

Leasehold improvements Fair value (b) 15 246 26 929 Accumulated amortisation ( 414) (16 661)

Total leasehold improvements 14 832 10 268

Total land and buildings excluding capital work in progress 674 264 508 049

Capital work in progress at cost 3 639 4 100

Total land and buildings 677 903 512 149

7B Infrastructure, plant and equipment Fair value (c) 534 823 514 824 Accumulated depreciation (315 326) (295 386)

Total infrastructure, plant and equipment excluding capital work in progress 219 497 219 438

Capital work in progress at cost 54 514 48 828

Total infrastructure, plant and equipment 274 011 268 266



7. Non-Financial Assets continued

2008 2007 $’000 $’000

7C Intangibles Computer software at cost 36 992 31 818 Accumulated amortisation (23 374) (20 531)

Total intangibles excluding capital work in progress 13 618 11 287

Capital work in progress at cost 2 067 947

Total intangibles 15 685 12 234

(a) Freehold land and buildings are carried at the Directors’ determination of fair value based on independent valuations, where appropriate. This is determined by the original acquisition cost together with capital expenditure since acquisition or latest full independent valuation. Freehold land and buildings and leasehold land were revalued at 30 June 2008 in accordance with the revaluation policy stated in note 1.25, and were completed by independent valuers, McGees Property.

(b) Leasehold buildings and improvements are carried at the Director’s determination of fair value based on internal valuations and were revalued at 30 June 2008 in accordance with the revaluation policy stated in note 1.25.

(c) Infrastructure, plant and equipment are carried at the Director’s determination of fair value in accordance with the revaluation policy stated in note 1.25.

Table A1Reconciliation of the opening and closing balances of property, infrastructure, plant and equipment and intangibles (2007-08)

Leasehold Buildings buildings Infra- on and Total structure, freehold improve- Total land and plant and Land land ments Buildings buildings equipment Intangibles Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

As at 1 July 2007 Gross book value 158 956 615 881 36 306 652 187 811 143 514 824 31 818 1 357 785 Accumulated depreciation/ amortisation ( 163) (284 536) (18 395) (302 931) (303 094) (295 386) (20 531) (619 011)

Net book value 1 July 2007 158 793 331 345 17 911 349 256 508 049 219 438 11 287 738 774

Additions – 10 764 7 143 17 907 17 907 40 922 5 562 64 391

Net revaluation increment 43 368 141 602 5 107 146 709 190 077 – – 190 077

Depreciation and amortisation ( 41) (20 741) (2 563) (23 304) (23 345) (40 128) (3 015) (66 488)Recoverable amount write- downs ( 447) – – – ( 447) ( 14) – ( 461)

Disposals – – ( 475) ( 475) ( 475) (3 223) ( 216) (3 914)

Transfers/ reclassifications (15 000) (2 502) – (2 502) (17 502) 2 502 – (15 000)

Net book value 30 June 2008 186 673 460 468 27 123 487 591 674 264 219 497 13 618 907 379

Net book value as at 30 June 2008 represented by: Gross book value 186 673 460 468 27 537 488 005 674 678 534 823 36 992 1 246 493 Accumulated depreciation/ amortisation – – ( 414) ( 414) ( 414) (315 326) (23 374) (339 114)Closing net book value 30 June 2008 186 673 460 468 27 123 487 591 674 264 219 497 13 618 907 379



7. Non Financial Assets continued

Table A2Reconciliation of the opening and closing balances of property, infrastructure, plant and equipment and intangibles (2006-07)


As at 1 July 2006 Gross book value 158 956 608 378 33 685 642 063 801 019 508 218 28 539 1 337 776 Accumulated depreciation/ amortisation ( 122) (257 258) (16 482) (273 740) (273 862) (284 435) (17 658) (575 955)

Net book value 1 July 2006 158 834 351 120 17 203 368 323 527 157 223 783 10 881 761 821

Additions – 7 521 2 963 10 484 10 484 44 136 4 112 58 732

Depreciation and amortisation – prior year – (5 519) ( 1) (5 520) (5 520) (2 922) – (8 442)Depreciation and amortisation – current year ( 41) (21 766) (2 240) (24 006) (24 047) (38 066) (3 523) (65 636)Recoverable amount write- downs – – – – – ( 73) – ( 73)

Disposals – ( 11) ( 14) ( 25) ( 25) (7 420) ( 183) (7 628)

Net book value 30 June 2007 158 793 331 345 17 911 349 256 508 049 219 438 11 287 738 774

Net book value as at 30 June 2007 represented by: Gross book value 158 956 615 881 36 306 652 187 811 143 514 824 31 818 1 357 785 Accumulated depreciation/ amortisation ( 163) (284 536) (18 395) (302 931) (303 094) (295 386) (20 531) (619 011)Closing net book value 30 June 2007 158 793 331 345 17 911 349 256 508 049 219 438 11 287 738 774

Table BAssets under construction


Carrying amount at 30 June 2008 1 680 1 681 278 1 959 3 639 54 514 2 067 60 220

Carrying amount at 30 June 2007 – 4 100 – 4 100 4 100 48 828 947 53 875



7. Non Financial Assets continued

2008 2007 $’000 $’000

7D Inventories Retail Inventory held for sale 13 707 12 042 Provision for stock obsolescence ( 6) ( 5)

Total retail 13 701 12 037

Broadcasting consumables Inventory not held for sale at cost 79 116

Total broadcasting consumables 79 116

TV programs held for distribution Purchased 32 337 34 279 Produced 26 735 23 559 In progress 15 454 14 085

Total TV programs held for distribution 74 526 71 923

Total inventories 88 306 84 076

Inventories are categorised as follows: Current 79 284 77 579 Non-current 9 022 6 497

Total inventories 88 306 84 076

7E Other non-financial assets Prepaid property rentals 74 158 Prepaid royalties 5 535 9 269 Other prepayments 9 112 8 447

Total other non-financial assets 14 721 17 874

Other non-financial assets are categorised as follows: Current 13 291 16 220 Non-current 1 430 1 654

Total other non-financial assets 14 721 17 874

7F Assets classified as held for sale Land and buildings at carrying value (1 July 2003) 15 000 –

Total assets classified as held for sale 15 000 –

All assets classified as held for sale are current assets.

Assets classified as held for sale relate to the ABC’s former Perth site at 187 Adelaide Terrace, Perth. In April 2008, the ABC formally appointed Knight Frank as agent to sell the site. Marketing of the property has commenced with initial expressions of interest closing on 29 July 2008.



8. Payables 2008 2007 Note $’000 $’000

8A Suppliers Trade creditors 12 65 798 55 966 Other creditors 12 2 959 4 245


Other creditors include forward currency contracts – cash flow hedges of $34 730 (2007 $44 706) and forward currency contracts – held for trading of $82 850 (2007 $126 462).

Current 68 431 59 855 Non-current 326 356


8B Other Interest payable 12 20 37 Unearned revenue 12 9 010 5 358

Total other 9 030 5 395

Other is categorised as follows: Current 8 602 4 913 Non-current 428 482

Total other 9 030 5 395

Total payables 77 787 65 606

Payables are carried at amortised cost.

9. Interest Bearing Liabilities 2008 2007 Note $’000 $’000

9A Loans Loans from Government 12 80 000 102 000

Total loans 80 000 102 000

Maturity schedule for loans: Payable within one year 23 500 22 000 Payable in one to five years 56 500 80 000

Total loans 80 000 102 000

Loans from Government are carried at amortised cost. The loans are provided on a long term fixed interest rate basis at a weighted average interest rate of 5.39% (2007 5.55%). The loans are to be repaid in full on maturity, the dates of which range between 2009 and 2012. Interest is payable annually in arrears.



10. Provisions 2008 2007 $’000 $’000

10A Employees Salaries and wages 15 261 13 139 Annual leave 47 166 39 178 Long service leave (a) 67 611 66 291 Superannuation 257 273

Total employees 130 295 118 881

(a) Independent actuarial valuations for the Corporation were performed by Professional Financial Consulting Pty Ltd.

Employees categorised as follows: Current 73 548 63 660 Non-current 56 747 55 221

Total employees 130 295 118 881

The classification of current includes amounts for which there is not an unconditional right to defer settlement by one year, hence in the case of employee provisions the above classification does not represent the amount expected to be settled within one year of reporting date. Employee provisions expected to be settled in one year $39 772 000 (2007 $34 819 000), in excess of one year $75 005 000 (2007 $70 650 000).

11. Cash Flow Statement Reconciliation 2008 2007 $’000 $’000

Reconciliation of operating surplus to net cash from operating activities

Operating surplus 12 213 18 279

Depreciation of fixed assets 63 473 62 113 Amortisation of intangibles 3 015 3 523 Transfer to provisions – employee entitlements 11 414 2 293 Impairment of: – receivables 944 1 832 – land and buildings 447 – – infrastructure, plant and equipment 14 73 – inventories 1 879 3 306 Loss on disposal of property, infrastructure, plant and equipment 3 651 7 492 Changes in assets and liabilities Increase in receivables (5 384) (3 535)Increase in accrued revenue (1 264) ( 909)Decrease (increase) in prepayments 3 153 (3 347)(Increase) decrease in inventories (4 230) 13 552 Increase in supplier payables 7 579 6 966 Increase (decrease) in other payables 3 635 (4 935)

Net cash from operating activities 100 539 106 703



12. Financial Instruments

12.1 Capital Risk ManagementThe Corporation manages its capital to ensure that it is able to continue as a going concern through aligning operations with Government funded objectives. The Corporation’s overall strategy remains unchanged from previous years with borrowings limited to those disclosed in note 9: Interest Bearing Liabilities and operating cash flows used to manage operations and make loan repayments.

12.2 Categories of Financial Instruments 2008 2007 Note $’000 $’000

Financial assets Cash and cash equivalents 6A 5 897 3 456 Goods and services receivables (net) 6B 13 776 12 613 Bills of exchange and other investments 6B 124 142 114 394 Net GST receivable 6B 6 652 4 227 Other receivables 6B 7 526 6 674 Accrued revenue 6C 11 541 10 277

Carrying amount of financial assets 169 534 151 641

Financial liabilities Loans from Government 9A 80 000 102 000 Trade creditors 8A 65 798 55 966 Other creditors 8A 2 959 4 245 Interest payable 8B 20 37 Unearned revenue 8B 9 010 5 358

Carrying amount of financial liabilities 157 787 167 606

Income from financial assets Interest 4B 13 295 11 563

Total income from financial assets 13 295 11 563

Expenses related to financial liabilities Finance costs 5E 5 673 6 874

Total expenses related to financial liabilities 5 673 6 874

12.3 Financial Risk ManagementThe Corporation’s financial risk management policies and procedures are established to identify and analyse the risks faced by the Corporation, to set appropriate risk limits and controls to monitor risks and adherence to limits. The Corporation’s policies are reviewed regularly to reflect changes in the Corporation‘s activities. There has been no change in the policies from the previous period. Compliance with policies and exposure limits is reviewed by the Corporation’s internal auditors on a continuous basis.

The Corporation’s Treasury function provides advice and services to the business, coordinates access to foreign currency contracts and monitors and assesses the financial risks relating to the operations of the Corporation through internal risk reports.

Where appropriate, the Corporation seeks to minimise the effects of its financial risks by using derivative financial instruments to hedge its risk exposures. The use of financial derivatives is governed by the Corporation’s policies as approved by the Board of Directors, which provide written principles on foreign exchange risk, credit risk, the use of financial derivatives and investment of funds.

The Corporation does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.



12. Financial Instruments continued

12.4 Market RiskThe Corporation’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates arising from transactions and assets and liabilities that are denominated in a currency that is not Australian dollars. The Corporation enters into foreign exchange forward contracts to hedge the exchange rate risk arising from some of these transactions.

The Corporation is not exposed to interest rate risks on borrowings as all borrowings are at fixed interest rates. The Corporation derives interest revenue from excess funds invested, which is impacted by interest rate fluctuations.

The Corporation is not exposed to any other price risk on financial instruments.

There has been no change to the Corporation’s exposure to market risks or the manner in which it manages and measures the risk from the previous period.

12.5 Foreign Currency RiskThe Corporation is exposed to foreign currency risk primarily in relation to activities in the Corporation’s overseas bureaux, bank accounts in foreign currency, goods and services sold in foreign currency and foreign currency expenditure. The Corporation’s foreign currency risk is managed through the Corporation’s foreign exchange management policy. In order to manage foreign currency risk, the Corporation has from time to time entered into forward foreign currency contracts.

The following sensitivity analysis is based on the foreign currency risk in existence at balance sheet date. The table demonstrates the estimated sensitivity on the Corporation’s results to a 10% change (increase/decrease) in the United States Dollar (USD), Great British Pounds (GBP) and Euro (EUR) exchange rate. 10% is the sensitivity rate used when reporting foreign currency risk internally and represents management’s assessment of the possible change in foreign exchange rates over the next annual reporting period. All other variables are assumed to remain constant and the impact on the Corporation’s results is proportional to the change in exchange rates.

2008 2007 $’000 $’000

Foreign Currency outstanding positions at 30 June Equity Equity

USD AUD / USD +10% ( 317) ( 443)AUD / USD –10% 317 443

GBP AUD / GBP +10% ( 184) ( 192)AUD / GBP –10% 184 192

EUR AUD / EUR +10% ( 93) ( 54)AUD / EUR –10% 93 54

The impact on the Corporation’s surplus is not material.




12.6 Hedging InstrumentsSpecific HedgesThe Corporation enters into forward exchange contracts to cover specific foreign currency payments when exposures of $50 000 or greater (equivalent) are entered into under a firm contract for goods or services involving a specific foreign currency amount and payment date. Exposures are covered if they fall within a set period, which can generally be a minimum of 3 months or maximum of 6 months subject to market conditions.

The net loss of $21 584 (2007 net loss $40 228) on specific hedges of anticipated foreign currency purchases from July 2008 to December 2008 has been recognised at balance date in the Statement of Changes in Equity. The Corporation’s cash flow hedges were all effective.

The following table sets out the gross value to be received under foreign currency contracts, the weighted average contracted exchange rates and the settlement periods of outstanding contracts for the Corporation.

Sell Australian Dollars Average Exchange Rate 2008 2007 2008 2007 $’000 $’000

Buy USD Less than 1 year 2 087 2 297 0.9094 0.7963Buy GBP Less than 1 year 849 1 117 0.4709 0.4028Buy EUR Less than 1 year 82 16 0.6111 0.6202

Forward Exchange ContractsThe Corporation also enters into general forward exchange contracts to cover foreign currency payments when exposures less than $50 000 (equivalent) of a recurrent nature and with varying foreign currency amounts and payment dates are incurred. General cover is generally held between 40% to 60% of estimated exposures for USD, GBP and EUR subject to market conditions.

At balance date, the Corporation held forward exchange contracts to buy USD, GBP and EUR. Gains/losses arising from general hedges outstanding at year end have been recognised in the Income Statement.

12.7 Interest Rate RiskThe Corporation is not exposed to interest rate risk on borrowings as all borrowings are at fixed interest rates. The Corporation derives interest revenue from funds invested, which is impacted by interest rate fluctuations. Although, the Corporation is not dependent on interest revenue to continue operations, a 0.5% decrease in the interest rate would result in a decrease in interest revenue of $923 000 (2007 $415 000) and a 0.5% increase in the interest rate would result in an increase in interest revenue of $923 000 (2007 $415 000). The change in interest revenue is proportional to the change in interest rates.

12.8 Price RiskThe Corporation is not exposed to price risk.

12.9 Liquidity RiskThe liquidity risk of the Corporation is low due to the ongoing appropriations received from Government.

The Corporation is dependent upon direct and indirect appropriations of monies by Parliament. In excess of 78% (2007 81%) of normal activities are funded in this manner, and without these appropriations the Corporation would be unable to meet its obligations.




12.10 Credit RiskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Corporation.

Credit risk arises from the financial assets of the Corporation, which comprise cash and cash equivalents, trade and other receivables, available-for-sale financial assets and derivative instruments.

The Corporation has adopted a policy of only dealing with credit worthy counterparties and obtaining collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Corporation undertakes credit ratings assessments through independent ratings agencies and if not available, uses publicly available financial information and its own trading record to rate customers.

The Corporation manages its credit risk by undertaking credit checks on customers who wish to take on credit terms. The Corporation has policies that set limits for each individual customer. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The Corporation has no material concentration of credit risk with any single customer as the Corporation has a large number of customers spread across a range of industries and geographical areas.

The credit risk arising from dealings in financial instruments is controlled by a strict policy of credit approvals, limits and monitoring procedures. Credit exposure is controlled by counterparty limits that are reviewed and approved by the Board of Directors.

The Corporation does not have any significant credit risk exposure to any single counterparty. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

The Corporation’s maximum exposure to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount, net of allowance for doubtful debts, of those assets as indicated in the Balance Sheet.

Credit exposure of foreign currency and interest rate bearing investments is represented by the net fair value of the contracts, as disclosed.

Not Past Not Past Past Past Due nor Due nor Due or Due or Impaired Impaired Impaired Impaired

2008 2007 2008 2007Categories of financial instruments $’000 $’000 $’000 $’000

Financial assets Cash and cash equivalents 5 897 3 456 – –Goods and services receivables 7 784 8 245 5 992 4 368Bills of exchange and other investments 124 142 114 394 – –Net GST receivable 6 652 4 227 – –Other receivables 7 526 6 674 – –Accrued revenue 11 541 10 277 – –

Carrying amount of financial assets 163 542 147 273 5 992 4 368




12.10 Credit Risk continued

Ageing of financial assets that are past due but not impaired

0 to 30 31 to 60 61 to 90 90 plus Total days days days days

$’000 $’000 $’000 $’000 $’000

2008 Financial assets Goods and services receivables 4 134 901 175 782 5 992 Total financial assets 4 134 901 175 782 5 992

2007 Financial assets Goods and services receivables 1 112 604 568 2 084 4 368 Total financial assets 1 112 604 568 2 084 4 368

Maturities for financial liabilities On Demand 1 Year 1 to 5 Total or less years

$’000 $’000 $’000 $’000

2008 Financial liabilities Loans from Government – 23 500 56 500 80 000Trade creditors 65 798 – – 65 798Other creditors 2 633 – 326 2 959Interest payable 20 – – 20Unearned revenue 8 582 – 428 9 010Total financial liabilities 77 033 23 500 57 254 157 787

2007 Financial liabilities Loans from Government – 22 000 80 000 102 000Trade creditors 55 966 – – 55 966Other creditors 3 889 – 356 4 245Interest payable 37 – – 37Unearned revenue 4 876 – 482 5 358Total financial liabilities 64 768 22 000 80 838 167 606

There are no financial liabilities with maturities of more than 5 years.

Loans from Government are provided on a long-term, fixed interest rate basis.




12.11 Net Fair Values of Financial Assets and LiabilitiesThe following methods and assumptions were used to estimate the net fair values:

Cash, receivables, payables and short term borrowingsThe carrying amount approximates the net fair value because of the short term maturity.

Loans from GovernmentThe net fair values of long term borrowings are estimated using discounted cash flow analysis, based on current interest rates for liabilities with similar risk profiles.

Forward exchange contractsThe net fair values of forward exchange contracts are taken to be the unrealised gain or loss at balance date calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

Carrying Amount Net Fair Value

2008 2007 2008 2007 $’000 $’000 $’000 $’000

Financial AssetsForeign exchange contracts ( 63) ( 155) ( 63) ( 155)

Financial LiabilitiesLong term borrowings (loans) 80 000 102 000 76 500 99 887

13. Contingent Liabilities 2008 2007 $’000 $’000

Quantifiable ContingenciesContingent liabilitiesOther guarantees (a) 1 150 1 010

Total contingent liabilities 1 150 1 010

(a) The Corporation has provided guarantees and an indemnity to the Reserve Bank of Australia in support of bank guarantees required in the day to day operations of the Corporation.

Unquantifiable ContingenciesIn the normal course of activities, claims for damages and other recoveries have been lodged at the date of this report against the Corporation and certain of its officers. The Corporation has disclaimed liability and is actively defending these actions. It is not possible to estimate the amounts of any eventual payments which may be required or amounts that may be received in relation to any of these claims.

The Corporation has commenced proceedings in the Queensland Supreme Court to confirm the Corporation’s action in terminating, or in the alternative, to have the court set aside a contract for the purchase of land for the Corporation’s new headquarters in Brisbane. A deposit of $1.5 million has been paid and is currently included in Capital work in progress. Should the litigation be successful, the deposit will be repaid to the Corporation. Should the litigation not be successful, the Corporation may be required to make a payment, the amount of which cannot be reliably determined at this time.

In relation to the Corporation’s former Perth site at 187 Adelaide Terrace, Perth (currently reported in note 7F: Assets classified as held for sale), any proceeds in excess of $8.8 million (net of costs) will be forwarded to the Commonwealth Government. This amount cannot be determined until such time as the sale is finalised and the net proceeds determined.



14. Directors’ Remuneration 2008 2007 $ $

Remuneration received or due and receivable by Directors of the Corporation 1 051 897 1 044 090

The number of Directors of the Corporation included in these figures are shown below in the relevant remuneration bands: Number Number

$ Nil – $ 14 999 – 1$ 30 000 – $ 44 999 1 –$ 45 000 – $ 59 999 5 5$ 60 000 – $ 74 999 – 3$ 150 000 – $ 164 999 1 –$ 585 000 – $ 599 999 – 1$ 600 000 – $ 614 999 1 –

Total number of Directors of the Corporation 8 10

Included in remuneration is fringe benefits tax paid or payable to the ATO. Also included are eligible termination payments where applicable, performance payments paid or payable and accumulated leave entitlements paid or payable

15. Related Party Disclosures

Directors of the CorporationThe Directors of the Corporation during the year were:

• Maurice Newman AC (Chairman)

• Mark Scott (Managing Director)

• Dr Janet Albrechtsen

• Dr Ron Brunton (retired 1 May 2008)

• John Gallagher QC (retired 23 February 2008)

• Peter Hurley

• Steven Skala

• Keith Windschuttle

The aggregate remuneration of Directors is disclosed in note 14: Directors’ Remuneration.

Transactions with entities in the wholly owned groupTransactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Music Choice Australia Pty Ltd and The News Channel Pty Limited The companies are wholly owned subsidiaries of the Corporation that did not trade during the 2007-08 financial year.

The Corporation provided secretarial and accounting services for Music Choice Australia Pty Ltd and The News Channel Pty Limited during the year free of charge.

The Corporation divested its interests in the symphony orchestras in December 2006. Transactions between the Corporation and the respective orchestras in 2007-08 were not significant and are on the basis of agreed commercial terms and conditions between the entities.



16. Officers’ Remuneration 2008 2007 $ $

The aggregate amount of total remuneration of Officers shown is: 1 809 969 1 914 873

The number of Officers who received or were due to receive total remuneration of $130 000 or more: Number Number

$220 000 – $234 999 – 1 $310 000 – $324 999 – 2 $325 000 – $339 999 1 1 $340 000 – $354 999 – 1 $355 000 – $369 999 3 1 $385 000 – $399 999 1 –

Total 5 6

Officers’ remuneration includes all officers concerned with or taking part in the management of the Corporation, except the Managing Director. Details in relation to the Managing Director have been incorporated in note 14: Directors’ Remuneration.

17. Auditor’s Remuneration 2008 2007 $ $

Remuneration to the Auditor-General for auditing the financial statements for the reporting period 251 117 245 551

Ernst & Young has been contracted by the Australian National Audit Office to provide audit services on their behalf. Fees for these services are included in the above. In addition, Ernst & Young has earned $11 590 (2007 $54 976) where separately contracted by the Corporation.

18. Assets Held in Trust 2008 2007 $ $

The Corporation is trustee for a foundation Ian Reed with accumulated funds at 30 June as follows: Foundation

Balance carried forward from previous year 568 385 550 689Interest received 18 273 17 696

Available for payments 586 658 568 385

Payments (10 788) –

Fund closing balance 575 870 568 385

Monies were received under formal trust arrangements. These trusts are independently managed in accordance with the terms of the trusts and the funds are held in authorised trustee investments. These funds are not available for other purposes of the Corporation and are not recognised in the financial statements.



19. Correction of Error

Calculation of depreciation expense in previous financial yearsThe calculation of depreciation has been understated by a total of $12 421 000 between the 2005 and 2007 financial years. The error was caused by a system calculation and had the effect of overstating Land and Buildings by $8 065 000 and Infrastructure, Plant and Equipment by $4 356 000 over the period.

The error has been corrected by restating each of the affected financial statement line items for the prior year. An adjusting entry has been processed at 1 July 2007 to ensure the balances as at 30 June 2008 reflect the necessary amendments.

20. Controlled Entities Beneficial percentage Place of held by incorporation economic entity

2008 2007

Ultimate parent entity: Australian Broadcasting Corporation

Controlled entities of Australian Broadcasting Corporation:

Music Choice Australia Pty Ltd Australia 100% 100%

The News Channel Pty Limited Australia 100% 100%

Music Choice Australia Pty Ltd and The News Channel Pty Ltd have been dormant since 2000 and did not trade in the 2007-08 financial year.

As a result, consolidated financial statements for the ABC Group have not been presented as the operations and results of the Corporation are reflective of those of the consolidated entity.

In addition, the Corporation divested its interests in its former subsidiaries, the respective state symphony orchestras in December 2006. As consolidated financial statements have not been prepared, prior year comparative figures related to the divestment of the symphony orchestras by the ABC have not been disclosed. All comparative information disclosed for the ABC is the same as for the former consolidated entity except that the divestment had the effect of reducing the consolidated Surplus and consolidated Reserves in the prior year by $13 228 000.



21. Reporting by OutcomesThe Corporation is structured to meet three outcomes:

Outcome 1Audiences throughout Australia – and overseas – are informed, educated and entertained.

Outcome 2Australian and international communities have access to at least the scale and quality of satellite and analog terrestrial radio and television transmission services that existed at 30 June 2003.

Outcome 3The Australian community has access to ABC digital television services in accordance with approved digital implementation plans.

Note 21A – Net Cost of Outcome Delivery

Outcome 1 Outcome 2 Outcome 3 Total

2008 2007 2008 2007 2008 2007 2008 2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Departmental expenses 887 964 827 965 85 445 81 624 72 568 66 870 1 045 977 976 459

Total expenses 887 964 827 965 85 445 81 624 72 568 66 870 1 045 977 976 459

Other external income

Departmental

Sale of goods and services 176 142 150 389 – – – – 176 142 150 389

Interest 13 295 11 563 – – – – 13 295 11 563

Other 34 763 23 233 – – 27 21 34 790 23 254

Total departmental 224 200 185 185 – – 27 21 224 227 185 206

Total other external income 224 200 185 185 – – 27 21 224 227 185 206

Net cost/(contribution) of outcome 663 764 642 780 85 445 81 624 72 541 66 849 821 750 791 253

Note 21B – Departmental Income and Expenses by Outcome Groups and Outputs

Outcome 1 Outcome 2 Outcome 3 (a) Total

Output Output Output Output Output Group 1.1 Group 1.2 Group 1.3 Group 2.1 Group 3.1

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Operating expenses

Employees 121 131 109 392 260 335 234 761 9 540 8 613 – – – – 391 006 352 766

Suppliers 88 796 79 395 190 842 170 386 6 993 6 251 85 445 81 624 72 568 66 870 444 644 404 526

Depreciation and amortisation 20 598 20 354 44 268 43 680 1 622 1 602 – – – – 66 488 65 636

Write-down and impairment of assets 1 017 1 616 2 187 3 468 80 127 – – – – 3 284 5 211

Net loss from disposal of assets 1 131 2 323 2 431 4 986 89 183 – – – – 3 651 7 492

Finance costs 1 757 2 132 3 778 4 574 138 168 – – – – 5 673 6 874

Other 40 655 41 539 87 374 89 145 3 202 3 270 – – – – 131 231 133 954

Total operating expenses 275 085 256 751 591 215 551 000 21 664 20 214 85 445 81 624 72 568 66 870 1 045 977 976 459

Funded by:

Revenue from Government 227 239 222 207 422 006 412 661 17 341 16 957 87 317 83 126 80 060 74 581 833 963 809 532

Sale of goods and services 35 240 30 088 137 609 117 489 3 293 2 812 – – – – 176 142 150 389

Interest 2 660 2 313 10 386 9 034 249 216 – – – – 13 295 11 563

Other 6 955 4 648 27 158 18 151 650 434 – – 27 21 34 790 23 254

Total operating income 272 094 259 256 597 159 557 335 21 533 20 419 87 317 83 126 80 087 74 602 1 058 190 994 738

(a) The Corporation returned $7 733 000 (2007 $6 410 000) of previous year’s appropriation as a repayment of capital.



22. Appropriations Departmental Outputs Loans Equity Total

2008 2007 2008 2007 2008 2007 2008 2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance carried forward from previous year – – – – – – – –

Appropriation Acts 1 and 3 833 963 809 532 – – – – 833 963 809 532

Appropriation Acts 2 and 4 – – – – 12 750 14 250 12 750 14 250

Available for payment from CRF 833 963 809 532 – – 12 750 14 250 846 713 823 782

Cash payments made out of CRF 833 963 809 532 – – 12 750 14 250 846 713 823 782

Balance carried forward to next year – – – – – – – –

Represented by:

Appropriations receivable – – – – – – – –

This table reports on appropriations made by Parliament from the Consolidated Revenue Fund (CRF) in respect of the Corporation. When received by the Corporation, the payments made are legally the money of the Corporation and do not represent any balance remaining in the CRF.

Documents

Financial Statements - About the ABCabout.abc.net.au/wp-content/uploads/2012/06/AnnualReport... · 2014-07-28 · Financial Statements ABC FINANCIAL STATEMENTS 141 Statement by Directors