AR 2014-15: 9. Financial Report

Summary of Financial Results

  2015 2014 2013
  $'000 $'000 $'000

Services provided to other Government Entities

147,209 150,516 146,217

Total income from transactions

149,905 150,969 152,411

Total expenses from transactions

(139,875) (151,298) (153,106)

Net result from transactions before depreciation and amortisation

31,751 22,110 23,156

Net result from transactions

10,030 (329) (695)

Net result for the period

8,436 (619) (6,627)

Net cash flow from operating and investing activities

24,726 10,075 (6,480)

Total assets

103,750 97,942 98,715

Total liabilities

37,443 40,071 39,891
  • CenITex met its budget for the financial year with a turnaround of about $7m on the previous year.

Provision of services to customers

$150.52 million

Less expenses to deliver the service

$144.44 million

Net result from service delivery

$6.073 million

Less expenses to implement change

($6.078) million

Net result from transactions

($0.005) million

 

CenITex has delivered an outstanding result for the year. Despite the challenge of closure, it improved its EBITDA by 44%, strengthened its balance sheet and improved liquidity. While a component of improved EBITDA was delivered as a consequence of recognising outcomes of physical stock takes, in the main these resulted from business as usual operating activities. 

Our improvements are primarily attributed to increased productivity from our workforce and the realisation of benefits derived from prior investments in the operating environment through outcomes from the Efficient Technology Services (ETS) program and asset refresh programs. These technical improvements were further augmented with continued service improvement processes, resulting in reduced risks in the operating environment.  

In recognition of these results, CenITex maintained pricing to its customers for FY15/16 at FY14/15 levels, absorbing costs associated with CPI price increases and EBA related staff cost increases. Going forward, it will continue to drive productivity and review its investment strategies relative to its forward plans. 

The following describes the financial aspects of activities undertaken by the organisation during the year: 

  • CenITex’s baseline revenue represented as workplace and hosting charges was challenged, reflecting our customers’ desire to reduce their costs by reducing hosting requirements or transferring them to other providers. It also reflects an element of uncertainty caused by Project Atlas.  
  • Project revenues increased as CenITex assisted customers with migration onto its Win7 platform 
  • The onset of Project Atlas caused significant uncertainty to arise in CenITex and its customers’ projection of revenues. Upon consultation with our customers, the organisation reduced its workforce to meet an outlook of reduced demand.  
  • Continued investment in the technical environment through asset refresh and realisation of prior periods investments saw the delivery of significant savings. 
  • Proactive engagement with vendors and rationalisation of contracts gave rise to further savings, in particular in areas of software licensing and hardware maintenance. 
  • Additionally, CenITex migrated to new payroll, financial and procurement platforms, resulting in further efficiency and cost savings. 
  • Improved collaboration between Finance and Customer Engagement, in conjunction with revised invoice processes, gave rise to much improved liquidity. 
  • As the workforce size was reduced, the organisation conducted a restack and successfully negotiated accommodation outcomes. 
  • On account of Project Atlas, CenITex reduced its typical investment in asset refresh. It invested $7m in funding projects which were essentially to manage risks: 
    • an upgrade to the SAN brought improved application performance for customers on the GSP 
    • significantly improved the outcomes of virtual desktop infrastructure  
    • improved productivity for customers and CenITex alike with the introduction of self-service spam management and remote access through mobile phones. 

During the year, CenITex also conducted two physical asset counts. The results of these counts have given rise to prior year adjustments on the basis that an accounting error was recorded in relation to assets that were transferred to CenITex via Allocation Statements at the time of its creation. Given the time that has passed, it is impractical to allocate the error to any one year, thus they have been treated as a prior year error and reported in accordance with the Accounting Standard on accounting policies, changes in accounting estimates and errors (AASB 108). Because of this, the accounting treatment of prior physical counts was also reassessed, with adjustments being reflected in accordance with AASB 108. The full details of these adjustments are reported in the Comprehensive operating statement, Balance Sheet and Note 19 of the accounts.


Financial Report

for the financial year ended 30 June 2015

Contents

Comprehensive Operating Statement

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Statutory Certification

Auditor-General’s Report

This financial report covers CenITex as an individual entity and is presented in Australian currency. 

Its principal address is: 

CenITex 

Level 32, 80 Collins Street 

Melbourne VIC 3000


Comprehensive Operating Statement

for the financial year ended 30 June 2015

  Note 2015 2014
    $'000 $'000
      restated (1)
Income from transactions      

Services provided to other government entities

2(a) 147,209 150,516
Interest 2(b) 1,122 453

Fair Value of assets and services received free of charge or for nominal consideration (1)

2(c) 1,574 -

Total income from transactions (1)

  149,905 150,969

Expenses from transactions

     
Employee benefits 3(a) 59,090 62,728
ICT expenditure 3(b) 44,143 47,347

Depreciation (1)

3(c) 21,721 22,439
Other operating expenses 3(d) 14,921 18,784

Total expenses from transactions (1)

  139,875 151,298

Net result from transactions (net operating balance) (1)

  10,030 (329)

Other economic flows included in net result

     
Provision for doubtful debts   (115) (87)

Net gain/(loss) on disposal of non-financial assets (1)

  (1,054) (172)

Net gain/(loss) from revaluation of long service leave liability

  (425) (31)

Total other economic flows included in net result (1)

  (1,594) (290)

Net Result (1)

  8,436 (619)

Other economic flows - other comprehensive income

  - -

Comprehensive result (1)

  8,436 (619)

(1) Refer Note 19 for correction of prior year errors related to asset values. 

The above Comprehensive Operating Statement should be read in conjunction with the accompanying notes.

Balance Sheet

as at 30 June 2015

  Note 2015 2014 As at 1 July 2013
    $'000 $'000 $'000
      restated (1) restated (1)
Assets      

 

Financial Assets        
Cash and deposits 17(a) 38,084 13,383 3,362
Receivables 4 4,519 8,408 9,144

Total financial assets

  42,603 21,791 12,506

Non-Financial Assets

       
Prepayments 5 13,501 14,058 12,397

Property, plant and equipment (1)

6 19,522 27,373 38,975

Intangible assets

7 28,124 34,720 34,837

Total non-financial assets

  61,147 76,151 86,209

Total assets

  103,750 97,942 98,715
Liabilities        
Payables 8 7,903 9,547 12,896
Unearned revenue 9 658 2,807 324
Provisions 10 12,738 11,529 10,558
Borrowings 11 16,144 16,188 16,113

Total liabilities

  37,443 40,071 39,891
New assets   66,307 57,871 58,824
Equity        

Accumulated loss (1)

  (56,613) (65,049) (64,430)

Contribution by Owners

  122,920 122,920 123,254

Total equity

  66,307 57,871 58,824

Commitments for expenditure

14      

Contingent assets and contingent liabilities

15      

(1) Refer Note 19 for correction of prior year errors related to asset values. 

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

Statement of Changes in Equity

for the financial year ended 30 June 2015

 

Accumulated Loss

Contributions by Owners

Total
  $'000 $'000 $'000

Balance at 1 July 2013 (1)

(64,430) 123,254 58,824

Net result for the year (1)

(619) - (619)

Administrative restructure - net assets transferred

- (334) (334)

Balance at 30 June 2014 (1)

(65,049) 122,920 57,871

Net result for the year

8,436 - 8,436

Administrative restructure - net assets transferred

- - -

Balance at 30 June 2015

(56,613) 122,920 66,307

(1) Refer Note 19 for correction of prior year errors related to asset values. 

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

Cash Flow Statement

for the financial year ended 30 June 2015

  Note 2015 2014
    $'000 $'000
      restated (1)

Cash flows from operating activities

     
Receipts      

Receipts from other government entities (1)

  152,769 163,793

Interest received

  1,122 453

Net GST received

  2,615 448

Total Receipts (1)

  156,506 164,694
Payments      

Payments to suppliers

  (69,702) (84,014)

Payments to employees

  (55,931) (59,496)

Interest and other costs of finance paid

  (4) (11)

Total Payments

  (125,007) (143,521)

Net cash flows from/(used in) operating activities (1)

17(b) 31,499 21,173

Cash flows from investing activities

     

Payments for non-financial assets (1)

  (6,863) (11,111)

Proceeds from sale of non-financial assets

  90 13

Net cash flows from/(used in) investing activities (1)

  (6,773) (11,098)

Repayment of finance leases

  (25) (54)

Net cash flows from/(used in) financing activities

  (25) (54)

Net increase/(decrease) in cash and cash equivalents

  24,701 10,021

Cash and cash equivalents at the beginning of the financial year

  13,383 3,362

Cash and cash equivalents at the end of the financial year

17(a) 38,084 13,383

(1) Refer Note 19 for correction of prior year errors related to asset values. 

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

Non-cash transactions are disclosed in Note 17.


Notes to the Financial Statements

Contents

Note  

1 Summary of accounting policies

2 Income from transactions

3 Expenses from transactions

4 Receivables

5 Prepayments

6 Property, plant and equipment

7 Intangible assets

8 Payables  

9 Unearned revenue  

10 Borrowings

11 Provisions  

12 Superannuation

13 Leases

14 Commitments for expenditure

15 Contingent assets and contingent liabilities  

16 Financial instruments

17 Cash flow information  

18 Ex gratia payments

19 Correction of errors

20 Responsible persons

21 Remuneration of executives and payments to other personnel with significant management responsibilities

22 Related party transactions

23 Remuneration of auditors  

24 Events occurring after the balance date

Note 1. Summary of accounting policies

These annual financial statements represent the audited general purpose financial statements for CenITex for the period ended 30 June 2015. The purpose of the report is to provide users with information about CenITex’s stewardship of resources entrusted to it.  

(a) Statement of compliance

The financial report is a general purpose financial report that has been prepared in accordance with the Financial Management Act 1994 and applicable Australian Accounting Standards (AAS), which includes the Australian accounting standards issued by the Australian Accounting Standards Board (AASB), interpretations and other mandatory professional requirements. 

Where appropriate, those AASs paragraphs applicable to not-for-profit entities have been applied. 

Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events are reported. 

Subsequent to the 2013-14 reporting period, AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements and AASB 12 Disclosure of Interests in Other Entities have been published that are mandatory for the 30 June 2015 reporting period. CenITex has assessed the application of these new AASs and determined that they are not applicable to CenITex who is not a parent of another entity nor has interest in another entity. Therefore, there is no change in accounting policies for the 2014-15 reporting period. 

The financial report also complies with relevant Financial Reporting Directions (FRDs) issued by the Minister for Finance, and relevant Standing Direction (SD) authorised by the Minister for Finance.

(b) Basis of preparation

These financial statements have been prepared on accrual basis whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid. 

Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. 

The significant estimates and associated assumptions are made for recognition of long service leave liabilities, and the discount rate for the measurement is provided by the Department of Treasury and Finance (DTF). Refer to the DTF for determination of the discount rate.  

Judgements and estimates are made for determination of fair value and useful life for property, plant and equipment, refer Note 1(f) and Note 1(h) for details. 

The accounting policies applied in preparing the financial statements for the year ended 30 June 2015 and the comparative information presented for the year ended 30 June 2014 are set out below. 

The financial report has been prepared on a historical cost convention except for plant and equipment and long service leave where fair value is applied. Cost is based on the fair value of the consideration given in exchange for assets. 

Consistent with AASB 13 Fair Value Measurement, where it is applicable, assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: 

  • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities; 
  • Level 2 – The lowest level input that is significant to the fair value measurement is directly or indirectly observable; 
  • Level 3 – The lowest level input that is significant to the fair value measurement is unobservable. 

The functional currency of CenITex is the Australian dollar, which has also been identified as the presentation currency of CenITex.

(c) Reporting entity

CenITex is a State Body established on 16 July 2008 by Order in Council under section 14 of the State Owned Enterprise Act 1992 (the Act) and declared a re-organising body on 24 April 2012 by Order in Council under section 7(1) of the Act.

Objectives and funding

CenITex’s mission is to provide information and communication technology (ICT) workplace and hosting services for the whole of Victorian Government in an industry competitive, integrated and reliable manner, delivering efficient and excellent customer service and value. CenITex is predominantly funded by customer departments and agencies for the provision of services. The fees charged for these services are based on a cost recovery model.

(d) Scope and presentation of financial statements

As a result of the state-wide policy to improve consistency in public sector reporting, CenITex has prepared its complete set of financial statements to align with the Accounting Standard AASB 1049 Whole of Government and General Government Sector Financial Reporting presentation format used in the Financial Report for the State and the general government sector.

Comprehensive Operating Statement

CenITex’s Comprehensive operating statement comprises three components, being ‘net result from transactions’, ‘other economic flows included in net result’, as well as ‘other economic flows – other comprehensive income’. . This classification is consistent with the whole of government reporting format and is allowed under Accounting Standard AASB 101 Presentation of Financial Statements. 

Income and expenses in the Comprehensive operating statement are classified according to whether they arise from ‘transactions’ or ‘other economic flows’. 

‘Transactions’ are those economic flows that are considered to arise as a result of policy decisions, usually interactions between two entities by mutual agreement. Transactions also include flows within an entity, such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the final consideration is cash. 

‘Other economic flows included in net result’ are changes in the volume or value of an asset or liability that do not result from transactions.  

The net result is equivalent to profit or loss derived in accordance with AAS.

Balance sheet

Assets and liabilities are presented in liquidity order, with assets aggregated into financial assets and non-financial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled more than 12 months after the reporting period) are disclosed in the notes, where relevant. 

Statement of Changes in Equity

The Statement of changes in equity presents reconciliations of each non-owner and owner equity opening balance at the beginning of the reporting period to the closing balance at the end of the reporting period. It also shows separately changes due to amounts recognised in the ‘comprehensive result’ and amounts recognised ‘in other comprehensive income – other movements in equity’ related to transactions with the owner in its capacity as owner.

Cash Flow Statement

Cash flows are classified according to whether they arise from operating activities, investing activities, or financing activities. This classification is consistent with requirements under AASB 107 Statement of Cash Flows. 

For the purposes of the Cash flow statement, cash comprises cash on hand, cash at bank and deposits at call, and highly liquid investments with short periods to maturity that are readily convertible to cash on hand and are subject to an insignificant risk of changes in value. 

Rounding of amounts

Amounts in the financial statements (including the notes) have been rounded to the nearest thousand dollars, unless otherwise stated.

(e) Income from transactions

Income is recognised to the extent that it is probable that the economic benefits will flow to the entity and the income can be reliably measured at fair value. 

Services provided to other government entities

CenITex provides services to government departments and agencies. Revenue is brought to account when services have been provided or when a usage or service charge has been made.  

Interest

Interest includes interest received on deposits. Interest income is recognised as revenue using the effective interest method which allocates the interest over the relevant period.

(f) Expenses from transactions

Employee benefits

See Note 1(i) regarding employee benefit provisions.  

Employee benefits expenses include all costs related to employment, including wages and salaries, leave entitlements, redundancy payments and superannuation contributions. They are recognised when incurred, except for contributions in respect of defined benefit plans. These expenses also include payments to contractors. 

Superannuation

Defined benefit plans

The amount charged to the Comprehensive operating statement in respect of defined benefit superannuation plans represents the contributions made by CenITex to the superannuation plan with regard to the current services of current CenITex staff. Superannuation contributions are made to the plans based on the relevant rules of each plan.

The Department of Treasury and Finance (DTF) in its Annual Financial Statements disclose on behalf of the State as the sponsoring employer, the net defined benefit cost related to the members of these plans as an administered liability. See DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans.

ICT expenditure

ICT expenditure includes software licences and maintenance, hardware maintenance, telecommunication expenses and outsourced ICT expenses. They are recognised in the period in which they are incurred.

Depreciation

Where assets have separate identifiable components that have distinct useful lives, a separate depreciation rate is determined for each component.

Depreciation is calculated using the straight-line method to allocate the asset’s value less any estimated residual value over its estimated useful life, starting from the time at which the asset is held ready for use. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Unless otherwise stated, the depreciation periods used for current and prior year are listed below:

Expenses from transactions are recognised as they are incurred, and reported in the financial year to which they relate.

Building lease hold improvements

5 to 10 years

Computer equipment

3 to 4 years

Plant and equipment - Facilities

5 to 10 years

Plant and equipment - Network

5 years

Plant and equipment - Servers

5 years

Plant and equipment - Storage

5 years

Plant and equipment - Office machines & equipment

5 years

Motor vehicles under finance lease

5 years

Intangible Assets

5 years

 

Interest expense

Interest expense represents costs incurred in connection with borrowings. It includes interest components of finance lease repayments. 

Interest expense is recognised in the period in which it is incurred.  

Other operating expenses

Other operating expenses generally represent the day-to-day running costs incurred by CenITex in its normal operations and include: 

  • Supplies and services 

Supplies and services costs are recognised as an expense in the reporting period in which they are incurred.

Other economic flows included in net result

Other economic flows included in net result are changes in the volume or value an asset or liability that does not result from transaction. It includes: 

  • gains and losses from disposals; 
  • gains and losses from revaluation of long service leave liability; and 
  • provision for doubtful debts

(g) Financial assets

Cash and deposits

Cash and deposits comprise cash on hand and cash at bank, deposits at call and highly liquid investments with an original maturity of three months or less that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Receivables

Receivables consist predominantly of: 

  • contractual receivables, such as debtors in relation to goods and services, accrued revenue; and 
  • statutory receivables that is GST input tax credits recoverable.  

Contractual receivables are classified as financial instruments and categorised as loans and receivables (refer Note 1(j)). Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments because they do not arise from a contract. 

Receivables are subject to impairment testing as described below. A provision for doubtful receivables is made when there is objective evidence that the debts will not be collected. Bad debts are written-off when identified.

Impairment of financial assets

At the end of each reporting period, CenITex assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets, except those measured at fair value through profit or loss, are subject to annual review for impairment. 

Receivables are assessed for bad and doubtful debts on a regular basis. Those bad debts considered as written off by mutual consent are classified as a transaction expense. Bad debts not written off by mutual consent and the allowance for doubtful receivables are classified as other economic flows included in net result. 

The amount of the allowance is the difference between the financial asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.

(h) Non-financial assets

Prepayments

Prepayments represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period. These include software licences and maintenance, other ICT expenditure and accommodation expenses. 

Property, plant and equipment

All non-current physical assets are initially measured at cost and subsequently revalued at fair value less accumulated depreciation and impairment. A fair value assessment of non-current assets was undertaken during the year. 

The fair value of property, plant and equipment is normally determined by reference to the asset’s depreciated replacement cost due to their short-term nature. 

The initial cost for non-financial physical assets under a finance lease (refer Note 1(i))

is measured at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease.

The costs of leasehold improvements are capitalised as assets and depreciated over the shorter of the remaining terms of the leases or the estimated useful lives of the improvements. 

Intangible assets

Intangible assets represent identifiable non-monetary assets without physical substance. 

Purchased intangible assets are initially recognised at cost. Intangible assets with finite useful lives are carried at cost less accumulated depreciation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to CenITex. 

When the recognition criteria in Accounting Standard AASB 138 Intangible Assets are met, internally generated intangible assets are recognised and measured at cost less accumulated depreciation and impairment losses. 

Expenditure on research activities is recognised as an expense in the period in which it is incurred. 

An internally-generated intangible asset arising from development (or from the development phase of an intangible project) is recognised only if all of the following are demonstrated: 

  1. the technical feasibility of completing the intangible asset so that it will be available for use or sale; 
  2. an intention to complete the intangible asset and use or sell it; 
  3. the ability to use or sell the intangible asset; 
  4. the intangible asset will generate probable future economic benefits; 
  5. the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and 
  6. the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Impairment of non-financial assets

Except for financial assets (refer Note 1(g)), intangible assets with indefinite useful lives (and intangible assets not yet available for use) and all other assets including property, plant and equipment are tested annually for indications of impairment. 

If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their possible recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written-off by a charge to the Comprehensive operating statement, except to the extent that the write-down can be debited to an asset revaluation surplus amount applicable to that class of asset. 

It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. The recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell.

(i) Liabilities

Payables

Payables consist of: 

  • contractual payables, such as accounts payable. Accounts payable represent liabilities for goods and services provided to CenITex before the end of the financial year that are unpaid, and arise when CenITex becomes obliged to make future payments in respect of purchase of those goods and services; 
  • statutory payables, such as GST and fringe benefits tax payables. 

Contractual payables are classified as financial instruments and categorised as financial liabilities at amortised cost (see Note 13, Note 14 and Note 16). Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from a contract. 

Unearned Revenue

Unearned revenue is recognised as a liability when customer payments of accounts which at report date were billed and paid in advance but the services have not yet been provided to the customer. When the services are provided to the customer, the unearned revenue balance is reduced and the revenue is brought to account. 

Borrowings

Interest bearing liabilities are recorded initially at fair value, less directly attributable transaction costs.  

Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised using the effective interest rate method in the comprehensive result over the period of the interest bearing liability. 

Provisions

Provisions are recognised when CenITex has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. 

When some or all of the economic benefits required to settle a provision are expected to be recognised from a third party, the receivable is recognised as an asset if recovery is virtually certain and the amount of the receivable can be measured reliably.

Employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries and annual leave are recognised in the provision for employee benefits as ‘current liabilities’.  

Depending on the expectation of the timing of settlement, liabilities for wages and salaries and annual leave are measured at: 

  • undiscounted value – component that CenITex expects to wholly settle within 12 months; or 
  • present value – component that CenITex does not expect to wholly settle within 12 months. 
(ii) Long service leave

Liability for long service leave (LSL) is recognised in the provision for employee benefits.  

Unconditional LSL is disclosed as a current liability even when CenITex does not expect to settle the liability within 12 months because it does not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. 

The components of this current LSL liability are measured at: 

  • undiscounted value – component that CenITex expects to wholly settle within 12 months 
  • present value – component that CenITex does not expect to wholly settle within 12 months 

Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value. 

Any gain or loss following revaluation of the present value of non-current LSL liability is recognised in the ‘net result from transactions’, except to the extent that a gain or loss arises due to changes in bond interest rates for which it is then recognised as an other economic flow. 

(iii) Employee benefits on-costs

Employee benefits on-costs (payroll tax, workers compensation, superannuation, annual leave and LSL accrued while on leave taken in service) are recognised and included with annual leave and LSL employee benefits.

(iv) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts a voluntary redundancy in exchange for these benefits. CenITex recognises termination benefits when it is demonstrably committed either to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after Balance Sheet date are discounted to present value.

Leases

A lease is a right to use an asset for an agreed period of time in exchange for payment. Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and rewards incidental to ownership. Leases of property, plant and equipment are classified as finance infrastructure leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership from the lessor to the lessee. All other leases are classified as operating leases.

Finance leases

Finance leases are recognised as assets and liabilities at amounts equal to either the fair value of the leased plant and equipment or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The leased asset is depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum lease payments are allocated between the principal component of the lease liability and the interest expenses calculated using the interest rate implicit in the lease, and are charged directly to the Comprehensive operating statement. Contingent rentals associated with finance leases are recognised as an expense in the period in which they are incurred.

Operating leases

Operating lease payments, including any contingent rentals, are recognised as an expense in the Comprehensive operating statement on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern of the benefits derived from the use of the leased asset. The leased asset is not recognised in the balance sheet.

All incentives for the agreement of a new or renewed operating lease are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive’s nature or form or the timing of payments. In the event that lease incentives are received to enter into operating leases, the aggregate cost of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(j) Financial Instruments

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of CenITex’s activities, certain financial assets and financial liabilities arise under statutory obligation rather than a contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in an AASB 132 Financial Instruments: Presentation. For example, statutory receivables arising from taxes do not meet the definition of financial instruments as they do not arise under contract.  

Where relevant, for note disclosure purposes, a distinction is made between those financial assets and financial liabilities that meet the definition of financial instruments in accordance with AASB 132 and those that do not.  

The following refers to financial instruments unless otherwise stated. 

Categories of non-derivative financial instruments

Loans and receivables

Loans and receivables are financial instrument assets with fixed and determinable payments that are not quoted on an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, receivables are measured at amortised cost using the effective interest method, less any impairment.  

Loans and receivables category includes trade receivables and other receivables, but not statutory receivables.

Financial liabilities at amortised cost

Financial instrument liabilities are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest-bearing liability, using the effective interest rate method (refer to Note 16). 

Financial instruments liabilities measured at amortised cost include all of CenITex’s contractual payables, loan from Government and interest-bearing arrangements other than those designated at fair value through profit or loss.

(k) Equity

Contributions by owners

Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is, contributed capital and its repayment) are treated as equity transactions and, therefore, do not form part of the income and expenses of CenITex. 

Additions to net assets that have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners.  

Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners.

(l) Commitments

Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable contractual or statutory sources and are disclosed at their nominal value and inclusive of the GST (refer Note 13).

(m) Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value and presented inclusive of the GST (refer Note 15).

(n) Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In the latter case, GST is recognised as part of the cost of acquisition of the asset or as part of the expense.  

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Balance Sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities that were recovered from, or paid to, the taxation authority, are presented as an operating cash flow.

(o) Events after reporting date

Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between CenITex and other parties, the transactions are recognised only when the agreement is irrevocable at or before balance date. Adjustments are made to amounts recognised in the financial statements for events that occur after the reporting date and before the date on which the statements are authorised for issue where those events provide information about conditions that existed at the reporting date. Note disclosure is made about events between the balance date and the date on which the statements are authorised for issue where the events relate to conditions that arose after the reporting date and which may have a material impact on the results of subsequent years.

(p) Australian Accounting Standards (AASs) issued that are not yet effective

As at 30 June 2015, certain new AASs have been published that are not mandatory for the 30 June 2015 reporting period. CenITex assesses the impact of all these new standards for their applicability and early adoption. 

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement. CenITex has assessed that this Standard is not applicable as CenITex does not report assets available for sale. 

AASB 15 Revenue from Contracts with Customers. This Standard replaces AASB 111 Construction Contracts and AASB 118 Revenue. CenITex has reviewed this Accounting Standard and has determined that it is not applicable.

Note 2. Income from transactions

  2015 2014
  $'000 $'000

(a) Services provided to other Government Entities:

   
Work place support 101,592 112,774
Hosting 30,835 24,798
Projects 14,487 12,656

Victorian Government Electronic Messaging System (VGEMS)

295 288

Total Revenue from services provided to other Government Entities

147,209 150,516

(b) Interest

   

Interest on bank deposits

1,122 453

Total interest revenue

1,122 453

(c) Fair Value of assets and services received free of charge or for nominal consideration Assets

   

Plant and equipment (1)

1,574 -

Total fair value of assets and services received free of charge or for nominal consideration

1,574 -

(1)Refer Note 19 for correction of prior year errors related to asset values.

Note 3. Expenses from transactions

    2015 2014
    $'000 $'000
      restated

(a) Employee benefits

     

Post employment benefits

     

- Defined contribution superannuation plans

12 4,246 4,526

- Defined benefit superannuation expense

12 227 260

Termination benefits

  924 1,349

Salaries, wages, leave entitlements, contractor payments

  53,693 56,593

Total employee benefits

  59,090 62,728

(b) ICT Expenditure

     

Software licences and maintenance

  20,424 22,704

Hardware maintenance

  7,947 7,127

Telecommunications

  13,803 15,341

Outsourced ICT

  1,969 2,175

Total ICT Expenditure

  44,143 47,347

(c) Depreciation

     

Depreciation of non-current assets (1)

6 11,922 14,856

Depreciation of non-current intangible assets

7 9,799 7,583

Total depreciation and amortisation (1)

  21,721 22,439

(d) Other operating expenses

     

Occupancy

  13,140 12,959

Professional services, travel, stationery (2)

  1,777 5,814

Interest expense - finance lease costs

  4 11

Total other operating expenses

  14,921 18,784

(1)Refer Note 19 for correction of prior year errors related to asset values. 

(2)Provision for doubtful debts has been reported as other operating expense in previous years. It has been reclassified under Other Economic Flows and disclosed in the Comprehensive Operating Statement.

Note 4. Receivables

  2015 2014
  $'000 $'000

Current receivables

   
Contractual    
Trade receivables 2,018 6,637

Provision for doubtful contractual receivables (See also Note 4(a) )

(470) (355)

Other receivables

1,951 1,398

Statutory

   

GST input tax credit recoverable

1,020 728

Total current receivables

4,519 8,408

Total receivables

4,519 8,408

(a) Movement in the provision for doubtful contractual receivables

  2015 2014
  $'000 $'000

Balance at beginning of the year

355 268

Increase of the provision in the year

115 87

Balance at end of the year

470 355

(b) Ageing analysis of contractual receivables 

See Note 16(d) for the ageing of contractual receivables.

(c) Nature and extent of risk arising from contractual receivables

See Note 16(d) for the nature and extent of credit risk arising from contractual receivables.

Note 5. Prepayments

  2015 2014
  $'000 $'000

Current other assets

   

Prepayments - Software licences and maintenance, and other ICT expenditure paid in advance

13,210 13,704

Accommodation expenditure paid in advance

291 354

Total other assets

13,501 14,058

Note 6. Property, plant and equipment

 

  2015 2014
  $'000 $'000

 

  restated (1)

Buildings - leasehold improvements:

   

At fair value

461 2,601

Less accumulated depreciation

(217) (2,207)

Written down value

244 394

Plant and equipment - Computer equipment (1)

   
At fair value 1,062 1,261
Less accumulated depreciation (966) (1,178)

Written down value

96 83

Plant and equipment - Facilities (1)

   
At fair value 5,260 5,595
Less accumulated depreciation (4,259) (4,266)
Written down value 1,001 1,329

Plant and equipment - Network (1)

   
At fair value 52,060 52,291
Less accumulated depreciation (45,329) (42,691)
Written down value 6,731 9,600

Plant and equipment - Servers (1)

   
At fair value 43,390 46,888
Less accumulated depreciation (38,755) (39,840)
Written down value 4,635 7,048

Plant and equipment - Storage (1)

   
At fair value 39,167 37,826
Less accumulated depreciation (32,496) (29,107)
Written down value 6,671 8,719

Plant and equipment - Office Machines and Equipment (1)

   
At fair value 28 44
Less accumulated depreciation (26) (33)
Written down value 2 11

Motor vehicles under finance lease

   
At fair value 225 287
Less accumulated depreciation (83) (98)
Written down value 142 189

Net carrying amount of property, plant and equipment

19,522 27,373

(1)Refer Note 19 for correction of prior year errors related to asset values.

Movements in carrying amounts

 

Buildings leasehold improvements

     

Plant and equipment 

(1) (2)

   

Motor vehicles under finance lease

Total
    Level 3    
   

Computer equipment

Facilities

Network

Servers

Storage

Office machines & equipment

   
  $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
2015                  

Opening balance (3)

394 83 1,329 9,600 7,048 8,719 11 189 27,373

Administrative restructure - net assets transferred

- - - - - - - - 0
Additions - 86 44 1,758 1,390 1,813 - 32 5,123
Disposals - (1) (45) (496) (472) - (2) (36) (1,052)
Adjustments - - (2) (2) 24 (20) - - 0
Transfers - 1 - - - - (1) - 0

Depreciation expense

(150) (73) (325) (4,129) (3,355) (3,841) (6) (43) (11,922)

Closing balance

244 96 1,001 6,731 4,635 6,671 2 142 19,522
 

Buildings leasehold improvements

     

Plant and equipment 

(1) (2)

   

Motor vehicles under finance lease

Total
    Level 3    
   

Computer equipment

Facilities

Network

Servers

Storage

Office machines & equipment

   
  $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
2014                  

Opening balance (3)

808 912 1,652 13,397 9,841 12,232 19 114 38,975

Administrative restructure - net assets transferred

- (334) - - - - - - (334)
Additions - 28 198 2,525 2,007 1,102 - 148 6,008
Disposals - (9) - (46) (77) (71) - (18) (221)
Adjustments - - - - - - - - 0
Transfers - 17 (25) (1,217) (323) (649) (1) (1) (2,199)

Depreciation expense

(414) (531) (496) (5,059) (4,400) (3,895) (7) (54) (14,856)

Closing balance

394 83 1,329 9,600 7,048 8,719 11 189 27,373

(3)Refer Note 19 for correction of prior year errors related to asset values.

(1) Classified in accordance with the fair value measurement hierarchy as at reporting date. See Note 1(b). 

(2) Description of unobservable assets to level 3 valuation: 

  • Plant and equipment is valued at depreciated replacement cost where the weighted average cost per asset is $21,307 and the cost per unit is between $0 to $1,082,767 (2014: $0 to $1,082,767). The useful life of plant and equipment is disclosed in Note 1(f). 

(3) Refer Note 19 for correction of prior year errors. 

(4) Work in progress had been reported as property, plant and equipment and the details had been disclosed in the note for property, plant and equipment in previous financial years. As the majority of work in progress is the development of intangible assets, it is reported as intangibles and the details are disclosed in the note for intangible assets in this financial year, the comparable information of last year have been amended accordingly.

  2015 2014
  $'000 $'000
    restated (1)

Aggregate depreciation recognised as an expense during the year:

   

Buildings leasehold improvements

150 414

Plant and equipment - Computer equipment (1)

73 531

Plant and equipment - Facilities (1)

325 496

Plant and equipment - Network (1)

4,129 5,059

Plant and equipment - Servers (1)

3,355 4,400

Plant and equipment - Storage (1)

3,841 3,895

Plant and equipment - Office machines and equipment (1)

6 7

Motor vehicles

43 54

Total depreciation expense

11,922 14,856

(1)Refer Note 19 for correction of prior year errors related to asset values.

Note 7. Intangible assets

Non-Current assets

Work in progress (1)

Capitalised development (2)

Total
  2015 2014 2015 2014 2015 2014
  $'000 $'000 $'000 $'000 $'000 $'000

Gross carrying amount

           

Opening balance

9,411 18,333 43,745 27,357 53,156 45,690

Additions - new work in progress

3,495 7,724 - - 3,495 7,724

Adjustments - work in progress

(202) (258) - - (202) (258)

Transfer to capitalised development

(8,672) (16,388) - - (8,672) (16,388)

Additions - from work in progress

- - 8,672 16,388 8,672 16,388

Retirements

- - (1,787) - (1,787) -

Closing balance

4,032 9,411 50,630 43,745 54,662 53,156

Accumulated amortisation and impairment

           
Opening balance - - (18,436) (10,853) (18,436) (10,853)

Depreciation expense

- - (9,799) (7,583) (9,799) (7,583)

Retirement of intangibles

- - 1,697 - 1,697 -
Closing balance - - (26,538) (18,436) (26,538) (18,436)

Net book value at the end of the financial year

4,032 9,411 24,092 25,309 28,124 34,720

 

(1)Work in progress had been reported as property, plant and equipment and the details had been disclosed in the note for property, plant and equipment in previous financial years. As the majority of work in progress is the development of intangible assets, it is reported as intangibles and the details are disclosed in the note for intangible assets in this financial year, the comparable information of last year have been amended accordingly. 

(2)CenITex capitalises costs associated with the development, design, build and configuration of desktop, network, server, storage, identity access management, security environments, virtual environments and software that generate future economic benefits to the entity. These assets are amortised over a useful life that is aligned with the underpinning information technology infrastructure assets.

Note 8. Payables

 

  2015 2014
  $'000 $'000

Current payables

   

Contractual

   

Supplies and services

7,291 9,008

Other Current Payables

   

Other payables

601 525

Statutory

   

FBT payable

11 14

Total payables

7,903 9,547

(a) Maturity analysis of contractual payables

See Note 16(e) for the maturity analysis of contractual payables. 

(b) Nature and extent of risk arising from contractual payables

See Note 16(f) for the nature and extent of risks arising from contractual payables.

Note 9. Unearned revenue

  2015 2014
  $'000 $'000

Unearned revenue

658 2,807

Total unearned revenue

658 2,807

Note 10. Borrowings

  2015 2014
  $'000 $'000

Current borrowings

   

Finance lease liabilities (1) (2)

67 71

Loan from Government (3)

16,000 -

Total current borrowings

16,067 71

Non-current borrowings

   

Finance lease liabilities (1) (2)

77 117

Loan from Government (3)

- 16,000

Total non-current borrowings

77 16,117

Total borrowings

16,144 16,188

(1) Secured by the assets leased. Finance leases are effectively secured as the rights to the leased assets revert to the lessor in the event of default. 

(2) Refer Note 13 Leases for details. 

(3) It is an unsecured loan which bears no interest. The term of a loan is agreed with the Treasurer. 

(a) Maturity analysis of interest bearing liabilities

Refer to Note 16(e) for the maturity analysis of interest bearing liabilities. 

(b) Nature and extent of risk arising from interest bearing liabilities

Refer to Note 16(f) for the nature and extent of risks arising from interest bearing liabilities.

Note 11. Provisions

  2015 2014
  $'000 $'000

Current

   
  • Unconditional and expected to be settled within 12 months
3,499 3,574
  • Unconditional and expected to be settled after 12 months)
4,535 3,964
  8,034 7,538

Provisions related to employee benefit on-costs:

   
  • Unconditional and expected to be settled within 12 months
623 543
  • Unconditional and expected to be settled after 12 months
751 603
  1,374 1,146

Provision for other employee entitlements

- -

Total current provisions

9,408 8,684

Non-current

   

Employee benefits

2,871 2,470

Provisions related to employee benefit on-costs

459 375

Total non-current provisions

3,330 2,845

Total provisions

12,738 11,529

(a) Employee benefits and related on-costs

  2015 2014
  $'000 $'000

Currentemployee benefits

   

Annual leave entitlements

4,396 4,169

Unconditional long service leave entitlements

3,638 3,369
     

Non-current employee benefits

   

Conditional long service leave entitlements

2,871 2,470

Total employee benefits

10,905 10,008

Current on-costs

1,374 1,146

Non-current on-costs

459 375

Total on-costs

1,833 1,521

Total employee benefits and related on-costs

12,738 11,529

Note 12. Superannuation

CenITex employees are entitled to receive superannuation benefits and CenITex contributes to defined benefit as well as contribution plans. The defined benefit plan provides benefits based on years of service and final average salary. 

CenITex does not recognise any defined benefit liability in respect of the plans because the entity has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance recognises and discloses the State’s defined benefit liabilities in its financial statements under the note for administered items.  

However, superannuation contributions for the reporting period are included as part of employee benefits in CenITex’s Comprehensive Operating Statement.  

The basis for contributions is determined by the various schemes.  

Certain employees of CenITex employed under the Victorian Public Sector Award are entitled to benefits from the Government Employees Superannuation Fund in the event of retirement, disability or death. This fund provides defined lump-sum benefits based on years of service and final average salary. 

Details of the major employee superannuation funds and contributions made by CenITex are as follows:

Fund

Contribution 

for the year

Contribution outstanding at year end

  2015 2015
  $'000 $'000

Defined benefit plans:

   

State Employees Retirement Benefits Scheme (SERBS)

227 -

Defined contribution plans:

   

Victorian Superannuation Fund – VicSuper scheme

2,543 -

Other

1,703 -

Total defined contributions

4,246 -

Total

4,473 -
Fund

Contribution 

for the year

Contribution outstanding at year end

  2014 2014
  $'000 $'000

Defined benefit plans:

   

State Employees Retirement Benefits Scheme (SERBS)

260 -

Defined contribution plans:

   

Victorian Superannuation Fund – VicSuper scheme

2,751 -

Other

1,775 -

Total defined contributions

4,526 -

Total

4,786 -

Note 13. Leases

Finance leases

Finance leases relate to motor vehicles with lease terms of three years. CenITex has options to purchase the motor vehicles for a nominal amount at the conclusion of the lease agreements.

 

Minimum future lease payments

Present value of minimum future lease payments

2015 $'000 $'000

Finance lease liabilities payable

   
  • Not longer than one year
74 67
  • Longer than one year and not longer than five years
79 77

Minimum future lease payments (1)

153 144

Less future finance charges

9 -

Present value of minimum lease payments

144 144

Included in the financial statements as:

   

Current interest bearing liabilities (refer to Note 10)

- 67

Non-current interest bearing liabilities (refer to Note 10)

- 77

Total interest bearing liabilities

- 144
 

Minimum future lease payments

Present value of minimum future lease payments

2014 $'000 $'000

Finance lease liabilities payable

   
  • Not longer than one year
80 71
  • Longer than one year and not longer than five years
123 117

Minimum future lease payments (1)

203 188

Less future finance charges

15 -

Present value of minimum lease payments

188 188

Included in the financial statements as:

   

Current interest bearing liabilities (refer to Note 10)

- 71

Non-current interest bearing liabilities (refer to Note 10)

- 117

Total interest bearing liabilities

- 188

(1) Minimum finance lease payments include the aggregate of all lease payments and any guaranteed residual.

Operating leases

Leasing arrangements

Operating leases relate to buildings with lease terms of three to five years, with an option to extend for a further three years. All operating lease contracts contain market review clauses in the event that CenITex exercises its option to renew. CenITex does not have an option to purchase the leased asset at the expiry of the lease period. 

  2015 2014
  $'000 $'000

Operating leases payable

   

Not longer than one year

11,834 10,503

Longer than one year and not longer than five years

33,014 33,884

Longer than five years

1,868 6,962

Total operating leases payable (1)

46,716 51,349

(1)The disclosed amount is inclusive of GST.

Note 14. Commitments for expenditure

  2015 2014
  $'000 $'000

The following commitments have not been recognised as liabilities in the financial statements:

(a) Capital expenditure commitments

   

Plant and equipment

   

Payable:

   

Not longer than one year

285 138

Total capital expenditure commitments (1)

285 138

(1)The disclosed amount is inclusive of GST.

(b) Lease commitments

Finance lease liabilities and non-cancellable operating lease commitments are disclosed in Note 13.

Note 15. Contingent assets and contingent liabilities

As a result of findings arising from its physical stock takes during the year, CenITex intends to conduct a review of its property plant and equipment. Outcomes of this review may give rise to further material adjustments which at this time cannot be measured.

Note 16. Financial instruments

(a) Financial risk management objectives and policies

CenITex’s principal financial instruments comprise:

  • cash assets 
  • receivables (excluding statutory receivables) 
  • payables (excluding statutory payables) 
  • interest bearing liabilities 
  • finance lease payables.

Details of significant accounting policies and methods adopted in respect of each class of financial asset, financial liability and equity instrument including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised are disclosed throughout Note 1 to these financial statements. 

The main purpose in holding financial instruments is to manage CenITex’s financial risks prudently within the government’s policy parameters. 

CenITex’s main financial risks include credit risk, liquidity risk and interest rate risk. CenITex manages these financial risks in accordance with its Financial Risk Management Policy. 

CenITex uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and oversight of financial risks rests with CenITex’s Risk and Audit Committee.

(b) Categorisation of financial instruments

 

Contractual Financial Assets Loans and Receivables

Contractual Financial Liabilities at amortised cost

Total
2015 $'000 $'000 $'000

Contractual Financial Assets

     

Cash and deposits

38,084 - 38,084

Receivables

3,499 - 3,499

Total financial assets

41,583 - 41,583

Contractual Financial Liabilities

     

Payables

- 7,892 7,892

Interest bearing liabilities

- 144 144

Loan from Government

- 16,000 16,000

Total financial liabilities

- 24,036 24,036
 

Contractual Financial Assets Loans and Receivables

Contractual Financial Liabilities at amortised cost

Total
2014 $'000 $'000 $'000

Contractual Financial Assets

     

Cash and deposits

13,383 - 13,383

Receivables

7,680 - 7,680

Total financial assets

21,063 - 21,063

Contractual Financial Liabilities

     

Payables

- 9,533 9,533

Interest bearing liabilities

- 188 188

Loan from Government

- 16,000 16,000

Total financial liabilities

- 12,528 12,528

The amount of financial assets disclosed here excludes statutory receivables (i.e. GST input tax credit recoverable). 

The amount of financial liabilities disclosed here excludes statutory payables (i.e. taxes payable).

(c) Net holding gain /(loss) on financial instruments by category

  2015 2014
  $'000 $'000

Contractual financial assets

   

Cash and deposits

1,122 453
  1,122 453

Contractual financial liabilities

285 138

Interest bearing liabilities

(4) (11)

Net holding gain/(loss)

1,118 442

The net holding gains and losses disclosed above are determined as follows: 

  • For cash and deposits, the net gain or loss is calculated by taking the interest revenue and adding or subtracting foreign exchange gains or losses arising from revaluation of the financial assets minus any impairment recognised in the net result. 
  • For financial liabilities measured at amortised cost, the net gain or loss is calculated by taking the interest expense and adding or subtracting foreign exchange gains or losses arising from the revaluation of financial liabilities at amortised cost.

(d) Credit risk exposures

Credit risk arises from the financial assets of CenITex, which comprise cash and deposits, and trade and other receivables. CenITex's exposure to credit risk arises from the potential default of counter parties on their contractual obligations resulting in financial loss to CenITex. Credit risk is measured at fair value and is monitored on a regular basis. 

Credit risk associated with CenITex financial assets is minimal because the debtors are government departments.  

Provision for impairment of contractual financial assets is recognised when there is objective evidence that CenITex will not be able to collect a receivable. Objective evidence includes financial difficulties of the debtor, default payments, and changes in credit ratings. 

The carrying amount of financial assets recorded in the financial report, net of any allowances for losses, represents CenITex’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

Table 16.1: Credit risk exposure and ageing analysis of financial assets
 

Weighted 

average effective 

interest rate

Credit risk exposure

Not past due and not impaired

 

Past due but not impaired

Impaired financial assets

Carrying amount

Fixed interest rate

Variable 

interest rate

Non-interest 

bearing

Less than

1 Month

1–3 months

3 months – 

1 year

1–5 years

2015  

($'000)

($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000)
Cash 2.0% 38,084 15,000 23,084 - 38,084 - - - - -

Receivables (i)

  1,548 - - 1,548 977 180 312 79 - 470
Other   1,951 - - 1,951 1,951 - - - - -
    41,583 15,000 23,084 3,499 41,012 180 312 79 - 470
2014   ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000)
Cash 2.5% 13,383 - 13,383 - 13,383 - - - - -

Receivables (i)

  6,282 - - 6,282 4,982 427 185 688 - 355
Other   1,398 - - 1,398 1,398 - - - - -
    21,063 - 13,383 7,680 19,763 427 185 688 - 355

(i)Ageing analysis of receivables excludes doubtful debts and statutory receivables for GST input tax credits recoverable. These amounts are no contractual, and are therefore outside the scope of this disclosure.

(e) Liquidity risk

Liquidity risk arises when CenITex is unable to meet its financial obligations as they fall due. CenITex operates under the Victorian Government’s Fair Payments policy of settling financial obligations within 30 days and, in the event of a dispute, making payments within 30 days of the date of resolution.  

Maximum exposure to liquidity risk is the carrying amounts of financial liabilities. CenITex manages its liquidity risk by: 

  • maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligation; 
  • careful maturity planning of its financial obligations based on forecasts of future cash flows.
Table 16.2: Liquidity risk exposure and maturity analysis of financial liabilities
 

Weighted 

average effective 

interest rate

Nominal amount(i)

Liquidity risk exposure

Maturity dates

               
2015   ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000) ($'000)
Payables:                    

Other payables (1)

  7,892 - - 7,892 7,892 - - - -

Interest bearing liabilities:

                   

Finance lease liabilities

6.4% 153 153 - - 4 9 61 79 -

Loan from Government

  16,000 - - 16,000 - - 16,000 - -
    24,045 153 - 23,892 7,896 9 16,061 79 -
2014                    
Payables:                    
Other payables (1)   9,533 - - 9,533 9,533 - - - -
Interest bearing liabilities:                    
Finance lease liabilities 6.6% 203 203 - - 38 8 34 123 -
Loan from Government   16,000 - - 16,000 - - - 16,000 -
    25,736 203 - 25,533 9,571 8 34 16,123 -

(1)The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities.

(f) Market risk

CenITex’s exposure to market risk is primarily through interest rate risk with only insignificant exposure to foreign currency risk and other price risks. Objectives, policies and processes used to manage each of these risks are disclosed in the paragraphs below. 

Foreign currency risk

CenITex is exposed to insignificant foreign currency risk through its payables relating to purchases from overseas for which the counterparty invoices are in foreign currency. 

Based on past and current assessment of economic outlook, it is deemed unnecessary for CenITex to enter into any hedging arrangements to manage the risk. 

Interest rate risk

Exposure to interest rate risk relates solely to cash balances held in deposits at variable interest rates. For financial liabilities, CenITex’s exposure to interest rate risk relates solely to motor vehicle leases. CenITex’s interest bearing liabilities are managed by VicFleet at interest rates fixed at the inception of the lease. 

CenITex’s exposure to interest rate risk is set out in tables 16.1 and 16.2. 

Sensitivity disclosure analysis

Taking into account future expectations, economic forecasts, and management’s knowledge and experience of the financial markets, CenITex believes the following movements are possible over the next 12 months: 

A parallel shift of +1.00% and -1.00% in market interest rates (AUD) from year-end rates of 2.00% (2014:2.5%) 

Table 16.3 discloses the impact on net operating result and equity for each category of financial instrument held by CenITex at year-end, as presented to key management personnel, if the above movements were to occur.

Table 16.3: Market risk exposure
   

2015

Interest rate risk

    -1.00% (100 basis points) 1.00% (100 basis points)
 

Carrying amount

Profit Equity Profit Equity
 

($‘000)

($‘000)

($‘000)

($‘000)

($‘000)

Financial assets:

         

Cash and deposits

38,084 (381) (381) 381 381

Receivables (1)

3,499 - - - -

Financial liabilities:

         

Payables (1)

7,892 - - - -

Interest bearing liabilities(2)

144 - - - -

Loan from Government(3)

16,000 - - - -

Total increase/ (decrease)

  (381) (381) 381 381
   

2014

Interest rate risk

    -1.00% (100 basis points) 1.00% (100 basis points)
 

Carrying amount

Profit Equity Profit Equity
 

($‘000)

($‘000)

($‘000)

($‘000)

($‘000)

Financial assets:

         

Cash and deposits

13,383 (134) (134) 134 134

Receivables (1)

7,680 - - - -

Financial liabilities:

         

Payables (1)

9,533 - - - -

Interest bearing liabilities(2)

188 - - - -

Loan from Government(3)

16,000 - - - -

Total increase/ (decrease)

  (134) (134) 134 134

(1)The carrying amount is denominated in Australian Dollars and is non-interest bearing. This item is not subject to the identified risk sensitivities. 

(2) Interest bearing liabilities relate solely to finance lease liabilities associated with motor vehicles. Each contract has interest fixed at the inception of the lease. This item is not subject to identified risk sensitivities. 

(3)Loan from Government bears no interest. This item is not subject to the identified risk sensitivities.

(g) Fair value

CenITex considers the carrying amount of financial assets and financial liabilities recorded in the financial report to be a reasonable approximation of their fair values, either due to their short-term nature or with the expectation that they will be paid in full. 

Note 17. Cash flow information

  2015 2014
  $'000 $'000

(a) Reconciliation of cash and cash equivalents

   

For the purpose of Cash Flow Statement, cash includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown on the Cash Flow Statement is reconciled to the related items in the Balance Sheet as follows:

Total cash and deposits disclosed in the Balance Sheet

38,084 13,383

Balance as per Cash Flow Statement

38,084 13,383
  2015 2014
  $'000 $'000
    restated (1)

(b)Reconciliation of net result for the period to net cash flows from operating activities

   

Net result for the period

8,436 (619)

Non-cash movements

   

Net (gain)/loss on sale or disposal of non-current assets (1)

1,054 (285)

Depreciation and amortisation of non-current assets (1)

21,721 22,439

Resources provided free of charge or for nominal consideration (1)

(1,574) 471

Increase/(decrease) in doubtful debts

115 87

Movements in assets and liabilities

   

(Increase)/decrease in receivables

4,044 3,791

(Increase)/decrease in prepayments

558 (1,661)

Increase/(decrease) in payables

(1,911) (6,558)

Increase/(decrease) in unearned revenue

(2,149) 2,483

Increase/(decrease) in provisions

1,205 1,025

Net cash flows from/(used in) operating activities

31,499 21,173

(1) Refer Note 19 for correction of prior year errors related to asset values.

Note 18. Ex gratia payments

No ex-gratia payments were made during the year. (2014: NIL)

Note 19. Correction of errors

The stemming from recording asset stocktake outcomes described below have been adjusted by restating each of the affected financial statement line items for the prior year. 

Property, Plant and Equipment transferred to CenITex from other agencies via an Allocation Statement during the period 2008 to 2011 were not subject to a stock take at the time of transfer. Asset stock takes since have shown that the Allocation Statements contained inaccurate or incomplete asset records. As these transfers and stock takes did not occur at the same point in time, it is impractical to determine which year the asset discrepancies actually occurred. Retrospective restatements have been made to the earliest set of financial statements after their discovery. 

The net impact of these errors is: 

2012-13 closing balances 

  • overstatement of the operating net loss result by $0.368 million 
  • understatement of property, plant and equipment by $0.368 million 

2013-14 closing balance 

  • understatement of the operating net loss result by $0.614 million 
  • overstatement of property, plant and equipment by $0.246 million 
  • overstatement of accumulated retained earnings by $0.368 million 

The below section shows the restatement of each line item affected by the error.

(a) Restatement of financial statements as a result of the correction of errors - 30 June 2014

Line items of financial statements affected

Comprehensive Operating Statement (extract)

  Notes 2014

Correction of 2014 errors

Restated 2014

    $'000 $'000 $'000

Expenses from transactions

       

Depreciation

3(c) 22,296 143 22,439

Total expenses from transactions

  151,155 143 151,298

Net result from transactions (net operating balance)

  (185) (143) (328)

Other economic flows included in net result

       

Net gain/(loss) on disposal of non-financial assets

  299 (471) (172)

Total other economic flows included in net result

  181 (471) (290)

Net Result

  (5) (614) (619)

Comprehensive result

  (5) (614) (619)

Balance Sheet (extract)

  Notes 2014

Correction of 2013 errors

Correction of 2014 errors

Restated 2014

    $'000 $'000 $'000 $'000

Non-Financial Assets

         

Property, plant and equipment

3(c) 27,619 368 (614) 27,373

Total non-financial assets

  76,397 368 (614) 76,151

Total assets

  98,188 368 (614) 97,942

Net assets

  58,117 368 (614) 57,871
Equity          

Accumulated loss

  (64,803) 368 (614) (65,049)

Total equity

  58,117 368 (614) 57,871

Cash Flow Statement (extract)

  Notes 2014

Correction of 2014 errors

Restated 2014

    $'000 $'000 $'000

Cash flows from operating activities

       
Receipts        

Receipts from other government entities

  164,264 (471) 163,793

Total Receipts

  165,165 (471) 164,694

Net cash flows from/(used in) operating activities (1)

17(b) 21,644 (471) 21,173

Cash flows from investing activities

       

Payments for non-financial assets

  (11,582) 471 (11,111)

Net cash flows from/(used in) investing activities

  (11,569) 471 (11,098)

Note 3. Expenses from transactions (extract)

  Notes 2014

Correction of 2014 errors

Restated 2014

    $'000 $'000 $'000

(c) Depreciation

       

Depreciation of non-current assets

6 14,713 143 14,856

Total depreciation and amortisation

  22,296 143 22,439

Note 6. Property, plant and equipment (extract)

Non-Current assets (extract)

2014

Correction of 2013 errors

Correction of 2014 errors

Restated 2014

  $'000 $'000 $'000 $'000

Plant and equipment - Computer equipment

       

At fair value

1,536 (275) - 1,261

Less accumulated depreciation

(1,447) 242 27 (1,178)

Written down value

89 (33) 27 83

Plant and equipment - Facilities

       

At fair value

6,978 435 (1,818) 5,595

Less accumulated depreciation

(5,566) (459) 1,759 (4,266)

Written down value

1,412 (24) (59) 1,329

Plant and equipment - Network

       
At fair value 60,370 (3,970) (4,109) 52,291
Less accumulated depreciation (49,718) 2,535 4,492 (42,691)
Written down value 10,652 (1,435) 383 9,600

Plant and equipment - Servers

       
At fair value 56,942 (1,142) (8,912) 46,888
Less accumulated depreciation (49,544) 1,063 8,641 (39,840)
Written down value 7,398 (79) (271) 7,048

Plant and equipment - Storage

       
At fair value 46,217 (1,078) (7,313) 37,826
Less accumulated depreciation (38,743) 3,017 6,619 (29,107)
Written down value 7,474 1,939 (694) 8,719

Plant and equipment - Office Machines and Equipment

       
At fair value 46 (2) - 44
Less accumulated depreciation (35) 2 - (33)
Written down value 11 - - 11

Net carrying amount of property, plant and equipment

27,619 368 (614) 27,373

Movements in carrying amounts (extract)

  Computer equipment Facilities Network Servers Storage Office machines & equipment Total
  $'000 $'000 $'000 $'000 $'000 $'000 $'000
2014              

Opening balance

945 1,676 14,832 9,920 10,293 19 38,607

Correction of 2013 errors

(33) (24) (1,435) (79) 1,939 - 368

Restated opening balance

912 1,652 13,397 9,841 12,232 19 38,975

Transfers

17 5 (1,042) (220) (486) (1) (1,728)

Correction of 2014 errors

- (30) (175) (103) (163) - (471)

Restated transfers

17 (25) (1,217) (323) (649) (1) (2,199)

Depreciation expense

(558) (467) (5,617) (4,232) (3,364) (7) (14,713)

Correction of 2014 errors

27 (29) 558 (168) (531) - (143)

Restated depreciation expense

(531) (496) (5,059) (4,400) (3,895) (7) (14,856)

Restated closing balance

83 1,329 9,600 7,048 8,719 11 27,373
  2014

Correction of 2014 errors

Restated 2014

  $'000 $'000 $'000

Aggregate depreciation recognised as an expense during the year:

     

Plant and equipment - Computer equipment

558 (27) 531

Plant and equipment - Facilities

467 29 496

Plant and equipment - Network

5,617 (558) 5,059

Plant and equipment - Servers

4,232 168 4,400

Plant and equipment - Storage

3,364 531 3,895

Plant and equipment - Office machines and equipment

7 - 7

Total depreciation expense

14,713 143 14,856

Note 17. Cash flow information (extract)

  2014

Correction of 2014 errors

Restated 2014

  $'000 $'000 $'000

Net result for the period

(5) (614) (619)

Non-cash movements (extract)

     

Net (gain)/loss on sale or disposal of non-current assets

186 (471) (285)

Depreciation and amortisation of non-current assets

22,296 143 22,439

Resources provided free of charge or for nominal consideration

- 471 471

Net cash flows from/(used in) operating activities

21,644 (471) 21,173

(b) Restatement of financial statements as a result of the correction of errors - 30 June 2013

Line items of financial statements affected

Comprehensive Operating Statement (extract)

  Notes 2013

Correction of 2013 errors

Restated 2013

    $'000 $'000 $'000

Fair Value of assets and services received free of charge or for nominal consideration (1)

2(c) - 5,809 5,809

Total income from transactions

  146,602 5,809 152,411

Other economic flows included in net result

       

Net gain/(loss) on disposal of non-financial assets

  (594) (5,441) (6,035)

Total other economic flows included in net result

  491 (5,441) (5,932)

Net Result

  (6,995) 368 (6,627)

Comprehensive result

  (6,995) 368 (6,627)

Balance Sheet (extract)

  Notes 2013

Correction of 2013 errors

Restated 2013

    $'000 $'000 $'000

Non-Financial Assets

       

Property, plant and equipment

6 38,607 368 38,975

Total non-financial assets

  85,841 368 86,209

Total assets

  98,347 368 98,715

Net assets

  58,456 368 58,824

Equity

       

Accumulated loss

  (64,789) 368 (64,430)

Total equity

  58,456 368 58,824

Note 6. Property, plant and equipment (extract)

Non-Current assets (extract)

 

 

 

  $'000 $'000 $'000

Plant and equipment - Computer equipment

     

At fair value

6,637 (275) 6,362

Less accumulated depreciation

(5,692) 242 (5,450)

Written down value

945 (33) 912

Plant and equipment - Facilities

     

At fair value

4,997 435 5,432

Less accumulated depreciation

(3,321) (459) (3,780)

Written down value

1,676 (24) 1,652

Plant and equipment - Network

     
At fair value 58,950 (3,970) 54,980
Less accumulated depreciation (44,118) 2,535 (41,583)
Written down value 14,832 (1,435) 13,397

Plant and equipment - Servers

     
At fair value 50,710 (1,142) 49,568
Less accumulated depreciation (40,790) 1,063 (39,727)
Written down value 9,920 (79) 9,841

Plant and equipment - Storage

     
At fair value 40,959 (1,078) 39,881
Less accumulated depreciation (30,666) 3,017 (27,649)
Written down value 10,293 1,939 2,232

Plant and equipment - Office Machines and Equipment

     
At fair value 48 (2) 46
Less accumulated depreciation (29) 2 (27)
Written down value 19 - 19

Net carrying amount of property, plant and equipment

38,607 368 38,975

Note 17. Cash flow information (extract)

  2013

Correction of 2013 errors

Restated 2013

  $'000 $'000 $'000

Net result for the period

(6,995) 368 (6, 627)

Non-cash movements (extract)

     

Net (gain)/loss on sale or disposal of non-current assets

594 5,441 6,035

Resources provided free of charge or for nominal consideration

- (5,809) (5,809)

Net cash flows from/(used in) operating activities

8,895 - 8,895

Note 20. Responsible persons

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period. 

Persons who held positions of ministers and accountable officers responsible for CenITex during the financial year from 1 July 2014 to 30 June 2015 were: 

  • The Assistant Treasurer, Minister for Technology and the Minister Responsible for the Aviation Industry, the Hon. Gordon Rich-Phillips MLC, from 1 July 2014 to 3 December 2014 
  • The Minister for Finance and the Minister for Multicultural Affairs, the Hon. Robin Scott MP, from 4 December 2014 to 30 June 2015 
  • Chairman, Mr Randall Straw, from 1 July 2014 to 30 June 2015 
  • Chief Executive, Mr Michael Vanderheide, from 1 July 2014 to 30 June 2015
    Position Name Period

    Board member

    Randall Straw

    1 July 2014 to 30 June 2015

    Board member

    Johanna Barker

    1 July 2014 to 30 June 2015
    Board member

    Richard Tait

    1 July 2014 to 30 June 2015
    Board member

    Conrad Harvey

    1 July 2014 to 30 June 2015

     

    Income band Total remuneration 2015 Total remuneration 2014

    $0–10,000

    -

    3

    $10,001–20,000

    - 3

    $20,001–30,000

    3 -

    $30,001–40,000

    - -

    $40,001–50,000

    1 -

    Total as at 30 June

    4 6
    Total amount $132,108 $49,425

     

    Remuneration

    Remuneration received or receivable by accountable officers in connection with the management of CenITex during the reporting period was: 

    • Accountable officer: 1 July 2014 to 30 June 2015, $330,000 to $339,999. (2014: $330,000 to $339,999) 

    Amounts relating to Ministers are reported in the financial statements of the Department of Premier and Cabinet. 

    Other transactions

    Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance have been considered and there are no matters to report.

    Note 21. Remuneration of executives and payments to other personnel with significant management responsibilities

    (a) Remuneration of executives

    The numbers of executive officers, other than ministers and the accountable officer, and their total remuneration during the reporting period are shown in the table below in their relevant income bands. Base remuneration is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefits. The total annualised employee equivalent provides a measure of full time equivalent executive officers over the reporting period. 

    (a) Remuneration of executives

    Income Band

    Base Remuneration 2015 

    No.

    Total Remuneration 2015 

    No.

    Base Remuneration 2014 

    No.

    Total Remuneration 2014 

    No.

    $20,000 – 29,999

    1 - - -

    $110,000 – 119,999

    - 1 - 1

    $150,000 – 159,999

    - - 1 -

    $160,000 – 169,999

    1 1 - -

    $180,000 – 189,999

    - - - 1

    $210,000 – 219,999

    - - 1 1

    $220,000 – 229,999

    1 - - -

    $230,000 – 239,999

    - 1 - -

    $250,000 – 259,999

    - - 1 1

    $260,000 – 269,999

    1 - 1 -

    $270,000 – 279,999

    - 1 - 1

    Total number of executives

    4.0 4.0 4.0 4.0

    Total annualised employee equivalents (AEE) (1)

    3.3 3.3 3.8 3.8

    Total amount

    $684,615 $792,876 $888,065 $930,285

    (1)Annualised employee equivalent is based on paid working hours of 38 ordinary hours per week over the 52 weeks for a reporting period.

    (b) Payments to other personnel with significant management responsibilities

    There were no payments made to contractors of CenITex charged with significant management responsibilities. (2014: NIL).

    Note 22. Related party transactions

    Randall Straw was appointed as a Director of CenITex Board on 17 December 2013 and subsequently appointed as Chairman effective 9 April 2014. He is also a Director of the Victorian Government Purchasing Board, managed by Department of Treasury and Finance (DTF). Randall Straw is also engaged on contract work with the Department of Economic Development, Jobs, Transport and Resources (DEDJTR). CenITex provides services to both DEDJTR and DTF on normal commercial terms.

    There were no other transactions between CenITex and responsible persons and their related parties during the financial year.

    Note 23. Remuneration of auditors

      2015 2014
      $'000 $'000

    Victorian Auditor General’s Office

       

    Audit of the financial report

    81 79
    Total 81 79

    Note 24. Events occurring after the balance date

    No matters and/or circumstances have arisen since the end of the reporting period which significantly affect or may significantly affect the operations of CenITex, the results of those operations, or the state of affairs of CenITex in future financial years.

    Statutory Certification

    We certify that the Financial Statements for CenITex for the year ended 30 June 2015 have been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards and other mandatory professional reporting requirements. 

    We further state that, in our opinion, the information set out in the Comprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes to and forming part of the financial statements, present fairly the financial transactions for the year ended 30 June 2015 and the financial position of CenITex as at that date. 

    We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate. 

    We authorise the attached financial statements for issue on 9 October 2015.

     

    image of signature of Randall Straw

    Randall Straw
    Chairman
    CenITex

    image of signature of Michael Vanderheide

    Michael Vanderheide
    Chief Executive
    CenITex

    image of signature of Catherine Ho

    Catherine Ho
    Chief Financial Officer
    CenITex

    Melbourne

    9 October 2015


    Auditor-General’s report

    VAGO - Victorian Auditor-General's Office 

    Independent Auditor's Report 

    To the Board Members, CenITex  

    The Financial Report 

    The accompanying financial report for the year ended 30 June 2015 of CenITex which comprises the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement, notes comprising a summary of significant accounting policies and other explanatory information, and the statutory certification has been audited. 

    The Board Members' Responsibility for the Financial Report 

    The Board Members of CenITex are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards, and the financial reporting requirements of the Financial Management Act 1994, and for such internal control as the Board Members determine is necessary to enable the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error. 

    Auditor's Responsibility 

    As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report based on the audit, which has been conducted in accordance with Australian Auditing Standards. Those Standards require compliance with relevant ethical requirements relating to audit engagements and that the audit be planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement. 

    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The audit procedures selected depend on judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, consideration is given to the internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Board Members, as well as evaluating the overall presentation of the financial report. 

    I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. 

    Independence 

    The Auditor-General's independence is established by the Constitution Act 1975. The Auditor-General is not subject to direction by any person about the way in which his powers and responsibilities are to be exercised. In conducting the audit, the Auditor-General, his staff and delegates complied with all applicable independence requirements of the Australian accounting profession. 

    Opinion 

    In my opinion, the financial report presents fairly, in all material respects, the financial position of CenITex as at 30 June 2015 and its financial performance and its cash flows for the year then ended in accordance with applicable Australian Accounting Standards, and the financial reporting requirements of the Financial Management Act 1994. 

     

    Melbourne 

    14 October 2015  

    Dr Peter Frost 

    acting Auditor-General