AR 2015-16 Financial Report

Summary of Financial Results

 
2016
2015
2014
 
$'000
$'000
$'000
Services provided to other Government Entities
152,979
147,209
150,516
Total income from transactions
155,164
149,905
150,969
Total expenses from transactions
(146,799)
(138,677)
(157,667)
Net result from transactions before depreciation and amortisation
25,780
29,680
15,741
Net result from transactions
8,365
11,228
(6,698)
Net result for the period
7,472
9,649
(6,989)
Net cash flow from operating and investing activities
16,667
24,727
10,075
Total assets
110,739
98,593
91,572
Total liabilities
36,047
37,443
40,071

CenITex reports another successful year. Albeit reporting a lower net result to the previous period, it has achieved better outcomes for its customers and continues to improve the strength of its balance sheet and maintains necessary liquidity.

Its income from services provided to other Government entities increased by 3.9%, reflecting increased demand, mainly in workplace support. This increase is consistent with renewed activities across its customer base.

As promised in the previous year, it reduced prices by up to 5% to all its customers, while absorbing the effects of inflation. It reduced its operating cost base through further consolidation of network links and gains through vendor negotiations.

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

  • Investment in the Cloud: Enabled by the WoVG agreement with Microsoft Azure, CenITex piloted and launched services in Infrastructure as a Service on Azure. In consultation with its customer base, CenITex pursued investment in Cloud technology and commenced activities to introduce Office 365. It also commenced capability assessments to enable further development in this space.
  • Investment in Security ($0.5m): Recognising the escalating risks related to Cyber-security, CenITex commenced a program of works that delivered a 24X7 security operating centre and enhanced its patching and intruder detection programs.
  • Investment in the Innovation Fund ($1.2m): In collaboration with its customer base, a series of new services were piloted which resulted in improved business outcomes for customers and enabled new services to be shared across government.
  • Investment in upgrading tools of trade ($0.6m): It upgraded its workplace device fleet, thus enabling the roll out of current state workplace technology such as Win10, lending to increased productivity.
  • Investment in better reporting tools ($0.3m): CenITex commenced a program to improve its reporting capabilities to customers. This program seeks to allow ‘live’ customer reporting through a portal which means the customer gets reports on demand as opposed to waiting for monthly or quarterly reporting.
  • Investment in refreshing its asset base to ensure sustainability of the environment ($18.2m): Consistent with prior years, a number of infrastructure assets were refreshed as they came to end of life.
  • Investment in capability uplift through delivery of many new programs such as Lean, Knowledge Leadership and Agile.
  • Recognised a milestone with the repayment of its S37 Advance of $16m from the Department of Treasury and Finance. CenITex is now debt free.

During the year, CenITex implemented a change in accounting policy where the asset threshold was raised from $1000 to $5000 per asset. As a consequence, and in compliance with the requirements of the accounting standards (AASB 108), it made adjustments to prior year accounts. This resulted in the restatement of balances in property plant and equipment (PPE) and comprehensive result with a net change in accumulated losses for 2014 and 2015 respectively. CenITex also reviewed its treatment of intangible assets and the capitalisation of labour in asset refresh projects. The review resulted in the reclassification of labour capitalised from intangible assets to PPE and in some instances where substantiation rules were not met, the cost was expensed. The accounting standards in AASB 108 require that the financial impact of these adjustments be reflected in the accounts as if they were reported in the correct accounting period. This means the restatement of balances in PPE, Intangible assets, cashflow and the comprehensive result for the reporting periods ended 30 June 2014 and 2015 respectively. The full details of these adjustments are reported in Note19 of the financial statements.


Financial Report

for the financial year ended 30 June 2016

Contents

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 2016

 
Note
2016
2015
   
$’000
$’000
     
restated (1)
Income from transactions      
Services provided to other government entities
2(a)
152,979
147,209
Interest
2(b)
1,757
1,122
Fair Value of assets and services received free of charge or for nominal consideration
2(c)
428
1,574
       
Total income from transactions  
155,164
149,905
       
Expenses from transactions      
Employee benefits (1)
3(a)
64,383
60,773
ICT expenditure (1)
3(b)
49,089
44,531
Depreciation (1)
3(c)
17,415
18,452
Occupancy expenses
3(d)
13,013
13,140
Other operating expenses
3(e)
2,899
1,781
       
Total expenses from transactions (1)  
146,799
138,677
       
Net result from transactions (net operating balance) (1)  
8,365
11,228
       
Other economic flows included in net result      
Provision for doubtful debts  
456
(115)
Net gain/(loss) on disposal of non-financial assets (1)  
(433)
(1,039)
Net gain/(loss) from revaluation of long service leave liability  
(916)
(425)
       
Total other economic flows included in net result (1)  
(893)
(1,579)
       
Net Result (1)  
7,472
9,649
Other economic flows - other comprehensive income    
-
Comprehensive result (1)  
7,472
9,649

(1)Refer Note 19 for changes in accounting policy and correction of errors.

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

Balance Sheet

as at 30 June 2016

 
Note
2016
2015
As at 1 July 2014
   
$’000
$’000
$’000
     
restated (1)
restated (1)
Assets        
Financial Assets        
Cash and deposits
44,788
38,084
13,383
Receivables
9,110
4,519
8,408
Total financial assets  
53,898
42,603
21,791
Non-Financial Assets        
Property, plant and equipment (1)
39,576
34,009
43,057
Intangible assets (1)
4,155
8,480
12,666
Prepayments
13,110
13,501
14,058
Total non-financial assets (1)  
56,841
55,990
69,781
Total assets (1)  
110,739
98,593
91,572
Liabilities        
Payables
16,984
7,903
9,547
Borrowings
123
16,144
16,188
Provisions
14,907
12,738
11,529
Unearned revenue
4,033
658
2,807
Total liabilities  
36,047
37,443
40,071
Net assets  
74,692
61,150
51,501
Equity        
Accumulated loss (1)  
(54,298)
(61,770)
(71,419)
Contribution by Owners  
128,990
122,920
122,920
Total equity (1)  
74,692
61,150
51,501
Commitments for expenditure      
Contingent assets and contingent liabilities      

(1)Refer Note 19 for changes in accounting policy and correction of errors.

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 2016

 
Accumulated Loss
Contributions by Owners
Total
 
$'000
$'000
$'000
Balance at 1 July 2014 (1)
(71,419)
122,920
51,501
Net result for the year (1)
9,649
-
9,649
Contributed capital
-
-
-
Balance at 30 June 2015 (1)
(61,770)
122,920
61,150
Net result for the year
7,472
-
7,472
Contributed capital  
6,070
6,070
Balance at 30 June 2016
(54,298)
128,990
74,692

(1)Refer Note 19 for changes in accounting policy and correction of errors.

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

Cash Flow Statement

for the financial year ended 30 June 2016

 
Note
2016
2015
   
$'000
$'000
     
restated (1)
Cash flows from operating activities      
Receipts      
Receipts from other government entities  
156,783
152,769
Interest received  
1,757
1,122
Net GST received (1)  
2,212
2,653
Total Receipts  
160,752
156,544
Payments      
Payments to suppliers (1)  
(68,374)
(69,499)
Payments to employees (1)  
(57,057)
(57,614)
Interest and other costs of finance paid  
(5)
(4)
Total Payments (1)  
(125,436)
(127,117)
Net cash flows from/(used in) operating activities
35,316
29,427
Cash flows from investing activities      
Payments for non-financial assets (1)  
(18,684)
(4,790)
Proceeds from sale of non-financial assets  
35
90
Net cash flows from/(used in) investing activities (1)  
(18,649)
(4,700)
Cash flows from financing activities      
Owner contributions by state government  
6,070
-
Repayment of loan from Government  
(16,000)
-
Repayment of finance leases  
(34)
(25)
Net cash flows from/(used in) financing activities  
(9,964)
(25)
Net increase/(decrease) in cash and cash equivalents  
6,704
24,701
Cash and cash equivalents at the beginning of the financial year  
38,084
13,383
Cash and cash equivalents at the end of the financial year
44,788
38,084

1)Refer Note 19 for changes in accounting policy and correction of errors.

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

These annual financial statements represent the audited general purpose financial statements for CenITex for the period ended 30 June 2016. 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 AAS 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.

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 annual and long service leave liabilities, and the discount rate for the measurement is provided by the Department of Treasury and Finance (DTF).

Judgements and estimates are made for determination of fair value and useful life for property, plant and equipment and intangible assets refer Note 1 (g) and Note 1 (j) for details. Judgements and assumptions made by management also has significant effects on estimates related to the defined benefit superannuation plans, refer Note 1 (g) for details.

The accounting policies applied in preparing the financial statements for the year ended 30 June 2016 and the comparative information presented for the year ended 30 June 2015 are set out below.

The financial report has been prepared on a historical cost convention except for plant and equipment where fair value is applied and annual and long service leave which are measured at present value. 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.

For the purpose of fair value disclosures, CenITex has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above

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
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/received 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) Changes in accounting policy and correction of errors
During financial year 2015-16, CenITex made changes to the accounting policy in relation to asset capitalisation threshold. In addition, errors of previous treatments of intangible assets and standard labour rate capitalised have been identified and adjusted.

Consistent with requirements under AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, these changes in accounting policies and correction of errors are applied retrospectively, refer Note 19 for the details of the impact on the financial statements.

(f) 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.

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

Employee benefits
See Note 1(k) 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
The amount charged to the Comprehensive operating statement in respect of defined benefit superannuation plans and defined contribution 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:

Building Leasehold improvements 5 to 10 years
Plant and equipment 5 to 10 years
Motor vehicles under finance lease 3 years
Intangible assets 5 years

Occupancy expense
Occupancy expense represents operating lease rental costs which are recognised in the period in which they are incurred.

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

  • Professional services, travel, stationery
  • Interest expense

Professional services, travel and stationery costs are recognised as an expense in the reporting period in which they are incurred.

Interest expense represents costs incurred in connection with borrowings. It includes interest components of finance lease repayments and is recognised in the period in which it is incurred.

(h) 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.

(i) 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(l)). 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.

(j) Non-financial assets

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 annually.

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 (k)) 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.

Non-financial physical assets are measured at fair value on a cyclical basis, in accordance with the FRDs issued by the Minister for Finance. A full revaluation normally occurs every five years, based upon the asset’s government purpose classification but may occur more frequently if fair value assessments indicate material changes in values. Independent valuers are generally used to conduct these scheduled revaluations. Any interim revaluations are determined in accordance with the requirements of the FRDs.

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(i)), 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.

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 occupancy expenses.

(k) 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.
  • 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 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.

Borrowings
Finance lease liabilities are recorded initially at fair value, less directly attributable transaction costs.

Subsequent to initial recognition, finance lease 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) On-costs related to employee expenses
On-costs such as payroll tax, workers compensation, superannuation are recognised separately from the provision for 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.

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.

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.

(l) 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 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.

(m) 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.

(n) 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 14).

(o) 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).

(p) 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.

(q) 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.

(r) Australian Accounting Standards (AAS) issued that are not yet effective
As at 30 June 2016, certain new AAS have been published that are not mandatory for the 30 June 2016 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. The key changes include the simplified requirements for the classification and measurement of financial assets, a new hedging accounting model and a revised impairment loss model to recognise impairment losses earlier, as opposed to the current approach that recognises impairment only when incurred. While CenITex’s assessment has not identified any material impact arising from AASB 9, it will continue to be monitored and assessed.

AASB 15 Revenue from Contracts with Customers. This standard provides a single revenue recognition model based on the transfer of goods and services and the consideration expected to be received in return for that transfer, it replaces AASB 111 Construction Contracts, AASB 118 Revenue and ultimately AASB 1004 Contributions. Applicable for annual reporting periods beginning on or after 1 January 2018. Preliminary assessment has not identified any material impact arising from AASB 15, however, ongoing work is being carried out to monitor and assess the impact of this standard.

AASB 16 Leases. This standard requires the recognition of most of operating leases, which are currently not recognised, on the balance sheet. Applicable for annual reporting period beginning on or after 1 January 2019. At this stage, ongoing work is being carried out to assess the impact of this standard.

Note 2. Income from transactions

 
2016
2015
 
$'000
$'000
(a) Services provided to other Government Entities:    
Work place support
109,987
101,592
Hosting
28,623
30,835
Projects
14,059
14,487
Victorian Government Electronic Messaging System (VGEMS)
310
295
Total Revenue from services provided to other Government Entities
152,979
147,209
(b) Interest    
- Interest on bank deposits
1,757
1,122
Total interest revenue
1,757
1,122
(c) Fair Value of assets and services received free of charge or for nominal consideration Assets    
Plant and equipment
428
1,574
Total fair value of assets and services received free of charge or for nominal consideration
428
1,574

From 1 July 2015 to 30 June 2016 CenITex incurred $2,031,000 of capital funding during the delivery of customer funded projects. (2015: $1,434,000).

Note 3. Expenses from transactions

   
2016
2015
   
$'000
$'000
     
restated
(a) Employee benefits      
Post employment benefits      
- Defined contribution superannuation plans
12
4,412
4,246
- Defined benefit superannuation expense
12
211
227
Termination benefits  
193
924
Salaries, wages, leave entitlements, contractor payments (1)  
59,567
55,376
Total employee benefits (1)  
64,383
60,773
(b) ICT Expenditure      
Software licences and maintenance  
22,804
20,424
Hardware maintenance (1)  
9,043
8,335
Telecommunications  
13,171
13,803
Outsourced ICT  
4,071
1,969
Total ICT Expenditure (1)  
49,089
44,531
(c) Depreciation and amortisation      
Depreciation of non-current assets (1)
5
13,514
14,358
Amortisation of non-current intangible assets (1)
6
3,901
4,094
Total depreciation and amortisation (1)  
17,415
18,452
(d) Occupancy expense      
Occupancy  
13,013
13,140
Total occupancy expense  
13,013
13,140
(e) Other operating expenses      
Professional services, travel, stationery  
2,893
1,777
Interest expense - finance lease costs  
6
4
Total other operating expenses  
2,899
1,781

(1) Refer Note 19 for changes in accounting policy and correction of errors.

Note 4. Receivables

 
2016
2015
 
$'000
$'000
Current receivables    
Contractual    
Trade receivables
5,016
2,018
Provision for doubtful contractual receivables (See also Note 4(a) )
(15)
(470)
Other receivables
2,478
1,951
Total contractual receivables
7,479
3,499
Statutory    
GST input tax credit recoverable
1,631
1,020
Total statutory receivables
1,631
1,020
Total current receivables
9,110
4,519
Total receivables
9,110
4,519

(a) Movement in the provision for doubtful contractual receivables

 
2016
2015
 
$'000
$'000
Balance at beginning of the year
470
355
Increase/(Decrease) of the provision in the year
(455)
115
Balance at end of the year
15
470

(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. Property, plant and equipment

Non-Current assets
2016
2015
 
$'000
$'000
   
restated
Buildings - leasehold improvements:    
At cost
1,896
461
Less accumulated depreciation
(1,361)
(217)
Written down value
535
244
Plant and equipment - Computer equipment (1)    
At fair value
11
299
Less accumulated depreciation
(11)
(244)
Written down value
-
55
Plant and equipment - Facilities (1)    
At fair value
2,938
3,498
Less accumulated depreciation
(2,456)
(2,637)
Written down value
482
861
Plant and equipment - Network (1)    
At fair value
47,552
51,115
Less accumulated depreciation
(39,662)
(43,808)
Written down value
7,890
7,307
Plant and equipment - Servers (1)    
At fair value
34,604
46,778
Less accumulated depreciation
(25,282)
(39,325)
Written down value
9,322
7,453
Plant and equipment - Storage (1)    
At fair value
31,972
44,081
Less accumulated depreciation
(24,159)
(33,977)
Written down value
7,813
10,104
Plant and equipment - Office Machines and Equipment (1)    
At fair value
5
8
Less accumulated depreciation
-
(8)
Written down value
5
-
Motor vehicles under finance lease    
At cost
226
225
Less accumulated depreciation
(104)
(83)
Written down value
122
142
Construction in progress    
At cost
13,407
7,843
Written down value
13,407
7,843
Net carrying amount of property, plant and equipment
39,576
34,009

(1)Refer Note 19 for changes in accounting policies related to asset values..

Movements in carrying amounts

 
Buildings leasehold improvements
     
Plant and equipment
(1), (2)
    Construction
in progress (4)
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
$'000
2016                    
Opening balance (3)
244
55
861
7,307
7,453
10,104
-
7,843
142
34,009
Additions
138
(41)
30
6,683
2,557
4,062
5
12,120
40
25,594
Disposals
-
-
(52)
(385)
(295)
(36)
-
-
(17)
(785)
Adjustments
420
(3)
2
(74)
(30)
(29)
-
(872)
-
(586)
Transfers
-
(11)
(41)
(767)
3,061
(1,700)
-
(5,684)
-
(5,142)
Depreciation expense
(267)
-
(318)
(4,874)
(3,424)
(4,588)
-
-
(43)
(13,514)
Closing balance
535
-
482
7,890
9,322
7,813
5
13,407
122
39,576
 
Buildings leasehold improvements
     
Plant and equipment
(1), (2)
    Construction
in progress (4)
Motor vehicles under finance lease
Total
 
Level 3
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
24
1,234
10,914
10,335
13,498
4
6,465
189
43,057
Additions
-
54
23
1,179
696
700
-
4,277
32
6,961
Disposals
-
(1)
(37)
(491)
(472)
-
-
-
(36)
(1,037)
Adjustments
-
-
(2)
(2)
24
(20)
-
(616)
-
(616)
Transfers
-
(1)
1
644
912
731
(2)
(2,283)
-
2
Depreciation expense
(150)
(21)
(358)
(4,937)
(4,042)
(4,805)
(2)
-
(43)
(14,358)
Closing balance (3)
244
55
861
7,307
7,453
10,104
-
7,843
142
34,009

(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 $22,331 and the cost per unit is between $5,000 to $1,031,059 (2015: $1 to $1,082,767). The useful life of plant and equipment is disclosed in note 1(g).

(3) Refer Note 19 for changes in accounting policy and correction of errors.

(4) In previous years, uncompleted works associated with establishing physical assets have been reported as work in progress as part of the intangible asset balance. From financial year 2015-16 onwards, these uncompleted works are reported as construction in progress as part of the property, plant and equipment balance.
The comparative information of prior year has been amended to reflect this change

 
2016
2015
 
$'000
$'000
   
restated (1)
Aggregate depreciation recognised as an expense during the year;    
Buildings leasehold improvements
267
150
Plant and equipment - Computer equipment (1)
-
21
Plant and equipment - Facilities (1)
318
358
Plant and equipment - Network (1)
4,874
4,937
Plant and equipment - Servers (1)
3,424
4,042
Plant and equipment - Storage (1)
4,588
4,805
Plant and equipment - Office machines and equipment (1)
-
2
Motor vehicles under finance lease
43
43
Total depreciation expense
13,514
14,358

(1)Refer Note 19 for changes in accounting policy related to asset values.

Note 6. Intangible assets

Non-Current assets
Work in progress (1)
Capitalised development (2)
Total
   
Software configuration and installation
Virtual server environment
Identity and access management (IDAM) services
Network environment
End user computer services
Storage consolidation design
Security services
 
2016
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Gross carrying amount                  
Opening balance (3)
-
4,637
1,484
6,897
630
5,775
1,274
951
21,648
Additions
-
-
-
-
-
-
-
-
-
Adjustments - work in progress
-
-
-
-
-
-
-
-
-
Transfer
-
-
(264)
-
-
-
(1,083)
-
(1,347)
Closing balance
-
4,637
1,220
6,897
630
5,775
191
951
20,301
Accumulated amortisation and impairment                  
Opening balance (3)
-
(3,761)
(460)
(3,155)
(505)
(4,213)
(884)
(190)
(13,168)
Depreciation expense
-
(712)
(255)
(1,379)
(125)
(1,155)
(84)
(190)
(3,900)
Transfer
-
-
145
-
-
-
777
-
922
Closing balance
-
(4,473)
(570)
(4,534)
(630)
(5,368)
(191)
(380)
(16,146)
Net book value at the end of the financial year
-
164
650
2,363
-
407
-
571
4,155
Non-Current assets
Work in progress (1)
Capitalised development (2)
Total
   
Software configuration and installation
Virtual server environment
Identity and access management (IDAM) services
Network environment
End user computer services
Storage consolidation design
Security services
 
2015 (3)
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Gross carrying amount                  
Opening balance (3)
6,328
6,424
1,484
1,522
630
5,775
1,274
-
17,109
Additions
-
-
-
5,375
-
-
-
951
6,326
Adjustments
-
-
-
-
-
-
-
-
-
Transfer
(6,328)
-
-
-
-
-
-
-
-
Disposals
-
(1,787)
-
-
-
-
-
-
(1,787)
Closing balance (3)
-
4,637
1,484
6,897
630
5,775
1,274
951
21,648
Accumulated amortisation and impairment                  
Opening balance (3)
-
(4,464)
(163)
(1,973)
(453)
(3,058)
(629)
(31)
(10,771)
Depreciation expense
-
(994)
(297)
(1,182)
(52)
(1,155)
(255)
(159)
(4,094)
Disposals
-
1,697
-
-
-
-
-
-
1,697
Closing balance (3)
-
(3,761)
(460)
(3,155)
(505)
(4,213)
(884)
(190)
(13,168)
Net book value at the end of the financial year (3)
-
876
1,024
3,742
125
1,562
390
761
8,480

(1) In previous financial year, all project works both tangible and intangible that have not been finalised were reported as work in progress. The work in progress only includes uncompleted works which are attributed to intangible assets. The comparatives now have been amended.

(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 depreciated over a useful life that is aligned with the underpinning information technology infrastructure assets.

(3) Refer Note 19 for changes in accounting policy and correction of errors.

Note 7. Prepayments

 
2016
2015
 
$'000
$'000
Current other assets    
Prepayments - Software licences and maintenance, and other ICT expenditure paid in advance
12,904
13,210
Accommodation expenditure paid in advance
206
291
Total other assets
13,110
13,501

Note 8. Payables

 
2016
2015
 
$'000
$'000
Current payables    
Contractual    
Supplies and services
15,020
7,291
Total contractual payables
15,020
7,291
Other Current Payables    
Other payables
1,953
601
Total other Current Payables
1,953
601
Statutory    
FBT payable
11
11
Total Statutory Payables
11
11
Total payables
16,984
7,903

(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. Borrowings

 
2016
2015
 
$'000
$'000
Current borrowings    
Finance lease liabilities (1) (2)
84
67
Loan from Government (3)
-
16,000
Total current borrowings
84
16,067
Non-current borrowings    
Finance lease liabilities (1) (2)
39
77
Total non-current borrowings
39
77
Total borrowings
123
16,144

(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 10. Provisions

 
2016
2015
 
$'000
$'000
Current    
Employee benefits    
  • Unconditional and expected to be settled within 12 months
3,690
3,499
  • Unconditional and expected to be settled after 12 months
5,557
4,535
 
9,247
8,034
Provisions related to employee benefit on-costs:    
  • Unconditional and expected to be settled within 12 months
590
623
  • Unconditional and expected to be settled after 12 months
889
751
 
1,479
1,374
Provision for other employee entitlements
-
-
Total current provisions
10,726
9,408
Non-current    
Employee benefits
3,604
2,871
Provisions related to employee benefit on-costs
577
459
Total non-current provisions
4,181
3,330
Total provisions
14,907
12,738

(a) Employee benefits and related on-costs

 
2016
2015
 
$'000
$'000
Current employee benefits    
Annual leave entitlements
4,648
4,396
Unconditional long service leave entitlements
4,598
3,638
     
Non-current employee benefits    
Conditional long service leave entitlements
3,604
2,871
Total employee benefits
12,850
10,905
Current on-costs
1,480
1,374
Non-current on-costs
577
459
Total on-costs
2,057
1,833
Total employee benefits and related on-costs
14,907
12,738

(b) Movement in provisions for on-cost

 
2016
2015
 
$'000
$'000
Opening balance
1,833
1,521
     
Additional provisions recognised
914
922
Reductions arising from payments
(690)
(610)
Closing balance
2,057
1,833
Current
1,480
1,374
Non-current
577
459
Total
2,057
1,833

Note 11. Unearned revenue

 
2016
2015
 
$'000
$'000
Unearned revenue
4,033
658
Total unearned revenue
4,033
658

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
 
2016
2016
 
$'000
$'000
Defined benefit plans:    
State Employees Retirement Benefits Scheme (SERBS)
211
-
Defined contribution plans:    
Victorian Superannuation Fund – VicSuper scheme
2,530
-
Other
1,882
-
Total defined contributions
4,412
-
Total
4,623
-

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
2016
$'000
$'000
Finance lease liabilities payable    
- Not longer than one year
86
84
- Longer than one year and not longer than five years
40
39
Minimum future lease payments (1)
126
123
Less future finance charges
3
-
Present value of minimum lease payments
123
123
Included in the financial statements as:    
Current finance lease liabilities (refer to Note 9)
-
84
Non-current finance lease liabilities (refer to Note 9)
-
39
Total finance lease liabilities  
123
 
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 finance lease liabilities (refer to Note 9)
-
67
Non-current finance lease liabilities (refer to Note 9)
-
77
Total finance lease liabilities  
144

(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.

 
2016
2015
 
$'000
$'000
Operating leases payable    
Not longer than one year
13,605
11,834
Longer than one year and not longer than five years
24,015
33,014
Longer than five years
-
1,868
Total operating leases payable (1)
37,620
46,716

(1)The disclosed amount is inclusive of GST

Note 14. Commitments for expenditure

 
2016
2015
 
$'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
6,881
285
Total capital expenditure commitments (1)
6,881
285

(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

At 30 June 2016 CenITex had no contingent assets or liabilities.

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)
  • finance lease liabilities.

Details of significant accounting policies and methods adopted in respect of each class of financial asset and financial liability 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
2016      
Contractual Financial Assets      
Cash and deposits
44,788
-
44,788
Receivables
7,479
-
7,479
Total financial assets
52,267
-
52,267
Contractual Financial Liabilities      
Payables
-
16,973
16,973
Finance lease liabilities
-
123
123
Loan from Government
-
-
-
Total financial liabilities
-
17,096
17,096
 
Contractual Financial Assets Loans and Receivables
Contractual Financial Liabilities at amortised cost
Total
2015      
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
Finance lease liabilities
-
144
144
Loan from Government
-
16,000
16,000
Total financial liabilities
-
24,036
24,036

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

 
2016
2015
 
$'000
$'000
Contractual financial assets    
Cash and deposits
1,757
1,122
 
1,757
1,122
Contractual financial liabilities    
Finance lease liabilities
(6)
(4)
Net holding gain/(loss)
1,757
1,118

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 is that debts are more than 150 days overdue.

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
2016  
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
Cash
2.0%
44,788
28,500
16,288
-
44,788
-
-
-
-
-
Receivables (i)  
5,001
-
-
5,001
4,491
93
328
89
-
15
Other  
2,478
-
-
2,478
2,478
-
-
-
-
-
   
52,267
28,500
16,288
7,479
51,757
93
328
89
-
15
2015                      
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

(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
 
Fixed interest rate
Variable
interest rate
Non-interest
bearing
Less than
1 Month
1–3 months
3 months –
1 year
1–5 years
>5 years
2016  
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
($'000)
Payables:                    
payables (1)  
16,973
-
-
16,973
16,973
-
-
-
-
Interest bearing liabilities:                    
Finance lease liabilities
6.1%
126
126
-
-
47
26
13
40
-
Loan from Government  
-
-
-
-
-
-
-
-
-
   
17,099
126
-
16,973
17,020
26
13
40
-
2015                    
Payables:                    
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
-

(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.

CenITex manages this risk by undertaking fixed rate with relatively even maturity profiles. Management has concluded for cash at bank, as financial assets that can be left at floating rate without necessarily exposing CenITex to significant bad risk, management monitors movement in interest rates on a daily basis.

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% (2015:2%).

Table 16.3 discloses the impact on net result from transactions 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

   
2016
   
Interest rate risk
   
–1.00%
1.00%
   
(100 basis points)
(100 basis points)
 
Carrying amount ($‘000)
Net result from transactions
Equity
Net result from transactions
Equity
 
($‘000)
($‘000)
($‘000)
($‘000)
Financial assets:          
Cash and deposits
44,788
(448)
(448)
448
448
Receivables (1)
7,479
-
-
-
-
Financial liabilities:          
Payables (1)
16,973
-
-
-
-
Finance lease liabilities(2)
123
-
-
-
-
Loan from Government(3)
-
-
-
-
-
Total increase/ (decrease)  
(448)
(448)
448
448
           
   
2015
   
Interest rate risk
   
–1.00%
1.00%
   
(100 basis points)
(100 basis points)
 
Carrying amount ($‘000)
Net result from transactions
Equity
Net result from transactions
Equity
 
($‘000)
($‘000)
($‘000)
($‘000)
Financial assets:          
Cash and deposits
38,084
(381)
(381)
381
381
Receivables (1)
3,499
-
-
-
-
Financial liabilities:          
Payables (1)
7,892
-
-
-
-
Finance lease liabilities(2)
144
-
-
-
-
Loan from Government(3)
16,000
-
-
-
-
Total increase/ (decrease)  
(381)
(381)
381
381

(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)Finance lease liabilities relate solely to 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

 
2016
2015
 
$'000
$'000
(a) Reconciliation of cash and cash equivalents    
For the purpose of the 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
44,788
38,084
Balance as per Cash Flow Statement
44,788
38,084
 
2016
2015
 
$'000
$'000
   
restated (1)
(b)Reconciliation of net result for the period to net cash flows from operating activities    
Net result for the period
7,472
9,649
Non-cash movements    
Net (gain)/loss on sale or disposal of non-current assets (1)
433
1,039
Depreciation and amortisation of non-current assets (1)
17,415
18,452
Resources received free of charge or for nominal consideration
(428)
(1,574)
Increase/(decrease) in doubtful debts
(456)
115
Movements in assets and liabilities    
(Increase)/decrease in receivables
(4,469)
4,044
(Increase)/decrease in prepayments
391
558
Increase/(decrease) in payables
9,414
(1,911)
Increase/(decrease) in unearned revenue
3,375
(2,149)
Increase/(decrease) in provisions
2,169
1,205
Net cash flows from/(used in) operating activities (1)
35,316
29,428

(1)Refer Note 19 changes in accounting policy and correction of errors.

Note 18. Ex gratia payments

No ex-gratia payments were made during the year. (2015: NIL)

Note 19. Changes in accounting policy and correction of errors

(a) Changes in accounting policy
During financial year 2015-16, CenITex increased its asset capitalisation threshold from $1,000 to $5,000, as assets with a purchase price of less than $5,000 per unit are commodity in nature and shall be expensed. The changes have been adjusted by restating each of the affected financial statement line items for the prior year.

The net impact of the change in threshold on financial statement is:

2013-14 closing balances

  • Decrease in property, plant and equipment by $11.268 million.
  • Decrease in accumulated depreciation by $10.097 million.
  • Increase in accumulated retained loss by $1.171 million.

2014-15 closing balances

  • Decrease in property, plant and equipment by $9.988 million.
  • Decrease in accumulated depreciation by $9.104 million.
  • Increase in accumulated retained loss by $0.884 million.

(b) Correction of errors
The errors stemming from correcting the treatments of intangible assets and standard labour rate described below have been adjusted by restating each of the affected financial statement line items for the prior year.

(1) Treatments of intangible assets

Under AASB 138 Intangible assets, it is required that the cost base of intangible assets should only include costs directly attributable to the generation of intangible assets. Simultaneously, AASB 116 Property, plant and equipment requires that the cost of an item of property, plant and equipment should include any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

In previous years, CenITex included labour costs attributing to the installation of physical assets in the cost base of intangible assets. From financial year 2015-16 onwards, labour costs directly attributed to establishing physical assets are reported as costs of property, plant and equipment. The labour costs attributing to the generation of intangible assets are reported as costs of intangible assets.

The net impact of the correction of treatments of intangible assets on financial statement is:

2013-14 closing balances

  • Increase in property, plant and equipment by $14.757 million.
  • Increase in accumulated depreciation by $4.366 million.
  • Decrease in accumulated amortisation by $6.765 million.
  • Decrease in work in progress by $1.598 million.
  • Increase in construction in progress $6.465 million.
  • Decrease in intangible assets by $23.145 million.
  • Increase in accumulated retained loss by $1.123 million

2014-15 closing balances

  • Increase in property, plant and equipment by $14.800 million.
  • Increase in accumulated depreciation by $7.271 million.
  • Decrease in accumulated amortisation by $11.535 million.
  • Decrease in work in progress by $2.455 million.
  • Increase in construction in progress $7.843 million.
  • Decrease in intangible assets by $24.124 million.
  • Decrease in accumulated retained loss by $0.327 million.

(2) Treatments of standard labour rates that is capital in nature

Under AASB 116 Property, plant and equipment and AASB 138 Intangible assets, it is required that only the costs of employee benefits (as defined in AASB 119 Employee Benefits) directly arising from the construction of the physical asset or the generation of intangible asset can be capitalised and form part of the cost base of asset, other associated labour costs shall be recognised as expenses.

Historically CenITex has capitalised the costs of employee benefits at cost recovery rates including leave and labour utilisation rate and funding recovery of project management functions. From financial year 2015-16 onwards, CenITex only capitalises the costs of employee benefits arising directly from the activities attributing to the works that are capital in nature at the directly attributable rates.

The net impact of correction for standard labour rates on financial statement is:

2013-14 closing balances

  • Decrease in intangible assets by $3.492 million.
  • Decrease in accumulated amortisation by $0.901 million.
  • Decrease in work in progress by $1.485 million.
  • Increase in accumulated retained loss by $4.076 million.

2014-15 closing balances

  • Decrease in intangible assets by $4.859 million.
  • Decrease in accumulated amortisation by $1.837 million.
  • Decrease in work in progress by $1.577 million.
  • Increase in accumulated retained loss by $4.599 million.

The consolidated impact of the change in accounting policy and correction of errors on financial statement is:

2013-14 closing balances

  • Increase in property, plant and equipment by $3.488 million.
  • Decrease in intangible assets by $26.637 million.
  • Decrease in accumulated depreciation by $5.732 million.
  • Decrease in accumulated amortisation by $7.666 million.
  • Decrease in work in progress by $3.083 million.
  • Increase in construction in progress $6.465 million.
  • Increase in accumulated retained earnings by $6.369 million.

2014-15 closing balances

  • Increase in property, plant and equipment by $4.812 million.
  • Decrease in intangible assets by $28.983 million.
  • Decrease in accumulated depreciation by $1.832 million.
  • Decrease in accumulated amortisation by $13.371 million.
  • Decrease in work in progress by $4.032 million.
  • Increase in construction in progress $7.843 million.
  • Increase in accumulated retained loss by $5.157 million.

The below section shows the restatement of each line items affected by the changes in accounting policies and errors.

(c) Restatement of financial statements as a result of changes in accounting policies and correction of errors - 30 June 2015

Line items of financial statements affected

Comprehensive Operating Statement (extract)

 
Notes
2015
 
Adjustment of 2015 results
Restated 2015
   
$’000
 
$’000
$’000
Expenses from transactions          
Employee benefits
3(a)
59,090
 
1,683
60,773
ICT expenditure
3(b)
44,143
 
388
44,531
Depreciation
3(c)
21,721
 
(3,269)
18,452
Total expenses from transactions  
139,875
 
(1,198)
138,677
Net result from transactions (net operating balance)  
10,030
 
1,198
11,228
Other economic flows included in net result          
Net gain/(loss) on disposal of non-financial assets  
(1,054)
 
15
(1,039)
Total other economic flows included in net result  
(1,594)
 
15
(1,579)
Net Result  
8,436
 
1,213
9,649
Comprehensive result  
8,436
 
1,213
9,649

Balance Sheet (extract)

 
Notes
2015
Adjustment of 2014 results
Adjustment of 2015 results
Restated 2015
   
$’000
$’000
$’000
$’000
Non-Financial Assets          
Property, plant and equipment
5
19,522
15,685
(1,198)
34,009
Intangible assets
6
28,124
(22,055)
2,411
8,480
Total non-financial assets  
61,147
(6,370)
1,213
55,990
Total assets  
103,750
(6,370)
1,213
98,593
Net assets  
66,307
(6,370)
1,213
61,150
Equity          
Accumulated loss  
(56,613)
(6,370)
1,213
(61,770)
Total equity  
66,307
(6,370)
1,213
61,150

Cash Flow Statement (extract)

 
Note
2015
 
Adjustment of 2015 results
Restated 2015
   
$'000
 
$'000
$'000
Cash flows from operating activities          
Receipts          
Goods and services tax received from the ATO (net)  
2,615
 
38
2,653
Total Receipts  
156,506
 
38
156,544
Payments          
Payments to suppliers  
(69,072)
 
(427)
(69,499)
Payments to employees  
(55,931)
 
(1,683)
(57,614)
Total payments  
(125,007)
 
(2,110)
(127,117)
Net cash flows from/(used in) operating activities
17(b)
31,499
 
(2,072)
29,427
Cash flows from investing activities          
Payments for non-financial assets  
(6,863)
 
2,073
(4,790)
Net cash flows from/(used in) investing activities  
(6,773)
 
2,073
(4,700)

Note 3. Expenses from transactions (extract)

   
2015
 
Adjustment of 2015 results
Restated 2015
   
$'000
 
$'000
 
(a) Employee benefits          
Salaries, wages, leave entitlements, contractor payments  
53,693
 
1,683
55,376
Total employee benefits  
59,090
 
1,683
60,773
(b) ICT expenditure          
Hardware maintenance  
7,947
 
388
8,335
Total ICT expenditure  
44,143
 
388
44,531
(c) Depreciation          
Depreciation of non-current assets
5
11,922
 
2,436
14,358
Depreciation of non-current intangible assets
6
9,799
 
(5,705)
4,094
Total depreciation  
21,721
 
(3,269)
18,452

Note 6. Property, plant and equipment (extract)

Non-Current assets (extract)
2015
Adjustment of 2014 results
Adjustment of 2015 results
Restated 2015
 
$'000
$'000
$'000
$'000
Plant and equipment - Computer equipment        
At fair value
1,062
(1,095)
332
299
Less accumulated depreciation
(966)
1,036
(314)
(244)
Written down value
96
(59)
18
55
Plant and equipment - Facilities        
At fair value
5,260
(2,248)
486
3,498
Less accumulated depreciation
(4,259)
2,154
(532)
(2,637)
Written down value
1,001
(94)
(46)
861
Plant and equipment - Network        
At fair value
52,060
(1,493)
548
51,115
Less accumulated depreciation
(45,329)
2,807
(1,286)
(43,808)
Written down value
6,731
1,314
(738)
7,307
Plant and equipment - Servers        
At fair value
43,390
3,090
298
46,778
Less accumulated depreciation
(38,755)
197
(767)
(39,325)
Written down value
4,635
3,287
(469)
7,453
Plant and equipment - Storage        
At fair value
39,167
5,264
(350)
44,081
Less accumulated depreciation
(32,496)
(485)
(996)
(33,977)
Written down value
6,671
4,779
(1,346)
10,104
Plant and equipment - Office Machines and Equipment        
At fair value
28
(29)
9
8
Less accumulated depreciation
(26)
22
(4)
(8)
Written down value
2
(7)
5
-
Construction in progress        
At cost
-
6,465
1,378
7,843
Written down value
-
6,465
1,378
7,843
Net carrying amount of property, plant and equipment
19,522
15,685
(1,198)
34,009

Movements in carrying amounts (extract)

 
Computer equipment
Facilities
Network
Servers
Storage
Office machines & equipment
Construction in progress
Total
 
$'000
$'000
$'000
$'000
$'000
$'000
$’000
$'000
2015                
Opening balance
83
1,329
9,600
7,048
8,719
11
-
27,373
Adjustment of 2014 results
(59)
(95)
1,314
3,287
4,779
(7)
6,465
15,684
Restated opening balance
24
1,234
10,914
10,335
13,498
4
6,465
43,057
Additions
86
44
1,758
1,390
1,813
-
-
5,123
Adjustment of 2015 results
(32)
(21)
(579)
(694)
(1,113)
 
4,277
1,838
Restated additions
54
23
1,179
696
700
-
4,277
6,961
Disposals
(1)
(45)
(496)
(472)
-
(2)
-
(1,052)
Adjustment of 2015 results  
8
5
   
2
 
15
Restated disposals
(1)
(37)
(491)
(472)
-
-
-
(1,037)
Adjustments
-
(2)
(2)
24
(20)
-
-
0
Adjustment of 2015 results            
(616)
(616)
Restated adjustments
-
(2)
(2)
24
(20)
-
(616)
(616)
Transfers
-
-
-
-
-
 
-
0
Adjustment of 2015 results
(1)
1
644
912
731
(2)
(2,283)
2
Restated transfers
(1)
1
644
912
731
(2)
(2,283)
2
Depreciation expense
(73)
(325)
(4,129)
(3,355)
(3,841)
(6)
0
(11,922)
Adjustment of 2015 results
52
(33)
(808)
(687)
(964)
4
-
(2,436)
Restated depreciation expense
(21)
(358)
(4,937)
(4,042)
(4,805)
(2)
-
(14,358)
Restated closing balance
55
861
7,307
7,453
10,104
-
7,843
34,009
 
2015
Adjustment of 2015 results
Restated 2015
 
$'000
$'000
$'000
Aggregate depreciation recognised as an expense during the year:      
Plant and equipment - Computer equipment
73
(52)
21
Plant and equipment - Facilities
325
33
358
Plant and equipment - Network
4,129
808
4,937
Plant and equipment - Servers
3,355
687
4,042
Plant and equipment - Storage
3,841
964
4,805
Plant and equipment - Office machines and equipment
6
(4)
2
Total depreciation expense
11,922
2,436
14,358

Note 6. Intangible assets (extract)

Non-Current assets
Work in progress
Capitalised development
 
   
Software configuration and installation
Virtual server environment
Identity and access management (IDAM) services
Network environment
End user computer services
Storage consolidation design
Security services
Total
2015
$'000
$'000
$’000
$'000
$'000
$'000
$'000
$'000
$'000
Gross carrying amount                  
Opening balance
9,411
6,617
6,420
1,682
7,823
6,223
14,981
 
43,746
Adjustment of 2014 results
(3,083)
(193)
(4,936)
(160)
(7,193)
(448)
(13,707)
 
(26,637)
Restated opening balance
6,328
6,424
1,484
1,522
630
5,775
1,274
-
17,109
Additions - work in progress
3,495
-
-
-
-
-
-
-
-
Adjustment of 2015 results
(3,495)
-
-
-
-
-
-
-
-
Restated additions - work in progress
-
-
-
-
-
-
-
-
-
Adjustments - work in progress
(202)
-
-
-
-
-
-
-
-
Adjustment of 2015 results
202
-
-
-
-
-
-
-
-
Restated adjustments - work in progress
-
-
-
-
-
-
-
-
-
Transfers
(8,672)
(1,787)
887
5,896
715
-
-
1,174
6,885
Adjustment of 2015 results
2,344
-
(887)
(521)
(715)
-
-
(223)
(2,346)
Restated transfers
(6,328)
(1,787)
-
5,375
-
-
-
951
4,539
Restated closing balance
-
4,637
1,484
6,897
630
5,775
1,274
951
21,648
Accumulated depreciation and impairment                  
                   
Depreciation expense  
(1,033)
(1,402)
(1,319)
(1,601)
(1,245)
(2,996)
(203)
(9,799)
Adjustment of 2015 results  
39
1,105
137
1,549
90
2,741
44
5,705
Restated depreciation expense  
(994)
(297)
(1,182)
(52)
(1,155)
(255)
(159)
(4,094)
Restated closing balance
-
(3,761)
(460)
(3,155)
(505)
(4,213)
(884)
(190)
(13,168)
                   
Restated net book value at the end of the financial year
-
876
1,024
3,742
125
1,562
390
761
8,480

Note 17. Cash flow information (extract)

 
2015
Adjustment of 2015 results
Restated 2015
 
$'000
$'000
$'000
Net result for the period
8,436
1,213
9,649
Non-cash movements (extract)      
Net (gain)/loss on sale or disposal of non-current assets
1,054
(15)
1,039
Depreciation of non-current assets
21,721
(3,269)
18,452
Net cash flows from/(used in) operating activities
31,499
(2,071)
29,428

(d) Restatement of financial statements as a result of changes in accounting policies and correction of errors - 30 June 2014

Line items of financial statements affected

Balance Sheet (extract)

 
Notes
2014
Adjustment of 2014 results
Restated 2014
   
$’000
$’000
$’000
Non-Financial Assets        
Property, plant and equipment
5
27,373
15,684
43,057
Intangible assets
6
34,720
(22,054)
12,666
Total non-financial assets  
76,151
(6,370)
69,781
Total assets  
97,942
(6,370)
91,572
Net assets  
57,871
(6,370)
51,501
Equity        
Accumulated loss  
(65,049)
(6,370)
(71,419)
Total equity  
57,871
(6,370)
51,501

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 2015 to 30 June 2016 were:

  • The Minister for Finance and the Minister for Multicultural Affairs, the Hon. Robin Scott MP, from 1 July 2015 to 30 June 2016
  • Chairman, Mr Randall Straw, from 1 July 2015 to 30 June 2016
  • Chief Executive, Mr Michael Vanderheide, from 1 July 2015 to 30 June 2016
Position Name Period
Board member Randall Straw 1 July 2015 to 30 June 2016
Board member Johanna Barker 1 July 2015 to 30 June 2016
Board member Richard Tait 1 July 2015 to 30 June 2016
Board member Conrad Harvey 1 July 2015 to 30 June 2016
Board member Kathryn Anderson 8 January 2016 to 30 June 2016
Board member Richard Bolt 8 January 2016 to 30 June 2016
Board member Amanda Cattermole 8 January 2016 to 30 June 2016
Board member Gail Moody 8 January 2016 to 30 June 2016
Board member Julie Fahey 16 April 2016 to 30 June 2016
Income band
Total Remuneration 2016
Total Remuneration 2015
$0–10,000
5
-
$20,001–30,000
3
3
$40,001–50,000
1
1
Total as at 30 June
9
4
Total amount
$135,199
$132,108

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

  • Accountable officer: 1 July 2015 to 30 June 2016, $350,000 to $359,999. (2015: $330,000 to $339,999)

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

Amounts relating to Victorian Government Department Board members are reported in the financial statements of their Departments.

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
2016
No.
Total Remuneration
2016
No.
Base Remuneration
2015
No.
Total Remuneration
2015
No.
         
$20,000 - 29,999
-
-
1
-
$80,000 - 89,999
1
1
-
-
$110,000 – 119,999
-
-
-
1
$120,000 – 129,999
1
1
-
-
$160,000 – 169,999
-
-
1
1
$180,000 – 189,999
1
-
-
-
$190,000 – 199,999
-
1
-
-
$220,000 – 229,999
-
-
1
-
$230,000 – 239,999
1
1
-
1
$260,000 – 269,999
-
-
1
-
$270,000 – 279,999
1
-
-
1
$280,000 – 289,999
-
1
-
-
Total number of executives
5.0
5.0
4.0
4.0
Total annualised employee equivalents (AEE) (1)
3.8
3.8
3.3
3.3
Total amount
$899,123
$917,385
$684,615
$792,876

(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 (2015: NIL).

Note 22. Related party transactions

Randall Straw was appointed as a Director of the CenITex Board on 17 December 2013 and subsequently re-appointed as Chairman effective 9 April 2014, and 22 Dec 2015. He is also a Director of the Victorian Government Purchasing Board (VGPB) managed by Department of Treasury and Finance (DTF), a member of the ICT Committee at Emergency Services Telecommunications Authority (ESTA) managed by the Department of Justice and Regulation (DJR), and a member of the Telecommunications Committee at VicTrack, managed by Department of Economic Development, Jobs, Transport and Resources (DEDJTR). Randall is also engaged on contract work with the DEDJTR. CenITex provides services to DJR, DEDJTR and DTF, and receives some telecommunications services from VicTrack, all on normal commercial terms. The Emergency Services and Telecommunications Authority is not a customer of CenITex.

Joh Barker was appointed as a Director of the CenITex Board effective 9 April 2014 and subsequently reappointed on 9 January 2016. Joh is a current member of the Audit and Risk Committee for Energy Safe Victoria, a member of the Audit and Risk Committee for Indigo Shire, and resigned as a Board member from Goulburn Valley Water on 22 February 2016. Indigo Shire and Goulburn Valley water are not customers of CenITex.

Richard Tait is an independent Director of the CenITex who was appointed as a Director of CenITex Board on 17 December 2013 and subsequently re-appointed effective 9 April 2014, and 22 December 2015. Richard has been a member of the ICT Sub-Committee of the Emergency Services Telecommunications Authority since June 2015. The Emergency Services and Telecommunications Authority is not a customer of CenITex.

Kathryn Anderson was appointed as a Director of the CenITex Board effective 22 December 2015. Kathryn currently holds the position of Deputy Secretary Corporate Services within the Department of Environment, Land, Water and Planning. The Department of Environment, Land, Water and Planning is a customer of CenITex.

Richard Bolt was appointed as a Director of CenITex Board effective 22 December 2015. He is Secretary of the Department of Economic Development, Jobs, Transport and Resources, the Rural Assistance Commissioner and Head of the Western Distributor Administrative Office. These organisations are customers of CenITex.

Amanda Cattermole was appointed as a Director of the CenITex Board effective 22 December 2015. Amanda is currently the Deputy Secretary Regulation, Health Protection and Emergency Management within the Department of Health and Human Services. The Department of Health and Human Services is a customer of CenITex.

Gail Moody was appointed as a Director of the CenITex Board effective 22 December 2015. Gail currently holds the position of Deputy Secretary, Corporate Governance and Infrastructure in the Department of Justice & Regulation. The Department of Justice and Regulation is a customer of CenITex.

Julie Fahey was appointed as a Director of the CenITex Board on 19 April 2016. Julie is also a member of the ICT Committee at Emergency Services Telecommunications Authority (ESTA) managed by the Department of Justice and Regulation (DJR). The Emergency Services and Telecommunications Authority is not a customer of CenITex.

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

Note 23. Remuneration of auditors

 
2016
2015
 
$'000
$'000
Victorian Auditor General’s Office    
Audit of the financial report
143
81
Total
143
81
 
2016
2015
 
$'000
$'000
Victorian Auditor General’s Office    
Audit of the financial report
143
81
Total
143
81

Note 24. Events occurring after the balance date

CenITex is a State Body established on 16 July 2008 by Order in Council (establishing Order) under section 14 of the State Owned Enterprise Act 1992 (Act) and declared a re-organising body on 24 April 2012 by Order in Council under section 7(1) of the Act. CenITex's status as a reorganising body was revoked on 14 July 2016 and reverted to a State body under section 14 of the Act. These changes were effected by Order in Council No. G28 of 14 July 2016. The Minister for Finance will continue to be the relevant Minister from that date.

Statutory Certification

We certify that the Financial Statements for CenITex for the year ended 30 June 2016 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 2016 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.

image of signature of Randall Straw

Randall Straw
Chairman
CenITex
27/10/2016

image of signature of Michael Vanderheide

Michael Vanderheide
Chief Executive
CenITex
27/10/16

image of signature of Catherine Ho

Catherine Ho
Chief Financial Officer
CenITex
27/10/16

Melbourne


Auditor-General’s report

VAGO - Victorian Auditor-General's Office

Independent Auditor's Report

To the Board Members, CenITex

The Financial Report
I have audited the accompanying financial report for the year ended 30 June 2016 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.

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, my staff and I 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 2016 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
28 October 2016

image of signature of Tim Maxfield

for Andrew Greaves
Auditor-General