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Financial Statements

Notes To and Forming Part of the Financial Statements

For the year ended 30 June 1997


(c) Investments

The Authority's funds are invested in NSW Treasury Corporation's "Hour Glass" facility. The book value recorded is the market value. Changes in market value during the year are brought to account as interest income.

(d) Finance Lease Contingent Rentals

Any increase or decrease in lease payments resulting from changes in the factors on which lease payments are based, which occur subsequent to the inception of the lease, are shown as contingent rentals in the Income and Expenditure Statement.

(e) Borrowings

Borrowings are recorded at face value less unamortised discount or plus unamortised premium. Any discounts or premiums are deferred and amortised to the Income and Expenditure Statement over the term of the borrowing on a straight line basis.

(f) Deferred Revenue

Book profits realised from the sale of assets under sale and lease back transactions are recognised in the Balance Sheet as deferred revenue and amortised over the term of the lease.

(g) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of stock on the basis of weighted average costs. A provision for inventory obsolescence is maintained and reviewed on an annual basis.

(h) Receivables

Bad debts are written off when they are determined to be irrecoverable. A provision is raised for any doubtful debts based on a review of all outstanding amounts at balance date.

(i) Insurance

The Authority has been insured for third party personal injury and property damage liability exposures arising out of its operations since 1991. Prior to that time, the Authority was not insured against such liability exposures other than those for which cover was provided by the Motor Accidents Compensation Scheme.

The Authority is a licensed self-insurer for workers compensation claims made under the New South Wales WorkCover Scheme.

Actuarially reviewed provisions are maintained for those claims which have arisen or may arise from these uninsured liability exposures. Recoveries under contracts of reinsurance are recognised as receivables.

(j) Foreign Exchange

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Accounts receivable and payable at balance date which are denominated in foreign currencies are translated at the rates of exchange ruling at balance date. Resulting exchange differences are brought to account in determining the profit or loss for the financial year.

Except for certain specific hedges, all resulting exchange differences arising on settlement or re-statement are brought to account in determining the profit or loss for the financial year, and transaction costs, premiums and discounts on forward currency contracts are deferred and amortised over the life of the contract.

Where a purchase or sale is specifically hedged, exchange gains or losses on the hedging transaction arising up to the date of purchase or sale, and costs, premiums and discounts relative to the hedging transaction, are included with the purchase or sale. Exchange gains and losses arising on the hedge transaction after that date are taken to the Income and Expenditure Statement.

(k) Debt Defeasance

Where assets are given up to extinguish the principal and all future interest of a debt, any differences in the carrying values of assets foregone and the liability extinguished are brought to account in the Income and Expenditure Statement for the period. Costs incurred in establishing the defeasance are expensed in the period in which defeasance occurs.

In all cases of defeasance, it is highly improbable that the Authority will again be required to pay any part of the debt, or meet any guarantees or indemnities associated with the debt.

(l) Employee Entitlements

Provision is made for annual leave and long service leave estimated to be payable to employees on the basis of statutory and contractual requirements. The provision for long service leave includes the Authority's current legal obligations and the expected future payments where no legal entitlement has arisen.

Provision made in respect of annual leave and long service leave liabilities which will be settled within twelve months of the balance date is measured at the nominal amounts. Long service leave liability not expected to be settled within twelve months is assessed at the net present value of the estimated future cash outflows to be made by the Authority. Long service leave liabilities are actuarially assessed.

The employees' retirement benefits liability in respect of three defined benefit superannuation schemes managed by the State Authorities Superannuation Board is fully provided for in the financial statements. The Authority's liability is based on an actuarial assessment (refer Note 12(i)).

(m) Comparatives

Comparative figures are, where appropriate, reclassified so as to provide a meaningful comparison with the current year.

(n) Rounding

All amounts shown in the financial statements are expressed by reference to the nearest thousand dollars unless otherwise specified.

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