abc annual report financial statements

Table of Contents

Independent Audit Report 118

Statement by Directors 120

Statement of Financial Performance 121

Statement of Financial Position 122

Statement of Cash Flows 123

Schedule of Commitments 124

Schedule of Contingencies 125

1. Statement of Significant Accounting Policies 126

2. Expenses and Revenues 136

3. Economic Dependency 136

4. Revenues from Government 137

5. Revenue from Independent Sources 137

6. Operating Expenses - Goods and Services 138

7. Borrowing Costs 139

8. Financial Assets 139

9. Non Financial Assets 140

10. Interest Bearing Liabilities 145

11. Provisions 145

12. Payables 145

13. Equity 146

14. Cash Flow Reconciliation 147

15. External Financing Arrangements 147

16. Financial Instruments (Consolidated) 148

17. Remuneration of Directors 151

18. Related Party Disclosures 151

19. Remuneration of Officers 154

20. Remuneration of Auditors 155

21. Trust Funds 155

22. Controlled Entities 156

23. Reporting by Outcomes 157

24. Subsequent Events 157

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ABC Annual ReportFinancial Statements

ABC finances.qxd 22/11/2001 12:06 Page 2

Independent Audit Report

To the Minister of Communications, Information Technology and the Arts.

ScopeI have audited the financial statements of the Australian Broadcasting

Corporation for the year ended 30 June 2001. The financial statements include

the consolidated financial statements of the economic entity comprising the

Australian Broadcasting Corporation and the entities it controlled at the year’s

end or from time to time during the year. The financial statements comprise:

• Statement by Directors;

• Statement of Financial Performance;

• Statement of Financial Position;

• Statement of Cash Flows;

• Schedule of Commitments;

• Schedule of Contingencies;

• Notes to and forming part of the financial statements.

The members of the Board are responsible for the preparation and

presentation of the financial statements and the information they contain.

I have conducted an independent audit of the financial statements in

order to express an opinion on them to you.

The audit has been conducted in accordance with the Australian National

Audit Office Auditing Standards, which incorporate the Australian Auditing

Standards, to provide reasonable assurance as to whether the financial statements

are free of material misstatement. Audit procedures included examination,

on a test basis, of evidence supporting the amounts and other disclosures in the

financial statements, and the evaluation of accounting policies and significant

accounting estimates. These procedures have been undertaken to form an opinion

as to whether, in all material respects, the financial statements are presented

fairly in accordance with Australian Accounting Standards, and other mandatory

professional reporting requirements and statutory requirements in Australia so

as to present a view of the Australian Broadcasting Corporation and the economic

entity which is consistent with my understanding of the Australian Broadcasting

Corporation and the economic entity’s financial position, and performance as

represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

118


Independent Audit Report (cont)

Audit Opinion

In my opinion,

• the financial statements have been prepared in accordance with the Schedule 1

of the Commonwealth Authorities and Companies (Financial Statements

2000-2001) Orders; and

• the financial statements give a true and fair view, in accordance with applicable

Accounting Standards, other mandatory professional reporting requirements and

Schedule 1 of the Commonwealth Authorities and Companies (Financial Statements

2000-2001) Orders, of the financial position of the Australian Broadcasting

Corporation and the economic entity as at 30 June 2001 and their performance for

the year then ended.

Australian National Audit Office

Edward Hay

Executive Director

Delegate of the Auditor-General

Canberra

14 August 2001

119


Australian Broadcasting Corporation

120

In our opinion, the attached financial statements give a true and fair

view of the matters required by Schedule 1 of the Commonwealth Authorities

and Companies (Financial Statements 2000-2001) Orders made under

the Commonwealth Authorities and Companies Act 1997 for the year ended

30 June 2001.

Signed in accordance with a resolution of the directors.

DONALD McDONALD AO JONATHAN SHIER

Chairman Managing Director

14 August 2001 14 August 2001

Statement by Directors


121

for the year ended 30 June 2001

Consolidated ABC2001 2000 2001 2000

Notes $’000 $’000 $’000 $’000

Revenues from ordinary activitiesRevenues from government 4 668 540 643 995 622 921 599 158Sales of goods and services 5D 1 16 968 1 1 1 964 95 452 92 098 Interest 5A 12 193 10 039 1 1 059 9 084 Proceeds from disposal of assets 5B 787 452 778 412 Net foreign exchange gain 5C 1 276 787 1 276 787 Other 5E 12 338 13 094 5 008 6 605 Total revenues from ordinary activities 812 102 780 331 736 494 708 144

Expenses from ordinary activitiesEmployees 6A 329 241 310 831 284 895 268 825 Suppliers 6B 292 147 273 667 261 131 245 942 Depreciation and amortisation 6C 55 531 48 017 54 904 47 415 Write-down of assets 6D 4 275 1 893 4 275 1 932 Disposal of assets 5B 1 631 1 034 1 604 1 033 Program amortisation 6E 101 652 94 478 101 652 94 478 Other 6F - - 195 450 Total expenses from ordinary activities 784 477 729 920 708 656 660 075

Borrowing costs 7 12 282 13 373 12 282 13 372

Net operating surplus from ordinary activities* 15 343 37 038 15 556 34 697

Net surplus 15 343 37 038 15 556 34 697

Net credit (debit) to asset revaluation reserve (38 483) 5 207 (38 483) 5 207 Total revenues, expenses and valuation adjustmentsrecognised directly in equity (38 483) 5 207 (38 483) 5 207 Total changes in equity other than those resultingfrom transactions with owners as owners beforecapital use charge (23 140) 42 245 (22 927) 39 904

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

NOTE* Net surplus attributable to theCorporation before capital use charge 15 343 37 038 15 556 34 697 Capital use provided for or paid (56 179) (55 568) (56 179) (55 568)

Contribution to accumulated results (40 836) (18 530) (40 623) (20 871)

Statement of Financial Performance


Statement of Financial Position

122

as at 30 June 2001


Notes $’000 $’000 $’000 $’000

ASSETSFinancial assetsCash 8A 29 592 18 425 4 887 4 067 Receivables 8B 63 596 84 907 62 911 83 264 Accrued revenues 8D 4 85 1 4 041 4 851 3 065 Investments 8C - - 1 840 1 840 Total financial assets 98 039 1 07 373 74 489 92 236

Non-financial assetsLand and buildings 9A 338 618 407 055 338 287 406805 Infrastructure, plant and equipment 9B 30 1 079 2228 3 3 298 516 220 327 Inventories 9D 76 584 68 5 2 1 76 559 68 491 Intangibles 9C 14 1 18 16 566 1 4 1 18 16 566 Other 9E 13 657 9 0 1 2 1 3 590 8 352 Total non-financial assets 744 056 72398 7 7 4 1 070 720 541

Total assets 842 095 83 1 360 815 559 812 777

LIABILITIESInterest bearing liabilitiesLoans 10A 190 000 142 966 190 000 142 966 Total interest bearing liabilities 190 000 142 966 190 000 142 966

Provisions Employees 11A 114 256 125 219 104 753 116 050 Total provisions 114 256 125 219 104 753 116 050

PayablesSuppliers 12A 5 7 123 51 981 51 966 47 868 Other 12B 22 620 15088 9 219 8 475 Total payables 79 743 67 069 61 185 56 343

Total liabilities 383 999 335 254 355 938 315 359

EQUITYParent equity interestCapital 13 74 513 33 204 74 5 13 33 204 Reserves 13 228 708 267 191 228 708 267 191 Accumulated surplus 13 154 875 195 711 156 400 197 023 Total parent entity interest 458 096 496 106 459 621 497 418

Total equity 458 096 496 106 459 621 497 418

Current liabilities 149 044 196 797 126 334 180 467 Non-current liabilities 234 955 138 457 229 604 134 892 Current assets 185 188 181 329 161 7 63 166 072 Non-current assets 656 907 650 031 653 796 646 705





Notes $’000 $’000 $’000 $’000Inflows Inflows

(Outflows) (Outflows)OPERATING ACTIVITIESCash receivedAppropriations 4 659 167 632 158 622 921 599 1 58 Sales of goods and services 130 920 141 467 92 064 109 808 Interest and bill discounts 13 331 9848 1 1 056 8 945 GST recovered from taxation authority 22 475 - 22 32 1 - Total cash received 825 893 783 473 748 362 7 17 9 1 1 Cash usedEmployees (334 845) (334054) (289 359) (290 780)Suppliers (416 173) (311 7 74) (393 643) (292 660)Borrowing costs (15896) (8 307) (15 896) (8 305)Total cash used (766 914) (654 135) (698 898) (591 745)

Net cash from operating activities 14 58 979 129 338 49 464 126 166

INVESTING ACTIVITIESCash receivedProceeds from sale of property, plant and equipment 5B 787 452 778 412 Bills of exchange and promissory notes 28 818 - 27 530 - Total cash received 29 605 452 28 308 412 Cash usedPurchase of property, plant and equipment (107 002) (65 564) (106 537) (65 093)Bills of exchange and promissory notes - (42 095) - (40 795)Total cash used (107 002) (107 659) (106 537) (105 888)

Net cash from investing activities (77 397) (107 207) (78 229) (105 476)

FINANCING ACTIVITIESCash receivedProceeds from loans 100 000 487 100 000 487 Equity appropriation 41 309 33 204 4 1 309 33 204 Total cash received 141 309 33 691 14 1 309 33 691 Cash usedRepayments of debt (53 000) - (53 000) - Capital use paid (58 724) (55 568) (58 724) (55 568)Total cash used ( 1 1 1 724) (55 568) ( 1 1 1 724) (55 568)

Net cash from financing activities 29 585 (2 1 877) 29 585 (21 877)

Net increase (decrease) in cash held 1 1 167 254 820 (1 187)Cash at beginning of reporting period 18 425 18 1 7 1 4 067 5 254 Cash at end of reporting period 8A 29 592 18 425 4 887 4 067


Statement of Cash Flows

123


124

as at 30 June 2001


$’000 $’000 $’000 $’000BY TYPE

Capital commitmentsInfrastructure, plant and equipment (1) 2 138 8 388 2 138 8 37 7 Total capital commitments 2 138 8 388 2 138 8 37 7

Other commitmentsOperating leases (2) 31 644 37 071 31 154 36 608 Other (3) 485 009 440 146 478 353 428 730 Total other commitments 516 653 477 217 509 507 465 338

Commitments receivable (231 652) (333 768) (231 557) (333 536)Net commitments 287 139 151 837 280 088 140 179

BY MATURITYAll net commitmentsOne year or less 1 1 9 042 79 007 1 12 661 74 985 From one to five years 156 190 72 586 155 520 64 950 Over five years 1 1 907 244 1 1 907 244 Net commitments 287 139 151 837 280 088 140 179

Operating lease commitmentsOne year or less 14 155 13 066 13 800 12 802 From one to five years 17 447 23 749 17 3 1 2 23 550 Over five years 42 256 42 256Net operating lease commitments 31 644 37 07 1 31 154 36 608

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

NB: Commitments are GST inclusive where relevant.1. Outstanding contractual commitments for capital works primarily associated with the conversion

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

Nature of Lease General description of leasing arrangement

Motor vehicles – business and Fully maintained operating lease; lease periods 24/36 months and/orsenior executive 40 000/60 000km; no contingent rentals exist; there are no renewal

or purchase options available to the Corporation.

PC leasing Corporation entered into supply argreement in 1999; 3 year lease on the specific equipment covering hardware, operating system and maintenance of hardware; lease of equipment is for 3 years; equipment returned at end of lease; Corportion has option to extend lease with one months notice.

Property leases - office and Lease payments subject to increment increase in accordance with CPIor business premises other agreed increment; initial period of lease range from 1 year to 10

years; Corporation has options to extend in accordance with lease.

3. Other commitments as at 30 June 2001 are covered by an agreement and are associated with provision oftransmission services and satellite services, purchase of programs and program rights.

Schedule of Commitments


125

as at 30 June 2001

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

The Corporation has provided guarantees and indemnity to the Reserve Bankof Australia for $1 950 711 (2000 $2 186 626) in support of 10 (2000 11) BankGuarantees required in the day to day operations of the Corporation.

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

Schedule of Contingencies

Schedule of Contingencies


126

The principal accounting policies adopted in preparing the financial

statements of the Australian Broadcasting Corporation (the “Corporation” or “ABC”)

and the consolidated financial statements of the Corporation, its controlled

entities and the entities it controlled from time to time during the period, are

stated to assist in a general understanding of these financial statements.

These policies have been applied consistently by all entities in the economic entity.

1.1 Basis of Accounting

The financial statements are required by clause 1 (b) of Schedule 1 to the

Commonwealth Authorities and Companies Act 1997 and are a general purpose

financial report.

They have been prepared in accordance with:

• Schedule 1 of the Commonwealth Authorities and Companies (Financial

Statements 2000-2001) Orders made by the Finance Minister for the preparation

of Financial Statements in relation to financial years ending on or after 30 June 2001;

• Australian Accounting Standards and Accounting Interpretations issued by

Australian Accounting Standards Boards;

• other authoritative pronouncements of the Boards; and

• Consensus Views of the Urgent Issues Group.

The statements have been prepared having regard to:

• Statements of Accounting Concepts; and

• the Explanatory Notes to Schedule 1 of the Commonwealth Authorities and

Companies (Financial Statements 2000-2001) Orders issued by the Department

of Finance and Administration; and

• Guidance Notes issued by that Department.

The Corporation and Consolidated Statements of Financial Performance and

Financial Position have been prepared on an accrual basis and are in accordance

with historical cost convention, except for certain assets which, as noted, are at

valuation. Except where stated, no allowance is made for the effect of changing

prices on the results or on the financial position.

Assets and liabilities are recognised in the Corporation and Consolidated

Statements of Financial Position when and only when it is probable that future

economic benefits will flow and the amounts of the assets or liabilities can

be reliably measured. Assets and liabilities arising under agreements equally

proportionately unperformed are however not recognised unless required by an

Accounting Standard. Liabilities and assets which are unrecognised are reported

in the Schedule of Commitments and the Schedule of Contingencies.


Notes to and Forming Part of theFinancial Statements

1. Statement of Significant Accounting Policies


127

Revenues and expenses are recognised in the Corporation and Consolidated

Statements of Financial Performance when and only when the flow or consumption

or loss of economic benefits has occurred and can be reliably measured.

1.2 Rounding

Amounts are rounded to the nearest $1,000 except in relation to :

remuneration of directors

remuneration of officers (other than directors)

remuneration of auditors

trust funds

1.3 Principles of Consolidation

The consolidated financial statements are those of the economic entity,

comprising the financial statements of the Australian Broadcasting Corporation,

its controlled entities and the entities it controlled from time to time during

the period.

Controlled entities have annual reporting periods ending 31 December. Accounts

of the controlled entities are prepared for the period 1 July 2000 to

30 June 2001 for consolidation using accounting policies which are consistent

with those of the Corporation.

Control exists where the Australian Broadcasting Corporation has the capacity to

dominate the decision making in relation to the financial and operating policies

of another entity so the controlled entity operates to achieve the objectives of the

Australian Broadcasting Corporation.

The effects of all transactions and balances between the entities are eliminated in

full. Details of controlled entities are contained in note 22.

Financial statements of subsidiaries not considered to be a going concern have

been prepared on a liquidation basis. No adjustments were necessary in relation

to the recoverability and classification of the recorded assets of those subsidiaries.

1.4 Taxation

The Australian Broadcasting Corporation and its primary controlled entities are

not subject to income tax pursuant to Section 71 of the Australian Broadcasting

Corporation Act 1983.

Music Choice Australia Pty Ltd and The News Channel Pty Limited, whilst subject to

income tax, have been inactive for the year ended 30 June 2000 and 30 June 2001.

The Corporation and controlled entities are subject to fringe benefits tax, payroll

tax and goods and services tax.

Notes to and Forming Part of theFinancial Statements (cont)

1. Statement of Significant Accounting Policies (cont)


128

1.5 Foreign Currency Transactions

Revenues and expenditures denominated in foreign currencies are converted

to Australian currency at the exchange rates prevailing at the date of the

transaction, or at the hedged rate.

Exchange gains and losses and hedging costs arising on contracts entered into

as hedges of specific revenue or expense transactions are deferred until the date

of such transactions at which time they are included in the determination of such

revenues or expenses.

Open hedge contracts relating to all other revenue and expenditure transactions

are converted at the applicable exchange rate at balance date with exchange gains

or losses being included in the Statement of Financial Performance.

All foreign currency balances are converted to Australian currency at the

exchange rate prevailing at balance date, except for liabilities brought to account

at contract rates, which are subject to currency swap contracts for which an

Australian dollar currency repayment schedule has been adopted. Monetary assets

and liabilities of overseas branches and amounts payable to or by the Corporation

in foreign currencies are translated into Australian currency at the applicable

exchange rate at balance date. Non-monetary items of overseas branches are

translated at exchange rates current at the transaction date.

1.6 Derivatives

Derivative financial instruments are used by the Corporation to manage financial

risks and are not entered into for trading purposes. The classes of derivative financial

contracts used are interest rate swaps, forward foreign exchange contracts and

foreign exchange.

Derivative financial instruments designated as hedges are accounted for on the

same basis as the underlying exposure.

A. Interest rate swaps and forward rate agreements

Interest rate swaps and forward rate agreements are entered into for the

purpose of managing the Corporation's interest rate position. Gains or losses on

interest rate swaps are included in the measurement of interest payments on the

transactions to which they relate. Premiums or discounts are amortised through

the Statement of Financial Performance each year over the life of the swap.

B. Forward exchange contracts

Forward exchange contracts are used to hedge specific and regular occurring

foreign exchange payments. Contracts are revalued at year end and the gain or loss

is included in the Statement of Financial Performance.

C. Foreign exchange options

Foreign exchange options are used to hedge specific foreign currency

payments. Premiums paid on foreign exchange options are amortised to the

Statement of Financial Performance over the life of the contract.




129


1.7 Borrowings

Borrowings are recorded at the amount of the net proceeds received and

carried at amortised cost until the liabilities are fully settled. Interest on the

instruments is recognised as an expense on an effective yield basis. Borrowings

are Commonwealth Government guaranteed.

All borrowing costs are expensed as incurred except to the extent that they are

directly attributable to qualifying assets, in which case they are capitalised. The

amount capitalised in a reporting period does not exceed the costs incurred

in that period.

1.8 Cash

Cash includes notes and coins held, and any deposits held at call with

a bank or financial institution.

1.9 Receivables

Receivables are carried at nominal amounts due less provision for doubtful debts.

The Corporation makes a specific provision for doubtful debts by conducting

a detailed review of material debtors, making an assessment of the probability of

recovery of those debts and taking into account past bad debts experience.

1.10 Bills of Exchange and Promissory Notes

Premiums or discounts are amortised through the Statement of Financial

Performance each year from the date of purchase so that investments

attain their redemption value by maturity date and income is recognised on

an effective yield basis.

Any profits or losses arising from the disposal prior to maturity are taken to the

Statement of Financial Performance in the period in which they are realised. These

assets are intended to be held to maturity and are carried at cost or cost adjusted

for discounts and premiums.

1.11 Trade Creditors

Creditors are recognised at their nominal amounts, being the amounts at which

the liabilities will be settled. Liabilities are recognised to the extent that the

goods and services have been received (and irrespective of having been invoiced).

Settlement is on normal commercial terms.

1.12 Reporting by Outcomes and Segments

A comparison of Budget and Actual figures by outcomes specified in the

Appropriation Acts relevant to the Corporation is presented in note 23. Any

intra-government costs included in the figure “net cost to Budget outcomes” are

eliminated in calculating the actual budget outcome for the Government overall.

The Corporation principally provides a national television and radio service within

the broadcasting industry. It is therefore considered for segmental reporting to

operate predominantly in one industry and in one geographical area, Australia.



130

1.13 Revenue Recognition

Revenue from the sale of goods and services is recognised upon the delivery of

goods and services to customers.

Interest revenue is recognised on a proportional basis taking into account the

interest rates applicable to the financial assets.

Credit sales are on normal commercial terms.

Revenue from disposal of non-current assets is recognised when control

of the asset has passed to the buyer.

External contributions earned in respect of the production of television

programs are reflected in the Statement of Financial Performance once the

program has been broadcast (refer note 1.19).

Subsidies, grants, sponsorships and donations are recognised on receipt unless

paid to the Corporation for specific purpose where recognition of revenue will be

recognised in accordance with the agreement.

Recognition of appropriations from the government is discussed in note 1.22.

Core operations

All material revenue described in this note are revenues relating to the core oper-

ating activities of the Corporation and controlled entities. Details of revenue

amounts are given in notes 4 and 5.

1.14 Employee Entitlements

Leave

The liability for employee entitlements includes provision for annual leave and

long service leave. No provision has been made for sick leave as all sick leave is

non-vesting and the average sick leave taken in future years by employees of the

Corporation and the economic entity is estimated to be less than the annual

entitlement for sick leave.

The liability for annual leave reflects the value of total annual leave entitlements

of all employees at 30 June 2001 and is recognised at its nominal amount.

The non-current portion of the liability for long service leave is recognised and

measured at the present value of the estimated future cash flows to be made

in respect of all employees at 30 June 2001. In determining the present value

of the liability, attrition rates and pay increases through promotion and inflation

have been taken into account.

On-costs relating to annual and long service leave have been included in the

provision.




131


Separation and redundancies

Provision is made for separation and redundancy payments in cases where

positions have been formally identified as excess to requirements, the existence

of an excess has been publicly communicated, and a reliable estimate of the

amount payable can be determined.

Superannuation

Employees contribute to the Commonwealth Superannuation Scheme and

the Public Sector Superannuation Scheme. Employer contributions amounting to

$28 080 557 (1999/2000: $27 380 292) for the Corporation and $31 595 741

(1999/2000: $31 022 700) for the economic entity in relation to these schemes

have been expensed in these financial statements.

No liability is shown for superannuation in the Statement of Financial Position as

the employer contributions fully extinguish the accruing liability which is assumed

by the Commonwealth.

Employer Superannuation Productivity Benefit contributions totalled

$7 381 108 (1999/2000: $6 736 618) for the Corporation and $8 383 419

(1999/2000: $7 919 128) for the economic entity.

1.15 Repairs and Maintenance

Maintenance, repair expenses and minor renewals which do not constitute

an upgrading or enhancement of equipment are expensed as incurred.

1.16 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of

acquisition includes the fair value of assets transferred in exchange and liabilities

undertaken.

Assets acquired at no cost, or for nominal consideration, are initially

recognised as assets and revenues at their fair value at the date of acquisition.

1.17 Infrastructure, Plant and Equipment

Asset recognition threshold

Purchases of infrastructure, plant and equipment are recognised initially at cost

in the Statement of Financial Position, except for purchases costing less than

$2000, which are expensed in the year of acquisition (other than where they

form part of a group of similar items which are significant in total).

Revaluations

Schedule 1 of the Commonwealth Authorities and Companies (Financial Statements

2000-2001) Orders requires that land, buildings, infrastructure, plant and

equipment be revalued progressively in accordance with the “deprival” method

of valuation in successive three-year cycles, so that no asset has a value greater

than three years old.



132

1.17 Infrastructure, Plant and Equipment (continued)

The requirements of Schedule 1 have been implemented as follows:

• Freehold land, buildings on freehold land and leasehold improvements are

each revalued progressively on a geographical basis. The current cycles

commenced in 2000-01 and each of these asset classes were independently

revalued during the 2000-01 financial year.

• All plant and equipment assets on hand at the commencement of the cycle,

including information technology assets (not under operating leases) and

furniture and fittings were independently revalued during 2000-01 financial year.

• All libraries and archives were independently revalued during the 2000-01

financial year.

• Motor vehicles were revalued at directors’ valuation in the 1999-00 financial

year and are not due for revaluation until 2002-03.

Assets in each class acquired after the commencement of a progressive

revaluation cycle are not captured by the progressive revaluation then in progress.

In accordance with the deprival methodology, land is measured at its current

market buying price. Property other than land, plant and equipment is measured

at its depreciated replacement cost. Where assets are held which would not

be replaced or are surplus to requirements, measurement is at net realisable

value. All valuations are independent or at directors’ valuations.

Recoverable Amount Test

Schedule 1 requires the application of the recoverable amount test to the

Corporation’s non-current assets in accordance with AAS 10 Recoverable Amount

of Non-Current Assets. The carrying amounts of these non-current assets have

been reviewed to determine whether they are in excess of their recoverable

amounts. In assessing recoverable amounts, the relevant cash flows, including

the expected cash inflows from future appropriations by the Parliament, have

been discounted to their present value.

No write-down to recoverable amount has been made in 2000-01.

Depreciation and amortisation

Depreciable property, plant and equipment assets are written off to their

estimated residual values over their estimated useful lives to the Corporation using,

in all cases, the straight line method of depreciation. Leasehold improvements are

amortised on a straight line basis over the lesser of the estimated useful life of the

improvements or the unexpired period of the lease.

Depreciation/amortisation rates (useful lives) and methods are reviewed

at each balance date and necessary adjustments are recognised in the current,

or current and future reporting periods, as appropriate. Residual values are

re-estimated for a change in prices only when assets are revalued.

Notes to and Forming Part of the Financial Statements (cont)



133

1.17 Infrastructure, Plant and Equipment (continued)

Depreciation and amortisation rates applying to each class of depreciable asset are

based on the following useful lives:

2001 2000

Buildings on freehold land 50 years 50 years

Leasehold land, buildings and improvements Lease term Lease term

Plant and equipment 6 - 15 years 6 - 15 years

As part of the revaluation of all plant and equipment, the useful lives of all

assets were reassessed and in the majority of cases shortened, owing to the effect

of technological change and the conversion from analogue to digital. This has

accelerated the depreciation on many assets.

The aggregate amount of depreciation allocated for each class of asset during

the reporting period is disclosed in Note 6C.

Asset Write-down

A nation-wide stock count of all plant and equipment assets was completed during

2000-01 and a total write-down of $4.3 million received directors approval in May

2001. Of this amount, $1.9 million was provided for in the 1999-2000 financial

statements and a further write-down of $2.4 million has been made in 2000-01

as disclosed in note 6D.

1.18 Intangibles

The carrying amount of each non-current intangible asset is reviewed to

determine whether it is in excess of the asset’s recoverable amount. If an excess

exists as at the reporting date, the asset is written down to its recoverable

amount immediately. In assessing recoverable amounts, the relevant cash flows,

including the expected cash inflows from future appropriations by the Parliament,

have been discounted to their present value.

No write-down to recoverable amount has been made in 2000-01.

Intangible assets such as software, do not require independent valuation and

can be recorded at either cost, or at fair value by way of directors’ valuation.

A directors’ valuation of the Bananas in Pyjamas intellectual property rights has

been done on a discounted cash flow basis during the 2000-01 financial year.

Intangible assets are amortised on a straight-line basis over their anticipated

useful lives.

Useful lives are:

2001 2000

Copyright 5 years 5 years

Software 3 –5 years 3 – 5 years

The aggregate amount of amortisation allocated for intangible assets during the

reporting period is disclosed in Note 6C.




134

1.19 Inventories

Inventories held for resale are valued at the lower of cost or net realisable

value. Inventories not held for resale are valued at cost, unless they are no

longer required, in which case they are valued at net realisable value. Television

programs are produced for domestic transmission and include direct salaries

and expenses. Fixed production overheads are expensed in the period in which

they are incurred.

The cost of television program inventory is amortised as follows:

• News, Current Affairs and Live Programs - 100% on first screening.

• Children's, Education and Movies - Straight line over the shorter of the

license period or three years.

• All other programs not covered above - 90% first screening and 10% second

screening or in third year.

• Programs not shown within three years of completion or purchase to be

amortised 100% in year three.

• Alternative Amortisation Schedule - Management may determine an alternative

amortisation schedule for exceptional programs in any of the above categories

for which the stated policy is considered inappropriate.

Subsequent sales of residual rights are recognised in the period in which

they occur.

The costs of programs produced for news, current affairs and radio are expensed

as incurred. Such programs are normally broadcast soon after production, stock on

hand at any time being minimal.

The provision for obsolete retail stock is based on stock on hand over twelve

months old and which may require discounting or disposal. Items in engineering

and general stores which have not been issued for three years are provided for

as obsolete.

1.20 Capital Usage Charge

A capital usage charge of 12% is imposed by the Commonwealth on the net assets

of the Corporation. The charge is adjusted to take account of asset gifts and

revaluation increments during the financial year.

1.21 Leases

A distinction is made between finance leases which effectively transfer from the

lessor to the lessee substantially all the risks and benefits incidental to

ownership of leased non-current assets and operating leases under which the

lessor effectively retains substantially all such risks and benefits.

Operating lease payments are expensed on a basis which is representative

of the pattern of benefits derived from the leased assets. The net present value

of future net outlays in respect of surplus space under non-cancellable lease

agreements is expensed in the period in which the space becomes surplus.

Lease incentives taking the form of “free” leasehold improvements and rent holi-

days are recognised as liabilities. These liabilities are reduced by allocating lease

payments between rental expense and reduction of the liability.




135

1.22 Appropriations

From 1 July 1999, the Commonwealth Budget has been prepared under an accruals

framework. Under this framework, Parliament appropriates monies

to the Corporation as revenue appropriations, as loan appropriations and as

equity injections.

Revenue Appropriations

Revenues from government are revenues of the core operating activities

of the Corporation.

Appropriations for outputs are recognised as revenue to the extent they

have been received into the Corporation’s bank account or are entitled to be

received by the Corporation at year end.

Transactions by the Government as owner.

Appropriations to the Corporation designated as “capital equity injections”

are recognised directly in equity, to the extent that the appropriation has been

received into the Corporation’s bank account or are entitled to be received by

the Corporation at year end.

1.23 Grants

The corporation recognises grant liabilities as follows.

Most grant agreements require the grantee to perform services or provide

facilities, or to meet eligibility criteria. In these cases, liabilities are recognised

only to the extent that the services required have been performed or the

eligibility criteria have been satisfied by the grantee. (Where grants money

are paid in advance of performance or eligibility, a prepayment is recognised).

In cases where grant agreements are made without conditions to be

monitored, liabilities are recognised on signing of the agreement.

1.24 Changes in Accounting Policy

Changes in accounting policy have been identified in this note under their

appropriate headings.

1.25 Comparative Figures

Where applicable, prior year comparative figures have been restated to reflect the

current year's presentation in the financial statements.

1.26 Reclassification of Financial Information

Some line items and subtotals reported in the previous financial year have been

reclassified and repositioned in the financial statements as a result of the first

time application on 1 July 2000 of the revised standards AAS 1 Statement of

Financial Performance, AAS 37 Financial Report Presentation and Disclosures and

AAS 36 Statement of Financial Position.

A revenue and an expense previously disclosed as abnormal have been

reclassified and are shown as individually significant items in Note 2.

These items are no longer identified separately on the face of the Statement of

Financial Performance.




136


Notes $’000 $’000 $’000 $’000Expenses from ordinary activitiesEmployee related 6A 329 241 3108 31 284 895 268 825 Artist fees 6B 14 425 14 142 6 100 6 680 Auditor's remuneration 6B 320 290 200 230Bad and doubtful debts 6B 104 16 1 (64) 98Communications 6B 24 364 15 984 23 601 14 516 Computer costs 6B 5 433 4 580 5 175 4 3 17 Consultants and contract labour 6B 13 475 14 909 1 3 005 1 4 138 Depreciation and amortisation 6C 55 531 48 0 1 7 54 904 47 415 Freight 6B 2 258 2 463 1 649 1 664 Borrowing costs 7 12 282 13 373 12 282 13 372 Legal costs 6B 2 768 1 618 2 741 1 607 Disposal of non-current assets 5B 1 631 1 034 1 604 1 033 Materials and minor items 6B 15 410 12 755 12 205 12 416 Merchandising and promotion 6B 58 799 57 447 52 166 5 1 287 Transmission services 6B 69 453 68 317 69 453 68 317 Operating leases and occupancy 6B 19 379 16 757 17 691 15 989 Program amortisation 6E 101 652 94 478 101 652 94 478 Program rights 6B 6 992 6 441 6 902 6 147 Repairs, maintenance and hire 6B 20 441 18840 17 466 16 075 Satellite and transmission 6B 1 1 901 1 1 399 11 901 11 399 Travel 6B 15 415 17 7 77 13 514 14 947 Video production services 6B 4 454 2 426 3 750 2 426 Incidental 6B 6 756 7 361 3 676 3 689 Write-down of assets 6D 4 275 1 893 4 275 1 932 Payment to controlled entities 6F - - 195 450 Total expenses from ordinary activities 796 759 743 293 720 938 673 447

Revenues from independent sourcesCo-production contributions 5D 2 897 3 1 15 1 902 2 139 Concert sales and subsidies 5D 19 916 18985 - - Net gain on foreign exchange 5C 1 276 787 1 276 787 Proceeds from disposal of non-current assets 5B 787 452 778 412 Interest and bill discounts 5A 1 2 193 10039 11 059 9084 Merchandising 5D 55 780 53 745 55 738 5 3 673 Program sales 5D 6 493 9644 6 407 9 495 Rent and hire of facilities 5D 1 1 015 7 607 10 590 7 948 Royalties 5D 19 393 17 433 19 341 1 7 408 Sponsorships and donations 5E 6 165 5 273 - - Technology sales 5D 1 474 1 435 1 474 1 435 Incidental 5E 6 173 7 821 5 008 6 605 Total revenues from independent sources 143 562 136 336 1 13 573 108 986 Total revenues from Government 4A, B, C 668540 643 995 622 92 1 599 158 Total revenues from ordinary activities 81 2 102 780 331 736 494 708 144 Net operating surplus/deficit from ordinary activities 15 343 37 038 15 556 34 697

The ABC was established in 1932 as the Australian Broadcasting Commission. Since 1983 it has operatedunder the provisions of the Australian Broadcasting Corporation Act.

The Corporation and its controlled entities are dependent upon direct and indirect appropriations of monies by Parliament. In excess of 84% of normal activities are funded in this manner, and without these appropriations the Corporation and its controlled entities would be unable to meettheir obligations. (Refer to note 4 for details of revenues from Government).


2. Expenses and Revenues

3. Economic Dependency


137


$’000 $’000 $’000 $’000

4A Appropriations (a) 553 652 530 778 553 652 530 778

4B Appropriations - Transmission revenue 69 269 68 380 69 269 68 380

4C Funding from Commonwealth/State Governments forOrchestral SubsidiariesDepartment of Communications, Information Technologyand the Arts 36 246 33 000 - - Other 9 373 1 1 83 7 - -

45 619 44 837 - -

Total revenues from Government 668 540 643 995 622 921 599 158

(a) Appropriations from the Government include $61 569 000 (2000 $58 413 000) in respect of capital use chargefunding. This amount was repaid to the Government on the 27 June 2001.


$’000 $’000 $’000 $’000

5A InterestDeposits 1 875 1 619 741 756 Bills receivable 10 318 8 420 10 318 8 328

12 193 10 039 11 059 9 084

5B Proceeds and expenses from sales of assetsNon-financial assets- Infrastructure, plant and equipment

Revenue (proceeds) from sale 787 452 778 412 Expenses from sale 1 631 1 034 1 604 1 033 Gain/(loss) on sale (844) (582) (826) (621 )

5C Net foreign exchange gainNon-speculative 1 276 787 1 276 787

1 276 787 1 276 787

5D Sales of goods and servicesGoods 75 618 73 605 75 618 73 605 Services 41 350 38 359 19 834 18 493

116 968 1 1 1 964 95 452 92 098

Cost of sales of goods 44 571 43 525 44 571 43 525

5E Other revenuesSponsorships and donations 6 165 5 273 - - Subsidies and grants 3 145 - 3 145 863 Writeback of superannuation provision upon settlement - 2 275 - 2 275 Other 3 028 5 546 1 863 3 467

12 338 13 094 5 008 6 605

Total revenue from independent sources 143 562 136 336 113 573 108 986


4. Revenues from Government

5. Revenues from Independent Sources


138


$’000 $’000 $’000 $’000

6A Employee expensesBasic remuneration for services provided 271 577 267 940 233 333 231 064 Leave entitlements 37 417 39 472 31 819 34 942 Separation and redundancy 20 247 3 419 19 743 2 819

329 241 310 831 284 895 268 825

The Corporation and its controlled entities contribute to the Commonwealth Superannuation Scheme(CSS) and the Public Sector Superannuation (PSS) which provide retirement, death and disability benefits to employees. Contributions to the schemes are at a rate calculated to cover existing and emerging obligations. Current contribution rates are 18.6% (2000 18.6%) of salary (CSS) and 11.5% (2000 11.5%) of salary (PSS).

An additional 3% is contributed for employer productivity benefits.

6B Suppliers expensesSupply of goods and services 284 615 266 675 253 599 238 957 Operating lease rentals 7 532 6 992 7 532 6 985

292 147 273 667 261 131 245 942

6C Depreciation and amortisationDepreciation of property, plant and equipment 51 326 43 706 50 699 43 104 Amortisation of intangible assets 4 205 4 311 4 205 4 311

55 531 48 017 54 904 47 415

The aggregate amounts of depreciation or amortisation expensed during the reporting period for each class ofdepreciable asset are as follows:

Buildings 10 037 12 942 9 996 12 942 Leasehold improvements 1 314 783 1 314 754 Infrastructure, plant and equipment 39 976 29 981 39 390 29 408 Software 1 992 1 991 1 992 1 991 Copyright 2 212 2 320 2 212 2 320

55 531 48 017 54 904 47 415

6D Write-down of assetsFinancial assets

Investments - - - 47 Non-financial assets

Infrastructure, plant and equipment 4 275 1 893 4 275 1 885 4 275 1 893 4 275 1 932

6E Program Amortisation 101 652 94 478 101 652 94 478 101 652 94 478 101 652 94 478

6F OtherPayment to controlled entities - - 195 450

- - 195 450


6. Operating Expenses – Goods and Services


139


$’000 $’000 $’000 $’000

Loans 12 282 13 371 12 282 13 371 Other - 2 - 1 Total borrowing costs 12 282 13 373 12 282 13 372

8A CashCash at bank and on hand 29 592 18 425 4 887 4 067

29 592 18 425 4 887 4 067

Balance of cash as at 30 June shown in the Statement of Cash Flows 29 592 18 425 4 887 4 067

8B ReceivablesGoods and services 13 862 10 048 14 544 10 258 Less:Provision for doubtful debts (403) (403) (287) (403)

13 459 9 645 14 257 9 855

Bills of exchange 43 975 72 793 43 962 7 1 492 GST receivable 3 461 - 3 059 - Other debtors 2 701 2469 1 633 1 9 1 7

50 1 37 75 262 48 654 73 409 Total receivables 63 596 84 907 62 91 1 83 2 64

Receivables (gross) which are overdue are aged as follows:

Not Overdue 57 104 78 379 57600 79 551 Overdue by:- less than 30 days 2 235 3 657 946 1 518 - 30 to 60 days 1 187 947 1 078 609 - 60 to 90 days 1 038 467 924 408 - more than 90 days 2 750 1 860 2 650 1 5 8 1 Total receivables (gross) 64 314 85 310 63 198 83 667

8C InvestmentsShares in subsidiaries at cost 22 - - 1 840 1 840

- - 1 840 1 840

8D Accrued revenues 4 851 4 041 4 851 3 065

4 851 4 041 4 851 3 065


7. Borrowing Costs

8. Financial Assets


140


$’000 $’000 $’000 $’0009A Land and buildingsFreehold land - Independent valuation 1998 - 80 705 - 80 705 Freehold land - Independent valuation 2001(a) 119 194 - 119 194 - Freehold land - at cost - 5 420 - 5 420

119 194 86 125 119 194 86 125

Building on freehold land - Independent valuation 2000 - 6 186 - 6 186 Accumulated depreciation - (1 973) - (1 973)

- 4 213 - 4 213

Building on freehold land - Independent valuation 1998 - 316 738 - 316 738 Accumulated depreciation - (19 057) - (19 057)

- 297 681 - 297 681

Building on freehold land - Independent valuation 2001 (a) 407 475 - 407 475 - Accumulated depreciation (199 521) - (199 521) -

207 954 - 207 954 -

Buildings on freehold land - at cost 937 10 916 937 10 916 Accumulated depreciation (34) (168) (34) (168)

903 10 748 903 10 748

Leasehold land - Directors' valuation 2000 - 180 - 180 Accumulated depreciation - (14) - (14)

- 166 - 166

Leasehold land - Independent valuation 1998 - 1 000 - 1 000 Accumulated depreciation - (40) - (40)

- 960 - 960

Leasehold land - Independent valuation 2001 (a) 1 839 - 1 839 - Accumulated depreciation - - - -

1 839 - 1 839 -

Leasehold buildings - Directors' valuation 2000 - 1 051 - 1 051 Accumulated depreciation - (113) - (113)

- 938 - 938

Leasehold building - Independent valuation 1998 - 1 853 - 1 853 Accumulated depreciation - (74) - (74)

- 1 779 - 1 779

Leasehold building - Independent valuation 2001 (a) 7 37 1 - 7 37 1 - Accumulated depreciation (4 848) - (4 848) -

2 523 - 2 523 -

Leasehold improvements - at cost 8 468 4 822 7 988 4 464 Accumulated depreciation (4 137) (2 538) (3 988) (2 430)

4 331 2 284 4 000 2 034

Leasehold improvements - Independent valuation 2000 4 458 4 458 4 458 4 458 Accumulated depreciation (2 584) (2 297) (2 584) (2 297)

1 874 2 161 1 874 2 161

Total land and buildings 338 618 407 055 338 287 406 805

(a) The revaluations were in accordance with the revaluation policy stated in note 1.17 and were completed by independentvaluers Edward Rushton Australia Pty Ltd and McGee Bowen Pty Ltd. Revaluation decrements of $62 676 000 for land, building and leasehold improvements were made to the asset revaluation reserve.


9. Non Financial Assets


141


$’000 $’000 $’000 $’000

9B Infrastructure, plant and equipment

Director's valuation 2000 (a) - 1 648 - 1 648 Accumulated depreciation - (1 400) - (1 400)

- 248 - 248

Independent valuation 1997 - 20 000 - 20 000 Accumulated depreciation - (4 078) - (4 078)

- 15 922 - 15 922

Independent valuation 2001 (a) 469 357 - 469 357 - Accumulated depreciation (339 501) - (339 501) -

129 856 - 129 856 -

Independent valuation 1998 - 380 899 - 380 899 Accumulated depreciation - (262 753) - (262 753)

- 118 146 - 118 146

At cost 61 413 46 040 57 073 41 958 Accumulated depreciation (4 268) (15 354) (2 491) (13 778)

57 145 30 686 54 582 28 180

Plant and equipment (excluding capital works in progress) 187 001 165 002 184 438 162 496 Capital works in progress at cost (b) 114 078 57 831 1 14 078 57 831 Total plant and equipment (including capital works in progress) 301 079 222 833 298 516 220 327

(a) The revaluations were in accordance with the revaluation policy stated in note 1.17 and were completed by anindependent valuer Edward Rushton Australia Pty Ltd. Revaluation increments of $22 483 000 for infrastructure,plant and equipment were made to the asset revaluation reserve.(b) This amount includes borrowing costs which have been capitalised of $204 387 (2000 $150 189).

9C Intangible assetsComputer software - Directors' valuation 1998 2 466 2 466 2 466 2 466 Accumulated amortisation (1 405) (968) (1 405) (968)

1 061 1 498 1 061 1 498

Computer software at cost 7 777 7 804 7 777 7 804 Accumulated amortisation (3 570) (2 016) (3 570) (2 016)

4 207 5 788 4 207 5 788

Copyright - Independent valuation 1998 - 14 500 - 14 500 Accumulated amortisation - (5 220) - (5 220)

- 9 280 - 9 280

Copyright - Directors' valuation 2001 (a) 1 1 062 - 1 1 062 - Accumulated amortisation (2 212) - (2 212) -

8 850 - 8 850 - Total intangible assets 14 1 18 16 566 14 1 18 16 566

Total land, buildings, infrastructure, plant and equipment 539 737 588 623 536 843 585 867and intangibles (excluding capital works in progress)


9. Non Financial Assets (cont)


142


$’000 $’000 $’000 $’000

9D Inventories

RetailInventory held for sale 8 466 7 074 8 441 7 044 Provision for stock obsolescence (433) (233) (433) (233)

8 033 6 841 8 008 6 811

Broadcasting consumablesInventory not held for sale (cost) 1 000 1 019 1 000 1 019

TV programsPurchased 23 885 17 915 23 885 17 9 15 Produced 30 747 30 306 30 747 30 306 In progress 12 919 12 440 12 919 12 440

67 551 60 661 67 551 60 66 1

Total inventories 76 584 68 521 76 559 68 491

9E Other non-financial assetsPrepaid property rentals - - - - Other prepayments 13 657 7 980 13 590 7 320 Deferred interest rate hedging expenditure - 1 0 32 - 1 032

13 657 9 0 12 13 590 8 352

(a) The revaluations were in accordance with the revaluation policy stated in note 1.17 and were adopted

by the directors. Revaluation increments of $1 782 000 for copyright were made to the revaluation reserve.




143

Table A1Movement summary 2000-01 for all assets irrespective of valuation basis (Consolidated)

Item Land Buildings Total Other Computer Other Total Totalland and infrastructure, software intangibles intangiblesbuildings plant and

equipment$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Gross value as at 1 July 2000 87 306 346 023 433 329 448 587 10 270 14 500 24 770 906 686

AdditionsAcquisition of replacement assests - - - - - - - -Acquisition of new assets - 8 319 8 319 44 672 - - - 52 991

Revaluations 34 091 74 603 108 694 101 684 - (3 438) (3 438) 206 940Assets transferred in/(out) - - - - - - - -Reclassifications - - - 27 (27) - (27) -Write-offs - - - (45 817) - - - (45 817)Change in accounting policy - - - - - - - -Disposals (364) (236) (600) (18 383) - - - (18 983)Gross value as at 30 June 2001 121 033 428 709 549 742 530 770 10 243 11 062 21 305 1 101 817

Accumulated depreciation / amortisation as at 1 July 2000 54 26 221 26 275 283 585 2 984 5 220 8 204 318 064

Disposals - 12 12 (17 364) - - - (17 352)Depreciation/amortisation - - - - - - - -charge for assets held 24 1 1 327 1 1 35 1 39 976 1 992 2 212 4 204 55 531Adjustment for revaluations (78) 173 564 173 486 79 1 13 - (5 220) (5 220) 247 379Assets transferred in/(out) - - - - - - - -Reclassifications - - - 1 (1) - (1) -Write-offs - - - (41 542) - - - (41 542)Adjustment for other movements - - - - - - - -Accumulated depreciation/amortisation at 30 June 2001 - 21 1 1 24 2 1 1 124 34 3 769 4 9 7 5 2 2 1 2 7 1 8 7 562 080Net book value at 30 June 2001 121 033 2 1 7 585 338 618 1 8 7 00 1 5 268 8 850 1 4 1 18 539 7 3 7Net book value at 1 July 2000 87 252 319 802 407 054 1 65 002 7 286 9 280 16 566 588 62 2

Net revaluation increments/decrements in the table above comprise:• For land – net revaluation increment of $34 169 000• For building on freehold land – a net decrement of $98 961 000• For other infrastructure, plant and equipment – net increment of $22 571 000• For other intangibles – net increment of $1 782 000

Table BSummary of balance of assets at valuation as at 30 June 2001 (Consolidated)


equipment$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

As at 30 June 2001Gross value 121 033 419 304 540 337 469 357 2 466 11 063 13 529 1 023 223Accumulated depreciation/ amortisation - (206 666) (206 666) (339 499) (1 405) (2 213) (3 618) (549 783)Net book value 121 033 212 638 333 67 1 129 858 1 061 8 850 9 911 473 440As at 30 June 2000Gross value 81 885 330 286 412 171 402 547 2 466 14 500 16 966 831 684Accumulated depreciation/ amortisation (54) (23 514) (23 568) (268 231) (968) (5 220) (6 188) (297 987)Net book value 81 831 306 772 388 603 134 316 1 498 9 280 10 778 533 697




144

Table A2Movement summary 2000-01 for all assets irrespective of valuation basis. (ABC)


equipment$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Gross value as at 1 July 2000 87 306 345 665 432 971 444 674 10 270 14500 24 770 902 415

AdditionsAcquisition of replacement assests - - - - - - - -Acquisition of new assets - 8 197 8 197 43 950 - - - 52 147

Revaluations 34091 74603 108 694 101 684 - (3 438) (3 438) 206 940Assets transferred in/(out) - - - - - - - -Reclassifications - - - 27 (27) - (27) -Write-offs - - - (45 817) - - - (45 817)Change in accounting policy - - - - - - - -Disposals (364) (236) (600) (18 088) - - - (18 688)Gross value as at 30 June 2001 121 033 428 229 549 262 526 430 10 243 11 062 21 305 1096 997

Accumulated depreciation / amortisation as at 1 July 2000 54 26 113 26 167 282 126 2 984 5 220 8 204 316 497

Disposals - 12 12 (17 096) - - - (17 084)Depreciation/amortisation - - - - - - - -Charge for assets held 24 11 286 11 310 39 390 1 992 2 212 4 204 54 904Adjustment for revaluations (78) 173 564 173 486 79 1 13 - (5 220) (5 220) 247 379Assets transferred in/(out) - - - - - - - -Reclassifications - - - 1 (1) - (1) -Write-offs - - - (41 542) - - - (41 542)Change in accounting policy - - - - - - - -Adjustment for other movements - - - - - - - -Accumulated depreciation/amortisation at 30 June 2001 - 210 975 210 975 341 992 4 975 2 212 7 187 560 154Net book value at 30 June 2001 121 033 217 254 338 287 184 438 5 268 8 850 14 118 536 843Net book value at 1 July 2000 87 252 319 552 406 804 162 548 7 286 9280 16 566 585 918

Net revaluation increments/decrements in the table above comprise:• For land – net revaluation increment of $34 169 000• For building on freehold land – a net decrement of $98 961 000• For other infrastructure, plant and equipment – net increment of $22 571 000• For other intangibles – net increment of $1 782 000




145


$’000 $’000 $’000 $’00010A LoansLoans (a) 140 000 40 000 140 000 40 000 Bonds - maturity value $53 000 000 - 52 966 - 52 966 Inscribed stock 50 000 50 000 50 000 50 000

190 000 142 966 190 000 142 966

(a) Of this amount, $40 million are repayable in Japanese Yen. Currency swap contracts have been undertaken to effectively remove the currency risk associated with these loans.

Maturity schedule for loans:Payable within one year - 52 966 - 52 966 Payable within one to two years 50 000 - 50 000 - Payable within two to five years 89 000 90 000 89 000 90 000 Payable more than five years 51 000 - 51 000 - Total Loans 190 000 142 966 190 000 142 966


$’000 $’000 $’000 $’00011A EmployeesSalaries and wages 15 284 20 674 14 440 19 556 Annual leave 42 797 43 17 7 4 1 057 4 1 545 Long service leave 54 445 59 219 4 7 667 52 93 3 Superannuation 1 515 42 1 395 - Workers' compensation 21 3 - - Separation and redundancy 194 2 104 194 2 016 Aggregate employee entitlement liability 1 14 256 1 2 5 219 104 753 1 16 050


$’000 $’000 $’000 $’00012A SuppliersTrade creditors 52 852 48 625 49 579 44 655 Other creditors 4 271 3 356 2 387 3 213

57 123 51 981 51 966 47 868

12B OtherInterest payable 498 2 091 498 2 091 Unearned revenue 22 122 12 997 8 721 6 384

22 620 15 088 9 219 8 475

Total Payables 79 743 67 069 61 185 56 343


10. Interest Bearing Liabilities

11. Provisions

12. Payables


146

Consolidated

Item Capital Accumulated Asset Totalresults revaluation equity

reserve2001 2000 2001 2000 2001 2000 2001 2000

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance as at 1 July 33 204 - 195 711 214 24 1 267 191 261 984 496 106 476 225

Operating results - - 15 343 37 038 - - 15 343 37 038

Net revaluation increase/(decreases) - - - - (38 483) 5 207 (38 483) 5 207

Equity appropriation: capital 41 309 33 204 - - - - 41 309 33 204

Capital Use Charge - - (56 179) (55 568) - - (56 179) (55 568)

Closing balance as at 30 June 74 513 33 204 154 875 195 71 1 228 708 267 191 458 096 496 106

ABC

Item Capital Accumulated Asset Totalresults revaluation equity

reserve2001 2000 2001 2000 2001 2000 2001 2000

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Opening balance as at 1 July 33 204 - 197 023 217 894 267 191 261 984 497 418 479 878

Operating results - - 15 556 34 697 - - 15 556 34 697

Net revaluation increase/(decreases) - - - - (38 483) 5 207 (38 483) 5 207

Equity appropriation: capital 41 309 33 204 - - - - 41 309 33 204

Capital Use Charge - - (56 179) (55 568) - - (56 179) (55 568)

Closing balance as at 30 June 74 513 33 204 156 400 197 023 228 708 267 191 459 621 497 418

(a) $17.1 million ($29.1 million 1999/2000) of the ABC’s on-going base funding is included in the equity injection of capital ($41.3 million 2000/01, $33.2 million 1999/2000) on the advice of the Department of Finance and Administration. This amount isapplied to meet debt financing arrangements relating predominantly to the purpose built facilities in the Ultimo and Southbankcomplexes. From 2001/02 onwards, this funding will be appropriated to the ABC as revenue. The remaining amount of $4.2 million is an equity injection provided to assist in the conversion to digital television, announced in the 1998/99 Budget.


13. Equity


147


$’000 $’000 $’000 $’000

Net operating surplus from ordinary activities 15 343 37 038 15 556 34 697

Capital use provided (56 179) (55 568) (56 179) (55 568)Depreciation of fixed assets 51 326 43 706 50 699 43 104 Amortisation of intangibles 4 205 4 311 4 205 4 31 1 Amortisation of program purchases 101 652 94 478 101 652 94 478 Transfer to/from provisions - employee entitlements (10 963) 17 525 (11 297) 17 036

-doubtful debts (69) 98 (69) 98 Transfer to provision - asset write-down - 1 893 - 1 932 Write down of assets 4 275 - 4 275 - (Profit)/loss on disposal of property, infrastructure, 844 582 826 621 plant and equipment

Changes in assets and liabilitiesIncrease/(decrease) in receivables (7 438) 5 559 (7 108) 6 205 Increase/(decrease) in other current assets (5 455) 9 957 (7 024) 10 362 Increase/(decrease) in inventories (109 715) (105 431) (109 720) (105 401)(Increase)/decrease in creditors 63 621 70 348 62 904 76 101 (Increase)/decrease in provisions/ liabilities 7 532 4 842 744 (1 810)

Net cash flows provided by operating activities 58 979 129 338 49 464 126 166


$’000 $’000 $’000 $’000

Total facility (a) 1 000 1 500 1 000 1 000 Amount of facility used - - - - Facility available 1 000 1 500 1 000 1 000

(a) ABC facility is held with Reserve Bank of Australia, subsidiary facility held with Commonwealth Bank of Australia.


14. Cash Flow Reconciliation

15. External Financing Arrangements


148

Floating 1 Year 1 to 2 2 to 5 More Non Total WeightedInterest or less Years Years than 5 Interest Average

A. Interest Rate Risk Rate Years Bearing InterestNote $’000 $’000 $’000 $’000 $’000 $’000 $’000 Rate

2001Financial Assets (Recognised)Cash at bank and on hand 8A 29 592 - - - - - 29 592 3.90%ReceivablesGoods and Services 8B - - - - - 13 459 13 459 N/AAccrued Revenues 8D - - - - - 4 851 4 851 N/AOther Debtors 8B - - - - - 6 162 6 162 N/ABills of Exchange 8B 43 975 - - - - - 43 975 5.12%Total Financial Assets 73 567 - - - - 24 472 98 039

Total Assets 842 095

Financial Liabilities (Recognised)DebtLoans - Long Term Borrowings 10A - 50 000 89 000 51 000 - 190 000 6.46%Provisions and PayablesSuppliers 12A/B - - - - - 79 743 79 743 N/ATotal Financial Liabilities - - 50 000 89 000 51 000 79 743 269 743

Total Liabilities 383 999

Financial Liabilities (Unrecognised)Interest Rate Swap (10 000) - 50 000 (40 000) - - - N/A#

2000Financial Assets (Recognised)Cash at bank and on hand 8A 18 425 - - - - - 18 425 4.90%ReceivablesGoods and Services 8B - - - - - 9 645 9 645 N/AAccrued Revenues 8D - - - - - 4 041 4 041 N/AOther Debtors 8B - - - - - 2 469 2 469 N/ABills of Exchange 8B 72 793 - - - - - 72 793 6.21%Total Financial Assets 91 218 - - - - 16 155 107 373

Total Assets 831 360

Financial Liabilities (Recognised)DebtLoans - Long Term Borrowings 10A - 52 966 - 90 000 - - 142 966 8.57%Provisions and PayablesSuppliers 12A/B - - - - - 67 069 67 069 N/ATotal Financial Liabilities - 52 966 - 90 000 - 67 069 210 035

Total Liabilities 335 254

Financial Liabilities (Unrecognised)Interest Rate Swap(Notional principal amounts only) 15 000 25 000 - (40 000) - - - N/A

#The interest rates under these swaps range from the bank bill swap reference rate (BBSW) less 10 basis points and 4.84% on payables and BBSW and 4.40% on receivables. BBSW rates are reset at 90 days.


16. Financial Instruments (Consolidated)


149

B. Net Fair Values of Financial Assets and Liabilities

The following methods and assumptions were used to estimate the net fair values.

Cash, receivables, payables and short term borrowings

The carrying amount approximates the net fair value because of the short term maturity.

Investments

The carrying amount for non traded instruments has been assessed by the directors

based on the underlying net assets, expected cash flows and any particular special

circumstances of the investee as approximating net fair values.

Long term borrowings

The net fair values of long term borrowings are estimated using discounted cash flow

analysis, based on current borrowing rates for similar types of borrowing arrangements.

Interest rate swaps and cross currency swap agreements

The net fair values of unrecognised financial instruments reflect the estimated

amounts the economic entity expects to pay or receive to terminate the contracts (net

of transaction costs) or to replace the contracts at their current market rates as at the

reporting date. This is based on independent market quotations and using standard

valuation techniques.

Forward exchange contracts

The net fair values of forward exchange contracts is taken to be the unrealised gain

or loss at balance date calculated by reference to current forward exchange rates for

contracts with similar maturity profiles.

Carrying Amount Net Fair Value2001 2000 2001 2000

$’000 $’000 $’000 $’000Financial AssetsSwap agreements - - 14 104 14 531Foreign exchange contracts 628 76 852 66

Financial LiabilitiesLong term borrowings (loans) 190 000 142 966 204 262 160 044


16. Financial Instruments (Consolidated) (cont)


150

C. Credit Risk Exposures

Credit risk represents the loss that would be recognised if counterparties to

financial instruments fail to perform as contracted.

Financial Assets

The economic entity's maximum exposures to credit risk at reporting date in

relation to each class of recognised financial assets is the carrying amount, net of

provision for doubtful debts, of those assets as indicated in the Statement of

Financial Position.

Items not recognised in the Statement of Financial Position

The credit risk arising from dealings in financial instruments is controlled by

a strict policy of credit approvals, limits and monitoring procedures. The economic

entity has no material concentration of credit risk with any single counterparty

and, as a matter of policy, only transacts with financial institutions that have a

high credit rating. Credit exposure of foreign currency and interest rate derivatives

is represented by the net fair value of the contracts, as disclosed.

D. Hedging Instruments

Specific Hedges

The net unrecognised gain of $224 061 (2000 unrecognised loss $10 348) on specific

hedges of anticipated foreign currency purchases will be recognised at

the date of the underlying transactions.

General Hedges

At balance date, the Corporation held forward exchange contracts to buy United

States Dollars (USD), Great British Pounds (GBP) and the Euro (EUR).

The following table sets out the gross value to be received under foreign

currency contracts, the weighted average contracted exchange rates and the

settlement periods of outstanding contracts for the economic entity.

Sell Australian Dollars Average Exchange Rate2001 2000 2001 2000

$’000 $’000Buy USD

Less than 1 year 3 380 3 390 0.5642 0.6272Greater than 1 year - 303 - 0.6600Buy GBP

Less than 1 year 1 082 3 747 0.3803 0.3864Buy EUR

Less than 1 year 1 766 1 071 0.5863 0.6387


16. Financial Instruments (Consolidated) (cont)


151

ABC2001 2000

$ $Remuneration received or due and receivable by directors of the Corporation.

869 351 789 631

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

$Nil - $9 999 1 2 $10 000 - $19 999 2 2$20 000 - $29 999 4 5$30 000 - $39 999 1 1$80 000 - $89 999 - 1$90 000 - $99 999 1 1$430 000 - $439 999 - 1 $600 000 - $610 999 1 -

Remuneration received or due and receivable by directors of the Corporation and Controlled Entities as detailed in note 22 is

$2 233 754 (2000 $2 150 392). Directors’ remuneration for 2001 includes the reimbursement of relocation expenses.

Directors of the Corporation

The Directors of the Corporation during the year were:

• Donald McDonald (Chairman)

• Jonathan Shier (Managing Director)

• Russell Bate (Retired 19 December 2000)

• Leith Boully (Appointed Director 11 October 2000)

• John Gallagher QC

• Ian Henschke

• Michael Kroger

• Ross McLean

• Maurice Newman (Appointed Director 20 December 2000)

• Judith Sloan

The aggregate remuneration of Directors is disclosed in note 17.


17. Remuneration of Directors

18. Related Party Disclosures


152

Controlled entities

Transactions between related parties are on normal commercial terms and

conditions no more favourable than those available to other parties unless otherwise

stated.

Symphony Australia Holdings Pty Limited

The company is a wholly owned subsidiary of the Corporation. Symphony Australia

Holdings Pty Limited issued 6 shares at a value of $30 to the Corporation in 1997 with a

further 464 804 shares issued to the Corporation during the 1999/2000 financial year.

During the period the Corporation provided goods and services to Symphony Australia

Holdings Pty Limited on normal terms and conditions totalling $455 659 (2000 $445 142).

At year end the Corporation was owed $281 088 (2000 $181 374) in relation to the supply

of these goods and services.

At year end the Corporation owed Symphony Australia Holdings Pty Limited an amount of

$18 858 (2000 $192 868) in relation to long service leave for staff at incorporation.

Adelaide Symphony Orchestra Pty Limited

During the year the Corporation provided goods and services to Adelaide Symphony

Orchestra Pty Limited on normal terms and conditions totalling $180 114 (2000 $209 838).


of these goods and services. At year end the Corporation owed Adelaide Symphony

Orchestra Holdings Pty Limited an amount of $25 837 (2000 $46 969) in relation to long

service leave for staff at incorporation.

Melbourne Symphony Orchestra Pty Limited

During the period the Corporation provided goods and services to Melbourne Symphony


At year end the Corporation is owed $51 181 (2000 $28 574) for these goods and services.

At year end the Corporation owed Melbourne Symphony Orchestra Pty Limited an amount

of $45 377 (2000 $69 280) in relation to long service leave for staff at incorporation.

Orchestral Network Australia Pty Limited

The company is a wholly owned subsidiary of the Corporation. Orchestral Network Australia

Pty Limited issued 2 shares to the Corporation during the 1999 /2000 financial year.

Queensland Orchestras Pty Limited

The company became a wholly owned subsidiary of the Corporation during the financial

year. Queensland Orchestras Pty Limited issued 2 shares with a value of $2 to the

Corporation.

During the year the Corporation provided goods and services to Queensland Orchestras

Pty Limited on normal terms and conditions totalling $50 256.

At year end the Corporation was owed $52 176 in relation to the supply of these goods

and services. At year end the Corporation owed Queensland Orchestras Pty Limited $63 821

for long service leave for staff at incorporation.


18. Related Party Disclosures (cont)


153

Sydney Symphony Orchestra Holdings Pty Limited

During the period the Corporation provided goods and services on normal terms and

conditions totalling $87 746 (2000 $89 134). At year end Sydney Symphony Orchestra

Holdings Pty Limited owed the Corporation $266 604 (2000 $145 399). At year end the

Corporation owed Sydney Symphony Orchestra Holdings Pty Limited $186 869 (2000 $186

869) for long service leave for staff at incorporation.

Tasmanian Symphony Orchestra Pty Limited

The company became a wholly owned subsidiary of the Corporation on the 1 October

1999. Tasmanian Symphony Orchestra Pty Limited issued 222 372 shares with a value of

$175 214 to the Corporation.

During the year the Corporation provided goods and services to Tasmanian Symphony



of these goods and services. At year end the Corporation owed Tasmanian Symphony

Orchestra Pty Limited $30 199 (2000 $119 979) for long service leave for staff at incorporation.

West Australian Symphony Orchestra Holdings Pty Limited

During the period the Corporation provided goods and services to West Australian

Symphony Orchestra Holdings Pty Limited on normal terms and conditions totalling

$159 452 (2000 $156 336). At year end the Corporation was owed $131 880 (2000 $104 464)

in relation to the supply of these goods and services. At year end the Corporation owed

West Australian Symphony Orchestra Holdings Pty Limited an amount of $105 148

(2000 $106 182) in relation to long service leave for staff at incorporation.

Music Choice Australia Pty Limited and The News Channel Pty Limited

The companies are wholly owned subsidiaries of the Corporation that did not trade

during the 2000/2001 financial year.

AIM West Pty/Equipco Australia Pty Limited/AIM Holdings Australia Pty Limited

During the 1998/99 financial year, AIM West Pty, Equipco Australia Pty Limited, AIM

Holdings Australia Pty Limited were placed in voluntary liquidation. These companies are

in the process of being deregistered.

Arnbridge Pty Limited

During the financial year ended 30 June 1999, Arnbridge Pty Limited was placed into

voluntary liquidation. This company is in the process of being deregistered.

Australian Information Media Pty Limited

During the 1998/99 financial year, Australian Information Media Pty Limited was placed

into voluntary liquidation. This company is in the process of being deregistered.


18. Related Party Disclosures (cont)


154


$ $ $ $

The aggregate amount of total remuneration of Officers shown is: 2 987 400 2 367 174 3 249 278 2 597 812

The number of officers included in these figuresare shown below in the relevant income bands

2001 2000 2001 2000Number Number Number Number

$130 000 - $139 999 1 - 1 -

$150 000 - $159 999 - 1 - 1

$160 000 - $169 999 1 - 1 -

$180 000 - $189 999 1 1 1 1

$190 000 - $199 999 - 2 - 2

$210 000 - $219 999 - 1 - 1

$220 000 - $229 999 1 - 1 -

$230 000 - $239 999 1 - 1 1

$240 000 - $249 999 1 - 1 -

$250 000 - $259 999 2 - 2 -

$260 000 - $269 999 - - 1 -

$270 000 - $279 999 1 - 1 -

$280 000 - $289 999 2 - 2 -

$430 000 - $439 999 1 - 1 -

$570 000 - $579 999 - 1 - 1

$860 000 - $869 999 - 1 - 1

The officer remuneration includes all officers concerned with or taking part in the management of the Corporation during2000-01 except the Managing Director. Details in relation to the Managing Director have been incorporated into note 17-Remuneration of Directors.

Consolidated remuneration excludes officers of the principal entity who are Directors in the wholly owned group. Details inrelation to the officers have been incorporated into note 17 - Remuneration of Directors.

Consolidated remuneration includes termination payable of $425 181 (2000 $973 762).


19. Remuneration of Officers


155


$ $ $ $Remuneration to the Auditor-General for auditing thefinancial statements for reporting period. 257 000 266 000 203 000 205 000

Total amount payable to the Australian National Audit Office for the audit of the Corporation and controlled entitiesfinancial statements. No other services were provided by the Auditor–General during the reporting period.

2001 2000 2001 2000 $ $ $ $

The Corporation is trustee for foundations Ian Reed Sir Charles Moseswith accumulated funds at 30 June as follows: Foundation Foundation

Revenues 23 578 27 059 3 3 Expenses (25 587) (11 484) - - Surplus/(deficit) for year (2 009) 15 575 3 3

Fund opening balance 446 253 430 678 3 187 3 184

Fund closing balance 444 244 446 253 3 190 3 187

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


20. Remuneration of Auditors

21. Trust Funds


156

During the year the Corporation had fifteen 100% owned controlled entities, all incorporated in Australia.

Beneficial Beneficialpercentage percentage

held by held byeconomic economic

entity entity

2001 2000% %

Chief Entity:Australian Broadcasting Corporation

Controlled entities ofAustralian Broadcasting Corporation

Adelaide Symphony Orchestra Pty Limited 100% 100%

Melbourne Symphony Orchestra Pty Limited 100% 100%

Queensland Orchestras Pty Limited 100% 100%

Sydney Symphony Orchestra Holdings Pty Limited 100% 100%

Symphony Australia Holdings Pty Limited 100% 100%

Tasmanian Symphony Orchestra Pty Limited 100% 100%

West Australian Symphony Orchestra 100% 100%Holdings Pty Limited

Orchestral Network Australia Pty Limited 100% 100%

Music Choice Australia Pty Limited 100% 100%

The News Channel Pty Limited 100% 100%

AIM Holdings Australia Pty Limited (a) 100% 100%

AIM West Pty (a) 100% 100%

Arnbridge Pty Limited (a) 100% 100%

Australian Information Media Pty Limited (a) 100% 100%

Equipco Australia Pty Limited (a) 100% 100%

(a) Entities placed into voluntary liquidation during the 1998/1999 financial year.


22. Controlled Entities


A

157

The Corporation is structured to meet two outcomes:

Outcome 1

The ABC will create and deliver distinctive programming and services; inform, entertain and educate

its audiences; and develop cultural and community identity.

Outcome 2

The ABC will maintain the scale and quality of analog terrestrial transmission of its national

networks, regional networks and Radio Australia programming which existed immediately prior

to the privatisation of the NTN.

Table AReporting by Outcomes for 2000-2001

The above note and table apply to the ABC’s appropriation only and not to the consolidated entity.

On 4 July 2001, the Supreme Court of Victoria ordered the ABC to pay R Clarke the sum of

$710 700 and to Runaway Bay Centre Pty Limited the sum of $386 250 in damages for defamation

payable within 30 days. The financial effect of this payment has been reflected in the accounts

as at 30 June 2001.

The ABC is appealing this decision.


23. Reporting by Outcomes

24. Subsequent Events

Outcome 1 Outcome 2 Total

Budget Actual Budget Actual Budget Actual

$’000 $’000 $’000 $’000 $’000 $’000

Total net administered expenses - - - - - -

Add: Net Cost of entity outputs 553 652 594 398 69 269 69 146 622 921 663 544

Cost outcome before extraordinary item 553 652 594 398 69 269 69 146 622 921 663 544

Extraordinary items - - - - - -

Net Cost to Budget Outcome 553 652 594 398 69 269 69 146 622 921 663 544

Outcome specific assets 864 019 815 559 864 019 815 559

Assets that are not outcome specific - -

NB The Net Cost to Budget Outcome shown includes intra government costs that are eliminated in calculating the overall Budget Outcome.


158


abc annual report financial statements

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