CONCISE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2006 CORPORATE GOVERNANCE STATEMENT OF RECOGNISED INCOME AND EXPENSE

Transcription

1 CORPORATE GOVERNANCE STATEMENT OF RECOGNISED INCOME AND EXPENSE Income Statement Statement of Recognised Income and Expense Balance Sheet Cash Flow Statement Discussion and Analysis Notes to and Forming Part of the Financial Statements 1. Accounting Policies 2. Segment Information 3. Revenue 4. Dividends 5. Explanation of transition to AIFRS 6. Changes in Accounting Policy 7. Events Subsequent to Reporting Date 8. Full Financial Report Directors Declaration This Concise Financial Report has been derived from the full financial report for the year ended 30 June The financial statements included in the Concise Financial Report cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Fremantle Ports as the full financial report. 77

2 INCOME STATEMENT Note 2006 $ $ 000 Revenue 3 89,488 84,181 Operational expenses (44,992) (37,760) Commercial management (23,320) (24,749) Port utilities (4,339) (4,290) Finance costs (2,997) (2,043) Other expenses (560) (127) Profit before income tax 13,280 15,212 Income tax expense (3,498) (3,513) Profit for the year 9,782 11,699 The above Income Statement should be read in conjunction with the accompanying notes and discussion and analysis. 78

3 STATEMENT OF RECOGNISED INCOME AND EXPENSE 2006 $ $ 000 Net income recognised directly in equity - - Profit for the year 9,782 11,699 Total recognised income and expense for the year 9,782 11,699 The above Statement of Recognised Income and Expense should be read in conjunction with the accompanying notes and discussion and analysis. 79

4 BALANCE SHEET $ 000 $ 000 ASSETS Current assets Cash and cash equivalents 14,550 14,230 Trade and other receivables 12,481 11,679 Inventories 636 1,204 Total current assets 27,667 27,113 Non-current assets Receivables 9,582 9,826 Property, plant and equipment 158, ,500 Deferred tax assets 10,302 8,293 Total non-current assets 178, ,619 Total assets 205, ,732 LIABILITIES Current liabilities Trade and other payables 6,226 8,415 Interest bearing borrowings 2,092 1,673 Income tax payable Provisions 4,279 3,674 Other 1,110 1,492 Total current liabilities 14,540 15,411 Non-current liabilities Interest bearing borrowings 50,763 44,521 Provisions 10,718 11,317 Other 1,632 1,650 Total non-current liabilities 63,113 57,488 Total liabilities 77,653 72,899 Net assets 128, ,833 EQUITY Contributed equity 53,298 51,771 Retained earnings 74,915 70,062 Total equity 128, ,833 The above Balance Sheet should be read in conjunction with the accompanying notes and discussion and analysis. 80

5 CASH FLOW STATEMENT Note $ 000 $ 000 Cash flows from operating activities Receipts from customers 86,167 78,505 Payments to suppliers and employees (69,355) (59,752) Interest received 2,095 2,133 Interest paid (2,846) (1,456) Income tax paid (4,832) (7,995) Net cash inflow from operating activities 11,229 11,435 Cash flows from investing activities Purchase of property, plant and equipment (14,416) (41,162) Proceeds from sale of property, plant and equipment Net cash outflow from investing activities (14,109) (41,140) Cash flows from financing activities Repayment of borrowings (1,558) (1,026) Proceeds from borrowings 8,220 25,343 Payment of finance lease liabilities (284) (230) Proceeds from finance lease receivable Dividends paid 4 (4,929) (5,760) Equity contribution 1,527 5,319 Net cash inflow from financing activities 3,200 23,865 Net increase / (decrease) in cash and cash equivalents 320 (5,840) Cash and cash equivalents at 1 July 14,230 20,070 Cash and cash equivalents at 30 June 14,550 14,230 The above Cash Flow should be read in conjunction with the accompanying notes and discussion and analysis. 81

6 DISCUSSION AND ANALYSIS Income Statement Fremantle Ports recorded an after tax profit of $9.8 million for 2006 (2005: $11.7 million). As a result of an increase in containerised cargoes and the motor vehicle trade in the Inner harbour and the bulk business in the Outer Harbour, revenue was 8.7% higher than last year (excluding contribution of a property inherited by Fremantle Ports on the expiration of a trading agreement for the year ended 30 June 2005). Dividends In accordance with Government Financial Policy, a dividend of $4.9 million (2005: $5.8 million) was provided for based on the results of the year ended 30 June 2005 and paid by 30 June The dividend provided in 2005 was based on the financial results of the year ended 30 June Balance Sheet Assets Total assets increased by $11.2 million (2005: $30.0 million) during 2006 to $205.9 million (2005: $194.8 million). This is mainly due to increase in property, plant and equipment. Liabilities Total liabilities increased by $4.8 million (2005: $17.3 million) from The increase is mainly due to increase in borrowings. Equity The equity contribution for the year is $1.5 million received from the WA Government for the contribution towards interest on Special Borrowings for the Bulk Unloader purchased in October 2001 and for the contribution towards the North Quay Rail Loop and Terminal Project. Cash Flow Statement The net cash flows for 2005/2006 were comparable to the previous year. Net cash inflow from operating activities was slightly lower than in the previous year mainly due to an increase in payments to suppliers and employees offset by an increase in receipts from customers. Net cash outflow from investing activities was lower than 2004/2005 predominantly due to a decrease in payments for property, plant and equipment. Net cash inflow from financing activities was significantly lower than the previous year due to a decrease in proceeds from borrowings and equity contributions received. 82

7 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES This concise financial report has been derived from the full financial report which complies with the Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the financial reporting provisions of the Port Authorities Act International Financial Reporting Standards ( IFRS ) form the basis of Australian Accounting Standards adopted by the AASB, being Australian equivalents to IFRS ( AIFRS ). There is no statutory requirement for Fremantle Ports to prepare a concise financial report. However the concise financial report has been prepared on the basis that it complies with Accounting Standard AASB 1039 Concise Financial Reports. The financial statements are prepared in Australian dollars and all values are rounded to the nearest thousand dollars ($ 000) unless otherwise stated. 2. SEGMENT INFORMATION The mission statement of Fremantle Ports is To add value for our customers and stakeholders by facilitating trade in a commercial and efficient manner while fulfilling our social and environmental responsibilities. Fremantle Ports activities are directed towards achieving this mission and in this regard Fremantle Ports operates in one reportable business segment for reporting purposes as required by AASB 114 Segment Reporting. The principal activity of Fremantle Ports is the provision of port related activities and services. Fremantle Ports operates predominantly in the one geographical segment, being Australia. 3. REVENUE $ 000 $ 000 Revenue 89,488 84,181 Included in revenue for 2005 is $2.438 million which represents the fair value of a property that was inherited by Fremantle Ports from the expiration of a trading agreement. 4. DIVIDENDS $ 000 $ 000 Dividend paid in the financial year 4,929 5,760 In accordance with Government Financial Policy, WA Ports are required to pay dividends of 50% of after tax profits. However, in accordance with AIFRS, dividends relating to the financial results for the year ended 30 June 2006 have not been provided as they are expected to be declared by the Board of Directors after balance sheet date. A dividend of $4.929 million (2005: $5.760 million) in respect of the financial results for the year ended 30 June 2005 was paid by 30 June

8 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 5. EXPLANATION OF TRANSITION TO AIFRS These are Fremantle Port s first financial statements prepared in accordance with AIFRS. The policies set out in the significant accounting policies section of this report have been applied in preparing the financial statements for the year ended 30 June 2006, the comparative information presented in these financial statements for the year ended 30 June 2005 and in the preparation of an opening AIFRS balance sheet at 1 July 2004 (the entity s date of transition). In preparing the opening AIFRS balance sheet, Fremantle Ports has adjusted amounts reported previously in financial statements prepared in accordance with Australian Accounting Standards before 1 July An explanation of how the transition from previous AGAAP to AIFRS has affected Fremantle Ports financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables. (a) Reconciliation of total equity as presented under previous AGAAP to that under AIFRS Notes 30 June 1 July $ 000 $ 000 Total equity under previous AGAAP 117, ,269 Adjustments to retained earnings Taxation (i) (993) (1,641) Employee benefits: (ii) Defined benefit adjustment (987) - Discounting of sick leave 928 1,187 Transfer from revaluation reserve (iii) 5,102 5,102 Reversal of dividends provided (iv) 4,929 5,760 Adjustments to other reserves Transfer of revaluation reserve to retained earnings (iii) (5,102) (5,102) Total equity under AIFRS 121, ,575 84

9 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (i) Taxation To comply with AASB 112 Income Taxes, Fremantle Ports is required to use the balance sheet liability method, rather than the income statement method previously adopted under AGAAP. The balance sheet liability method recognises tax balances when there is a difference between the carrying value of an asset or liability and its corresponding tax base. As a result of the above adjustments, the deferred tax liabilities and deferred tax assets decreased as follows: Adjustments to opening Balance Sheet (1 July 2004) Deferred tax assets increased by $2.074 million and deferred tax liabilities increased by $3.715 million. Adjustments to 30 June 2005 Balance Sheet Deferred tax assets increased by $2.547 million and deferred tax liabilities increased by $3.540 million. (ii) Employee Benefits Under AASB 119 Employee Benefits, all employee benefit entitlements that are expected to be settled more than twelve months after the reporting date must be measured at their present value. This resulted in a change in accounting policy in that sick leave expected to be settled more than twelve months after the reporting date which previously was not discounted, will now be measured at present value. Fremantle Ports net obligation in respect of defined benefit superannuation plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. Under AGAAP this benefit is discounted at the rate of interest expected to be earned by the fund. However AASB 119 Employee Benefits requires this discount rate to be the national bond rate current at reporting date. Actuarial valuations on the unfunded defined benefit superannuation liabilities were completed as at 30 June 2004 and 30 June 2005 using the national bond rate resulting in an actuarial loss of $0.987 million being recognised in the income statement for the year ended 30 June (iii) Revaluation Reserve Property, plant and equipment will be measured at cost under AIFRS. Any revaluation reserve balance relating to assets recognised at deemed cost were transferred to retained earnings at transition date. (iv) Provision for Dividends The previous AASB 1044 Provisions, Contingent Liabilities and Contingent Assets states that dividends cannot be recognised as a provision unless they are declared, determined or publicly recommended prior to reporting date. The publication of proposed dividends in the Statement of Corporate Intent creates a valid expectation that a dividend will be paid. Therefore, a provision for dividend of $4.929 million (2004: $5.760 million) was provided for in the accounts for the year ended 30 June 2005 under previous AGAAP. However, AASB 110 Events after the Balance Sheet Date, provides that a liability for dividend is not to be recognised if the dividends are declared after the reporting date. Declared is considered to mean that the dividends are appropriately authorised and no longer at the discretion of Fremantle Ports. Undeclared dividends do not meet the criteria of a present obligation. Under Section 84 (2) of the Port Authorities Act 1999, the Board recommends a dividend to the Minister after reporting date and the dividend is subject to the Minister s subsequent approval. The adjustment above for the reversal of the provision for dividends in the accounts for the year ended 30 June 2004 and 30 June 2005 prepared under AGAAP is made in compliance with AIFRS. 85

10 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 5. EXPLANATION OF TRANSITION TO AIFRS (continued) (b) Reconciliation of net profit under AGAAP to that under AIFRS YEAR ENDED 30 JUNE 2005 Notes 30 June 2005 $ 000 Net profit as reported under AGAAP 12,297 Adjustment to income tax expense (i) 648 Adjustment for employee benefits: (ii) Defined benefit adjustment (987) Sick leave adjustment (259) Net profit under AIFRS 11,699 (i) Income Tax expense The adjustment to income tax expense relates to the AIFRS adjustments as referenced in note 5 (a)(i). (ii) Employee Benefits The adjustment for employee benefits relates to the discounting of sick leave expected to be settled more than twelve months after the reporting date to be measured at present value and the actuarial loss of the unfunded superannuation liabilities as at 30 June 2005 as referenced in note 5 (a)(ii). (c) Explanation of material adjustments to the cash flow statement for 2005/06 Term Deposits of $12.5 million previously classified as investing cash flows under previous AGAAP are now classified as cash or cash equivalents as required by AASB 107 Cash Flow Statements under AIFRS. There are no other material differences between the cash flow statement presented under AIFRS and the cash flow statement presented under previous AGAAP. 6. CHANGES IN ACCOUNTING POLICY In the current financial year, Fremantle Ports adopted AASB 132 Financial Instruments: Disclosure & Presentation and AASB 139 Financial Instruments: Recognition and Measurement. This change in accounting policy has been adopted in accordance with the transition rules contained in AASB 1 First-Time Adoption of Australian Equivalents to International Financial Reporting Standards, which does not require the restatement of comparative information for financial instruments within the scope of AASB 132 Financial Instruments: Disclosure & Presentation and AASB 139 Financial Instruments: Recognition and Measurement. This change in accounting policy has not resulted in any adjustments to the results of Fremantle Ports for the financial year. 86

11 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 7. EVENTS SUBSEQUENT TO REPORTING DATE There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of Fremantle Ports, to affect significantly the operations of the Port, the results of those operations, or the state of affairs of the Port, in future financial years. 8. FULL FINANCIAL REPORT The concise financial report and financial statements and specific disclosures contained therein have been derived from the full financial report for the year ended 30 June A copy of the full financial report, including the auditor s report on the full financial report, can be made available without charge by writing to: Manager External Affairs Fremantle Ports PO Box 95 Fremantle WA

12 DIRECTORS DECLARATION DIRECTORS DECLARATION The directors of the Fremantle Port Authority declare that in their opinion, the concise financial report of the Fremantle Port Authority for the year ended 30 June 2006 as set out on pages 2 to 12 complies with Australian Accounting Standard AASB 1039 Concise Financial Reports. The financial statements and specific disclosures included in this concise financial report have been derived from the full financial report for the year ended 30 June This declaration is signed in accordance with a resolution of the Directors on 18 August Chairman Director 18 August

13 FINANCIAL AUDIT REPORT AUDITOR GENERAL INDEPENDENT AUDIT REPORT To the Members of Fremantle Port Authority Audit Opinion In my opinion, the concise financial report of the Fremantle Port Authority for the year ended 30 June 2006 complies with Accounting Standard AASB 1039 Concise Financial Reports. Scope The Board of Directors is responsible for the concise financial report. The concise financial report consists of the Income Statement, Statement of Recognised Income and Expense, Balance Sheet, Cash Flow Statement, Discussion and Analysis, accompanying Notes and Directors Declaration. Summary of my Role I have independently audited the concise financial report to express an opinion on it. This was done by testing selected samples of the evidence and testing that the information in the concise financial report is consistent with the full financial statements. Further information on my audit approach is provided in my audit practice statement. Refer I have also independently audited the full financial report of the Authority for the year ended 30 June My audit report on the full financial report was signed on 31 August 2006 and was not subject to any qualification. An audit does not guarantee that every amount and disclosure in the financial report is error free, nor does it examine all evidence and every transaction. However, my audit procedures should identify errors or omissions significant enough to adversely affect the decisions of users of the financial report. JOHN DOYLE ACTING AUDITOR GENERAL 31 August

14