DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE. Annual Report 2009/2010

Transcription

1 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE Annual Report 2009/2010

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3 Contents Introduction and Overview 1 Purpose of the Report...1 Letter to the Minister...2 Chief Executive s Message...3 Departmental Overview...4 The Territory Context...6 Organisational Chart...7 Corporate Governance 8 Three Year Corporate Plan...8 Executive Team...9 Management Board...10 Senior Leadership Forum Business Planning...12 Boards and Committees...13 Audits and Reviews...13 Legislation and Statutory Boards and Authorities...14 Access to Information...15 Information and Business Systems...16 Legal Services...16 Procurement Services...17 Financial Services...18 Corporate Communications 19 Community Consultation and Feedback...19 Corporate Communications Services...20 Our People 22 Overview...22 Our Staff in Profile...23 Staff Diversity...23 Indigenous Employment and Training Unit...24 Workforce Development...24 Employment Programs...26 Staff and Project Recognition...29 Reporting Against Employment Instructions...30 Occupational Health and Safety...32 Performance Reporting 34 Regional Highlights...34 Construction Division...39 Housing...42 Infrastructure and Major Projects Division...43 Financial Statements 46 Department of Construction and Infrastructure...46 Construction Division...74

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5 Introduction and Overview Purpose of the Report This annual report provides a record of the activities and achievements of the Department of Construction and Infrastructure and its Government Business Division for The report aims to inform the Legislative Assembly, Territorians and other stakeholders of: the primary functions and responsibilities of the department significant activities undertaken during the year highlighting specific achievements against budgeted outputs The department s fiscal management and performance. 1

6 The Hon Gerry McCarthy MLA Minister for Construction Parliament House DARWIN NT 0800 Dear Minister I am pleased to present you with the annual report of the Department of Construction and Infrastructure for the year ended 30 June The report describes the performance and key achievements of each of the department s output groups, as required by section 28 of the Public Sector Employment and Management Act. I advise, to the best of my knowledge and belief, that: a) Proper records of all transactions affecting the department are kept and employees under my control observe the provisions of the Financial Management Act, its regulations and applicable Treasurer s Directions. b) Procedures within the department afford proper internal control and a current description of such procedures is recorded in the accounting and property manual, which has been prepared in accordance with the requirements of the Financial Management Act. c) No indication of fraud, malpractice, major breach of legislation or delegation, major error in, or omission from, the accounts and records exists. d) In accordance with section 15 of the Financial Management Act, I advise that as at 30 June 2010, the department had adequate internal audit capacity and the results of all internal audit matters have been reported to me. e) The financial statements included in the annual report have been prepared from proper accounts and records and in accordance with Treasurer s Directions. f) All Employment Instructions issued by the Commissioner for Public Employment have been satisfied. Yours sincerely ALAN WAGNER Chief Executive Officer 18 October

7 Chief Executive s Message This has been a year of major change, with the creation of the new Department of Construction and Infrastructure in December The new department recognises the value of work provided by the Construction Division, formerly within the Department of Planning and Infrastructure, and emphasises the continued and growing role in delivering infrastructure projects for the Northern Territory. Since the formation of the department, much work has taken place to establish a corporate identity and strategic directions. That work has culminated in the development of the Corporate Plan , which was drafted in May The plan will guide our work over the coming three years and ensure that we continue to work effectively to deliver on Northern Territory Government priorities. It will also underpin the divisional plans that are currently being developed. The new department has already achieved much of which we can be proud. The number and dollar value of the projects we have delivered is significant: almost 1000 contracts, to the value of over $600 million, were awarded in the largest capital works program ever. We have introduced new contract delivery models including Early Contractor Involvement (ECI), which was used during the Tiger Brennan Drive project. ECI allows and encourages contractors input through the design phase, which can create cost efficiencies. The department has also started using staged works contracts, which allows commencement of site early works prior to detailed design completion and approval thereby accelerating delivery. The department s work in took place within a context of significant change as the Australian and Northern Territory governments responded to global and local issues. Some of the major initiatives to which we are contributing are outlined in the Departmental Overview in the next section of this report. Professional development, industry relationships and industry training and employment have, by necessity and by design, been a major focus in This will continue in as we deliver on government priorities throughout the Northern Territory. I thank all staff for their hard work and dedication during ALAN WAGNER Chief Executive Officer 3

8 Departmental Overview The Department of Construction and Infrastructure was created in December 2009, comprising the Construction Division and Infrastructure planning elements of the former Department of Planning and Infrastructure. This significant change meant that much of the reporting period was a time of transition, consolidation and setting strategic directions. The appointment of a new Chief Executive Officer was pending at end of The National Context In response to the global financial crisis, the Australian Government introduced its Economic Stimulus Plan, which involves funding projects across the nation to boost local infrastructure and support jobs. The department has a key role in delivering these projects throughout the Northern Territory. More detail is provided below. Building the Education Revolution The Building the Education Revolution has three elements: st 1. Primary Schools for the 21 Century (P21) for all Australian primary schools to build facilities such as libraries, multipurpose halls or classrooms or to upgrade existing facilities. In the Territory, the total P21 package is $ million, including 134 schools. st 2. Science and Language Centres for 21 Century Secondary Schools for the construction of new science laboratories or language learning centres. In the Territory, $15.76 million is being spent to deliver these centres for 8 schools. 3. National School Pride program to fund minor capital works and maintenance projects in government and non-government schools in Australia. In the Territory, most of the Pride projects are being delivered by individual schools. The Construction Division is helping the Department of Education and Training deliver these projects on request. Overall there are 159 projects across 142 schools being delivered in the Northern Territory. The project planning process involved a good level of consultation with both urban and remote school communities, to ensure projects meet the needs of the school community. Design consultants have completed documentation on most projects, using design templates where possible to progress design. To date, 132 construction contracts have been let to the value of $146.9 million. Around $12 million has been committed to 113 consultancies covering design, certification, engineering, cost planning, project management, probity and contract surveillance. The Northern Territory has successfully used a different construction contract methodology to other jurisdictions. No managing contractors are involved. Existing Northern Territory Government procurement processes, based on ensuring value for money, have been used for awarding contracts. External building cost consultants (or quantity surveyors) provide an additional check to ensure the offer from the preferred tenderer is in line with market rates. 4

9 More than 500 local companies have received benefit from the DET Stimulus program, and 24 schools are now using their new buildings. At the request of the Australian Government, which asked that we defer some projects to , a total of seven projects with a budget of around $10 million will be held over to lengthen the stimulus effect. Most of these projects are now being designed and documented. Stimulus Housing Initiative The Social Housing Initiative covers 3 programs: 1. Repairs and Maintenance program In and , a total of $4.11 million was spent on repairs and maintenance of 292 separate dwellings in Darwin and regional areas of the Territory. The program was completed in May New Construction Stage 1 projects The design and construction of four four-bedroom houses, with one house in Darwin, two houses in Alice Springs and one house in Tenant Creek were completed in January 2010 for a cost of $1.94 million (covering construction, design, documentation and project management). A total of 18 duplex units were designed and constructed in Millner, Malak, Bakewell and Humpty Doo. The project cost was $5.67 million (covering construction, design, documentation and project management). 3. New Construction - Stage 2 projects A total of four projects were approved for non-government organisations in the Northern Territory and construction has commenced: Design and construction of eight new independent units of accommodation supporting the homeless and disadvantaged at Goyder Street, Alice Springs, for the Salvation Army (NT) Property Trust, for a contracted cost of $1.43 million. Design and construction of a new residence to accommodate 12 single bedrooms as independent living units supporting the homeless and disadvantaged at Henry Street, Stuart Park, for the Salvation Army (NT) Property Trust, for a contracted cost of $1.617 million. The design, documentation and construction of 10 x two bedroom duplexes totalling 20 units of accommodation for the homeless and disadvantaged at 107 Dick Ward Drive for the Saint Vincent de Paul (NT) Inc for a contracted cost of $5.83 million. The design, documentation and refurbishment of an existing three storey building in Alice Springs referred to as the Lodge owned by the Synod of the Diocese (NT) Inc for an estimated cost of $3.83 million. The refurbishment is designed to accommodate 35 people requiring renal dialysis treatment. The department is also involved in delivering five social housing developments sponsored by Department of Housing, Local Government and Regional Services (DHLG&RS). The projects commenced in May 2010 and are due for completion in December They are: a) Patterson Street, Alice Springs construction of transitional housing comprising eight units with manager s residence and communal support areas for a contracted cost of $2.1 million. 5

10 b) Crerar Road, Berrimah construction of transitional housing comprising 18 units with manager s residence and communal support areas for a contracted cost of $5.7 million. c) Percy Court, Alice Springs construction of transitional housing comprising 28 units with manager s residence and communal support areas for a contracted cost of $6.4 million. d) Willshire Street, The Gap, Alice Springs construction of four social housing units for a contracted cost of $1 million. e) Duplexes at Bellamack construction of four duplexes, totalling eight units on four separate allotments, for a contracted cost of $2.1 million. Planners were consulted extensively to ensure a smooth approval process in obtaining planning approvals for the projects in March and April The final Stimulus Housing package is the Wirrina Affordable Housing complex comprising 45 units at an estimated cost of $13.5 million. Territory construction company Sitzler was announced as the successful contractor in June The Territory Context Territory 2030 The Northern Territory Government s 20-year strategic plan, Territory 2030, sets priorities for the future in six core areas: Education; Health and Wellbeing; Society; The Environment; Economic Sustainability; and Knowledge, Creativity and Innovation. As the NT Government s major deliverer of public infrastructure, the department helps achieve the outcomes of Territory Over the past 12 months some of the key projects delivered or commenced included: Government Employee Housing Housing the Territory Palmerston Super Clinic Healthy Territory Rosebery Schools A Smart Territory Tiger Brennan Drive Stage 2 Growing the Territory Palmerston Boat Ramp Great Territory Lifestyle Alan Walker Radiation Oncology Centre Healthy Territory Remote Police Stations A Safe Territory Victoria Highway Upgrade Growing the Territory Tanami Road Upgrade Growing the Territory Various projects at Alice Springs Hospital Healthy Territory In the coming year, the department will continue to work on delivering public infrastructure projects and contributing to Territory 2030 targets, including involvement in the 20 Growth Towns project under the Working Future strategy. 6

11 Organisational Chart Chief Executive of DCI Construction Division Infrastructure and Major Projects Division Corporate Services Division General Manager Construction Division Deputy Chief Executive Officer Executive Director Corporate Services Buildings Alice Springs Region Infrastructure Services Financial Services Building Assets Tennant Creek Region Stimulus Human Resources and Organisational Development Roads and Civil Katherine Region Services Delivery Coordination Unit Procurement Services Major Projects and Design Nhulunbuy Region Information and Business Systems Corporate Communications Audit / Probity and Risk Management Legal Services Business Support 7

12 Corporate Governance Three Year Corporate Plan A Corporate Plan was developed by senior management across the department in May It articulates a clear vision, mission and key objectives. Vision To be recognised as the expert in government, achieving best practice infrastructure programming, procurement and construction, while maximising the use of Territory business and resources. Mission Government infrastructure delivered on time and within budget. Major objectives 1. Deliver quality government infrastructure 2. Total asset management 3. The building industry has the capacity to respond effectively to government s needs in the regions 4. A professional, agile and high performing organisation. The corporate governance arrangements outlined in this section were developed in December 2009 as an interim measure to support the new departmental structure. The arrangements will be fully implemented in now that a permanent Chief Executive has been appointed. 8

13 Executive Team The Executive Team leads the department by setting the strategic direction, and reviewing and approving initiatives that align with government direction and priorities. Its role is to ensure that the department drives government priorities including Territory 2030, 20 Growth Towns, Indigenous Employment; Election Commitments and Key Projects. The Executive Team meets fortnightly, with the capacity to consider urgent matters outof-session. Its members are: Chief Executive (Chair) Deputy Chief Executive Officer General Manager, Construction Division Executive Director, Corporate Services. Progress of key initiatives is reported to the Management Board and communicated through the monthly departmental newsletter. Executive Team Profiles Chief Executive Alan Wagner Alan Wagner joined the department in July He is a former Deputy Director General of Queensland s Department of Education and Training and has qualifications in electrical engineering, project management, business administration and strategic asset management. Alan also has an enviable record of public works provision in regional and remote areas of Queensland, including programs delivering employment opportunities for Indigenous people. Deputy Chief Executive Mike Chiodo Mike Chiodo joined the department in January 2008, having worked as senior executive with a number of organisations including Coles Myer, Thakral Property Holdings, the City of Sydney and Sydney Harbour Foreshore Authority. Before joining the department Mike developed a successful consulting business providing services including corporate strategic planning, business planning, major project management, asset management, property management and construction program delivery. General Manager, Construction Division Fiona Williams Fiona Williams has extensive experience in senior roles in the Northern Territory Public Sector. She has worked with the former departments of Planning and Infrastructure, and Business, Economic and Regional Development. Fiona has a Bachelor of Commerce and has worked interstate in roles focusing on project management, financial management, audit and quality management with organisations such as IP Australia, Department of Defence, the Health Insurance Commission and the Department of Industry, Tourism and Resources. Executive Director, Corporate Services Lisa Watson Lisa Watson has been with the Construction Division for 14 years, eight of which were in Alice Springs. This gives her a strong appreciation for the regional environment 9

14 and related issues. Lisa has extensive experience in project administration and business and commercial management. She holds a Bachelor of Business, majoring in management, and has also completed the Professional Management Program. Management Board The Management Board provides input and makes decisions that align with government priorities and direction with respect to departmental strategic and governance matters. Its role is to: ensure the department drives government priorities consider issues that will impact on the department ensure consistency with the department s strategic direction and governance framework review business proposals and policies make decisions and recommendations as required. The Management Board meets monthly, with the capacity to consider urgent matters out-of-session. Its members are: Chief Executive Deputy CEO General Manager, Construction Division Executive Director Corporate Services Director Civil Construction Director Building Assets Director Building Director Major Projects Senior Director lnfrastructure Services Director Financial Services Director Human Resources and Organisational Development Chief Information Officer Solicitor Regional representative. Records of the Management Board Meetings and progress of key initiatives are communicated as appropriate through the monthly departmental newsletter. 10

15 Senior Leadership Forum The Senior Leadership Forum fosters a collaborative leadership team to inspire and communicate change within the department and allow for networking in relation to current projects and future directions. Its role is to: provide updates on key priorities of government and ensure they are driven throughout the department provide regional networking opportunities provide regional and business unit updates present key initiatives and projects to other members. The Senior Leaders Forum is held quarterly in different locations throughout the Territory. Each forum comprises senior leaders from across the department who have been nominated by Executive and Senior Management. Records of the Senior Leaders Forum are reported to the Executive Team and communicated as appropriate through the monthly newsletter 11

16 Business Planning Process Plans Timeframes Executive Management develop 3 Year Corporate Plan 3 Year Corporate Plan May 2010 The three year Corporate Plan is presented to the Management Board and the Divisional Plans are developed Divisional Plans Infrastructure Services Division Corporate Services Division Construction Division August 2010 The Divisional Plans are presented to relevant staff, and Business Plans are developed Business Plans September 2010 Managers conduct PDPs with staff incorporating their respective Business Plan Personnel Development Plans (PDPs) October / November 2010 Progress on plans is reported quarterly and updates are made available on the Intranet. Completed actions are highlighted in the newsletter Quarterly updates due: September 2010 December 2010 March 2011 June 2011 The Corporate Plan will form the basis of divisional plans for Construction Division, Infrastructure Services Division and Corporate Services Division. The groups started developing their plans at the end of , to align with the overall plan and provide direction at a more operational level. After completion of divisional plans, unit business plans will be developed to guide staff in the coming 12 months and assist in the personal development plans process. Progress against plans will be reported quarterly. All plans will be made available on the intranet and promoted through the staff newsletter. 12

17 Boards and Committees In preliminary planning work took place to establish an Information Management Committee, Organisational Development Committee and Audit and Risk Committee. The committees will meet regularly throughout and further details will be included in the annual report. OH&S Committee The Workplace Occupational Health and Safety Committee was formed in December 2009 through the election process detailed in the Workplace Health and Safety Act. The OH&S Committee meets quarterly and comprises representatives from Highway House with regional representation to be implemented. External Boards and Committees Our people represent the department and the Northern Territory on a range of external boards and committees. They include: Joint Australasian Procurement and Construction Council and Australian Construction Industry Forum (Lisa Watson, Fiona Williams) Interdepartmental working group Building our Strengths, a Framework For Action for Women in the Territory (Fiona Williams and Lisa Watson) COAG Infrastructure Working Group (Cate Lawrence) COAG Critical Infrastructure Working Group (Cate Lawrence) Audits and Reviews Auditing is a key component of the department s governance framework, in line with legislation and Treasurer s Directions. Prior to December 2009, this agency was part of the former Department of Planning and Infrastructure s governance framework and as such, participated in their Risk Management and Audit Committee. The new department has embarked on a review of current internal audit and risk practices to ensure progress towards compliance with the Institute of Internal Auditors Australia s International Professional Practices Framework (IPPF). Specialised independent review consultants are assisting with the integration of enterprise wide risk management and risk based internal audit activities. In January 2010 the department employed a consultant to act as the Chief Audit Executive and the Probity Manager who currently works closely with the Audit and Risk Advisor. Internal Audit continued to work across all divisions in with the primary role of assuring executive management that: systems and operations comply with appropriate, accepted and documented governance policies, standards and procedures, and legislative and other regulatory requirements systems and business processes are conducted in an efficient and effective manner 13

18 management of business information is high quality controls over the technological environment are operational and effective physical security over assets and personnel is of an acceptable standard. Internal Audits The department conducted a range of internal audits including: Seven Control Self Assessments Eight Probity Audits Fifteen Compliance Audits One Efficiency/Effectiveness Review Two Post Construction Reviews External Audits Compliance Audit Office of the Australian Building and Construction Commissioner National Code of Practice for the Construction Industry (National Code) Tiger Brennan Drive Extension Stage 2. Completed National Code of Practice for the Construction Industry (National Code) Royal Darwin Hospital Radiation Oncology Unit. Completed National Code of Practice for the Construction Industry (National Code) Project Not Confirmed. Commencement Prior June Audit conducted by the Auditor-General A compliance audit was conducted by the authorised auditors of the Auditor-General s office in to ascertain whether the department has implemented and maintained proper internal procedures that assist in complying with the requirements set out in the Financial Management Act, Treasurers Directions, Procurement Act and other applicable legislation and regulations. The following audits were conducted and finalised by the Auditor-General s office during the year. Financial and Compliance Audits Northern Territory Office of the Auditor-General Financial Statements Audit: Construction Division Financial Statement Audit Financial Statements Audit: Construction Division Interim Financial Statements Audit Compliance Audit: End of Year Department (DPI) 2009 All responses were considered satisfactory by the auditors and will be reviewed in the Auditor-General audit. All findings will be monitored by the new Audit Committee. Legislation and Statutory Boards and Authorities The department is not responsible for administering any legislation, statutory boards or authorities. 14

19 Access to Information Information Act Under Section 11 of the Information Act 2010, the agency is required to annually prepare a report detailing: Its structure and functions; The kinds of government information it usually holds and whether that information may be accessed; Its procedures for providing access under Part 3 (Access and Correction Rights) to government information it holds; and Its procedures for correcting under Part 3 personal information it holds. The information on the department s website lists all the information held by the Department of Construction and Infrastructure and is available to assist persons interested in making application under the Act. Within the department, the Construction Division is a recognised Government Business Division and is subject to the Act for personal information only under Part 1 Section 5 (4). Accessing Information The agency has policies and procedures to enable people to access information and to request corrections to personal information. The policies and procedures are available at Applications must be in writing and identify the name of the applicant; provide sufficient details to identify the information sought or the information to be corrected; specify an address to which correspondence regarding the application may be sent and where applicable include the application fee of $ Information Officer Department of Construction and Infrastructure Information & Business Systems GPO Box 61 PALMERSTON NT 0831 Tel: (08) Fax: (08) Applications can be lodged via post, facsimile or [email protected] Request for Access to Information in Information Act Requests Applications carried over from previous year 0 Applications to access personal information 1 Applications to access government information 3 Requests Withdrawn 0 15

20 Responses completed within 30 day period 0 Responses completed exceeding 30 day period 1 Applications on hand as at 30 June 0 Records and Archives Management Pursuant to Part 9 of the Act, the department has been actively pursuing improvements in records management practices, procedures and policies to improve compliance with the requirements of Records Management Standards of the NT Government and the Act. Types of Government Information Held by the Agency The Agency s Information Management strategy centres on ensuring compliance with Part 9 of the Act that take place within the Strategic Records Unit, in line with advice and standards provided by the Northern Territory Archives Service. The agency is developing processes and procedures to ensure all types of records are captured accurately. A comprehensive list of the agency s publications is available on the internet. Information and Business Systems Achievements 2009/2010 Transition of Information Technology, Information Management and Business Systems services to DCI. Priorities for 2010/2011 Establishment of an agency Information Management Committee to govern information management for the agency through developing policies, setting ICT strategic directions and reviewing and endorsing ICT initiatives to ensure alignment with the agency s ICT architecture and business objectives. Development of an agency s ICT Strategic Plan which will include the technology and systems to support the business requirements for the agency. Implementation of video conferencing services to all DCI sites to enhance client and customer relations, increase communications across the Territory and to reduce travel costs and carbon footprint. Legal Services The department has a lawyer who is employed by the Solicitor for the Northern Territory and based at Highway House. The lawyer manages the delivery of legal services including providing legal advice and representation, drafting and reviewing legal documentation, participating in negotiations, referring matters to the Department of Justice central office or to private law firms where specific expertise or services are required and managing private firms engaged to perform legal services. The lawyer is a member of, and reports to, the Management Board on legal matters affecting the department. 16

21 Key achievements in Development of standard conditions of tender, contract and response schedule inserts for contracts requiring National Code of Practice compliance and Occupational Health and Safety Accreditation. Delivery of legal training to divisions and officers. Negotiation and award of high value design and construct contracts for the Building the Education Revolution Stimulus initiative. Priorities for Visit and provide legal information sessions to all divisions of the department, starting with presentations in Katherine and Alice Springs Review the rules and clauses regarding site inspections with a view to ensuring clarity for tenderers and departmental project officers Develop standard special conditions for use with design and construction tenders Facilitate legal training sessions on contract and procurement. Procurement Services The department is the largest single purchaser of works, goods and services in the Northern Territory, representing around 45% of the government s procurement for Tiers 3 to 5, measured by value. This means the department has a key role in implementing a number of NT and Australian government policies, including Buy Territory, Apprentices and Trainees, Indigenous Employment and Training on construction and maintenance contracts, and the National Code of Practice for the Construction Industry. This year, a new procurement projects function was created to take over corporate procurement functions for the new department, including maintenance of the Agency Procurement Management Plan, and to provide a dedicated capacity for the department to be represented in the development of construction procurement processes by the Department of Business and Employment. Key achievements in Review of procurement templates. Regional visits to ensure that local procurement issues are identified and addressed. Developing and rolling out contracts training. Identifying, prioritising and developing a number of improvements to the tender evaluation processes of the department, to bring efficiencies and ensure consistent and defensible procurement outcomes. Assisting local Indigenous people to gain employment and training with department contractors. Assisting non-government companies winning Construction Division contracts to provide meaningful employment and training opportunities for local Indigenous people. Developing the department s strategy for Indigenous employment and training. 17

22 Implementing and coordinating the provisions of the Australian Government s National Code of Practice for the Construction Industry in tender and contract documents. Promoting awareness of the Model Client Framework as a structure to ensure good occupational health and safety for Construction Division projects. Priorities for Continue to strengthen the rigour of a range of processes including evaluation, due diligence, business paper development, contractor performance reporting and debriefing. Review request for quote and request for tender documents for all tiers and, if necessary, develop new documentation to support increased rigour of procurement process. Redevelop procurement forms to include guidance notes. Update internal procurement website to include information on when, why and how to work through procurement requirements. Develop a framework for engaging consultants performing the duties of staff members in the organisation. Look at ways to identify opportunities for smarter procurement that meets agency needs. Financial Services The unit provides financial services to the department s Executive management and operational divisions to facilitate responsible financial management, a standard approach to financial issues and good corporate governance practices. Areas within Finance include; accounting, budget, facilities, property management and departmental Occupational Health and Safety services across the regions. Key Achievements in : Establishment of a financial structure for the new department as a result of the restructure Management of internal workshops within the department to support ledger integrity Priorities for : Development of a Financial Management Plan Implementation of a Greening the Fleet Replacement Strategy Property Management support for the Highway House fit out Transition to the NT Government Electronic Invoice Management System (EIMS) 18

23 Corporate Communications Community Consultation and Feedback The Department of Construction and Infrastructure delivers a broad range of projects on behalf of other Northern Territory Government departments. Generally, the consultation phase of a project is managed by the client agency however, in the year, DCI sought input and feedback from the community and specific stakeholder groups on several projects to inform the decision-making around planned design and construction including: Palmerston Boat Ramp design Tiger Brennan Drive Stage 2 reconstruction of Yarralin Airstrip upgrades to utilities at Nitmiluk National Park Katherine Terrace Streetscape Works Katherine Regional Cultural Precinct relocation of Lajamanu Airstrip. 19

24 Corporate Communications Services The Department of Construction and Infrastructure s Corporate Communications Unit provides a range of communication services to support staff across the Territory in delivering information to the public, stakeholder groups and other government departments. Services include: planning and implementing of communication strategies advertising management stakeholder consultation and communication media management and coaching ministerial liaison on media and marketing and communications issues coordination across government sponsorship management industry liaison event management Internet and intranet development and maintenance publication production writing services coordinating of merchandise and collateral. associated reporting. Key Achievements in Throughout the year, the unit has been involved in a broad range of projects in all regions. Some highlights include: External: Tiger Brennan Drive Stage 2 managing ongoing communications and media. Palmerston Boat Ramp coordinating advice to the public seeking input on the planned design. McMinn Street Duplication progress reports to residents and the community on progress of the project. Construction Industry forums held in Darwin and Alice Springs to share information and seek feedback from the construction industry event management and associated marketing and communications activity. Civil Contractors Federation Award submissions writing and preparing award submissions for staff entering the annual Training Awards. Rosebery School management of media and communications requirements. Ongoing industry liaison with key groups such as Civil Contractors Federation NT, Institute of Architects, Engineers Australia and the Australian Institute of Project Management. Managing the annual sponsorship commitments of the department including attendance at industry events and optimising the benefits on offer in return for our sponsorship. 20

25 Internal: Participation in Program Steering Group meetings with NT Government client agencies providing media advice and identifying opportunities to promote projects. Producing a monthly internal staff newsletter to highlight personal achievements, progress on DCI projects and corporate initiatives and to let the Executive Team report back to staff on a range of issues. Redeveloping the intranet site in line with NT Government branding with a new corporate colour and style. Preparing communication plans for internal projects such as the transition from Construction Division to Department of Construction and Infrastructure, end of financial year changes to procurement processes. Coordinating the reporting and distribution of all corporate messages to ensure consistency and relevance. Producing monthly noticeboard displays within Highway House to promote achievements focused around our core areas of Our Business, Our People, Our Services and Our Relationships. Maintaining links with whole-of-government marketing and communications strategies and direction. Generating positive news stories for the staff intranet site. Priorities for Continue to provide strategic marketing and communications, media and web advice and services in support of Capital Works and Minor New Works projects being delivered Territory-wide. Continue to produce a monthly internal newsletter to highlight personal achievements and progress on DCI projects. Develop an annual Media Training Program for DCI staff across all regions. Continue to conduct Web Editor Training for DCI staff. Develop a Secretariat Education Program for Executive Assistants across the department. Manage the department s Industry Forums in Darwin and Alice Springs including event management and associated marketing and communications activities. Develop a process for recording the department s Industry Liaison activities. Continue to participate in client Program Steering Group meetings with staff of the Construction Division to identify media opportunities for government. 21

26 Our People Overview This was a year of major change with the announcement of the agency restructure and the creation of the Department of Construction and Infrastructure. This new department recognises the value of work provided by the Construction Division (formerly within the Department of Planning and Infrastructure) and emphasises the continued and growing role in delivering infrastructure projects for the Northern Territory. The Northern Territory Government s increased infrastructure program has resulted in increased staffing levels in the Construction Division to enable the delivery of significant major project and infrastructure programs in the Northern Territory. The work of the Construction Division is complemented by that of the Infrastructure Services and Corporate Services Groups. The department s achievements are made possible only through its people. Our people are the foundation for building and maintaining the professional relationships in the department and achieving organisational outcomes. When the department was formed in December 2009, work began to establish a corporate identity. In April 2010, key executives and senior officers took part in a oneday workshop to develop the Corporate Plan. 22

27 Our Staff in Profile As at 30 June 2010, the department s staff profile included: 435 full-time equivalent employees 467 actual staff 102 regional staff 38% female staff 1.7% Indigenous employees an average age of 42 years. Figure 1: Departmental Staff Profile Departmental Staff Profile Number of full-time equivalent staff 435 Total number of staff employed (including casuals) 467 Female staff 38% Average age of staff 42 Number of Indigenous staff 8 Indigenous staff 1.7% Separation permanent staff 9.2% Separation permanent and temporary staff 19.4% Staff Diversity The department has a diverse workforce and is committed to recognising and supporting its employees. It strives to maintain an environment that is free from bullying, harassment and discriminatory practices and has developed a policy, toolkit and training program to support this. A total of 29 per cent of staff have recorded their Equal Employment Opportunity (EEO) details in the Personal Integrated Pay System (PIPS). This data is recorded to help develop workforce strategies to support equity and diversity in the workplace. Figure 2: Department Classification Streams by Gender at 30 June 2010 Stream Male Female Executive Administration Graduate 3 2 Indigenous Cadet Scholarship 3 - Professional 34 7 Technical Works Integrated Learning Scholarship (WILS) 6 - Total

28 Figure 3: Department Staffing by Age and Gender Number of Staff Members Total Age Group Female Male The department s age profile shows an ageing workforce with 21% of staff over the age of 55. This reflects the nature of work and the demographics of the construction industry. Indigenous Employment Indigenous employment is being enhanced through employment programs such as the Cadetship Program and Technical Traineeships. In 2010, the department had four people in the Cadetship Program, which provides local Indigenous students financial assistance with course fees, book costs and living expenses. Students also undertake work experience during university holidays. The department recently employed two Indigenous Technical Trainees. Indigenous Employment and Training Unit The department is committed to increasing Indigenous employment within the construction industry. The Indigenous Employment and Training Unit has been established to work with Indigenous people and the construction industry. The unit assists local Indigenous people gain employment with Construction Division contractors as well as helping non-government companies win Construction Division contracts and provide meaningful employment and training opportunities for local Indigenous people. Workforce Development The department focused on change management in The changes centred on the agency restructure and finalising the organisational structure to best facilitate the government infrastructure program. The department has undertaken a range of activities to enhance and build the skills and experience of individuals in order to develop our organisational capability. 24

29 Personal Development Plans (PDPs) The PDPs are a mechanism for staff and their supervisors to establish a shared understanding of work unit objects and identify personal professional development needs each year. The completion of a personal development plan encourages personal responsibility for learning and development needs and outcomes. Workforce and Organisational Development In staff of the Construction Division sat on a whole-of-department Workforce Development Committee (under the former Department of Planning and Infrastructure). In an Organisational Development Committee will be established in the Department of Construction and Infrastructure to provide strategic direction to the department on a range of issues ranging from graduate employment, trainees and scholarships to leadership development. Training and Development In , the department invested $ in training and development activities. These included: Studies Assistance The department continues to provide studies assistance for staff wanting to gain qualifications ranging from Certificate to Post Graduate Degree level. The department strongly supports employees gaining relevant professional, technical and other skills through tertiary study, which is part of efforts to build the capability of the department s workforce. The department currently provides 13 employees with studies assistance to gain qualifications in the following fields: Certificate IV Project Management Certificate IV Occupational Health & Safety Certificate IV Business Administration Certificate IV Training and Assessment Associate Degree in Building Surveying Diploma Building Certification Engineering Degree Masters in Engineering Management Degree in Commerce Bachelor in Social Science. Professional Management Program The department has supported two employees to attend the Professional Management Program run by the University of Adelaide. This program has been designed to increase the effectiveness of middle and senior managers. 25

30 Public Sector Management Program The department has supported one staff member to take part in the Public Sector Management Program (PSMP) coordinated by the Office of the Commissioner for Public Employment. The PSMP is a joint venture between Commonwealth, State and Territory governments and is a national strategy to deliver high quality public sector management training. Women in Leadership and Management The department continues to support development programs such as Discovery and Springboard. The department has supported three women to attend the Discovery program, which is designed to build skills and confidence in women with the potential and desire to progress to managerial and leadership roles. Lookrukin Indigenous Women s Leadership Development Program The department encourages the representation of Indigenous women in senior positions and actively supports the pilot program designed to provide a high level learning experience for Aboriginal and Torres Strait Islander women. The department has nominated one staff member to take part in the pilot program. Learning and Professional Development The department encourages the professional development of staff to ensure they are adequately equipped to carry out their responsibilities. Staff development in was supported through employee attendance at conferences, seminars and workshops in addition to formal study. Technical Conference The TechTalk conference was held from 13 to 15 April 2010 at the Medina Vibe Hotel. A total of 94 participants from the buildings and civil sections attended the three-day event, which was a mix of presentations and workshops. The main focus was on being eco-friendly; including the Northern Territory Government climate change policy, environmental issues, renewable energy, energy efficiency and the department s response to this. Presenters from industry and the department discussed new products, techniques and the department s role in the delivery of future projects. Occupational Health and Safety White Card Training The department identified and provided White Card Training to 161 employees in at a cost of $9660. The department will continue to identify current and new employees to undertake training. Employment Programs The department recognises our workforce is ageing and has been strengthening our future workforce by supporting graduate, apprentice and technical traineeships as part of succession planning and recruitment strategies. Early Career Programs The department has established a wide range of employment programs across the various tertiary education levels as a long-term strategy to support and build a pool of applicants who have the skills and qualifications required to start a career in the public sector. 26

31 The programs offered include: Graduate Development Program The department has four graduates on the program at present with qualifications including architecture, environmental science and civil engineering. The program comprises of multiple six-month placements in various divisions along with formal training and development in the processes of government. Work Integrated Learning Scholarships (WILS) The Works Integrated Learning Scholarship (WILS) program is an ongoing initiative by the Northern Territory Government and Charles Darwin University designed to encourage student participation at the university while addressing NT skill shortages and providing a link to employment in the Northern Territory Public Sector. In 2010, the department supports seven WILS, all of whom are studying engineering. The WILS program is open to everyone who has been accepted to study an engineering degree through Charles Darwin University. National Indigenous Cadetship Program The department supported four Indigenous students studying engineering. The program provides students with financial assistance and the opportunity to do paid work experience during university holidays. Civil Traineeships The department offers a range of Technical Traineeships whereby employees are provided on the job training and a qualification in: Certificate IV in Civil Construction (Supervision) Certificate IV in Civil Construction (Design) Diploma Civil in Construction (Management) Engineering Co-Op Scholarships The Co-Op program is designed to encourage student participation at Charles Darwin University and the Territory workforce. The program incorporates full-time tertiary education with work placements during semester breaks and a 6 month placement during their third year of study. The program also provides students with financial assistance. Support for a Professor of Structural Engineering The department continues to provide financial support to the Charles Darwin University for the employment of a Professor of Structural Engineering. The department receives a direct benefit from this partnership whereby the professor liaises closely with the department s structural engineers on current projects and can provide expert technical advice on construction projects; alternatives and complementary methodologies; mutual professional development through the sharing of differential skills and knowledge on project work. Apprenticeships This program emphasises providing Territorians the opportunity to gain a qualification through structured employment and training in the NT Public Sector. In 2010, the department took on three Business Office Skills Apprentices. 27

32 Figure 5: Employment Program Participants Program Number of participants Graduate 4 Work Integrated Learning Scholarships 6 National Indigenous Cadet Program 4 Technical Traineeships 22 Engineering Co-Op Scholarships 11 Apprenticeships 3 These early career programs have been implemented to build on the technical and engineering capacity in the department. Careers Expos The department continues to support Careers Expos to source people for careers in the department and the Northern Territory Public Sector. The department was represented at high school careers expos around the Northern Territory and also at the Charles Darwin University s Graduate Recruitment Fair. Induction An induction program has been developed to provide new employees with a snapshot of the agency including its strategic directions, its core business and outcomes. This program provides employees with information about conditions of service, the Code of Conduct, probation, employee entitlements, occupational health and safety and information on accessing information on the staff intranet site. Guest speakers attend the induction program and provide valuable information on topics such as procurement and marketing and communications. Work-life Balance The department continues to recognise the importance of employees commitment and interests outside the workplace that contribute to their general health and wellbeing. In response to the needs of our staff the department supports providing, where appropriate, opportunities for staff to gain a better work-life balance. The department currently manages work-life balance arrangements on a case-by-case basis, ensuring they suit individual employees as well as the workplace. Applications for work-life balance mainly cater for family responsibilities, such as children and elderly parents. Some of the flexible work practices in place include: part-time work extended leave options for staff with carer or other family responsibilities women on maternity leave returning to work part-time flexible working hours 28

33 flexible work arrangements such as working from home supporting purchased annual leave and leave at half-pay where possible transition to retirement. The department established a Health and Wellbeing Committee in late 2009, with representatives from across the department. Construction Division staff took part in the National Walk to Work Day in 2009, followed by a healthy breakfast provided by the department. The event was so popular that it resulted in a regular walking group. The Happy Steppers meet each Friday morning and go for a half hour walk around Palmerston before work. The committee is considering a number of ideas for Staff and Project Recognition The department celebrated some significant industry awards in acknowledging individuals and group efforts to deliver projects and programs to the benefit of Territorians. Construction Division (now DCI) Quarterly Staff Recognition Award Staff are asked to nominate individuals they feel are worthy of recognition. The Executive Team judges the awards and provides a small prize. A certificate is presented to the staff member by the CEO or another member of the Executive Team. In 2010 this expanded to include recognition of teams as well as individuals. Quarterly winners are automatically entered into the Annual DCI Awards in the same category. Annual Construction Division Awards These annual awards give staff a chance to nominate teams, individuals or projects for recognition. One category is made up of the four Staff Recognition Award winners from throughout the year. Staff vote to decide the overall annual winner. Other categories include the Construction Division Project Award and the Recruitment and Training Award. These awards will become the Annual DCI Awards in Civil Contractors Federation NT 2009 Annual Earth Awards The Barkly Highway Repairs Project, managed by the department s Tennant Creek office, was named the winner of the $1 million to $5 million category. The project was automatically nominated in the national awards held in October 2009 and received a commendation. Civil Contractors Federation NT 2010 Annual Training Awards Six of our staff were nominated, with Tiani Sampson and Antonios Mastoros receiving a highly commended in the Indigenous Training and Employment and Mature Age Achiever categories respectively. Australian Institute of Project Management Awards 2010 The Casuarina Police Station project was nominated in the Construction/Engineering under $100 million category and Robert Foote was nominated for Individual Program Manager. Engineering Excellence Awards 2010 The Victoria Highway construction project was nominated. 29

34 Reporting Against Employment Instructions Employment Instruction and Requirements Agency Department s Action in Number 1 Recruitment Agency to develop procedures on recruitment and selection for internal use. Chief Executive required to report annually on the number of employees in each designation and variations since last report. Number 2 Probation Chief Executive is to develop a probationary process for their Agency and convey details of the probationary process to employees within their first week of reporting for duty. Number 3 Natural Justice The rules of natural justice to be observed in all dealings with employees. Number 4 Performance Management Chief Executive to report annually on management training and staff development programs. Chief Executive to develop and implement performance management systems for their Agency. Number 5 Medical Incapacity No Agency action or reporting requirements. Number 6 Inability to Discharge Duties Chief Executive to provide the Office of the Commissioner for Public Employment with information on the extent to which this Employment Instruction has been used by the Agency. The department has established procedures for use by managers and selection panels. Agency staff are trained on recruitment procedures when required. Information about the probation process is available on the department s intranet and discussed during their induction. The principles of natural justice are observed in all dealings with employees. Staff participated in Personal Development Plans as a mechanism for each employee to seek constructive feedback. This involves employees discussing with their manager skill gaps, career plans, mentoring or training to meet individual and work unit goals. Advice is provided to managers as required by Human Resources staff. Section 44 Inability to Discharge Duties action was not undertaken against any employees. Chief Executive may establish procedures regarding this Employment Instruction within their Agency. Number 7 Discipline Chief Executive to provide the Office of the Commissioner for Public Employment with information on the extent to which this Employment Instruction has been used by the Agency. The Discipline Policy and information are on the intranet. No investigations were undertaken in relation to Section 49 Discipline. Chief Executive may establish procedures regarding Discipline within their Agency. Number 8 Management of Grievances Chief Executive to establish written grievance setting procedures for the Agency that should be available to employees and outline steps for dealing with grievances. The Grievance Policy and information are on the intranet. A total of 2 Section 59 Grievances were received. 30

35 Number 9 Incorporated in Employment Instruction 1. Number 10 Employee Records Agencies are required to maintain appropriate employee records and implement procedures for maintaining and accessing these records. Number 11 Equal Employment Opportunity Management Programs Chief Executive to devise and implement programs to ensure equal employment opportunities and outcomes are achieved. All personnel files are securely maintained by the Department of Business and Employment on behalf of the agency. Any personnel files that are held within the agency are securely maintained. Equal employment policies are on the intranet. Chief Executive to report annually on programs and initiatives the Agency has developed. Report should also include details on specific action in relation to Aboriginal Employment and Career Development, and also measures to enable employees to balance work and family responsibilities. Number 12 Occupational Health and Safety Programs Chief Executive to develop programs to ensure employees are consulted in developing and implementing Occupational Health and Safety programs. The Occupational Health and Safety policy and procedures information are on the intranet. Chief Executive to report annually on Occupational Health and Safety programs. Records must be kept on risk assessment, maintenance control and information, instruction and training provided to employees. Number 13 - Code of Conduct Chief Executive may issue guidelines regarding acceptance of gifts and benefits to employees. Chief Executive may issue an Agency specific Code of Conduct. Number 14 Part-Time Employment Chief Executive to provide information on the number of part-time employees by salary stream, as requested by the Commissioner for Public Employment. Staff are provided with a copy of the Code of Conduct booklet as part of their induction. Staff have access to the electronic version of the Code of Conduct booklet via the NT Government intranet. The agency supports part-time working arrangements and other flexible arrangements. There are 14 part-time employees working for the department. 31

36 Occupational Health and Safety Employee Assistance Program An Employee Assistance Program provides a range of professional, confidential counselling services independent of the public sector. This service is available to all employees and their immediate family members free for the first five visits. Figure 6: Employee Assistance Program usage Total $ Total number of people accessing services 58 Total sessions Jul to Sep 2009 Oct to Dec 2009 Jan to Mar 2010 Apr to Jun 2010 Clients Sessions Flu Vaccinations The department continued to provide staff with flu vaccinations over the flu season. Given the global spread of the human influenza virus in 2010, the department will offer flu vaccinations in as part of its business continuity efforts. Figure 7: Employee Uptake of Flu Vaccinations and Hepatitis A and B Vaccinations Flu vaccinations 133 Percentage of staff vaccinated 28.9% Hepatitis A and B vaccinations 5 32

37 Key priorities for Human Resources in are: develop and implement a wellness strategy for the department develop and implement a leadership program refine and enhance the department s performance management systems through updating and modernising policies and documentation optimise the use of technology to increase efficiencies develop and implement an appropriate workplace behaviours policy, toolkit and training package implement a workforce and organisational development committee. 33

38 Performance Reporting Government Business Division Summary of Outcomes and Outputs Expenditure by Output Group Regional Highlights The Department of Construction and Infrastructure manages a broad range of Capital Works, Minor New Works and Repairs and Maintenance projects Territory wide. Some of the highlights for the financial year are included on the map. 34

39 East Arnhem Region Yirrkala School upgrade Location Project Manager Value (excluding GST) Scope of work Client Contractors Commentary NTG or AG funded East Arnhem Region community of Yirrkala Kris McConnell $1.81M The Yirrkala School upgrade involved the demolition of three existing asbestos lined classrooms, internal upgrades to the existing administration area and construction of a new four classroom building including toilets, teachers prep and storerooms. Department of Education and Training Deltareef Pty Ltd This was a project delivered as part of the Federal and Northern Territory Government s Closing the Gap initiative. NTG and AG funded project 35

40 Katherine Region Jilkminggan Health Centre Location Project Manager Jilkminggan community, Katherine Greg Quill Value (excluding GST) $ Scope of work Client Contractors Commentary NTG or AG funded Relocate transportable building. Extensions and renovations to existing Health Centre. Department of Health and Families Atkin Building Co Pty Ltd This project delivered improved health facilities for residents of the community. NTG funded project 36

41 Tennant Creek Region Tennant Creek High School Science Centre Location Project Manager Value (excluding GST) Scope of work Client Contractors Commentary NTG or AG funded Tennant Creek Ash Beechey $1.970m The Science and Language Centres (SLC) for the 21 st Century Secondary Schools component of Building the Education Revolution (BER) provided funding for the construction of new or refurbishment of existing science laboratories or language centres in Secondary Schools by June Unlike the Primary Schools of the 21 st Century (P21) funding was allocated to schools on a competitive basis. The Territory was successful in receiving funding for eight Territory Secondary schools through the SLC. Tennant Creek High School was successful in receiving funding for the construction of a Science Centre. Department of Education and Training Probuild (NT) Pty Ltd This was a project delivered as part of the Australian Government s Building the Education Revolution program. AG funded project 37

42 Alice Springs Region Tanami Road upgrade and seal and Plenty Highway widen formation, gravel resheet and upgrade floodways Location Project Manager Tanami Road and Plenty Highway (Alice Springs Region) Henry Szczypiorski Value (excluding GST) $11M Scope of work Client Contractors Commentary NTG or AG funded Tanami Road: Improvements to the road surface to raise the standard of the road. Plenty Highway: Resurfacing and widening and upgrade to floodways and drainage to increase flood immunity. Department of Lands and Planning John Holland Group Pty Ltd This contract was the first one in Alice Springs Region (Road Projects) to comply with The Australian Government Building and Construction OH&S Accreditation Scheme and National Code of Practice for the Construction Industry due to the amount of the contract and partly federally funded projects. These projects won the civil category of the 2010 Construction Industry Excellence Awards for John Holland Group Pty Ltd. NTG and AG funded projects` 38

43 Construction Division The Construction Division is a Government Business Division responsible for delivering most of the Northern Territory s infrastructure projects. This includes managing the design, procurement and construction of infrastructure for the Northern Territory Government and, in some cases, indirectly for the Australian Government. The Construction Division has around 360 staff and has offices located in the key regional centres of Darwin, Nhulunbuy, Katherine, Tennant Creek and Alice Springs. The division is responsible for: Delivering capital works projects including buildings, roads, bridges and port infrastructure in urban and remote locations across the Northern Territory. This is facilitated through offices in Darwin, Nhulunbuy, Katherine, Tennant Creek and Alice Springs. Providing project management services to maintain roads and other public infrastructure. Developing and managing all stages of government infrastructure construction projects. Providing design, sacred site and environmental clearances, documentation and procurement services for construction projects. Providing a 24-hour road condition reporting service to the public via the internet and phone. 39

44 Working with local industry associations to foster strong relationships and provide training and development opportunities in the construction industry. Key achievements in Awarded 997 contracts to the value of $ million. Commenced construction of Rosebery Middle School. Completed the Alan Walker Radiation Oncology Unit at Royal Darwin Hospital. Completed Stage 1 Alice Springs Middle School. Completed Police College Training Facility. Completed Hidden Valley Sprint Car Facilities. Civil construction Constructed four additional overtaking lanes between Katherine and Darwin. Continued the strengthening and widening program on existing national highways, rural arterial roads and urban arterial roads. Continued the rolling program of sealing on Litchfield Loop Road and Fogg Bay Road. Continued Roads to Recovery Program including upgrading of targeted sections of local roads to improve their condition. Commenced upgrade of Daly River Road to improve access to Nauiyu community. Continued the sealing of the Tanami Road. Continued upgrade of the Plenty Highway. Continued traffic management project on urban arterial roads. Continued various landscaping upgrades. Completed two passing lanes on Tiger Brennan Drive between Amy Johnson Avenue and Stoddart Street. Completed Girraween Road realignment to the Stuart Highway. Completed the Pine Hill Access Road. Completed East Arm boat ramp. Priorities for The Construction Division will deliver Government infrastructure projects Territory-wide including: Building the Education Revolution schools infrastructure program across the Territory Road infrastructure, power, sewerage and street lighting for new Palmerston East suburbs Upgrade of various remote schools including Lajamanu School, Angurugu School, Gapuwiyak School, Numbulwar School and Gunbalanya School GEH capital works and repairs and maintenance programs Relocate and upgrade Alice Springs Hospital emergency department Construct Palmerston Water Park 40

45 Construct Palmerston sporting facilities including provision of headworks for soccer, rugby and netball facilities Construct WWII museum facilities at East Point Construct Themis police station and associated accommodation at Yarralin, Ramingining and Gupuwiyak Construct prisoner work camp at Tennant Creek Upgrade of staff accommodation on campus at Royal Darwin Hospital Construct a new health centre at Milingimbi Upgrade of Tanami and Litchfield Roads and the Plenty Highway Complete Rosebery Schools Complete Stage 2 East Arm Port Access Route Tiger Brennan Drive Extension Complete Stage 2 Alice Springs Middle School. Complete Hidden Valley Motor Sport Complex major drainage and electrical upgrade. Civil Construction Sealing of Litchfield and Fog Bay Road Construct bus interchanges at Humpty Doo and Coolalinga. Construct new high level bridge over Cullen River. Construct an off-road cycle path between Palmerston and Howard Springs. Complete sealing of Minjilang Airstrip Complete replacement of Cullen Bay pontoon. Complete McArthur River Bridge at Borroloola. 41

46 Construction Division - Performance Reporting Performance Measure Budget Revised Budget Actual Comments Quantity Projects managed Available hours charged to projects 80% 80% 79% Value of projects managed $870M $870M $1.209B During the financial year a number of additional infrastructure projects were added to the program, resulting in an increased number of projects and expenditure. Quality Clients satisfied with service and product 85% 85% 79% Client Survey conducted June 10 Timeliness Projects completed within agreed timeframes 85% 85% 89% Cash flow targets met 90% 90% 92% Housing Upgraded 18 dwellings for Police and 37 dwellings for other Northern Territory Government agencies. Constructed 91 dwellings across the Government Employee Housing (GEH) program (31 dwellings delayed due to land tenure issues). Replaced five GEH dwellings (two dwellings delayed due to land tenure issues). Constructed seven dwellings in conjunction with the Department of Education and Training Apartment Style Teacher Housing Program (18 dwellings been delayed due to land tenure issues). Delivered land servicing for GEH (70 per cent of the land servicing is being delivered through the Strategic Indigenous Housing and Infrastructure Program with the remainder being delivered by Construction Division). Land tenure is a significant issue for this component of the GEH program. Delivered 21 GEH dwellings under Closing The Gap ($5.5 million of this program is being delivered in conjunction with the DET Apartment Style Teacher Housing program). 42

47 Summary of Government Employee Housing Construction Program [as at 30 June 2010) GEH Construction Program Construction Program Program $000 (including revote) Expenditure $000 GEH Replacement GEH New construction GEH Land Servicing GEH Closing The Gap GEH DET Apartment Style Teacher Housing Total Infrastructure and Major Projects Division Infrastructure Services provides strategic and policy advice on infrastructure planning, building sustainability, energy management and capital works project definition. The group also manages the Capital Works and Repairs and Maintenance programs and developing and maintaining the asset management systems. Infrastructure Services provides professional advice and services to government agencies so that: Government-built assets support departmental service delivery at optimal life cycle costs Government-built assets demonstrate energy efficiency and sustainability Government programs support a viable and sustainable local design and construction industry. Infrastructure Key Achievements in Participated in a project with the Australian Government to manage asbestos in communities that are part of the Northern Territory Emergency Response (NTER). This included: identifying and recording the locations of asbestos containing materials and developing asbestos registers removing and disposing of asbestos-containing materials that could pose a risk in the near future placing asbestos signage where asbestos containing materials remain in a building, with the approval of those responsible for managing the buildings establishing, coordinating and maintaining an asbestos-containing materials register for all assets in the 73 NTER communities. Spent $27.57 million on Minor New Works in government infrastructure across the Northern Territory. Spent $84.28 million on repairs and maintenance of government infrastructure across the Northern Territory. 43

48 Helped the Department of Natural Resources, the Environment and the Arts develop the significant information technology infrastructure required to underpin the Spirited Travellers tourism guide. Infrastructure Priorities for Develop the Built Assets Management Policy and Toolkit to guide whole-ofgovernment resourcing. Deliver and implement the Asset Management System across government. Program-manage delivery of infrastructure across the 20 Growth Towns. Coordinate the Asbestos Management Program across government, in conjunction with the Australian Government. Infrastructure Services - Performance Reporting As a result of the restructure on the 4th December 2009 of the former Department of Planning and Infrastructure, the output groups within Infrastructure Services have changed. Infrastructure Services within DCI has two output groups: Asset and Program Management and Infrastructure Development. The output groups of Infrastructure Strategy and Infrastructure Sustainability are no longer output groups under DCI Infrastructure Services. Asset and Program Management Performance Measures Performance Measure Estimates Estimates Revised Actual Comments Quantity Capacity to provide advice and analysis * $15.28M $15.79M $21.87M Overspent in is the result of additional salaries and related expenses associated with the agency restructure, higher than anticipated legal expenses and the donation of completed Capital Works to Power and Water Corporation. Quality Client Satisfaction 95% 95% 96% Client Survey conducted May 10 Timeliness Timeframes as agreed 95% 95% 95% * Includes repairs and maintenance (Asset Information System, Building Asset management Services, Asset Management System) minor new works, capital works and program delivery fees 44

49 Infrastructure Development (Strategy in budget paper) Performance Measure Estimates Estimates Revised Actual Comments Quantity Preliminary Plans produced in progress to be completed 2011 Major Project Plans in progress to be completed 2011 Quality Client Satisfaction 95% 95% 90% Client Survey conducted May 10 Timeliness Timeframes as agreed 95% 95% 95% Note: Master project plans as published in Budget paper transferred to DLP Budget Paper has five Major project plans. Major Projects Delivery of the Wirrina Redevelopment project. Continue land reclamation at East Arm Port. Tie rod replacement program at East Arm Port. Complete Tiger Brennan Drive Stage 2 and commence Stage 3. Complete Johnston headworks and spine road. Complete headworks to Zuccoli and to Bellamack Stage C. Major Projects Key Achievements Commenced Johnston subdivision headworks and spine road. Completed Namatjira Drive. Commenced the procurement delivery for the Wirrina Redevelopment project. Commenced land reclamation at East Arm Port. Completed the Four Bridges Project on the Victoria Highway. Completed Tiger Brennan Drive (Berrimah Drive duplication) Stage 1. 45

50 Financial Statements Department of Construction and Infrastructure 46

51 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE FINANCIAL STATEMENT OVERVIEW For the Year Ended 30 June 2010 The Department of Construction and Infrastructure was created as a result of the Administrative Arrangement Orders issued on the 4 December 2009 with retrospective effect for accounting purposes from 1 July The former Department of Planning and Infrastructure was divided into the Department of Construction and Infrastructure, and the Department of Lands and Planning. The recognition of net assets and the transfer of assets to Department of Lands and Planning were treated as equity adjustments shown in the Statement of Changes in Equity. No comparative disclosure is available as a newly created Agency this financial year. The Department of Construction and Infrastructure consists of the Infrastructure Output group. The Department is responsible for planning, constructing and maintaining government infrastructure across the Territory, including public and government employee housing on behalf of the Department of Housing, Local Government and Regional Services. Financial Performance The Operating Statement details the Agency s financial performance on income and expenditure for the financial year. The Department of Construction and Infrastructure incurred a loss of $1.408 million for the year (prior to other comprehensive income); against a budgeted surplus of $419,000. Total operating expenditure was $ million; with $4.816 million employee expenditure and $4.701 million repairs and maintenance, and $9.528 million purchase of goods and services. Within the goods and services total $3.354 million is attributed to unfunded legal expenses. Financial Position The Balance Sheet details the Agency s financial position on assets, liabilities and equity at a point in time. As at the 30 June 2010 the Agency s assets totalled $ million; of which 86% relates to Construction Works in Progress. The remaining assets relate to cash deposits, receivables, and property plant and equipment. Cash Flow Statement The Statement of Cash Flows provides information on the movement of cash in and out of Department of Construction and Infrastructure during the year. The cash balance at the 30 June 2010 was $ million. 47

52 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE CERTIFICATION OF THE FINANCIAL STATEMENTS We certify that the attached financial statements for the Department of Construction and Infrastructure have been prepared from proper accounts and records in accordance with the prescribed format, the Financial Management Act and Treasurer s Directions. We further state that the information set out in the Comprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, and notes to and forming part of the financial statements, presents fairly the financial performance and cash flows for the year ended 30 June 2010 and the financial position on that date. At the time of signing, we are not aware of any circumstances that would render the particulars included in the financial statements misleading or inaccurate... Alan Wagner Vicki Highland Chief Executive A/Director Finance 13 October October

53 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE COMPREHENSIVE OPERATING STATEMENT As at 30 June Note $ 000 INCOME Grants and Subsidies Revenue Capital 3,440 Appropriation Output 16,176 Sales of Goods and Services 3,561 Goods and Services Received Free of Charge Other Income 151 TOTAL INCOME 3 23,608 EXPENSES Employee Expenses 4,816 Administrative Expenses Purchases of Goods and Services 5 9,528 Repairs and Maintenance 4,701 Depreciation and Amortisation Other Administrative Expenses 2,778 Grants and Subsidies Expenses Capital 2,274 TOTAL EXPENSES 3 25,016 NET DEFICIT (1,408) OTHER COMPREHENSIVE INCOME Changes in Asset revaluation Reserves (1,438,326) TOTAL OTHER COMPREHENSIVE INCOME (1,438,326) COMPREHENSIVE RESULT (1,439,734) The Comprehensive Operating Statement is to be read in conjunction with the notes to the financial statements. No comparative disclosure is available because the agency was created on 1 July 2009 from Administrative Arrangement Order of 4 December

54 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE BALANCE SHEET As at 30 June Note $ 000 ASSETS Current Assets Cash and Deposits 6 13,190 Receivables 7 4,900 Prepayments 2 Total Current Assets 18,092 Non-Current Assets Property, Plant and Equipment 8 329,032 Total Non-Current Assets 329,032 TOTAL ASSETS 347,124 LIABILITIES Current Liabilities Deposits Held Payables 10 5,763 Provisions Total Current Liabilities 7,017 Non-Current Liabilities Provisions Total Non-Current Liabilities 184 TOTAL LIABILITIES 7,201 NET ASSETS 339,923 EQUITY Capital 914,583 Reserves 12 18,361 Accumulated Funds (593,020) TOTAL EQUITY 339,923 The Balance Sheet is to be read in conjunction with the notes to the financial statements. No comparative disclosure is available because the agency was created on 1 July 2009 from Administrative Arrangement Order of 4 December

55 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE STATEMENT OF CHANGES IN EQUITY As at 30 June 2010 Equity at 1 July $ 000 Comprehensive result $ 000 Transactions with owners in their capacity as owners $ 000 Equity at 30 June $ 000 Note Accumulated Funds (591,613) (1,408) - (593,021) (591,613) (1,408) - (593,021) Reserves 12 Asset Revaluation Reserve 1,456,687 (1,438,326) - 18, ,687 (1,438,326) - 18,361 Capital - Transactions with Owners 1,926, ,926,199 Equity Injections Capital Appropriation , ,836 Equity Transfers In - - 4,324 4,324 Other Equity Injections ,517 46,517 National Partnership Payments , ,732 Commonwealth - Capital - 8,890 8,890 Equity Withdrawals - Capital Withdrawal - - (24,719) (24,719) Equity Transfers Out - (1,358,196) (1,358,196) 1,926,199 (1,011,616) 914,583 Total Equity at End of Financial Year 2,791,272 (1,439,734) (1,019,468) 339,923 This Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements. No comparative disclosure is available because the agency was created on 1 July 2009 from Administrative Arrangement Order of 4 December

56 DEPARTMENT OF CONSTRUCTION AND INFRASTRUCTURE CASH FLOW STATEMENT As at 30 June 2010 Note 2010 $ 000 CASH FLOWS FROM OPERATING ACTIVITIES Operating Receipts Grants and Subsidies Received 4,940 Capital Appropriation Output 16,176 Receipts From Sales of Goods And Services 68,869 Total Operating Receipts 89,985 Operating Payments Payments to Employees (10,800) Payments for Goods and Services (76,112) Grants and Subsidies Paid (2,274) Capital (59) Community Service Obligations Total Operating Payments (89,245) Net Cash From Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Investing Payments Purchases of Assets 8 (329,708) Total Investing Payments (329,708) Net Cash Used In Investing Activities (329,708) CASH FLOWS FROM FINANCING ACTIVITIES Financing Receipts Deposits Received (2,593) Equity Injections 180,836 Capital Appropriation Commonwealth Appropriation 139,622 46,517 Other Equity Injections Total Financing Receipts 364,382 Financing Payments Equity Withdrawals (24,719) Total Financing Payments (24,719) Net Cash From Financing Activities 339,663 Net Increase in Cash Held 10,695 Cash at Beginning of Financial Year 2,495 CASH AT END OF FINANCIAL YEAR 6 13,190 The Cash Flow Statement is to be read in conjunction with the notes to the financial statements. No comparative disclosure is available because the agency was created on 1 July 2009 from Administrative Arrangement Order of 4 December

57 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 INDEX OF NOTES TO THE FINANCIAL STATEMENTS 1. Objectives and Funding 2. Statement of Significant Accounting Policies 3. Comprehensive Operating Statement by Output Group INCOME 4. Goods and Services Received Free of Charge EXPENSES 5. Purchases of Goods and Services ASSETS 6. Cash and Deposits 7. Receivables 8. Property, Plant and Equipment LIABILITIES 9. Deposits Held 10. Payables 11. Provisions EQUITY 12. Reserves OTHER DISCLOSURES 13. Notes to the Cash Flow Statement 14. Financial Instruments 15. Commitments 16. Contingent Liabilities and Contingent Assets 17. Events Subsequent to Balance Date 18. Accountable Officer s Trust Account 19. Write-offs, Postponements and Waivers 20. Schedule of Territory Items 53

58 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE OBJECTIVES AND FUNDING The Department of Construction and Infrastructure s (DCI) vision is achieving best practice infrastructure programming, procurement and construction, whilst maximising the use of Territory business and resources, delivered on time and within budget. Additional information in relation to DCI and its principal activities may be found in the Performance Reporting section of the Annual Report. DCI is predominantly funded by, and is dependent on the receipt of Parliamentary appropriations. The financial statements encompass all funds through which the Agency controls resources to carry on its functions and deliver outputs. For reporting purposes, the output delivered by DCI is summarised in Note 3, which provides summary financial information in the form of a Comprehensive Operating Statement by Output Group. 2. a) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared in accordance with the requirements of the Financial Management Act and related Treasurer s Directions. The Financial Management Act requires DCI to prepare financial statements for the year ended 30 June based on the form determined by the Treasurer. The form of Agency financial statements is to include: (i) a Certification of the Financial Statements; (ii) (iii) (iv) (v) (vi) a Comprehensive Operating Statement; a Balance Sheet; a Statement of Changes in Equity; a Cash Flow Statement; and applicable explanatory notes to the financial statements. The financial statements have been prepared using the accrual basis of accounting, which recognises the effect of financial transactions and events when they occur, rather than when cash is paid out or received. As part of the preparation of the financial statements, all intra Agency transactions and balances have been eliminated. Except where stated, the financial statements have also been prepared in accordance with the historical cost convention. The form of the Agency financial statements is also consistent with the requirements of Australian Accounting Standards. The effects of all relevant new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are effective for the current annual reporting period have been evaluated. The Standards and Interpretations and their impacts are: AASB 101 Presentation of Financial Statements (September 2007), AASB Amendments to Australian Accounting Standards arising from AASB 101, AASB Further Amendments to Australian Accounting Standards arising from AASB 101 This Standard has been revised and introduces a number of terminology changes 54

59 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 as well as changes to the structure of the Comprehensive Operating Statement and Statement of Changes in Equity. Other Comprehensive Income is now disclosed in the Comprehensive Operating Statement and the Statement of Changes in Equity discloses owner changes in equity separately from non-owner changes in equity. AASB Amendments to Australian Accounting Standards Improving Disclosures about Financial Instruments The Standard amends AASB 7 Financial Instruments: Disclosures to require enhanced disclosures about fair value measurements. It establishes a three-level hierarchy for making fair value measurements, requiring those financial instruments measured at fair value in the Balance Sheet to be categorised into levels. b) Australian Accounting Standards and Interpretations Issued but not yet Effective At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective. Standard/ Interpretation Summary Effective for annual reporting periods beginning on or after Impact on financial statements AASB Further amendments to Australian Accounting Standards arising from the annual improvements project [AASB 5, 8, 101, 107, 117, 118, 136 and 139] AASB 124 Related party disclosures (Dec 2009) AASB Amendments to Australian Accounting Standards [AASB 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 and 1031 and Interpretations 2, 4, 16, 1039 and 1052] AASB 9 Financial instruments Some amendments will result in accounting changes for presentation, recognition or measurement purposes, while other amendments relate to terminology and editorial changes. Government related entities have been granted partial exemption with certain disclosure requirements. This standard amends AASB 8 to require an entity to exercise judgement in assessing whether a government and entities known to be under the control of that government are considered a single customer for purposes of certain operating segment disclosures. This standard also makes numerous editorial amendments to other AASs. This standard simplifies requirements for the classification and measurement of financial assets resulting from Phase 1 of the IASB s project to replace IAS 39 Financial instruments: recognition and measurement (AASB 139 Financial Instruments: recognition and measurement). 1 Jan 2010 Minimal effective to the financial statements 1 Jan 2011 Minimal effect on the financial statements. 1 Jan 2011 Minimal effect on the financial statements. 1 Jan 2013 Minimal effect on the financial statements. 55

60 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 c) Agency and Territory Items The financial statements of DCI include income, expenses, assets, liabilities and equity over which DCI has control (Agency items). Certain items, while managed by DCI, are controlled and recorded by the Territory rather than DCI (Territory items). Territory items are recognised and recorded in the Central Holding Authority as discussed below. Central Holding Authority The Central Holding Authority is the parent body that represents the Government s ownership interest in Government controlled entities. The Central Holding Authority also records all Territory items, such as income, expenses, assets and liabilities controlled by the Government and managed by Agencies on behalf of the Government. The main Territory item is Territory income, which includes taxation and royalty revenue, Commonwealth general purpose funding (such as GST revenue), fines, and statutory fees and charges. The Central Holding Authority also holds certain Territory assets not assigned to Agencies as well as certain Territory liabilities that are not practical or effective to assign to individual Agencies such as unfunded superannuation and long service leave. The Central Holding Authority recognises and records all Territory items, and as such, these items are not included in the Agency s financial statements. However, as the Agency is accountable for certain Territory items managed on behalf of Government, these items have been separately disclosed in note 19 - Schedule of Territory Items. d) Comparatives DCI was established as a result of the administrative restructure of 4 December As a new entity, DCI is not required to provide comparative financial disclosures for the financial year in this financial report. See note 2(w). e) Presentation and Rounding of Amounts Amounts in the financial statements and notes to the financial statements are presented in Australian dollars and have been rounded to the nearest thousand dollars, with amounts of $500 or less being rounded down to zero. f) Changes in Accounting Policies There have been no changes to accounting policies adopted in as a result of management decisions. g) Accounting Judgements and Estimates The preparation of the financial report requires the making of judgements and estimates that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities 56

61 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements and estimates that have significant effects on the financial statements are disclosed in the relevant notes to the financial statements. Notes that include significant judgements and estimates are: Employee Benefits Note 2(v) and Note 10: Non-current liabilities in respect of employee benefits are measured as the present value of estimated future cash outflows based on the appropriate Government bond rate, estimates of future salary and wage levels and employee periods of service. Contingent Liabilities Note 15: The present value of material quantifiable contingent liabilities are calculated using a discount rate based on the published 10-year Government bond rate. Doubtful Debts Note 2(o), 7: Receivables & 13: Financial Instruments Depreciation and Amortisation Note 2(k), Note 8: Property, Plant and Equipment. h) Goods and Services Tax Income, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred on a purchase of goods and services is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable or payable unless otherwise specified. i) Income Recognition Income encompasses both revenue and gains. Income is recognised at the fair value of the consideration received, exclusive of the amount of goods and services tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration being exchanged are not recognised as income. Grants and Other Contributions Grants, donations, gifts and other non-reciprocal contributions are recognised as revenue when the Agency obtains control over the assets comprising the 57

62 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 contributions. Control is normally obtained upon receipt. Contributions are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated. Appropriation Output Appropriation is the operating payment to each agency for the outputs they provide and is calculated as the net cost of Agency outputs after taking into account funding from Agency income. It does not include any allowance for major non-cash costs such as depreciation. Commonwealth appropriation follows from the Intergovernmental Agreement on Federal Financial Relations, resulting in Special Purpose Payments and National Partnership payments being made by the Commonwealth Treasury to state treasuries, in a manner similar to arrangements for GST payments. These payments are received by Treasury on behalf of the Central Holding Authority and then on passed to the relevant agencies as Commonwealth Appropriation. Revenue in respect of Appropriations is recognised in the period in which the Agency gains control of the funds. Sale of Goods Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when: the significant risks and rewards of ownership of the goods have transferred to the buyer; the Agency retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be reliably measured; it is probable that the economic benefits associated with the transaction will flow to the Agency; and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rendering of Services Revenue from rendering services is recognised by reference to the stage of completion of the contract. The revenue is recognised when: the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and it is probable that the economic benefits associated with the transaction will flow to the entity. Interest Revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. Goods and Services Received Free of Charge Goods and services received free of charge are recognised as revenue when a fair value can be reliably determined and the resource would have been purchased if it 58

63 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 had not been donated. Use of the resource is recognised as an expense. Disposal of Assets A gain or loss on disposal of assets is included as a gain or loss on the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal. Contributions of Assets Contributions of assets and contributions to assist in the acquisition of assets, being non-reciprocal transfers, are recognised, unless otherwise determined by Government, as gains when the Agency obtains control of the asset or contribution. Contributions are recognised at the fair value received or receivable. j) k) Repairs and Maintenance Expense Funding is received for repairs and maintenance works associated with Agency assets as part of Output Revenue. Costs associated with repairs and maintenance works on Agency assets are expensed as incurred. Depreciation and Amortisation Expense Items of property, plant and equipment, including buildings but excluding land, have limited useful lives and are depreciated or amortised using the straight-line method over their estimated useful lives. Amortisation applies in relation to intangible non-current assets with limited useful lives and is calculated and accounted for in a similar manner to depreciation. The estimated useful lives for each class of asset are in accordance with the Treasurer s Directions and are determined as follows: 2010 Buildings Plant and Equipment Years 4-15 Years Assets are depreciated or amortised from the date of acquisition or from the time an asset is completed and held ready for use. l) Interest Expense Interest expenses include interest and finance lease charges. Interest expenses are expensed in the period in which they are incurred. m) Cash and Deposits For the purposes of the Balance Sheet and the Cash Flow Statement, cash includes cash on hand, cash at bank and cash equivalents. Cash equivalents are highly liquid short-term investments that are readily convertible to cash. Cash at bank includes monies held in the Accountable Officer s Trust Account (AOTA) that are ultimately payable to the beneficial owner refer also to note

64 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 n) Receivables Receivables include accounts receivable and other receivables and are recognised at fair value less any allowance for impairment losses. The allowance for impairment losses represents the amount of receivables the Agency estimates are likely to be uncollectible and are considered doubtful. Analyses of the age of the receivables that are past due as at the reporting date are disclosed in an aging schedule under credit risk in Note 14 Financial Instruments. Reconciliation of changes in the allowance accounts is also presented. Accounts receivable are generally settled within 30 days and other receivables within 30 days. o) Property, Plant and Equipment Acquisitions All items of property, plant and equipment with a cost, or other value, equal to or greater than $5,000 are recognised in the year of acquisition and depreciated as outlined below. Items of property, plant and equipment below the $5,000 threshold are expensed in the year of acquisition. The construction cost of property, plant and equipment includes the cost of materials and direct labour, and an appropriate proportion of fixed and variable overheads. Complex Assets Major items of plant and equipment comprising a number of components that have different useful lives, are accounted for as separate assets. The components may be replaced during the useful life of the complex asset. Subsequent Additional Costs Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the Agency in future years. Where these costs represent separate components of a complex asset, they are accounted for as separate assets and are separately depreciated over their expected useful lives. Construction (Work in Progress) As part of Financial Management Framework, the Department of Construction and Infrastructure (DCI) is responsible for managing general government capital works projects on a whole of Government basis. Therefore appropriation for most of agencies capital works is provided directly to DCI and the cost of construction work in progress is recognised as an asset of DCI. Once completed, capital works assets are transferred to the Agency. p) Revaluations and Impairment Revaluation of Assets Subsequent to initial recognition, assets belonging to the following classes of noncurrent assets are revalued with sufficient regularity to ensure that the carrying 60

65 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 amount of these assets does not differ materially from their fair value at reporting date: Land; Buildings; Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable, willing parties in an arms length transaction. Plant and equipment are stated at historical cost less depreciation, which is deemed to equate to fair value. The unique nature of some of the heritage and cultural assets may preclude reliable measurement. Such assets have not been recognised in the financial statements. Impairment of Assets An asset is said to be impaired when the asset s carrying amount exceeds its recoverable amount. Non-current physical and intangible Agency assets are assessed for indicators of impairment on an annual basis. If an indicator of impairment exists, the Agency determines the asset s recoverable amount. The asset s recoverable amount is determined as the higher of the asset s depreciated replacement cost and fair value less costs to sell. Any amount by which the asset s carrying amount exceeds the recoverable amount is recorded as an impairment loss. Impairment losses are recognised in the Comprehensive Operating Statement unless the asset is carried at a revalued amount. Where the asset is measured at a revalued amount, the impairment loss is offset against the Asset Revaluation Surplus for that class of asset to the extent that an available balance exists in the Asset Revaluation Surplus. In certain situations, an impairment loss may subsequently be reversed. Where an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount. A reversal of an impairment loss is recognised in the Comprehensive Operating Statement as income, unless the asset is carried at a revalued amount, in which case the impairment reversal results in an increase in the Asset Revaluation Surplus. Note 12 provides additional information in relation to the Asset Revaluation Surplus. q) Leased Assets Leases under which the Agency assumes substantially all the risks and rewards of ownership of an asset are classified as finance leases. Other leases are classified as operating leases. Finance Leases Finance leases are capitalised. A leased asset and a lease liability equal to the present value of the minimum lease payments are recognised at the inception of the lease. Lease payments are allocated between the principal component of the lease liability and the interest expense. 61

66 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 Operating Leases Operating lease payments made at regular intervals throughout the term are expensed when the payments are due, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. Lease incentives under an operating lease of a building or office space is recognised as an integral part of the consideration for the use of the leased asset. Lease incentives are to be recognised as a deduction of the lease expenses over the term of the lease. r) Payables Liabilities for accounts payable and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Agency. Accounts payable are normally settled within 30 days. s) Employee Benefits Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries and recreation leave. Liabilities arising in respect of wages and salaries and recreation leave and other employee benefit liabilities that fall due within twelve months of reporting date are classified as current liabilities and are measured at amounts expected to be paid. Non-current employee benefit liabilities that fall due after twelve months of the reporting date are measured at present value, calculated using the Government long term bond rate. No provision is made for sick leave, which is non-vesting, as the anticipated pattern of future sick leave to be taken is less than the entitlement accruing in each reporting period. Employee benefit expenses are recognised on a net basis in respect of the following categories: wages and salaries, non-monetary benefits, recreation leave, sick leave and other leave entitlements; and other types of employee benefits. As part of the Financial Management Framework, the Central Holding Authority assumes the long service leave liabilities of Government Agencies, including DCI and as such no long service leave liability is recognised in Agency financial statements. t) Superannuation Employees superannuation entitlements are provided through the: NT Government and Public Authorities Superannuation Scheme (NTGPASS); Commonwealth Superannuation Scheme (CSS); or non-government employee nominated schemes for those employees commencing on or after 10 August

67 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 DCI makes superannuation contributions on behalf of its employees to the Central Holding Authority or non-government employee nominated schemes. Superannuation liabilities related to government superannuation schemes are held by the Central Holding Authority and as such are not recognised in Agency financial statements. u) Contributions by and Distributions to Government DCI may receive contributions from Government where the Government is acting as owner of the Agency. Conversely, DCI may make distributions to Government. In accordance with the Financial Management Act and Treasurer s Directions, certain types of contributions and distributions, including those relating to administrative restructures, have been designated as contributions by, and distributions to, Government. These designated contributions and distributions are treated by DCI as adjustments to equity. The Statement of Changes in Equity provides additional information in relation to contributions by, and distributions to, Government. v) Commitments Disclosures in relation to capital and other commitments, including lease commitments are shown at note 15 and are consistent with the requirements contained in AASB 101, AASB 116 and AASB 117. Commitments are those contracted as at 30 June where the amount of the future commitment can be reliably measured. w) Administrative Restructure The Administrative Arrangement Order was revised on 4 December These changes to the Administrative Arrangement Order under the Financial Management Act come into effect from 1 July of the financial year they occur. The former Department of Planning and Infrastructure (DPI) was divided into the Department of Lands and Planning (DLP) and DCI. DCI was created to provide all construction and capital works planning activities on behalf of other NT Government agencies from the former DPI. The Housing capital Infrastructure function from the Department of Housing, Local Government and Regional Services was also transferred to DCI. With the significant increase in capital works funding in recent years, this stand alone agency will concentrate on developing and implementing best practise infrastructure programming, procurement and construction approaches with an emphasis on ensuring government expenditure creates sustained training and job opportunities for all Territorians, wherever they live. In accordance with the Treasurer s Directions, the recognition of net assets and the transfer of asset to DLP were treated as equity adjustments shown in the Statement of Changes in Equity. 63

68 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE Note Infrastructure 2010 $ 000 Total 2010 $ 000 INCOME Grants and Subsidies Revenue Capital 3,440 3,440 Appropriation Output 16,176 16,176 Sales of Goods and Services 3,561 3,561 Goods and Services Received Free of Charge Other Income TOTAL INCOME 23,608 23,608 EXPENSES Employee Expenses 4,816 4,816 Administrative Expenses Purchases of Goods and Services 5 9,528 9,528 Repairs and Maintenance 4,701 4,701 Depreciation and Amortisation Other Administrative Expenses 2,778 2,778 Grants and Subsidies Expenses Capital 2,274 2,274 TOTAL EXPENSES 25,016 25,016 NET DEFICIT (1,408) (1,408) OTHER COMPREHENSIVE INCOME Asset Revaluation Reserve (1,438,326) (1,438,326) TOTAL OTHER COMPREHENSIVE INCOME (1,438,326) (1,438,326) COMREHENSIVE RESULT (1,439,734) (1,439,734) This Comprehensive Operating Statement by Output Group is to be read in conjunction with the notes to the financial statements. 4. GOODS AND SERVICES RECEIVED FREE OF CHARGE 2010 $ 000 Corporate and Information Services PURCHASES OF GOODS AND SERVICES The net deficit has been arrived at after charging the following expenses: Goods and Services Expenses: Consultants (1) 179 Advertising (2) - Marketing and Promotion (3) 3 Document Production 0 Legal Expenses (4) 3,354 Recruitment (5) 5 Information Technology Charges 1,518 Training and Study 148 Official Duty Fares 77 Travelling Allowance 8 (1) Includes marketing, promotion and IT consultants. (2) Does not include recruitment advertising or marketing and promotion advertising. (3) Includes advertising for marketing and promotion but excludes marketing and promotion consultants expenses, which are incorporated in the consultants category. (4) Includes legal fees, claim and settlement costs. (5) Includes recruitment related advertising costs. 64

69 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE CASH AND DEPOSITS 2010 $ 000 Cash on Hand 13,190 13, RECEIVABLES Current Accounts Receivable 495 Less: Allowance for Impairment Losses (33) 462 GST Receivables 4,438 4,438 Total Receivables 4, PROPERTY, PLANT AND EQUIPMENT Land At Fair Value 9,584 Buildings At Fair Value 61,579 Less: Accumulated Depreciation (45,789) 15,790 Construction (Work in Progress) At Capitalised Cost 298, ,535 Plant and Equipment At Fair Value 5,353 Less: Accumulated Depreciation (230) 5,123 Total Property, Plant and Equipment 329,032 65

70 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE PROPERTY, PLANT AND EQUIPMENT(Continued) 2010 Property, Plant and Equipment Reconciliations A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of is set out below: Land Buildings Construction (Work in Progress) Infrastructure Computer Software Computer Hardware Transport Equipment Plant & Equipment Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Carrying Amount as at 1 July ,176 36, ,819 2,208, ,468 2,784,510 Additions , , ,707 Disposals Depreciation - (889) (30) (919) Additions/(Disposals) from Asset Transfers (232,852) (25,951) (324,891) (2,208,254) (246) (370) (102) (3,415) (2,796,081) Revaluation Increments/(Decrements) 5,260 6, ,815 Carrying Amount as at 30 June ,584 15, , z 0 0 5, ,032 66

71 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE DEPOSITS HELD 2010 $ 000 Current Deposits Held 845 Total Deposits Held PAYABLES Accounts Payable 2,901 Accrued Expenses 2,862 Total Payables 5, PROVISIONS Current Employee Benefits Recreation Leave 275 Leave Loading 44 Other Employee Benefits 10 Other Current Provisions Other Provisions Non-Current Employee Benefits Recreation Leave Total Provisions 593 DCI employed 31 employees as at 30 June RESERVES Asset Revaluation Surplus (i) Nature and Purpose of the Asset Revaluation Surplus The asset revaluation surplus includes the net revaluation increments and decrements arising from the revaluation of non-current assets. Impairment adjustments may also be recognised in the Asset Revaluation Surplus. (ii) Movements in the Asset Revaluation Surplus Balance as at 1 July 1,456,687 Asset Revaluation Reserve Transferred Out (1,450,141) Increment Land 5,260 Increment - Buildings 6,555 Balance as at 30 June 18,361 67

72 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE NOTES TO THE CASH FLOW STATEMENT Reconciliation of Cash The total of Agency Cash and Deposits of $13,190,143 recorded in the Balance Sheet is consistent with that recorded as cash in the Cash Flow Statement $ 000 Reconciliation of Net Deficit to Net Cash From Operating Activities Net Deficit (1,408) Non-Cash Items: Depreciation and Amortisation 919 Asset Donations 2,500 Repairs & Maintenance/Minor New Works 630 Changes in Assets and Liabilities: Decrease in Receivables 8,667 Decrease in Prepayments 103 Increase in Other Assets (3) Decrease in Payables (5,106) Decrease in Provision for Employee Benefits (5,001) Decrease in Other Provisions (561) Net Cash From Operating Activities FINANCIAL INSTRUMENTS A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments held by the Department of Construction and Infrastructure (DCI) include cash and deposits, receivables and payables. DCI has limited exposure to financial risks as discussed below. (a) Categorisation of Financial Instruments The carrying amounts of DCI s financial assets and liabilities by category are disclosed in the table below $000 Financial Assets Cash and deposits 13,190 Receivables 462 Financial Liabilities Fair value through profit and loss (FVTPL): Designated as at FVTPL 5,763 68

73 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) (b) Credit Risk DCI has limited credit risk exposure (risk of default). In respect of any dealings with organisations external to Government, DCI has adopted a policy of only dealing with credit worthy organisations and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents DCI s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained. Receivables Receivable balances are monitored on an ongoing basis to ensure that exposure to bad debts is not significant. A reconciliation and aging analysis of receivables is presented below. Aging of Receivables $ Not Overdue 440 Overdue for less than 30 Days - Overdue for 30 to 60 Days - Overdue for more than 60 Days 1 Total 441 Reconciliation of the Allowance for Impairment Losses Increase in allowance recognised in profit or loss 1 Total 440 (c) Liquidity risk Liquidity risk is the risk that DCI will not be able to meet its financial obligations as they fall due. DCI s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet is liabilities when they fall due. The following tables detail DCI s remaining contractual maturity for its financial assets and liabilities. It should be noted that these values are undiscounted, and consequently totals may not reconcile to the carrying amounts presented in the Balance Sheet. 69

74 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) 2010 Fixed Interest Rate Variable Interest $ 000 Less than a Year $ to 5 Years $ 000 More than 5 Years $ 000 Non Interest Bearing $ 000 Total $ 000 Assets Cash and deposits 13,190 13,190 Receivables 4,900 4,900 Total Financial Assets: 18,090 18,090 Liabilities Deposits Held Payables 5,763 5,763 Total Financial Liabilities: 6,608 6,608 (d) Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. It comprises interest rate risk, price risk and currency risk. i) ii) iii) Interest Rate Risk DCI is not exposed to interest rate risk as its financial assets and financial liabilities are non-interest bearing. Price Risk DCI is not exposed to price risk as it does not hold units in unit trusts. Currency Risk DCI is not exposed to currency risk as it does not hold borrowings denominated in foreign currencies or transactional currency exposures arising from purchases in a foreign currency. (e) Net Fair Value The fair value of financial instruments is estimated using various methods. These methods are classified into the following levels: Level 1 fair value is calculated using quoted prices in active markets. Instruments whose carrying amount is deemed to be equal to its fair value qualify for this level of classification. Level 2 to be used for those instruments that cannot be classified as either Level 1 or Level 3. Level 3 fair value is estimated using inputs other than quoted market data, for example, net present value. 70

75 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) 2010 Total Carrying Net Fair Value Net Fair Value Amount Level 1 Total $ 000 $ 000 $ 000 Financial Assets 13,190 13,190 13,190 Cash and Deposits 4,900 4,900 4,900 Receivables Total Financial Assets: 18,090 18,090 18,090 Financial Liabilities Deposits Held Payables 5,763 5,763 5,763 Total Financial Liabilities: 6,608 6,608 6, COMMITMENTS 2010 $ 000 (i) Capital Expenditure Commitments Capital expenditure commitments are primarily in relation to the construction of building and infrastructure. Capital expenditure commitments contracted for at balance date but not recognised as liabilities are payable as follows: Within one year 123,270 Later than one year and not later than five years 2, ,830 71

76 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE CONTINGENT LIABILITIES AND CONTINGENT ASSETS a) Contingent liabilities A Deed exists between the Northern Territory of Australia ( NTA ) (through the Department of Construction and Infrastructure) and the Darwin Port Corporation ( DPC ) in relation to the East Arm Port Stage 1 remedial works. NTA will enter into a Deed of Settlement with the Thiess Laing O Rourke Joint Venture (the Joint Venture ) to resolve the dispute relating to the failed tie rods at the East Arm Wharf. The Settlement Deed will indemnify NTA in respect of liability for loss or damage to property of third parties caused by the carrying out of the remedial works or the cluster failure works. Because the Wharf is owned by DPC, a third party in this context, the purpose of the indemnity in the Deed between NTA and DPC is to: Create an obligation on NTA to rectify damage to the wharf or other DPC property caused by the carrying out of the remedial works and the cluster failure works, and Indemnify DPC against such damage and including any claims which may be made against DPC as a result. The indemnity contained in the Deed is contingent upon the settlement of the dispute with the Consortium. b) The department has entered into other agreement which contain indemnity clauses. The contingent liabilities arising from theses indemnities are unquantifiable, but expected to be immaterial. However, for all events that would give rise to a liability DCI has comprehensive risk management procedures in place. Contingent assets The Department of Construction and Infrastructure had no contingent assets as at 30 June EVENTS SUBSEQUENT TO BALANCE DATE No events have arisen between the end of the financial year and the date of this report that require adjustment to, or disclosure in these financial statements. 72

77 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE ACCOUNTABLE OFFICER S TRUST ACCOUNT In accordance with section 7 of the Financial Management Act, an Accountable Officer s Trust Account has been established for the receipt of money to be held in trust. A summary of activity is shown below: Nature of Trust Money Opening Balance 1 July 2009 Receipts Payments Closing Balance 30 June 2010 Retention Money (104) Liquated Damages (693) Surveyors Board (31) - (31) 0 Other (7) - (7) (38) WRITE-OFFS, POSTPONEMENTS AND WAIVERS The Department of Construction and Infrastructure had no write-offs, waivers or postponements during SCHEDULE OF TERRITORY ITEMS The following Territory items are managed by the Department of Construction and Infrastructure on behalf of the Government and are recorded in the Central Holding Authority (refer note 2(b)). TERRITORY INCOME AND EXPENSES 2010 $ 000 Income Grants and Subsidies Revenue Capital 113 Other Income 20,600 Total Income 20,713 Expenses Central Holding Authority Income Transferred 20,713 Total Expenses Territory Income less Expenses 0 TERRITORY ASSETS AND LIABILITIES Assets Other Receivables 20,600 Total Assets 20,600 Liabilities Central Holding Authority Income Payable 20,600 Total Liabilities 0 Net Assets 0 73

78 Financial Statements Construction Division

79 CONSTRUCTION DIVISION FINANCIAL STATEMENT OVERVIEW For the Year Ended 30 June 2010 Construction Division is responsible for the project management of design, procurement and supervision of construction and maintenance of built assets for the Northern Territory Government client agencies. It has no construction charter of its own and arranges private contractors for all construction work on behalf of clients. It provides a full range of technical expertise in the supervision of construction and maintenance of roads, bridges, buildings, mechanical and electrical plant and hydraulics. As well as delivering the Government s works program, management has continued to focus on improving performance and implementing improved structures, systems and processes to support the commercial activities of Construction Division. Considerable work has been carried out in mapping systems and processes and implementing revised NT Government procurement procedures, as well as various financial management improvements. For the financial year Construction Division has managed projects with a value of $1.209 billion, compared to the previous year when it managed projects with a value of $794 million. Financial Performance Construction Division recorded an after tax surplus of $3.199 million compared with $4.374 million in the prior year. Construction Division is liable for Income Tax under the Northern Territory Tax Equivalents Regime. Construction Division has provided 30% of remaining pretax profits as income tax this year amounting to $1.371 million. A dividend of $1.600 million was provided for from after tax surplus compared with $2.187 million dividend in the prior year. An increase in income of $ million, which represents primarily project management fees occurred as a result of a $415 million or 52% increase in the capital projects managed to a total program of $1.209 billion, and interest income on cash balances of $363,000. Increases in employee expenses and purchases of goods and services are directly related to project management activities which are consistent with the increase in revenue. Financial Position Net Assets of the Construction Division have increased by $1.600 million this year to $7.096 million. This is primarily the result of continued sound financial performance and current assets increasing above the corresponding increase in current liabilities. An increase in current assets is primarily the result of cash and deposits on hand at year end $ million compared with $ million prior year. Liabilities have increased by $9.320 million due to deposits held as part of the project management activities performed. 75

80 CONSTRUCTION DIVISION CERTIFICATION OF THE FINANCIAL STATEMENTS We certify that the attached financial statements for the Construction Division have been prepared from proper accounts and records in accordance with the prescribed format, the Financial Management Act and Treasurer s Directions. We further state that the information set out in the Comprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, and notes to and forming part of the financial statements, presents fairly the financial performance and cash flows for the year ended 30 June 2010 and the financial position on that date. At the time of signing, we are not aware of any circumstances that would render the particulars included in the financial statements misleading or inaccurate... Alan Wagner Vicki Highland Chief Executive A/Director Finance 13 October October

81 77

82 CONSTRUCTION DIVISION COMPREHENSIVE OPERATING STATEMENT As at 30 June $ $ 000 Note INCOME Grants and Subsidies Revenue Current 10 - Sales of Goods and Services 88,739 65,565 Interest Revenue Gain on Disposal of Assets Other Income TOTAL INCOME 89,764 66,105 EXPENSES Employee Expenses 35,698 27,008 Administrative Expenses Purchases of Goods and Services 5 45,897 29,842 Depreciation Other Administrative Expenses 3,589 2,907 Interest Expenses - 52 TOTAL EXPENSES 85,194 59,856 SURPLUS BEFORE INCOME TAX 4 4,570 6,249 Income Tax Expense 4 (1,371) (1,875) NET SURPLUS 3,199 4,374 TOTAL OTHER COMPREHENSIVE INCOME - - COMPREHENSIVE RESULT 3,199 4,374 The Comprehensive Operating Statement is to be read in conjunction with the notes to the financial statements. 78

83 CONSTRUCTION DIVISION BALANCE SHEET As at 30 June $ $ 000 Note ASSETS Current Assets Cash and Deposits 6 21,959 10,846 Receivables 7 8,329 8,609 Prepayments Total Current Assets 30,333 19,492 Non-Current Assets Property, Plant and Equipment Total Non-Current Assets TOTAL ASSETS 30,440 19,520 LIABILITIES Current Liabilities Deposits Held 9 11,156 3,217 Payables 10 3,222 2,189 Provisions 11 7,334 7,382 Total Current Liabilities 21,712 12,788 Non-Current Liabilities Provisions 11 1,632 1,236 Total Non-Current Liabilities 1,632 1,236 TOTAL LIABILITIES 23,344 14,024 NET ASSETS 7,096 5,496 EQUITY Capital Accumulated Funds 12 6,893 5,293 TOTAL EQUITY 7,096 5,496 The Balance Sheet is to be read in conjunction with the notes to the financial statements. 79

84 CONSTRUCTION DIVISION STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2010 Equity at 1 July $ 000 Comprehensive result $ 000 Transactions with owners in their capacity as owners $ 000 Equity at 30 June $ 000 Note Accumulated Funds 12 5,294 3,199-8,493 Dividends Paid - - (1,600) (1,600) 5,294 3,199 (1,600) 6,893 Capital - Transactions with Owners Total Equity at End of Financial Year 5,497 3,199 (1,600) 7, Accumulated Funds 3,106 4,374-7,480 Dividends Paid - - (2,187) (2,187) 3,106 4,374 (2,187) 5,293 Capital - Transactions with Owners Equity Injections Equity Transfers In Total Equity at End of Financial Year 3,289 4,374 (2,167) 5,496 This Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements. 80

85 CONSTRUCTION DIVISION CASHFLOW STATEMENT For the year ended 30 June $ $ 000 Note CASH FLOWS FROM OPERATING ACTIVITIES Operating Receipts Grants and Subsidies Received Current 10 - Receipts From Sales of Goods And Services 96,351 69,795 Interest Received Total Operating Receipts 96,699 70,356 Operating Payments Payments to Employees (34,032) (25,673) Payments for Goods and Services (55,342) (37,977) Income Tax Paid (1,875) (2,061) Interest Paid - (79) Total Operating Payments (91,249) (65,790) Net Cash From Operating Activities 13 5,450 4,566 CASH FLOWS FROM INVESTING ACTIVITIES Investing Payments Purchases of Assets (90) (13) Total Investing Payments (90) (13) Net Cash Used In Investing Activities (90) (13) CASH FLOWS FROM FINANCING ACTIVITIES Financing Receipts Deposits Received 7,940 (4,908) Total Financing Receipts 7,940 (4,908) Financing Payments Repayment of Borrowings - (2,500) Dividend Paid 12 (2,187) (2,404) Total Financing Payments (2,187) (4,904) Net Cash From/(Used In) Financing Activities 5,753 (9,812) Net Increase/(Decrease) in Cash Held 11,113 (5,259) Cash at Beginning of Financial Year 10,846 16,105 CASH AT END OF FINANCIAL YEAR 6 21,959 10,846 The Cash Flow Statement is to be read in conjunction with the notes to the financial statements. 81

86 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 INDEX OF NOTES TO THE FINANCIAL STATEMENTS 1. Objectives and Funding 2. Statement of Significant Accounting Policies INCOME 3. Gain on Disposal of Assets EXPENSES 4. Income Tax Expense 5. Purchases of Goods and Services ASSETS 6. Cash and Deposits 7. Receivables 8. Property, Plant and Equipment LIABILITIES 9. Deposits Held 10. Payables 11. Provisions EQUITY 12. Reserves OTHER DISCLOSURES 13. Notes to the Cash Flow Statement 14. Financial Instruments 15. Commitments 16. Contingent Liabilities and Contingent Assets 17. Events Subsequent to Balance Date 18. Write-offs, Postponements and Waivers 82

87 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE OBJECTIVES AND FUNDING Construction Division has been determined by the Treasurer to be a Government Business Division (GBD) as specified in the Financial Management Act. Construction Division provides project management for the design, procurement, and supervision of construction and maintenance of Northern Territory Government built assets. Unlike general government agencies Construction Division does not receive direct appropriation for its commercial activities. Instead, operating revenue is primarily generated from fees charged to other NT Government Agencies for its project management activities. 2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of Accounting The financial statements have been prepared in accordance with the requirements of the Financial Management Act and related Treasurer s Directions. The Financial Management Act requires the Construction Division to prepare financial statements for the year ended 30 June based on the form determined by the Treasurer. The form of Agency financial statements is to include: (i) a Certification of the Financial Statements; (ii) an Operating Statement; (iii) a Balance Sheet; (iv) a Statement of Changes in Equity; (v) a Cash Flow Statement; and (vi) applicable explanatory notes to the financial statements. The form of the Agency financial statements is also consistent with the requirements of Australian Accounting Standards. The effects of all relevant new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are effective for the current annual reporting period have been evaluated. The Standards and Interpretations and their impacts are: AASB 101 Presentation of Financial Statements (September 2007), AASB Amendments to Australian Accounting Standards arising from AASB 101, AASB Further Amendments to Australian Accounting Standards arising from AASB 101 This Standard has been revised and introduces a number of terminology changes as well as changes to the structure of the Comprehensive Operating Statement and Statement of Changes in Equity. Other Comprehensive Income is now disclosed in the Comprehensive Operating Statement and the Statement of Changes in Equity discloses owner changes in equity separately from non-owner changes in equity. AASB Amendments to Australian Accounting Standards Improving Disclosures about Financial Instruments The Standard amends AASB 7 Financial Instruments: Disclosures to require enhanced disclosures about fair value measurements. It establishes a three-level hierarchy for making fair value measurements, requiring those financial instruments measured at fair value in the Balance Sheet to be categorised into levels. 83

88 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 b) Australian Accounting Standards and Interpretations Issued but not yet Effective At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective. Standard/Interpretation Summary Effective for annual reporting periods beginning on or after Impact on financial statements AASB Further amendments to Australian Accounting Standards arising from the annual improvements project [AASB 5, 8, 101, 107, 117, 118, 136 and 139] AASB 124 Related party disclosures (Dec 2009) AASB Amendments to Australian Accounting Standards [AASB 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 and 1031 and Interpretations 2, 4, 16, 1039 and 1052] Some amendments will result in accounting changes for presentation, recognition or measurement purposes, while other amendments relate to terminology and editorial changes. Government related entities have been granted partial exemption with certain disclosure requirements. This standard amends AASB 8 to require an entity to exercise judgement in assessing whether a government and entities known to be under the control of that government are considered a single customer for purposes of certain operating segment disclosures. This standard also makes numerous editorial amendments to other AASs. 1 Jan 2010 Minimal effect on the financial statements. 1 Jan 2011 Minimal effect on the financial statements. 1 Jan 2011 Minimal effect on the financial statements. AASB 9 Financial instruments This standard simplifies requirements for the classification and measurement of financial assets resulting from Phase 1 of the IASB s project to replace IAS 39 Financial instruments: recognition and measurement (AASB 139 Financial Instruments: recognition and measurement). 1 Jan 2013 Minimal effect on the financial statements. 84

89 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 c) Central Holding Authority The Central Holding Authority is the parent body that represents the Government s ownership interest in Government controlled entities. The Central Holding Authority also records all Territory items, such as income, expenses, assets and liabilities controlled by the Government and managed by Agencies on behalf of the Government. The main Territory item is Territory income, which includes taxation and royalty revenue, Commonwealth general purpose funding (such as GST revenue), fines, and statutory fees and charges. The Central Holding Authority also holds certain Territory assets not assigned to Agencies as well as certain Territory liabilities that are not practical or effective to assign to individual Agencies such as unfunded superannuation and long service leave. d) Comparatives Where necessary, comparative information for the financial year has been reclassified to provide consistency with current year disclosures. e) Presentation and Rounding of Amounts Amounts in the financial statements and notes to the financial statements are presented in Australian dollars and have been rounded to the nearest thousand dollars, with amounts of $500 or less being rounded down to zero. f) Changes in Accounting Policies There have been no changes to accounting policies adopted in as a result of management decisions. g) Accounting Judgements and Estimates The preparation of the financial report requires the making of judgements and estimates that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements and estimates that have significant effects on the financial statements are disclosed in the relevant notes to the financial statements. Notes that include significant judgements and estimates are: Employee Benefits Note 2(r) and Note 11: Non-current liabilities in respect of employee benefits are measured as the present value of estimated future cash outflows based on the appropriate Government bond rate, estimates of 85

90 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 future salary and wage levels and employee periods of service. Depreciation and Amortisation Note 2(j), Note 8: Property, Plant and Equipment. h) Goods and Services Tax Income, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred on a purchase of goods and services is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable or payable unless otherwise specified. i) Income Recognition Income encompasses both revenue and gains. Income is recognised at the fair value of the consideration received, exclusive of the amount of goods and services tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration being exchanged are not recognised as income. Grants and Other Contributions Grants, donations, gifts and other non-reciprocal contributions are recognised as revenue when the Agency obtains control over the assets comprising the contributions. Control is normally obtained upon receipt. Contributions are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated. Rendering of Services Revenue from rendering services is recognised by reference to the stage of completion of the contract. The revenue is recognised when: the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and it is probable that the economic benefits associated with the transaction will flow to the entity. Interest Revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. 86

91 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 Disposal of Assets A gain or loss on disposal of assets is included as a gain or loss on the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal. Refer also to note 3. Contributions of Assets Contributions of assets and contributions to assist in the acquisition of assets, being non-reciprocal transfers, are recognised, unless otherwise determined by Government, as gains when the Agency obtains control of the asset or contribution. Contributions are recognised at the fair value received or receivable. j) Depreciation and Amortisation Expense Items of property, plant and equipment, including buildings but excluding land, have limited useful lives and are depreciated or amortised using the straight-line method over their estimated useful lives. Amortisation applies in relation to intangible non-current assets with limited useful lives and is calculated and accounted for in a similar manner to depreciation. The estimated useful lives for each class of asset are in accordance with the Treasurer s Directions and are determined as follows: Plant and Equipment 3-15 Years 3-15 Years Computer Equipment and Software 3-5 Years 3-5 Years Transport equipment 3-15 Years 3-15 Years Assets are depreciated or amortised from the date of acquisition or from the time an asset is completed and held ready for use. k) l) m) Interest Expense Interest expenses include interest and finance lease charges. Interest expenses are expensed in the period in which they are incurred. Cash and Deposits For the purposes of the Balance Sheet and the Cash Flow Statement, cash includes cash on hand, cash at bank and cash equivalents. Cash equivalents are highly liquid short-term investments that are readily convertible to cash. Receivables Receivables include accounts receivable and other receivables and are recognised at fair value less any allowance for impairment losses. The allowance for impairment losses represents the amount of receivables the Agency estimates are likely to be uncollectible and are considered doubtful. Analyses of the age of the receivables that are past due as at the reporting date are disclosed in an aging schedule under credit risk in Note 14 Financial Instruments. 87

92 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 Reconciliation of changes in the allowance accounts is also presented. Accounts receivable are generally settled within 30 days and other receivables within 30 days. n) Property, Plant and Equipment Acquisitions All items of property, plant and equipment with a cost, or other value, equal to or greater than $5,000 are recognised in the year of acquisition and depreciated as outlined below. Items of property, plant and equipment below the $5,000 threshold are expensed in the year of acquisition. The construction cost of property, plant and equipment includes the cost of materials and direct labour, and an appropriate proportion of fixed and variable overheads. Complex Assets Major items of plant and equipment comprising a number of components that have different useful lives, are accounted for as separate assets. The components may be replaced during the useful life of the complex asset. Subsequent Additional Costs Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the Agency in future years. Where these costs represent separate components of a complex asset, they are accounted for as separate assets and are separately depreciated over their expected useful lives. o) Revaluations and Impairment Revaluation of Assets Subsequent to initial recognition, assets belonging to the following classes of noncurrent assets are revalued with sufficient regularity to ensure that the carrying amount of these assets does not differ materially from their fair value at reporting date: Land; Buildings; Infrastructure Assets; Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable, willing parties in an arms length transaction. Plant and equipment are stated at historical cost less depreciation, which is deemed to equate to fair value. The unique nature of some of the heritage and cultural assets may preclude reliable measurement. Such assets have not been recognised in the financial statements. 88

93 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 Impairment of Assets An asset is said to be impaired when the asset s carrying amount exceeds its recoverable amount. Non-current physical and intangible Agency assets are assessed for indicators of impairment on an annual basis. If an indicator of impairment exists, the Agency determines the asset s recoverable amount. The asset s recoverable amount is determined as the higher of the asset s depreciated replacement cost and fair value less costs to sell. Any amount by which the asset s carrying amount exceeds the recoverable amount is recorded as an impairment loss. Impairment losses are recognised in the Comprehensive Operating Statement unless the asset is carried at a revalued amount. Where the asset is measured at a revalued amount, the impairment loss is offset against the Asset Revaluation Surplus for that class of asset to the extent that an available balance exists in the Asset Revaluation Surplus. In certain situations, an impairment loss may subsequently be reversed. Where an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount. A reversal of an impairment loss is recognised in the Comprehensive Operating Statement as income, unless the asset is carried at a revalued amount, in which case the impairment reversal results in an increase in the Asset Revaluation Surplus. p) Leased Assets Leases under which the Agency assumes substantially all the risks and rewards of ownership of an asset are classified as finance leases. Other leases are classified as operating leases. Finance Leases Finance leases are capitalised. A leased asset and a lease liability equal to the present value of the minimum lease payments are recognised at the inception of the lease. Lease payments are allocated between the principal component of the lease liability and the interest expense. Operating Leases Operating lease payments made at regular intervals throughout the term are expensed when the payments are due, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property. Lease incentives under an operating lease of a building or office space is recognised as an integral part of the consideration for the use of the leased asset. Lease incentives are to be recognised as a deduction of the lease expenses over the term of the lease. q) Payables Liabilities for accounts payable and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to Construction Division. Accounts payable are normally settled within 30 days. 89

94 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 r) Employee Benefits Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries and recreation leave. Liabilities arising in respect of wages and salaries and recreation leave and other employee benefit liabilities that fall due within twelve months of reporting date are classified as current liabilities and are measured at amounts expected to be paid. Non-current employee benefit liabilities that fall due after twelve months of the reporting date are measured at present value, calculated using the Government long term bond rate. No provision is made for sick leave, which is non-vesting, as the anticipated pattern of future sick leave to be taken is less than the entitlement accruing in each reporting period. Employee benefit expenses are recognised on a net basis in respect of the following categories: wages and salaries, non-monetary benefits, recreation leave, sick leave and other leave entitlements; and other types of employee benefits. As part of the Financial Management Framework, the Central Holding Authority assumes the long service leave liabilities of Government Agencies, including Construction Division and as such no long service leave liability is recognised in Agency financial statements. s) Superannuation Employees superannuation entitlements are provided through the: NT Government and Public Authorities Superannuation Scheme (NTGPASS); Commonwealth Superannuation Scheme (CSS); or non-government employee nominated schemes for those employees commencing on or after 10 August Construction Division makes superannuation contributions on behalf of its employees to the Central Holding Authority or non-government employee nominated schemes. Superannuation liabilities related to government superannuation schemes are held by the Central Holding Authority and as such are not recognised in the Construction Division s financial statements. t) u) Dividends Construction Division is required to remit a dividend in accordance with the Northern Territory Government s dividend Policy which is 50 per cent of net profit after tax. Commitments Disclosures in relation to capital and other commitments, including lease commitments are shown at note 15 and are consistent with the requirements contained in AASB 101, AASB 116 and AASB 117. Commitments are those contracted as at 30 June where the amount of the future commitment can be reliably measured. 90

95 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE GAIN ON DISPOSAL OF ASSETS 2010 $ $ 000 Net proceeds from the disposal of minor assets 1 - Gain on the disposal of minor assets 1-4. INCOME TAX EXPENSE The prima facie income tax expense on pre-tax accounting surplus from operations reconciles to the income tax expense in the financial statements as follows; Net surplus before income tax 4,570 6,249 Income tax expense calculated at 30% (1,371) (1,875) Income Tax Expense 1,371 1, PURCHASES OF GOODS AND SERVICES The net surplus has been arrived at after charging the following expenses: Goods and Services Expenses: Consultants (1) 31,467 17,868 Advertising (2) 5 11 Marketing and Promotion (3) Document Production Legal Expenses (4) Recruitment (5) Training and Study 1,537 1,080 Official Duty Fares Audit and other services Corporate Support by external agencies 3,589 2,907 Motor vehicle expense 3,069 2,776 Travelling Allowance (1) Includes marketing, promotion and IT consultants. (2) Does not include recruitment advertising or marketing and promotion advertising. (3) Includes advertising for marketing and promotion but excludes marketing and promotion consultants expenses, which are incorporated in the consultants category. (4) Includes legal fees, claim and settlement costs. (5) Includes recruitment related advertising costs. 6. CASH AND DEPOSITS Cash on Hand - 1 Cash at Bank 21,959 10,845 21,959 10, RECEIVABLES Current Accounts Receivable 2,552 3,196 Interest Receivables Other Receivables 5,730 5,390 8,329 8,609 91

96 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE PROPERTY, PLANT AND EQUIPMENT 2010 $ $ 000 Plant and Equipment At Cost Less: Accumulated Depreciation (564) (559) Computer Equipment and Software At Cost Less: Accumulated Depreciation (28) (24) 11 8 Transport equipment At Cost 5 5 Less: Accumulated Depreciation (2) (1) 3 4 Total Property, Plant and Equipment Property, Plant and Equipment Reconciliations A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of is set out below: Plant & Equipment Computer Equipment & Software Transport Equipment Total $ 000 $ 000 $ 000 $ 000 Carrying Amount as at 1 July Additions Depreciation (5) (4) (1) (10) Carrying Amount as at 30 June Property, Plant and Equipment Reconciliations A reconciliation of the carrying amount of property, plant and equipment at the beginning and end of is set out below: Plant & Equipment Computer Equipment & Software Transport Equipment Total $ 000 $ 000 $ 000 $ 000 Carrying Amount as at 1 July Additions Depreciation (40) (6) (1) (47) Carrying Amount as at 30 June

97 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE DEPOSTS HELD 2010 $ $ 000 Current Deposits Held 11,156 3,217 Total Deposits Held 11,156 3, PAYABLES Accounts Payable Accrued Expenses 1,535 1,517 GST Payable 1, Total Payables 3,222 2, PROVISIONS Current Employee Benefits Recreation Leave 2,804 2,094 Leave Loading Other Employee Benefits 1, Income Tax 1,371 1,875 Dividend 1,600 2,187 7,334 7,382 Non-Current Employee Benefits Recreation Leave 1,632 1,236 1,632 1,236 Total Provisions 8,966 8,618 The Agency employed 403 employees as at 30 June 2010 (338 employees as at 30 June 2009). 12. EQUITY Equity represents the residual interest in the net assets of the Construction Division. The Government s ownership interest in Construction Division is held in the Central Holding Authority as described in note 2 (b). Capital Balance as at 1 July Equity Injection - 20 Balance as at 30 June Accumulated Funds Balance as at 1 July 5,294 3,106 Surplus for the Period 3,199 4,374 Dividend Recognised (1,600) (2,187) Balance as at 30 June 6,893 5,293 93

98 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE NOTES TO THE CASH FLOW STATEMENT Reconciliation of Cash The total of Agency Cash and Deposits of $21,959,000 recorded in the Balance Sheet is consistent with that recorded as cash in the Cash Flow Statement $ $ 000 Reconciliation of Net Surplus to Net Cash From Operating Activities Net Surplus 3,199 4,374 Non-Cash Items: Depreciation and Amortisation Changes in Assets and Liabilities: Decrease in Receivables Increase in Prepayments (7) (7) Increase/(Decrease) in Payables 1,033 (847) Increase in Provision for Employee Benefits 1,438 1,031 Decrease in Income Tax Liability (503) (186) Net Cash From Operating Activities 5,450 4, FINANCIAL INSTRUMENTS A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments held by the Construction Division include cash and deposits, receivables and payables. The Construction Division has limited exposure to financial risks as discussed below. (a) Categorisation of Financial Instruments The carrying amounts of the Construction Division s financial assets and liabilities by category are disclosed in the table below $000 $000 Financial Assets Cash and deposits 21,959 10,846 Receivables 8,329 8,609 Financial Liabilities Amortised cost Deposits held 11,156 3,217 Payables 3,222 2,189 94

99 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) (b) Credit Risk The Construction Division has limited credit risk exposure (risk of default). In respect of any dealings with organisations external to Government, Construction Division has adopted a policy of only dealing with credit worthy organisations and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Construction Division s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained. Receivables Receivable balances are monitored on an ongoing basis to ensure that exposure to bad debts is not significant. A reconciliation and aging analysis of receivables is presented below. Ageing of Receivables $ Not Overdue 1,390 Overdue for less than 30 Days 837 Overdue for more than 60 Days 325 Total 2, Not Overdue 563 Overdue for less than 30 Days 1,931 Overdue for 30 to 60 Days 134 Overdue for more than 60 Days 568 Total 3,196 (c) Liquidity risk Liquidity risk is the risk that Construction Division will not be able to meet its financial obligations as they fall due. The Construction Division s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet is liabilities when they fall due. The following tables detail Construction Division s remaining contractual maturity for its financial assets and liabilities. It should be noted that these values are undiscounted, and consequently totals may not reconcile to the carrying amounts presented in the Balance Sheet. 95

100 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) 2010 Maturity analysis for financial assets & liabilities Variable Interest Less than a Year Fixed Interest Rate 1 to 5 Years More than 5 Years Non Interest Bearing Total Weighted Average $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 % Assets Cash and deposits 21, , Receivables ,329 8,329 - Total Financial Assets: 21, ,329 30,288 Liabilities Deposits Held ,156 11,156 - Payables ,222 3,222 - Total Financial Liabilities: ,378 14, Maturity analysis for financial assets & liabilities Fixed Interest Rate Variable Interest Less than a Year 1 to 5 Years More than 5 Years Non Interest Bearing Total Weighted Average $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 % Assets Cash and deposits 10, , Receivables ,609 8,609 - Total Financial Assets: 10, ,609 19,455 Liabilities Deposits Held ,217 3,217 - Payables ,189 2,189 - Total Financial Liabilities: ,406 5,406 (d) Market Risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The primary market risk that Construction Division is likely to be exposed to is interest rate risk. i) Interest Rate Risk Construction Division has limited exposure to interest rate risk on its financial assets and financial liabilities. The Construction Division exposure to interest rate risk on financial assets and financial liabilities is set out in the following tables. Market Sensitivity Analysis Changes in the variable rates of 100 basis points (1 per cent) at reporting date would have the following effect on Construction Divisions profit or loss and equity 96

101 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) Profit or Loss and Equity 100 basis points increase 100 basis points decrease $ 000 $ June 2010 Financial assets cash at bank 220 (220) Net Sensitivity: 220 (220) 30 June 2009 Financial assets cash at bank 108 (108) Net Sensitivity: 108 (108) ii) Price Risk Construction Division is not exposed to price risk as it does not hold units in unit trusts. iii) Currency Risk Construction Division is not exposed to currency risk as it does not hold borrowings denominated in foreign currencies or transactional currency exposures arising from purchases in a foreign currency. (e) Net Fair Value The fair value of financial instruments is estimated using various methods, as classified below. Construction Division financial instruments are estimated using level 1, which is the carrying amount as recorded in the financial statements. Where differences exist, these are not material. Level 1 fair value is calculated using quoted prices in active markets. Instruments whose carrying amount is deemed to be equal to its fair value qualify for this level of classification. Level 2 to be used for those instruments that cannot be classified as either Level 1 or Level 3. Level 3 fair value is estimated using inputs other than quoted market data, for example, net present value Total Carrying Amount Net Fair Value Level 1 Net Fair Value Total $ 000 $ 000 $ 000 Financial Assets Cash and Deposits 21,959 21,959 21,959 Receivables 8,329 8,329 8,329 Total Financial Assets: 30,288 30,288 30,288 Financial Liabilities Deposits Held 11,156 11,156 11,156 Payables 3,222 3,222 3,222 Total Financial Liabilities: 14,378 14,378 14,378 97

102 ANNUAL CONSTRUCTION REPORT 2009/2010 DIVISION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) 2009 Total Carrying Net Fair Value Net Fair Value Amount Level 1 Total $ 000 $ 000 $ 000 Financial Assets Cash and Deposits 10,846 10,846 10,846 Receivables 8,609 8,609 8,609 Total Financial Assets: 19,455 19,455 19,455 Financial Liabilities Deposits Held 3,217 3,217 3,217 Payables 2,189 2,189 2,189 Total Financial Liabilities: 5,406 5,406 5, COMMITMENTS 2010 $ $ 000 Operating Lease Commitments The Agency leases property under non-cancellable operating leases expiring in 4 years. Leases generally provide the Construction Division with a right of renewal at which time all lease terms are renegotiated. The Construction Division also leases items of plant and equipment under non-cancellable operating leases. Future operating lease commitments not recognised as liabilities are payable as follows: Within one year Later than one year and not later than five years CONTINGENT LIABILITIES AND CONTINGENT ASSETS a) Contingent liabilities Construction Division has entered into agreements which contain indemnity clauses. The contingent liabilities arising from the indemnities are unquantifiable, but expected to be immaterial. However, for all the events that would give rise to the liabilities, the entity has comprehensive risk management procedures in place. b) Contingent assets Construction Division has no contingent assets at 30 June 2010 (2009: nil) 17. EVENTS SUBSEQUENT TO BALANCE DATE No events have arisen between the end of the financial year and the date of this report that require adjustment to, or disclosure in these financial statements. 18. WRITE-OFFS, POSTPONEMENTS AND WAIVERS Construction Division had no write-offs, postponements or waivers in and

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