Independent Auditor's Report

Statement by the Chief Executive and Chief Finance Officer

ROYAL AUSTRALIAN MINT INCOME STATEMENT
for the period ended 30 June 2009

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

ROYAL AUSTRALIAN MINT BALANCE SHEET
as at 30 June 2009

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

ROYAL AUSTRALIAN MINT STATEMENT OF CHANGES IN EQUITY
as at 30 June 2009

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

ROYAL AUSTRALIAN MINT CASH FLOW STATEMENT
for the period ended 30 June 2009

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

ROYAL AUSTRALIAN MINT SCHEDULE OF COMMITMENTS
as at 30 June 2009

NB: Commitments were GST inclusive where relevant.

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

 

ROYAL AUSTRALIAN MINT SCHEDULE OF COMMITMENTS
as at 30 June 2009

Footnote

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

ROYAL AUSTRALIAN MINT SCHEDULE OF CONTINGENCIES
as at 30 June 2009

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

ROYAL AUSTRALIAN MINT SCHEDULE OF ADMINISTERED ITEMS
as at 30 June 2009

ROYAL AUSTRALIAN MINT SCHEDULE OF ADMINISTERED ITEMS
as at 30 June 2009

ROYAL AUSTRALIAN MINT NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
for the year ended 30 June 2009

Notes to the Financial Statements

Note 1: Summary of Significant Accounting Policies

Note 2: Events after the Balance Sheet Date

Note 3: Income

Note 4: Expenses

Note 5: Income Tax Expense (Competitive Neutrality)

Note 6: Financial Assets

Note 7: Non-Financial Assets

Note 8: Payables

Note 9: Interest Bearing Liabilities

Note 10: Provisions

Note 11: Cash Flow Reconciliation

Note 12: Contingent Liabilities and Assets

Note 13: Executive Remuneration

Note 14: Remuneration of Auditors

Note 15: Financial Instruments

Note 16: Administered Reconciliation Table

Note 17: Note to the Schedule of Administered Items

Note 18: Appropriations

Note 19: Special Accounts

Note 20: Compensation and Debt Relief

Note 21: Reporting of Outcomes

ROYAL AUSTRALIAN MINT NOTES TO AND FORMING PART OF THE Financial Statements
for the year ended 30 June 2009

Note 1: Summary of Significant Accounting Policies

1.1 Objectives of the Royal Australian Mint

The Royal Australian Mint (the Mint) is an Australian Government prescribed agency under the Financial Management and Accountability Act 1997. The objective of the Mint is to meet the coinage needs of the Australian economy, collectors and foreign countries through the manufacture and sale of circulating coins, collector coins and other minted like products. The Mint's collector coin and minted non-coin business is a commercial activity within Government-set parameters.

The Mint is structured to meet one outcome and one output:

Outcome 1: Manufacture and sale of circulating coins to meet the coinage needs of the Australian economy, and collector coins and other minted products for Australia and foreign countries.

Output 1.1: Royal Australian Mint

The Mint's activities contributing toward this objective are classified as either Departmental or Administered. Departmental activities involve the use of assets, liabilities, revenues and expenses controlled or incurred by the Mint in it's own right. Administered activities involve the management by the Mint, on behalf of the Government, of the sale of circulating coin and repatriating funds to the Commonwealth through the Seigniorage process.

The continued existence of the Mint in its present form and with its present program is dependent on Government policy and continuing appropriation by Parliament for the Mint's administration and program.

1.2 Basis of Preparation of the Financial Report

The financial statements and notes are required by section 49 of the Financial Management and Accountability Act 1997 and are a general purpose financial report.

The Financial Statements and notes have been prepared in accordance with:

• Finance Minister's Orders (or FMO) for reporting periods ending on or after 1 July 2008, and
• Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial report has been prepared on an accrual basis and is in accordance with the historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial report is presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FMO, assets and liabilities are recognised in the balance sheet when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under Agreements Equally Proportionately Unperformed are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments and the schedule of contingencies.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the income statement when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

Administered revenues, expenses, assets and liabilities and cash flows reported in the Schedule of Administered Items and related notes are accounted for on the same basis and using the same policies as for departmental items, except where otherwise stated at Note 1.22.

1.3 Significant Accounting Judgements and Estimates

In the process of applying the accounting policies listed in this note, the Mint has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:

• The fair value of leasehold improvements and infrastructure, plant and equipment has been taken to be the market value of similar fitout, plant and machinery as determined by an independent valuer.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.

1.4 Changes in Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

No accounting standard has been adopted earlier than the application date as stated in the standard. Of the new standards, amendments to standards and interpretations issued by the Australian Accounting Standards Board that are applicable to the current period, none have had a material financial impact on the Mint.

Future Australian Accounting Standard Requirements

Of the new standards, amendments to standards and interpretations issued by the Australian Accounting Standards Board that are applicable to future periods, none are expected to have a material financial impact on the Mint.

1.5 Revenue

Revenue from Production of Circulating Coin

The Mint derives circulating coin revenue through retention of a Government approved transfer price from sale of circulating coin to the Reserve Bank of Australia (RBA).

Revenue from Government

Amounts appropriated for Departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue when the Mint gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned.

Appropriations receivable are recognised at their nominal amounts.

Resources Received Free of Charge

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition unless received from another Government agency or authority as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

Resources received free of charge are recorded as either revenue or gains depending on their nature.

Other Types of Revenue

Revenue from the Sale of Goods and Services

Revenue from the sale of goods is recognised when:

• the risks and rewards of ownership have been transferred to the buyer
• the seller retains no managerial involvement nor effective control over the goods
• the revenue and transaction costs incurred can be reliably measured, and
• it is probable that the economic benefits associated with the transaction will flow to the Mint.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

• the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
• the probable economic benefits associated with the transaction will flow to the Mint.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at balance date. Allowances are made when collectability of the debt is no longer probable.

Interest Revenue

Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement. The interest recognised in the financial statements is adjusted against payments made under competitive neutrality arrangements.

Seigniorage and repurchase of circulating coin

Seigniorage is collected by the Mint on behalf of the Commonwealth. Seigniorage represents the difference between the face value of coinage sold to the RBA and its cost of production to the Mint plus associated selling and distribution expenses and any additional allowances for unavoidable costs and/or surplus agreed by the Department of the Treasury (i.e. the transfer price).

The Mint repurchases mutilated and withdrawn circulating coins on behalf of the Commonwealth. The costs incurred by the Mint in repurchasing circulating coins are offset to an extent by the sale of scrap metal and the balance is supplemented by the Commonwealth via a reduction in the total amount paid to the Commonwealth's Official Public Account (refer Note 1.22).

The net revenues from circulating coin sales are not directly available to be used by the Mint for its own purposes and are remitted to the Commonwealth's Official Public Account. Seigniorage for 2008–09 is $114.0 m (2007–08: $90.2 m).

1.6 Gains

Other Resources Received Free of Charge

Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government agency or authority as a consequence of a restructuring of administrative arrangements (Refer to Note 1.7).

Resources received free of charge are recorded as either revenue or gains depending on their nature.

Sale of Assets

Gains from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

1.7 Transactions with the Government as Owner

Equity Injections

Amounts appropriated which are designated as ‘equity injections' for a year (less any formal reductions) are recognised directly in contributed equity in that year.

Restructuring of Administrative Arrangements

Net assets received from or relinquished to another Australian Government agency or authority under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Other Distributions to Owners

The FMO require that distributions to owners be debited to contributed equity unless in the nature of a dividend.

1.8 Employee Benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of balance date are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

All other employee benefit liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Mint is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that applied at the time the leave is taken, including the Mint's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the work of an actuary as at 30 June 2007. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. The Mint undertook a review of staff numbers, age profile and leave entitlements at 30 June 2009 to confirm that there have been no significant change in any of these factors during the current year. Hence, an actuarial review was not undertaken in the current year.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The Mint recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

Eligible ongoing employees of the Mint are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap).

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance and Deregulation as an administered item.

The Mint makes employer contributions to the employee superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of the Mint's employees. The Mint accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June 2009 represents outstanding contributions for the final fortnight of the year.

1.9 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased non-current assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

1.10 Borrowing Costs

All borrowing costs are expensed as incurred.

1.11 Cash

Cash and cash equivalents includes notes and coins held and any deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash is recognised at its nominal amount.

1.12 Financial Assets

The Mint classifies its financial assets in the following categories:

• financial assets at fair value through profit or loss
• held-to-maturity investments
• available-for-sale financial assets, and
• loans and receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets are recognised and derecognised upon trade date.

Effective Interest Method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Financial Assets at Fair Value Through Profit or Loss

Financial assets are classified as financial assets at fair value through profit or loss where the financial assets:

• have been acquired principally for the purpose of selling in the near future
• are a part of an identified portfolio of financial instruments that the Mint manages together and has a recent actual pattern of short-term profit-taking or
• are derivatives that are not designated and effective as a hedging instrument.

Assets in this category are classified as current assets.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

Available-for-Sale Financial Assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the asset within 12 months of the balance sheet date.

Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the reserves (equity) with the exception of impairment losses. Interest is calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognised directly in profit or loss. Where the asset is disposed of or is determined to be impaired, part (or all) of the cumulative gain or loss previously recognised in the reserve is included in profit for the period.

Where a reliable fair value cannot be established for unlisted investments in equity instruments cost is used. The Mint has no such instruments.

Held-to-Maturity Investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis.

Loans and Receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non current assets. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of Financial Assets

Financial assets are assessed for impairment at each balance date.

• financial assets held at amortised cost — if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the income statement.
• available-for-sale financial assets — if there is objective evidence that an impairment loss on an available-for-sale financial asset has been incurred, the amount of the difference between its cost, less principal repayments and amortisation, and its current fair value, less any impairment loss previously recognised in expenses, is transferred from equity to the income statement.
• available-for-sale financial asset (held at cost) — If there is objective evidence that an impairment loss has been incurred the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets.

1.13 Financial Liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss' or other financial liabilities.

Financial liabilities are recognised and derecognised upon ‘trade date'.

Financial liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other Financial Liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

1.14 Contingent Liabilities and Contingent Assets

Contingent Liabilities and Contingent Assets are not recognised in the Balance Sheet but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

1.15 Financial Guarantee Contracts

Financial guarantee contracts are accounted for in accordance with AASB 139 Financial Instruments: Recognition and Measurement. They are not treated as a contingent liability, as they are regarded as financial instruments outside the scope of AASB 137 Provisions, Contingent Liabilities and Contingent Assets.

1.16 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor agency's accounts immediately prior to the restructuring.

1.17 Property, Plant and Equipment

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the Balance Sheet, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. As the Mint has no obligation to restore or make good any alterations to its rental premises no costs for restoration or make good of premises has been added to the value of the Mint's leasehold improvements and no provision for ‘make good' has been recognised.

Revaluations

Fair values for each class of asset are determined as shown below:

Following initial recognition at cost, property plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through operating result. Revaluation decrements for a class of assets are recognised directly through operating result except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation

Depreciable property plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Mint using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Due to the nature and the existence of a long term preservation policy which ensures the service potential of the National Coin Collection is maintained for an indefinite period, the heritage and cultural assets are considered to have indefinite useful lifes.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

Impairment

All assets are assessed for impairment at 30 June 2009. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment adjustment made if the asset's recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the Mint were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

1.18 Intangibles

The Mint's intangibles comprise externally acquired software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the Mint's software are 2 to 5 years (2007–08: 2 to 5 years).

All software assets are assessed for indications of impairment as at 30 June 2009.

1.19 Inventories

Inventories held for sale are valued at the lower of cost and net realisable value.

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:

• raw materials and stores — purchase cost on a first-in-first-out basis, and
• finished goods and work-in-progress — cost of direct materials and labour plus attributable costs that can be allocated on a reasonable basis.

Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost at the date of acquisition.

1.20 Taxation / Competitive Neutrality

The Mint is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses and assets are recognised net of GST:

• except where the amount of GST incurred is not recoverable from the Australian Taxation Office, and
• except for receivables and payables.

Competitive Neutrality

The Mint sells collector coins and minted non-coin products on a for-profit basis. Under Competitive Neutrality arrangements, the Mint is required to make Australian Income Tax Equivalent payments to the Government, in addition to payments for FBT and GST. Notional interest calculation for purposes of competitive neutrality is based on current 10 year market bond rate.

The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and to unused tax losses.

1.21 Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

At 30 June 2009 the Mint reviewed the classification of the National Coin Collection and determined that it meets the definition of a heritage and cultural asset as it is held for the community's benefit and represents part of Australia's heritage and cultural background. Accordingly, consistent with the FMOs and Australian Accounting Standards the National Coin Collection has been reclassified from Other Non Financial Assets to Heritage and Cultural Assets with effect from 1 July 2007. This reclassification has resulted in a $12.581 million reduction in the Other Non Financial Assets comparative and a corresponding increase of $12.581 million in the Infrastructure Plant and Equipment comparative.

1.22 Reporting of Administered Activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the schedule of administered items and related notes.

Except where otherwise stated below, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Administered Cash Transfers to and from the Official Public Account

Revenue collected by the Mint for use by the Government rather than the Mint is Administered revenue. Collections are transferred to the Official Public Account maintained by the Department of Finance and Deregulation. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the agency on behalf of the Government and reported as such in the Statement of Cash Flows in the Schedule of Administered Items and in the Administered Reconciliation Table in Note 16: Administered Reconciliation Table. The schedule of administered items largely reflects the Government's transactions, through the agency, with parties outside the Government.

Revenue

All administered revenues are revenues relating to the course of ordinary activities performed by the Mint on behalf of the Australian Government. All Administered revenue relates to Seigniorage (refer to Note 1.5).

Note 2: Events After the Balance Sheet Date

To more accurately reflect the true nature of the Mint's role in the production, warehousing and distribution of circulating coins on behalf of the Commonwealth, the Minister for Finance and Deregulation has agreed to reclassify the finished goods circulating coin inventory as an administered rather than departmental asset effective from 1 July 2009.

As a result the circulating coin finished good inventory of $5.496 million was transferred from the Departmental Balance Sheet to the Administered Schedule of Assets. Consistent with the FMO, the transfer was adjusted directly against the Mint's Contributed Equity on 1 July 2009.

Note 3: Income

Note 4: Expenses

Separate from its production and sale of circulating coins, the Mint produces and sells numismatic and other collectible items on a 'for-profit' basis and is subject to the Australian Government's Competitive Neutrality Policy in relation to those activities. The above amounts have been calculated as being payable to the Australian Government in the form of company income and payroll taxes under the Income Tax Assessment Acts and the ACT Payroll Tax Act 1987 had they applied. These amounts are payable/receivable by the Mint to/from the Official Public Account net of competitive neutrality interest income calculated on cash derived from those activities that has been deposited in the Official Public Account.

Note 5: Income Tax Expense (Competitive Neutrality)

Note 6: Financial Assets

Note 7: Non-Financial Assets

Leasehold improvements and Plant and equipment are subject to revaluation. The carrying amount is included in the valuation figures above.

All revaluations were conducted in accordance with the revaluation policy stated at Note 1. On 30 June 2009, an independent valuer, the Australian Valuation Office conducted the revaluations.

There were no revaluation increment/decrement for leasehold improvements (2008: No increment/decrement) and no revaluation increment/decrement for plant and equipment (2008: $5,273 increments).

No indicators of impairment were found for infrastructure, plant and equipment.

The National Coin Collection includes donated coins free of cost. The collection was valued by an independent appraiser, the Australian Valuation Office at 30 June 2009. Revaluation increments recognised directly in equity $3.52 million (2007-08: $1.138 million). The coin collection is under the control of the Mint, and it is classed as a restricted asset because it is not available to be sold or made available to a third party.

Note 7D: Analysis of Property, Plant and Equipment

Note 7E: Analysis of Intangibles

Note 8: Payables

Note 9: Interest Bearing Liabilities

A Finance lease exists in relation to a Teer Coating machine. The lease is non-cancellable with a fixed term of 33  months and a residual amount of $88,201.65 excluding GST. The interest rate implicit in the lease averaged 9.8 per cent. The lease assets secure the lease liabilities. The Mint guarantees the residual value of the asset leased. There are no contingent rentals.

Note 10: Employee Provisions

The classification of current employee provisions includes amounts for which there is not an unconditional right to defer settlement by one year, hence in the case of employee provisions the above classification does not represent the amount expected to be settled within one year of reporting date. Employee provisions expected to be settled in twelve months from the reporting date were $756,293 (2008: $651,043), and in excess of one year $3,807,741 (2008: $2,987,764).

Note 11: Cash Flow Reconciliation

Note 12: Contingent Liabilities and Assets

Quantifiable Contingencies

The Schedule of Contingencies reports no contingent liabilities as at 30 June 2009 (2008: $0).

The Schedule also reports no contingent assets as at 30 June 2009 (2008: $1 million).

The schedule of contingencies in the financial report reports a contingent asset as at 30 June 2008 in respect of a financial undertaking provided by a supplier to ensure due and proper performance under contract. As a result of the supplier's performance under the contract during the year this undertaking has been extinguished, the Mint therefore has not recognised the contingent liability as at 30 June 2009.

Unquantifiable Contingencies

At 30 June 2009, the Mint has an unquantifiable contingent liability in relation to a claim for damages arising from delays in completion of the building refurbishment project (2008: $0). The claim has been made by the building refurbishment managing contractor against the building owner, the Department of Finance and Deregulation (Finance). As the tenant of the premises in the dispute, the tenant and the building owner are pursuing negotiations with the managing contractor. The Mint and Finance are currently obtaining legal advice as to their combined and separate liability/(ies) under this claim. Due to the complexity of the claim and the absence of a direct contractual relationship between the managing contractor and the Mint, as the contract is solely between the managing contractor and the building owner, the probable amount of any claim payable by the Mint cannot be reliably determined at 30 June 2009.

Remote Contingencies

The Mint has no remote contingent liabilities at 30 June 2009 (2008: Nil).

As at 30 June 2009 the Mint has a remote contingent asset of $1.3 million relating to a financial undertaking by a supplier to ensure due and proper performance of its contract with the Mint (2008: $0). The probability of the Mint invoking this financial undertaking is considered remote as the supplier is meeting its contractual obligations as and when they occur.

Note 13: Senior Executive Remuneration

Note 14: Remuneration of Auditors

Note 15: Financial Instruments

Note 15F: Credit Risk

The Mint is exposed to minimal credit risk as receivables are cash and trade receivables.

The maximum exposure to credit risk is the risk that arises from a potential default of a debtor. This amount is equal to the total amount of trade receivables (2009: $1,337,000 and 2008: $1,082,000). The Mint has assessed the risk of default on payment at 30 June 2009 as nil and made no allocation to an allowance for impairment of debts account in 2009 (2008: $12,000 was allocated to an allowance for impairment).

The Mint manages its credit risk by undertaking background and credit checks prior to allowing a debtor relationship. In addition the Mint has policies and procedures that guide the application of employee debt recovery techniques.

The Mint trades only with recognised, creditworthy third parties and as such holds no collateral to mitigate against risk.

 

Note 15G: Liquidity Risk

The Mint's liabilities are Suppliers payables, Finance Lease instalments payable, Seigniorage payable to Government and competitive neutrality payments to government. The exposure to liquidity risk is based on the notion that the Mint will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to appropriation funding for capital purchases and the provisions of the Memorandum of Understanding between the Mint and the Department of Treasury, which provide for the Mint to retain its cost of production from the face value of coins at the time of production and quarterly payment of Seigniorage payable. In addition, the Mint has policies in place to ensure timely payments are made when due. Accordingly, the Mint's exposure to liquidity is assessed as $Nil (2008: $Nil).

 

Note 15H: Market risk

Sensitivity analysis of the risk that the Mint is exposed to for 2009

The Mint's raw material inventory and cost of goods sold can be affected by movements in metal prices, which in turn are determined by fluctuations in both metal markets and the Australian dollar. However, the Mint actively manages this exposure to ensure that the risk are reduced to non-material levels by:

• denominating all contracts for the supply of precious metals in Australian Dollars, thereby limiting the Mint's exposure to fluctuations in precious metal prices purely to the less volatile metal component of the precious metal price;
• consciously scheduling the purchase of precious metals to avoid known global seasonal peak precious metal periods, unless the purchase is unavoidable, in which case minimum quantities are purchased;
• requiring non-precious metal suppliers to set the metal price at the average settlement price quoted on the London Metal Exchange for the three months prior to delivery, thereby eliminating seasonal fluctuations in non-precious metal prices; and
• denominating non-precious metal contracts in Australian dollars at an agreed exchange rate set at the time of order.

Note 15I: Assets Pledged/or held as collateral

The Mint has no assets pledged/held as collateral

Note 16: Administered Reconciliation Table

Note 17: Notes to the Schedule of Administered Items

The Mint has no Administered commitments, contingent liabilities or contingent assets as at reporting date (2008: Nil).

Note 18: Appropriations

[click on the thumbnail table below to view the full-size image]

Note 19: Special Accounts

 

 

Note 20: Compensation and Debt Relief

Note 21: Reporting of Outcomes