Note 1: Summary of Significant Accounting Policies
Note 2: Events after the Balance Sheet Date
Note 3: Economic Dependency
Note 4: Income
Note 5: Expenses
Note 6: Income Tax Expense (Competitive Neutrality)
Note 7: Financial Assets
Note 8: Non-Financial Assets
Note 9: Payables
Note 10: Provisions
Note 11: Cash Flow Reconciliation
Note 12: Contingent Liabilities and Assets
Note 13: Senior Executive Remuneration
Note 14: Remuneration of Auditors
Note 15: Financial Instruments
Note 16: Administered Reconciliation Table
Note 17: Administered Commitments, Contingent Liabilities, Contingent Assets and Administered Investments
Note 18: Appropriations
Note 19: Special Accounts
Note 20: Compensation and Debt Relief
Note 21: Reporting of Outcomes

Note 1: Summary of Significant Accounting Policies

1.1 Objectives of the Royal Australian Mint

The Royal Australian Mint (the Mint) is a prescribed agency under the Financial Management and Accountability Act 1997. The objective of the Mint is to produce circulating coin for Australia plus a range of numismatic and minted non-coin products including medallions and tokens. The Mint’s collector coin and minted non-con business is commercial within Government-set parameters.

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

Outcome 1: Satisfy the Reserve Bank of Australia’s forecast for circulating coin.

Output 1.1.1: Coin production, associated policy advice and visitor services.

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.

1.2 Basis of preparation of the Financial Statements

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 statements and notes have been prepared in accordance with:

• Finance Minister’s Orders (or FMOs), for reporting periods ending on or after
  1 July 2007) and
• Australian Accounting Standards (AAS) 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 historical cost convention, except for certain assets and liabilities, which as noted, are at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or on the financial position of the Mint.

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

Unless alternative treatment is specifically required by an Accounting Standard or the FMOs, assets and liabilities are recognised in the Balance Sheet when and only when it is probable that future economic benefits will flow to the Mint 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 unrealised are reported in the Schedule of Commitments and the Schedule of Contingencies (other than unquantifiable or remote contingencies, which are reported at Note 12).

Unless alternative treatment is specifically required by an accounting standard, revenues 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.

1.3 Significant Accounting Judgements and Estimates 

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 Statement of Compliance

Adoption of new Australian Accounting Standard requirements

No accounting standard has been adopted earlier than the application date as stated in the standard. The following new standards are applicable to the current reporting period:

Financial instrument disclosure

AASB 7 Financial Instruments: Disclosures is effective for reporting periods beginning on or after 1 January 2007 (the 2007–08 financial year) and amends the disclosure requirements for financial instruments. In general AASB 7 requires greater disclosure than that previously required. Associated with the introduction of AASB 7 a number of accounting standards were amended to reference the new standard or remove the present disclosure requirements through AASB 2005-10 Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038]. These changes have no financial impact but will affect the disclosure presented in future financial reports.

The following new standards, amendments to standards or interpretations for the current financial year have no material financial impact on the Mint.

• AASB 101	Presentation of Financial Statement;
• AASB 1048	Interpretation and Application of Standards;
• AASB 2007-1	Amendments to Australian Accounting Standards arising from AASB interpretation 11;
• AASB 2007-4	Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments;
• AASB 2007-7	Amendments to Australian Accounting Standards (AASB 1, 2, 4, 5, 107, 128);
• AASB 2008-4	Amendments to Australian Accounting Standards — Key Management Personnel Disclosures by Disclosing Entities;
• ERR Erratum	Proportionate Consolidation (AASB 101, AASB 107, AASB 121, AASB 127 Interpretation 13);
• Interpretation 10	Interim Financial Reporting and Impairment;
• Interpretation 11 AASB 2	Group and Treasury Share Transactions; and
• Interpretation 1003	Australian Petroleum Resource Rent tax

Future Australian Accounting Standard requirements

The following new standards, amendments to standards or interpretations have been issued by the Australian Accounting Standards Board but are effective for future reporting periods. It is estimated that the impact of adopting these pronouncements when effective will have no material financial impact on future reporting periods.

• AASB 3	Business Combinations
• AASB 8	Operating Segments
• AASB 101	Presentation of Financial Statements
• AASB 123	Borrowing Costs
• AASB 127	Consolidated Financial Statements
• AASB 1004	Contributions
• AASB 1050	Administered Items
• AASB 1051	Land Under Roads
• AASB 2007-2	Amendments to Australian Accounting Standards arising from Interpretation 12 (AASB 1, AASB 117, AASB 118, AASB 120, AASB 121, AASB 127, AASB 131, and AASB 139);
• AASB 2007-3	Amendments to Australian Accounting Standards arising from AASB 8
• AASB 2007-6	Amendments to Australian Accounting Standards arising from AASB 123
• AASB 2007-8	Amendments to Australian Accounting Standards arising from AASB 101
• AASB 2007-9	Amendments to Australian Accounting Standards arising from the Review of AAS 27, 29 and 31 (AASB 3, AASB 5, AASB 8, AASB 101, AASB 114, AASB 116, AASB 127 and AASB 137)
• AASB 2008-1	Amendments to Australian Accounting Standards — Share-based Payments: Vesting Conditions and cancellations (AASB 2)
• AASB 2008-2	Amendments to Australian Accounting Standards — Puttable Financial Instruments and obligations arising on Liquidation (AASB 7, AASB 101, 132, AASB 139 and Interpretation 2)
• AASB 2008-3	Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 (AASBs 1, 2, 4, 5, 7, 101, 107, 112, 114, 116, 121, 128, 131, 132, 133, 134, 136, 137, 138, and 139 and Interpretations 9 and 107)
• AASB 2008-5	Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASBs 5, 7, 101, 102, 107, 108, 110, 116, 118, 119, 120, 123, 127, 128, 129, 131, 132, 134, 136, 138, 139, 140, 141, 1023 and 1038)
• AASB 2008-6	Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASBs 1 and 5)
• AASB 2008-7	Amendments to Australian Accounting Standards — Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (AASBs 1, 118, 121, 127, 136)
• Interpretation 1	Changes in Existing Decommissioning, Restoration and Similar Liabilities;
• Interpretation 4	Determining Whether an Arrangement Contains a Lease;
• Interpretation 12	Service Concession Arrangements
• Interpretation 13	Customer Loyalty Programmes
• Interpretation 14	AASB 119 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
• Interpretation 129	Service Concession Arrangement Disclosures
•Interpretation 1038	Contributions by Owners Made to Wholly-Owned Public Sector Entities.

Other

The following standards and interpretations have been issued but are not applicable to the operations of the Mint.

AASB 1049 Whole of Government and General Government Sector Financial Reporting

AASB 1049 specifies the reporting requirements for the General Government Sector and has no effect on the Mint’s financial statements.

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). For the period 1 July to 31 December 2007 and in prior years, circulating coin revenue was recognised at the time of sale of circulating coin to the RBA. From 1 January 2008, consistent with the new Memorandum of Understanding (MOU) between the Mint and the Department of the Treasury, circulating coin revenue is recognised at the time of completion of production and classification of the circulating coins as finished goods in the Mint’s inventory.

This change in the circulating coin revenue recognition from the point of sale to the RBA, to the point of completion of production has increased circulating coin revenue by $11m in the current financial year.

In addition, the new MOU allows the Mint a one-off payment of $20m towards the establishment of a circulating coin buffer stock to provide for contingencies and meet any unexpected demand for circulating coin. This one-off payment has been recognised as Other Revenue (Refer to Note 4D) in the current year and transferred directly to a Buffer Stock Reserve (Refer to Note 1.8).

Revenue from Government

Amounts appropriated for Departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue when the agency 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.

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 transition 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 provision for bad and doubtful debts. Collectibility of debts is reviewed at balance date. An allowance for impairment is made when collectibility 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.

1.6 Gains

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 are 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 Commonwealth agency under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Other distributions to owners

The FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend. In 2007–08, there were no distributions to owners.

1.8 Reserves

Property, plant and equipment revaluation reserve

The balance of asset revaluation reserves in the balance sheet reflect differences between the fair value of the Mint’s property, plant and equipment and coin collection revaluation reserve and their cost. These unrealised gains are transferred directly to the relevant reserve and are not included in accounting profits. The unrealised gains on these assets are not distributable until the gains are realised through the sale of the relevant asset.

Buffer Stock Reserve

The Buffer Stock Reserve provides funding for the establishment of a circulating coin buffer stock to meet any unexpected demand for circulating coin and provide for contingencies. (refer Note 1.5)

There are no restrictions on the distribution of this reserve to owners.

1.9 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) and termination benefits due to be settled 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 as 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, 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 2008 to confirm that there had been no significant change in any of these factors during the current year. Hence, an actuarial review was not undertaken in the current year.

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 Commonwealth. 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 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.

From 1 July 2005, new employees are eligible to join the PSSap scheme.

The liability for superannuation recognised as at 30 June represents an accrual for the final fortnight of financial year.

1.10 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 benefits 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 principle 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.

1.11 Borrowing Costs

All borrowing costs are expensed as incurred.

1.12 Cash

Cash and cash equivalents includes notes and coins held and any deposits in bank accounts, including deposits held in the Official Public Account (OPA), 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.

1.13 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 ‘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;
• is a part of an identified portfolio of financial instruments that the agency manages together and has a recent actual pattern of short-term profit-taking; or
• is a derivative that is 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 can not 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 Mint 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 assets (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.

1.14 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

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).

1.15 Contingent Liabilities and Contingent Assets

Contingent Liabilities and 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 existing liability or asset 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 recognised when settlement is greater than remote.

1.16 Financial Guarantee Contracts

Financial guarantee contracts are accounted for in accordance with AASB139. They are not treated as a contingent assets or liabilities, as they are regarded as financial instruments outside the scope of AASB137.

1.17 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 revenues 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.

1.18 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 makegood any alterations to its rental premises no costs for restoration or makegood of premises has been added to the value of the Mint’s leasehold improvements and no provision for ‘makegood’ has been recognised.

Revaluations

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

Asset class	Fair value measured at:
Plant & equipment	Market Selling Price
Leasehold improvements	Depreciated replacement cost

Following initial recognition at cost, property plant and equipment are carried at fair value less 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 the operating result. Revaluation decrements for a class of asset are recognised directly through the 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 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.

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

	2008	2007
Office equipment	5 years	5 years
Leasehold Improvements	15 years	15 years
Factory machinery	10–20 years	10–20 years

Impairment

All assets were assessed for impairment at 30 June 2008. 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.

1.19 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.

Intangible assets are amortised on a straight-line basis over their anticipated useful lives. The useful lives of the Mint’s software are 3–5 years (2007: 3–5 years).

All software assets were assessed for indications of impairment as at 30 June 2008. No indicators of impairment were noted.

1.20 Inventories

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

Inventories held for distribution are valued at cost, less any loss of service potential.

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.
• Finished goods and work in progress — cost of direct materials and labour plus attributable costs that are capable of being allocated on a reasonable basis.

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

1.21 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 coin 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 rates.

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.

Note 2: Events after the Balance Sheet Date

There were no significant events after the balance sheet date.

Note 3: Economic Dependency

The Mint is economically dependent on the Reserve Bank of Australia for the purchase of circulating coin.

Note 4: Income

Note 5: Expenses

Note 6: Income tax expense – Competitive Neutrality

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 by the Mint to 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 7: Financial Assets

Note 8: Non-Financial Assets

Leasehold improvements and plant and equipment are subject to revaluation. The carrying amount is included in the valuation figures on previous page.

All revaluations are conducted in accordance with the revaluation policy stated at Note 1.17. On 30 June 2008, an independent valuer, the Australian Valuation Office conducted the revaluations.

Revaluation increments of $5,273 for plant and equipment (2007: $3,184,982) were credited to the asset revaluation reserve by asset class and included in the equity section of the balance sheet; there were no revaluation increments/decrements for leasehold improvements (2007: decrements of $87,774 expensed).

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

Note 9: Payables

Note 10: Provisions

The classification of current 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 one year: $651,043 (2007: $699,566); in excess of one year: $2,987,764 (2007: $2,576,891).

Note 11: Cash flow reconciliation

Note 12: Contingent Liabilities and Assets

Quantifiable Contingencies

As at 30 June 2008, the Mint had no quantifiable contingencies. (2007: $0).

Unquantifiable Contingencies

At 30 June 2008, the Mint had no unquantifiable contingencies (2007: $0).

Remote Contingencies

At 30 June 2008, the Mint has a remote contingent asset of $1M relating to a supplier financial undertaking to ensure due and proper performance of the contract with the Mint (2007: $0). The probability of the Mint invoking this guarantee is considered remote as the supplier is meeting its contractual obligations as and when they occur.

The Mint has no remote contingent liabilities as at 30 June 2008 (2007: $0).

Note 13: Senior Executive Remuneration

Note 14: Remuneration of Auditors

Note 15: Financial Instruments

Note 15A: Categories of Financial Instruments

Note 15B: Net income and expense from financial assets

Note 15C: Net income and expense from financial liabilities

There is no net interest income/expense from financial liabilities not at fair value from profit and loss in the years ending 2008 and 2007.

Note 15D: Fair Value of Financial Instruments

The carrying value of the Mint’s financial instruments as disclosed in the Balance Sheet equals their fair value as at balance date.

Note 15E: 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 (2008: $1,082,000 and 2007: $226,000). The Mint has assessed the risk of default on payment and made an allocation of $12,000 to an allowance for impairment of debts account in 2008 (2007: $6,000).

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.

Credit quality of financial instruments not past due or individually determined as impaired.

Ageing of financial assets that are past due but not impaired for 2008

At 30 June 2008 goods and services receivable of $12,000 have been individually assessed as impaired (2007: $6,000). Collectibility of trade receivables is reviewed on an on-going basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identified. An impairment allowance is recognised when there is objective evidence that the Mint will not be able to collect the receivable. Financial difficulties of the debtor and default of payments are considered objective evidence of impairment.

Note 15F: Liquidity risk

The Mint’s liabilities include, suppliers payable, seigniorage payable and competitive neutrality payable to the Government. The exposure to liquidity risk is based on the notion that the Mint will experience difficulty in meeting its obligations associated with financial liabilities. The risk of the Mint experiencing liquidity problems 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. In addition, the Mint has policies in place to ensure timely payments are made when due.

The Mint’s exposure to liquidity is assessed as $Nil (2007: $Nil).

The following table illustrates the maturities for financial liabilities

Note 15G: Market risk

Metal prices are determined by movements in the international metal market and fluctuations in the Australian dollar. As a consequence, the Mint’s raw material inventory and cost of goods sold are affected by movements in these prices. The Mint actively manages this exposure to ensure that the risk are reduced to non-material levels by:

• specifying that contracts for the supply of precious metals be in Australian Dollars, thereby limiting the Mint’s exposure to fluctuations in foreign currencies;
• scheduling the purchase of precious metals at times to avoid known global seasonal peaks, 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 at the time of order.

Note 15H: Assets Pledged/or held as collateral

The Mint has no assets pledged/held as collateral.

Note 16: Administered Reconciliation Table

Note 17: Administered Commitments, Contingent Liabilities, Contingent Assets and Administered Investments

The Mint has no Administered commitments, contingent liabilities, contingent assets or administered investments as at reporting date (2007: Nil).

Note18: Appropriations

Table A — Acquittal of Authority to Draw Cash from the Consolidated Revenue Fund for Other than Ordinary Annual Services Appropriations

Note 19: Special Accounts

In the current year a $20m additional receipt was credited to the Special Account (2007:$Nil) for money retained from the Seigniorage payable to the Commonwealth to meet the costs of establishing a circulating coin buffer stock. This buffer stock was established to provide for contingencies and meet any future unexpected demand for circulating coin (refer Note 1.8). The retention of Seigniorage money for this purpose is provided for in the Memorandum of Understanding between the Mint and the Department of the Treasury effective 1 January 2008. This receipt is within the purpose of the Special Account as the money was retained to meet the costs of establishing a circulating coin buffer stock, which forms part of the cost of ‘producing, supplying, managing and operating’ circulating coin.

Note 20: Compensation and Debt Relief

Note 21: Reporting of Outcomes

Note 21A: Net Cost of Outcome Delivery

The Mint’s outcome and output are described in Note 1.1. Net costs shown include intra-government costs that are eliminated in calculating the actual Budget Outcome.

Note 21B: Major Classes of Departmental Revenues and Expenses by Output Groups and Outputs

Outcome 1 is described in Note 1.1. Net costs shown include intra-government costs that are eliminated in calculating the actual Budget outcome.

Note 21C: Major Classes of Administered Revenues and Expenses by Outcomes