Notes to the Financial Statements continued 

for the year ended 30 June 2006

Note 10: Provision for Repayment of Surplus to the Crown

	2006 Actual $000	2006 Main Estimates $000	2006 Supplementary Estimates $000	2005 Actual $000
Net surplus/(deficit)	4,203	(1,805)	(1,045)	(4,085)
Adjustment for memorandum account deficit(s)	2,809	1,805	3,912	4,273
Net surplus payable to the Crown	7,012	-	2,867	188

Note 11: Employee Entitlements

	2006 Actual $000	2006 Main Estimates $000	2006 Supplementary Estimates $000	2005 Actual $000
Current
Annual leave	944	693	785	590
Total current	944	693	785	590
Non-current
Retirement and resigning leave	204	136	200	136
Long service leave	101	133	100	133
Total non-current	305	269	300	269
Total employee entitlements	1,249	962	1,085	859

Note 12: Reconciliation of Net Surplus/(Deficit) to Net Cash Flows from Operating Activities

	2006 Actual $000	2006 Main Estimates $000	2006 Supplementary Estimates $000	2005 Actual $000
Net surplus/(deficit) from operations	4,203	(1,805)	(1,045)	(4,085)
Add/(less) non-cash items
Depreciation	1,257	1,736	1,179	784
Increase/(decrease) in non-current employee entitlements	36	-	31	-
Add/(less) movements in working capital
(Increase)/decrease in debtors and receivables	(6,736)	(4,638)	(4,847)	(3,864)
Increase/(decrease) in creditors and payables	(850)	301	6,081	4,181
Increase/(decrease) in current employee entitlements	354	50	195	239
Add/(less) investing activity items
Net (gain)/loss on sale of fixed assets	(12)	-	-	15
Fixed asset write-offs	142	-	-	-
Net cash flows from operating activities	(1,606)	(4,356)	1,594	(2,730)

Note 13: Related party transactions

The Department of Building and Housing is a wholly owned entity of the Crown. The Government significantly influences the roles of the Department as well as being its major source of revenue.

The Department enters into numerous transactions with other government departments, Crown agencies and state-owned enterprises on an arm's-length basis. These transactions are not considered to be related party transactions.

Note 14: Financial instruments

The Department is party to financial instruments as part of its normal operations. These include bank balances, debtors and receivables, and creditors and payables.

Credit Risk
Credit risk is the risk that a third party will default on its obligations to the Department, causing the Department to incur a loss. In the normal course of its business, the Department incurs credit risk from trade debtors, and transactions with financial institutions.

The Department does not require any security to support financial instruments with financial institutions that the Department deals with, as these entities have high credit ratings.

Fair value
The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.

Currency risk
Currency risk is the risk that the value of debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates.

The Department has no currency risk with regard to cash and debtors, as the financial instruments it deals with are in New Zealand dollars. The Department has no significant exposure to currency risk on creditors and payables.

Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. This could impact on the return on investments or the cost of borrowing. The Department has no significant exposure to interest rate risk on its financial instruments.

Under the Public Finance Act 1989, the Department cannot raise a loan without Minister of Finance approval and no such loans have been raised. Accordingly, there is no interest rate exposure for funds borrowed.

Note 15: Contingent Assets

The Department does not have any contingent assets as at 30 June 2006 (2005: Nil). Contingent liabilities are separately disclosed in the Statement of Contingent Liabilities.

Back to top