Notes to the Financial Statements

 1. Other Revenue

Actual 2014/15

$000

Other Revenue note

        Actual 2015/16
$000

 

473

Sale of services

1,428

54

Rental revenue from sub-leases

50

18

Net gain on disposal of property, plant and equipment

4

29

Other

3

574

Total Other Revenue

1,485

During the year, ERO disposed of laptops and a motor vehicle that reached a pre-determined mileage or age. The net gain on disposals was $4,000 (2015: net gain $18,000).

2. Personnel Costs

Actual 2014/15

$000

Personnel costs note

        Actual 2015/16
$000

 

19,536

Salaries and wages

20,022

592

Employer contribution to superannuation schemes

781

43

Increase/(decrease) in employee entitlements

(81)

314

Other

17

20,485

Total Personnel Costs

20,739

Employer contributions to defined contribution plans include contributions to the State Sector Retirement Savings Scheme, KiwiSaver, the Individual Retirement Plan and the Government Superannuation Fund.

3. Other Expenses

Actual
2014/15
$000

Other Expenses note

Actual
2015/16

 

$000

Unaudited Budget 2015/16

$000

1,841

Leasing and Rental Costs

1,747

1,728

344

Consultancy

381

340

1,935

Domestic Travel

2,005

1,827

54

International Travel

64

65

66

Fees paid to Auditors for Financial Statements Audit

59

56

2,145

Other

2,578

1,860

6,385

Total Other Expenses

6,834

5,876

4. Capital Charge

ERO pays a Capital Charge to the Crown based on its equity as at 30 June and 31 December each year. The Capital Charge rate for the year ended 30 June 2016 was 8 percent (30 June 2015: 8 percent).

5. Property, Plant and Equipment

Property, Plant and Equipment note

Computer hardware

 

$000

Motor vehicles

 

$000

Office Equipment

 

$000

Furniture & Fittings

 

$000

Leasehold improve-ments

$000

P,P & E

Total

 

$000

30 June 2015

 

 

 

 

 

 

Cost

759

1,880

370

62

2,446

5,517

Accumulated Depreciation

(675)

(558)

(345)

(52)

(1,680)

(3,310)

Balance at 30 June 2015

84

1,322

25

10

766

2,207

30 June 2015

 

 

 

 

 

 

Balance at 1 July 2015

84

1,322

25

10

766

2,207

Additions

177

0

0

231

537

945

Disposals – Costs

(172)

(56)

(43)

(14)

(533)

(818)

Disposals – Accumulated Depreciation

173

46

43

12

533

807

Depreciation

(79)

(265)

(11)

(9)

(160)

(524)

Balance at 30 June 2016

183

1,047

14

230

1,143

2,617

30 June 2016

 

 

 

 

 

 

Cost

764

1,824

327

279

2,450

5,644

Accumulated Depreciation

(581)

(777)

(313)

(49)

(1,307)

(3,027)

Balance at 30 June 2016

183

1,047

14

230

1,143

2,617

6. Intangibles

Intangibles note

Computer software
$000

Review procedures

$000

Intangibles Total

$000

30 June 2015

 

 

 

Cost

1,264

1,019

2,283

Accumulated Amortisation

(1,220)

(354)

(1,574)

Balance at 30 June 2015

44

665

709

 

 

 

 

30 June 2016

 

 

 

Balance at 1 July 2015

44

665

709

Additions

17

108

125

Amortisation

(17)

(176)

(193)

Balance at 30 June 2016

44

597

641

 

 

 

 

30 June 2016

 

 

 

Cost

1,281

1,127

2,408

Accumulated Amortisation

(1,237)

(530)

(1,767)

Balance at 30 June 2016

44

597

641

 There are no restrictions over the title of ERO's intangible assets, nor any intangible assets pledged as security for liabilities.

7. Receivables

The carrying value of receivables approximates their fair value as they are normally issued with duration of note more than three months. All receivables were less than 30 days old.

Actual
30 June 2015

$000

Receivables note

Actual
30 June 2016

$000

8

Receivables from contractual services (exchange transactions)

79

8

Total Receivables

79

8. Payables and Deferred Revenue

Actual
30 June 2015

$000

Payables and Deferred Revenue

Actual
30 June 2016
$000

340

Creditors

326

600

Accrued Expenses

421

854

Income in Advance for Contractual Services

386

1,794

Total Payables and Deferred Revenue under Exchange Transactions

1,133

243

Tax Payables – GST, FBT and PAYE

215

243

Total Payables and Deferred Revenue under Non-Exchange Transactions

215

2,037

Total Payables and Deferred Revenue

1,348

The carrying value of creditors and other payables approximate their fair value as they are normally settled within three months.

9. Provisions

Leasing Incentives

Lease incentives received as an inducement to enter into an operating lease are recognised evenly over the term of the lease as a reduction in the rental expense.

Reinstatement Provision

ERO has entered into leases on its premises in Auckland, Hamilton, Napier, Whanganui, Wellington and Dunedin. As part of the lease agreements, ERO has some reinstatement obligations at the termination of the leases.

Actual
2014/15

$000

Provisions note

Actual
2015/16
$000

 

Current Portion

 

43

Leasing Incentives

75

22

Onerous Contracts

0

178

Reinstatement

178

243

Total Current Portion at end of Year

253

 

 

 

 

Non-Current Portion

 

171

Leasing Incentives

171

337

Reinstatement

357

508

Total Non-Current Portion at End of Year

528

751

Total Provisions at End of Year

781

 

 

 

 

Leasing Incentives

 

257

Balance at Start of Year

214

0

Additional Provision during the Year

84

(43)

Provision used during the Year

(52)

214

Total Leasing Incentives Provision at End of Year

246

 

 

 

 

Onerous Contract

 

16

Balance at Start of Year

22

22

Additional Provision during the Year

0

(16)

Provision used during the Year

(22)

22

Total Onerous Contract Provision at End of Year

0

 

 

 

 

Reinstatement

 

517

Balance at Start of Year

515

66

Additional Provision during the Year

20

(68)

Unused Provision reversed during the Year

0

0

Provision used during the Year

0

515

Total Reinstatement Provision at End of Year

535

751

Total Provisions at End of Year

781

10. Employee Entitlements

Actual

30 June 2015

$000

Employee Entitlements note

Actual

30 June 2016
$000

 

Current Liabilities

 

1,260

Annual Leave, Special Leave and Sick Leave

1,202

461

Retirement Leave and Long Service Leave

468

0

Accrued Salaries

151

1,721

Total Current Portion

1,821

 

Non-Current Liabilities

 

741

Retirement and Long Service Leave

711

741

Total Non-Current Portion

711

2,462

Total Employee entitlements at End of Year

2,532

The present value of retirement leave and long service leave obligations depend on factors that are determined on an actuarial basis using several assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary inflation factor. Any changes in these assumptions will affect the carrying amount of the liability.

Expected future payments are discounted using discount rates derived from the yield curve of New Zealand government bonds. The discount rates used have maturities that match, as closely as possible, the estimated future cash outflows. The discount rates and salary inflation factor used are those advised by the Treasury.

If the risk-free discount rates were to differ by 1 percent from ERO's estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $39,446 higher/lower.

If the salary inflation factor were to differ by 1 percent from ERO's estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $39,356 higher/lower.

11. Related Parties

ERO is a wholly owned entity of the Crown.

Related party disclosures have not been made for transactions with related parties that are within a normal supplier or client/recipient relationship on terms and condition no more or less favourable than those that it is reasonable to expect ERO would have adopted in dealing with the party at arm's length in the same circumstances. Further, transactions with other government agencies (for example, government departments and Crown entities) are not disclosed as related party transactions when they are consistent with the normal operating arrangements between government agencies and undertaken on the normal terms and conditions for such transactions.

Related party transactions required to be disclosed

ERO has no related party transactions required to be disclosed. Any related party transactions have been entered into on an arms' length basis by ERO.

Key management personnel compensation

Key management personnel include the Chief Executive and seven members of the Executive Leadership Team.

Actual 2014/15

Key management personnel compensation

Actual 2015/16

1,574

Remuneration ($000s)

1,682

8

Full-time Equivalent Staff

8

The Minister of Education does not have responsibility for planning, directing and controlling the activities of ERO. The Minister's remuneration and other benefits have therefore been excluded from the above disclosure.

12. Financial Instruments

Actual

30 June 2015
$000

Financial Instruments note

Actual
30 June 2016
$000

 

Loans and Receivables

 

5,994

Cash

5,014

8

Receivables

79

6,002

Total Loans and Receivables

5,093

 

 

 

 

Financial Liabilities measured at Amortised Cost

 

940

Payables (excluding Income in Advance)

747

13. Events after Balance Date

There have been no significant events after balance date.

14. Explanation of Major Variances against Budget

Variances against budget note

Actual 2015/16

$000

Unaudited Budget 2015/16
$000

Variance to Budget
2015/16
$000

Statement of Comprehensive Income and Expense

 

 

 

 

6,834

5,876

958

 

717

913

(196)

Statement of Financial Position

 

 

 

 

5,014

4,466

548

 

641

1,241

(600)

Statement of Cash Flows

 

 

 

Cash applied to Personnel

6,862

6,250

612

Purchase of Intangible Assets

125

735

(610)

The major variances to budget were as follows:

  • Other Expenses was $958,000 above budget due mainly to an increase in expenditure associated with contractual services that ERO receives revenue for.
  • Depreciation and amortisation was $196,000 below budget due to timing of expenditure on computer equipment and software.
  • Cash was $548,000 above budget due to timing of capital expenditure.
  • Cash applied to Suppliers was $612,000 above budget due to an increase in other expenses associated with ERO's contractual services described above.
  • Purchase of Intangible Assets was $610,000 below budget due to timing of expenditure on computer software.

Appropriation Statements

The following statements report information about the expenses and capital incurred against each approproation administered by ERO for the year ended 30 June 2016.

Statement of Budgeted and Actual Expenses and Capital Expenditure incurred against Appropriations

For the year ended 30 June 2016

Expenditure

After remeasure-ments

 

2014/15
$000

Vote Education Review Office

Statement of Budgeted and Actual Expenses and Capital Expenditure incurred against appropriations

Expenditure before remeasurements

 


2015/16
$000

Remeasurements

 

 

 

 

2015/16

$000

Expenditure after remeasurements

 

 

 

2015/16

$000

Approved Appropriation

 

 

 

2015/16

$000

 

Departmental Output Expenses

 

 

 

 

3,441

Quality of Education Reports and Services

4,338

6

4,344

4,509

3,441

Total Departmental Output Expenses

4,338

6

4,344

4,509

 

Multi-Category Appropriation

 

 

 

 

 

Accountability Reviews

 

 

 

 

9,731

Early Childhood Education Services

9,432

23

9,455

9,492

14,667

Schools and Other Education Service Providers

14,762

29

14,791

14,879

24,398

Total Accountability Reviews

24,194

52

24,246

24,371

 

Permanent Legislative Authority

 

 

 

 

1,007

Capital Expenditure – PLA

1,070

0

1,070

2,110

28,846

Total and Permanent Appropriations

29,602

58

29,660

30,990