financial statements - nsw parliament

Financial statementsof NSW Health Organisations under control of the NSW Ministry of Health 2019-20Volume TwoUnder the Annual Reports (Departments) Act 1985 the NSW Ministry of Health is required to table the audited financial statements of each controlled entity.

This volume of the Annual Report contains the financial statements of each entity indexed as follows:

Entity Cover page

Rural NSW local health districtsFar West ............................................................................................................................................................. 1Hunter New England .................................................................................................................................... 2Mid North Coast ............................................................................................................................................. 3Murrumbidgee .................................................................................................................................................4Northern NSW ................................................................................................................................................ 5Southern NSW ................................................................................................................................................6Western NSW ...................................................................................................................................................7

Cover page 1

Far West Local Health District

Financial statements for the year ended 30 June 2020

Cover page 2

Hunter New England Local Health District


INDEPENDENT AUDITOR’S REPORT

Hunter New England Local Health District

To Members of the New South Wales Parliament

Opinion

I have audited the accompanying financial statements of the Hunter New England Local Health District

(the District), which comprise the Statement of Comprehensive Income for the year ended

30 June 2020, the Statement of Financial Position as at 30 June 2020, the Statement of Changes in

Equity and the Statement of Cash Flows for the year then ended, notes comprising a Statement of

Significant Accounting Policies and other explanatory information of the District and the consolidated

entity. The consolidated entity comprises the District and the entities it controlled at the year’s end or

from time to time during the financial year.

In my opinion, the financial statements:

• give a true and fair view of the financial position of the District and the consolidated entity as at

30 June 2020, and of their financial performance and cash flows for the year then ended in

accordance with Australian Accounting Standards

• are in accordance with section 45E of the Public Finance and Audit Act 1983 (PF&A Act) and

the Public Finance and Audit Regulation 2015.

My opinion should be read in conjunction with the rest of this report.

Basis for Opinion

I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the

standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’

section of my report.

I am independent of the District and the consolidated entity in accordance with the requirements of

the:

• Australian Auditing Standards

• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for

Professional Accountants (including Independence Standards)’ (APES 110).

I have fulfilled my other ethical responsibilities in accordance with APES 110.

Parliament promotes independence by ensuring the Auditor-General and the Audit Office of

New South Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove an

Auditor-General

• mandating the Auditor-General as auditor of public sector agencies

• precluding the Auditor-General from providing non-audit services.

I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my

audit opinion.

Emphasis of Matter – Presentation of Budget Information

Without modification to the opinion expressed above, I draw attention to the basis of presenting

adjusted budget information detailed in Note 38. The note states that AASB 1055 ‘Budgetary

Reporting’ is not applicable to the District. It also states that, unlike the requirement in AASB 1055

‘Budgetary Reporting’ to present original budget information, the District’s financial statements present

adjusted budget information.

The Chief Executive’s Responsibilities for the Financial Statements

The Chief Executive is responsible for the preparation and fair presentation of the financial statements

in accordance with Australian Accounting Standards and the PF&A Act, and for such internal control

as the Chief Executive determines is necessary to enable the preparation and fair presentation of the

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Chief Executive is responsible for assessing the ability of the

District and the consolidated entity to continue as a going concern, disclosing as applicable, matters

related to going concern and using the going concern basis of accounting.

Auditor’s Responsibilities for the Audit of the Financial Statements

My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error

• issue an Independent Auditor’s Report including my opinion.

Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in

accordance with Australian Auditing Standards will always detect material misstatements.

Misstatements can arise from fraud or error. Misstatements are considered material if, individually or

in aggregate, they could reasonably be expected to influence the economic decisions users take

based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing

and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar3.pdf. The

description forms part of my auditor’s report.

The scope of my audit does not include, nor provide assurance:

• that the District or the consolidated entity carried out their activities effectively, efficiently and

economically

• about the assumptions used in formulating the budget figures disclosed in the financial

statements

• about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented

• about any other information which may have been hyperlinked to/from the financial statements.

Dominika Ryan

Director, Financial Audit

Delegate of the Auditor-General for New South Wales

21 September 2020

SYDNEY

http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf

Hunter New England Local Health DistrictStatement of Comprehensive Income for the year ended 30 June 2020

Consolidated Consolidated Consolidated Parent ParentActual Budget1 Actual Actual Actual

2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

Continuing operationsExpenses excluding lossesEmployee related expenses 2 1,441,580 1,445,332 1,423,012 - - Personnel services 3 - - - 1,376,788 1,327,823 Visiting medical officers 4 112,696 114,289 106,469 112,696 106,469 Other expenses 5 640,123 653,765 606,138 640,123 606,138 Depreciation and amortisation 6 105,693 105,175 94,165 105,693 94,165 Grants and subsidies 7 7,843 6,959 6,358 7,843 6,358 Finance costs 8 6,694 6,697 6,721 6,694 6,721 Payments to Affiliated Health Organisations 9 149,092 149,092 143,155 149,092 143,155 Total expenses excluding losses 2,463,721 2,481,309 2,386,018 2,398,929 2,290,829

RevenueNSW Ministry of Health recurrent allocations 11 1,965,016 1,983,796 1,887,356 1,965,016 1,887,356 NSW Ministry of Health capital allocations 11 147,273 150,774 68,106 147,273 68,106 Acceptance by the Crown Entity of employee benefits 15 64,792 64,772 95,189 - - Sale of goods and services 12 - - 272,804 - 272,804 Sale of goods and services from contracts with customers 12 268,201 278,640 - 268,201 - Investment revenue 13 1,599 2,565 2,532 1,599 2,532 Grants and other contributions 14 90,285 80,040 65,947 90,285 65,947 Other income 16 9,829 8,797 10,068 9,829 10,068 Total revenue 2,546,995 2,569,384 2,402,002 2,482,203 2,306,813 Operating result 83,274 88,075 15,984 83,274 15,984 Gains / (losses) on disposal 17 (2,891) (785) (4,351) (2,891) (4,351) Impairment losses on financial assets 20 (1,275) (825) (519) (1,275) (519) Net result from continuing operations 36 79,108 86,465 11,114 79,108 11,114 Net result 79,108 86,465 11,114 79,108 11,114

Other comprehensive incomeItems that will not be reclassified to net result in subsequent periodsChanges in revaluation surplus of property, plant and equipment 22 4,084 - 868,592 4,084 868,592 Total other comprehensive income 4,084 - 868,592 4,084 868,592 TOTAL COMPREHENSIVE INCOME 83,192 86,465 879,706 83,192 879,706

¹ Unaudited adjusted budget, see Note 38.

The accompanying notes form part of these financial statements.

Hunter New England Local Health DistrictStatement of Financial Position as at 30 June 2020


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

ASSETS

Current assetsCash and cash equivalents 19 110,856 81,954 103,395 110,856 103,395 Receivables 20 49,582 62,546 63,472 49,582 63,472 Inventories 21 3,197 2,597 2,597 3,197 2,597

163,635 147,097 169,464 163,635 169,464 Total current assets 163,635 147,097 169,464 163,635 169,464

Non-current assetsReceivables 20 246 254 - 246 - Property, plant & equipment 22 - Land and buildings 2,263,475 2,263,943 2,158,534 2,263,475 2,158,534 - Plant and equipment 147,542 143,245 140,162 147,542 140,162 - Infrastructure systems 47,281 46,655 46,655 47,281 46,655 Total property, plant & equipment 2,458,298 2,453,843 2,345,351 2,458,298 2,345,351 Right-of-use assets 23 17,345 17,187 - 17,345 - Intangible assets 24 697 1,088 1,088 697 1,088 Total non-current assets 2,476,586 2,472,372 2,346,439 2,476,586 2,346,439 Total assets 2,640,221 2,619,469 2,515,903 2,640,221 2,515,903

Hunter New England Local Health DistrictStatement of Financial Position as at 30 June 2020 (continued)


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

LIABILITIES

Current liabilitiesPayables 27 161,015 154,566 157,273 161,015 157,273 Contract liabilities 28 3,190 - - 3,190 - Borrowings 29 5,208 4,872 2,223 5,208 2,223 Provisions 30 234,489 223,565 219,203 234,489 219,203 Other current liabilities 31 2,063 11,613 238 2,063 238

405,965 394,616 378,937 405,965 378,937 Total current liabilities 405,965 394,616 378,937 405,965 378,937

Non-current liabilitiesBorrowings 29 89,432 77,857 74,058 89,432 74,058 Provisions 30 4,198 4,032 3,911 4,198 3,911 Other non-current liabilities 31 225 240 240 225 240 Total non-current liabilities 93,855 82,129 78,209 93,855 78,209 Total liabilities 499,820 476,745 457,146 499,820 457,146 Net assets 2,140,401 2,142,724 2,058,757 2,140,401 2,058,757

EQUITYReserves 1,001,717 999,432 999,431 1,001,717 999,431 Accumulated funds 1,138,684 1,143,292 1,059,326 1,138,684 1,059,326 Total Equity 2,140,401 2,142,724 2,058,757 2,140,401 2,058,757



Hunter New England Local Health DistrictStatement of Changes in Equity for the year ended 30 June 2020

PARENT AND CONSOLIDATION

Accumulated Funds

Asset Revaluation Total

Notes $000 $000 $000Balance at 1 July 2019 1,059,326 999,431 2,058,757 Changes in accounting policy 1(f) (1,548) - (1,548) Restated balance as at 1 July 2019 1,057,778 999,431 2,057,209 Net result for the year 79,108 - 79,108 Other comprehensive income:Net change in revaluation surplus of property, plant and equipment 22 - 4,084 4,084 Reclassification of revaluation increments / (decrements) to accumulated funds on disposal of assets 1,798 (1,798) - Total other comprehensive income 1,798 2,286 4,084 Total comprehensive income for the year 80,906 2,286 83,192 Balance at 30 June 2020 1,138,684 1,001,717 2,140,401

Accumulated Funds


Notes $000 $000 $000Balance at 1 July 2018 1,047,293 132,641 1,179,934 Changes in accounting policy (AASB 9) (370) - (370) Balance at 1 July 2018 1,046,923 132,641 1,179,564 Net result for the year 11,114 - 11,114 Other comprehensive income:Net change in revaluation surplus of property, plant and equipment 22 - 868,592 868,592 Reclassification of revaluation increments / (decrements) to accumulated funds on disposal of assets 1,802 (1,802) - Total other comprehensive income 1,802 866,790 868,592 Total Comprehensive Income for the Year 12,916 866,790 879,706

Transactions with owners in their capacity as ownersIncrease / (decrease) in net assets from equity transfers 39 (513) - (513) Balance at 30 June 2019 1,059,326 999,431 2,058,757


Hunter New England Local Health DistrictStatement of Cash Flows for the year ended 30 June 2020


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

CASH FLOWS FROM OPERATING ACTIVITIESPaymentsEmployee related (1,386,167) (1,406,949) (1,337,210) - - Suppliers for goods and services (829,007) (840,229) (795,381) (829,007) (795,381) Grants and subsidies (173,209) (172,324) (166,271) (173,209) (166,271) Finance costs (6,693) (6,697) (6,722) (6,693) (6,722) Personnel services - - - (1,386,167) (1,337,210) Total payments (2,395,076) (2,426,199) (2,305,584) (2,395,076) (2,305,584) ReceiptsNSW Ministry of Health recurrent allocations 1,965,016 1,983,796 1,887,356 1,965,016 1,887,356 NSW Ministry of Health capital allocations 147,273 150,774 68,106 147,273 68,106 Reimbursements from the Crown Entity 27,506 27,506 27,226 27,506 27,226 Sale of goods and services 287,213 282,941 269,451 287,213 269,451 Interest received 1,602 2,565 2,520 1,602 2,520 Grants and other contributions 99,696 94,902 70,875 99,696 70,875 Other 89,218 87,149 88,578 89,218 88,578 Total receipts 2,617,524 2,629,633 2,414,112 2,617,524 2,414,112 NET CASH FLOWS FROM OPERATING ACTIVITIES 36 222,448 203,434 108,528 222,448 108,528

CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of property, plant and equipment 5,791 1,173 6,438 5,791 6,438 Purchases of property, plant and equipment and intangibles (219,219) (221,811) (101,322) (219,219) (101,322) NET CASH FLOWS FROM INVESTING ACTIVITIES (213,428) (220,638) (94,884) (213,428) (94,884)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from borrowings and advances 3,215 3,215 - 3,215 - Repayment of borrowings and advances (2,383) (5,090) (8,988) (2,383) (8,988) Payment of principal portion of lease liabilities (2,391) (2,362) - (2,391) - NET CASH FLOWS FROM FINANCING ACTIVITIES (1,559) (4,237) (8,988) (1,559) (8,988)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 7,461 (21,441) 4,656 7,461 4,656 Opening cash and cash equivalents 19 103,395 103,395 98,739 103,395 98,739 CLOSING CASH AND CASH EQUIVALENTS 19 110,856 81,954 103,395 110,856 103,395



1. Statement of Significant Accounting Policies

a)

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b) Basis of preparation

Reporting entity

The Hunter New England Local Health District Special Purpose Service Entity, which was established as a Division of theHNELHD on 1 January 2011 in accordance with the Health Services Act 1997. This Division provides personnel services toenable the HNELHD to exercise its functions.

Hunter New England Local Health DistrictNotes to and forming part of the Financial Statementsfor the year ended 30 June 2020

The Hunter New England Local Health District (the HNELHD) was established under the provisions of the Health Services Act1997 with effect from 1 January 2011.

The HNELHD is a NSW Government entity and is controlled by the NSW Ministry of Health, which is the immediate parent. Thereporting entity is also controlled by the State of New South Wales (and is consolidated as part of the NSW Total State SectorAccounts), which is the ultimate parent. The reporting entity is a not-for-profit entity (as profit is not its principal objective).

The HNELHD, as a reporting entity, comprises all the entities under its control, namely:

As a consequence the values in the financial statements presented herein consist of the parent entity and the consolidatedentity which comprises the parent and special purpose service entity. In the process of preparing the consolidated financialstatements consisting of the controlling and controlled entities, all inter-entity transactions and balances have been eliminated,and like transactions and other events are accounted for using uniform accounting policies.

These consolidated financial statements for the year ended 30 June 2020 have been authorised for issue by the ChiefExecutive on 21 September 2020.

The parent entity comprises all the operating activities of the Hospital Facilities and the Community Health Centres underits control. It also encompasses the Restricted Assets (as disclosed in Note 26), which, while containing assets which arerestricted for specified uses by the grantor or the donor, are nevertheless controlled by the parent entity.

Following the Novel Coronavirus (COVID-19) pandemic in late February 2020, the HNELHD has seen a decline in normalhospital activities. Restrictions were imposed by the Australian Government resulting in the suspension of non-urgent electivesurgeries to ensure increased capacity across the health system. Critical resources were reassigned to plan and prepare forpossible surges as a result of the outbreak. The unprecedented measures undertaken by both the Australian and Stategovernments to contain the spread of COVID-19, have resulted in significant impacts to the economy and within the healthsector.

When the NSW Budget is handed down in November 2020-21, the interim Service Agreement and funding arrangements will bereplaced with a full-year 2020-21 Service Agreement and budget. The Service Agreement sets out the level of financialresources for public health services under HNELHD's control and the source of these funds. By agreement, the ServiceAgreement requires local management to control its financial liquidity and in particular meet benchmarks for the payment ofcreditors. Where HNELHD fails to meet Service Agreement performance standards, the NSW Ministry of Health as the statemanager will take action in accordance with annual performance framework requirements, including financial support andincreased management interaction by the NSW Ministry of Health.

The HNELHD's financial statements are general purpose financial statements which have been prepared on an accrual basisand in accordance with applicable Australian Accounting Standards (AAS) (which include Australian Accounting Interpretations),the requirements of the Health Services Act 1997 and its regulations (including observation of the Accounts and AuditDetermination for Public Health Organisations), the Public Finance and Audit Act 1983 (the Act) and the Public Finance andAudit Regulation 2015, and the NSW Treasurer's Directions issued under the Act. The financial statements comply with theNSW Treasury mandates circular for NSW General Government Sector Entities.

The financial statements of the HNELHD have been prepared on a going concern basis.

In alignment with the approach of other States and Territories, and following a recommendation by the National Cabinet ofCommonwealth, the 2020-21 NSW Budget has been deferred until 17 November 2020. On this basis, the Secretary of NSWHealth, the Chair of Hunter New England Local Health District Board and the Chief Executive, through an interim ServiceAgreement, have agreed to service and funding levels for the forward financial year. The interim Service Agreement providesfor 48 per cent of the LHD’s annual funding.



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c)

d)

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e)

f)

(i) Effective for the first time in 2019-20

The Commonwealth has entered a National Partnership Agreement, in response to the COVID-19 pandemic, with Statesand Territories, including NSW. The Agreement will deliver funding to public hospitals and provide stability and certainty offunding while ensuring access to new life saving therapies in public hospitals. The HNELHD is subject to additional NSWMinistry of Health recurrent and capital allocations to provide for costs incurred related to COVID-19 activities and toensure debts can be paid as and when they become due and payable.

The accounting policies applied in 2019-20 are consistent with those of the previous financial year except as a result ofnew or revised Australian Accounting Standards that have been applied for the first time as follows:

All amounts are rounded to the nearest one thousand dollars and are expressed in Australian currency, which is the HNELHD'spresentation and functional currency.

Allocated funds, combined with other revenues earned, are adequate to pay debts as and when they become due andpayable.

The HNELHD has the capacity to review the timing of NSW Ministry of Health allocation cash flows to ensure that debtscan be paid when they become due and payable.

The HNELHD has developed an Efficiency and Improvement Plan (EIP) which identifies revenue improvement and costsaving strategies. Benefits from the EIP are retained by the HNELHD and assist in meeting its overall budget target. TheEIP is monitored and evaluated by the NSW Ministry of Health throughout the financial year.

Comparative Information

Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in respectof the previous period for all amounts reported in the financial statements.

Despite the impact of COVID-19, the going concern assumption remains appropriate. Reasons for this include:

Property, plant and equipment, assets held for sale and certain financial assets and liabilities are measured at fair value. Otherfinancial statement items are prepared in accordance with the historical cost convention except where specified otherwise.

Judgements, key assumptions and estimations management has made are disclosed in the relevant notes to the financialstatements.

Statement of Compliance

The financial statements and notes comply with Australian Accounting Standards which include Australian AccountingInterpretations.

receivables and payables are stated with the amount of GST included.

Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flows arisingfrom investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified asoperating cash flows.

The HNELHD applied AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities, andAASB 16 Leases for the first time. The nature and effect of the changes as a result of adoption of these new accountingstandards are described below.

Several other amendments and interpretations apply for the first time in 2019-20, but do not have an impact on the financialstatements of the HNELHD.

Accounting for the Goods & Services Tax (GST)

Income, expenses and assets are recognised net of the amount of GST, except that:

the amount of GST incurred by the HNELHD as a purchaser that is not recoverable from the Australian Taxation Office isrecognised as part of an asset's cost of acquisition or as part of an item of expense; and

Certain comparative information has been reclassified to ensure consistency with current year presentation and classification.

Changes in accounting policy, including new or revised Australian Accounting Standards



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30 June 2020 30 June 2020 30 June 2020AASB 15 Without

adoption of AASB 15

Impact of AASB 15

Notes $'000 $'000 $'000

Sale of goods and services from contracts with customers 268,201 268,201 - Grants and other contributions (a)(b) 38,401 41,542 (3,141)

306,602 309,743 (3,141) 306,602 309,743 (3,141)


adoption of AASB 15

Impact of AASB 15

Notes $'000 $'000 $'000LiabilitiesContract liabilities (b) 3,190 - 3,190 Other liabilities - 49 (49)

3,190 49 3,141

(3,190) (49) (3,141) (3,190) (49) (3,141)

determining the transaction price; and

Impact on the Statement of Comprehensive Income (increase / (decrease)):

PARENT AND CONSOLIDATED

identifying the satisfied and unsatisfied performance obligations;

allocating the transaction price to the satisfied and unsatisfied performance obligations.

The impact of applying the above practical expedients is not expected to significantly affect the financial statements.

The effect of adopting AASB 15 is as follows:

Operating resultNet Result

Impact on the Statement of Financial Position (increase / (decrease)):


Revenue

Total adjustments to equity

The adoption of AASB 15 did not have an impact on Other Comprehensive Income and the Statement of Cash Flows forthe financial year.

Total liabilitiesEquityAccumulated funds

In accordance with the transition provisions in AASB 15, the HNELHD has adopted AASB 15 retrospectively with thecumulative effect of initially applying the standard recognised at the date of initial application, i.e. 1 July 2019. TheHNELHD has used the transitional practical expedient permitted by the standard to reflect the aggregate effect of all of themodifications that occur before 1 July 2018 when:

AASB 15 Revenue from Contracts with Customers (AASB 15)

AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies,with limited exceptions, to all revenue arising from contracts with customers. AASB 15 establishes a five-step model toaccount for revenue arising from contracts with customers and requires that revenue be recognised at an amount thatreflects the consideration to which the HNELHD expects to be entitled in exchange for transferring goods or services to acustomer.

AASB 15 requires the HNELHD to exercise judgement, taking into consideration all of the relevant facts and circumstanceswhen applying each step of the model to contracts with their customers. The standard also specifies the accounting for theincremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standardrequires relevant disclosures.



(a)

(b)

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adoption of AASB 1058

Impact of AASB 1058

Notes $'000 $'000 $'000

Grants and other contributions (a)(b) 51,885 52,167 (282) 51,885 52,167 (282) 51,885 52,167 (282)Net Result


AASB 1058 requires recognition of receipt of an asset, after the recognition of any related amounts in accordance withother Australian Accounting Standards, as income:

AASB 1058 Income of Not-for-Profit Entities (AASB 1058)

Income from grants were previously recognised upon receipt of cash. Under the new revenue recognitionrequirements of AASB 15, income should be recognised when a performance obligation, by transferring a promisedgood or service, is satisfied. This may be at a point in time or over time. This has led to the accrual of grant incomewhere the entity has satisfied its obligations promised in the contract with the customer.

In accordance with the transition provisions in AASB 1058, the HNELHD has adopted AASB 1058 retrospectively with thecumulative effect of initially applying the standard at the date of initial application, i.e. 1 July 2019. The HNELHD hasadopted the practical expedient in AASB 1058 whereby existing assets acquired for consideration significantly less than fairvalue principally to enable the HNELHD to further its objectives, are not restated to their fair value.


The nature of these adjustments is described below:

AASB 1058 applies to income with a donation component, i.e. transactions where the consideration to acquire an asset issignificantly less than fair value principally to enable a not-for-profit entity to further its objectives; and volunteer services.AASB 1058 adopts a residual approach, meaning that entities first apply other applicable Australian Accounting Standards(e.g. AASB 1004, AASB 15, AASB 16, AASB 9, AASB 137) to a transaction before recognising income.

Not-for-profit entities need to determine whether a transaction is/contains a donation (accounted for under AASB 1058) or acontract with a customer (accounted for under AASB 15).

Operating result

when the obligations under the transfer is satisfied, for transfers to enable an entity to acquire or construct arecognisable non-financial asset that will be controlled by the HNELHD.

immediately, for all other income within the scope of AASB 1058.


Revenue

The reason for the changes in grants and other contributions is due to the non-recurring nature of grants and contributionsreceived and varying nature of performance obligations across grant contracts resulting in different timing of revenuereceived.

AASB 1058 replaces most of the existing requirements in AASB 1004 Contributions. The scope of AASB 1004 is nowlimited mainly to contributions by owners (including parliamentary appropriations that satisfy the definition of a contributionby owners), administrative arrangements and liabilities of government departments assumed by other entities.

Income from grants were previously recognised upon receipt of cash. Under the new revenue recognitionrequirements of AASB 15, income should be recognised when a performance obligation, by transferring a promisedgood or service, is satisfied. This may be at a point in time or over time. This has led to a deferral of grant incomewhere the entity has not yet satisfied its obligations promised in the contract with the customer.





Impact of AASB 1058

Notes $'000 $'000 $'000

Other liabilities (b) 1,830 - 1,830 1,830 - 1,830

(1,830) - (1,830) (1,830) - (1,830)

(a)

(b)


Total liabilities



EquityAccumulated funds

AASB 16 supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease,Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the Substance of TransactionsInvolving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentationand disclosure of leases and requires lessees to recognise most leases on the Statement of Financial Position.

Lessor accounting

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases aseither operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 does not have a significantimpact for leases where the entity is the lessor.

The reason for the changes in grants and other contributions is due to the timing of revenue received to construct non-financial assets to be controlled by the entity.

AASB 16 Leases


Income from grants to construct non-financial assets to be controlled by the entity were previously recognised uponreceipt of cash. Under the new revenue recognition requirements of AASB 1058, income should have beenrecognised over time as the non-financial assets are being constructed. This has led the accrual of grant incomewhere the entity has satisfied its obligations to construct the assets.

Liabilities


Income from grants to construct non-financial assets to be controlled by the entity were previously recognised uponreceipt of cash. Under the new revenue recognition requirements of AASB 1058, income should have beenrecognised over time as the non-financial assets are being constructed. This has led to the deferral of grant incomewhere the entity has not yet satisfied its obligations to construct the assets.



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1 July 2019$'000

19,902 19,902

19,902 19,902

- -

BorrowingsTotal liabilitiesEquityAccumulated funds

For leases previously classified as finance leases the HNELHD recognised the carrying amount of the lease asset andlease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the dateof initial application. The measurement principles of AASB 16 are only applied after that date.

Total assets

The effect of adopting AASB 16 on the Statement of Financial Position as at 1 July 2019 (increase / (decrease)) is, asfollows:

Liabilities

applying a single discount rate to a portfolio of leases with reasonably similar characteristics;

relying on its previous assessment on whether leases are onerous immediately before the date of initial application asan alternative to performing an impairment review;

not recognise a lease liability and right-of-use-asset for short-term leases that end within 12 months of the date ofinitial application;

excluding the initial direct costs from the measurement of the right-of- use asset at the date of initial application; and


AssetsReceivablesRight-of-use assets

The HNELHD has adopted the partial retrospective option in AASB 16, where the cumulative effect of initially applyingAASB 16 is recognised on 1 July 2019 and the comparatives for the year ended 30 June 2019 are not restated.

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability isrecognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the lessee’s incrementalborrowing rate at the date of initial application. The weighted average lessee’s incremental borrowing rate applied to thelease liabilities on 1 July 2019 was 1.97%.

The corresponding right-of-use asset is initially recorded on transition at an amount equal to the lease liability, adjusted bythe amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement of FinancialPosition as at 30 June 2019.

The HNELHD elected to use the practical expedient to expense lease payments for lease contracts that, at theircommencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases),and lease contracts for which the underlying asset is valued at $10,000 or under when new (low-value assets).

In applying AASB 16 for the first time, the HNELHD has used the following practical expedients permitted by the standard:

Lessee accounting

not reassess whether a contract is, or contains, a lease at 1 July 2019, for those contracts previously assessed underAASB 117 and Interpretation 4;

using hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

AASB 16 requires the HNELHD to account for all leases under a single on-balance sheet model similar to the accountingfor finance leases under AASB 117. As the lessee, the HNELHD recognises a lease liability and right-of-use asset at theinception of the lease. The lease liability is measured at the present value of the future lease payments, discounted usingthe interest rate implicit in the lease, or the lessee’s incremental borrowing rate if the interest rate implicit in the leasecannot be readily determined. The corresponding right-of-use asset is measured at the value of the lease liability adjustedfor lease payments before inception, lease incentives, initial direct costs and estimates of costs for dismantling andremoving the asset or restoring the site on which it is located.



1 July 2019$'000

23,927 2,175 21,752

1.97%20,031

113 17

(33) 19,902

(ii)

Upon review, the HNELHD has not identified any arrangements in scope of AASB 1059.

The difference between the operating lease commitments disclosed in applying AASB 117 at the end of the annualreporting period immediately preceding the date of initial application (i.e. 30 June 2019), discounted using the incrementalborrowing rate at the date of initial application; and lease liabilities recognised in the Statement of Financial Position at thedate of initial application (i.e 1 July 2019) is the result of HNELHD enterring a number of short-term, cancellable leaseswhich are out of the scope of AASB 16.

Lease liabilities as at 1 July 2019

Operating lease commitments as at 30 June 2019 (GST included)(Less): GST included in operating lease commitmentsOperating lease commitments as at 30 June 2019 (GST excluded)Weighted average incremental borrowing rate as at 1 July 2019Discounted operating lease commitments as at 1 July 2019(Less): commitments relating to short-term leasesAdd / (Less) : contracts re-assessed as lease contractsAdd / (Less): Other adjustments

AASB 1059 Service Concession Arrangements is applicable to public sector entities only and is effective for annual periodsbeginning on or after 1 January 2020. This standard requires the grantor to recognise a service concession asset in aservice concession arrangement where it controls the asset. A corresponding financial liability and/or grant of right liabilityis also recognised depending on the nature of the consideration exchanged. Service concession assets (including thoseprovided by the operator, an upgrade to or a major component replacement of an existing asset of the grantor; and existingassets of the grantor – also applicable to previously unrecognised intangible assets except goodwill) are initially measuredat current replacement cost based on AASB 13 Fair Value Measurement principles. They are subsequently accounted forunder AASB 116 Property, Plant & Equipment or AASB 138 Intangible Assets. Service concession liabilities are initiallymeasured at the same amount as the service concession asset and subsequently measured using either the 'financialliability' model applying AASB 9 Financial Instruments or, the 'grant of right' model under AASB 1059 Service ConcessionArrangements. AASB 1059 Service Concession Arrangements requires retrospective application.

Issued but not yet effective

NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless NSW Treasurydetermines otherwise. The following new Australian Accounting Standards, excluding standards not considered applicableor material to the HNELHD have not been applied and are not yet effective. The possible impact of these AccountingStandards in the period of initial application includes:

The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019 as follows:


AASB 1059 Service Concession Arrangements

The HNELHD has completed its impact assessment of AASB 1059 by reviewing all material arrangements where theprivate sector is performing any services on behalf of the HNELHD. Any identified arrangements have been assessedwhether it falls within the scope of AASB 1059. If it does meet the scoping guidelines of AASB 1059, financial impacts werecalculated.

Overview of Assessment Activities


2. Employee related expenses

Consolidated Consolidated Parent Parent2020 2019 2020 2019$000 $000 $000 $000

Salaries and wages (including annual leave and ADO) 1,245,459 1,202,484 - - Superannuation - defined benefit plans 9,229 10,152 - - Superannuation - defined contribution plans 109,925 105,729 - - Long service leave 58,505 91,086 - - Redundancies 2,402 332 - - Workers' compensation insurance 15,920 13,185 - - Fringe benefits tax 140 44 - -

1,441,580 1,423,012 - -

3. Personnel services


Salaries and wages (including annual leave and ADO) - - 1,245,459 1,202,484 Superannuation - defined contribution plans - - 109,925 105,729 Long service leave - - 2,942 6,049 Redundancies - - 2,402 332 Workers' compensation insurance - - 15,920 13,185 Fringe benefits tax - - 140 44

- - 1,376,788 1,327,823

4. Visiting medical officers

Visiting medical officers (VMOs) enhance full-time medical specialist services by providing speciality input in a number ofdisciplines throughout the HNELHD's hospitals. VMO expenses of $112,696 thousand (2019: $106,469 thousand) representpart of the day-to-day running costs incurred in the normal operations of the HNELHD. These costs are expensed as incurred.

Personnel services of $705 thousand (2019: $530 thousand) have been capitalised in property, plant and equipment andintangible assets and are excluded from the above.

Employee related costs of $705 thousand (2019: $530 thousand) have been capitalised in property, plant and equipment andintangible assets and are therefore excluded from the above.

Personnel services of Hunter New England Local Health District were provided by its controlled entity, Hunter New EnglandLocal Health District Special Purpose Service Entity.


5.

Consolidated Consolidated Parent Parent2020 2019 2020 2019$000 $000 $000 $000203 379 203 379 220 207 220 207

9,949 10,156 9,949 10,156 527 276 527 276 - 3 - 3

82,674 80,701 82,674 80,701 70,649 63,615 70,649 63,615 43,741 41,713 43,741 41,713 17,106 17,046 17,106 17,046 39,165 35,982 39,165 35,982 27,496 24,660 27,496 24,660

2,493 2,527 2,493 2,527 - 3 - 3

67,820 56,601 67,820 56,601 102,423 105,930 102,423 105,930

4,344 3,948 4,344 3,948 6,952 6,090 6,952 6,090 4,209 4,721 4,209 4,721 1,865 2,825 1,865 2,825

- 6,412 - 6,412

93,817 81,400 93,817 81,400 10,905 10,433 10,905 10,433 12,529 14,697 12,529 14,697 41,036 35,813 41,036 35,813

640,123 606,138 640,123 606,138

Other expenses

Specialised services (dental, radiology, pathology and allied health)Staff related costsTravel related costsOther (see Note 5(a))

InsuranceInterstate patient outflows Maintenance (see Note 5(b))Medical and surgical suppliesMotor vehicle expensesPostal and telephone costsPrinting and stationeryRates and chargesRental

The majority of the costs in relation to drug supplies and medical and surgical supplies expenses relate to the consumption ofinventory held by the HNELHD.

AdvertisingAuditor's remuneration - audit of financial statementsBlood and blood productsConsultanciesContractorsDomestic supplies and servicesDrug suppliesFood supplies Fuel, light and powerPatient transport costsInformation management expenses


5.


(a) OtherAircraft expenses (Ambulance) - 4 - 4 Corporate support services 14,695 15,071 14,695 15,071 Courier and freight 1,387 1,314 1,387 1,314 Isolated patient travel and accommodation assistance scheme 6,519 6,319 6,519 6,319 Legal services 377 127 377 127 Membership/professional fees 846 906 846 906 Public private partnership contracted services 1,755 716 1,755 716 Quality assurance / accreditation 418 440 418 440 Security services 963 800 963 800 Motor vehicle operating lease expense - minimum lease payments - 4 - 4 Other operating lease expense - minimum lease payments - 330 - 330 Expenses relating to short-term leases 1,784 - 1,784 - Expenses relating to leases of low-value assets 1,584 - 1,584 - Other miscellaneous 10,708 9,782 10,708 9,782

41,036 35,813 41,036 35,813

(b) Reconciliation of total maintenanceMaintenance contracts 24,095 17,953 24,095 17,953 New / replacement equipment under $10,000 27,243 17,655 27,243 17,655 Repairs maintenance / non contract 16,474 20,990 16,474 20,990 Other 8 3 8 3 Maintenance expense - contracted labour and other (non-employee related) in Note 5

67,820 56,601 67,820 56,601

Employee related/personnel services maintenance 10,048 9,458 10,048 9,458 77,868 66,059 77,868 66,059

Other expenses (continued)


5.

Maintenance expense

Operating expenses

●

●

Variable lease payments are not included in the measurement of the lease liability (i.e. variable lease payments that do notdepend on an index or a rate, initially measured using the index or rate as at the commencement date). These payments arerecognised in the period in which the event or condition that triggers those payments occurs.

Recognition and Measurement


Day-to-day servicing costs or maintenance are charged as expenses as incurred except where they relate to the replacementor enhancement of a part or component of an asset, in which case the costs are capitalised and depreciated.

Lease expense

The HNELHD's insurance activities are conducted through the NSW Treasury Managed Fund (TMF) Scheme of self insurancefor government entities. The expense / (premium) is determined by the fund manager based on past claims experience. TheTMF is managed by NSW Self Insurance Corporation (SiCorp), a controlled entity of the ultimate parent.

Insurance

Leases of assets that are valued at $10,000 or under when new.

Leases that meet the definition of short-term. i.e. where the lease term at commencement of the lease is 12 months orless. This excludes leases with a purchase option.

From 1 July 2019, the HNELHD recognises the lease payments associated with the following types of leases as an expense ona straight-line basis:

Lease expense (from 1 July 2019)

Up to 30 June 2019, operating lease payments are recognised as an operating expense in the Statement of ComprehensiveIncome on a straight-line basis over the lease term. An operating lease is a lease other than a finance lease.

Operating leases

Lease expense (up to 30 June 2019)

Operating expenses generally represent the day-to-day running costs incurred in the normal operations of the HNELHD. Thesecosts are expensed as incurred. The recognition and measurement policy for non-employee related expenses is detailed inNote 27.


6. Depreciation and amortisation


Depreciation - buildings 71,683 65,531 71,683 65,531 Depreciation - plant and equipment 27,819 24,935 27,819 24,935 Depreciation - infrastructure systems 2,458 3,060 2,458 3,060 Depreciation - right-of-use buildings 3,342 - 3,342 - Amortisation - intangible assets 391 639 391 639

105,693 94,165 105,693 94,165

7. Grants and subsidies


Non-government organisations 5,038 5,202 5,038 5,202 Grants to research organisations 899 558 899 558 Grants paid to entities controlled by the immediate parent 368 82 368 82 Other grants 1,538 516 1,538 516

7,843 6,358 7,843 6,358


Refer to Note 22 Property, plant and equipment, Note 23 Leases, and Note 24 Intangible assets for recognition andmeasurement policies on depreciation and amortisation.

Grants and subsidies expense generally comprise contributions in cash or in kind to various local government authorities andnot-for-profit community organisations to support their health-related objectives and activities. The grants and subsidies areexpensed on the transfer of the cash or assets. The transferred assets are measured at their fair value.


8. Finance costs


Interest expense from finance lease 6,155 6,521 6,155 6,521 Interest expense from lease liabilities 368 - 368 - Interest expense from financial liabilities at amortised cost 171 189 171 189 Other interest charges - 11 - 11

6,694 6,721 6,694 6,721


9. Payments to Affiliated Health Organisations


(a) Recurrent sourcedCalvary Mater Newcastle 147,299 140,695 147,299 140,695

147,299 140,695 147,299 140,695 (b) Capital sourced

Calvary Mater Newcastle 1,793 2,460 1,793 2,460 1,793 2,460 1,793 2,460

149,092 143,155 149,092 143,155


General operating expenses/revenues of Calvary Mater Hospital (Affiliated Health Organisation) have only been included inthe Statement of Comprehensive Income prepared to the extent of the cash payments made to the Health Organisationsconcerned. HNELHD is not deemed to own or control the various assets/liabilities of the aforementioned Health Organisationsand such amounts have been excluded from the Statement of Financial Position. Any exceptions are specifically listed in thenotes that follow.

Finance costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs arerecognised as expenses in the period in which they are incurred, in accordance with NSW Treasury’s mandate to not-for-profitNSW General Government Sector entities.

Payments to non-government affiliated health organisations generally comprise contributions in cash or in kind. Non-government affiliated health organisations support the NSW Ministry of Health's role of 'system manager' in relation to theNSW public health system. The payments are expensed on the transfer of the cash or assets. The transferred assets aremeasured at their fair value.


10. Revenue


11. NSW Ministry of Health allocations

Until 30 June 2019, income is recognised in accordance with AASB 111 Construction Contracts, AASB 118 Revenue andAASB 1004 Contributions.

From 1 July 2019, income is recognised in accordance with the requirements of AASB 15 Revenue from Contracts withCustomers (AASB 15) or AASB 1058 Income of Not-for-Profit Entities (AASB 1058), dependent on whether there is a contractwith a customer defined by AASB 15.

Payments are made by the immediate parent as per the Service Agreement to the HNELHD and adjusted for approvedsupplementations, mostly for salary agreements and approved enhancement projects. The Service Agreement between theimmediate parent and the HNELHD does not contain sufficiently specific enforceable performance obligations as defined byAASB 15 and are therefore recognised upon the receipt of cash, in accordance with AASB 1058.

Interstate patient flows are funded through the NSW State Pool Account, based on activity and consistent with the pricedetermined in cross border agreements. The funding is also recognised as part of the NSW Ministry of Health recurrentallocation from the immediate parent.

The HNELHD recognised additional NSW Ministry of Health recurrent allocations of $18,572 thousand and NSW Ministry ofHealth capital allocations of $1,510 thousand to cover costs incurred with preparation, diagnosis and treatment of COVID-19patients.

Deemed appropriation money is money received directly by the HNELHD which forms part of the consolidated fund and is notappropriated to the HNELHD by an Act.

Under the GSF Act 2018, the HNELHD’s own source revenue (which includes but is not limited to receipts from NSW Ministryof Health recurrent and capital allocations, patient fees, non-patient fees, grants and other contributions, other ancillaryservices, proceeds from the sale of property, plant and equipment and proceeds from borrowings and advances) meets thedefinition of deemed appropriation money under the GSF Act (Section 4.7).


12.

(a) Sale of goods comprise the following:


Pharmacy sales 259 232 259 232 Sale of prosthesis 8,770 6,407 8,770 6,407 Other 382 332 382 332

9,411 6,971 9,411 6,971 (b) Rendering of services comprise the following:

PatientsPatient Fees:- Inpatient fees 91,461 102,226 91,461 102,226 - Nursing home fees 2,366 2,345 2,366 2,345 - Non inpatient fees 7,012 6,606 7,012 6,606 Department of Veterans' Affairs 16,109 21,388 16,109 21,388 Highly specialised drugs 37,838 29,920 37,838 29,920 Motor Accident Authority third party 23,253 20,258 23,253 20,258 Multi Purpose Service Centre fees 4,819 4,829 4,819 4,829 StaffPrivate use of motor vehicles 271 293 271 293 Salary packaging fee 630 1,530 630 1,530 Meals and accommodation 338 317 338 317 Child care fees 1,310 1,409 1,310 1,409 General communityCar parking 4,685 5,581 4,685 5,581 Clinical services (excluding clinical drug trials) 10,929 10,660 10,929 10,660 Commercial activities 5,842 5,364 5,842 5,364 Fees for conferences and training 416 398 416 398 Fees for medical records 392 376 392 376 Information retrieval 6 8 6 8 Meals on Wheels 24 16 24 16 Non-NSW Health entitiesLinen service revenues - 1 - 1 Services to other organisations 4,346 5,198 4,346 5,198 Entities controlled by the immediate parentHosted service revenues 250 60 250 60 Shared corporate service revenues 241 287 241 287 OtherInfrastructure fees - annual charge 6,409 6,016 6,409 6,016 Infrastructure fees - monthly facility charge 26,127 26,602 26,127 26,602 Other 13,716 14,145 13,716 14,145

258,790 265,833 258,790 265,833 268,201 272,804 268,201 272,804

Sale of goods and services / Sale of goods and services from contracts with customers


Sale of goods from contracts with customers (from 1 July 2019)

i.

ii.

iii.

iv.

v.


Sale of goods (until 30 June 2019)

Revenue from the sale of goods is recognised when the HNELHD transfers the significant risks and rewards of ownership ofthe goods, usually on delivery of the goods.

Revenue is measured at the transaction price agreed under various contracts. No element of financing is deemed present aspayments are due when the service is provided.

Refer to Note 28 for the disclosure of the aggregate amount of the transaction price allocated to performance obligations thatare unsatisfied (or partially unsatisfied) at the end of the reporting period, and when the HNELHD expects to recognise theunsatisfied portion as revenue.

An agreement is in place with the Commonwealth Department of Veterans' Affairs through which direct funding is providedfor the provision of health services to entitled veterans. For inpatient services, revenue is recognised by the HNELHD onan accrual basis by reference to patient admissions. Non admitted patients are recognised by the NSW Ministry of Healthin the form of a block grant.

Use of hospital facilities

Specialist doctors with rights of private practice are subject to an infrastructure charge, including service charges whereapplicable for the use of hospital facilities at rates determined by the NSW Ministry of Health.

Revenue from the sale of goods is recognised when the HNELHD satisfies a performance obligation by transferring thepromised goods. Sale of goods comprises of pharmacy sales, sale of prosthesis and other items. The HNELHD typicallysatisfies its performance obligations when the control of goods is transferred to the customer. The payments are typically duewhen invoiced.

Revenue from these sales is recognised based on the price specified in the contract, and revenue is only recognised to theextent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the salesare made with a short credit term. No volume discount or warranty is provided on the sale.

Patient fees are derived from chargeable inpatients and non-inpatients on the basis of rates specified by the NSW Ministryof Health. Revenue is recognised on an accrual basis when the service has been provided to the patient.

Patient fees

Rendering of services (until 30 June 2019)

Revenue is recognised when the service is provided or by reference to the type and stage of services provided to date.

Rendering of services from contracts with customers (from 1 July 2019)

Revenue from rendering of services is recognised when the HNELHD satisfies the performance obligation by transferring thepromised services. Revenue is typically recognised as follows:

Department of Veterans' Affairs

Revenue for highly specialised drugs is paid by the Commonwealth in accordance with the terms of the Commonwealthagreement through Medicare and reflects the recoupment of costs incurred under Section 100 of the National Health Act1953 for highly specialised drugs. The agreement provides for the provision of medicines for the treatment of chronicconditions where specific criteria are met in respect of admitted day patients, non admitted patients or patients ondischarge. Revenue is recognised when the drugs have been provided to the patient.

Motor Accident Authority third party

A bulk billing agreement exists in which motor vehicle insurers' effect payment directly to NSW Health for the hospitalcosts for those persons hospitalised or attending for inpatient treatment as a result of motor vehicle accidents. TheHNELHD recognises the revenue on an accrual basis from the time the patient is treated or admitted into hospital.

Highly specialised drugs


13. Investment revenue


Interest income from financial assets at amortised cost 1,599 2,520 1,599 2,520 Royalties - 12 - 12

1,599 2,532 1,599 2,532

Interest income

Royalties


Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except forfinancial assets that subsequently become credit impaired. For financial assets that become credit impaired the effectiveinterest rate is applied to the amortised cost of the financial asset (i.e. after deducting the loss allowance for expected creditlosses).

Until 30 June 2019, royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement.

From 1 July 2019, royalties are usually recognised when the underlying performance obligation is satisfied. It is recognised atthe estimated amount if the consideration is variable.


14. Grants and other contributions


Clinical drug trials - 1,210 - 1,210 Commonwealth government grants - 21,556 - 21,556 Cancer Institute grants received from an entity controlled by the immediate parent - 10,109 - 10,109 Grants & contributions received from entities controlled by the ultimate parent - 16,696 - 16,696 Grants & contributions received from entities controlled by the immediate parent - 1,876 - 1,876 Research grants - 1,895 - 1,895 Other grants - 8,840 - 8,840 Grants to acquire / construct a recognisable non-financial asset to be controlled by the entity

Grants to acquire / construct non-financial asset - - - - Other grants with sufficiently specific performance obligations

Cancer Institute grants received from an entity controlled by the immediate parent 10,009 - 10,009 - Clinical trials and research grants 3,991 - 3,991 - Commonwealth government grants received for community based services 10,516 - 10,516 - Commonwealth government grants other 4,483 - 4,483 - Grants from entities controlled by the ultimate parent 671 - 671 - Other grants from entities controlled by the immediate parent 316 - 316 - Other grants 7,947 - 7,947 -

Grants without specific performance obligationsClinicals trial and research grants 559 - 559 - Commonwealth government grants other 3,145 - 3,145 - Grants from entities controlled by the ultimate parent 1 - 1 - Other grants from entities controlled by the immediate parent 44,275 - 44,275 - Other grants 851 - 851 -

Donations 3,521 3,765 3,521 3,765 90,285 65,947 90,285 65,947



- Chaplaincies and Pastoral Care- Pink Ladies / Hospital Auxiliaries- Patient Support Groups- Community Organisations- Health Education

Income from grants (other than contributions by owners) is recognised when the entity obtains control over the contribution.The HNELHD is deemed to have assumed control when the grant is received or receivable.

Grants and other contributions (from 1 July 2019)


Grants and other contributions (until 30 June 2019)

Revenue from grants with sufficiently specific performance obligations is recognised when the HNELHD satisfies aperformance obligation by transferring the promised goods or services. The HNELHD typically receives grants in respect ofresearch, clinical drug trials and other community, health and wellbeing related projects. The HNELHD uses various methodsto recognise revenue over time, depending on the nature and terms and conditions of the grant contract. The payments aretypically based on agreed timetable or on achievement of different milestones set up in the contract.

Income from grants to acquire / construct a recognisable non-financial asset to be controlled by the HNELHD is recognisedwhen the HNELHD satisfies its obligations under the transfer. The HNELHD satisfies the performance obligation under thetransfer over time as the non-financial assets are being constructed. The percentage of cost incurred is used to recogniseincome, because this most closely reflects the progress to completion.

Contributions are recognised at their fair value. Contributions of services are recognised when and only when a fair value ofthose services can be reliably determined and the services would be purchased if not donated.

Revenue from these grants is recognised based on the grant amount specified in the funding agreement/funding approval,and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element offinancing is deemed present as funding payments are usually received in advance or shortly after the relevant obligation issatisfied.

Receipt of these services, while important, is not recognised because typically such services would not have been purchasedif not donated.

Receipt of volunteer services is recognised when and only when the fair value of those services can be reliably determinedand the services would have been purchased if not donated. Volunteer services recognised are measured at fair value. TheHNELHD receives volunteer services for the below activities:

Volunteer services

Income from grants without sufficiently specific performance obligations is recognised when the HNELHD obtains control overthe granted assets (e.g. cash).

Refer to Note 28 for the transaction price allocated to the performance obligations that have not been satisfied at the end ofthe year and when it is expected to be recognised as revenue.

- Counselling, Transport, Home Help and Patient Activities- Practical Support to Patients and Relatives- Patient Services, Fund Raising- Patient and Family Support


15.


Superannuation - defined benefit plans 9,229 10,152 - - Long service leave provision 55,563 85,037 - -

64,792 95,189 - -

16. Other income


Other income comprises the following: Bad debts recovered 3 1 3 1 Commissions 1,253 1,755 1,253 1,755 Discounts 79 - 79 - Insurance refunds 1,447 712 1,447 712 Rental income- other rental income 2,220 2,174 2,220 2,174 Sale of merchandise, old wares and books 39 50 39 50 Sponsorship 24 51 24 51 Treasury Managed Fund hindsight adjustment - 679 - 679 Unclaimed deposits - 12 - 12 Other 4,764 4,634 4,764 4,634

9,829 10,068 9,829 10,068

Other Income


Other income includes rental income arising from operating leases which is accounted for on a straight-line basis over thelease term under AASB 16 Leases. The rental income is incidental to the purpose for holding the property.

The following liabilities and expenses have been assumed by the Crown Entity:

Acceptance by the Crown Entity of employee benefits


17. Gains / (losses) on disposal


Property, plant and equipment 22,234 30,083 22,234 30,083 Less: accumulated depreciation 13,552 19,294 13,552 19,294 Written down value 8,682 10,789 8,682 10,789 Less: proceeds from disposal 5,791 6,438 5,791 6,438 Gain / (Loss) on disposal of property, plant and equipment

(2,891) (4,351) (2,891) (4,351)

Total gains / (losses) on disposal (2,891) (4,351) (2,891) (4,351)

18. Conditions and restrictions on income of not-for-profit entities

The HNELHD receives various types of grants and donations from different grantors / donors, some of which may not haveenforceable performance obligations. The HNELHD determines the grantor / donor expectations in determining the externallyimposed restrictions and discloses them in accordance with different types of restrictions. The types of restrictions and incomeearned with restrictions are detailed in Note 26 Restricted assets.


19. Cash and cash equivalents


Cash at bank and on hand 110,856 103,395 110,856 103,395 110,856 103,395 110,856 103,395

Cash and cash equivalents (per Statement of Financial Position) 110,856 103,395 110,856 103,395 Closing cash and cash equivalents (per Statement of Cash Flows) 110,856 103,395 110,856 103,395

Most cash and cash equivalents held by the HNELHD are restricted assets and are not held for operating and capitalexpenditure.

HealthShare NSW, a controlled entity of the immediate parent makes all payments to employees and most payments tosuppliers of goods and services and grants and subsidies on behalf of the HNELHD. These payments are reported asexpenses and operating cash outflows in the financial statements of the HNELHD.

HealthShare NSW receives payments directly from the NSW Ministry of Health on behalf of the HNELHD to fund thesepayments. These payments are reported as revenue (NSW Ministry of Health recurrent allocations) and operating cash inflowsin the financial statements of the HNELHD when HealthShare NSW makes these payments on behalf of the HNELHD.

Health Infrastructure, a controlled entity of the immediate parent makes most payments to purchase property, plant andequipment on behalf of the HNELHD. These payments are reported as additions to property, plant and equipment andinvesting cash outflows in the financial statements of the HNELHD.

Health Infrastructure receives payments directly from the NSW Ministry of Health on behalf of the HNELHD to fund thesepayments. These payments are reported as revenue (NSW Ministry of Health capital allocations) and operating cash inflows inthe financial statements of the HNELHD.

Cash and cash equivalent assets recognised in the Statement of Financial Position are reconciled at the end of the financialyear to the Statement of Cash Flows as follows:

Refer to Note 40 for details regarding credit risk, liquidity risk and market risk arising from financial instruments.

For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash at bank, cash on hand, short-termdeposits with original maturities of three months or less, which are subject to an insignificant risk of changes in value.


20. Receivables


CurrentTrade receivables from contracts with customers 22,019 - 22,019 - Sale of goods and services - 32,286 - 32,286 Intra health receivables 2,139 7,212 2,139 7,212 Goods and Services Tax 16,753 13,817 16,753 13,817 Other receivables 5,319 5,201 5,319 5,201 Sub total 46,230 58,516 46,230 58,516 Less: Allowance for expected credit losses*- Trade receivables from contracts with customers (2,297) - (2,297) - - Sale of goods and services - (2,020) - (2,020) - Other receivables (604) (115) (604) (115) Sub total 43,329 56,381 43,329 56,381 Prepayments 6,253 7,091 6,253 7,091

49,582 63,472 49,582 63,472

(a)

Trade receivables from contracts with customersBalance at the beginning of the year (2,020) - (2,020) - Amounts written off during the year 424 - 424 - (Increase) / decrease in allowance recognised in the

net result¹ (701) - (701) - Balance at the end of the year (2,297) - (2,297) -

Sale of goods and servicesBalance at the beginning of the year - (370) - (370) Amounts written off during the year - (1,650) - (1,650) Balance at the end of the year - (2,020) - (2,020)

Other receivablesBalance at the beginning of the year (115) - (115) - Amounts written off during the year 86 (115) 86 (115) (Increase) / decrease in allowance recognised in the net result (575) - (575) - Balance at the end of the year (604) (115) (604) (115)

(2,901) (2,135) (2,901) (2,135)


Non-currentPrepayments 246 - 246 -

246 - 246 -

* Movement in the allowance for expected credit losses

¹ Includes impairment loss of $701 thousand (2019: $435 thousand) recognised on receivables from contracts with customers.


20. Receivables (continued)

(b)

Current and non-current include:


Patient fees - compensable 1,859 2,372 1,859 2,372 Patient fees - ineligible 1,855 1,518 1,855 1,518 Patient fees - inpatient & other 10,351 20,270 10,351 20,270

14,065 24,160 14,065 24,160

Consolidated Parent2020 2020$000 $000

Contract receivables (included in Note 20) 24,411 24,411 24,411 24,411


Subsequent measurement

Financial assets at amortised cost

Impairment

All ‘regular way’ purchases or sales of receivables are recognised and derecognised on a trade date basis. Regular waypurchases or sales are purchases or sales of receivables that require delivery of assets within the time frame established byregulation or convention in the marketplace.

For lease receivables, the HNELHD applies the simplified approach permitted by AASB 9 Financial Instruments, where the lossallowance is based on lifetime ECLs.

For trade receivables, the HNELHD applies a simplified approach in calculating ECLs. The HNELHD recognises a lossallowance based on lifetime ECLs at each reporting date. The HNELHD has established a provision matrix based on itshistorical credit loss experience for trade receivables, adjusted for forward looking factors specific to the receivable.

The HNELHD recognises an allowance for expected credit losses (ECLs) for all debt financial assets not held at fair valuethrough profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that theHNELHD expects to receive, discounted at the original effective interest rate.

The HNELHD holds receivables with the objective to collect the contractual cash flows and therefore measures them atamortised cost using the effective interest method, less any impairment. Changes are recognised in the net result for the yearwhen impaired, derecognised or through the amortisation process.

Receivables are initially recognised at fair value plus any directly attributable transaction costs. Trade receivables that do notcontain a significant financing component are measured at the transaction price.

The current and non-current trade receivables from contracts with customers balances above include the followingpatient fee receivables:

Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired aredisclosed in Note 40.


21. Inventories


CurrentDrug supplies 3,197 2,597 3,197 2,597

3,197 2,597 3,197 2,597


The cost of inventories acquired at no cost or for nominal consideration is the current replacement cost as at the date ofacquisition. Current replacement cost is the cost the HNELHD would incur to acquire the asset. Net realisable value is theestimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costsnecessary to make the sale.

Inventories held for distribution are stated at cost, adjusted when applicable, for any loss of service potential. A loss of servicepotential is identified and measured based on the existence of a current replacement cost that is lower than the carryingamount. Inventories (other than those held for distribution) are stated at the lower of cost and net realisable value. Cost iscalculated using the weighted average cost method.

Obsolete items are disposed of in accordance with instructions issued by the NSW Ministry of Health.

The increase in medical and surgical supplies is a result of the HNELHD preparing for an increase in COVID-19 patients.Inventories held for distribution for COVID-19 are also consumed in the normal services provided by the HNELHD.

Market demand has increased the weighted average cost of inventories in medical and surgical supplies due to the outbreakof COVID-19. Market demand for these items is expected to continue and as a result the carrying amount and currentreplacement cost are aligned. At the 30 June 2020, the HNELHD has determined that it plans to use the remaining medicaland surgical supplies inventory in a relatively short time period, well before expiry, and there is no available alternative that ismore efficient or effective nor a likelihood of an alternative being on the market in the foreseeable future.


22.

(a)


Land and Buildings

Plant and Equipment¹

Infrastructure Systems Total

$000 $000 $000 $000As at 30 June 2020Gross carrying amount 3,218,992 312,353 96,169 3,627,514 Less: accumulated depreciation and impairment 955,517 164,811 48,888 1,169,216 Net carrying amount 2,263,475 147,542 47,281 2,458,298

Land and Buildings




The net carrying amount of privately financed project (PFP) assets included in land and buildings and infrastructure is$77,078 thousand as at 30 June 2020 (30 June 2019: $79,609 thousand).

1 For non-specialised assets with short useful lives, recognition at depreciated historical cost is regarded as an acceptableapproximation of fair value, in accordance with Treasury Policy Paper 14-01.

Property, plant and equipment

Total property, plant and equipment


22.

(a)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000Year ended 30 June 2020Net carrying amount at beginning of year 2,158,534 140,162 46,655 2,345,351 Adjusted net carrying amount at beginning of year 2,158,534 140,162 46,655 2,345,351 Additions 187,811 31,378 - 219,189 Disposals (2,008) (6,674) - (8,682) Transfers within NSW Health entities through Statement of Comprehensive Income - 316 - 316 Net revaluation increments less revaluation decrements 4,084 - - 4,084 Depreciation expense (71,683) (27,819) (2,458) (101,960) Reclassifications (13,263) 10,179 3,084 - Net carrying amount at end of year 2,263,475 147,542 47,281 2,458,298

Further details regarding the fair value measurement of property, plant and equipment are disclosed in Note 25.

Property, plant and equipment (continued)

Total property, plant and equipment - reconciliation

A reconciliation of the carrying amount for each class of property, plant and equipment is set out below:

* This does not include finance lease assets that relate to privately financed projects according to TPP06-08. AASB 16does not apply to these assets in 2019-20


22.

(a)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000Year ended 30 June 2019Net carrying amount at beginning of year 1,263,388 141,865 75,961 1,481,214 Additions 75,981 23,099 355 99,435 Disposals (3,310) (7,479) - (10,789) Transfers within NSW Health entities through Statement of Comprehensive Income - 425 - 425 Net revaluation increments less revaluation decrements 874,504 - (5,912) 868,592 Depreciation expense (65,531) (24,935) (3,060) (93,526) Reclassifications 13,502 7,187 (20,689) - Net carrying amount at end of year 2,158,534 140,162 46,655 2,345,351



Total property, plant and equipment - reconciliation (continued)


22.

(b)


Land and Buildings

Plant and Equipment



Land and Buildings




Property, plant and equipment held and used by the HNELHD


The HNELHD has no property, plant and equipment where it is the lessor under operating leases. All property, plant andequipment balances are for items held and used by the HNELHD.


22.

(b)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000Year ended 30 June 2020Net carrying amount at beginning of year 2,154,318 140,162 46,655 2,341,135 Adjusted net carrying amount at beginning of year 2,154,318 140,162 46,655 2,341,135 Additions 187,811 31,378 - 219,189 Disposals (2,008) (6,674) - (8,682) Transfers within NSW Health entities through Statement of Comprehensive Income - 316 - 316 Net revaluation increments less revaluation decrements 4,084 - - 4,084 Depreciation expense (71,498) (27,819) (2,458) (101,775) Reclassifications (13,263) 10,179 3,084 - Net carrying amount at end of year 2,259,444 147,542 47,281 2,454,267

Property, plant and equipment held and used by the HNELHD - reconciliation

A reconciliation of the carrying amount for each class of property, plant and equipment held and used by the entity is setout below:


* This does not include finance lease assets that relate to privately financed projects according to TPP06-08. AASB 16does not apply to these assets in 2019-20



22.

(c)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000As at 30 June 2020Gross carrying amount 7,686 - - 7,686 Less: accumulated depreciation and impairment 3,655 - - 3,655 Net carrying amount 4,031 - - 4,031

Land and Buildings

Plant and Equipment


$000 $000 $000 $000As at 30 June 2019Gross carrying amount 7,686 - - 7,686 Less: accumulated depreciation and impairment 3,470 - - 3,470 Net carrying amount 4,216 - - 4,216

Property, plant and equipment where the HNELHD is the lessor under operating leases



22.

(c)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000Year ended 30 June 2020Net carrying amount at beginning of year 4,216 - - 4,216 Adjusted net carrying amount at beginning of year 4,216 - - 4,216 Depreciation expense (185) - - (185) Net carrying amount at end of year 4,031 - - 4,031


A reconciliation of the carrying amount for each class of property, plant and equipment subject to an operating lease is setout below:

Property, plant and equipment where the HNELHD is the lessor under operating leases - reconciliation

* This does not include finance lease assets that relate to privately financed projects according to TPP06-08. AASB 16does not apply to these assets in 2019-20Further details regarding the fair value measurement of property, plant and equipment are disclosed in Note 25.


22.

Capitalisation thresholds

The present value of the expected cost for the restoration or cost of dismantling of an asset after its use is included in the costof the respective asset if the recognition criteria for a provision are met.

Restoration costs

Property, plant and equipment and intangible assets costing $10,000 and above individually (or forming part of a networkcosting more than $10,000) are capitalised.

Land and buildings are owned by the Health Administration Corporation. Land and buildings which are operated/occupied bythe HNELHD are deemed to be controlled by the HNELHD and are reflected as such in the financial statements.

Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent, i.e. the deferredpayment amount is effectively discounted over the period of credit.

Major inspection costs

Property, plant and equipment acquired are initially recognised at cost and subsequently revalued at fair value lessaccumulated depreciation and impairment. Cost is the amount of cash or cash equivalents paid or the fair value of the otherconsideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amountattributed to that asset when initially recognised in accordance with the requirements of other Australian AccountingStandards.

Acquisition of property, plant and equipment

Health Administration Corporation, a controlled entity of the immediate parent, manages the approved major capital worksprogram for the NSW Ministry of Health and its controlled entities. Health Administration Corporation receives NSW Ministry ofHealth Capital Allocations and grants on behalf of the HNELHD and makes payments to contractors and suppliers. HealthAdministration Corporation initially records all costs incurred as work in progress or expenses and subsequently transfers tothe HNELHD. The costs are then accordingly reflected in the HNELHD financial statements. The HNELHD acquires mostassets in this manner.


Fair value is the price that would be received to sell an asset in an orderly transaction between market participants atmeasurement date.

Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition(see also assets transferred as a result of an equity transfer - Note 39).

When a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as areplacement if the recognition criteria are satisfied.



22.

Useful livesBuildings 40 yearsBuildings - leasehold improvements 3-10 yearsPlant and equipment 4-20 yearsInfrastructure Systems 40 years

Property, plant and equipment acquired under finance leases are depreciated over the asset’s useful life. However, if there isno reasonable certainty that the lessee entity will obtain ownership at the end of the lease term, the asset is depreciated overthe shorter of the estimated useful life of the asset and the lease term.

Property, plant and equipment at 30 June 2019 includes non-current assets acquired under finance leases only. The assetsare recognised at fair value or, if lower, the present value of the minimum lease payments, at the inception of the lease.Property, plant and equipment does not include amounts in respect of operating leases.

Until 30 June 2019, AASB 117 Leases (AASB 117) distinguished between finance leases that effectively transfer from thelessor to the lessee substantially all the risks and rewards incidental to ownership of the leased assets, and operating leasesunder which the lessor does not transfer substantially all the risks and rewards.

Subsequent to the adoption of AASB 16, the HNELHD, as a lessee, recognises a right-of-use asset at cost and acorresponding lease liability at the lease commencement date. Right-of-use assets that do not meet the definition ofinvestment properties are included in Property, Plant and Equipment under the corresponding asset categories. Furtherinformation on right-of-use assets is contained in Note 23.

Further information on leases is contained in Note 23.

Therefore, at that date property, plant and equipment recognised under leases previously treated as finance leases underAASB 117 are derecognised. The right-of-use assets arising from these leases are recognised and included in the separateline item together with those arising from leases previously treated as operating leases under AASB 117.

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset for most leases. TheHNELHD has elected to present right-of-use assets separately in the Statement of Financial Position.

Right-of-use assets acquired by lessees (under AASB 16 from 1 July 2019)

Finance leases acquired by lessees (Under AASB 117 until 30 June 2019)

The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period andadjusted if appropriate.

'Infrastructure Systems' comprises public facilities which provide essential services and enhance the productive capacity of theeconomy including roads, bridges, water infrastructure and distribution works, sewerage treatment plants, seawalls and waterreticulation systems.

'Plant and equipment' comprises, among others, medical, computer and office equipment, motor vehicles, furniture and fittingsand PODS (a detachable or self-contained unit on ambulances used for patient treatment).

Details of depreciation rates initially applied for major asset categories are as follows:

Depreciation is provided for on a straight-line basis for all depreciable assets so as to write off the depreciable amount of eachasset as it is consumed over its useful life to the HNELHD. Land is not a depreciable asset. All material identifiablecomponents of assets are depreciated over their useful lives.


Depreciation of property, plant and equipment


22.

Property, plant and equipment is measured at the highest and best use by market participant's that is physically possible,legally permissible and financially feasible. The highest and best use must be available at a period that is not remote andtakes into account the characteristics of the asset being measured, including any socio-political restrictions imposed bygovernment. In most cases, after taking into account these considerations, the highest and best use is the existing use. Inlimited circumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use orwhere there is a feasible higher restricted alternative use.

Physical non-current assets are valued in accordance with the 'Valuation of Physical Non-Current Assets at Fair Value' Policyand Guidelines Paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 Fair Value Measurement, AASB116 Property, Plant and Equipment and AASB 140 Investment Property.

Revaluation of property, plant and equipment

The HNELHD has adopted the option to not apply AASB 16 to assets that would be classified as service concession assets inaccordance with AASB 1059 Service Concession Arrangements: Grantors. The HNELHD continues to apply its existingaccounting policy to these assets until AASB 1059 is applied. In a privately financed project (PFP), a public-sector entity (thegrantor) arranges for the private sector (the operator) to design, finance and build infrastructure and provide associatedoperational or management services for an agreed period (the service period). They are currently accounted for under TPP 06-8 Privately Financed Projects. Some PFP assets are acquired under a finance lease and accounted for following the principlesof AASB 117 according to TPP 06-8.

Interim revaluations are conducted between comprehensive revaluations where cumulative changes to indicators suggest fairvalue may differ materially from carrying value.

Privately financed project (PFP) assets accounted for under AASB 117 (until 30 June 2020)

For other assets valued using other valuation techniques, any balances of accumulated depreciation existing at therevaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts arethen increased or decreased by the revaluation increments or decrements.

Non-specialised assets with short useful lives are measured at depreciated historical cost, as an approximation of fair value.The HNELHD has assessed that any difference between fair value and depreciated historical cost is unlikely to be material.

Due to the COVID-19 pandemic in early 2020, the HNELHD management performed an additional assessment to determine ifthe fair value of its property plant and equipment as at 30 June 2020 materially differed from the carrying value. Managementconcluded that there is no definitive or conclusive market evidence to support any material adjustments. No adjustments wereapplied as a result.

Fair value of property, plant and equipment is based on a market participants’ perspective, using valuation techniques (marketapproach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs. Alsorefer to Note 25 for further information regarding fair value.

The last comprehensive revaluation was completed on 31 December 2018 and was based on an independent assessment.

Revaluations are made with sufficient regularity to ensure the carrying amount of each asset in the class does not differmaterially from its fair value at reporting date. The HNELHD conducts a comprehensive revaluation at least every three yearsfor its land and buildings and infrastructure. Interim desktop revaluations are conducted between comprehensive revaluationsfor those assets, where cumulative changes to indicators suggest fair value may differ materially from carrying value. TheHNELHD uses an independent professionally qualified valuer for such revaluations.

An interim management revaluation was completed on 31 March 2020 as a result of a cumulative increase in indicators of 4%for land and buildings and 4% for infrastructure. The HNELHD used an external professionally qualified valuer to conduct theinterim revaluation. Indicators provided by Opteon Solutions were not applied as they were deemed immaterial.



22.

Where an asset that has previously been revalued is disposed of, any balance remaining in the revaluation surplus in respectof that asset is transferred to accumulated funds.

After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used todetermine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed itsrecoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had noimpairment loss been recognised for the asset in prior years. Such reversal is recognised in net result and is treated as arevaluation increase. However, to the extent that an impairment loss on the same class of asset was previously recognised innet result, a reversal of that impairment loss is also recognised in net result.

As a not-for-profit entity, an impairment loss is recognised in the net result to the extent the impairment loss exceeds theamount in the revaluation surplus for the class of asset.

Specialised assets held for continuing use of their service capacity are rarely sold and their cost of disposal is typicallynegligible. Their recoverable amount is expected to be materially the same as fair value, where they are regularly revaluedunder AASB 13.

The HNELHD assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indicationexists, or when annual impairment testing for an asset is required, the HNELHD estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written downto its recoverable amount.

As a not-for-profit entity with no cash generating units, impairment under AASB 136 Impairment of Assets is unlikely to arise.As property, plant and equipment is carried at fair value or an amount that approximates fair value, impairment can only arisein the rare circumstances such as where the costs of disposal are material.

Impairment of property, plant and equipment

Property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected fromits use or disposal. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of theasset and are included in the consolidated Statement of Comprehensive Income.

As a not-for-profit entity, revaluation increments and decrements are offset against one another within a class of non-currentassets, but not otherwise.

Revaluation decrements are recognised immediately as a loss in the net result, except to the extent that it offsets an existingrevaluation surplus on the same class of assets, in which case, the decrement is debited directly to the revaluation surplus.

Revaluation increments are recognised in other comprehensive income and credited to revaluation surplus in equity. However,to the extent that an increment reverses a revaluation decrement in respect of the same class of asset previously recognisedas a loss in the net result, the increment is recognised immediately as a gain in the net result.

When revaluing non-current assets using the cost approach, the gross amount and the related accumulated depreciation areseparately restated. Where the income approach or market approach is used, accumulated depreciation is eliminated againstthe gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

Derecognition of property, plant and equipment

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financialyear end and adjusted if appropriate.


Revaluation of property, plant and equipment (continued)


23. Leases

(a) Entity as a lessee

Land and Buildings

Plant and Equipment Total

$'000 $'000 $'000

19,902 - 19,902 785 - 785

(3,342) - (3,342) 17,345 - 17,345

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset and a corresponding leaseliability for most leases.

The HNELHD leases various property, equipment and motor vehicles. Lease contracts are typically made for fixed periods of 1 to 8 years, but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range ofdifferent terms and conditions. The lease agreements do not impose any covenants but leased assets may not be used assecurity for borrowing purposes. The HNELHD does not provide residual value guarantees in relation to leases.

Extension and termination options are included in a number of property and equipment leases. These terms are used tomaximise operational flexibility in terms of managing contracts. The majority of extension and termination options held areexercisable only by the HNELHD and not by the respective lessor. In determining the lease term, management considers allfacts and circumstances that create an economic incentive to exercise an extension option, or not exercise a terminationoption. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonablycertain to be extended (or not terminated).

The HNELHD has elected to recognise payments for short-term leases and low value leases as expenses on a straight linebasis, instead of recognising a right-of-use asset and lease liability. Short-term leases are leases with a lease term of 12months or less. Low value assets are assets with a fair value of $10,000 or less when new and comprise mainly of small officeand medical equipment items.

The following table presents right-of-use assets. There are no right-of-use assets that meet the definition of investmentproperty.

Right-of-use assets under leases

2020

Balance at 30 June 2020

Balance at 1 July 2019AdditionsDepreciation expense

Potential future cash outflows of $35,797 thousand have not been included in the lease liability because it is not reasonablycertain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significantchange in circumstances occurs which affects this assessment and that is within the control of the lessee.



23. Leases (continued)

(a) Entity as a lessee (continued)

Total$'000

19,902 16

368 (2,759) 17,527

Total$'000

3,342 368

1,784 1,584 7,078

The HNELHD had total cash outflows for leases of $2,759 thousand for the year ended 30 June 2020.

Total amount recognised in the statement of comprehensive income

Depreciation expense of right-of-use assets2020


The following amounts were recognised in the Statement of Comprehensive Income for the year ended 30 June 2020 inrespect of leases where the HNELHD is the lessee:

Expenses relating to leases of low-value assetsExpenses relating to short-term leasesInterest expense on lease liabilities

Balance at 30 June 2020PaymentsInterest expensesAdditionsBalance at 1 July 20192020

The following table presents liabilities under leases.

Lease liabilities





Operating leases

Finance leases

2019 2019$'000 $'000

3,098 - 11,749 -

9,080 - 23,927 -

2,175 - 21,752 -

Recognition and Measurement (under AASB 16 from 1 July 2019)

The HNELHD recognises lease liabilities to make lease payments and right-of-use assets representing the right to use theunderlying assets, except for short-term leases and leases of low-value assets.

The HNELHD assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys theright to control the use of an identified asset for a period of time in exchange for consideration.

Total (including GST)Later than five yearsLater than one year and not later than five yearsWithin one year


Future minimum lease payments under non-cancellable leases as at 30 June 2019 are, as follows:

The HNELHD entered into a number of leases, with lease terms ranging from 5 to 28 years with various local councils and theCalvary Mater Newcastle for the use of hospital campus land and community health buildings. The contract specifies leasepayments of $1 per annum. The leased premise is be used by the HNELHD to provide different community health services.The hospital campus land and community health buildings account for a small portion of the similar assets the HNELHD isusing for the purpose of providing community services. Therefore it does not have a significant impact on the HNELHD'soperations.

Leases at significantly below market terms and conditions principally to enable the entity to further its objectives

Total (excluding GST)Less: GST recoverable from the Australian Taxation Office




i.

Useful livesBuildings 1 to 8 years

ii.

At the commencement date of the lease, the HNELHD recognises lease liabilities measured at the present value of leasepayments to be made over the lease term. Lease payments include:

● fixed payments (including in substance fixed payments) less any lease incentives receivable;

● variable lease payments that depend on an index or a rate;

● amounts expected to be paid under residual value guarantees;

● exercise price of a purchase option reasonably certain to be exercised by the HNELHD; and

● payments of penalties for terminating the lease, if the lease term reflects the HNELHD exercising the option toterminate.

Right-of-use assets

The HNELHD recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset isavailable for use). Right-of-use assets are initially measured at the amount of initial measurement of the lease liability(refer (ii) below), adjusted by any lease payments made at or before the commencement date, lease incentives, any initialdirect costs incurred, and estimated costs of dismantling and removing the asset or restoring the site.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,which is generally the case for real estate leases, the incremental borrowing rate is used. The HNELHD does not borrowfunds in the market. Instead they receive an allocation of the appropriations from the Crown Entity and where the CrownEntity needs additional funding, Treasury Corporation (TCorp) goes to the market to obtain these funds. As a result, theHNELHD is using TCorp rates as their incremental borrowing rates. These rates are published by NSW Treasury on aregular basis.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurredto produce inventories) in the period in which the event or condition that triggers the payment occurs.

Lease liabilities

The right-of-use assets are subsequently measured at cost. They are depreciated on a straight-line basis over the shorterof the lease term and the estimated useful lives of the assets, as follows:

If ownership of the leased asset transfers to the HNELHD at the end of the lease term or the cost reflects the exercise ofa purchase option, depreciation is calculated using the estimated useful life of the asset.

The right-of-use assets are also subject to impairment. The HNELHD assesses, at each reporting date, whether there isan indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset isrequired, the HNELHD estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds itsrecoverable amount, the asset is considered impaired and is written down to its recoverable amount. After an impairmentloss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’srecoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverableamount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment lossbeen recognised for the asset in prior years. Such reversal is recognised in the net result.




iii. Short-term leases and leases of low-value assets

iv. Leases that have significantly below-market terms and conditions principally to enable the entity to further its objectives

The HNELHD’s lease liabilities are included in borrowings in Note 29.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reducedfor the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in anindex or rate used to determine such lease payments) or a change in the assessment of an option to purchase theunderlying asset.

Until 30 June 2019, a lease was classified at the inception date as a finance lease or an operating lease. A lease thattransferred substantially all the risks and rewards incidental to ownership to the HNELHD was classified as a finance lease.

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at theinception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of aspecific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset (or those assets)is not explicitly specified in an arrangement.

Recognition and measurement (under AASB 117 until 30 June 2019)

The initial and subsequent measurement of right-of-use assets under leases at significantly below-market terms andconditions that are entered into principally to enable the HNELHD to further its objectives is the same as normal right-of-use assets. They are measured at cost, subject to impairment.

The HNELHD applies the short-term lease recognition exemption to its short-term leases of buildings, machinery, motorvehicles and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date anddo not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of officeequipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets arerecognised as an expense on a straight-line basis over the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments were recognised as an operating expensein the Statement of Comprehensive Income on a straight-line basis over the lease term.

Property, plant and equipment acquired under finance leases was depreciated over the useful life of the asset. However, ifthere is no reasonable certainty that the HNELHD will obtain ownership by the end of the lease term, the asset wasdepreciated over the shorter of the estimated useful life of the asset and the lease term.

Where a non-current asset was acquired by means of a finance lease, at the commencement of the lease, the asset wasrecognised at its fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability wasestablished at the same amount. Lease payments were apportioned between finance charges and reduction of the leaseliability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges were recognisedin finance costs in the Statement of Comprehensive Income.



(b) Entity as a lessor

Future minimum rentals receivable (undiscounted) under non-cancellable operating lease as at 30 June 2020 are, as follows:

2020 2019$'000 $'000

1,336 1,740 769 1,317 44 741 17 28 10 28 69 84 2,245 3,938

Lessor for finance leases


Hunter New England Local Health District leases few retail spaces located within the hospital precincts under operating leaseswith rental payable monthly. Lease payments generally contain uplift clauses to align to the market conditions.

An operating lease is a lease other than a finance lease. Rental income arising is accounted for on a straight-line basis overthe lease terms and is included in revenue in the Statement of Comprehensive Income due to its operating nature. Initial directcosts incurred in negotiating and arranging an operating lease are added to the carrying amount of the underlying asset andrecognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the periodin which they are earned.

Lessor for operating leases

Finance income arising from finance leases is recognised over the lease term, based on a pattern reflecting a constantperiodic rate of return on the lessor’s net investment in the lease.

At the lease commencement date, the HNELHD recognises a receivable for assets held under a finance lease in its Statementof Financial Position at an amount equal to the net investment in the lease. The net investment in leases is classified asfinancial assets amortised cost and equals the lease payments receivable by a lessor and the unguaranteed residual value,plus initial direct costs, discounted using the interest rate implicit in the lease.

Leases that the HNELHD transfers substantially all the risks and rewards incidental to ownership of an asset are classified asfinance leases. From 1 July 2019, subleases are classified by reference to the right-of-use asset arising from the head lease,rather than by reference to the underlying asset.

Total (excluding GST)Later than five yearsFour to five yearsThree to four yearsTwo to three yearsLater than one year and not later than five yearsWithin one year





24. Intangible assets


Cost (gross carrying amount) 2,071 2,071 2,071 2,071 Less: accumulated amortisation and impairment 1,374 983 1,374 983 Net carrying amount 697 1,088 697 1,088


2020 2019$000 $000

1,088 1,727 (391) (639)

Net carrying amount at end of year 697 1,088


Net carrying amount at beginning of year

A reconciliation of the carrying amount of intangibles at the beginning and end of the current reporting year is set out below:

Year ended 30 June 2020

Amortisation (recognised in depreciation and amortisation)

The useful lives of intangible assets are assessed to be finite.

All research costs are expensed. Development costs are only capitalised when certain criteria are met

The HNELHD recognises intangible assets only if it is probable that future economic benefits will flow to the HNELHD and thecost of the asset can be measured reliably. Intangible assets are measured initially at cost. Where an asset is acquired at noor nominal cost, the cost is its fair value as at the date of acquisition. Following initial recognition, intangible assets aresubsequently measured at fair value only if there is an active market. As there is no active market for the HNELHD's intangibleassets, the assets are carried at cost less any accumulated amortisation and impairment losses.

The HNELHD's intangible assets are amortised using the straight-line method over a period of four years.

Intangible assets are tested for impairment where an indicator of impairment exists. If the recoverable amount is less than itscarrying amount, the carrying amount is reduced to recoverable amount and the reduction is recognised as an impairmentloss.

Computer software developed or acquired by the HNELHD are recognised as intangible assets. Most computer software isacquired from the Health Administration Corporation, a controlled entity of the immediate parent. The amortisation period andthe amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reportingperiod.


25.

●

●

●

(a)

Level 1 Level 2 Level 3Total Fair

Value$000 $000 $000 $000

- 3,102 1,916,773 1,919,875 - - 42,467 42,467 - 3,102 1,959,240 1,962,342


Value$000 $000 $000 $000

- 7,760 1,988,148 1,995,908 - - 44,747 44,747 - 7,760 2,032,895 2,040,655

Fair value measurement of non-financial assets


The above figures exclude leasehold improvements, work in progress and newly completed projects which are carried atcost, and as a result they will not agree to Note 22.

There were no transfers between level 1 and 2 during the year ended 30 June 2020.

Fair value measurement and hierarchy



- Infrastructure systems

The HNELHD recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which thechange has occurred.

- Infrastructure systems - Land and buildingsProperty, plant and equipment (Note 22)2019

2020Property, plant and equipment (Note 22) - Land and buildings

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date. The fair value measurement is based on the presumption that the transaction tosell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of aprincipal market, in the most advantageous market for the asset or liability.

A number of the HNELHD’s accounting policies and disclosures require the measurement of fair values, for both financial andnon-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevantobservable inputs and minimises the use of unobservable inputs. Under AASB 13 Fair Value Measurement, the HNELHDcategorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows:

Level 1 – quoted (unadjusted) prices in active markets for identical assets / liabilities that the entity can access at the measurement date.

Level 3 – inputs that are not based on observable market data (unobservable inputs).

Level 2 – inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

Fair value hierarchy


25. Fair value measurement of non-financial assets (continued)

(b)

Non-current assets held for sale is a non-recurring item that is measured at the lower of its fair value less cost to sell or itscarrying amount. These assets are categorised as level 2.

For land, buildings and infrastructure systems the HNELHD obtains external valuations by independent valuers at leastevery three years. The last revaluation was performed by Opteon Solutions for the 2018-19 financial year. OpteonSolutions is an independent entity and is not an associated entity of the HNELHD.

Valuation techniques, inputs and processes

At the end of each reporting period a fair value assessment is made on any movements since the last revaluation, and adetermination as to whether any adjustments need to be made. These adjustments are made by way of application ofindices (refer Note 22 reconciliation).

The non-current assets categorised in (a) above have been measured as either level 2 or level 3 based on the followingvaluation techniques and inputs:

For land, the valuation by the valuer is made on a market approach, comparing similar assets (not identical) andobservable inputs. The most significant input is price per square metre.

All commercial and non-restricted land is included in level 2 as these land valuations have a high level of observableinputs although these lands are not identical.

All of the restricted land has been classified as level 3 as, although observable inputs have been used, a significant levelof professional judgement is required to adjust inputs in determining the land valuations. Certain parcels of land havezoning restrictions, for example hospital grounds, and values are adjusted accordingly.

For buildings and infrastructure, many assets are of a specialised nature or use, and thus the most appropriate valuationmethod is depreciated replacement cost. These assets are included as level 3 as these assets have a high level ofunobservable inputs. However, residential properties are valued on a market approach and included in level 2.

The property market is being impacted by the significant uncertainty that the COVID-19 outbreak has caused. Salesevidence have been utilised across the HNELHD to assess the land and non-specialised properties, in line with thevaluation by the valuers made on a market approach.



(c)


Land and Buildings

Infrastructure Systems

Other Assets

Total Level 3 Recurring

$000 $000 $000 $0001,988,148 44,747 - 2,032,895 1,988,148 44,747 - 2,032,895

4,084 - - 4,084 (1,942) - - (1,942)

(69,433) (2,280) - (71,713)

(4,084) - - (4,084) 1,916,773 42,467 - 1,959,240 Fair value as at 30 June 2020

There were no transfers between level 1 or 2 during the year ended 30 June 2020.

Transfer from Buildings to Medical equipment >$200,000

Fair value as at 1 July 2019

Reconciliation of recurring Level 3 fair value measurements

Adjusted fair value as at 1 July 2019

Disposals

2020

Depreciation expense

Revaluation increments / (decrements) recognised inother comprehensive income – included in line item'Changes in revaluation surplus of property, plant andequipment’ (Note 22)



(c)


Land and Buildings


Other Assets


$000 $000 $000 $0001,032,994 75,961 - 1,108,955

122,695 82 - 122,777

870,209 (5,912) - 864,297 4,653 - - 4,653

(1,425) - - (1,425) (2,851) - - (2,851)

(60,454) (3,057) - (63,511) 22,327 (22,327) - -

1,988,148 44,747 - 2,032,895

Disposals

Reconciliation of recurring Level 3 fair value measurements (continued)


Fair value as at 30 June 2019Reclassification between Asset ClassesDepreciation expense

Transfers from Level 2Transfers to Level 2


AdditionsFair value as at 1 July 20182019


26. Restricted assets


1 July 2019 2020Opening Revenue Expense Closing

Category $000 $000 $000 $000Community welfare 2,960 3,216 3,526 2,650 Facility improvements 27,241 12,193 11,037 28,397 Holds funds in perpetuity 61 459 - 520 Patient welfare 16,862 3,127 4,711 15,278 Private practice disbursements (No.2 Accounts) 26,236 6,885 7,646 25,475 Public contributions 1,711 101 138 1,674 Research 11,814 5,848 4,649 13,013 Staff welfare 667 391 221 837 Training and education including conferences 8,340 997 116 9,221 Other (43) 43 - -

95,849 33,260 32,044 97,065

CategoryCommunity welfare

Facility improvements

Holds funds in perpetuity

Patient welfare

Private practice disbursements (No.2 Accounts)

Public contributions

Research

Staff welfare

Training and education including conferences

Other

Unclaimed monies

All money and personal effects of patients which are left in the custody of the HNELHD by any patient who is discharged ordies in the hospital and which are not claimed by the person lawfully entitled thereto within a period of twelve months arerecognised as the property of the HNELHD.

All such money and the proceeds of the realisation of any personal effects are lodged to the credit of the Samaritan Fund whichis used specifically for the benefit of necessitous patients or necessitous outgoing patients.

Professional training, education and conferences.

Staff benefits such as staff recognition awards, functions and staff amenity improvements.

Research to gain knowledge, understanding and insight.

Donations or legacies received without any donor-specified conditions as to its use.

Does not meet the definition of any of the above categories.

Staff specialists’ private practice arrangements to improve the level of clinical servicesprovided.

Improvements such as medical needs, financial needs and standards for patients’ privacyand dignity.

The HNELHD's financial statements include the following assets which are restricted for stipulated purposes and / or byexternally imposed conditions, eg. donor requirements. The assets are only available for application in accordance with theterms of the donor restrictions. They consist of cash assets and rights and obligations to receive and make payments as at 30June 2020.

Restricted assets are held for the following purpose and cannot be used for any other purpose.

Donor has explicitly requested funds be invested permanently and not otherwise expended.

Repairs, maintenance, renovations and/or new equipment or building related expenditure.

Improvements to service access, health literacy, public and preventative health care.Purpose


27. Payables


CurrentAccrued salaries, wages and on-costs 42,455 33,531 - - Taxation and payroll deductions 4,501 8,384 - - Accrued liability - purchase of personnel services - - 46,956 41,915 Creditors 44,450 51,569 44,450 51,569 Other creditors - Capital works - 29 - 29 - Payables to entities controlled by the immediate parent 26,586 21,955 26,586 21,955 - Other 43,023 41,805 43,023 41,805

161,015 157,273 161,015 157,273


Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to theHNELHD. Gains and losses are recognised in the net result when the liabilities are derecognised as well as through theamortisation process.

Subsequent measurement is at amortised cost using the effective interest method. Short-term payables with no stated interestrate are measured at the original invoice amount where the effect of discounting is immaterial.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables are disclosed inNote 40.

These amounts represent liabilities for goods and services provided to the HNELHD and other amounts. Payables arerecognised initially at fair value, net of directly attributable transaction costs.


28. Contract liabilities

Consolidated Consolidated Parent Parent

2020

1 July 2019 adjusted for

AASB 15 2020


AASB 15$000 $000 $000 $000

CurrentContract liabilities 3,190 238 3,190 238

3,190 238 3,190 238


Revenue recognised that was included in the contract liability balance (adjusted for AASB 15) at the beginning of the year 238 238 Revenue recognised from performance obligations satisfied in previous periods (1,359) (1,359) Transaction price allocated to the remaining performance obligations from contracts with customers 37,678 37,678

2021 2022 2023 ≥ 2024Specific revenue class $'000 $'000 $'000 $'000Sales of goods and services from contracts with customers 12,324 12,324 - - Grants and other contributions 10,923 1,629 424 54

23,247 13,953 424 54

Contract liabilities relate to consideration received in advance from customers. The balance of the contract liabilities at the 30June 2020 was impacted by the timing of payments received for grants and other contributions. The satisfaction of the specificperformance obligations within the contract hadn't been met at the 30 June 2020. Revenue from the contract liabilities will berecognised when the specific performance obligations have been met.

The contract liability balance has significantly increased during the year because of the timing of payments received.

The transaction price allocated to the remaining performance obligations relates to the following revenue classes and isexpected to be recognised as follows:



29. Borrowings


CurrentOther loans and deposits 959 725 959 725 Lease liability (see Note 23) 2,431 - 2,431 - Public Private Partnerships 1,818 1,498 1,818 1,498

5,208 2,223 5,208 2,223

Non-currentOther loans and deposits 7,245 5,149 7,245 5,149 Lease liability (see Note 23) 15,096 - 15,096 - Public Private Partnerships 67,091 68,909 67,091 68,909

89,432 74,058 89,432 74,058


Financial liabilities at amortised cost

Borrowings classified as financial liabilities at amortised cost are initially measured at fair value, net of directly attributabletransaction costs. These are subsequently measured at amortised cost using the effective interest method. Gains and lossesare recognised in the net result when the liabilities are derecognised as well as through the amortisation process.

Finance lease liabilities are determined in accordance with AASB 117 Leases until 30 June 2019. From 1 July 2019, leaseliabilities are determined in accordance with AASB 16.

Borrowings are classified as current liabilities unless the HNELHD has an unconditional right to defer settlement of the liabilityfor at least 12 months after the reporting date. Refer to Note 40 (b) for derecognition policy.

No assets have been pledged as security / collateral for liabilities and there are no restrictions on any title to property.

Final repayment date for ‘Other loans and deposits’ is June 2027.

Other loans still to be extinguished represent monies to be repaid to the Health Administration Corporation, an entity controlledby the immediate parent; the immediate parent itself; and the NSW Treasury, which is controlled by the ultimate parent.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings are disclosed inNote 40.


29. Borrowings (continued)

(a)


Within one year 7,983 7,788 7,983 7,788 Later than one year and not later than five years 33,977 33,150 33,977 33,150 Later than five years 83,420 92,231 83,420 92,231 Minimum lease payments 125,380 133,169 125,380 133,169 Less: Future finance charges 56,471 62,762 56,471 62,762 Present value of minimum lease payments 68,909 70,407 68,909 70,407


Within one year 1,818 1,498 1,818 1,498 Later than one year and not later than five years 11,160 9,526 11,160 9,526 Later than five years 55,931 59,383 55,931 59,383 Present value of minimum lease payments classified as: 68,909 70,407 68,909 70,407

Current 1,818 1,498 1,818 1,498 Non-current 67,091 68,909 67,091 68,909

68,909 70,407 68,909 70,407

When Stage 1 construction was completed in January 2008, the former Hunter New England Area Health Service(HNEAHS) transferred the Mater hospital to Calvary Mater Newcastle and recognised the transfer as a grant expense of$71.33M. The recognition was based on the fact that services are delivered by Little Company of Mary Health Care beinga Third Schedule Hospital health care provider which is outside the accounting control of either the former HNEAHS or theMinistry of Health. Upon completion of the Project, the former HNEAHS transferred the other parts of the new Hospitaland recognised the transfer of a grant expense of $35.48M in June 2009.

In 2005-06, the Health Administration Corporation entered into a contract with a private sector provider, NovaCare ProjectPartnership for financing, design, construction and commissioning of a new Mater Hospital, a mental health facility andrefurbishment of existing buildings, and facilities management and delivery of ancillary non-clinical services on the siteuntil November 2033. The redevelopment was completed in three stages. Stage 1 was completed in January 2008followed by Stage 2 in February 2009. Construction of Stage 3 was completed on 16 June 2009.

Minimum lease payments in relation to PPP finance leases recognised under AASB 117 Leases as required by TPP 06-08 are payable as follows:

The present value of PPP finance lease payments is as follows:

The Public, Private Partnership relate to the provision of service-enabling infrastructure that includes private sectordelivering a combination of design, construction, financing, maintenance, operations and delivery of clinical and non-clinical services. Payments are made by the HNELHD to the private sector entities on the basis of delivery of assets orservice delivery. The liability to pay the private sector entities is based on financing arrangements involving ConsumerPrice Index (CPI)-linked finance and fixed finance.

Public Private Partnership (PPP) finance leases under AASB 117 Leases




TCorp borrowings

Other loans and deposits Leases

Total liabilities from financing

activities$000 $000 $000 $000

1 July 2018 - 85,269 - 85,269 Cash flows - (8,988) - (8,988)30 June 2019 - 76,281 - 76,281 Recognised on adoption of AASB 16 - - 19,902 19,902 1 July 2019 - 76,281 19,902 96,183 Cash flows - 832 (2,391) (1,559)New leases - - 16 16 30 June 2020 - 77,113 17,527 94,640

Changes in liabilities arising from financing activities

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings aredisclosed in Note 40.

The former HNEAHS recognised the new mental health facility as an asset of $39.29M. The refurbished Convent andMcAuley buildings at the Mater hospital site as occupied by the former HNEAHS, was also recognised as an asset andoffsetting liability of $11.08M. The basis for the accounting treatment is that services will be delivered by the formerHNEAHS on the site of Mater Hospital for the duration of the Head Lease of these facilities until November 2033.


30. Provisions


CurrentEmployee benefits and related on-costsAnnual leave - short term benefit 135,726 132,194 - - Annual leave - long term benefit 52,834 46,170 - - Long service leave consequential on-costs 39,430 36,723 - - Provision for other employee benefits 6,499 4,116 - - Provision for personnel services liability - - 234,489 219,203

234,489 219,203 234,489 219,203 Total current provisions 234,489 219,203 234,489 219,203

Non-currentEmployee benefits and related on-costsLong service leave consequential on-costs 3,429 3,193 - - Provision for personnel services liability - - 3,429 3,193

3,429 3,193 3,429 3,193 Other ProvisionsMake good provision 769 718 769 718

769 718 769 718 Total non-current provisions 4,198 3,911 4,198 3,911

Provisions - current 234,489 219,203 - - Provisions - non-current 3,429 3,193 - - Accrued salaries, wages and on-costs, taxation and payroll deductions (Note 27) 46,956 41,915 - - Liability - purchase of personnel services - - 284,874 264,311

284,874 264,311 284,874 264,311

Aggregate employee benefits and related on-costs


30. Provisions (continued)

Make good provisions

Carrying amount at beginning of period 718 759 718 759 - Additional provisions recognised 51 - 51 - Amounts used - (41) - (41) Carrying amount at end of period 769 718 769 718


Movements in provisions (other than employee benefits)

Movements in other provisions during the financial year, other than employee benefits, are set out below:

Specific on-costs relating to long service leave assumed by the Crown Entity are borne by the HNELHD.

Employee benefits and other provisions

Salaries and wages, annual leave, sick leave, allocated days off (ADO) and on-costs

Salaries and wages (including non-monetary benefits) and paid sick leave that are expected to be settled wholly within 12months after the end of the period in which the employees render the service are recognised and measured at theundiscounted amounts of the benefits.

Annual leave and ADO are not expected to be settled wholly before 12 months after the end of the annual reporting period inwhich the employees render the related service. As such, they are required to be measured at present value in accordancewith AASB 119 Employee Benefits (although short-cut methods are permitted).

Actuarial advice obtained by NSW Treasury, a controlled entity of the ultimate parent, has confirmed that using the nominalannual leave balance plus the annual leave entitlements accrued while taking annual leave can be used to approximate thepresent value of the annual leave liability. On-costs of 18.31% are applied to the value of leave payable at 30 June 2020(comparable on-costs for 30 June 2019 were 18.20%). The HNELHD has assessed the actuarial advice based on theHNELHD’s circumstances to both the annual leave and ADO and has determined that the effect of discounting is immaterial.All annual leave and ADO are classified as a current liability even where the HNELHD does not expect to settle the liabilitywithin 12 months as the HNELHD does not have an unconditional right to defer settlement.

Unused non-vesting sick leave does not give rise to a liability as it is not considered probable that sick leave taken in thefuture will be greater than the benefits accrued in the future.

Long service leave and superannuation

The HNELHD's liability for long service leave and defined benefit superannuation (State Authorities Superannuation Schemeand State Superannuation Scheme) are assumed by the Crown Entity, which is a controlled entity of the ultimate parent. TheHNELHD accounts for the liability as having been extinguished, resulting in the amount assumed being shown as part of thenon-monetary revenue item described as 'Acceptance by the Crown Entity of employee benefits'.



Other provisions

Other provisions are recognised when: the HNELHD has a present legal or constructive obligation as a result of a past event;it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of theamount of the obligation. When the HNELHD expects some or all of a provision to be reimbursed, for example, under aninsurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtuallycertain. The expense relating to a provision is presented net of any reimbursement in the Statement of ComprehensiveIncome.

The superannuation expense for the financial year is determined by using the formulae specified in the Treasurer’s Directions.The expense for certain superannuation schemes (i.e. Basic Benefit and First State Super) is calculated as a percentage ofthe employee's salary. For other superannuation schemes (i.e. State Superannuation Scheme and State AuthoritiesSuperannuation Scheme), the expense is calculated as a multiple of the employee's superannuation contributions.

Consequential costs to employment are recognised as liabilities and expenses where the employee benefits to which theyrelate have been recognised. This includes outstanding amounts of workers’ compensation insurance premiums and fringebenefits tax.

Consequential on-costs

Long service leave is measured at the present value of expected future payments to be made in respect of services providedup to the reporting date. Consideration is given to certain factors based on actuarial review, including expected future wageand salary levels, experience of employee departures, and periods of service. Expected future payments are discounted usingthe long-term Commonwealth Government bond rate at the reporting date.

Any provisions for restructuring are recognised only when the HNELHD has a detailed formal plan, and the HNELHD hasraised a valid expectation in those affected by the restructuring that it will carry out the restructuring by starting to implementthe plan or announcing its main features to those affected.

If the effect of the time value of money is material, provisions are discounted at a pre-tax rate that reflects the current marketassessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in theprovision due to the passage of time (i.e. unwinding of discount rate) is recognised as a finance cost.


31. Other liabilities


CurrentUnearned revenue 233 238 233 238 Liabilities under transfer to acquire or construct non-financial assets to be controlled by the entity 1,830 - 1,830 -

2,063 238 2,063 238

Non-currentUnearned revenue 225 240 225 240

225 240 225 240


2020$'000

- 1,548 1,548

282 -

1,830

Opening balance of liabilities arising from transfers to acquire/construct non-financial assets to be controlledby the entityAdd: adjustments upon initial application of AASB 1058Adjusted opening balanceAdd: receipt of cash during the financial year

● Patient fees received in advance of services being provided

● Receipts from various higher education providers and medical colleges relating to salary support and student placement

● Rent received in advance for Armidale Private Hospital for the forty year period ending 2037

Unearned revenue was derived from the following:

Reconciliation of financial assets and corresponding liabilities arising from transfers to acquire or construct non-financial assets to be controlled by the HNELHD.

Refer to Note 14 for a description of the HNELHD's obligations under transfers received to acquire or construct non-financialassets to be controlled by the HNELHD.

The HNELHD expects to recognise as income any liability for unsatisfied obligations as at the end of the reporting periodevenly in the next 1-3 financial years, as the related asset(s) are constructed / acquired.

Less: income recognised during the financial yearClosing balance of liabilities arising from transfers to acquire / construct non-financial assets to becontrolled by the entity


32. Commitments

(a) Capital commitments


Within one year 216,873 69,807 216,873 69,807 Later than one year and not later than five years 38,651 5,990 38,651 5,990 Total (including GST) 255,524 75,797 255,524 75,797

(b)

33. Contingent liabilities and assets


(a)

(b)

Aggregate capital expenditure for the acquisition of land and buildings, plant and equipment, infrastructure systems, andintangible assets, contracted for at balance date and not provided for:

Contingent assetsHNELHD has no contingent assets (2019: nil) as at 30 June 2020.

Contingent asset related to commitments for expenditure

The total 'Capital expenditure commitments' of $255.52 million as at 30 June 2020 includes input tax credits of $25.44million that are expected to be recoverable from the Australian Taxation Office (2019 $9.07 million).

HNELHD has no contingent liabilities (2019: nil) as at 30 June 2020.

Contingent liabilities

The HNELHD is not aware of any contingent liabilities or assets which would have a material effect on the disclosures in thesefinancial statements.


34. Trust funds


1 July 2019 30 June 2020Opening

equity Revenue Expense Closing

equityCategory $'000 $000 $000 $'000Patient Trust 1,165 200 (773) 592 Refundable Deposits 1,855 459 (378) 1,936 Private Patient Trust Funds 2,785 44,924 (44,920) 2,789 Third Party Funds 45 1,020 (1,008) 57 Total trust funds 5,850 46,603 (47,079) 5,374



equityCategory $'000 $000 $000 $'000Patient Trust 1,535 21 (391) 1,165 Refundable Deposits 2,127 567 (839) 1,855 Private Patient Trust Funds 2,615 44,184 (44,014) 2,785 Third Party Funds 5 937 (897) 45 Total trust funds 6,282 45,709 (46,141) 5,850

Category PurposePatient Trust

Refundable Deposits

Private Patient Trust Funds

Third Party Funds

Any amounts drawn down from trust funds under the private practice arrangements are not included in the key managementpersonnel compensation amounts or disclosed as a related party transaction in Note 41.

The HNELHD holds trust funds of $5.4 million (2019: $5.9 million) which are held for the safe keeping of patients' monies,deposits on hired items of equipment and Private Practice Trusts.

These funds are excluded from the financial statements as the HNELHD cannot use them for the achievement of itsobjectives. The following is a summary of the transactions in the trust account.

The following list provides a brief description of the purpose of the trust fund categories.

The safe custody of patients’ valuables including monies.

A sum of money held in trust as a security deposit.

The revenue derived from private patient and other billable services provided by StaffSpecialists.

A sum of money held in trust on behalf of external parties, e.g. external foundations,volunteer groups and auxiliaries.


35. Interests in associates

Name of entity

Place of business and country of incorporation

Class of shares

Nature of relationship

Measurement method

2020 2019 2020 2019% % $000 $000

Hunter Medical Research Institute Australia

Not applicable 25 25 Associate Equity method - -

Set out below are the associates of HNELHD as at 30 June 2020 which, in the opinion of management, are material to the group. The proportion of ownership interest held by the group equals the voting rights held by the group.

Ownership interest held by

HNELHD Carrying Amount

Hunter Medical Research Institute is a company limited by guarantee, whose constitution prohibits the distribution of funds to its members. Accordingly the carrying amount has been equity accounted at nil value and as such no financial information has been disclosed. Hunter Medical Research Institute has a 31 December reporting period.


36.


Net cash used on operating activities 222,448 108,528 222,448 108,528 Depreciation and amortisation expense (105,693) (94,165) (105,693) (94,165) Allowance for impairment (1,275) (519) (1,275) (519) (Increase) / decrease in unearned revenue (500) 158 (500) 158 Decrease / (increase) in provisions (15,572) (15,308) (15,572) (15,308) Increase / (decrease) in prepayments and other assets (11,869) 727 (11,869) 727 Decrease / (increase) in payables (3,672) 15,619 (3,672) 15,619 Decrease / (increase) in contract liabilities (2,952) - (2,952) - Net gain / (loss) on sale of property, plant and equipment (2,891) (4,351) (2,891) (4,351) Assets donated or brought to account (Note 37) 315 425 315 425 Other 769 - 769 - Net result 79,108 11,114 79,108 11,114

37. Non-cash financing and investing activities


Assets donated or brought to account 315 425 315 425 Property, plant and equipment acquired by a lease 785 - 785 -

1,100 425 1,100 425

Reconciliation of cash flows from operating activities to net result


38. Adjusted budget review


Net result

The actual Net Result was lower than adjusted budget by $7 million, primarily due to:

Assets and liabilities

NSW Health's budget is shown at a consolidated level when presented in parliament each year (i.e. in the NSW GovernmentBudget Papers). The HNELHD's budget is not presented in parliament, therefore AASB 1055 Budgetary Reporting is notapplicable. Unlike the requirement in AASB 1055 Budgetary Reporting to present original budget information, the HNELHD'sfinancial statements present adjusted budget information. The adjusted budgeted amounts are drawn from the initial ServiceAgreements between the HNELHD and the NSW Ministry of Health at the beginning of the financial year, as well as anyadjustments for the effects of additional supplementation provided in accordance with delegations to derive a final budget atyear end (i.e. adjusted budget). The budget amounts are not subject to audit and, accordingly, the relevant budget entries inthe financial statements are unaudited.

Total Assets were 1% favourable ($21M above budget).

Current Assets were 11.2% favourable ($17M above budget). Cash and Cash Equivalents 35.3% favourable ($29M abovebudget), Receivables 20.7% unfavourable ($13M below budget) and Inventories 23.1% favourable ($1M above budget).

Non Current Assts were 0.2% favourable ($4M above budget) with Intangible Assets 35.9% unfavourable ($0.5M belowbudget) the only category with a variance of greater than 5%.

Total Liabilities were 4.8% unfavourable ($23M above budget).

Current Liabilities were 2.9% unfavourable ($11M above budget). Borrowings 6.9% unfavourable ($0.5M above budget) andOther Current Liabilities 82% favourable ($9M below budget). All other categories had variances of less than 5%.

Non Current Liabilities were 14.3% unfavourable ($12M above budget). Borrowings were 14.9% unfavourable ($12M abovebudget) and Other Non-Current Liabilities were 6.3% unfavourable ($0M above budget).

Total Expenses excluding losses variance was 0.1% favourable ($18M below budget). All categories had variances of lessthan 5% except for Grants and Subsidies which was 12.7% unfavourable, ($1M above budget).

Total Revenue variance was 0.9% unfavourable ($22M below budget). All categories had variances of less than 5% exceptfor Investment Revenue which was 37.7% unfavourable ($1M below budget), grants and other contributions which were12.8% favourable ($10M above budget) and Other Income which was 11.7% favourable ($1M above budget).

Losses on Disposal was 268.3% unfavourable ($2M above budget) and Impairment Losses on Financial Assets was 54.5%unfavourable ($0.5M above budget).

Cash flows

$000

Initial Allocation, including escalation, excluding award increases 1,843,598 Escalations and Growth Funding 60,832 Budget Relief - Covid 18,572 Revenue Budget Reductions 9,530 Single Room Relief 16,718 Their Futures Matter 7,269 Dental 5,000 IPTAAS 4,263 Minor Works P51069 increase from Local Recurrent FY20 4,000 NMHEC 2,500 Volunatary Redundancies 2,417 Various Special Projects 2,132 Adjust Superannuation Funding from Crown to State 1,952 Translational Research Grants 1,778 NSW Rural Generalist Medical and GP Training FY20 1,384 Mater PPP Funding Adjustments 1,215 Nurse Midwife Strategy Reserve FY20 1,090 Rural Doctors - Obstetric & Anaesthetic Incentive Grants 1,003 Treasury Managed Fund 713 Emergency Drought Relief Mental Health Support 600 Cannibas Medicines Advisory Service 532 PPP funding (6,979) Other Misc 3,677 79,366

Balance as per Statement of Comprehensive Income 1,983,796

Net Cash Flows From Operating Activities was 9.3% favourable ($19M above budget). Interest Received 37.5% unfavourable($1M below budget), Grants and Other Contributions 5.1% favourable ($5M above budget) were the only categories with avariance of greater than 5%.

Net Cash Flows From Investing Activities was 3.3% unfavourable ($7M below budget). The only category with a varianceabove 5% was Proceeds from Sale of Property, Plant & Equipment 393.7% ($5M above budget).

Net Cash Flows From Financing Activities was 60.8% favourable ($2M above budget). The only category with a varianceabove 5% was Repayment of Borrowings and Advances were 53.2% unfavourable ($3M below budget).

Movements in the level of the NSW Ministry of Health Recurrent Allocation that have occurred since the time of the initialallocation are as follows:


39. Equity

Equity transfers effected in the 2018/19 year were:

(a)

Equity transfers effected comprised:

2020 2019$000 $000

(a) - (513) - (513)

Assets and Liabilities transferred are as follows:

2020 2019$000 $000

Liabilities(a) - (513) Increase / (Decrease) in Net Assets From Equity Transfers - (513)

The category 'accumulated funds' includes all current and prior period retained funds.Accumulated Funds

The revaluation surplus is used to record increments and decrements on the revaluation of non-current assets. This accordswith the HNELHD's policy on the revaluation of property, plant and equipment as discussed in Note 22.

Revaluation Surplus

Annual Leave Provision

Annual Leave Provision - Transfer of Annual Leave Provisions between NSW Health

An equity transfer was made between NSW Health entities to realign the annual leave liability to the current legal employeras held in the payroll system (StaffLink) for various employment arrangements, including staff on rotation and secondment.This has resulted in an increase in net assets of $513 thousand relating to the transfer of Annual Leave provision balancesto other NSW Health entities.


39.


Equity transfers

Equity (continued)

The transfer of net assets between entities as a result of an administrative restructure, transfers of programs/functions andparts thereof between entities controlled by the ultimate parent are recognised as an adjustment to 'Accumulated Funds'. Thistreatment is consistent with AASB 1004 Contributions and Australian Accounting Interpretation 1038 Contributions by OwnersMade to Wholly-Owned Public Sector Entities.

Transfers arising from an administrative restructure involving not-for-profit entities and for-profit government entities arerecognised at the amount at which the asset was recognised by the transferor immediately prior to the restructure. Subject tobelow, in most instances this will approximate fair value.

All other equity transfers are recognised at fair value, except for intangibles. Where an intangible has been recognised atamortised cost by the transferor because there is no active market, the HNELHD recognises the asset at the transferor'scarrying amount. Where the transferor is prohibited from recognising internally generated intangibles, the HNELHD does notrecognise that asset.


40. Financial instruments

(a) Financial instrument categories


Carrying Amount

Carrying Amount

2020 2019Class Category $000 $000Financial Assets

110,856 103,395 26,576 42,564

Total Financial Assets 137,432 145,959

Financial Liabilities94,640 76,281

156,514 148,889 Total Financial Liabilities 251,154 225,170 Notes

(b) Derecognition of financial assets and financial liabilities

1 Excludes statutory receivables and prepayments (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) isderecognised when the contractual rights to the cash flows from the financial assets expire; or if the entity transfers itsrights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full withoutmaterial delay to a third party under a pass through arrangement and either:

● The HNELHD has transferred substantially all the risks and rewards of the asset; or

● The HNELHD has neither transferred nor retained substantially all the risks and rewards for the asset, but hastransferred control.

The HNELHD determines the classification of its financial assets and liabilities after initial recognition and, when allowed andappropriate, re-evaluates this at each financial year end.

Cash and cash equivalents (Note 19)Receivables (Note 20)¹

Amortised costAmortised cost

Borrowings (Note 29)

The Chief Executive has overall responsibility for the establishment and oversight of risk management and reviews and agreespolicies for managing each of these risks. Risk management policies are established to identify and analyse the risks faced bythe HNELHD, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed on a continuous basis.

The HNELHD's principal financial instruments are outlined below. These financial instruments arise directly from the HNELHD'soperations or are required to finance its operations. The HNELHD does not enter into or trade financial instruments, includingderivative financial instruments, for speculative purposes.

The HNELHD's main risks arising from financial instruments are outlined below, together with the HNELHD's objectives, policiesand processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout thesefinancial statements.

Payables (Note 27)²Financial liabilities measured at amortised costFinancial liabilities measured at amortised cost


40. Financial instruments (continued)

(b) Derecognition of financial assets and financial liabilities (continued)

(c) Offsetting financial instruments

(d) Financial risk

i.

When the HNELHD has transferred its rights to receive cash flows from an asset or has entered into a pass througharrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. Where the HNELHDhas neither transferred nor retained substantially all the risks and rewards or transferred control, the asset continues to berecognised to the extent of the HNELHD's continuing involvement in the asset. In that case, the HNELHD also recognisesan associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights andobligations that the entity has retained.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. Whenan existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of anexisting liability are substantially modified, such an exchange or modification is treated as the derecognition of the originalliability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the netresult.

Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position ifthere is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a netbasis, or to realise the assets and settle the liabilities simultaneously.

Credit risk

Credit risk arises when there is the possibility that the counterparty will default on their contractual obligations, resulting in afinancial loss to the HNELHD. The maximum exposure to credit risk is generally represented by the carrying amount of thefinancial assets (net of any allowance for credit losses).

Credit risk arises from financial assets of the HNELHD, including cash, receivables and authority deposits. No collateral isheld by the HNELHD. The HNELHD has not granted any financial guarantees.

Credit risk associated with the HNELHD's financial assets, other than receivables, is managed through the selection ofcounterparties and establishment of minimum credit rating standards. Authority deposits held with NSW TCorp areguaranteed by the State.

The HNELHD considers a financial asset in default when contractual payments are 90 days past due. However, in certaincases, the HNELHD may also consider a financial asset to be in default when internal or external information indicates thatthe HNELHD is unlikely to receive the outstanding contractual amounts in full before taking into account any creditenhancements held by the HNELHD.

Cash comprises cash on hand and bank balances deposited within the NSW Treasury banking system. Interest is earnedon daily bank balances at rates of approximately 0.00% (Restricted Funds Bank balance: 1.62%) in 2019-20 compared to0.00% (Restricted Funds Bank balance: 2.52%) in the previous year.

Cash and cash equivalents

To measure the expected credit losses, trade receivables, other receivables and contract assets have been grouped basedon shared credit risk characteristics and the days past due.

Accounting policy for impairment of trade receivables and other financial assets

Receivables - trade receivables, other receivables and contract assets

Collectability of trade receivables, other receivables and contract assets is reviewed on an ongoing basis. Procedures asestablished in the Treasurer’s Directions are followed to recover outstanding amounts, including letters of demand.

The HNELHD applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expectedloss allowance for all trade receivables, other receivables and contract assets.



(d) Financial risk (continued)

i.

Current <30 days 30-60 days 61-90 days >91 days Total30 June 2020 $'000 $'000 $'000 $'000 $'000 $'000Expected credit loss rate 1.01% 2.39% 5.11% 18.14% 61.75% 10.61%Estimated total gross carrying

amount 1 20,008 1,757 1,037 452 4,084 27,338 Expected credit loss 202 42 53 82 2,522 2,901

Current <30 days 30-60 days 61-90 days >91 days Total30 June 2019 2 $'000 $'000 $'000 $'000 $'000 $'000Expected credit loss rate 0.66% 2.71% 9.46% 28.53% 57.04% 5.70%Estimated total gross carrying

amount 1 31,095 2,140 951 354 2,947 37,487 Expected credit loss 205 58 90 101 1,681 2,135

Notes

The expected loss rates are based on historical observed loss rates. The historical loss rates are adjusted to reflect currentand forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.The HNELHD has identified relevant factors, and accordingly has adjusted the historical loss rates based on expectedchanges in these factors.

Trade receivables, other receivables and contract assets are written off when there is no reasonable expectation ofrecovery. Indicators that there is no reasonable expectation of recovery include, amongst others a failure to makecontractual payments for a period of greater than 90 days past due.

The loss allowance for trade receivables, other receivables and contract assets as at 30 June 2020 and 30 June 2019 wasdetermined as follows:

The HNELHD is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors as at 30June 2020.

¹ The analysis excludes statutory receivables and prepayments as these are not within the scope of AASB7 Financial Instruments: Disclosures. Therefore the 'total' will not reconcile to the receivables total in Note 20.

2 Prior year balances have been restated to include other receivables and contract assets

Accounting policy for impairment of trade receivables and other financial assets (continued)

Receivables - trade receivables, other receivables and contract assets (continued)

Credit risk (continued)




ii.

The HNELHD has negotiated no loan outside of arrangements with the NSW Ministry of Health or NSW Treasury.

Liquidity risk

Liquidity risk is the risk that the HNELHD will be unable to meet its payment obligations when they fall due. The HNELHDcontinuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of highquality liquid assets. The objective is to maintain a balance between continuity of funding and flexibility through the use ofoverdrafts, loans and other advances.

During the current and prior year, there were no defaults of loans payable. No assets have been pledged as collateral.

For other suppliers, where settlement cannot be affected in accordance with the above, e.g. due to short term liquidityconstraints, contact is made with creditors and terms of payment are negotiated to the satisfaction of both parties.

For small business suppliers, where payment is not made within the specified time period, simple interest must be paidautomatically unless an existing contract specifies otherwise.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced.Until the 30 June 2019, amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set bythe NSW Ministry of Health in accordance with NSW Treasury Circular 11/12. For small business suppliers, where termsare not specified, payment is made not later than 5 days from the date of receipt of a correctly rendered invoice. For othersuppliers, if trade terms are not specified, payment is made no later than 30 days from the date of receipt of a correctlyrendered invoice or a statement is received. From 1 July 2019, amounts owing to suppliers (which are unsecured) aresettled in accordance with the policy set by the NSW Ministry of Health in accordance with NSW Treasury. For all suppliers,that has a correctly rendered invoice, that has a matched purchase order and where goods have been received, animmediate payment is made irrespective of current contract payment terms.

The HNELHD has exposure to liquidity risk. However, the risk is minimised by the service agreement with the NSW Ministryof Health, as the annual service agreement requires local management to control its financial liquidity and in particular meetbenchmarks for the payment of creditors. Where the HNELHD fails to meet service agreement performance standards, theMinistry as the state manager can take action in accordance with annual performance framework requirements, includingproviding financial support and increased management interaction (refer Note 1).




ii.

EIR3Nominal

Amount1

Fixed Interest

Rate

Variable Interest

Rate

Non - Interest Bearing < 1 Yr 1-5 Yr > 5Yr

% $000 $000 $000 $000 $000 $000 $000

156,514 - - 156,514 156,514 - -

2.85 9,029 9,029 - - 1,148 4,594 3,287 1.98 18,754 18,754 - - 2,753 10,679 5,322 8.36 125,380 125,380 - - 7,983 33,977 83,420

309,677 153,163 - 156,514 168,398 49,250 92,029

2019

148,889 - - 148,889 148,889 - -

2.94 6,618 6,618 - - 891 3,273 2,454 - - - - - - -

8.36 133,169 133,169 - - 7,788 33,150 92,231 288,676 139,787 - 148,889 157,568 36,423 94,685 Notes:

3 Weighted Average Effective Interest Rate (EIR).

Maturity DatesInterest Rate Exposure

¹ The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities based on the earliest date on which the HNELHD can be required to pay. The tables include both interest and principal cash flows and therefore will not reconcile to the Statement of Financial Position.2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB7 Financial Instruments: Disclosures).

Payables:- Creditors 2

Borrowings:- Loans and deposits- Finance leases- Public Private

- Creditors 2

Borrowings:- Loans and deposits- Lease liabilities

Liquidity risk (continued)

- Public Private

The table below summarises the maturity profile of the HNELHD's financial liabilities together with the interest rate exposure.

Maturity Analysis and interest rate exposure of financial liabilities

Payables:2020



iii.

Interest Rate Risk

-1% 1% -1% 1%Net result (162) 162 (271) 271 Equity (162) 162 (271) 271

(e) Fair value measurement

i. Fair value compared to carrying amount

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date. The fair value measurement is based on the presumption that thetransaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in theabsence of a principal market, in the most advantageous market for the asset or liability.

The amortised cost of financial instruments recognised in the Statement of Financial Position approximates the fair value,because of the short term nature of many of the financial instruments.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket prices. The HNELHD's exposures to market risk are primarily through interest rate risk on the HNELHD'sborrowings and other price risks associated with the movement in the Hour Glass Investment Facilities. The HNELHD hasno exposure to foreign currency risk and does not enter into commodity contracts.

The effect on net result and equity due to a reasonably possible change in risk variable is outlined in the information below,for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after takinginto account the economic environment in which the HNELHD operates and the time frame for the assessment (i.e. untilthe end of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at theStatement of Financial Position date. The analysis is performed on the same basis as for 2019. The analysis assumes thatall other variables remain constant.

Market risk

However, the HNELHD is not permitted to borrow external to the NSW Ministry of Health (except energy loans which arenegotiated through NSW Treasury). Both NSW Treasury and NSW Ministry of Health loans are set at fixed rates andtherefore are generally not affected by fluctuations in market rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because ofchanges in market interest rates. Exposure to interest rate risk arises primarily through the HNELHD's interest bearingliabilities. This risk is minimised by undertaking mainly fixed rate borrowings, primarily through NSW TCorp. The HNELHDdoes not account for any fixed rate financial instruments at fair value through profit or loss or at fair value through othercomprehensive income. Therefore, for these financial instruments, a change in interest rates would not affect profit or lossor equity. A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates (based on officialReserve Bank of Australia interest rate volatility over the last five years). The basis will be reviewed annually and amendedwhere there is a structural change in the level of interest rate volatility.

20192020$000 $000

Therefore the fair value of the financial instruments does not differ from the carrying amount.


41. Related party transactions


(a) Key management personnel compensation

Key management personnel compensation is as follows:

2020 2019$000 $000

Short-term employee benefits 394 542 Post-employment benefits 19 22

413 564

(b)

(c) Transactions with the ultimate parent

There were no transactions with the ultimate parent during the financial period (2019: $Nil).

(d)

The following operating expenses were incurred with entities controlled by the immediate parent:

●

●● Staff related costs in relation to various secondments and service arrangements.● Various grants and subsidies towards research and other projects● Blood and Blood Products● Domestic Supplies and Services● Food Supplies ● Other Operating Expenses● Hospital Ambulance Transport Costs● Information Management Expenses● Auditor's Remuneration - Audit of Financial Statements● Specialised Services

The HNELHD's key management personnel comprise its board members and chief executive (or acting chief executive)from time to time during the year.

During the financial year and comparative year, the HNELHD entered into the various transactions with other entitiesconsolidated as part of the NSW Ministry of Health (the immediate parent) and the NSW Total State Sector (the ultimateparent) within the normal course of business.

Transactions the HNELHD had with government related entities during the financial year

Health Administration Corporation provides shared services for the majority of patient transport services, informationmanagement services, domestic supplies and services, food supplies and corporate support services.

There were no transactions with key management personnel and their close family members (2019: $Nil).

During the financial year, Hunter New England Local Health District obtained key management personnel services fromthe immediate parent and incurred $516 thousand (2019: $493 thousand) for these services. This amount does not formpart of the key management personnel compensation disclosed above.

Compensation for the Minister for Health is paid by the Legislature and is not reimbursed by the NSW Ministry of Healthand its controlled entities. Accordingly no such amounts are included in the key management personnel compensationdisclosures above.

Remuneration for the Secretary and Deputy Secretaries are paid by the NSW Ministry of Health and is not reimbursed bythe health entities. Accordingly no such amounts are included in the key management personnel compensationdisclosures above.

Transactions with key management personnel and their close family members

Health Administration Corporation provides some specialised services which includes pathology related costs.



(d) Transactions the HNELHD had with government related entities during the financial year (continued)

The following operating expenses were incurred with entities controlled by the ultimate parent:

●●●● Utilities, including electricity, gas and water expenses● Motor vehicle toll expenses●●● Rental costs for Property NSW leased properties●

The following revenues were earned from entities controlled by the immediate parent:

● Revenue from recurrent and capital allocations● Various grants and contributions towards research and other projects● Shared Corporate Services● Motor Accident Authority Third Party ● Hosted Services Provided to Other NSW Health Entities ● Cancer Institute Grants● Other Revenue

The following revenues were earned from entities controlled by the ultimate parent:

●●● Motor vehicle rebates● Insurance refunds● Revenue from acceptance of long service leave liabilities and defined benefit ● Services Provided to Non NSW Health Organisations

Assets and liabilities as follows:

●●●●

●

42.

Payroll and fringe benefits taxes Audit of the statutory financial statementsLegal and consultancy services

Various grants and other contributions towards research and other projects

END OF AUDITED FINANCIAL STATEMENTS

No other matters have arisen subsequent to balance date that would require these financial statements to be amended.

Events after the reporting period

Energy Efficient Government Program loans are held with the Crown Finance EntityIntra-health loans and advancesThe majority of the construction of property, plant and equipment is managed and overseen by HealthAdministration CorporationThe majority of capital commitments contracted but not provided for related to capital works overseen by the HealthAdministration Corporation.

Receivables and payables in respect of the above noted related party revenue and expense transactions

Various grants and subsidies towards research and other projects

Insurance costs

Motor Accident Authority third party revenue received from the State Insurance Regulatory Authority (SIRA)

Other Consultancies

Cover page 3

Mid North Coast Local Health District



Mid North Coast Local Health District


Opinion

I have audited the accompanying financial statements of the Mid North Coast Local Health District














Basis for Opinion





the:








Auditor-General




audit opinion.































economically


statements




Dominika Ryan



11 September 2020

SYDNEY

Mid North Coast Local Health DistrictStatement of Comprehensive Income for the year ended 30 June 2020


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

Continuing operationsExpenses excluding lossesEmployee related expenses 2 425,679 427,868 408,395 - - Personnel services 3 - - - 409,650 386,079 Visiting medical officers 4 63,793 55,806 61,503 63,793 61,503 Other expenses 5 186,730 190,557 179,203 186,730 179,203 Depreciation and amortisation 6 26,383 26,044 22,231 26,383 22,231 Grants and subsidies 7 2,532 1,971 2,593 2,532 2,593 Finance costs 8 360 79 288 360 288 Total expenses excluding losses 705,477 702,325 674,213 689,448 651,897

RevenueNSW Ministry of Health recurrent allocations 10 580,161 586,469 542,690 580,161 542,690 NSW Ministry of Health capital allocations 10 84,498 86,548 59,051 84,498 59,051 Acceptance by the Crown Entity of employee benefits 14 16,029 16,006 22,316 - - Sale of goods and services 11 - - 64,088 - 64,088 Sale of goods and services from contracts with customers 11 61,807 66,745 - 61,807 - Investment revenue 12 444 712 751 444 751 Grants and other contributions 13 27,913 27,399 14,283 27,913 14,283 Other income 15 1,542 1,071 2,311 1,542 2,311 Total revenue 772,394 784,950 705,490 756,365 683,174 Operating result 66,917 82,625 31,277 66,917 31,277 Gains / (losses) on disposal 16 96 (402) (190) 96 (190) Impairment losses on financial assets 20 (379) (192) (479) (379) (479) Net result from continuing operations 36 66,634 82,031 30,608 66,634 30,608 Net result from discontinued operations - - - - - Net result 66,634 82,031 30,608 66,634 30,608

Other comprehensive incomeItems that will not be reclassified to net result in subsequent periodsChanges in revaluation surplus of property, plant and equipment 24 17,983 - - 17,983 - Total other comprehensive income 17,983 - - 17,983 - TOTAL COMPREHENSIVE INCOME 84,617 82,031 30,608 84,617 30,608



2

Mid North Coast Local Health DistrictStatement of Financial Position as at 30 June 2020


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

ASSETS

Current assetsCash and cash equivalents 19 25,549 27,366 25,524 25,549 25,524 Receivables 20 13,531 16,471 16,751 13,531 16,751 Contract assets 21 1,018 - - 1,018 - Inventories 22 993 814 814 993 814 Other financial assets 23 - 3,591 3,591 - 3,591

41,091 48,242 46,680 41,091 46,680 Non-current assets held for sale 26 371 752 752 371 752 Total current assets 41,462 48,994 47,432 41,462 47,432

Non-current assetsProperty, plant & equipment 24 - Land and buildings 565,406 537,842 459,941 565,406 459,941 - Plant and equipment 31,454 47,015 42,999 31,454 42,999 - Infrastructure systems 22,691 17,920 18,064 22,691 18,064 Total property, plant & equipment 619,551 602,777 521,004 619,551 521,004 Right-of-use assets 25 6,391 6,889 - 6,391 - Total non-current assets 625,942 609,666 521,004 625,942 521,004 Total assets 667,404 658,660 568,436 667,404 568,436

Mid North Coast Local Health DistrictStatement of Financial Position as at 30 June 2020 (continued)


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

LIABILITIES

Current liabilitiesPayables 29 54,080 48,948 48,247 54,080 48,247 Contract liabilities 30 429 - - 429 - Borrowings 31 2,948 2,502 792 2,948 792 Provisions 32 62,173 57,548 55,970 62,173 55,970 Other current liabilities 33 1,274 291 72 1,274 72

120,904 109,289 105,081 120,904 105,081 Total current liabilities 120,904 109,289 105,081 120,904 105,081

Non-current liabilitiesBorrowings 31 10,616 11,673 7,254 10,616 7,254 Provisions 32 787 787 720 787 720 Other non-current liabilities 33 2,027 - - 2,027 - Total non-current liabilities 13,430 12,460 7,974 13,430 7,974 Total liabilities 134,334 121,749 113,055 134,334 113,055 Net assets 533,070 536,911 455,381 533,070 455,381

EQUITYReserves 80,508 62,523 62,525 80,508 62,525 Accumulated funds 452,562 474,388 392,856 452,562 392,856 Total Equity 533,070 536,911 455,381 533,070 455,381



3

Mid North Coast Local Health DistrictStatement of Changes in Equity for the year ended 30 June 2020


Accumulated Funds


Notes $000 $000 $000Balance at 1 July 2019 392,856 62,525 455,381 Changes in accounting policy 1(g) (6,928) - (6,928) Balance at 1 July 2019 385,928 62,525 448,453 Net result for the year 66,634 - 66,634 Other comprehensive income:Net change in revaluation surplus of property, plant and equipment 24 - 17,983 17,983 Total other comprehensive income - 17,983 17,983 Total comprehensive income for the year 66,634 17,983 84,617

Transactions with owners in their capacity as ownersIncrease / (decrease) in net assets from equity transfers 39 - - - Balance at 30 June 2020 452,562 80,508 533,070

Accumulated Funds


Notes $000 $000 $000Balance at 1 July 2018 360,977 62,809 423,786 Changes in accounting policy (AASB 9) 168 - 168 Balance at 1 July 2018 361,145 62,809 423,954 Net result for the year 30,608 - 30,608 Other comprehensive income:Reclassification of revaluation increments / (decrements) to accumulated funds on disposal of assets 284 (284) - Total other comprehensive income 284 (284) - Total Comprehensive Income for the Year 30,892 (284) 30,608

Transactions with owners in their capacity as ownersIncrease / (decrease) in net assets from equity transfers 39 819 - 819 Balance at 30 June 2019 392,856 62,525 455,381


4

Mid North Coast Local Health DistrictStatement of Cash Flows for the year ended 30 June 2020


2020 2020 2019 2020 2019Notes $000 $000 $000 $000 $000

CASH FLOWS FROM OPERATING ACTIVITIESPaymentsEmployee related (407,816) (416,703) (387,371) - - Suppliers for goods and services (271,950) (269,072) (262,267) (271,950) (262,267) Grants and subsidies (2,788) (2,225) (2,797) (2,788) (2,797) Finance costs (360) (79) (288) (360) (288) Personnel services - - - (407,816) (387,371) Total payments (682,914) (688,079) (652,723) (682,914) (652,723) ReceiptsNSW Ministry of Health recurrent allocations 580,161 586,469 542,690 580,161 542,690 NSW Ministry of Health capital allocations 84,498 86,548 59,051 84,498 59,051 Reimbursements from the Crown Entity 6,590 6,590 6,985 6,590 6,985 Sale of goods and services 64,937 67,454 65,355 64,937 65,355 Interest received 553 712 751 553 751 Grants and other contributions 25,110 28,630 15,352 25,110 15,352 Other 24,205 22,497 24,391 24,205 24,391 Total receipts 786,054 798,900 714,575 786,054 714,575 NET CASH FLOWS FROM OPERATING ACTIVITIES 36 103,140 110,821 61,852 103,140 61,852

CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of property, plant and equipment and intangibles 739 453 45 739 45 Proceeds from sale of financial assets 3,591 - 9,409 3,591 9,409 Purchases of property, plant and equipment

(104,362) (106,800) (67,406) (104,362) (67,406) NET CASH FLOWS FROM INVESTING ACTIVITIES (100,032) (106,347) (57,952) (100,032) (57,952)

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings and advances (792) (793) (763) (792) (763) Payment of principal portion of lease liabilities (2,291) (1,839) - (2,291) - NET CASH FLOWS FROM FINANCING ACTIVITIES (3,083) (2,632) (763) (3,083) (763)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 25 1,842 3,137 25 3,137 Opening cash and cash equivalents 19 25,524 25,524 22,387 25,524 22,387 CLOSING CASH AND CASH EQUIVALENTS 19 25,549 27,366 25,524 25,549 25,524



5


a)

*

*

b)

The District's financial statements are general purpose financial statements which have been prepared on an accrual basisand in accordance with applicable Australian Accounting Standards (AAS) (which include Australian AccountingInterpretations), the requirements of the Health Services Act 1997 and its regulations (including observation of the Accountsand Audit Determination for Public Health Organisations), the Public Finance and Audit Act 1983 (the Act) and the PublicFinance and Audit Regulation 2015, and the NSW Treasurer's Directions issued under the Act. The financial statementscomply with the NSW Treasury mandates circular for NSW General Government Sector Entities.

The financial statements of the District have been prepared on a going concern basis.

In alignment with the approach of other States and Territories, and following a recommendation by the National Cabinet ofCommonwealth, the 2020-21 NSW Budget has been deferred until 17 November 2020. On this basis, the Secretary of NSWHealth, the Chair of the Mid North Coast Local Health District Board and the Chief Executive, through an interim ServiceAgreement, have agreed to service and funding levels for the forward financial year. The interim Service Agreement providesfor 48 per cent of the LHD’s annual funding.

Mid North Coast Local Health DistrictNotes to and forming part of the Financial Statementsfor the year ended 30 June 2020

The Mid North Coast Local Health District (the District) was established under the provisions of the Health Services Act 1997with effect from 1 January 2011.

The District is a NSW Government entity and is controlled by the NSW Ministry of Health, which is the immediate parent. Thereporting entity is also controlled by the State of New South Wales (and is consolidated as part of the NSW Total State SectorAccounts), which is the ultimate parent. The reporting entity is a not-for-profit entity (as profit is not its principal objective).

The District, as a reporting entity, comprises all the entities under its control, namely:

As a consequence the values in the financial statements presented herein consist of the parent entity and the consolidatedentity which comprises the parent and special purpose service entity. In the process of preparing the consolidated financialstatements consisting of the controlling and controlled entities, all inter-entity transactions and balances have been eliminated,and like transactions and other events are accounted for using uniform accounting policies.

These consolidated financial statements for the year ended 30 June 2020 have been authorised for issue by the ChiefExecutive on the 11th of September 2020.

The parent entity comprises all the operating activities of the Hospital Facilities and the Community Health Centres underits control. It also encompasses the Restricted Assets (as disclosed in Note 28), which, while containing assets which arerestricted for specified uses by the grantor or the donor, are nevertheless controlled by the parent entity.

When the NSW Budget is handed down in November 2020-21, the interim Service Agreement and funding arrangements willbe replaced with a full-year 2020-21 Service Agreement and budget. The Service Agreement sets out the level of financialresources for public health services under the District's control and the source of these funds. By agreement, the ServiceAgreement requires local management to control its financial liquidity and in particular meet benchmarks for the payment ofcreditors. Where the District fails to meet Service Agreement performance standards, the NSW Ministry of Health as the statemanager will take action in accordance with annual performance framework requirements, including financial support andincreased management interaction by the NSW Ministry of Health.

Basis of preparation

Reporting entity

The Mid North Coast Local Health District Special Purpose Service Entity, which was established as a Division of theDistrict on 1 January 2011 in accordance with the Health Services Act 1997. This Division provides personnel services toenable the District to exercise its functions.

6



*

*

*

*

c)

d)

*

*

e)


Income, expenses and assets are recognised net of the amount of GST, except that the:

amount of GST incurred by the District as a purchaser that is not recoverable from the Australian Taxation Office isrecognised as part of an asset's cost of acquisition or as part of an item of expense; and


All amounts are rounded to the nearest one thousand dollars and are expressed in Australian currency, which is the District'spresentation and functional currency.

Allocated funds, combined with other revenues earned, are adequate to pay debts as and when they become due andpayable.

The District has the capacity to review the timing of NSW Ministry of Health allocation cash flows to ensure that debts canbe paid when they become due and payable.

The District has developed an Efficiency and Improvement Plan (EIP) which identifies revenue improvement and costsaving strategies. Benefits from the EIP are retained by the District and assist in meeting its overall budget target. TheEIP is monitored and evaluated by the NSW Ministry of Health throughout the financial year.


Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in respectof the previous period for all amounts reported in the financial statements.


Property, plant and equipment, assets held for sale and certain financial assets and liabilities are measured at fair value. Otherfinancial statement items are prepared in accordance with the historical cost convention except where specified otherwise.

Judgements, key assumptions and estimations management has made are disclosed in the relevant notes to the financialstatements.


The financial statements and notes comply with Australian Accounting Standards which include Australian AccountingInterpretations.


Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flowsarising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office areclassified as operating cash flows.

The Commonwealth has entered a National Partnership Agreement, in response to the COVID-19 pandemic, with Statesand Territories, including NSW. The Agreement will deliver funding to public hospitals and provide stability and certainty of funding while ensuring access to new life saving therapies in public hospitals. The District is subject to additional NSWMinistry of Health recurrent and capital allocations to provide for costs incurred related to COVID-19 activities and toensure debts can be paid as and when they become due and payable.

Following the Novel Coronavirus (COVID-19) pandemic in late February 2020, the District has seen a decline in normalhospital activities. Restrictions were imposed by the Australian Government resulting in the suspension of non-urgent electivesurgeries to ensure increased capacity across the health system. Critical resources were reassigned to plan and prepare forpossible surges as a result of the outbreak. The unprecedented measures undertaken by both the Australian and Stategovernments to contain the spread of COVID-19, have resulted in significant impacts to the economy and within the healthsector.

7



f)


*

*

*


adoption of AASB 15

Impact of AASB 15

Notes $'000 $'000 $'000

61,807 61,807 - Grants and other contributions (a)(b) 6,521 5,932 589

68,328 67,739 589

Sale of goods and services from contracts with customers

The District applied AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities, andAASB 16 Leases for the first time. The nature and effect of the changes as a result of adoption of these new accountingstandards are described below.

Several other amendments and interpretations apply for the first time in 2019-20, but do not have an impact on thefinancial statements of the District.



AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies,with limited exceptions, to all revenue arising from contracts with customers. AASB 15 establishes a five-step model toaccount for revenue arising from contracts with customers and requires that revenue be recognised at an amount thatreflects the consideration to which the District expects to be entitled in exchange for transferring goods or services to acustomer.

AASB 15 requires the District to exercise judgement, taking into consideration all of the relevant facts and circumstanceswhen applying each step of the model to contracts with their customers. The standard also specifies the accounting forthe incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standardrequires relevant disclosures.

In accordance with the transition provisions in AASB 15, the District has adopted AASB 15 retrospectively with thecumulative effect of initially applying the standard recognised at the date of initial application, i.e. 1 July 2019. The Districthas used the transitional practical expedient permitted by the standard to reflect the aggregate effect of all of themodifications that occur before 1 July 2018 when:

The accounting policies applied in 2019-20 are consistent with those of the previous financial year except as a result ofnew or revised Australian Accounting Standards that have been applied for the first time as follows:

Revenue





Net Result



Impact on the Statement of Comprehensive Income:

8




adoption of AASB 15

Impact of AASB 15

Notes $'000 $'000 $'000

Contract assets (a) 1,018 - 1,018 1,018 - 1,018

LiabilitiesContract liabilities (b) 429 - 429 Other liabilities - - -

429 - 429

589 - 589 589 - 589

(a)

(b) Income from grants were previously recognised upon receipt of cash. Under the new revenue recognitionrequirements of AASB 15, income should be recognised when a performance obligation, by transferring a promisedgood or service, is satisfied. This may be at a point in time or over time. This has led to a deferral of grant incomewhere the entity has not yet satisfied its obligations promised in the contract with the customer.



Total assets

Total liabilitiesEquityAccumulated funds

The reason for the changes in grants and other contributions is due to the non-recurring nature of grants and contributionsreceived and varying nature of performance obligations across grant contracts resulting in different timing of revenuereceived.

AASB 1058 replaces most of the existing requirements in AASB 1004 Contributions. The scope of AASB 1004 is nowlimited mainly to contributions by owners (including parliamentary appropriations that satisfy the definition of a contributionby owners), administrative arrangements and liabilities of government departments assumed by other entities.

AASB 1058 applies to income with a donation component, i.e. transactions where the consideration to acquire an asset issignificantly less than fair value principally to enable a not-for-profit entity to further its objectives; and volunteer services.AASB 1058 adopts a residual approach, meaning that entities first apply other applicable Australian AccountingStandards (e.g. AASB 1004, AASB 15, AASB 16, AASB 9, AASB 137) to a transaction before recognising income.

Not-for-profit entities need to determine whether a transaction is/contains a donation (accounted for under AASB 1058) ora contract with a customer (accounted for under AASB 15).

Impact on the Statement of Financial Position:


Assets


Income from grants were previously recognised upon receipt of cash. Under the new revenue recognitionrequirements of AASB 15, income should be recognised when a performance obligation, by transferring a promisedgood or service, is satisfied. This may be at a point in time or over time. This has led to the accrual of grant incomewhere the entity has satisfied its obligations promised in the contract with the customer.


9



*

*



Impact of AASB 1058

Notes $'000 $'000 $'000

Grants and other contributions (a)(b) 21,391 17,766 3,625 21,391 17,766 3,625



Impact of AASB 1058

Notes $'000 $'000 $'000

Other liabilities (b) 3,301 - 3,301 3,301 - 3,301

(3,301) - (3,301) (3,301) - (3,301)

(a)

when the obligations under the transfer is satisfied, for transfers to enable an entity to acquire or construct arecognisable non-financial asset that will be controlled by the District.


Liabilities



Revenue


Income from grants to construct non-financial assets to be controlled by the entity were previously recognised uponreceipt of cash. Under the new revenue recognition requirements of AASB 1058, income should have beenrecognised over time as the non-financial assets are being constructed. This has led the accrual of grant incomewhere the entity has satisfied its obligations to construct the assets.

In accordance with the transition provisions in AASB 1058, the District has adopted AASB 1058 retrospectively with thecumulative effect of initially applying the standard at the date of initial application, i.e. 1 July 2019. The District hasadopted the practical expedient in AASB 1058 whereby existing assets acquired for consideration significantly less thanfair value principally to enable the District to further its objectives, are not restated to their fair value.


Net Result


Impact on the Statement of Comprehensive Income:

AASB 1058 requires recognition of receipt of an asset, after the recognition of any related amounts in accordance withother Australian Accounting Standards, as income:

Total liabilities


The adoption of AASB 1058 did not have an impact on Other Comprehensive Income and the Statement of Cash Flowsfor the financial year.

EquityAccumulated funds

10



(b) Income from grants to construct non-financial assets to be controlled by the entity were previously recognised uponreceipt of cash. Under the new revenue recognition requirements of AASB 1058, income should have beenrecognised over time as the non-financial assets are being constructed. This has led to the deferral of grant incomewhere the entity has not yet satisfied its obligations to construct the assets.

AASB 16 requires the District to account for all leases under a single on-balance sheet model similar to the accounting forfinance leases under AASB 117. As the lessee, the District recognises a lease liability and right-of-use asset at theinception of the lease. The lease liability is measured at the present value of the future lease payments, discounted usingthe interest rate implicit in the lease, or the lessee’s incremental borrowing rate if the interest rate implicit in the leasecannot be readily determined. The corresponding right-of-use asset is measured at the value of the lease liability adjustedfor lease payments before inception, lease incentives, initial direct costs and estimates of costs for dismantling andremoving the asset or restoring the site on which it is located.

The reason for the changes in grants and other contributions is due to the timing of revenue received to construct non-financial assets to be controlled by the entity.

AASB 16 Leases

The District has adopted the partial retrospective option in AASB 16, where the cumulative effect of initially applyingAASB 16 is recognised on 1 July 2019 and the comparatives for the year ended 30 June 2019 are not restated.

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability isrecognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the lessee’sincremental borrowing rate at the date of initial application. The weighted average lessee’s incremental borrowing rateapplied to the lease liabilities on 1 July 2019 was 1.46%.

The corresponding right-of-use asset is initially recorded on transition at an amount equal to the lease liability, adjusted bythe amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement of FinancialPosition as at 30 June 2019.

The District elected to use the practical expedient to expense lease payments for lease contracts that, at theircommencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases),and lease contracts for which the underlying asset is valued at $10,000 or under when new (low-value assets).

AASB 16 supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease,Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the Substance of TransactionsInvolving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentationand disclosure of leases and requires lessees to recognise most leases on the Statement of Financial Position.

Lessor accounting

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases aseither operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 does not have asignificant impact for leases where the entity is the lessor.

Lessee accounting

For leases previously classified as finance leases the District recognised the carrying amount of the lease asset and leaseliability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date ofinitial application. The measurement principles of AASB 16 are only applied after that date.

11



*

*

*

*

*

*

1 July 2019$'000

- 5,836 5,836

5,836 5,836

- -

1 July 2019$'000

3,463 (315)

3,148 1.46%3,086 (327)

(80) 757

2,473

(73) 5,836

The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019 asfollows:


not reassess whether a contract is, or contains, a lease at 1 July 2019, for those contracts previously assessed underAASB 117 and Interpretation 4;


In applying AASB 16 for the first time, the District has used the following practical expedients permitted by the standard:


BorrowingsTotal liabilitiesEquityAccumulated funds

Total assets

The effect of adopting AASB 16 on the Statement of Financial Position as at 1 July 2019 is, as follows:

Liabilities


relying on its previous assessment on whether leases are onerous immediately before the date of initial applicationas an alternative to performing an impairment review;

not recognise a lease liability and right-of-use-asset for short-term leases that end within 12 months of the date ofinitial application;



AssetsReceivables

Right-of-use assets

Add: Lease payments relating to renewal periods not included in operating leasecommitments as at 30 June 2019


Operating lease commitments as at 30 June 2019 (GST included)(Less): GST included in operating lease commitmentsOperating lease commitments as at 30 June 2019 (GST excluded)Weighted average incremental borrowing rate as at 1 July 2019Discounted operating lease commitments as at 1 July 2019(Less): commitments relating to short-term leases(Less): commitments relating to low-value assetsAdd / (Less) : contracts re-assessed as lease contracts

Add / (Less): Other adjustments

12



(ii)

Upon review, the District has not identified any arrangements in scope of AASB 1059.

The District has completed its impact assessment of AASB 1059 by reviewing all material arrangements where the privatesector is performing any services on behalf of the District. Any identified arrangements have been assessed whether itfalls within the scope of AASB 1059. If it does meet the scoping guidelines of AASB 1059, financial impacts werecalculated.



AASB 1059 Service Concession Arrangements is applicable to public sector entities only and is effective for annualperiods beginning on or after 1 January 2020. This standard requires the grantor to recognise a service concession assetin a service concession arrangement where it controls the asset. A corresponding financial liability and/or grant of rightliability is also recognised depending on the nature of the consideration exchanged. Service concession assets (includingthose provided by the operator, an upgrade to or a major component replacement of an existing asset of the grantor; andexisting assets of the grantor – also applicable to previously unrecognised intangible assets except goodwill) are initiallymeasured at current replacement cost based on AASB 13 Fair Value Measurement principles. They are subsequentlyaccounted for under AASB 116 Property, Plant & Equipment or AASB 138 Intangible Assets. Service concession liabilitiesare initially measured at the same amount as the service concession asset and subsequently measured using either the'financial liability' model applying AASB 9 Financial Instruments or, the 'grant of right' model under AASB 1059 ServiceConcession Arrangements. AASB 1059 Service Concession Arrangements requires retrospective application.


NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless NSW Treasurydetermines otherwise. The following new Australian Accounting Standards, excluding standards not considered applicableor material to the District have not been applied and are not yet effective. The possible impact of these AccountingStandards in the period of initial application includes:

13




Salaries and wages (including annual leave and ADO) 369,589 347,891 - - Superannuation - defined benefit plans 1,375 1,584 - - Superannuation - defined contribution plans 33,071 31,159 - - Long service leave 15,492 22,168 - - Redundancies - 829 - - Workers' compensation insurance 6,133 4,776 - - Fringe benefits tax 19 (12) - -

425,679 408,395 - -



Salaries and wages (including annual leave and ADO) - - 369,589 347,891 Superannuation - defined benefit plans - - - - Superannuation - defined contribution plans - - 33,071 31,159 Long service leave - - 838 1,436 Redundancies - - - 829 Workers' compensation insurance - - 6,133 4,776 Fringe benefits tax - - 19 (12)

- - 409,650 386,079


Visiting medical officers (VMOs) enhance full-time medical specialist services by providing speciality input in a number ofdisciplines throughout the District's hospitals. VMO expenses of $63,793 thousand (2019: $61,503 thousand) represent part ofthe day-to-day running costs incurred in the normal operations of the District. These costs are expensed as incurred.

Personnel services of $37 thousand (2019: $228 thousand) have been capitalised in property, plant and equipment assetsand are excluded from the above.

Employee related costs of $37 thousand (2019: $228 thousand) have been capitalised in property, plant and equipmentassets and are therefore excluded from the above.

Personnel services of Mid North Coast Local Health District were provided by its controlled entity, Mid North Coast LocalHealth District Special Purpose Service Entity.

14


5.


91 66 91 66 159 155 159 155

3,681 3,687 3,681 3,687 659 894 659 894 336 209 336 209

7,316 6,785 7,316 6,785 23,713 22,110 23,713 22,110 12,321 11,687 12,321 11,687

4,610 4,532 4,610 4,532 8,721 8,418 8,721 8,418

11,309 8,557 11,309 8,557 626 535 626 535

16,835 16,354 16,835 16,354 32,204 33,419 32,204 33,419

1,140 1,135 1,140 1,135 1,390 1,439 1,390 1,439 1,189 1,209 1,189 1,209

938 937 938 937 - 3,365 - 3,365

2,148 2,042 2,148 2,042

31,498 27,485 31,498 27,485 4,383 3,925 4,383 3,925 3,703 4,014 3,703 4,014

17,760 16,244 17,760 16,244 186,730 179,203 186,730 179,203

AdvertisingAuditor's remuneration - audit of financial statementsBlood and blood productsConsultanciesContractorsDomestic supplies and servicesDrug suppliesFood supplies Fuel, light and powerPatient transport costsInformation management expenses

Postal and telephone costsPrinting and stationeryRates and chargesRentalHosted services purchased from entities controlled by the immediate parent

Other expenses

Specialised services (dental, radiology, pathology and allied health)Staff related costsTravel related costsOther (see Note 5(a))

InsuranceMaintenance (see Note 5(b))Medical and surgical suppliesMotor vehicle expenses

15


5.


(a) OtherCorporate support services 5,774 6,049 5,774 6,049 Courier and freight 392 381 392 381 Isolated patient travel and accommodation assistance scheme 2,486 2,115 2,486 2,115 Legal services 266 363 266 363 Membership/professional fees 512 175 512 175 Quality assurance / accreditation 14 - 14 - Security services 735 600 735 600 Motor vehicle operating lease expense - minimum lease payments - 733 - 733 Other operating lease expense - minimum lease payments - 1,221 - 1,221 Expenses relating to short-term leases 2,447 - 2,447 - Expenses relating to leases of low-value assets 205 - 205 - Other Management Services 781 839 781 839 Data Records & Storage 422 195 422 195 Books, Mags & Journals 216 245 216 245 Translator Services 85 102 85 102 Patient Support Services 64 43 64 43 Other miscellaneous 3,361 3,183 3,361 3,183

17,760 16,244 17,760 16,244

(b) Reconciliation of total maintenanceMaintenance contracts 7,092 7,044 7,092 7,044 New / replacement equipment under $10,000 5,274 6,166 5,274 6,166 Repairs maintenance / non contract 4,466 3,126 4,466 3,126 Other 3 18 3 18 Maintenance expense - contracted labour and other (non-employee related) in Note 5

16,835 16,354 16,835 16,354

Employee related/personnel services maintenance 1,752 1,802 1,752 1,802 18,587 18,156 18,587 18,156


16


5.

Maintenance expense

Operating expenses

●

●

Operating leases


Operating expenses generally represent the day-to-day running costs incurred in the normal operations of the District. Thesecosts are expensed as incurred. The recognition and measurement policy for non-employee related expenses is detailed inNote 29.


Up to 30 June 2019, operating lease payments are recognised as an operating expense in the Statement of ComprehensiveIncome on a straight-line basis over the lease term. An operating lease is a lease other than a finance lease.

Variable lease payments are not included in the measurement of the lease liability (i.e. variable lease payments that do notdepend on an index or a rate, initially measured using the index or rate as at the commencement date). These payments arerecognised in the period in which the event or condition that triggers those payments occurs.



Day-to-day servicing costs or maintenance are charged as expenses as incurred except where they relate to the replacementor enhancement of a part or component of an asset, in which case the costs are capitalised and depreciated.

Lease expense

The District's insurance activities are conducted through the NSW Treasury Managed Fund (TMF) Scheme of self insurance forgovernment entities. The expense / (premium) is determined by the fund manager based on past claims experience. The TMFis managed by NSW Self Insurance Corporation (SiCorp), a controlled entity of the ultimate parent.

Insurance


Leases that meet the definition of short-term. i.e. where the lease term at commencement of the lease is 12 months orless. This excludes leases with a purchase option.

From 1 July 2019, the District recognises the lease payments associated with the following types of leases as an expense on astraight-line basis:

17




Depreciation - buildings 16,822 15,451 16,822 15,451 Depreciation - plant and equipment 6,427 5,979 6,427 5,979 Depreciation - infrastructure systems 924 801 924 801 Depreciation - right-of-use buildings 1,051 - 1,051 - Depreciation - right-of-use plant and equipment 1,159 - 1,159 -

26,383 22,231 26,383 22,231



Non-government organisations 1 1,835 2,068 1,835 2,068 Grants to research organisations 40 42 40 42 Grants paid to entities controlled by the immediate parent 317 375 317 375 Other grants 340 108 340 108

2,532 2,593 2,532 2,593


Refer to Note 24 Property, plant and equipment and Note 25 Leases for recognition and measurement policies ondepreciation.

Grants and subsidies expense generally comprise contributions in cash or in kind to various local government authorities andnot-for-profit community organisations to support their health-related objectives and activities. The grants and subsidies areexpensed on the transfer of the cash or assets. The transferred assets are measured at their fair value.

1 The majority of 'Non-government organisations' grants include Ministerial approved grants (MAGS), which are specificallyapproved by the Minister of Health.

18


8. Finance costs


Interest expense from lease liabilities 110 - 110 - Interest expense from financial liabilities at amortised cost 250 288 250 288

360 288 360 288


Finance costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs arerecognised as expenses in the period in which they are incurred, in accordance with NSW Treasury’s mandate to not-for-profitNSW General Government Sector entities.

19


9. Revenue



Until 30 June 2019, income is recognised in accordance with AASB 111 Construction Contracts, AASB 118 Revenue and AASB1004 Contributions.

From 1 July 2019, income is recognised in accordance with the requirements of AASB 15 Revenue from Contracts withCustomers (AASB 15) or AASB 1058 Income of Not-for-Profit Entities (AASB 1058), dependent on whether there is a contractwith a customer defined by AASB 15.

Payments are made by the immediate parent as per the Service Agreement to the District and adjusted for approvedsupplementations, mostly for salary agreements and approved enhancement projects. The Service Agreement between theimmediate parent and the District does not contain sufficiently specific enforceable performance obligations as defined by AASB15 and are therefore recognised upon the receipt of cash, in accordance with AASB 1058.

Interstate patient flows are funded through the NSW State Pool Account, based on activity and consistent with the pricedetermined in cross border agreements. The funding is also recognised as part of the NSW Ministry of Health recurrentallocation from the immediate parent.

The District recognised additional NSW Ministry of Health recurrent allocations of $8,649 thousand and NSW Ministry of Healthcapital allocations of $130 thousand to cover costs incurred with preparation, diagnosis and treatment of COVID-19 patients.

Under the GSF Act 2018, the District’s own source revenue (which includes but is not limited to receipts from NSW Ministry ofHealth recurrent and capital allocations, patient fees, non-patient fees, grants and other contributions, other ancillary services,proceeds from the sale of property, plant and equipment and proceeds from borrowings and advances) meets the definition ofdeemed appropriation money under the GSF Act (Section 4.7).

Deemed appropriation money is money received directly by the District which forms part of the consolidated fund and is notappropriated to the District by an Act.

20


11.



Pharmacy sales 27 38 27 38 Sale of prosthesis 1,839 1,387 1,839 1,387 Other 131 351 131 351

1,997 1,776 1,997 1,776 (b) Rendering of services comprise the following:

PatientsPatient Fees:- Inpatient fees 18,343 22,315 18,343 22,315 - Nursing home fees 469 452 469 452 - Non inpatient fees 1,930 1,793 1,930 1,793 Department of Veterans' Affairs 9,485 10,578 9,485 10,578 Highly specialised drugs 12,334 11,179 12,334 11,179 Motor Accident Authority third party 3,604 3,478 3,604 3,478 Multi Purpose Service Centre fees 1,331 - 1,331 - Patient transport fees 87 89 87 89 Enteral nutrition 1 4 1 4 StaffPrivate use of motor vehicles 48 57 48 57 Meals and accommodation - 2 - 2 General communityCar parking 877 978 877 978 Clinical services (excluding clinical drug trials) 1,214 1,061 1,214 1,061 Commercial activities 82 192 82 192 Fees for conferences and training 20 19 20 19 Fees for medical records 90 82 90 82 Non-NSW Health entitiesLinen service revenues 3 23 3 23 Services to other organisations 89 197 89 197 Entities controlled by the immediate parentHosted service revenues 949 893 949 893 Linen service revenues 7 7 7 7 Shared corporate service revenues 1 - 1 - OtherInfrastructure fees - annual charge 2,434 2,275 2,434 2,275 Infrastructure fees - monthly facility charge 5,764 5,931 5,764 5,931 Other 648 707 648 707

59,810 62,312 59,810 62,312 61,807 64,088 61,807 64,088




Revenue from the sale of goods is recognised when the District transfers the significant risks and rewards of ownership of thegoods, usually on delivery of the goods.

21


11.


i.

ii.

iii.

iv.

v.


Revenue from rendering of services is recognised when the District satisfies the performance obligation by transferring thepromised services. Revenue is typically recognised as follows:


Revenue for highly specialised drugs is paid by the Commonwealth in accordance with the terms of the Commonwealthagreement through Medicare and reflects the recoupment of costs incurred under Section 100 of the National Health Act1953 for highly specialised drugs. The agreement provides for the provision of medicines for the treatment of chronicconditions where specific criteria are met in respect of admitted day patients, non admitted patients or patients ondischarge. Revenue is recognised when the drugs have been provided to the patient.


A bulk billing agreement exists in which motor vehicle insurers' effect payment directly to NSW Health for the hospital costsfor those persons hospitalised or attending for inpatient treatment as a result of motor vehicle accidents. The Districtrecognises the revenue on an accrual basis from the time the patient is treated or admitted into hospital.




Revenue from the sale of goods is recognised when the District satisfies a performance obligation by transferring the promisedgoods. Sale of goods comprises of pharmacy sales, sale of prosthesis and other items. The District typically satisfies itsperformance obligations when the control of goods is transferred to the customer. The payments are typically due wheninvoiced.

Revenue from these sales is recognised based on the price specified in the contract, and revenue is only recognised to theextent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the salesare made with a short credit term. No volume discount or warranty is provided on the sale.

Patient fees are derived from chargeable inpatients and non-inpatients on the basis of rates specified by the NSW Ministryof Health. Revenue is recognised on an accrual basis when the service has been provided to the patient.

Patient fees

Revenue is measured at the transaction price agreed under various contracts. No element of financing is deemed present aspayments are due when the service is provided.

Refer to Note 30 for the disclosure of the aggregate amount of the transaction price allocated to performance obligations thatare unsatisfied (or partially unsatisfied) at the end of the reporting period, and when the District expects to recognise theunsatisfied portion as revenue.

An agreement is in place with the Commonwealth Department of Veterans' Affairs through which direct funding is providedfor the provision of health services to entitled veterans. For inpatient services, revenue is recognised by the District on anaccrual basis by reference to patient admissions. Non admitted patients are recognised by the NSW Ministry of Health inthe form of a block grant.


Specialist doctors with rights of private practice are subject to an infrastructure charge, including service charges whereapplicable for the use of hospital facilities at rates determined by the NSW Ministry of Health.

Sale of goods and services / Sale of goods and services from contracts with customers (continued)

Recognition and Measurement (continued)

22




Interest income from financial assets at amortised cost 444 751 444 751 444 751 444 751

Interest income


Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except forfinancial assets that subsequently become credit impaired. For financial assets that become credit impaired the effectiveinterest rate is applied to the amortised cost of the financial asset (i.e. after deducting the loss allowance for expected creditlosses).

23




Clinical drug trials - 1,173 - 1,173 Commonwealth government grants - 4,411 - 4,411 Cancer Institute grants received from an entity controlled by the immediate parent - 1,237 - 1,237 Grants & contributions received from entities controlled by the ultimate parent - 1,496 - 1,496 Grants & contributions received from entities controlled by the immediate parent - 480 - 480 Research grants - 17 - 17 Other grants - 3,768 - 3,768 Grants to acquire / construct a recognisable non-financial asset to be controlled by the entity

Grants to acquire / construct non-financial asset 4,809 - 4,809 - Other grants with sufficiently specific performance obligations

Cancer Institute grants received from an entity controlled by the immediate parent 805 - 805 - Clinical trials and research grants 1,286 - 1,286 - Commonwealth government grants received for community based services 1,810 - 1,810 - Grants from entities controlled by the ultimate parent 217 - 217 - Other grants 2,404 - 2,404 -

Grants without specific performance obligationsCommonwealth government grants other 127 - 127 - Other grants from entities controlled by the immediate parent 15,141 - 15,141 - Other grants 13 - 13 -

Donations 1,301 1,701 1,301 1,701 27,913 14,283 27,913 14,283

24



- Chaplaincies and Pastoral Care- Pink Ladies / Hospital Auxiliaries- Patient Support Groups- Community Organisations- Health Education

Revenue from grants with sufficiently specific performance obligations is recognised when the District satisfies a performanceobligation by transferring the promised goods or services. The District typically receives grants in respect of research, clinicaldrug trials and other community, health and wellbeing related projects. The District uses various methods to recogniserevenue over time, depending on the nature and terms and conditions of the grant contract. The payments are typically basedon agreed timetable or on achievement of different milestones set up in the contract.

Income from grants to acquire / construct a recognisable non-financial asset to be controlled by the District is recognised whenthe District satisfies its obligations under the transfer. The District satisfies the performance obligation under the transfer overtime as the non-financial assets are being constructed. The percentage of cost incurred is used to recognise income, becausethis most closely reflects the progress to completion.

Contributions are recognised at their fair value. Contributions of services are recognised when and only when a fair value ofthose services can be reliably determined and the services would be purchased if not donated.

Revenue from these grants is recognised based on the grant amount specified in the funding agreement/funding approval,and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element offinancing is deemed present as funding payments are usually received in advance or shortly after the relevant obligation issatisfied.

Receipt of these services, while important, is not recognised because typically such services would not have been purchasedif not donated.

Receipt of volunteer services is recognised when and only when the fair value of those services can be reliably determinedand the services would have been purchased if not donated. Volunteer services recognised are measured at fair value. TheDistrict receives volunteer services for the below activities:

Volunteer services

Income from grants without sufficiently specific performance obligations is recognised when the District obtains control overthe granted assets (e.g. cash).

Refer to Note 30 for the transaction price allocated to the performance obligations that have not been satisfied at the end ofthe year and when it is expected to be recognised as revenue.

- Counselling, Transport, Home Help and Patient Activities- Practical Support to Patients and Relatives- Patient Services, Fund Raising- Patient and Family Support

Income from grants (other than contributions by owners) is recognised when the entity obtains control over the contribution.The District is deemed to have assumed control when the grant is received or receivable.




25


14.


Superannuation - defined benefit plans 1,375 1,584 - - Long service leave provision 14,654 20,732 - -

16,029 22,316 - -

15. Other income


Other income comprises the following: Bad debts recovered 10 49 10 49 Commissions 23 45 23 45 Discounts 28 - 28 - Insurance refunds 59 178 59 178 - other rental income 606 560 606 560 Sale of merchandise, old wares and books 10 15 10 15 Sponsorship 55 14 55 14 Treasury Managed Fund hindsight adjustment - 806 - 806 Other 751 644 751 644

1,542 2,311 1,542 2,311

Other Income




Other income includes rental income arising from operating leases which is accounted for on a straight-line basis over thelease term under AASB 16 Leases. The rental income is incidental to the purpose for holding the property.

The gross amount of a liability forgiven by a credit provider is recognised by the borrower as other income.

Forgiveness of liabilities

26




Property, plant and equipment 10,048 1,480 10,048 1,480 Less: accumulated depreciation 9,786 1,245 9,786 1,245 Written down value 262 235 262 235 Less: proceeds from disposal 286 45 286 45 Gain / (Loss) on disposal of property, plant and equipment

24 (190) 24 (190)

Assets held for sale 381 - 381 - Less: proceeds from disposal 453 - 453 - Gain / (loss) on disposal of assets held for sale 72 - 72 -

Financial assets 3,591 9,409 3,591 9,409 Less: proceeds from disposal 3,591 9,409 3,591 9,409 Gain / (loss) on disposal of financial assets - - - - Total gains / (losses) on disposal 96 (190) 96 (190)

17. Other gains / (losses)Recognition and Measurement

Impairment losses on non-financial assets

● Note 20 Receivables ● Note 21 Contract assets ● Note 24 Property, plant and equipment ● Note 25 Leases


The District receives various types of grants and donations from different grantors / donors, some of which may not haveenforceable performance obligations. The District determines the grantor / donor expectations in determining the externallyimposed restrictions and discloses them in accordance with different types of restrictions. The types of restrictions and incomeearned with restrictions are detailed in Note 28 Restricted assets.

Impairment losses may arise on non-financial assets held by the entity from time to time. Accounting for impairment losses isdependent upon the individual asset (or group of assets) subject to impairment. Accounting Policies and events giving rise toimpairment losses are disclosed in the following notes:

27




Cash at bank and on hand 25,549 25,524 25,549 25,524 25,549 25,524 25,549 25,524

Cash and cash equivalents (per Statement of Financial Position) 25,549 25,524 25,549 25,524 Closing cash and cash equivalents (per Statement of Cash Flows) 25,549 25,524 25,549 25,524

Cash and cash equivalent assets recognised in the Statement of Financial Position are reconciled at the end of the financialyear to the Statement of Cash Flows as follows:


For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash at bank, cash on hand, short-termdeposits with original maturities of three months or less, which are subject to an insignificant risk of changes in value.

Most cash and cash equivalents held by the District are restricted assets and are not held for operating and capitalexpenditure.

HealthShare NSW, a controlled entity of the immediate parent makes all payments to employees and most payments tosuppliers of goods and services and grants and subsidies on behalf of the District. These payments are reported as expensesand operating cash outflows in the financial statements of the District.

HealthShare NSW receives payments directly from the NSW Ministry of Health on behalf of the District to fund thesepayments. These payments are reported as revenue (NSW Ministry of Health recurrent allocations) and operating cash inflowsin the financial statements of the District when HealthShare NSW makes these payments on behalf of the District.

Health Infrastructure, a controlled entity of the immediate parent makes most payments to purchase property, plant andequipment on behalf of the District. These payments are reported as additions to property, plant and equipment and investingcash outflows in the financial statements of the District.

Health Infrastructure receives payments directly from the NSW Ministry of Health on behalf of the District to fund thesepayments. These payments are reported as revenue (NSW Ministry of Health capital allocations) and operating cash inflows inthe financial statements of the District.

28


20. Receivables


CurrentTrade receivables from contracts with customers 7,471 - 7,471 - Sale of goods and services - 8,380 - 8,380Intra health receivables 1,304 2,266 1,304 2,266Goods and Services Tax 3,821 2,683 3,821 2,683Other receivables 1,580 3,550 1,580 3,550Sub total 14,176 16,879 14,176 16,879 Less: Allowance for expected credit losses*- Trade receivables from contracts with customers (329) - (329) - - Sale of goods and services - (245) - (245) - Other receivables (917) (797) (917) (797) Sub total 12,930 15,837 12,930 15,837 Prepayments 601 914 601 914

13,531 16,751 13,531 16,751

(a)

Trade receivables from contracts with customersBalance at the beginning of the year (245) - (245) - Amounts written off during the year 150 - 150 - (Increase) / decrease in allowance recognised in the

net result¹ (234) - (234) - Balance at the end of the year (329) - (329) -

Sale of goods and servicesBalance at the beginning of the year - 168 - 168Amounts written off during the year - (413) - (413) Balance at the end of the year - (245) - (245)

Other receivablesBalance at the beginning of the year (797) - (797) - Amounts written off during the year 25 (797) 25 (797) (Increase) / decrease in allowance recognised in the net result (145) - (145) - Balance at the end of the year (917) (797) (917) (797)

(1,246) (1,042) (1,246) (1,042)



29



(b)



Patient fees - compensable 389 507 389 507Patient fees - ineligible 804 344 804 344Patient fees - inpatient & other 2,485 4,338 2,485 4,338

3,678 5,189 3,678 5,189


Contract receivables (included in Note 20) 8,358 8,358 8,358 8,358




Impairment

The current and non-current trade receivables from contracts with customers balances above include the followingpatient fee receivables:

Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired aredisclosed in Note 40.

All ‘regular way’ purchases or sales of receivables are recognised and derecognised on a trade date basis. Regular waypurchases or sales are purchases or sales of receivables that require delivery of assets within the time frame established byregulation or convention in the marketplace.

For lease receivables, the District applies the simplified approach permitted by AASB 9 Financial Instruments, where the lossallowance is based on lifetime ECLs.

For trade receivables, the District applies a simplified approach in calculating ECLs. The District recognises a loss allowancebased on lifetime ECLs at each reporting date. The District has established a provision matrix based on its historical creditloss experience for trade receivables, adjusted for forward looking factors specific to the receivable.

The District recognises an allowance for expected credit losses (ECLs) for all debt financial assets not held at fair valuethrough profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the Districtexpects to receive, discounted at the original effective interest rate.

The District holds receivables with the objective to collect the contractual cash flows and therefore measures them atamortised cost using the effective interest method, less any impairment. Changes are recognised in the net result for the yearwhen impaired, derecognised or through the amortisation process.

Receivables are initially recognised at fair value plus any directly attributable transaction costs. Trade receivables that do notcontain a significant financing component are measured at the transaction price.

In response to the COVID-19 pandemic, the District has changed the terms and conditions with its counterparties to offerdeferred payment terms to receive rental income from tenants, for a period of 6 months from 27 March 2020. The District hasa rental receivables balance amount of $68 thousand as at 30 June 2020. The expected impacts on the recoverability of thesereceivables is not considered significant.

30


21. Contract assets


2020


AASB 15 2020


AASB 15$000 $000 $000 $000

CurrentContract assets 1,018 - 1,018 -

1,018 - 1,018 -


Contract assets relate to the District's right to consideration in exchange for goods and services transferred to customers /works completed, but not billed at the reporting date. The contract assets are transferred to receivables when the rightsbecome unconditional. This usually occurs when the District issues an invoice to the customer. The balance of the contractassets relates to grants and other contributions for work completed but not yet invoiced as future work is required to becompleted before the District has the rights to invoice. Once all performance obligations are met and the District has rights toinvoice for the payment to be made, the contract asset is transferred to receivables.

31


22. Inventories


CurrentDrug supplies 993 814 993 814

993 814 993 814


Inventories held for distribution are stated at cost, adjusted when applicable, for any loss of service potential. A loss of servicepotential is identified and measured based on the existence of a current replacement cost that is lower than the carryingamount. Inventories (other than those held for distribution) are stated at the lower of cost and net realisable value. Cost iscalculated using the weighted average cost method.


The increase in medical and surgical supplies is a result of the District preparing for an increase in COVID-19 patients.Inventories held for distribution for COVID-19 are also consumed in the normal services provided by the District.

32


23. Other financial assets


CurrentOther loans and deposits - 3,591 - 3,591

- 3,591 - 3,591



Impairment


Other financial assets are initially measured at fair value plus any transaction costs. Other financial assets include intra healthloans and deposits with a maturity of three months or more.

Other financial assets are classified and subsequently measured at amortised cost as they are held for collection ofcontractual cash flows solely representing payments of principal and interest. Impairment losses are presented as a separateline item in the Statement of Comprehensive Income. Any gain or loss arising on derecognition is recognised directly in netresults and presented in other gains / (losses) together with foreign exchange gains and losses.

The District uses the ratings from external credit rating agencies both to determine whether there has been a significantincrease in credit risk on the deposits and to estimate ECLs. These estimates are performed at every reporting date.

The District recognises an allowance for expected credit losses (ECLs) for all debt financial assets not held at fair valuethrough profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the Districtexpects to receive, discounted at the original effective interest rate.

ECLs are recognised in two stages. For credit exposures where there has not been a significant increase in credit risk sinceinitial recognition, ECLs are based on default events possible within the next 12-months (i.e. a 12-month ECL). If there hasbeen a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected overthe remaining life of the exposure, irrespective of the timing of the default (i.e. a lifetime ECL). In addition, the Districtconsiders that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

All ‘regular way’ purchases or sales of other financial assets are recognised and derecognised on a trade date basis. Regularway purchases or sales are purchases or sales of other financial assets that require delivery of assets within the time frameestablished by regulation or convention in the marketplace.


The District term deposits are issued by financial institutions that have strong credit ratings and therefore considered to be lowcredit risk investments. Hence, the District measures the loss allowance for term deposits at an amount equal to a 12-monthECL. However, when there is a significant increase in credit risk since origination, the allowance will be based on the lifetimeECL.

33


24.

(a)


Land and Buildings



$000 $000 $000 $000As at 30 June 2020Gross carrying amount 842,162 62,155 35,703 940,020 Less: accumulated depreciation and impairment 276,756 30,701 13,012 320,469 Net carrying amount 565,406 31,454 22,691 619,551

Land and Buildings



$000 $000 $000 $000As at 30 June 2019Gross carrying amount 698,516 81,565 32,230 812,311 Less: accumulated depreciation and impairment 238,575 38,566 14,166 291,307 Net carrying amount 459,941 42,999 18,064 521,004

24.

(a)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000Year ended 30 June 2020Net carrying amount at beginning of year 459,941 42,999 18,064 521,004 Adjusted net carrying amount at beginning of year 459,941 42,999 18,064 521,004 Additions 95,146 9,853 - 104,999Disposals - (262) - (262)Net revaluation increments less revaluation decrements 16,946 - 1,037 17,983Depreciation expense (16,822) (6,427) (924) (24,173)Reclassifications 10,195 (14,709) 4,514 - Net carrying amount at end of year 565,406 31,454 22,691 619,551






1 For non-specialised assets with short useful lives, recognition at depreciated historical cost is regarded as an acceptableapproximation of fair value, in accordance with Treasury Policy Paper 14-01.


34


24.

(a)


Land and Buildings

Plant and Equipment


$000 $000 $000 $000Year ended 30 June 2019Net carrying amount at beginning of year 424,398 34,135 18,612 477,145 Additions 57,686 9,463 - 67,149Reclassification to assets held for sale (752) - - (752)Disposals - (235) - (235)Transfers within NSW Health entities through Statement of Comprehensive Income - (72) - (72)Depreciation expense (15,451) (5,979) (801) (22,231)Reclassifications (5,940) 5,687 253 -Net carrying amount at end of year 459,941 42,999 18,064 521,004

24.

(b)


24.


The District has no property, plant and equipment where it is the lessor under operating leases. All property, plant andequipment balances are for items held and used by the District.





Property, plant and equipment held and used by the District

Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent, i.e. the deferredpayment amount is effectively discounted over the period of credit.

Property, plant and equipment acquired are initially recognised at cost and subsequently revalued at fair value lessaccumulated depreciation and impairment. Cost is the amount of cash or cash equivalents paid or the fair value of the otherconsideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amountattributed to that asset when initially recognised in accordance with the requirements of other Australian AccountingStandards.


Health Administration Corporation, a controlled entity of the immediate parent, manages the approved major capital worksprogram for the NSW Ministry of Health and its controlled entities. Health Administration Corporation receives NSW Ministry ofHealth Capital Allocations and grants on behalf of the District and makes payments to contractors and suppliers. HealthAdministration Corporation initially records all costs incurred as work in progress or expenses and subsequently transfers tothe District. The costs are then accordingly reflected in the District financial statements. The District acquires most assets inthis manner.


Fair value is the price that would be received to sell an asset in an orderly transaction between market participants atmeasurement date.

35


24.

Useful livesBuildings 40 yearsBuildings - leasehold improvements 5-6 yearsPlant and equipment 5-20 yearsInfrastructure Systems 40 years



Land and buildings are owned by the Health Administration Corporation. Land and buildings which are operated/occupied bythe District are deemed to be controlled by the District and are reflected as such in the financial statements.

Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition(see also assets transferred as a result of an equity transfer - Note 39).




The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period andadjusted if appropriate.

'Infrastructure Systems' comprises public facilities which provide essential services and enhance the productive capacity of theeconomy including roads, bridges, water infrastructure and distribution works, sewerage treatment plants, seawalls and waterreticulation systems.

'Plant and equipment' comprises, among others, medical, computer and office equipment, motor vehicles and furniture andfittings.


Depreciation is provided for on a straight-line basis for all depreciable assets so as to write off the depreciable amount of eachasset as it is consumed over its useful life to the District. Land is not a depreciable asset. All material identifiable componentsof assets are depreciated over their useful lives.

Property, plant and equipment assets costing $10,000 and above individually (or forming part of a network costing more than$10,000) are capitalised.

Property, plant and equipment acquired under finance leases are depreciated over the asset’s useful life. However, if there isno reasonable certainty that the lessee entity will obtain ownership at the end of the lease term, the asset is depreciated overthe shorter of the estimated useful life of the asset and the lease term.

Property, plant and equipment at 30 June 2019 includes non-current assets acquired under finance leases only. The assetsare recognised at fair value or, if lower, the present value of the minimum lease payments, at the inception of the lease.Property, plant and equipment does not include amounts in respect of operating leases.

Until 30 June 2019, AASB 117 Leases (AASB 117) distinguished between finance leases that effectively transfer from thelessor to the lessee substantially all the risks and rewards incidental to ownership of the leased assets, and operating leasesunder which the lessor does not transfer substantially all the risks and rewards.

Therefore, at that date property, plant and equipment recognised under leases previously treated as finance leases underAASB 117 are derecognised. The right-of-use assets arising from these leases are recognised and included in the separateline item together with those arising from leases previously treated as operating leases under AASB 117.

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset for most leases. The Districthas elected to present right-of-use assets separately in the Statement of Financial Position.

36


24. Property, plant and equipment (continued)

Revaluations are made with sufficient regularity to ensure the carrying amount of each asset in the class does not differmaterially from its fair value at reporting date. The District conducts a comprehensive revaluation at least every three years forits land and buildings and infrastructure. Interim desktop revaluations are conducted between comprehensive revaluations forthose assets, where cumulative changes to indicators suggest fair value may differ materially from carrying value. The Districtuses an independent professionally qualified valuer for such revaluations.

For other assets valued using other valuation techniques, any balances of accumulated depreciation existing at the revaluationdate in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are thenincreased or decreased by the revaluation increments or decrements.

Non-specialised assets with short useful lives are measured at depreciated historical cost, as an approximation of fair value.The District has assessed that any difference between fair value and depreciated historical cost is unlikely to be material.

Due to the COVID-19 pandemic in early 2020, the District management performed an additional assessment to determine ifthe fair value of its property plant and equipment as at 30 June 2020 materially differed from the carrying value. Managementconcluded that there is no definitive or conclusive market evidence to support any material adjustments. No adjustments wereapplied as a result.

Fair value of property, plant and equipment is based on a market participants’ perspective, using valuation techniques (marketapproach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs. Alsorefer to Note 27 for further information regarding fair value.


Subsequent to the adoption of AASB 16, the District, as a lessee, recognises a right-of-use asset at cost and a correspondinglease liability at the lease commencement date. Right-of-use assets that do not meet the definition of investment properties areincluded in Property, Plant and Equipment under the corresponding asset categories. Further information on right-of-useassets is contained in Note 25.


Property, plant and equipment is measured at the highest and best use by market participant's that is physically possible,legally permissible and financially feasible. The highest and best use must be available at a period that is not remote and takesinto account the characteristics of the asset being measured, including any socio-political restrictions imposed by government.In most cases, after taking into account these considerations, the highest and best use is the existing use. In limitedcircumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use or wherethere is a feasible higher restricted alternative use.

Physical non-current assets are valued in accordance with the 'Valuation of Physical Non-Current Assets at Fair Value' Policyand Guidelines Paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 Fair Value Measurement, AASB116 Property, Plant and Equipment and AASB 140 Investment Property.


37


24.



Revaluation increments are recognised in other comprehensive income and credited to revaluation surplus in equity. However,to the extent that an increment reverses a revaluation decrement in respect of the same class of asset previously recognisedas a loss in the net result, the increment is recognised immediately as a gain in the net result.

When revaluing non-current assets using the cost approach, the gross amount and the related accumulated depreciation areseparately restated. Where the income approach or market approach is used, accumulated depreciation is eliminated againstthe gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.


The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financialyear end and adjusted if appropriate.

Where an asset that has previously been revalued is disposed of, any balance remaining in the revaluation surplus in respectof that asset is transferred to accumulated funds.

After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used todetermine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed itsrecoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had noimpairment loss been recognised for the asset in prior years. Such reversal is recognised in net result and is treated as arevaluation increase. However, to the extent that an impairment loss on the same class of asset was previously recognised innet result, a reversal of that impairment loss is also recognised in net result.

As a not-for-profit entity, an impairment loss is recognised in the net result to the extent the impairment loss exceeds theamount in the revaluation surplus for the class of asset.

Specialised assets held for continuing use of their service capacity are rarely sold and their cost of disposal is typicallynegligible. Their recoverable amount is expected to be materially the same as fair value, where they are regularly revaluedunder AASB 13.

The District assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indicationexists, or when annual impairment testing for an asset is required, the District estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written downto its recoverable amount.

As a not-for-profit entity with no cash generating units, impairment under AASB 136 Impairment of Assets is unlikely to arise.As property, plant and equipment is carried at fair value or an amount that approximates fair value, impairment can only arisein the rare circumstances such as where the costs of disposal are material.


Property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected fromits use or disposal. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of theasset and are included in the consolidated Statement of Comprehensive Income.

As a not-for-profit entity, revaluation increments and decrements are offset against one another within a class of non-currentassets, but not otherwise.

Revaluation decrements are recognised immediately as a loss in the net result, except to the extent that it offsets an existingrevaluation surplus on the same class of assets, in which case, the decrement is debited directly to the revaluation surplus.

38


25. Leases


Land and Buildings

Plant and Equipment Total

$'000 $'000 $'000

3,250 2,586 5,836 1,104 1,475 2,579

165 21 186 (1,051) (1,159) (2,210) 3,468 2,923 6,391

Potential future cash outflows of $Nil have not been included in the lease liability because it is not reasonably certain that theleases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant change incircumstances occurs which affects this assessment and that is within the control of the lessee.

During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extensions andtermination options was an increase in recognised lease liabilities and right-of-use assets of $Nil.


2020


Balance at 1 July 2019AdditionsReassessmentsDepreciation expense

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset and a corresponding leaseliability for most leases.

The District leases various property, equipment and motor vehicles. Lease contracts are typically made for fixed periods of 2to 6 years, but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range ofdifferent terms and conditions. The lease agreements do not impose any covenants but leased assets may not be used assecurity for borrowing purposes. The District does not provide residual value guarantees in relation to leases.

Extension and termination options are included in a number of property and equipment leases. These terms are used tomaximise operational flexibility in terms of managing contracts. The majority of extension and termination options held areexercisable only by the District and not by the respective lessor. In determining the lease term, management considers allfacts and circumstances that create an economic incentive to exercise an extension option, or not exercise a terminationoption. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonablycertain to be extended (or not terminated).

The District has elected to recognise payments for short-term leases and low value leases as expenses on a straight linebasis, instead of recognising a right-of-use asset and lease liability. Short-term leases are leases with a lease term of 12months or less. Low value assets are assets with a fair value of $10,000 or less when new and comprise mainly of small officeand medical equipment items.

The following table presents right-of-use assets. There are no right-of-use assets that meet the definition of investmentproperty.


39




Total$'000

5,836 2,579

110(2,401)

1866,310

Total$'000

2,210 110

2,447 205

4,972

Other adjustmentsPaymentsInterest expensesAdditionsBalance at 1 July 20192020


Lease liabilities



2020


The following amounts were recognised in the Statement of Comprehensive Income for the year ended 30 June 2020 inrespect of leases where the District is the lessee:

Expenses relating to leases of low-value assetsExpenses relating to short-term leasesInterest expense on lease liabilitiesDepreciation expense of right-of-use assets

The District had total cash outflows for leases of $2,401 thousand for the year ended 30 June 2020.


40




Operating leases

Finance leases

2019 2019$'000 $'000

1,695 - 1,751 -

17 - 3,463 - (315) -

3,778 - Total (excluding GST)Less: GST recoverable from the Australian Taxation Office

The District entered into a number of leases, with lease terms ranging from 3 to 65 years with various local councils and theDurri Aboriginal Corporation Medical Service, for the use of Community Health Buildings and land. The contract specifieslease payments of $1 per annum. The leased premise is be used by the District to provide different community healthservices. The Community Health Buildings and land account for a small portion of the similar assets the District is using for thepurpose of providing community services. Therefore it does not have a significant impact on the District's operations.


Total (including GST)Later than five yearsLater than one year and not later than five yearsWithin one year




The District recognises lease liabilities to make lease payments and right-of-use assets representing the right to use theunderlying assets, except for short-term leases and leases of low-value assets.

The District assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the rightto control the use of an identified asset for a period of time in exchange for consideration.

41




i.

Useful livesBuildings 1 to 5 years

Plant and equipment 1 to 6 years

Motor vehicles and other equipment 1 to 5 years

ii.

The right-of-use assets are also subject to impairment. The District assesses, at each reporting date, whether there is anindication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset isrequired, the District estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds itsrecoverable amount, the asset is considered impaired and is written down to its recoverable amount. After an impairmentloss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’srecoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverableamount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment lossbeen recognised for the asset in prior years. Such reversal is recognised in the net result.

The right-of-use assets are subsequently measured at cost. They are depreciated on a straight-line basis over the shorterof the lease term and the estimated useful lives of the assets, as follows:

If ownership of the leased asset transfers to the District at the end of the lease term or the cost reflects the exercise of apurchase option, depreciation is calculated using the estimated useful life of the asset.

Refer to Note for the subsequent measurement of right-of-use assets that meet the definition of investment properties.

Lease liabilities

At the commencement date of the lease, the District recognises lease liabilities measured at the present value of leasepayments to be made over the lease term. Lease payments include:




● exercise price of a purchase option reasonably certain to be exercised by the District; and

● payments of penalties for terminating the lease, if the lease term reflects the District exercising the option tot terminate.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for real estate leases, the incremental borrowing rate is used. The District does not borrow funds in the market. Instead they receive an allocation of the appropriations from the Crown Entity and where the Crown Entity needs additional funding, Treasury Corporation (TCorp) goes to the market to obtain these funds. As a result, the District is using TCorp rates as their incremental borrowing rates. These rates are published by NSW Treasury on a regular basis.

Right-of-use assets

The District recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset isavailable for use). Right-of-use assets are initially measured at the amount of initial measurement of the lease liability(refer (ii) below), adjusted by any lease payments made at or before the commencement date, lease incentives, any initialdirect costs incurred, and estimated costs of dismantling and removing the asset or restoring the site.

42






The District applies the short-term lease recognition exemption to its short-term leases of buildings, machinery, motorvehicles and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date anddo not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of officeequipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets arerecognised as an expense on a straight-line basis over the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments were recognised as an operating expensein the Statement of Comprehensive Income on a straight-line basis over the lease term.

Property, plant and equipment acquired under finance leases was depreciated over the useful life of the asset. However, ifthere is no reasonable certainty that the District will obtain ownership by the end of the lease term, the asset was depreciatedover the shorter of the estimated useful life of the asset and the lease term.

Where a non-current asset was acquired by means of a finance lease, at the commencement of the lease, the asset wasrecognised at its fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability wasestablished at the same amount. Lease payments were apportioned between finance charges and reduction of the leaseliability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges were recognisedin finance costs in the Statement of Comprehensive Income.

An operating lease is a lease other than a finance lease. Rental income arising is accounted for on a straight-line basis overthe lease terms and is included in revenue in the Statement of Comprehensive Income due to its operating nature. Initial directcosts incurred in negotiating and arranging an operating lease are added to the carrying amount of the underlying asset andrecognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the periodin which they are earned.




The initial and subsequent measurement of right-of-use assets under leases at significantly below-market terms andconditions that are entered into principally to enable the District to further its objectives is the same as normal right-of-useassets. They are measured at cost, subject to impairment.

The District’s lease liabilities are included in borrowings in Note 31.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reducedfor the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, achange in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in anindex or rate used to determine such lease payments) or a change in the assessment of an option to purchase theunderlying asset.

Until 30 June 2019, a lease was classified at the inception date as a finance lease or an operating lease. A lease thattransferred substantially all the risks and rewards incidental to ownership to the District was classified as a finance lease.

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at theinception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of aspecific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset (or those assets)is not explicitly specified in an arrangement.

43


26. Non-current assets held for sale


Assets held for saleLand and buildings 371 752 371 752

371 752 371 752


These assets are not depreciated while they are classified as held for sale. Interest and other expenses attributable to theliabilities of a disposal group classified as held for sale are continued to be recognised.

The District has certain non-current assets classified as held for sale, where their carrying amount will be recovered principallythrough a sale transaction, not through continuing use. Non-current assets held for sale are recognised at the lower of carryingamount and fair value less costs of disposal.

The non-current assets held for sale constitute assets that are surplus to requirements. The assets are being activelymarketed within a sales program which has been initiated and is expect to locate a buyer and complete the sale in the nexttwelve months. The assets held for sale comprise of 2 residential properties located in Kempsey and Macksville. PropertyNSW are coordinating with a sales agent to arrange the marketing and auction of the 2 properties. The asset sale process ispart of strategic asset management initiatives currently being undertaken by the District to fund other value added locallyfunded projects.

Further details regarding fair value measurement are disclosed in Note 27.

44


27.

●

●

●

(a)


Value$000 $000 $000 $000

- 3,852 421,696 425,548 - - 18,580 18,580 - 371 - 371- 4,223 440,276 444,499


Value$000 $000 $000 $000

- 3,878 374,227 378,105 - - 17,118 17,118 - 752 - 752- 4,630 391,345 395,975

Non-current assets held for sale (Note 26)

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date. The fair value measurement is based on the presumption that the transaction tosell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of aprincipal market, in the most advantageous market for the asset or liability.

A number of the District’s accounting policies and disclosures require the measurement of fair values, for both financial andnon-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevantobservable inputs and minimises the use of unobservable inputs. Under AASB 13 Fair Value Measurement, the Districtcategorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows:

Level 1 – quoted (unadjusted) prices in active markets for identical assets / liabilities that the entity can access at the measurement date.




2020Property, plant and equipment (Note 24)

- Land and buildings

The District recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which thechange has occurred.

Non-current assets held for sale (Note 26)- Infrastructure systems- Land and buildings

Property, plant and equipment (Note 24)2019









45



(b)


(c)


Land and Buildings


Other Assets


$000 $000 $000 $000374,227 17,118 - 391,345

45,923 1,288 - 47,211

16,945 1,037 - 17,9821,034 - - 1,034

(16,433) (863) - (17,296) 421,696 18,580 - 440,276

Transfers from Level 2

2020



The property market is being impacted by the significant uncertainty that the COVID-19 outbreak has caused. Salesevidence have been utilised across the District to assess the land and non-specialised properties, in line with the valuationby the valuers made on a market approach.

AdditionsFair value as at 1 July 2019

At the end of each reporting period a fair value assessment is made on any movements since the last revaluation, and adetermination as to whether any adjustments need to be made. These adjustments are made by way of application ofindices (refer Note 24 reconciliation).

The non-current assets categorised in (a) above have been measured as either level 2 or level 3 based on the followingvaluation techniques and inputs:

For land, the valuation by the valuer is made on a market approach, comparing similar assets (not identical) andobservable inputs. The most significant input is price per square metre.

All commercial and non-restricted land is included in level 2 as these land valuations have a high level of observableinputs although these lands are not identical.

The majority of the restricted land has been classified as level 3 as, although observable inputs have been used, asignificant level of professional judgement is required to adjust inputs in determining the land valuations. Certain parcels ofland have zoning restrictions, for example hospital grounds, and values are adjusted accordingly.

For buildings and infrastructure, many assets are of a specialised nature or use, and thus the most appropriate valuationmethod is depreciated replacement cost. These assets are included as level 3 as these assets have a high level ofunobservable inputs. However, residential properties are valued on a market approach and included in level 2.


Fair value as at 30 June 2020

Non-current assets held for sale is a non-recurring item that is measured at the lower of its fair value less cost to sell or itscarrying amount. These assets are categorised as level 2.


For land, buildings and infrastructure systems the District obtains external valuations by independent valuers at least everythree years. The last revaluation was performed by CBRE Valuation & Advisory Services for the 2019/20 financial year.CBRE Valuation & Advisory Services is an independent entity and is not an associated entity of the District.


46



(c)


Land and Buildings


Other Assets


$000 $000 $000 $000389,366 17,898 - 407,264

(312) - - (312) (14,705) (780) - (15,485)

(122) - - (122) 374,227 17,118 - 391,345

Transfers to Level 2Fair value as at 1 July 20182019


Fair value as at 30 June 2019Level 3 Cost AdjustmentsDepreciation expense

Reconciliation of recurring Level 3 fair value measurements (continued)

47




1 July 2019 2020Opening Revenue Expense Closing

Category $000 $000 $000 $000Community welfare 314 67 115 266Facility improvements 11,345 1,870 5,642 7,573 Patient welfare 845 286 224 907Private practice disbursements (No.2 Accounts) 12,148 2,674 1,401 13,421 Public contributions 1,551 589 587 1,553 Research 1,514 1,849 1,579 1,784 Staff welfare 4 13 8 9Training and education including conferences 834 41 127 748

28,555 7,389 9,683 26,261

CategoryCommunity welfare


Patient welfare

Private practice disbursements (No.2 Accounts)


Research

Staff welfare

Training and education including conferences

Staff specialists’ private practice arrangements to improve the level of clinical servicesprovided.

Improvements such as medical needs, financial needs and standards for patients’ privacyand dignity.

The District's financial statements include the following assets which are restricted for stipulated purposes and / or by externallyimposed conditions, eg. donor requirements. The assets are only available for application in accordance with the terms of thedonor restrictions. They consist of cash assets and rights and obligations to receive and make payments as at 30 June 2020.



Improvements to service access, health literacy, public and preventative health care.Purpose





Unclaimed monies

All money and personal effects of patients which are left in the custody of the District by any patient who is discharged or diesin the hospital and which are not claimed by the person lawfully entitled thereto within a period of twelve months are recognisedas the property of the District.

All such money and the proceeds of the realisation of any personal effects are lodged to the credit of the Samaritan Fund whichis used specifically for the benefit of necessitous patients or necessitous outgoing patients.

48


29. Payables


CurrentAccrued salaries, wages and on-costs 14,997 12,366 - - Taxation and payroll deductions 1,495 1,355 - - Accrued liability - purchase of personnel services - - 16,492 13,721 Creditors 10,863 18,716 10,863 18,716 Other creditors

- Capital works 2,585 1,975 2,585 1,975 - Payables to entities controlled by the immediate

parent 5,085 5,844 5,085 5,844 - Other 19,055 7,991 19,055 7,991

54,080 48,247 54,080 48,247


Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to theDistrict. Gains and losses are recognised in the net result when the liabilities are derecognised as well as through theamortisation process.

Subsequent measurement is at amortised cost using the effective interest method. Short-term payables with no stated interestrate are measured at the original invoice amount where the effect of discounting is immaterial.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables are disclosed inNote 40.

These amounts represent liabilities for goods and services provided to the District and other amounts. Payables arerecognised initially at fair value, net of directly attributable transaction costs.

49




2020


AASB 15 2020


AASB 15$000 $000 $000 $000

CurrentContract liabilities 429 72 429 72

429 72 429 72


Revenue recognised that was included in the contract liability balance (adjusted for AASB 15) at the beginning of the year 72 72 Revenue recognised from performance obligations satisfied in previous periods 105 105 Transaction price allocated to the remaining performance obligations from contracts with customers 7,245 7,245

2021 2022 2023 ≥ 2024Specific revenue class $'000 $'000 $'000 $'000Grants and other contributions 5,065 2,100 80 -

5,065 2,100 80 -

Contract liabilities relate to consideration received in advance from customers. The balance of the contract liabilities at the 30June 2020 was impacted by the timing of payments received for grants and other contributions. The satisfaction of the specificperformance obligations within the contract hadn't been met at the 30 June 2020. Revenue from the contract liabilities will berecognised when the specific performance obligations have been met.

The contract liability balance has increased during the year because of the timing of payments received.

The transaction price allocated to the remaining performance obligations relates to the following revenue classes and isexpected to be recognised as follows:


50


31. Borrowings


CurrentLoans 810 792 810 792 Lease liability (see Note 25) 2,138 - 2,138 -

2,948 792 2,948 792

Non-currentLoans 6,444 7,254 6,444 7,254 Lease liability (see Note 25) 4,172 - 4,172 -

10,616 7,254 10,616 7,254




TCorp borrowings

Other loans and deposits Leases

Total liabilities from financing

activities$000 $000 $000 $000

1 July 2018 - 8,809 - 8,809Cash flows - (763) - (763)30 June 2019 - 8,046 - 8,046Recognised on adoption of AASB 16 - - 5,836 5,8361 July 2019 - 8,046 5,836 13,882 Cash flows - (792) (2,291) (3,083)New leases - - 2,765 2,765 30 June 2020 - 7,254 6,310 13,564

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings aredisclosed in Note 40.


Final repayment of loan is scheduled for 30 June 2028.

Other loans still to be extinguished represent monies to be repaid to the Health Administration Corporation, an entity controlledby the immediate parent; the immediate parent itself; and the NSW Treasury, which is controlled by the ultimate parent.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings are disclosed inNote 40.


Borrowings classified as financial liabilities at amortised cost are initially measured at fair value, net of directly attributabletransaction costs. These are subsequently measured at amortised cost using the effective interest method. Gains and lossesare recognised in the net result when the liabilities are derecognised as well as through the amortisation process.

Finance lease liabilities are determined in accordance with AASB 117 Leases until 30 June 2019. From 1 July 2019, leaseliabilities are determined in accordance with AASB 16.

Borrowings are classified as current liabilities unless the District has an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Refer to Note 40 (b) for derecognition policy.

51


32. Provisions


CurrentEmployee benefits and related on-costsAnnual leave - short term benefit 36,932 36,213 - - Annual leave - long term benefit 13,932 10,389 - - Long service leave consequential on-costs 9,050 8,279 - - Provision for other employee benefits 2,259 1,089 - - Provision for personnel services liability - - 62,173 55,970

62,173 55,970 62,173 55,970 Total current provisions 62,173 55,970 62,173 55,970

Non-currentEmployee benefits and related on-costsLong service leave consequential on-costs 787 720 - - Provision for personnel services liability - - 787 720

787 720 787 720 Total non-current provisions 787 720 787 720

Provisions - current 62,173 55,970 - - Provisions - non-current 787 720 - - Accrued salaries, wages and on-costs, taxation and payroll deductions (Note 29) 16,492 13,721 - - Liability - purchase of personnel services - - 79,452 70,411

79,452 70,411 79,452 70,411




Salaries and wages (including non-monetary benefits) and paid sick leave that are expected to be settled wholly within 12months after the end of the period in which the employees render the service are recognised and measured at theundiscounted amounts of the benefits.

Annual leave and ADO are not expected to be settled wholly before 12 months after the end of the annual reporting period inwhich the employees render the related service. As such, they are required to be measured at present value in accordancewith AASB 119 Employee Benefits (although short-cut methods are permitted).


52



Actuarial advice obtained by NSW Treasury, a controlled entity of the ultimate parent, has confirmed that using the nominalannual leave balance plus the annual leave entitlements accrued while taking annual leave can be used to approximate thepresent value of the annual leave liability. On-costs of 18.7% are applied to the value of leave payable at 30 June 2020(comparable on-costs for 30 June 2019 were 18.4%). The District has assessed the actuarial advice based on the District’scircumstances to both the annual leave and ADO and has determined that the effect of discounting is immaterial. All annualleave and ADO are classified as a current liability even where the District does not expect to settle the liability within 12months as the District does not have an unconditional right to defer settlement.

Unused non-vesting sick leave does not give rise to a liability as it is not considered probable that sick leave taken in thefuture will be greater than the benefits accrued in the future.


The District's liability for long service leave and defined benefit superannuation (State Authorities Superannuation Scheme andState Superannuation Scheme) are assumed by the Crown Entity, which is a controlled entity of the ultimate parent. TheDistrict accounts for the liability as having been extinguished, resulting in the amount assumed being shown as part of the non-monetary revenue item described as 'Acceptance by the Crown Entity of employee benefits'.

The superannuation expense for the financial year is determined by using the formulae specified in the Treasurer’s Directions.The expense for certain superannuation schemes (i.e. Basic Benefit and First State Super) is calculated as a percentage ofthe employee's salary. For other superannuation schemes (i.e. State Superannuation Scheme and State AuthoritiesSuperannuation Scheme), the expense is calculated as a multiple of the employee's superannuation contributions.

Consequential costs to employment are recognised as liabilities and expenses where the employee benefits to which theyrelate have been recognised. This includes outstanding amounts of workers’ compensation insurance premiums and fringebenefits tax.


Specific on-costs relating to long service leave assumed by the Crown Entity are borne by the District.

Long service leave is measured at the present value of expected future payments to be made in respect of services providedup to the reporting date. Consideration is given to certain factors based on actuarial review, including expected future wageand salary levels, experience of employee departures, and periods of service. Expected future payments are discounted usingthe long-term Commonwealth Government bond rate at the reporting date.

53




CurrentUnearned revenue - 72 - 72Liabilities under transfer to acquire or construct non-financial assets to be controlled by the entity 1,274 - 1,274 -

1,274 72 1,274 72

Non-currentLiabilities under transfer to acquire or construct non-financial assets to be controlled by the entity 2,027 - 2,027 -

2,027 - 2,027 -


2020$'000

- 6,926 6,926 1,183 4,808

3,301

Refer to Note 13 for a description of the District's obligations under transfers received to acquire or construct non-financialassets to be controlled by the District.

The District expects to recognise as income, the liability of any unsatisfied obligations as at the end of the reporting period, inthe next 1-3 financial years, as the related assets are constructed / acquired.

Less: income recognised during the financial yearClosing balance of liabilities arising from transfers to acquire / construct non-financial assets to becontrolled by the entity

Opening balance of liabilities arising from transfers to acquire/construct non-financial assets to be controlledby the entityAdd: adjustments upon initial application of AASB 1058Adjusted opening balanceAdd: receipt of cash during the financial year

$72 thousand was received prior to 30 June 2019, from various colleges in advance, under the terms of contract to provideand support specialist training positions for various specialities for the year ending 30 June 2020.


Reconciliation of financial assets and corresponding liabilities arising from transfers to acquire or construct non-financial assets to be controlled by the District.

54


34. Commitments



Within one year 68,411 105,766 68,411 105,766 Later than one year and not later than five years 23,378 82,048 23,378 82,048 Later than five years - - - - Total (including GST) 91,789 187,814 91,789 187,814

(b)

Aggregate capital expenditure for the acquisition of land and buildings, plant and equipment and infrastructure systems,contracted for at balance date and not provided for:


The total 'Capital expenditure commitments' of $91,789 thousand as at 30 June 2020 includes input tax credits of $8,344thousand that are expected to be recoverable from the Australian Taxation Office (2019 $17,074 thousand).

55


35. Trust funds




equityCategory $'000 $000 $000 $'000Patient Trust 2 - - 2 Refundable Deposits 2 12 - 14 Private Patient Trust Funds 268 5,104 (5,073) 299 Third Party Funds 1,297 8,418 (8,305) 1,410 Total trust funds 1,569 13,534 (13,378) 1,725



equityCategory $'000 $000 $000 $'000Patient Trust 2 - - 2 Refundable Deposits - 2 - 2 Private Patient Trust Funds 243 4,832 (4,807) 268 Third Party Funds 1,280 8,519 (8,502) 1,297 Total trust funds 1,525 13,353 (13,309) 1,569

Category PurposePatient Trust

Refundable Deposits


Third Party Funds

Any amounts drawn down from trust funds under the private practice arrangements are not included in the key managementpersonnel compensation amounts or disclosed as a related party transaction in Note 41.

The District holds trust funds of $1,725 thousand (2019: $1,569 thousand) which are held for the safe keeping of patients'monies, deposits on hired items of equipment and Private Practice Trusts.

These funds are excluded from the financial statements as the District cannot use them for the achievement of its objectives.The following is a summary of the transactions in the trust account.




The revenue derived from private patient and other billable services provided by StaffSpecialists.

A sum of money held in trust on behalf of external parties, e.g. external foundations,volunteer groups and auxiliaries.

56


36.


Net cash used on operating activities 103,140 61,852 103,140 61,852 Depreciation and amortisation expense (26,383) (22,231) (26,383) (22,231) Allowance for impairment (379) (479) (379) (479) (Increase) / decrease in unearned revenue 3,624 140 3,624 140Decrease / (increase) in provisions (6,270) (4,145) (6,270) (4,145) Increase / (decrease) in prepayments and other assets (2,764) (826) (2,764) (826) Increase / (decrease) in contract assets 1,018 - 1,018 - Decrease / (increase) in payables (5,117) (3,441) (5,117) (3,441) Decrease / (increase) in contract liabilities (356) - (356) - Net gain / (loss) on sale of property, plant and equipment 96 (190) 96 (190) Assets donated or brought to account (Note 37) 25 (72) 25 (72) Net result 66,634 30,608 66,634 30,608



Assets donated or brought to account 27 (72) 27 (72) Property, plant and equipment acquired by a lease 2,578 - 2,578 -

2,605 (72) 2,605 (72)


57



Net result

The actual Net Result was lower than adjusted budget by $15 million, primarily due to:


Cash flows

NSW Health's budget is shown at a consolidated level when presented in parliament each year (i.e. in the NSW GovernmentBudget Papers). The District's budget is not presented in parliament, therefore AASB 1055 Budgetary Reporting is notapplicable. Unlike the requirement in AASB 1055 Budgetary Reporting to present original budget information, the District'sfinancial statements present adjusted budget information. The adjusted budgeted amounts are drawn from the initial ServiceAgreements between the District and the NSW Ministry of Health at the beginning of the financial year, as well as anyadjustments for the effects of additional supplementation provided in accordance with delegations to derive a final budget atyear end (i.e. adjusted budget). The budget amounts are not subject to audit and, accordingly, the relevant budget entries inthe financial statements are unaudited.

The 2019/2020 financial year presented unprecedented challenges for the MNLCHD.

Whilst total Assets are in line with budget, total liabilities were 10% higher than forecast, largely due to the increased annualleave and ADO provisions due to Covid-19, and the change in revenue accounting standard which lead to an increase inunearned revenue balances.

Closing cash balances were slightly lower than budget at year end, largely due to changes in cash management policieswhich came into effect during the year.

Continuing pressures on Patient Fees Inpatients revenue streams following recent Private Health Insurer policy amendments,including reductions in single room rates and coverage, which were further exacerbated by the bushfires and the Covid-19pandemic. Reducing DVA revenue, and certain performance obligations for grant revenue not being met in the current year,due to the impacts of Covid-19 and the bushfires.

Government Contibutions Revenue was below budget, which represents subsidy cash entitlement not fully drawn down. Inprevious years the Ministry has reduced the budget to match the actual cash drawn down, but the treatment of subsidysurpluses has been revised in the current year.

The Bushfire Emergency events, including smoke and respiratory emergency department presentations, staff absences andsmoke related maintenance, significantly impacted the MNCLHD results and operations in the current year. A bushfire relatedinsect infestation in theatres at the Coffs Harbour Health Campus, significantly impacted surgical activity.

The Covid-19 crisis continues to impact the District. In the first few months of the worldwide pandemic, the nationwidecancellation of elective surgery procedures, the worldwide phenomenon of a reduction in emergency departmentpresentations and lower bed utilisation all impacted activity targets. These factors also put further strain on patient feerevenue, which had already been under pressure for a number of years due to changes in private health fund policies, and thecontinued decline in DVA receipts. There was also significant investment in capital and increased expenditure to prepare, testand effectively deal with the crisis, as well as prepare for a possible second wave outbreak.

58


38. Adjusted budget review (continued)

$000

Initial allocation 1 July 2019 564,993 Annual Leave Reduction 480Bushfire Supplementations 3,000 COVID-19 Supplementations 8,649 Increased Activity 950Aboriginal Health 256Allied Health 1,432 Community Health 935Defined Benefit Superannuation Funds 578Dental 489Education & Training 746HARP 64Health Promotion 92IPTAAS 772Mental Health 1,535 Nursing & Midwifery 470TMF Insurance 313Other 715

Balance as per Statement of Comprehensive Income 586,469

Movements in the level of the NSW Ministry of Health Recurrent Allocation that have occurred since the time of the initialallocation on 1 July 2019 are as follows:

59


39. Equity


(a)


(b)


2020 2019$000 $000

(a)819

- 819


2020 2019$000 $000

Liabilities(a) 819Increase / (Decrease) in Net Assets From Equity Transfers - 819


Nil

Annual Leave Provision - Transfer of Annual Leave Provisions between NSW Healthentities

An equity transfer was made between NSW Health entities to realign the annual leave liability to the current legal employeras held in the payroll system (StaffLink) for various employment arrangements, including staff on rotation and secondment.This has resulted in an increase in net assets of $819 thousand relating to the transfer of Annual Leave provision balancesto other NSW Health entities.

The category 'accumulated funds' includes all current and prior period retained funds.Accumulated Funds

Separate reserve accounts are recognised in the financial statements only if such accounts are required by specific legislationor Australian Accounting Standards.

Separate Reserves

The revaluation surplus is used to record increments and decrements on the revaluation of non-current assets. This accordswith the District's policy on the revaluation of property, plant and equipment as discussed in Note 24.

Revaluation Surplus

60


39.


Equity transfers

Equity (continued)

The transfer of net assets between entities as a result of an administrative restructure, transfers of programs/functions andparts thereof between entities controlled by the ultimate parent are recognised as an adjustment to 'Accumulated Funds'. Thistreatment is consistent with AASB 1004 Contributions and Australian Accounting Interpretation 1038 Contributions by OwnersMade to Wholly-Owned Public Sector Entities.

Transfers arising from an administrative restructure involving not-for-profit entities and for-profit government entities arerecognised at the amount at which the asset was recognised by the transferor immediately prior to the restructure. Subject tobelow, in most instances this will approximate fair value.

All other equity transfers are recognised at fair value, except for intangibles. Where an intangible has been recognised atamortised cost by the transferor because there is no active market, the District recognises the asset at the transferor's carryingamount. Where the transferor is prohibited from recognising internally generated intangibles, the District does not recognisethat asset.

61





Carrying Amount

Carrying Amount

2020 2019Class Category $000 $000Financial Assets

25,549 25,524 9,109 13,154 1,018 -

- 3,591 Total Financial Assets 35,676 42,269

Financial Liabilities13,564 8,046 52,585 46,892

Total Financial Liabilities 66,149 54,938 Notes

The Chief Executive has overall responsibility for the establishment and oversight of risk management and reviews and agreespolicies for managing each of these risks. Risk management policies are established to identify and analyse the risks faced bythe District, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed on a continuous basis.

The District's principal financial instruments are outlined below. These financial instruments arise directly from the District'soperations or are required to finance its operations. The District does not enter into or trade financial instruments, includingderivative financial instruments, for speculative purposes.

The District's main risks arising from financial instruments are outlined below, together with the District's objectives, policies andprocesses for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout thesefinancial statements.

Payables (Note 29)²Financial liabilities measured at amortised costFinancial liabilities measured at amortised cost

3 While contract assets are also not financial assets, they are explicitly included (i.e in the scope of AASB 7 Financial Instruments: Disclosures) for the purpose of the credit risk disclosures.

Cash and cash equivalents (Note 19)Receivables (Note 20)¹

Other Financial Assets (Note 23)

Amortised costAmortised cost

Amortised costContract assets (Note 21)³ Amortised cost


1 Excludes statutory receivables and prepayments (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).

(b) Derecognition of financial assets and financial liabilitiesA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when the contractual rights to the cash flows from the financial assets expire; or if the entity transfers its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass through arrangement and either:

● The District has transferred substantially all the risks and rewards of the asset; or

● The District has neither transferred nor retained substantially all the risks and rewards for the asset, but has transferred c control.

The District determines the classification of its financial assets and liabilities after initial recognition and, when allowed andappropriate, re-evaluates this at each financial year end.

62





(d) Financial risk

i.

Collectability of trade receivables, other receivables and contract assets is reviewed on an ongoing basis. Procedures asestablished in the Treasurer’s Directions are followed to recover outstanding amounts, including letters of demand.

The District applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expectedloss allowance for all trade receivables, other receivables and contract assets.

Credit risk arises when there is the possibility that the counterparty will default on their contractual obligations, resulting in afinancial loss to the District. The maximum exposure to credit risk is generally represented by the carrying amount of thefinancial assets (net of any allowance for credit losses).

Credit risk arises from financial assets of the District, including cash, receivables and authority deposits. No collateral isheld by the District. The District has not granted any financial guarantees.

Credit risk associated with the District's financial assets, other than receivables, is managed through the selection ofcounterparties and establishment of minimum credit rating standards. Authority deposits held with NSW TCorp areguaranteed by the State.

The District considers a financial asset in default when contractual payments are 90 days past due. However, in certaincases, the District may also consider a financial asset to be in default when internal or external information indicates thatthe District is unlikely to receive the outstanding contractual amounts in full before taking into account any creditenhancements held by the District.

Cash comprises cash on hand and bank balances deposited within the NSW Treasury banking system. Interest is earnedon daily bank balances at rates of approximately 0.00% (Restricted Funds Bank balance: 1.10%) in 2019-20 compared to0.00% (Restricted Funds Bank balance: 2.36%) in the previous year. The TCorpIM Funds cash facility is discussed inmarket risk below.


To measure the expected credit losses, trade receivables, other receivables and contract assets have been grouped basedon shared credit risk characteristics and the days past due.



Credit risk

When the District has transferred its rights to receive cash flows from an asset or has entered into a pass througharrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. Where the District hasneither transferred nor retained substantially all the risks and rewards or transferred control, the asset continues to berecognised to the extent of the District's continuing involvement in the asset. In that case, the District also recognises anassociated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights andobligations that the entity has retained.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. Whenan existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of anexisting liability are substantially modified, such an exchange or modification is treated as the derecognition of the originalliability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the netresult.

Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position ifthere is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a netbasis, or to realise the assets and settle the liabilities simultaneously.

63




i.

Current <30 days 30-60 days 61-90 days >91 days Total30 June 2020 $'000 $'000 $'000 $'000 $'000 $'000Expected credit loss rate 0.57% 17.61% 11.02% 28.57% 66.25% 12.37%Estimated total gross carrying

amount 1 7,901 301 118 63 1,686 10,069 Expected credit loss 45 53 13 18 1,117 1,246

Current <30 days 30-60 days 61-90 days >91 days Total30 June 2019 2 $'000 $'000 $'000 $'000 $'000 $'000Expected credit loss rate 0.54% 1.82% 7.81% 17.92% 75.18% 8.74%Estimated total gross carrying

amount 1 9,857 461 131 250 1,230 11,930 Expected credit loss 54 8 10 45 925 1,042

Notes




The expected loss rates are based on historical observed loss rates. The historical loss rates are adjusted to reflect currentand forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.The District has identified relevant factors, and accordingly has adjusted the historical loss rates based on expectedchanges in these factors.

Trade receivables, other receivables and contract assets are written off when there is no reasonable expectation ofrecovery. Indicators that there is no reasonable expectation of recovery include, amongst others a failure to makecontractual payments for a period of greater than 90 days past due.

The loss allowance for trade receivables, other receivables and contract assets as at 30 June 2020 and 30 June 2019 wasdetermined as follows:

The District is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors as at 30June 2020.

¹ The analysis excludes statutory receivables and prepayments as these are not within the scope of AASB7 Financial Instruments: Disclosures. Therefore the 'total' will not reconcile to the receivables total in Note 20 and the contract assets total in Note 21.

2 Prior year balances have been restated to include other receivables and contract assets

64




ii.


For other suppliers, where settlement cannot be affected in accordance with the above, e.g. due to short term liquidityconstraints, contact is made with creditors and terms of payment are negotiated to the satisfaction of both parties.

For small business suppliers, where payment is not made within the specified time period, simple interest must be paidautomatically unless an existing contract specifies otherwise.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced.Until the 30 June 2019, amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set bythe NSW Ministry of Health in accordance with NSW Treasury Circular 11/12. For small business suppliers, where termsare not specified, payment is made not later than 5 days from the date of receipt of a correctly rendered invoice. For othersuppliers, if trade terms are not specified, payment is made no later than 30 days from the date of receipt of a correctlyrendered invoice or a statement is received. From 1 July 2019, amounts owing to suppliers (which are unsecured) aresettled in accordance with the policy set by the NSW Ministry of Health in accordance with NSW Treasury. For all suppliers,that has a correctly rendered invoice, that has a matched purchase order and where goods have been received, animmediate payment is made irrespective of current contract payment terms.

The District has exposure to liquidity risk. However, the risk is minimised by the service agreement with the NSW Ministry of Health, as the annual service agreement requires local management to control its financial liquidity and in particular meetbenchmarks for the payment of creditors. Where the District fails to meet service agreement performance standards, theMinistry as the state manager can take action in accordance with annual performance framework requirements, includingproviding financial support and increased management interaction (refer Note 1).

The District has negotiated no loan outside of arrangements with the NSW Ministry of Health or NSW Treasury.

Liquidity risk

Liquidity risk is the risk that the District will be unable to meet its payment obligations when they fall due. The Districtcontinuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of highquality liquid assets. The objective is to maintain a balance between continuity of funding and flexibility through the use ofoverdrafts, loans and other advances.

65




ii.

EIR3Nominal

Amount1

Fixed Interest

Rate

Variable Interest

Rate

Non - Interest Bearing < 1 Yr 1-5 Yr > 5Yr

% $000 $000 $000 $000 $000 $000 $000

52,585 - - 52,585 52,585 - -

3.18% 7,254 7,254 - - 810 3,507 2,937 1.76% 6,594 6,594 - - 2,362 4,168 64

66,433 13,848 - 52,585 55,757 7,675 3,001

2019

46,892 - - 46,892 46,892 - -

3.18% 8,046 8,046 - - 792 3,398 3,856 54,938 8,046 - 46,892 47,684 3,398 3,856 Notes:


The table below summarises the maturity profile of the District's financial liabilities together with the interest rate exposure.


Payables:2020



¹ The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities based on the earliest date on which the District can be required to pay. The tables include both interest and principal cash flows and therefore will not reconcile to the Statement of Financial Position.2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB7 Financial Instruments: Disclosures).

Payables:- Creditors 2

Borrowings:- Loans and deposits

- Creditors 2

Borrowings:- Loans and deposits- Lease liabilities

66



iii.

Interest Rate Risk

-1% 1% -1% 1%Net result (120) 120 (211) 211Equity (120) 120 (211) 211

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because ofchanges in market interest rates. Exposure to interest rate risk arises primarily through the District's interest bearingliabilities. This risk is minimised by undertaking mainly fixed rate borrowings, primarily through NSW TCorp. The Districtdoes not account for any fixed rate financial instruments at fair value through profit or loss or at fair value through othercomprehensive income. Therefore, for these financial instruments, a change in interest rates would not affect profit or lossor equity. A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates (based on officialReserve Bank of Australia interest rate volatility over the last five years). The basis will be reviewed annually and amendedwhere there is a structural change in the level of interest rate volatility.

20192020$000 $000

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes inmarket prices. The District's exposures to market risk are primarily through interest rate risk on the District's borrowingsand other price risks associated with the movement in the Hour Glass Investment Facilities. The District has no exposureto foreign currency risk and does not enter into commodity contracts.

The effect on net result and equity due to a reasonably possible change in risk variable is outlined in the information below,for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after takinginto account the economic environment in which the District operates and the time frame for the assessment (i.e. until theend of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at the Statementof Financial Position date. The analysis is performed on the same basis as for 2019. The analysis assumes that all othervariables remain constant.

Market risk

However, the District is not permitted to borrow external to the NSW Ministry of Health (except energy loans which arenegotiated through NSW Treasury). Both NSW Treasury and NSW Ministry of Health loans are set at fixed rates andtherefore are generally not affected by fluctuations in market rates.


67






2020 2019$000 $000

Short-term employee benefits 594 686 Post-employment benefits 38 42

632 728



(d)


●

●● Staff related costs in relation to training registration fee.● Various grants and subsidies towards research and other projects


The District's key management personnel comprise its board members and chief executive (or acting chief executive)from time to time during the year.

During the financial year and comparative year, the District entered into the various transactions with other entitiesconsolidated as part of the NSW Ministry of Health (the [immediate/senior] parent) and the NSW Total State Sector (theultimate parent) within the normal course of business.

Transactions the District had with government related entities during the financial year

Health Administration Corporation provides shared services for the majority of patient transport services, informationmanagement services, domestic supplies and services, food supplies and corporate support services.


During the financial year, Mid North Coast Local Health District obtained key management personnel services from theimmediate parent and incurred $409 thousand (2019: $372 thousand) for these services. This amount does not form partof the key management personnel compensation disclosed above.

Compensation for the Minister for Health is paid by the Legislature and is not reimbursed by the NSW Ministry of Healthand its controlled entities. Accordingly no such amounts are included in the key management personnel compensationdisclosures above.

Remuneration for the Secretary and Deputy Secretaries are paid by the NSW Ministry of Health and is not reimbursed bythe health entities. Accordingly no such amounts are included in the key management personnel compensationdisclosures above.

68



(d) Transactions the District had with government related entities during the financial year (continued)


●●●● Utilities, including electricity, gas and water expenses;● Motor vehicle toll expenses;●

The following operating expenses were incurred with entities controlled by the ultimate parent: (continued)

●


● Revenue from recurrent and capital allocations;● Various grants and contributions towards research and other projects.


●●● Motor vehicle rebates;● Insurance refunds;● Revenue from acceptance of long service leave liabilities and defined benefit

superannuation.


●●●

●

42.

Various grants and subsidies towards research and other projects.

Insurance costs.

Motor Accident Authority third party revenue received from the State Insurance Regulatory Authority (SIRA);Various grants and other contributions towards research and other projects;




Energy Efficient Government Program loans are held with the Crown Finance Entity;The majority of the construction of property, plant and equipment is managed and overseen by HealthAdministration Corporation;The majority of capital commitments contracted but not provided for related to capital works overseen by the HealthAdministration Corporation.

Receivables and payables in respect of the above noted related party revenue and expense transactions;

Payroll and fringe benefits taxes;Audit of the statutory financial statements;Legal and consultancy services;

69

Cover page 4

Murrumbidgee Local Health District



Murrumbidgee Local Health District


Opinion

I have audited the accompanying financial statements of the Murrumbidgee Local Health District














Basis for Opinion





the:








Auditor-General




audit opinion.






























economically


statements




Jan-Michael Perez



23 September 2020

SYDNEY


Cover page 5

Northern NSW Local Health District



Northern NSW Local Health District


Opinion

I have audited the accompanying financial statements of the Northern NSW Local Health District














Basis for Opinion





the:








Auditor-General




audit opinion.






























economically


statements




Dominika Ryan



23 September 2020

SYDNEY


1.

a.

b.

c.

2.

3.

Wayne JonesChief Executive18/09/2020

Northern NSW Local Health DistrictCertification of the Financial Statementsfor the year ended 30 June 2020

We are not aware of any circumstances which would render any particulars in the financial statements to be misleading or

inaccurate.

The financial statements exhibit a true and fair view of the financial position and the financial performance of the Northern

NSW Local Health District; and

NSW Treasurer's Directions issued under the Act.

the requirements of the Public Finance and Audit Act 1983 (the Act), the Public Finance and Audit Regulation 2015 ;

and

Australian Accounting Standards (AAS) (which include Australian Accounting Interpretations);

The financial statements of the Northern NSW Local Health District for the year ended 30 June 2020 have been prepared in

accordance with:

I state, pursuant to section 45F of the Public Finance and Audit Act 1983:

2

Northern NSW Local Health DistrictStatement of Comprehensive Income for the year ended 30 June 2020

Consolidated Consolidated Consolidated Parent Parent

Actual Budget1

Actual Actual Actual

2020 2020 2019 2020 2019

Notes $000 $000 $000 $000 $000

Continuing operations

Expenses excluding losses

Employee related expenses 2 560,090 564,306 535,242 - -

Personnel services 3 - - - 537,819 504,630

Visiting medical officers 4 87,635 79,434 84,504 87,635 84,504

Other expenses 5 220,756 225,669 216,833 220,756 216,833

Depreciation and amortisation 6 35,189 34,543 30,410 35,189 30,410

Grants and subsidies 7 5,255 5,011 4,563 5,255 4,563

Finance costs 8 270 226 141 270 141

Total expenses excluding losses 909,195 909,189 871,693 886,924 841,081

Revenue

NSW Ministry of Health recurrent allocations 10 762,749 762,749 707,445 762,749 707,445

NSW Ministry of Health capital allocations 10 68,128 70,302 86,486 68,128 86,486

Acceptance by the Crown Entity of employee

benefits 14 22,271 22,257 30,612 - -

Sale of goods and services 11 - - 69,848 - 69,848

Sale of goods and services from contracts

with customers 11 67,906 70,541 - 67,906 -

Investment revenue 12 271 344 351 271 351

Grants and other contributions 13 57,290 56,021 39,408 57,290 39,408

Other income 15 1,256 994 4,337 1,256 4,337

Total revenue 979,871 983,208 938,487 957,600 907,875

Operating result 70,676 74,019 66,794 70,676 66,794

Gains / (losses) on disposal 16 (200) (5) (407) (200) (407)

Impairment losses on financial assets 19 (63) (297) (152) (63) (152)

Net result from continuing operations 34 70,413 73,717 66,235 70,413 66,235

Net result 70,413 73,717 66,235 70,413 66,235

Other comprehensive income

Items that will not be reclassified to net result

in subsequent periods

Changes in revaluation surplus of property,

plant and equipment 22 22,326 - (7,000) 22,326 (7,000)

Total other comprehensive income 22,326 - (7,000) 22,326 (7,000)

TOTAL COMPREHENSIVE INCOME 92,739 73,717 59,235 92,739 59,235



3

Northern NSW Local Health DistrictStatement of Financial Position as at 30 June 2020


Actual Budget1


2020 2020 2019 2020 2019

Notes $000 $000 $000 $000 $000

ASSETS

Current assets

Cash and cash equivalents 18 16,528 14,850 16,625 16,528 16,625

Receivables 19 14,163 19,929 24,302 14,163 24,302

Contract assets 20 844 - - 844 -

Inventories 21 1,896 1,453 1,455 1,896 1,455

33,431 36,232 42,382 33,431 42,382

Non-current assets held for sale 24 - - - - -

Total current assets 33,431 36,232 42,382 33,431 42,382

Non-current assets

Property, plant & equipment 22

- Land and buildings 749,050 726,826 658,650 749,050 658,650

- Plant and equipment 44,390 48,729 38,955 44,390 38,955

- Infrastructure systems 23,861 20,341 20,966 23,861 20,966

Total property, plant & equipment 817,301 795,896 718,571 817,301 718,571

Right-of-use assets 23 12,185 11,917 - 12,185 -

Total non-current assets 829,486 807,813 718,571 829,486 718,571

Total assets 862,917 844,045 760,953 862,917 760,953

LIABILITIES

Current liabilities

Payables 27 53,080 60,360 59,550 53,080 59,550

Contract liabilities 28 180 - - 180 -

Borrowings 29 4,560 2,907 681 4,560 681

Provisions 30 77,504 71,399 69,817 77,504 69,817

Other current liabilities 31 359 403 44 359 44

135,683 135,069 130,092 135,683 130,092

Total current liabilities 135,683 135,069 130,092 135,683 130,092

Non-current liabilities

Borrowings 29 12,281 13,516 4,460 12,281 4,460

Provisions 30 1,073 1,073 998 1,073 998

Other non-current liabilities 31 2,147 74 74 2,147 74

Total non-current liabilities 15,501 14,663 5,532 15,501 5,532

Total liabilities 151,184 149,732 135,624 151,184 135,624 Net assets 711,733 694,313 625,329 711,733 625,329

EQUITY

Reserves 73,753 42,429 42,429 73,753 42,429

Accumulated funds 637,980 651,884 582,900 637,980 582,900 Total Equity 711,733 694,313 625,329 711,733 625,329



4

Northern NSW Local Health DistrictStatement of Changes in Equity for the year ended 30 June 2020


Accumulated

Funds

Asset

Revaluation Total

Notes $000 $000 $000

Balance at 1 July 2019 582,900 42,429 625,329

Changes in accounting policy 1(f) (6,335) - (6,335)

Balance at 1 July 2019 576,565 42,429 618,994

Net result for the year 70,413 - 70,413

Other comprehensive income:

Net change in revaluation surplus of property, plant and

equipment 22 - 22,326 22,326

Reclassification of revaluation increments / (decrements) to

accumulated funds on disposal of assets (8,998) 8,998 -

Total other comprehensive income (8,998) 31,324 22,326

Total comprehensive income for the year 61,415 31,324 92,739

Balance at 30 June 2020 637,980 73,753 711,733

Accumulated

Funds

Asset

Revaluation Total

Notes $000 $000 $000

Balance at 1 July 2018 518,052 46,755 564,807

Changes in accounting policy (AASB 9) 371 - 371 Balance at 1 July 2018 518,423 46,755 565,178




equipment 22 - (7,000) (7,000)

Reclassification of revaluation increments / (decrements) to

accumulated funds on disposal of assets (2,674) 2,674 -

Total other comprehensive income (2,674) (4,326) (7,000)

Total Comprehensive Income for the Year 63,561 (4,326) 59,235

Transactions with owners in their capacity as owners

Increase / (decrease) in net assets from equity transfers 37 916 - 916 Balance at 30 June 2019 582,900 42,429 625,329


5

Northern NSW Local Health DistrictStatement of Cash Flows for the year ended 30 June 2020


Actual Budget1


2020 2020 2019 2020 2019

Notes $000 $000 $000 $000 $000

CASH FLOWS FROM OPERATING

ACTIVITIES

Payments

Employee related (537,176) (549,751) (507,892) - -

Suppliers for goods and services (339,874) (331,788) (335,284) (339,874) (335,284)

Grants and subsidies (5,820) (5,576) (5,049) (5,820) (5,049)

Finance costs (270) (226) (141) (270) (141)

Personnel services - - - (537,176) (507,892)

Total payments (883,140) (887,341) (848,366) (883,140) (848,366)

Receipts

NSW Ministry of Health recurrent allocations 762,749 762,749 707,445 762,749 707,445

NSW Ministry of Health capital allocations 68,128 70,302 86,486 68,128 86,486

Reimbursements from the Crown Entity 10,131 10,131 9,255 10,131 9,255

Sale of goods and services 73,360 71,064 68,775 73,360 68,775

Interest received 271 344 351 271 351

Grants and other contributions 55,772 54,959 41,679 55,772 41,679

Other 29,038 28,522 32,491 29,038 32,491

Total receipts 999,449 998,071 946,482 999,449 946,482 NET CASH FLOWS FROM OPERATING

ACTIVITIES 34 116,309 110,730 98,116 116,309 98,116

CASH FLOWS FROM INVESTING

ACTIVITIES

Proceeds from sale of property, plant and

equipment 28 - 43 28 43

Purchases of property, plant and equipment

(112,642) (109,210) (98,502) (112,642) (98,502) NET CASH FLOWS FROM INVESTING

ACTIVITIES (112,614) (109,210) (98,459) (112,614) (98,459)

CASH FLOWS FROM FINANCING

ACTIVITIES

Repayment of borrowings and advances (681) (681) (664) (681) (664)

Payment of principal portion of lease liabilities (3,111) (2,614) - (3,111) - NET CASH FLOWS FROM FINANCING

ACTIVITIES (3,792) (3,295) (664) (3,792) (664)

NET INCREASE / (DECREASE) IN CASH

AND CASH EQUIVALENTS (97) (1,775) (1,007) (97) (1,007)

Opening cash and cash equivalents 18 16,625 16,625 17,632 16,625 17,632 CLOSING CASH AND CASH EQUIVALENTS 18 16,528 14,850 16,625 16,528 16,625



6


a)

*

*

b)

The District's financial statements are general purpose financial statements which have been prepared on an accrual basis

and in accordance with applicable Australian Accounting Standards (AAS) (which include Australian Accounting

Interpretations), the requirements of the Health Services Act 1997 and its regulations (including observation of the Accounts

and Audit Determination for Public Health Organisations), the Public Finance and Audit Act 1983 (the Act) and the Public

Finance and Audit Regulation 2015, and the NSW Treasurer's Directions issued under the Act. The financial statements

comply with the NSW Treasury mandates circular for NSW General Government Sector Entities.


In alignment with the approach of other States and Territories, and following a recommendation by the National Cabinet of

Commonwealth, the 2020-21 NSW Budget has been deferred until 17 November 2020. On this basis, the Secretary of NSW

Health, the Chair of the Northern NSW Local Health District Board and the Chief Executive, through an interim Service

Agreement, have agreed to service and funding levels for the forward financial year. The interim Service Agreement provides

for 48 per cent of the District's annual funding.

When the NSW Budget is handed down in November 2020, the interim Service Agreement and funding arrangements will be

replaced with a full-year 2020-21 Service Agreement and budget. The Service Agreement sets out the level of financial

resources for public health services under the District's control and the source of these funds. By agreement, the Service

Agreement requires local management to control its financial liquidity and in particular meet benchmarks for the payment of

creditors. Where the District fails to meet Service Agreement performance standards, the NSW Ministry of Health as the state

manager will take action in accordance with annual performance framework requirements, including financial support and

increased management interaction by the NSW Ministry of Health.

Northern NSW Local Health DistrictNotes to and forming part of the Financial Statements

for the year ended 30 June 2020

The Northern NSW Local Health District (the District) was established under the provisions of the Health Services Act 1997

with effect from 1 January 2011.

The District is a NSW Government entity and is controlled by the NSW Ministry of Health, which is the immediate parent. The

reporting entity is also controlled by the State of New South Wales (and is consolidated as part of the NSW Total State Sector

Accounts), which is the ultimate parent. The reporting entity is a not-for-profit entity (as profit is not its principal objective).


As a consequence the values in the financial statements presented herein consist of the parent entity and the consolidated

entity which comprises the parent and special purpose service entity. In the process of preparing the consolidated financial

statements consisting of the controlling and controlled entities, all inter-entity transactions and balances have been eliminated,

and like transactions and other events are accounted for using uniform accounting policies.

These consolidated financial statements for the year ended 30 June 2020 have been authorised for issue by the Chief

Executive on 18/09/2020.

The parent entity comprises all the operating activities of the Hospital Facilities and the Community Health Centres under

its control. It also encompasses the Restricted Assets (as disclosed in Note 26), which, while containing assets which are

restricted for specified uses by the grantor or the donor, are nevertheless controlled by the parent entity.


Reporting entity

The Northern NSW Local Health District Special Purpose Service Entity, which was established as a Division of the

District on 1 January 2011 in accordance with the Health Services Act 1997. This Division provides personnel services to

enable the District to exercise its functions.

7




*

*

*

*

c)

d)

*

*

e)



amount of GST incurred by the District as a purchaser that is not recoverable from the Australian Taxation Office is

recognised as part of an asset's cost of acquisition or as part of an item of expense; and


All amounts are rounded to the nearest one thousand dollars and are expressed in Australian currency, which is the District's

presentation and functional currency.

Allocated funds, combined with other revenues earned, are adequate to pay debts as and when they become due and

payable.

The District has the capacity to review the timing of NSW Ministry of Health allocation cash flows to ensure that debts can

be paid when they become due and payable.

The District has developed an Efficiency and Improvement Plan (EIP) which identifies revenue improvement and cost

saving strategies. Benefits from the EIP are retained by the District and assist in meeting its overall budget target. The

EIP is monitored and evaluated by the NSW Ministry of Health throughout the financial year.


Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in respect

of the previous period for all amounts reported in the financial statements.


Property, plant and equipment, assets held for sale and certain financial assets and liabilities are measured at fair value. Other

financial statement items are prepared in accordance with the historical cost convention except where specified otherwise.

Judgements, key assumptions and estimations management has made are disclosed in the relevant notes to the financial

statements.


The financial statements and notes comply with Australian Accounting Standards which include Australian Accounting

Interpretations.


Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flows

arising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are

classified as operating cash flows.

The Commonwealth has entered a National Partnership Agreement, in response to the COVID-19 pandemic, with States

and Territories, including NSW. The Agreement will deliver funding to public hospitals and provide stability and certainty of

funding while ensuring access to new life saving therapies in public hospitals. The District is subject to additional NSW

Ministry of Health recurrent and capital allocations to provide for costs incurred related to COVID-19 activities and to

ensure debts can be paid as and when they become due and payable.

Following the Novel Coronavirus (COVID-19) pandemic in late February 2020, the District has seen a decline in normal

hospital activities. Restrictions were imposed by the Australian Government resulting in the suspension of non-urgent elective

surgeries to ensure increased capacity across the health system. Critical resources were reassigned to plan and prepare for

possible surges as a result of the outbreak. The unprecedented measures undertaken by both the Australian and State

governments to contain the spread of COVID-19, have resulted in significant impacts to the economy and within the health

sector.

8




f)


*

*

*

The District applied AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities, and

AASB 16 Leases for the first time. The nature and effect of the changes as a result of adoption of these new accounting

standards are described below.

Several other amendments and interpretations apply for the first time in 2019-20, but do not have an impact on the

financial statements of the District.



AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies,

with limited exceptions, to all revenue arising from contracts with customers. AASB 15 establishes a five-step model to

account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that

reflects the consideration to which the District expects to be entitled in exchange for transferring goods or services to a

customer.

AASB 15 requires the District to exercise judgement, taking into consideration all of the relevant facts and circumstances

when applying each step of the model to contracts with their customers. The standard also specifies the accounting for

the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard

requires relevant disclosures.

In accordance with the transition provisions in AASB 15, the District has adopted AASB 15 retrospectively with the

cumulative effect of initially applying the standard recognised at the date of initial application, i.e. 1 July 2019. The District

has used the transitional practical expedient permitted by the standard to reflect the aggregate effect of all of the

modifications that occur before 1 July 2018 when:

The accounting policies applied in 2019-20 are consistent with those of the previous financial year except as a result of

new or revised Australian Accounting Standards that have been applied for the first time as follows:





9




30 June 2020 30 June 2020 30 June 2020

AASB 15 Without

adoption of

AASB 15

Impact of

AASB 15

Notes $'000 $'000 $'000

Sale of goods and services from contracts with customers 67,906 67,906 -

Grants and other contributions (a)(b) 15,214 14,351 863

83,120 82,257 863

30 June 2020 30 June 2020 30 June 2020

AASB 15 Without

adoption of

AASB 15

Impact of

AASB 15

Notes $'000 $'000 $'000

Contract assets (a) 844 - 844

Other receivables (a) 193 - 193

1,037 - 1,037

Liabilities

Contract liabilities (b) 180 - 180

Other liabilities - 6 (6)

180 6 174

857 (6) 863

857 (6) 863

(a)

(b) Income from grants were previously recognised upon receipt of cash. Under the new revenue recognition

requirements of AASB 15, income should be recognised when a performance obligation, by transferring a promised

good or service, is satisfied. This may be at a point in time or over time. This has led to a deferral of grant income

where the entity has not yet satisfied its obligations promised in the contract with the customer.

Revenue


The adoption of AASB 15 did not have an impact on Other Comprehensive Income and the Statement of Cash Flows for

the financial year.

Total assets

Total liabilities

Equity

Accumulated funds

The reason for the changes in grants and other contributions is due to the non-recurring nature of grants and contributions

received and varying nature of performance obligations across grant contracts resulting in different timing of revenue

received.


Net Result



Assets


Income from grants were previously recognised upon receipt of cash. Under the new revenue recognition


good or service, is satisfied. This may be at a point in time or over time. This has led to the accrual of grant income

where the entity has satisfied its obligations promised in the contract with the customer.



10




*

*

30 June 2020 30 June 2020 30 June 2020

AASB 1058 Without

adoption of

AASB 1058

Impact of

AASB 1058

Notes $'000 $'000 $'000

Grants and other contributions (a)(b) 42,076 37,825 4,251

42,076 37,825 4,251

30 June 2020 30 June 2020 30 June 2020

AASB 1058 Without

adoption of

AASB 1058

Impact of

AASB 1058

Notes $'000 $'000 $'000

Other liabilities (b) 2,443 359 2,084

2,443 359 2,084

(2,443) (359) (2,084)

(2,443) (359) (2,084)

when the obligations under the transfer is satisfied, for transfers to enable an entity to acquire or construct a

recognisable non-financial asset that will be controlled by the District.


Liabilities



Revenue

AASB 1058 replaces most of the existing requirements in AASB 1004 Contributions. The scope of AASB 1004 is now

limited mainly to contributions by owners (including parliamentary appropriations that satisfy the definition of a contribution

by owners), administrative arrangements and liabilities of government departments assumed by other entities.

AASB 1058 applies to income with a donation component, i.e. transactions where the consideration to acquire an asset is

significantly less than fair value principally to enable a not-for-profit entity to further its objectives; and volunteer services.

AASB 1058 adopts a residual approach, meaning that entities first apply other applicable Australian Accounting

Standards (e.g. AASB 1004, AASB 15, AASB 16, AASB 9, AASB 137) to a transaction before recognising income.

Not-for-profit entities need to determine whether a transaction is/contains a donation (accounted for under AASB 1058) or

a contract with a customer (accounted for under AASB 15).


cumulative effect of initially applying the standard at the date of initial application, i.e. 1 July 2019. The District has

adopted the practical expedient in AASB 1058 whereby existing assets acquired for consideration significantly less than

fair value principally to enable the District to further its objectives, are not restated to their fair value.


Net Result



AASB 1058 requires recognition of receipt of an asset, after the recognition of any related amounts in accordance with

other Australian Accounting Standards, as income:

Total liabilities


Equity

Accumulated funds


11




(a)

(b) Income from grants to construct non-financial assets to be controlled by the entity were previously recognised upon

receipt of cash. Under the new revenue recognition requirements of AASB 1058, income should have been

recognised over time as the non-financial assets are being constructed. This has led to the deferral of grant income

where the entity has not yet satisfied its obligations to construct the assets.


Income from grants to construct non-financial assets to be controlled by the entity were previously recognised upon


recognised over time as the non-financial assets are being constructed. This has led the accrual of grant income

where the entity has satisfied its obligations to construct the assets.

AASB 16 requires the District to account for all leases under a single on-balance sheet model similar to the accounting for

finance leases under AASB 117. As the lessee, the District recognises a lease liability and right-of-use asset at the

inception of the lease. The lease liability is measured at the present value of the future lease payments, discounted using

the interest rate implicit in the lease, or the lessee’s incremental borrowing rate if the interest rate implicit in the lease

cannot be readily determined. The corresponding right-of-use asset is measured at the value of the lease liability adjusted

for lease payments before inception, lease incentives, initial direct costs and estimates of costs for dismantling and

removing the asset or restoring the site on which it is located.

The reason for the changes in grants and other contributions is due to the timing of revenue received to construct non-

financial assets to be controlled by the entity.

AASB 16 Leases

The District has adopted the partial retrospective option in AASB 16, where the cumulative effect of initially applying

AASB 16 is recognised on 1 July 2019 and the comparatives for the year ended 30 June 2019 are not restated.

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability is

recognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the lessee’s

incremental borrowing rate at the date of initial application. The weighted average lessee’s incremental borrowing rate

applied to the lease liabilities on 1 July 2019 was 1.78%.

AASB 16 supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease,

Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the Substance of Transactions

Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation

and disclosure of leases and requires lessees to recognise most leases on the Statement of Financial Position.

Lessor accounting

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases as

either operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 does not have a

significant impact for leases where the entity is the lessor.

Lessee accounting

The adoption of AASB 1058 did not have an impact on Other Comprehensive Income and the Statement of Cash Flows

for the financial year.

12




*

*

*

*

*

*

not reassess whether a contract is, or contains, a lease at 1 July 2019, for those contracts previously assessed under

AASB 117 and Interpretation 4;


The corresponding right-of-use asset is initially recorded on transition at an amount equal to the lease liability, adjusted by

the amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement of Financial

Position as at 30 June 2019.

The District elected to use the practical expedient to expense lease payments for lease contracts that, at their

commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases),

and lease contracts for which the underlying asset is valued at $10,000 or under when new (low-value assets).


For leases previously classified as finance leases the District recognised the carrying amount of the lease asset and lease

liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of

initial application. The measurement principles of AASB 16 are only applied after that date.


relying on its previous assessment on whether leases are onerous immediately before the date of initial application

as an alternative to performing an impairment review;

not recognise a lease liability and right-of-use-asset for short-term leases that end within 12 months of the date of

initial application;


13




1 July 2019

$'000

7,873

7,873

7,873

7,873

-

-

1 July 2019

$'000

8,441

734

7,707

1.78%

6,868

644

105

153

54

1,692

170

(9)

7,873

The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019 as

follows:


Borrowings

Total liabilities

Equity

Accumulated funds

Total assets

The effect of adopting AASB 16 on the Statement of Financial Position as at 1 July 2019 (increase / (decrease)) is, as

follows:

Liabilities


Assets

Right-of-use assets

Add: Lease payments relating to renewal periods not included in operating lease

commitments as at 30 June 2019

Add / (Less) : adjustments relating to differences in rental amounts, including changes

in the index or rate affecting variable payments


Operating lease commitments as at 30 June 2019 (GST included)

(Less): GST included in operating lease commitments

Operating lease commitments as at 30 June 2019 (GST excluded)

Weighted average incremental borrowing rate as at 1 July 2019

Discounted operating lease commitments as at 1 July 2019

(Less): commitments relating to short-term leases

(Less): commitments relating to low-value assets

Add / (Less) : contracts re-assessed as lease contracts


(Less): commitments including service charges

14




(ii)


The District has completed its impact assessment of AASB 1059 by reviewing all material arrangements where the private

sector is performing any services on behalf of the District. Any identified arrangements have been assessed whether it

falls within the scope of AASB 1059. If it does meet the scoping guidelines of AASB 1059, financial impacts were

calculated.



AASB 1059 Service Concession Arrangements is applicable to public sector entities only and is effective for annual

periods beginning on or after 1 January 2020. This standard requires the grantor to recognise a service concession asset

in a service concession arrangement where it controls the asset. A corresponding financial liability and/or grant of right

liability is also recognised depending on the nature of the consideration exchanged. Service concession assets (including

those provided by the operator, an upgrade to or a major component replacement of an existing asset of the grantor; and

existing assets of the grantor – also applicable to previously unrecognised intangible assets except goodwill) are initially

measured at current replacement cost based on AASB 13 Fair Value Measurement principles. They are subsequently

accounted for under AASB 116 Property, Plant & Equipment or AASB 138 Intangible Assets. Service concession liabilities

are initially measured at the same amount as the service concession asset and subsequently measured using either the

'financial liability' model applying AASB 9 Financial Instruments or, the 'grant of right' model under AASB 1059 Service

Concession Arrangements. AASB 1059 Service Concession Arrangements requires retrospective application.


NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless NSW Treasury

determines otherwise. The following new Australian Accounting Standards, excluding standards not considered applicable

or material to the District have not been applied and are not yet effective. The possible impact of these Accounting

Standards in the period of initial application includes:

15





2020 2019 2020 2019

$000 $000 $000 $000

Salaries and wages (including annual leave and ADO) 485,905 456,468 - -

Superannuation - defined benefit plans 3,182 3,451 - -

Superannuation - defined contribution plans 42,932 40,210 - -

Long service leave 20,024 29,029 - -

Redundancies 138 172 - -

Workers' compensation insurance 7,886 5,899 - -

Fringe benefits tax 23 13 - -

560,090 535,242 - -



2020 2019 2020 2019

$000 $000 $000 $000

Salaries and wages (including annual leave and ADO) - - 485,905 456,468

Superannuation - defined contribution plans - - 42,932 40,210

Long service leave - - 935 1,868

Redundancies - - 138 172

Workers' compensation insurance - - 7,886 5,899

Fringe benefits tax - - 23 13

- - 537,819 504,630


Visiting medical officers (VMOs) enhance full-time medical specialist services by providing speciality input in a number of

disciplines throughout the District's hospitals. VMO expenses of $87,635 thousand (2019: $84,504 thousand) represent part of

the day-to-day running costs incurred in the normal operations of the District. These costs are expensed as incurred.

Personnel services of $1,741 thousand (2019: $1,397 thousand) have been capitalised in property, plant and equipment

assets and are excluded from the above.

Employee related costs of $1,741 thousand (2019: $1,397 thousand) have been capitalised in property, plant and equipment

assets and are therefore excluded from the above.

Personnel services of Northern NSW Local Health District were provided by its controlled entity, Northern NSW Local Health

District Special Purpose Service Entity.

16



5.


2020 2019 2020 2019

$000 $000 $000 $000

76 96 76 96

133 135 133 135

4,052 4,115 4,052 4,115

234 202 234 202

681 120 681 120

10,718 10,443 10,718 10,443

16,914 23,331 16,914 23,331

17,110 16,196 17,110 16,196

7,201 6,715 7,201 6,715

11,122 10,582 11,122 10,582

14,137 10,118 14,137 10,118

1,007 954 1,007 954

23,322 17,580 23,322 17,580

40,129 41,767 40,129 41,767

1,376 1,287 1,376 1,287

1,975 1,813 1,975 1,813

1,487 1,862 1,487 1,862

1,280 1,272 1,280 1,272

- 3,402 - 3,402

949 891 949 891

36,938 35,147 36,938 35,147

5,207 5,985 5,207 5,985

3,858 3,983 3,858 3,983

20,850 18,837 20,850 18,837

220,756 216,833 220,756 216,833

Part of the costs in relation to drug supplies and medical and surgical supplies expenses relate to the consumption of inventory

held by the District.

Advertising

Auditor's remuneration - audit of financial statements

Blood and blood products

Consultancies

Contractors

Domestic supplies and services

Drug supplies

Food supplies

Fuel, light and power

Patient transport costs

Information management expenses

Postal and telephone costs

Printing and stationery

Rates and charges

Rental

Hosted services purchased from entities controlled by

the immediate parent

Other expenses

Specialised services (dental, radiology, pathology and

allied health)

Staff related costs

Travel related costs

Other (see Note 5(a))

Insurance

Maintenance (see Note 5(b))

Medical and surgical supplies

Motor vehicle expenses

17



5.


2020 2019 2020 2019

$000 $000 $000 $000

(a) Other

Contract for patient services 483 327 483 327

Corporate support services 8,119 8,320 8,119 8,320

Courier and freight 450 471 450 471

Isolated patient travel and accommodation

assistance scheme 1,893 1,784 1,893 1,784

Legal services 328 317 328 317

Membership/professional fees 141 43 141 43

Quality assurance / accreditation 186 156 186 156

Security services 1,101 801 1,101 801

Motor vehicle operating lease expense - minimum

lease payments - 1,249 - 1,249

Other operating lease expense - minimum lease

payments - 1,779 - 1,779

Expenses relating to short-term leases 3,180 - 3,180 -

Expenses relating to leases of low-value assets 164 - 164 -

Other miscellaneous 4,805 3,590 4,805 3,590

20,850 18,837 20,850 18,837

(b) Reconciliation of total maintenance

Maintenance contracts 7,405 6,618 7,405 6,618

New / replacement equipment under $10,000 9,031 5,764 9,031 5,764

Repairs maintenance / non contract 6,881 5,186 6,881 5,186

Other 5 12 5 12

Maintenance expense - contracted labour and

other (non-employee related) in Note 5

23,322 17,580 23,322 17,580

Employee related/personnel services maintenance 2,825 2,765 2,825 2,765

26,147 20,345 26,147 20,345


18



5.

Maintenance expense

Operating expenses

●

●

Operating leases


Operating expenses generally represent the day-to-day running costs incurred in the normal operations of the District. These

costs are expensed as incurred. The recognition and measurement policy for non-employee related expenses is detailed in

Note 27.


Up to 30 June 2019, operating lease payments are recognised as an operating expense in the Statement of Comprehensive

Income on a straight-line basis over the lease term. An operating lease is a lease other than a finance lease.

Variable lease payments are not included in the measurement of the lease liability (i.e. variable lease payments that do not

depend on an index or a rate, initially measured using the index or rate as at the commencement date). These payments are

recognised in the period in which the event or condition that triggers those payments occurs.



Day-to-day servicing costs or maintenance are charged as expenses as incurred except where they relate to the replacement

or enhancement of a part or component of an asset, in which case the costs are capitalised and depreciated.

Lease expense

The District's insurance activities are conducted through the NSW Treasury Managed Fund (TMF) Scheme of self insurance for

government entities. The expense / (premium) is determined by the fund manager based on past claims experience. The TMF

is managed by NSW Self Insurance Corporation (SiCorp), a controlled entity of the ultimate parent.

Insurance


Leases that meet the definition of short-term. i.e. where the lease term at commencement of the lease is 12 months or

less. This excludes leases with a purchase option.

From 1 July 2019, the District recognises the lease payments associated with the following types of leases as an expense on a

straight-line basis:

19





2020 2019 2020 2019

$000 $000 $000 $000

Depreciation - buildings 23,593 21,344 23,593 21,344

Depreciation - plant and equipment 7,357 7,892 7,357 7,892

Depreciation - infrastructure systems 932 1,174 932 1,174

Depreciation - right-of-use buildings 934 - 934 -

Depreciation - right-of-use plant and equipment 2,373 - 2,373 -

35,189 30,410 35,189 30,410



2020 2019 2020 2019

$000 $000 $000 $000

Non-government organisations 2,447 1,825 2,447 1,825

Grants paid to entities controlled by the immediate

parent 36 48 36 48

Other grants 2,772 2,690 2,772 2,690

5,255 4,563 5,255 4,563


Refer to Note 22 Property, plant and equipment and Note 23 Leases for recognition and measurement policies on

depreciation.

Grants and subsidies expense generally comprise contributions in cash or in kind to various local government authorities and

not-for-profit community organisations to support their health-related objectives and activities. The grants and subsidies are

expensed on the transfer of the cash or assets. The transferred assets are measured at their fair value.

20



8. Finance costs


2020 2019 2020 2019

$000 $000 $000 $000

Interest expense from lease liabilities 145 - 145 -

Interest expense from financial liabilities at amortised

cost 125 141 125 141

270 141 270 141


Finance costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs are

recognised as expenses in the period in which they are incurred, in accordance with NSW Treasury’s mandate to not-for-profit

NSW General Government Sector entities.

21



9. Revenue



Until 30 June 2019, income is recognised in accordance with AASB 111 Construction Contracts, AASB 118 Revenue and

AASB 1004 Contributions.

From 1 July 2019, income is recognised in accordance with the requirements of AASB 15 Revenue from Contracts with

Customers (AASB 15) or AASB 1058 Income of Not-for-Profit Entities (AASB 1058), dependent on whether there is a contract

with a customer defined by AASB 15.

Payments are made by the immediate parent as per the Service Agreement to the District and adjusted for approved

supplementations, mostly for salary agreements and approved enhancement projects. The Service Agreement between the

immediate parent and the District does not contain sufficiently specific enforceable performance obligations as defined by

AASB 15 and are therefore recognised upon the receipt of cash, in accordance with AASB 1058.

Interstate patient flows are funded through the NSW State Pool Account, based on activity and consistent with the price

determined in cross border agreements. The funding is also recognised as part of the NSW Ministry of Health recurrent

allocation from the immediate parent.

The District recognised additional NSW Ministry of Health recurrent allocations of $12,314 thousand and NSW Ministry of

Health capital allocations of $502 thousand to cover costs incurred with preparation, diagnosis and treatment of COVID-19

patients.

Under the GSF Act 2018, the District’s own source revenue (which includes but is not limited to receipts from NSW Ministry of

Health recurrent and capital allocations, patient fees, non-patient fees, grants and other contributions, other ancillary services

and proceeds from the sale of property, plant and equipment) meets the definition of deemed appropriation money under the

GSF Act (Section 4.7).

Deemed appropriation money is money received directly by the District which forms part of the consolidated fund and is not

appropriated to the District by an Act.

22



11.



2020 2019 2020 2019

$000 $000 $000 $000

Pharmacy sales 84 87 84 87

Sale of prosthesis 1,433 1,160 1,433 1,160

Other 79 41 79 41

1,596 1,288 1,596 1,288

(b) Rendering of services comprise the following:

Patients

Patient Fees:

- Inpatient fees 23,417 24,930 23,417 24,930

- Nursing home fees 1,531 1,429 1,531 1,429

- Non inpatient fees 2,383 2,428 2,383 2,428

Department of Veterans' Affairs 9,728 10,077 9,728 10,077

Highly specialised drugs 4,724 10,225 4,724 10,225

Motor Accident Authority third party 4,376 4,674 4,376 4,674

Multi Purpose Service Centre fees 5,065 - 5,065 -

Patient transport fees 99 99 99 99

Staff

Private use of motor vehicles 24 16 24 16

Salary packaging fee 182 209 182 209

Meals and accommodation 125 194 125 194

General community

Cafeteria / kiosk 12 15 12 15

Car parking 547 639 547 639

Clinical services (excluding clinical drug trials) 2,463 1,713 2,463 1,713

Commercial activities 13 24 13 24

Fees for conferences and training 7 26 7 26

Fees for medical records 145 89 145 89

Information retrieval 4 2 4 2

Non-NSW Health entities

Services to other organisations 73 73 73 73

Entities controlled by the immediate parent

Hosted service revenues 2,148 2,042 2,148 2,042

Entities controlled by the ultimate parent

Other

Infrastructure fees - annual charge 295 849 295 849

Infrastructure fees - monthly facility charge 8,628 8,263 8,628 8,263

Other 321 544 321 544

66,310 68,560 66,310 68,560

67,906 69,848 67,906 69,848




Revenue from the sale of goods is recognised when the District transfers the significant risks and rewards of ownership of the

goods, usually on delivery of the goods.

23



11.


i.

ii.

iii.

iv.

v.


Revenue from rendering of services is recognised when the District satisfies the performance obligation by transferring the

promised services. Revenue is typically recognised as follows:


Revenue for highly specialised drugs is paid by the Commonwealth in accordance with the terms of the Commonwealth

agreement through Medicare and reflects the recoupment of costs incurred under Section 100 of the National Health Act

1953 for highly specialised drugs. The agreement provides for the provision of medicines for the treatment of chronic

conditions where specific criteria are met in respect of admitted day patients, non admitted patients or patients on

discharge. Revenue is recognised when the drugs have been provided to the patient.


A bulk billing agreement exists in which motor vehicle insurers' effect payment directly to NSW Health for the hospital

costs for those persons hospitalised or attending for inpatient treatment as a result of motor vehicle accidents. The District

recognises the revenue on an accrual basis from the time the patient is treated or admitted into hospital.




Revenue from the sale of goods is recognised when the District satisfies a performance obligation by transferring the promised

goods. Sale of goods comprises of pharmacy sales, sale of prosthesis and other items. The District typically satisfies its

performance obligations when the control of goods is transferred to the customer. The payments are typically due when

invoiced.

Revenue from these sales is recognised based on the price specified in the contract, and revenue is only recognised to the

extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the sales

are made with a short credit term. No volume discount or warranty is provided on the sale.

Patient fees are derived from chargeable inpatients and non-inpatients on the basis of rates specified by the NSW Ministry

of Health. Revenue is recognised on an accrual basis when the service has been provided to the patient.

Patient fees

Revenue is measured at the transaction price agreed under various contracts. No element of financing is deemed present as

payments are due when the service is provided.

Refer to Note 28 for the disclosure of the aggregate amount of the transaction price allocated to performance obligations that

are unsatisfied (or partially unsatisfied) at the end of the reporting period, and when the District expects to recognise the

unsatisfied portion as revenue.

An agreement is in place with the Commonwealth Department of Veterans' Affairs through which direct funding is provided

for the provision of health services to entitled veterans. For inpatient services, revenue is recognised by the District on an

accrual basis by reference to patient admissions. Non admitted patients are recognised by the NSW Ministry of Health in

the form of a block grant.


Specialist doctors with rights of private practice are subject to an infrastructure charge, including service charges where

applicable for the use of hospital facilities at rates determined by the NSW Ministry of Health.



24





2020 2019 2020 2019

$000 $000 $000 $000

Interest income from financial assets at amortised cost 271 351 271 351

271 351 271 351

Interest income


Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for

financial assets that subsequently become credit impaired. For financial assets that become credit impaired the effective

interest rate is applied to the amortised cost of the financial asset (i.e. after deducting the loss allowance for expected credit

losses).

25





2020 2019 2020 2019

$000 $000 $000 $000

Clinical drug trials - 877 - 877

Commonwealth government grants - 8,472 - 8,472

Cancer Institute grants received from an entity

controlled by the immediate parent - 5,926 - 5,926

Grants & contributions received from entities controlled

by the ultimate parent - 16,423 - 16,423


by the immediate parent - 236 - 236

Research grants - 33 - 33

Other grants - 4,954 - 4,954

Grants to acquire / construct a recognisable non-

financial asset to be controlled by the entity

Grants to acquire / construct non-financial asset 200 - 200 -

Other grants with sufficiently specific performance

obligations


controlled by the immediate parent 5,830 - 5,830 -

Clinical trials and research grants 1,021 - 1,021 -

Commonwealth government grants received for

community based services 3,740 - 3,740 -

Grants from entities controlled by the ultimate parent 316 - 316 -

Other grants from entities controlled by the

immediate parent 58 - 58 -

Other grants 4,249 - 4,249 -

Grants without specific performance obligations


immediate parent 40,244 - 40,244 -

Donations 1,632 2,487 1,632 2,487

57,290 39,408 57,290 39,408

26




- Chaplaincies and Pastoral Care

- Pink Ladies / Hospital Auxiliaries

- Patient Support Groups

- Community Organisations

- Health Education

Revenue from grants with sufficiently specific performance obligations is recognised when the District satisfies a performance

obligation by transferring the promised goods or services. The District typically receives grants in respect of research, clinical

drug trials and other community, health and wellbeing related projects. The District uses various methods to recognise

revenue over time, depending on the nature and terms and conditions of the grant contract. The payments are typically based

on agreed timetable or on achievement of different milestones set up in the contract.

Income from grants to acquire / construct a recognisable non-financial asset to be controlled by the District is recognised when

the District satisfies its obligations under the transfer. The District satisfies the performance obligation under the transfer over

time as the non-financial assets are being constructed. The percentage of cost incurred is used to recognise income, because

this most closely reflects the progress to completion.

Contributions are recognised at their fair value. Contributions of services are recognised when and only when a fair value of

those services can be reliably determined and the services would be purchased if not donated.

Revenue from these grants is recognised based on the grant amount specified in the funding agreement/funding approval,

and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of

financing is deemed present as funding payments are usually received in advance or shortly after the relevant obligation is

satisfied.

Receipt of these services, while important, is not recognised because typically such services would not have been purchased

if not donated.

Receipt of volunteer services is recognised when and only when the fair value of those services can be reliably determined

and the services would have been purchased if not donated. Volunteer services recognised are measured at fair value. The

District receives volunteer services for the below activities:

Volunteer services

Income from grants without sufficiently specific performance obligations is recognised when the District obtains control over

the granted assets (e.g. cash).

Refer to Note 28 for the transaction price allocated to the performance obligations that have not been satisfied at the end of

the year and when it is expected to be recognised as revenue.

- Counselling, Transport, Home Help and Patient Activities

- Practical Support to Patients and Relatives

- Patient Services, Fund Raising

- Patient and Family Support

Income from grants (other than contributions by owners) is recognised when the entity obtains control over the contribution.

The District is deemed to have assumed control when the grant is received or receivable.




27



14.


2020 2019 2020 2019

$000 $000 $000 $000


Long service leave provision 19,089 27,161 - -

22,271 30,612 - -

15. Other income


2020 2019 2020 2019

$000 $000 $000 $000

Other income comprises the following:

Commissions 44 56 44 56

Discounts 10 31 10 31

Insurance refunds 98 157 98 157

Rental income

- other rental income 469 380 469 380

Sale of merchandise, old wares and books 17 21 17 21

Treasury Managed Fund hindsight adjustment - 739 - 739

Unclaimed deposits - 10 - 10

Other 618 2,943 618 2,943

1,256 4,337 1,256 4,337



28





2020 2019 2020 2019

$000 $000 $000 $000

Property, plant and equipment 9,753 20,064 9,753 20,064

Less: accumulated depreciation 9,525 19,614 9,525 19,614

Written down value 228 450 228 450

Less: proceeds from disposal 28 43 28 43

Gain / (Loss) on disposal of property, plant and

equipment

(200) (407) (200) (407)

Right-of-use assets 3 - 3 -

Less: accumulated depreciation 1 - 1 -

Written down value 2 - 2 -

Less: proceeds from disposal - - - -

Less: lease liabilities extinguished 2 - 2 -

Gain / (Loss) on disposal of right-of-use assets - - - -

Total gains / (losses) on disposal (200) (407) (200) (407)



● Note 19 Receivables

● Note 20 Contract assets

● Note 22 Property, plant and equipment

● Note 23 Leases


The District receives various types of grants and donations from different grantors / donors, some of which may not have

enforceable performance obligations. The District determines the grantor / donor expectations in determining the externally

imposed restrictions and discloses them in accordance with different types of restrictions. The types of restrictions and income

earned with restrictions are detailed in Note 26 Restricted assets.

Impairment losses may arise on non-financial assets held by the entity from time to time. Accounting for impairment losses is

dependent upon the individual asset (or group of assets) subject to impairment. Accounting Policies and events giving rise to

impairment losses are disclosed in the following notes:

29





2020 2019 2020 2019

$000 $000 $000 $000

Cash at bank and on hand 16,528 16,625 16,528 16,625

16,528 16,625 16,528 16,625

Cash and cash equivalents (per Statement of

Financial Position) 16,528 16,625 16,528 16,625

Closing cash and cash equivalents (per Statement

of Cash Flows) 16,528 16,625 16,528 16,625

Cash and cash equivalent assets recognised in the Statement of Financial Position are reconciled at the end of the financial

year to the Statement of Cash Flows as follows:


For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash at bank, cash on hand, short-term

deposits with original maturities of three months or less, which are subject to an insignificant risk of changes in value.

Most cash and cash equivalents held by the District are restricted assets and are not held for operating and capital

expenditure.

HealthShare NSW, a controlled entity of the immediate parent makes all payments to employees and most payments to

suppliers of goods and services and grants and subsidies on behalf of the District. These payments are reported as expenses

and operating cash outflows in the financial statements of the District.

HealthShare NSW receives payments directly from the NSW Ministry of Health on behalf of the District to fund these

payments. These payments are reported as revenue (NSW Ministry of Health recurrent allocations) and operating cash inflows

in the financial statements of the District when HealthShare NSW makes these payments on behalf of the District.

Health Infrastructure, a controlled entity of the immediate parent makes most payments to purchase property, plant and

equipment on behalf of the District. These payments are reported as additions to property, plant and equipment and investing

cash outflows in the financial statements of the District.

Health Infrastructure receives payments directly from the NSW Ministry of Health on behalf of the District to fund these

payments. These payments are reported as revenue (NSW Ministry of Health capital allocations) and operating cash inflows in

the financial statements of the District.

30



19. Receivables


2020 2019 2020 2019

$000 $000 $000 $000

Current

Trade receivables from contracts with customers 6,423 - 6,423 -

Sale of goods and services - 7,579 - 7,579

Intra health receivables 1,116 4,292 1,116 4,292

Goods and Services Tax 4,630 4,622 4,630 4,622

Other receivables 526 1,235 526 1,235

Sub total 12,695 17,728 12,695 17,728

Less: Allowance for expected credit losses*

- Trade receivables from contracts with customers (329) - (329) -

- Sale of goods and services - (434) - (434)

- Other receivables (30) (29) (30) (29)

Sub total 12,336 17,265 12,336 17,265

Prepayments 1,827 7,037 1,827 7,037

14,163 24,302 14,163 24,302

(a)

Trade receivables from contracts with customers

Balance at the beginning of the year (434) - (434) -

Amounts written off during the year 134 - 134 -

(Increase) / decrease in allowance recognised in the

net result¹ (29) - (29) -

Balance at the end of the year (329) - (329) -

Sale of goods and services

Balance at the beginning of the year - (207) - (207)

Amounts written off during the year - 159 - 159


net result¹ - (386) - (386)

Balance at the end of the year - (434) - (434)

Other receivables

Balance at the beginning of the year (29) (55) (29) (55)

Amounts written off during the year 33 39 33 39


net result (34) (13) (34) (13)

Balance at the end of the year (30) (29) (30) (29)

(359) (463) (359) (463)


31





2020 2019 2020 2019

$000 $000 $000 $000

Non-current

Sale of goods and services - - - -

Sub total - - - -

Less: Allowance for expected credit losses* - -

- Sale of goods and services - -

Sub total - - - -

- - - -

(a)




net result¹ - 247 - 247

Balance at the end of the year - - - -

- - - -



32




(b)



2020 2019 2020 2019

$000 $000 $000 $000

Patient fees - compensable 629 902 629 902

Patient fees - ineligible 460 868 460 868

Patient fees - inpatient & other 2,766 3,682 2,766 3,682

3,855 5,452 3,855 5,452

Consolidated Parent

2020 2020

$000 $000

Contract receivables (included in Note 19) 7,751 7,751

7,751 7,751




Impairment

The current and non-current trade receivables from contracts with customers balances above include the following

patient fee receivables:

Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired are

disclosed in Note 38.

All ‘regular way’ purchases or sales of receivables are recognised and derecognised on a trade date basis. Regular way

purchases or sales are purchases or sales of receivables that require delivery of assets within the time frame established by

regulation or convention in the marketplace.

For trade receivables, the District applies a simplified approach in calculating ECLs. The District recognises a loss allowance

based on lifetime ECLs at each reporting date. The District has established a provision matrix based on its historical credit

loss experience for trade receivables, adjusted for forward looking factors specific to the receivable.

The District recognises an allowance for expected credit losses (ECLs) for all debt financial assets not held at fair value

through profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the District

expects to receive, discounted at the original effective interest rate.

The District holds receivables with the objective to collect the contractual cash flows and therefore measures them at

amortised cost using the effective interest method, less any impairment. Changes are recognised in the net result for the year

when impaired, derecognised or through the amortisation process.

Receivables are initially recognised at fair value plus any directly attributable transaction costs. Trade receivables that do not

contain a significant financing component are measured at the transaction price.

33



20. Contract assets


2020

1 July 2019

adjusted for

AASB 15 2020

1 July 2019

adjusted for

AASB 15

$000 $000 $000 $000

Current

Contract assets 844 - 844 -

844 - 844 -


Consolidated Parent

2020 2020

$000 $000


7,751 7,751

Contract assets relate to the District's right to consideration in exchange for goods and services transferred to customers /

works completed, but not billed at the reporting date. The contract assets are transferred to receivables when the rights

become unconditional. This usually occurs when the District issues an invoice to the customer. The balance of the contract

assets relates to grants and other contributions for work completed but not yet invoiced as future work is required to be

completed before the District has the rights to invoice. Once all performance obligations are met and the District has rights to

invoice for the payment to be made, the contract asset is transferred to receivables.

The contract asset balance has significantly increased during the year due to the timing of the rights to invoice and the

obligations met.

34



21. Inventories


2020 2019 2020 2019

$000 $000 $000 $000

Current

Drug supplies 1,723 1,324 1,723 1,324

Medical and surgical supplies 173 131 173 131

1,896 1,455 1,896 1,455


The cost of inventories acquired at no cost or for nominal consideration is the current replacement cost as at the date of

acquisition. Current replacement cost is the cost the District would incur to acquire the asset. Net realisable value is the

estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs

necessary to make the sale.

Inventories held for distribution are stated at cost, adjusted when applicable, for any loss of service potential. A loss of service

potential is identified and measured based on the existence of a current replacement cost that is lower than the carrying

amount. Inventories (other than those held for distribution) are stated at the lower of cost and net realisable value. Cost is

calculated using the weighted average cost method.


The increase in medical and surgical supplies is a result of the District preparing for an increase in COVID-19 patients.

Inventories held for distribution for COVID-19 are also consumed in the normal services provided by the District.

Market demand has increased the weighted average cost of inventories in medical and surgical supplies due to the outbreak

of COVID-19. Market demand for these items is expected to continue and as a result the carrying amount and current

replacement cost are aligned. At the 30 June 2020, the District has determined that it plans to use the remaining medical and

surgical supplies inventory in a relatively short time period, well before expiry, and there is no available alternative that is more

efficient or effective nor a likelihood of an alternative being on the market in the foreseeable future.

35



22.

(a)


Land and

Buildings

Plant and

Equipment¹

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2020

Gross carrying amount 1,143,612 88,537 39,612 1,271,761

Less: accumulated depreciation and impairment 394,562 44,147 15,751 454,460

Net carrying amount 749,050 44,390 23,861 817,301

Land and

Buildings

Plant and

Equipment¹

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2019



Net carrying amount 658,650 38,955 20,966 718,571

(a)


Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000


Net carrying amount at beginning of year 658,650 38,955 20,966 718,571

Additions 96,190 12,266 - 108,456

Disposals (1) (227) - (228)

Transfers within NSW Health entities through

Statement of Comprehensive Income - 58 - 58

Net revaluation increments less revaluation

decrements 19,505 - 2,821 22,326

Depreciation expense (23,593) (7,357) (932) (31,882)

Reclassifications (1,701) 695 1,006 -

Net carrying amount at end of year 749,050 44,390 23,861 817,301





1For non-specialised assets with short useful lives, recognition at depreciated historical cost is regarded as an acceptable

approximation of fair value, in accordance with Treasury Policy Paper 14-01.


36



22.

(a)


Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000


Net carrying amount at beginning of year 591,259 41,595 21,834 654,688

Additions 98,588 3,113 56 101,757

Disposals - (450) - (450)

Transfers within NSW Health entities through

Statement of Comprehensive Income - (14) - (14)


decrements (7,000) - - (7,000)

Depreciation expense (21,344) (7,892) (1,174) (30,410)

Reclassifications (2,853) 2,603 250 -

Net carrying amount at end of year 658,650 38,955 20,966 718,571

(b)


The District has no property, plant and equipment where it is the lessor under operating leases. All property, plant and

equipment balances are for items held and used by the District.





Land and buildings are owned by the Health Administration Corporation. Land and buildings which are operated/occupied by

the District are deemed to be controlled by the District and are reflected as such in the financial statements.

Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent, i.e. the deferred

payment amount is effectively discounted over the period of credit.

Property, plant and equipment acquired are initially recognised at cost and subsequently revalued at fair value less

accumulated depreciation and impairment. Cost is the amount of cash or cash equivalents paid or the fair value of the other

consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount

attributed to that asset when initially recognised in accordance with the requirements of other Australian Accounting

Standards.


Health Administration Corporation, a controlled entity of the immediate parent, manages the approved major capital works

program for the NSW Ministry of Health and its controlled entities. Health Administration Corporation receives NSW Ministry of

Health Capital Allocations and grants on behalf of the District and makes payments to contractors and suppliers. Health

Administration Corporation initially records all costs incurred as work in progress or expenses and subsequently transfers to

the District. The costs are then accordingly reflected in the District financial statements. The District acquires most assets in

this manner.


Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at

measurement date.

37



Useful lives

Buildings 40 years

Buildings - leasehold improvements 3-10 years

Plant and equipment 4-20 years

Infrastructure Systems 40 years



When a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a

replacement if the recognition criteria are satisfied.




The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period and

adjusted if appropriate.

'Infrastructure Systems' comprises public facilities which provide essential services and enhance the productive capacity of the

economy including roads, bridges, water infrastructure and distribution works, sewerage treatment plants, seawalls and water

reticulation systems.

'Plant and equipment' comprises, among others, medical, computer and office equipment, motor vehicles, furniture and fittings

and PODS (a detachable or self-contained unit on ambulances used for patient treatment).


Depreciation is provided for on a straight-line basis for all depreciable assets so as to write off the depreciable amount of each

asset as it is consumed over its useful life to the District. Land is not a depreciable asset. All material identifiable components

of assets are depreciated over their useful lives.

The present value of the expected cost for the restoration or cost of dismantling of an asset after its use is included in the cost

of the respective asset if the recognition criteria for a provision are met.

Restoration costs

Property, plant and equipment assets costing $10,000 and above individually (or forming part of a network costing more than

$10,000) are capitalised.

Property, plant and equipment acquired under finance leases are depreciated over the asset’s useful life. However, if there is

no reasonable certainty that the lessee entity will obtain ownership at the end of the lease term, the asset is depreciated over

the shorter of the estimated useful life of the asset and the lease term.

Property, plant and equipment at 30 June 2019 includes non-current assets acquired under finance leases only. The assets

are recognised at fair value or, if lower, the present value of the minimum lease payments, at the inception of the lease.

Property, plant and equipment does not include amounts in respect of operating leases.

Until 30 June 2019, AASB 117 Leases (AASB 117) distinguished between finance leases that effectively transfer from the

lessor to the lessee substantially all the risks and rewards incidental to ownership of the leased assets, and operating leases

under which the lessor does not transfer substantially all the risks and rewards.


Therefore, at that date property, plant and equipment recognised under leases previously treated as finance leases under

AASB 117 are derecognised. The right-of-use assets arising from these leases are recognised and included in the separate

line item together with those arising from leases previously treated as operating leases under AASB 117.

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset for most leases. The

District has elected to present right-of-use assets separately in the Statement of Financial Position.

38



Revaluations are made with sufficient regularity to ensure the carrying amount of each asset in the class does not differ

materially from its fair value at reporting date. The District conducts a comprehensive revaluation at least every three years for

its land and buildings and infrastructure. Interim desktop revaluations are conducted between comprehensive revaluations for

those assets, where cumulative changes to indicators suggest fair value may differ materially from carrying value. The District

uses an independent professionally qualified valuer for such revaluations.

Revaluation increments are recognised in other comprehensive income and credited to revaluation surplus in equity. However,

to the extent that an increment reverses a revaluation decrement in respect of the same class of asset previously recognised

as a loss in the net result, the increment is recognised immediately as a gain in the net result.

For other assets valued using other valuation techniques, any balances of accumulated depreciation existing at the

revaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are

then increased or decreased by the revaluation increments or decrements.

When revaluing non-current assets using the cost approach, the gross amount and the related accumulated depreciation are

separately restated. Where the income approach or market approach is used, accumulated depreciation is eliminated against

the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

Non-specialised assets with short useful lives are measured at depreciated historical cost, as an approximation of fair value.

The District has assessed that any difference between fair value and depreciated historical cost is unlikely to be material.

Due to the COVID-19 pandemic in early 2020, the District management performed an additional assessment to determine if

the fair value of its property plant and equipment as at 30 June 2020 materially differed from the carrying value. Management

concluded that there is no definitive or conclusive market evidence to support any material adjustments. No adjustments were

applied as a result.

Fair value of property, plant and equipment is based on a market participants’ perspective, using valuation techniques (market

approach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs. Also

refer to Note 25 for further information regarding fair value.


Subsequent to the adoption of AASB 16, the District, as a lessee, recognises a right-of-use asset at cost and a corresponding

lease liability at the lease commencement date. Right-of-use assets that do not meet the definition of investment properties

are included in Property, Plant and Equipment under the corresponding asset categories. Further information on right-of-use

assets is contained in Note 23.

Property, plant and equipment is measured at the highest and best use by market participant's that is physically possible,

legally permissible and financially feasible. The highest and best use must be available at a period that is not remote and

takes into account the characteristics of the asset being measured, including any socio-political restrictions imposed by

government. In most cases, after taking into account these considerations, the highest and best use is the existing use. In

limited circumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use or

where there is a feasible higher restricted alternative use.

Physical non-current assets are valued in accordance with the 'Valuation of Physical Non-Current Assets at Fair Value' Policy

and Guidelines Paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 Fair Value Measurement, AASB

116 Property, Plant and Equipment and AASB 140 Investment Property.


Interim revaluations are conducted between comprehensive revaluations where cumulative changes to indicators suggest fair

value may differ materially from carrying value.

As a not-for-profit entity, revaluation increments and decrements are offset against one another within a class of non-current

assets, but not otherwise.

Revaluation decrements are recognised immediately as a loss in the net result, except to the extent that it offsets an existing

revaluation surplus on the same class of assets, in which case, the decrement is debited directly to the revaluation surplus.

39




The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial

year end and adjusted if appropriate.

Where an asset that has previously been revalued is disposed of, any balance remaining in the revaluation surplus in respect

of that asset is transferred to accumulated funds.

After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used to

determine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its

recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no

impairment loss been recognised for the asset in prior years. Such reversal is recognised in net result and is treated as a

revaluation increase. However, to the extent that an impairment loss on the same class of asset was previously recognised in

net result, a reversal of that impairment loss is also recognised in net result.

As a not-for-profit entity, an impairment loss is recognised in the net result to the extent the impairment loss exceeds the

amount in the revaluation surplus for the class of asset.

Specialised assets held for continuing use of their service capacity are rarely sold and their cost of disposal is typically

negligible. Their recoverable amount is expected to be materially the same as fair value, where they are regularly revalued

under AASB 13.

The District assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication

exists, or when annual impairment testing for an asset is required, the District estimates the asset’s recoverable amount.

When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down

to its recoverable amount.

As a not-for-profit entity with no cash generating units, impairment under AASB 136 Impairment of Assets is unlikely to arise.

As property, plant and equipment is carried at fair value or an amount that approximates fair value, impairment can only arise

in the rare circumstances such as where the costs of disposal are material.


Property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from

its use or disposal. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the

asset and are included in the consolidated Statement of Comprehensive Income.

40



23. Leases


Land and

Buildings

Plant and

Equipment Total$'000 $'000 $'000

2,583 5,290 7,873

774 6,847 7,621

- (2) (2)

(934) (2,373) (3,307)

2,423 9,762 12,185

Potential future cash outflows of $300 thousand have not been included in the lease liability because it is not reasonably

certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant

change in circumstances occurs which affects this assessment and that is within the control of the lessee.

During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extensions and

termination options was an increase in recognised lease liabilities and right-of-use assets of $Nil.


2020


Balance at 1 July 2019

Additions

Disposals


From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset and a corresponding lease

liability for most leases.

The District leases various property, equipment and motor vehicles. Lease contracts are typically made for fixed periods of 1

to 5 years, but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of

different terms and conditions. The lease agreements do not impose any covenants but leased assets may not be used as

security for borrowing purposes. The District does not provide residual value guarantees in relation to leases.

Extension and termination options are included in a number of property and equipment leases. These terms are used to

maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are

exercisable only by the District and not by the respective lessor. In determining the lease term, management considers all

facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination

option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably

certain to be extended (or not terminated).

The District has elected to recognise payments for short-term leases and low value leases as expenses on a straight line

basis, instead of recognising a right-of-use asset and lease liability. Short-term leases are leases with a lease term of 12

months or less. Low value assets are assets with a fair value of $10,000 or less when new and comprise mainly of small office

and medical equipment items.

The following table presents right-of-use assets. There are no right-of-use assets that meet the definition of investment

property.


41





Total

$'000

7,873

7,621

145

(3,256)

(2)

12,381

Total

$'000

3,307

145

3,180

164

6,796

Terminations

Payments

Interest expenses

Additions


2020


Lease liabilities



2020


The following amounts were recognised in the Statement of Comprehensive Income for the year ended 30 June 2020 in

respect of leases where the District is the lessee:

Expenses relating to leases of low-value assets

Expenses relating to short-term leases

Interest expense on lease liabilities

Depreciation expense of right-of-use assets



42





Operating

leases

Finance

leases

2019 2019

$'000 $'000

3,771 -

4,657 -

13 -

8,441 -

734 -

7,707 - Total (excluding GST)

Less: GST recoverable from the Australian Taxation Office

The District entered into a 40 year lease with the Tweed Shire Council for the use of a community health building. The contract

specifies lease payments of $Nil per annum. The leased premise is be used by the District to provide different community

health services. The community health buildings account for a small portion of the similar assets the District is using for the

purpose of providing community health services. Therefore it does not have a significant impact on the District's operations.


Total (including GST)

Later than five years

Later than one year and not later than five years

Within one year




The District recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the

underlying assets, except for short-term leases and leases of low-value assets.

The District assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right

to control the use of an identified asset for a period of time in exchange for consideration.

43





i.

Useful lives

Buildings 1 to 5 years



ii.

The right-of-use assets are also subject to impairment. The District assesses, at each reporting date, whether there is an

indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is

required, the District estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds its

recoverable amount, the asset is considered impaired and is written down to its recoverable amount. After an impairment

loss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’s

recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable

amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss

been recognised for the asset in prior years. Such reversal is recognised in the net result.

The right-of-use assets are subsequently measured at cost. They are depreciated on a straight-line basis over the shorter

of the lease term and the estimated useful lives of the assets, as follows:

If ownership of the leased asset transfers to the District at the end of the lease term or the cost reflects the exercise of a

purchase option, depreciation is calculated using the estimated useful life of the asset.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,

which is generally the case for real estate leases, the incremental borrowing rate is used. The District does not borrow

funds in the market. Instead they receive an allocation of the appropriations from the Crown Entity and where the Crown

Entity needs additional funding, Treasury Corporation (TCorp) goes to the market to obtain these funds. As a result, the

District is using TCorp rates as their incremental borrowing rates. These rates are published by NSW Treasury on a

regular basis.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred

to produce inventories) in the period in which the event or condition that triggers the payment occurs.

Lease liabilities

At the commencement date of the lease, the District recognises lease liabilities measured at the present value of lease

payments to be made over the lease term. Lease payments include:





● payments of penalties for terminating the lease, if the lease term reflects the District exercising the option to

terminate.

Right-of-use assets

The District recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is

available for use). Right-of-use assets are initially measured at the amount of initial measurement of the lease liability

(refer (ii) below), adjusted by any lease payments made at or before the commencement date, lease incentives, any initial

direct costs incurred, and estimated costs of dismantling and removing the asset or restoring the site.

44







The District applies the short-term lease recognition exemption to its short-term leases of buildings, machinery, motor

vehicles and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and

do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office

equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are

recognised as an expense on a straight-line basis over the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments were recognised as an operating expense

in the Statement of Comprehensive Income on a straight-line basis over the lease term.

Property, plant and equipment acquired under finance leases was depreciated over the useful life of the asset. However, if

there is no reasonable certainty that the District will obtain ownership by the end of the lease term, the asset was depreciated

over the shorter of the estimated useful life of the asset and the lease term.

Where a non-current asset was acquired by means of a finance lease, at the commencement of the lease, the asset was

recognised at its fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability was

established at the same amount. Lease payments were apportioned between finance charges and reduction of the lease

liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges were recognised

in finance costs in the Statement of Comprehensive Income.


The initial and subsequent measurement of right-of-use assets under leases at significantly below-market terms and

conditions that are entered into principally to enable the District to further its objectives is the same as normal right-of-use

assets. They are measured at cost, subject to impairment.


After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced

for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a

change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an

index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the

underlying asset.

Until 30 June 2019, a lease was classified at the inception date as a finance lease or an operating lease. A lease that

transferred substantially all the risks and rewards incidental to ownership to the District was classified as a finance lease.

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the

inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a

specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset (or those assets)

is not explicitly specified in an arrangement.

45





2020 2019 2020 2019

$000 $000 $000 $000

Assets held for sale

Land and buildings - - - -

- - - -


These assets are not depreciated while they are classified as held for sale. Interest and other expenses attributable to the

liabilities of a disposal group classified as held for sale are continued to be recognised.

The District has certain non-current assets classified as held for sale, where their carrying amount will be recovered principally

through a sale transaction, not through continuing use. Non-current assets held for sale are recognised at the lower of carrying

amount and fair value less costs of disposal.

The non-current assets held for sale constitute assets that are surplus to requirements and are actively marketed within a sale

program which has been initiated and is expected to locate a buyer and complete the sale in the next twelve months.

For 2018/19 this asset relates to the Byron Bay Hospital which is no longer required with the opening of the new Byron Central

Hospital. The asset was recorded at $1. Due to rounding in the Financial Statements this note shows a $Nil balance. The

sale of this asset was finalised on 1 July 2019.


46



25.

●

●

●

(a)

Level 1 Level 2 Level 3

Total Fair

Value

$000 $000 $000 $000

- 21,001 565,170 586,171

- - 22,955 22,955

- 21,001 588,125 609,126


Total Fair

Value

$000 $000 $000 $000

- 19,134 345,586 364,720

- - 16,213 16,213

- 19,134 361,799 380,933

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to

sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a

principal market, in the most advantageous market for the asset or liability.

A number of the District’s accounting policies and disclosures require the measurement of fair values, for both financial and

non-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevant

observable inputs and minimises the use of unobservable inputs. Under AASB 13 Fair Value Measurement, the District

categorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows:

Level 1 – quoted (unadjusted) prices in active markets for identical assets / liabilities that the entity can access at the

measurement date.




2020

Property, plant and equipment (Note 22)


The District recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the

change has occurred.




2019




The above figures exclude leasehold improvements, work in progress and newly completed projects which are carried at

cost, and as a result they will not agree to Note 22.






47




(b)

The property market is being impacted by the significant uncertainty that the COVID-19 outbreak has caused. Sales

evidence have been utilised across the District to assess the land and non-specialised properties, in line with the valuation

by the valuers made on a market approach.

At the end of each reporting period a fair value assessment is made on any movements since the last revaluation, and a

determination as to whether any adjustments need to be made. These adjustments are made by way of application of

indices (refer Note 22 reconciliation).

The non-current assets categorised in (a) above have been measured as either level 2 or level 3 based on the following

valuation techniques and inputs:

For land, the valuation by the valuer is made on a market approach, comparing similar assets (not identical) and

observable inputs. The most significant input is price per square metre.

All commercial and non-restricted land is included in level 2 as these land valuations have a high level of observable

inputs although these lands are not identical.

All of the restricted land has been classified as level 3 as, although observable inputs have been used, a significant level

of professional judgement is required to adjust inputs in determining the land valuations. Certain parcels of land have

zoning restrictions, for example hospital grounds, and values are adjusted accordingly.

For buildings and infrastructure, many assets are of a specialised nature or use, and thus the most appropriate valuation

method is depreciated replacement cost. These assets are included as level 3 as these assets have a high level of

unobservable inputs. However, residential properties are valued on a market approach and included in level 2.

Non-current assets held for sale is a non-recurring item that is measured at the lower of its fair value less cost to sell or its

carrying amount. These assets are categorised as level 2.

For land, buildings and infrastructure systems the District obtains external valuations by independent valuers at least every

three years. The last revaluation was performed by CBRE Valuations Pty Ltd for the 2019-20 financial year. CBRE

Valuations Pty Ltd is an independent entity and is not an associated entity of the District.


48




(c)


Land and

Buildings

Infrastructure

Systems

Other

Assets

Total Level 3

Recurring

$000 $000 $000 $000

345,586 16,213 - 361,799

218,511 4,779 - 223,290

20,310 2,821 - 23,131

(1) - - (1)

(19,236) (858) - (20,094)

565,170 22,955 - 588,125


Land and

Buildings

Infrastructure

Systems

Other

Assets

Total Level 3

Recurring

$000 $000 $000 $000

368,678 17,265 - 385,943

(7,000) - - (7,000)

(16,092) (1,052) - (17,144)

345,586 16,213 - 361,799

Revaluation increments / (decrements) recognised in

other comprehensive income – included in line item

'Changes in revaluation surplus of property, plant and

equipment’ (Note 22)


2019

2020






Disposals

Additions








49





1 July 2019 2020

Opening Revenue Expense * Closing

Category $000 $000 $000 $000

Community welfare - 12 (715) 727

Facility improvements 6,277 1,519 1,195 6,601

Holds funds in perpetuity 1,395 - 1,395 -

Patient welfare 50 5 3 52

Private practice disbursements (No.2 Accounts) 3,925 356 773 3,508

Public contributions 405 449 544 310

Research 84 1 - 85

Staff welfare 81 1 - 82

Training and education including conferences 2,228 200 168 2,260

14,445 2,543 3,363 13,625

Category

Community welfare


Holds funds in perpetuity

Patient welfare

Private practice disbursements

(No.2 Accounts)


Research

Staff welfare

Training and education including

conferences

Other

Staff specialists’ private practice arrangements to improve the level of clinical services

provided.

Improvements such as medical needs, financial needs and standards for patients’ privacy

and dignity.

The District's financial statements include the following assets which are restricted for stipulated purposes and / or by externally

imposed conditions, eg. donor requirements. The assets are only available for application in accordance with the terms of the

donor restrictions. They consist of cash assets and rights and obligations to receive and make payments as at 30 June 2020.


Donor has explicitly requested funds be invested permanently and not otherwise expended.


Improvements to service access, health literacy, public and preventative health care.

Purpose

* During the year a reclassification was required between various Restricted Asset categories to correct their classification.

This was carried out with an adjustment made to the expenses in the applicable categories.





Does not meet the definition of any of the above categories.

Unclaimed monies

All money and personal effects of patients which are left in the custody of the District by any patient who is discharged or dies

in the hospital and which are not claimed by the person lawfully entitled thereto within a period of twelve months are recognised

as the property of the District.

All such money and the proceeds of the realisation of any personal effects are lodged to the credit of the Samaritan Fund which

is used specifically for the benefit of necessitous patients or necessitous outgoing patients.

50



27. Payables


2020 2019 2020 2019

$000 $000 $000 $000

Current

Accrued salaries, wages and on-costs 20,003 16,378 - -

Taxation and payroll deductions 2,041 1,864 - -

Accrued liability - purchase of personnel services - - 22,044 18,242

Creditors 16,232 24,041 16,232 24,041

Other creditors

- Capital works 1,137 5,321 1,137 5,321

- Payables to entities controlled by the immediate

parent 5,450 4,685 5,450 4,685

- Other 8,217 7,261 8,217 7,261

53,080 59,550 53,080 59,550


Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the

District. Gains and losses are recognised in the net result when the liabilities are derecognised as well as through the

amortisation process.

Subsequent measurement is at amortised cost using the effective interest method. Short-term payables with no stated interest

rate are measured at the original invoice amount where the effect of discounting is immaterial.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables are disclosed in

Note 38.

These amounts represent liabilities for goods and services provided to the District and other amounts. Payables are

recognised initially at fair value, net of directly attributable transaction costs.

51





2020

1 July 2019

adjusted for

AASB 15 2020

1 July 2019

adjusted for

AASB 15

$000 $000 $000 $000

Current

Contract liabilities 180 44 180 44

180 44 180 44

Consolidated Parent

2020 2020

$000 $000

Revenue recognised that was included in the contract

liability balance (adjusted for AASB 15) at the

beginning of the year 44 44

Revenue recognised from performance obligations

satisfied in previous periods 833 833

Transaction price allocated to the remaining

performance obligations from contracts with customers 3,260 3,260

2021 2022 2023 ≥ 2024

Specific revenue class $'000 $'000 $'000 $'000

Grants and other contributions 2,094 396 356 414

2,094 396 356 414

Contract liabilities relate to consideration received in advance from customers. The balance of the contract liabilities at the 30

June 2020 was impacted by the timing of payments received for grants and other contributions. The satisfaction of the specific

performance obligations within the contract hadn't been met at the 30 June 2020. Revenue from the contract liabilities will be

recognised when the specific performance obligations have been met.

The contract liability balance has significantly increased during the year because of the timing of payments received.

The transaction price allocated to the remaining performance obligations relates to the following revenue classes and is

expected to be recognised as follows:


52



29. Borrowings


2020 2019 2020 2019

$000 $000 $000 $000

Current

Other loans and deposits 698 681 698 681

Lease liability (see Note 23) 3,862 - 3,862 -

4,560 681 4,560 681

Non-current

Other loans and deposits 3,762 4,460 3,762 4,460


12,281 4,460 12,281 4,460




TCorp

borrowings

Other loans

and deposits Leases

Total liabilities

from financing

activities

$000 $000 $000 $000

1 July 2018 - 5,805 - 5,805

Cash flows - (664) - (664)

30 June 2019 - 5,141 - 5,141

Recognised on adoption of AASB 16 - - 7,873 7,873

1 July 2019 - 5,141 7,873 13,014

Cash flows - (681) (3,111) (3,792)

New leases - - 7,619 7,619

30 June 2020 - 4,460 12,381 16,841

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings are



Final repayment of loan is scheduled for 30 June 2026.

Other loans still to be extinguished represent monies to be repaid to the Health Administration Corporation, an entity controlled

by the immediate parent; the immediate parent itself; and the NSW Treasury, which is controlled by the ultimate parent.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings are disclosed in

Note 38.


Borrowings classified as financial liabilities at amortised cost are initially measured at fair value, net of directly attributable

transaction costs. These are subsequently measured at amortised cost using the effective interest method. Gains and losses

are recognised in the net result when the liabilities are derecognised as well as through the amortisation process.

Finance lease liabilities are determined in accordance with AASB 117 Leases until 30 June 2019. From 1 July 2019, lease

liabilities are determined in accordance with AASB 16.

Borrowings are classified as current liabilities unless the District has an unconditional right to defer settlement of the liability for

at least 12 months after the reporting date. Refer to Note 38 (b) for derecognition policy.

53



30. Provisions


2020 2019 2020 2019

$000 $000 $000 $000

Current

Employee benefits and related on-costs

Annual leave - short term benefit 46,454 45,588 - -

Annual leave - long term benefit 16,452 11,415 - -

Long service leave consequential on-costs 12,342 11,481 - -

Provision for other employee benefits 2,256 1,333 - -

Provision for personnel services liability - - 77,504 69,817

Total current provisions 77,504 69,817 77,504 69,817

Non-current


Long service leave consequential on-costs 1,073 998 - -

Provision for personnel services liability - - 1,073 998

Total non-current provisions 1,073 998 1,073 998

Provisions - current 77,504 69,817 - -

Provisions - non-current 1,073 998 - -

Accrued salaries, wages and on-costs, taxation and

payroll deductions (Note 27) 22,044 18,242 - -

Liability - purchase of personnel services - - 100,621 89,057

100,621 89,057 100,621 89,057




Salaries and wages (including non-monetary benefits) and paid sick leave that are expected to be settled wholly within 12

months after the end of the period in which the employees render the service are recognised and measured at the

undiscounted amounts of the benefits.

Annual leave and ADO are not expected to be settled wholly before 12 months after the end of the annual reporting period in

which the employees render the related service. As such, they are required to be measured at present value in accordance

with AASB 119 Employee Benefits (although short-cut methods are permitted).

Actuarial advice obtained by NSW Treasury, a controlled entity of the ultimate parent, has confirmed that using the nominal

annual leave balance plus the annual leave entitlements accrued while taking annual leave can be used to approximate the

present value of the annual leave liability. On-costs of 18.7% are applied to the value of leave payable at 30 June 2020

(comparable on-costs for 30 June 2019 were 18.3%). The District has assessed the actuarial advice based on the District’s

circumstances to both the annual leave and ADO and has determined that the effect of discounting is immaterial. All annual

leave and ADO are classified as a current liability even where the District does not expect to settle the liability within 12

months as the District does not have an unconditional right to defer settlement.

Unused non-vesting sick leave does not give rise to a liability as it is not considered probable that sick leave taken in the

future will be greater than the benefits accrued in the future.


54



Any provisions for restructuring are recognised only when the District has a detailed formal plan, and the District has raised a

valid expectation in those affected by the restructuring that it will carry out the restructuring by starting to implement the plan or

announcing its main features to those affected.

If the effect of the time value of money is material, provisions are discounted at a pre-tax rate that reflects the current market

assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the

provision due to the passage of time (i.e. unwinding of discount rate) is recognised as a finance cost.


The District's liability for long service leave and defined benefit superannuation (State Authorities Superannuation Scheme and

State Superannuation Scheme) are assumed by the Crown Entity, which is a controlled entity of the ultimate parent. The

District accounts for the liability as having been extinguished, resulting in the amount assumed being shown as part of the non-

monetary revenue item described as 'Acceptance by the Crown Entity of employee benefits'.

Other provisions are recognised when: the District has a present legal or constructive obligation as a result of a past event; it

is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the

amount of the obligation. When the District expects some or all of a provision to be reimbursed, for example, under an

insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually

certain. The expense relating to a provision is presented net of any reimbursement in the Statement of Comprehensive

Income.

The superannuation expense for the financial year is determined by using the formulae specified in the Treasurer’s Directions.

The expense for certain superannuation schemes (i.e. Basic Benefit and First State Super) is calculated as a percentage of

the employee's salary. For other superannuation schemes (i.e. State Superannuation Scheme and State Authorities

Superannuation Scheme), the expense is calculated as a multiple of the employee's superannuation contributions.

Consequential costs to employment are recognised as liabilities and expenses where the employee benefits to which they

relate have been recognised. This includes outstanding amounts of workers’ compensation insurance premiums and fringe

benefits tax.



Long service leave is measured at the present value of expected future payments to be made in respect of services provided

up to the reporting date. Consideration is given to certain factors based on actuarial review, including expected future wage

and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using

the long-term Commonwealth Government bond rate at the reporting date.

Other provisions

55





2020 2019 2020 2019

$000 $000 $000 $000

Current

Unearned revenue - 44 - 44

Liabilities under transfer to acquire or construct non-

financial assets to be controlled by the entity 359 - 359 -

359 44 359 44

Non-current


financial assets to be controlled by the entity 2,084 - 2,084 -

Other 63 74 63 74

2,147 74 2,147 74


2020

$'000

-

6,335

6,335

(3,692)

200

2,443

Refer to Note 13 for a description of the District's obligations under transfers received to acquire or construct non-financial

assets to be controlled by the District.

The District expects to recognise as income any liability for unsatisfied obligations at the end of the reporting period in which

the related asset(s) are constructed / acquired.

Less: income recognised during the financial year

Closing balance of liabilities arising from transfers to acquire / construct non-financial assets to be

controlled by the entity

Opening balance of liabilities arising from transfers to acquire/construct non-financial assets to be controlled

by the entity

Add: adjustments upon initial application of AASB 1058

Adjusted opening balance

Add: receipt of cash during the financial year

Patient Fee amounts received in advance.


Reconciliation of financial assets and corresponding liabilities arising from transfers to acquire or construct non-

financial assets to be controlled by the District.

56



32. Commitments



2020 2019 2020 2019

$000 $000 $000 $000

Within one year 20,337 85,751 20,337 85,751

Later than one year and not later than five years 2,319 5,543 2,319 5,543

Total (including GST) 22,656 91,294 22,656 91,294

(b)

Aggregate capital expenditure for the acquisition of land and buildings, plant and equipment and infrastructure systems,

contracted for at balance date and not provided for:


The total 'Capital expenditure commitments' of $22.656 million million as at 30 June 2020 includes input tax credits of

$2.060 million that are expected to be recoverable from the Australian Taxation Office (2019 $8.299 million).

57



33. Trust funds


1 July 2019 30 June 2020

Opening

equity Revenue Expense

Closing

equity

Category $'000 $000 $000 $'000

Patient Trust 150 1,242 (1,251) 140

Private Patient Trust Funds 474 5,645 (5,647) 473

Third Party Funds 1,309 3,689 (3,843) 1,155

Total trust funds 1,933 10,576 (10,741) 1,768

1 July 2018 30 June 2019

Opening

equity Revenue Expense

Closing

equity

Category $'000 $000 $000 $'000

Patient Trust 106 1,101 (1,057) 150

Private Patient Trust Funds 243 5,898 (5,667) 474



Category Purpose

Patient Trust


Third Party Funds

Any amounts drawn down from trust funds under the private practice arrangements are not included in the key management

personnel compensation amounts or disclosed as a related party transaction in Note 39.

The District holds trust funds of $1.8 million (2019: $1.9 million) which are held for the safe keeping of patients' monies,

deposits on hired items of equipment and Private Practice Trusts.

These funds are excluded from the financial statements as the District cannot use them for the achievement of its objectives.

The following is a summary of the transactions in the trust account.



The revenue derived from private patient and other billable services provided by Staff

Specialists.

A sum of money held in trust on behalf of external parties, e.g. external foundations,

volunteer groups and auxiliaries.

58



34.


2020 2019 2020 2019

$000 $000 $000 $000

Net cash used on operating activities 116,309 98,116 116,309 98,116

Depreciation and amortisation expense (35,189) (30,410) (35,189) (30,410)

Allowance for impairment (63) (152) (63) (152)

(Increase) / decrease in unearned revenue 3,891 13 3,891 13

Decrease / (increase) in provisions (7,761) (6,417) (7,761) (6,417)

Increase / (decrease) in prepayments and other assets (9,796) 6,113 (9,796) 6,113

Increase / (decrease) in contract assets 844 - 844 -

Decrease / (increase) in payables 2,456 (607) 2,456 (607)

Decrease / (increase) in contract liabilities (136) - (136) -

Net gain / (loss) on sale of property, plant and

equipment (200) (407) (200) (407)

Assets donated or brought to account (Note 35) 58 (14) 58 (14)

Net result 70,413 66,235 70,413 66,235



2020 2019 2020 2019

$000 $000 $000 $000

Assets donated or brought to account 58 (14) 58 (14)

Property, plant and equipment acquired by a lease 7,621 - 7,621 -

7,679 (14) 7,679 (14)


59





Net result


Cash flows

NSW Health's budget is shown at a consolidated level when presented in parliament each year (i.e. in the NSW Government

Budget Papers). The District's budget is not presented in parliament, therefore AASB 1055 Budgetary Reporting is not

applicable. Unlike the requirement in AASB 1055 Budgetary Reporting to present original budget information, the District's

financial statements present adjusted budget information. The adjusted budgeted amounts are drawn from the initial Service

Agreements between the District and the NSW Ministry of Health at the beginning of the financial year, as well as any

adjustments for the effects of additional supplementation provided in accordance with delegations to derive a final budget at

year end (i.e. adjusted budget). The budget amounts are not subject to audit and, accordingly, the relevant budget entries in

the financial statements are unaudited.

Current Assets were $2.8 million lower than budget. This was due mainly to lower than budget Receivables $5.8 million,

higher than budget Cash at Bank $1.7 million and Contract assets $0.8M. The lower than budget Receivables reflects lower

than budgeted Intra Health Receivables $3.2 million, Prepayments $0.8M and lower Sale of Goods & Services $1.2 million.

The higher than budgeted Cash at Bank is associated with reduced cash General buffer requirements $1.4 million.

Operating Activities - Net cash inflows were higher than budget by $5.6 million. Operating Payments were lower than budget

by $4.2 million and Operating Receipts were higher than budget by $1.4 million.

The lower than budget Revenues of $3.3 million was represented by Sale of Goods and Services from contracts with

customers $2.6 million and lower NSW Ministry of Health capital allocations $2.2 million.

The lower than budgeted Sale of Goods and Services from contracts with customers is primarily associated with lower

Patients Fees $1.5 million, Department of Veterans' Affairs revenues $0.3 million and Motor Accident Authority third party

revenues of $0.3 million.

The lower NSW Ministry of Health capital allocations of $2.2 million is due to delays in capital projects associated with the

impacts of COVID-19.

Non Current Assets were $21.7 million higher than budget. This result reflects the revaluation Increment of $22.3 million.

Investing Activities - Net cash outflows were higher than budget by $3.4 million. This related to Purchases of Property, Plant

and Equipment due to decreases in Capital Creditors of $4.2 million

The actual Net Result was lower than adjusted budget by $3.3 million, primarily due to lower than budgeted Revenues of $3.3

million.

60



36. Adjusted budget review (continued)

$000

Initial allocation, 19 June 2019 733,432

Special projects

Dental & Oral Health Program 255

Integrated Care Program 1,314

Mental Health Programs 603

National Partnership 3,000

National Disability Insurance Scheme (301)

Their Futures Matter 2,863

Other

COVID19 & Additional Activity 12,816

Decline in staff Defined Benefit Superannuation Funds 614

Equipment, Replacement and Maintenance 160

Isolated Patient Travel & Assistance Scheme 773

Medical Training & Research Position 890

Nursing & Midwifery Enhancements 837

Other 2,137

Private Single Revenue Adjustment 2,542

Palliative Care Medical Training & Research Position 676

Redundancies 138


Movements in the level of the NSW Ministry of Health Recurrent Allocation that have occurred since the time of the initial

allocation on 19 June 2019 are as follows:

61



37. Equity


(a)


(b)


2020 2019

$000 $000

(a)

- 916

- 916


2020 2019

$000 $000

Assets

(a)

Liabilities

(b) - 916

Increase / (Decrease) in Net Assets From Equity Transfers - 916


Equity transfers

The transfer of net assets between entities as a result of an administrative restructure, transfers of programs/functions and

parts thereof between entities controlled by the ultimate parent are recognised as an adjustment to 'Accumulated Funds'. This

treatment is consistent with AASB 1004 Contributions and Australian Accounting Interpretation 1038 Contributions by Owners

Made to Wholly-Owned Public Sector Entities.

Transfers arising from an administrative restructure involving not-for-profit entities and for-profit government entities are

recognised at the amount at which the asset was recognised by the transferor immediately prior to the restructure. Subject to

below, in most instances this will approximate fair value.

All other equity transfers are recognised at fair value, except for intangibles. Where an intangible has been recognised at

amortised cost by the transferor because there is no active market, the District recognises the asset at the transferor's carrying

amount. Where the transferor is prohibited from recognising internally generated intangibles, the District does not recognise

that asset.


Nil


entities

Nil

An equity transfer was made between NSW Health entities to realign the annual leave liability to the current legal employer

as held in the payroll system (StaffLink) for various employment arrangements, including staff on rotation and secondment.

This has resulted in an increase in net assets of $916 thousand relating to the transfer of Annual Leave provision balances

to other NSW Health entities.

The category 'accumulated funds' includes all current and prior period retained funds.

Accumulated Funds

Separate reserve accounts are recognised in the financial statements only if such accounts are required by specific legislation

or Australian Accounting Standards.

Separate Reserves

The revaluation surplus is used to record increments and decrements on the revaluation of non-current assets. This accords

with the District's policy on the revaluation of property, plant and equipment as discussed in Note 22.

Revaluation Surplus

62






Carrying

Amount

Carrying

Amount

2020 2019

Class Category $000 $000

Financial Assets

16,528 16,625

7,706 12,643

844 -


Financial Liabilities

16,841 5,141

51,039 57,686

63 74

Total Financial Liabilities 67,943 62,901

Notes


The Chief Executive and Board of the District have the overall responsibility for the establishment and oversight of risk

management and reviews and agrees policies for managing each of these risks. Risk management policies are established to

identify and analyse the risks faced by the District, to set risk limits and controls and to monitor risks. Compliance with policies is

reviewed on a continuous basis.

The District's principal financial instruments are outlined below. These financial instruments arise directly from the District's

operations or are required to finance its operations. The District does not enter into or trade financial instruments, including

derivative financial instruments, for speculative purposes.

The District's main risks arising from financial instruments are outlined below, together with the District's objectives, policies and

processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout these

financial statements.

Payables (Note 27)²

Other Liabilities (Note 31)

Financial liabilities measured at amortised cost



3 While contract assets are also not financial assets, they are explicitly included (i.e in the scope of AASB 7 Financial Instruments: Disclosures) for the

purpose of the credit risk disclosures.

Cash and cash equivalents (Note 18)

Receivables (Note 19)¹

Amortised cost

Amortised cost

Contract assets (Note 20)³ Amortised cost


1 Excludes statutory receivables and prepayments (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).

2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is

derecognised when the contractual rights to the cash flows from the financial assets expire; or if the entity transfers its

rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without

material delay to a third party under a pass through arrangement and either:


● The District has neither transferred nor retained substantially all the risks and rewards for the asset, but has transferred

control.

The District determines the classification of its financial assets and liabilities after initial recognition and, when allowed and

appropriate, re-evaluates this at each financial year end.

63






(d) Financial risk

i.

Collectability of trade receivables, other receivables and contract assets is reviewed on an ongoing basis. Procedures as

established in the Treasurer’s Directions are followed to recover outstanding amounts, including letters of demand.

The District applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected

loss allowance for all trade receivables, other receivables and contract assets.

Credit risk arises when there is the possibility that the counterparty will default on their contractual obligations, resulting in a

financial loss to the District. The maximum exposure to credit risk is generally represented by the carrying amount of the

financial assets (net of any allowance for credit losses).

Credit risk arises from financial assets of the District, including cash, receivables and authority deposits. No collateral is

held by the District. The District has not granted any financial guarantees.

Credit risk associated with the District's financial assets, other than receivables, is managed through the selection of

counterparties and establishment of minimum credit rating standards. Authority deposits held with NSW TCorp are

guaranteed by the State.

The District considers a financial asset in default when contractual payments are 90 days past due. However, in certain

cases, the District may also consider a financial asset to be in default when internal or external information indicates that

the District is unlikely to receive the outstanding contractual amounts in full before taking into account any credit

enhancements held by the District.

Cash comprises cash on hand and bank balances deposited within the NSW Treasury banking system. Interest is earned

on daily bank balances at rates of approximately 0.00% (Restricted Funds Bank balance: 1.10%) in 2019-20 compared to

0.00% (Restricted Funds Bank balance: 2.20%) in the previous year. The TCorpIM Funds cash facility is discussed in

market risk below.


To measure the expected credit losses, trade receivables, other receivables and contract assets have been grouped based

on shared credit risk characteristics and the days past due.



Credit risk

When the District has transferred its rights to receive cash flows from an asset or has entered into a pass through

arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. Where the District has

neither transferred nor retained substantially all the risks and rewards or transferred control, the asset continues to be

recognised to the extent of the District's continuing involvement in the asset. In that case, the District also recognises an

associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and

obligations that the entity has retained.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. When

an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original

liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the net

result.

Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position if

there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net

basis, or to realise the assets and settle the liabilities simultaneously.

64





i.

Current <30 days 30-60 days 61-90 days >91 days Total

30 June 2020 $'000 $'000 $'000 $'000 $'000 $'000

Expected credit loss rate 0.41% 1.30% 3.65% 23.44% 35.84% 4.61%

Estimated total gross carrying

amount 1 6,147 539 192 64 851 7,793

Expected credit loss 25 7 7 15 305 359


30 June 2019 2

$'000 $'000 $'000 $'000 $'000 $'000



amount 1 7,075 362 217 103 1,057 8,814


Notes




The expected loss rates are based on historical observed loss rates. The historical loss rates are adjusted to reflect current

and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

The District has identified relevant factors, and accordingly has adjusted the historical loss rates based on expected

changes in these factors.

Trade receivables, other receivables and contract assets are written off when there is no reasonable expectation of

recovery. Indicators that there is no reasonable expectation of recovery include, amongst others a failure to make

contractual payments for a period of greater than 90 days past due.

The loss allowance for trade receivables, other receivables and contract assets as at 30 June 2020 and 30 June 2019 was

determined as follows:

The District is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors as at 30

June 2020.

¹ The analysis excludes statutory receivables and prepayments as these are not within the scope of AASB7 Financial Instruments: Disclosures.

Therefore the 'total' will not reconcile to the receivables total in Note 19 and the contract assets total in Note 20.

2Prior year balances have been restated to include other receivables and contract assets

65





ii.


For other suppliers, where settlement cannot be affected in accordance with the above, e.g. due to short term liquidity

constraints, contact is made with creditors and terms of payment are negotiated to the satisfaction of both parties.

For small business suppliers, where payment is not made within the specified time period, simple interest must be paid

automatically unless an existing contract specifies otherwise.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced.

Until the 30 June 2019, amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set by

the NSW Ministry of Health in accordance with NSW Treasury Circular 11/12. For small business suppliers, where terms

are not specified, payment is made not later than 5 days from the date of receipt of a correctly rendered invoice. For other

suppliers, if trade terms are not specified, payment is made no later than 30 days from the date of receipt of a correctly

rendered invoice or a statement is received. From 1 July 2019, amounts owing to suppliers (which are unsecured) are

settled in accordance with the policy set by the NSW Ministry of Health in accordance with NSW Treasury. For all suppliers,

that has a correctly rendered invoice, that has a matched purchase order and where goods have been received, an

immediate payment is made irrespective of current contract payment terms.

The District has exposure to liquidity risk. However, the risk is minimised by the service agreement with the NSW Ministry of

Health, as the annual service agreement requires local management to control its financial liquidity and in particular meet

benchmarks for the payment of creditors. Where the District fails to meet service agreement performance standards, the

Ministry as the state manager can take action in accordance with annual performance framework requirements, including

providing financial support and increased management interaction (refer Note 1).


Liquidity risk

Liquidity risk is the risk that the District will be unable to meet its payment obligations when they fall due. The District

continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high

quality liquid assets. The objective is to maintain a balance between continuity of funding and flexibility through the use of

overdrafts, loans and other advances.

66





ii.

EIR3

Nominal

Amount1

Fixed

Interest

Rate

Variable

Interest

Rate

Non -

Interest

Bearing < 1 Yr 1-5 Yr > 5Yr

% $000 $000 $000 $000 $000 $000 $000

51,039 - - 51,039 51,039 - -

2.50% 4,831 4,831 - - 805 3,221 805

1.86% 12,835 12,835 - - 3,953 7,189 1,693

63 - - 63 63 - -

68,768 17,666 - 51,102 55,860 10,410 2,498

2019

57,686 - - 57,686 57,686 - -

2.50% 5,636 5,636 - - 805 3,221 1,610

- - - - - - -

74 - - 74 74 - -

63,396 5,636 - 57,760 58,565 3,221 1,610

Notes:


Other



Payables:

2020


Other


¹ The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities based on the earliest date on

which the District can be required to pay. The tables include both interest and principal cash flows and therefore will not reconcile to the

Statement of Financial Position.2

Excludes statutory payables and unearned revenue (i.e. not within scope of AASB7 Financial Instruments: Disclosures).

Payables:

- Creditors 2

Borrowings:

- Loans and deposits

- Finance leases

- Creditors 2

Borrowings:


- Lease liabilities

67




iii.

Interest Rate Risk

-1% 1% -1% 1%

Net result 4 (4) (114) 114

Equity 4 (4) (114) 114

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in market interest rates. Exposure to interest rate risk arises primarily through the District's interest bearing

liabilities. This risk is minimised by undertaking mainly fixed rate borrowings, primarily through NSW TCorp. The District

does not account for any fixed rate financial instruments at fair value through profit or loss or at fair value through other

comprehensive income. Therefore, for these financial instruments, a change in interest rates would not affect profit or loss

or equity. A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates (based on official

Reserve Bank of Australia interest rate volatility over the last five years). The basis will be reviewed annually and amended

where there is a structural change in the level of interest rate volatility.

20192020

$000 $000

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

market prices. The District's exposures to market risk are primarily through interest rate risk on the District's borrowings

and other price risks associated with the movement in the Hour Glass Investment Facilities. The District has no exposure

to foreign currency risk and does not enter into commodity contracts.

The effect on net result and equity due to a reasonably possible change in risk variable is outlined in the information below,

for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after taking

into account the economic environment in which the District operates and the time frame for the assessment (i.e. until the

end of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at the Statement

of Financial Position date. The analysis is performed on the same basis as for 2019. The analysis assumes that all other

variables remain constant.

Market risk

However, the District is not permitted to borrow external to the NSW Ministry of Health (except energy loans which are

negotiated through NSW Treasury). Both NSW Treasury and NSW Ministry of Health loans are set at fixed rates and

therefore are generally not affected by fluctuations in market rates.


68







2020 2019

$000 $000

Short-term employee benefits 1,182 1,118

Post-employment benefits 74 74

1,256 1,192

(b)



(d)

The following operating expenses were incurred with entities controlled by the [immediate/senior] parent:

●

●

● Various grants and subsidies towards research and other projects.


The District's key management personnel comprise its board members and chief executive (or acting chief executive)

from time to time during the year.

During the financial year and comparative year, the District entered into the various transactions with other entities

consolidated as part of the NSW Ministry of Health (the [immediate/senior] parent) and the NSW Total State Sector (the

ultimate parent) within the normal course of business.


Health Administration Corporation provides shared services for the majority of patient transport services, information

management services, domestic supplies and services, food supplies and corporate support services.


During the financial year, Northern NSW Local Health District obtained key management personnel services from the

immediate parent and incurred $374 thousand (2019: $428 thousand) for these services. This amount does not form part

of the key management personnel compensation disclosed above.

Compensation for the Minister for Health is paid by the Legislature and is not reimbursed by the NSW Ministry of Health

and its controlled entities. Accordingly no such amounts are included in the key management personnel compensation

disclosures above.

Remuneration for the Secretary and Deputy Secretaries are paid by the NSW Ministry of Health and is not reimbursed by

the health entities. Accordingly no such amounts are included in the key management personnel compensation

disclosures above.


69






●

●

● Utilities, including electricity, gas and water expenses

●

●


● Revenue from recurrent and capital allocations

● Various grants and contributions towards research and other projects


●

●

● Insurance refunds

● Revenue from acceptance of long service leave liabilities and defined benefit


●

●

●

●

40.

Various grants and subsidies towards research and other projects

Insurance costs


Various grants and other contributions towards research and other projects




Energy Efficient Government Program loans are held with the Crown Finance Entity

The majority of the construction of property, plant and equipment is managed and overseen by Health

Administration Corporation

The majority of capital commitments contracted but not provided for related to capital works overseen by the Health

Administration Corporation.


Payroll and fringe benefits taxes

Audit of the statutory financial statements

70

Cover page 6

Southern NSW Local Health District


Cover page 7

Western NSW Local Health District





Opinion

I have audited the accompanying financial statements of the Western NSW Local Health District














Basis for Opinion





the:








Auditor-General




audit opinion.












In preparing the financial statements, the Chief Executive is responsible for assessing the ability of

the District and the consolidated entity to continue as a going concern, disclosing as applicable,

matters related to going concern and using the going concern basis of accounting.
















economically


statements




Sally Bond

Director, Financial Audit Services


24 September 2020

SYDNEY


1.

a.

b.

c.

2.

3.

Mark Spittal Josh Carey

Acting Chief Executive

23 September 2020 23 September 2020

Executive Director Planning, Performance & Funding

Western NSW Local Health DistrictCertification of the Financial Statementsfor the year ended 30 June 2020

We are not aware of any circumstances which would render any particulars in the financial statements to be misleading or

inaccurate.

The financial statements exhibit a true and fair view of the financial position and the financial performance of the Western

NSW Local Health District; and

NSW Treasurer's Directions issued under the Act.

the requirements of the Public Finance and Audit Act 1983 (the Act), the Public Finance and Audit Regulation 2015 ;

and

Australian Accounting Standards (AAS) (which include Australian Accounting Interpretations);

The financial statements of the Western NSW Local Health District for the year ended 30 June 2020 have been prepared in

accordance with:

We state, pursuant to section 45F of the Public Finance and Audit Act 1983:

Western NSW Local Health DistrictStatement of Comprehensive Income for the year ended 30 June 2020


Actual Budget1


2020 2020 2019 2020 2019

Notes $000 $000 $000 $000 $000

Continuing operations

Expenses excluding losses

Employee related expenses 2 596,563 596,763 578,273 - -

Personnel services 3 - - - 571,451 543,647

Visiting medical officers 4 75,510 72,894 70,819 75,510 70,819

Other expenses 5 276,087 277,784 269,733 276,087 269,733

Depreciation and amortisation 6 57,882 57,220 50,164 57,882 50,164

Grants and subsidies 7 3,988 4,275 3,884 3,988 3,884

Finance costs 8 16,056 15,967 16,163 16,056 16,163

Payments to Affiliated Health Organisations 9 12,413 12,321 12,100 12,413 12,100

Total expenses excluding losses 1,038,499 1,037,224 1,001,136 1,013,387 966,510

Revenue

NSW Ministry of Health recurrent allocations 11 811,969 811,969 766,003 811,969 766,003

NSW Ministry of Health capital allocations 11 88,337 89,425 61,625 88,337 61,625

Acceptance by the Crown Entity of employee

benefits 15 25,112 25,091 34,626 - -

Sale of goods and services 12 - - 112,022 - 112,022

Sale of goods and services from contracts

with customers 12 109,227 111,972 - 109,227 -

Investment revenue 13 378 348 614 378 614

Grants and other contributions 14 66,114 63,941 36,095 66,114 36,095

Other income 16 4,547 2,528 6,580 4,547 6,580

Total revenue 1,105,684 1,105,274 1,017,565 1,080,572 982,939

Operating result 67,185 68,050 16,429 67,185 16,429

Gains / (losses) on disposal 17 70 - (162) 70 (162)

Impairment losses on financial assets 21 (283) (246) 32 (283) 32

Other gains / (losses) 18 (456) - - (456) -

Net result from continuing operations 37 66,516 67,804 16,299 66,516 16,299

Net result 66,516 67,804 16,299 66,516 16,299

Other comprehensive income

Items that will not be reclassified to net result

in subsequent periods

Changes in revaluation surplus of property,

plant and equipment 24 185,434 - - 185,434 -

Total other comprehensive income 185,434 - - 185,434 -

TOTAL COMPREHENSIVE INCOME 251,950 67,804 16,299 251,950 16,299



Western NSW Local Health DistrictStatement of Financial Position as at 30 June 2020


Actual Budget1


2020 2020 2019 2020 2019

Notes $000 $000 $000 $000 $000

ASSETS

Current assets

Cash and cash equivalents 20 6,973 5,873 9,997 6,973 9,997

Receivables 21 19,949 23,148 23,649 19,949 23,649

Inventories 22 3,510 3,053 3,053 3,510 3,053

Other financial assets 23 19,633 18,814 18,814 19,633 18,814

50,065 50,888 55,513 50,065 55,513

Non-current assets held for sale 26 96 552 552 96 552

Total current assets 50,161 51,440 56,065 50,161 56,065

Non-current assets

Receivables 21 10 30 30 10 30

Property, plant & equipment 24

- Land and buildings 1,194,342 1,015,474 939,112 1,194,342 939,112

- Plant and equipment 45,411 56,518 51,436 45,411 51,436

- Infrastructure systems 66,654 48,660 51,405 66,654 51,405

Total property, plant & equipment 1,306,407 1,120,652 1,041,953 1,306,407 1,041,953

Right-of-use assets 25 16,226 11,724 - 16,226 -

Total non-current assets 1,322,643 1,132,406 1,041,983 1,322,643 1,041,983

Total assets 1,372,804 1,183,846 1,098,048 1,372,804 1,098,048

LIABILITIES

Current liabilities

Payables 29 71,004 77,256 76,536 71,004 76,536

Contract liabilities 30 585 - - 585 -

Borrowings 31 7,643 5,585 2,126 7,643 2,126

Provisions 32 87,084 80,606 74,011 87,084 74,011

Other current liabilities 33 3,000 97 97 3,000 97

Total current liabilities 169,316 163,544 152,770 169,316 152,770

Non-current liabilities

Borrowings 31 171,275 169,729 162,402 171,275 162,402

Provisions 32 1,271 1,271 1,179 1,271 1,179

Other non-current liabilities 33 3,635 - - 3,635 -

Total non-current liabilities 176,181 171,000 163,581 176,181 163,581

Total liabilities 345,497 334,544 316,351 345,497 316,351 Net assets 1,027,307 849,302 781,697 1,027,307 781,697

EQUITY

Reserves 438,580 253,146 253,146 438,580 253,146

Accumulated funds 588,727 596,156 528,551 588,727 528,551 Total Equity 1,027,307 849,302 781,697 1,027,307 781,697



Western NSW Local Health DistrictStatement of Changes in Equity for the year ended 30 June 2020


Accumulated

Funds

Asset

Revaluation

Surplus Total

Notes $000 $000 $000

Balance at 1 July 2019 528,551 253,146 781,697

Changes in accounting policy 1(f) (6,340) - (6,340)

Balance at 1 July 2019 522,211 253,146 775,357




equipment 24 - 185,434 185,434

Total other comprehensive income - 185,434 185,434

Total comprehensive income for the year 66,516 185,434 251,950 Balance at 30 June 2020 588,727 438,580 1,027,307

Accumulated

Funds

Asset

Revaluation

Surplus Total

Notes $000 $000 $000

Balance at 1 July 2018 511,118 253,146 764,264

Changes in accounting policy (AASB 9) 164 - 164 Balance at 1 July 2018 511,282 253,146 764,428


Total Comprehensive Income for the Year 16,299 - 16,299

Transactions with owners in their capacity as owners

Increase / (decrease) in net assets from equity transfers 40 970 - 970 Balance at 30 June 2019 528,551 253,146 781,697


Western NSW Local Health DistrictStatement of Cash Flows for the year ended 30 June 2020


Actual Budget1


2020 2020 2019 2020 2019

Notes $000 $000 $000 $000 $000

CASH FLOWS FROM OPERATING

ACTIVITIES

Payments

Employee related (568,643) (571,653) (546,601) - -

Suppliers for goods and services (393,678) (390,975) (365,956) (393,678) (365,956)

Grants and subsidies (18,359) (18,554) (17,904) (18,359) (17,904)

Finance costs (16,056) (15,967) (16,163) (16,056) (16,163)

Personnel services - - - (568,643) (546,601)

Total payments (996,736) (997,149) (946,624) (996,736) (946,624)

Receipts

NSW Ministry of Health recurrent allocations 811,969 811,969 766,003 811,969 766,003

NSW Ministry of Health capital allocations 88,337 89,425 61,625 88,337 61,625

Reimbursements from the Crown Entity 10,903 10,903 10,489 10,903 10,489

Sale of goods and services 112,766 113,052 111,240 112,766 111,240

Interest received 504 348 614 504 614

Grants and other contributions 71,151 67,985 39,211 71,151 39,211

Other 37,569 36,199 40,008 37,569 40,008

Total receipts 1,133,199 1,129,881 1,029,190 1,133,199 1,029,190 NET CASH FLOWS FROM OPERATING

ACTIVITIES 37 136,463 132,732 82,566 136,463 82,566

CASH FLOWS FROM INVESTING

ACTIVITIES

Proceeds from sale of property, plant and

equipment 429 - 213 429 213

Proceeds from sale of financial assets 45,577 45,577 17,779 45,577 17,779

Purchases of property, plant and equipment (132,724) (132,044) (77,303) (132,724) (77,303)

Purchases of financial assets (46,397) (45,577) (30,933) (46,397) (30,933) NET CASH FLOWS FROM INVESTING

ACTIVITIES (133,115) (132,044) (90,244) (133,115) (90,244)

CASH FLOWS FROM FINANCING

ACTIVITIES

Repayment of borrowings and advances (2,126) (991) (1,595) (2,126) (1,595)

Payment of principal portion of lease liabilities (4,246) (3,821) - (4,246) - NET CASH FLOWS FROM FINANCING

ACTIVITIES (6,372) (4,812) (1,595) (6,372) (1,595)

NET INCREASE / (DECREASE) IN CASH

AND CASH EQUIVALENTS (3,024) (4,124) (9,273) (3,024) (9,273)

Opening cash and cash equivalents 20 9,997 9,997 19,270 9,997 19,270

CLOSING CASH AND CASH EQUIVALENTS 20 6,973 5,873 9,997 6,973 9,997




a)

*

*

b)


In alignment with the approach of other States and Territories, and following a recommendation by the National Cabinet of

Commonwealth, the 2020-21 NSW Budget has been deferred until 17 November 2020. On this basis, the Secretary of NSW

Health, the Chair of Western NSW Local Health District Board and the Chief Executive, through an interim Service Agreement,

have agreed to service and funding levels for the forward financial year. The interim Service Agreement provides for 48 per cent

of the LHD’s annual funding.

When the NSW Budget is handed down in November 2020-21, the interim Service Agreement and funding arrangements will

be replaced with a full-year 2020-21 Service Agreement and budget. The Service Agreement sets out the level of financial

resources for public health services under the District's control and the source of these funds. By agreement, the Service

Agreement requires local management to control its financial liquidity and in particular meet benchmarks for the payment of

creditors. Where the District fails to meet Service Agreement performance standards, the NSW Ministry of Health as the state

manager will take action in accordance with annual performance framework requirements, including financial support and

increased management interaction by the NSW Ministry of Health.

Western NSW Local Health DistrictNotes to and forming part of the Financial Statements


The Western NSW Local Health District (the District) was established under the provisions of the Health Services Act 1997 with

effect from 1 January 2011.

The District is a NSW Government entity and is controlled by the NSW Ministry of Health, which is the immediate parent. The

reporting entity is also controlled by the State of New South Wales (and is consolidated as part of the NSW Total State Sector

Accounts), which is the ultimate parent. The reporting entity is a not-for-profit entity (as profit is not its principal objective).



Reporting entity

The Western NSW Local Health District Special Purpose Service Entity, which was established as a Division of the District

on 1 January 2011 in accordance with the Health Services Act 1997. This Division provides personnel services to enable

the District to exercise its functions.

As a consequence the values in the financial statements presented herein consist of the parent entity and the consolidated

entity which comprises the parent and special purpose service entity. In the process of preparing the consolidated financial

statements consisting of the controlling and controlled entities, all inter-entity transactions and balances have been eliminated,

and like transactions and other events are accounted for using uniform accounting policies.

These consolidated financial statements for the year ended 30 June 2020 have been authorised for issue by the Acting Chief

Executive on 23 September 2020.

The parent entity comprises all the operating activities of the Hospital Facilities and the Community Health Centres under

its control. It also encompasses the Restricted Assets (as disclosed in Note 28), which, while containing assets which are

restricted for specified uses by the grantor or the donor, are nevertheless controlled by the parent entity.

The District's financial statements are general purpose financial statements which have been prepared on an accrual basis and

in accordance with applicable Australian Accounting Standards (AAS) (which include Australian Accounting Interpretations), the

requirements of the Health Services Act 1997 and its regulations (including observation of the Accounts and Audit

Determination for Public Health Organisations), the Public Finance and Audit Act 1983 (the Act) and the Public Finance and

Audit Regulation 2015, and the NSW Treasurer's Directions issued under the Act. The financial statements comply with the

NSW Treasury mandates circular for NSW General Government Sector Entities.




*

*

*

*

c)

d)

*

*

e)



amount of GST incurred by the District as a purchaser that is not recoverable from the Australian Taxation Office is

recognised as part of an asset's cost of acquisition or as part of an item of expense; and


Allocated funds, combined with other revenues earned, are adequate to pay debts as and when they become due and

payable.

The District has the capacity to review the timing of NSW Ministry of Health allocation cash flows to ensure that debts can

be paid when they become due and payable.

The District has developed an Efficiency and Improvement Plan (EIP) which identifies revenue improvement and cost

saving strategies. Benefits from the EIP are retained by the District and assist in meeting its overall budget target. The EIP

is monitored and evaluated by the NSW Ministry of Health throughout the financial year.


Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in respect

of the previous period for all amounts reported in the financial statements.


Property, plant and equipment, assets held for sale and certain financial assets and liabilities are measured at fair value. Other

financial statement items are prepared in accordance with the historical cost convention except where specified otherwise.

Judgements, key assumptions and estimations management has made are disclosed in the relevant notes to the financial

statements.


The financial statements and notes comply with Australian Accounting Standards which include Australian Accounting

Interpretations.


Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flows arising

from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified as

operating cash flows.

The Commonwealth has entered a National Partnership Agreement, in response to the COVID-19 pandemic, with States

and Territories, including NSW. The Agreement will deliver funding to public hospitals and provide stability and certainty of

funding while ensuring access to new life saving therapies in public hospitals. The District is subject to additional NSW

Ministry of Health recurrent and capital allocations to provide for costs incurred related to COVID-19 activities and to

ensure debts can be paid as and when they become due and payable.

Following the Novel Coronavirus (COVID-19) pandemic in late February 2020, the District has seen a decline in normal hospital

activities. Restrictions were imposed by the Australian Government resulting in the suspension of non-urgent elective surgeries

to ensure increased capacity across the health system. Critical resources were reassigned to plan and prepare for possible

surges as a result of the outbreak. The unprecedented measures undertaken by both the Australian and State governments to

contain the spread of COVID-19, have resulted in significant impacts to the economy and within the health sector.

All amounts are rounded to the nearest one thousand dollars and are expressed in Australian currency, which is the District's

presentation and functional currency.




f)


*

*

*

30 June 2020 30 June 2020 30 June 2020

AASB 15 Without

adoption of

AASB 15

Impact of

AASB 15

Notes $'000 $'000 $'000

Sale of goods and services from contracts 109,227 109,227 -

with customers

Grants and other contributions (a) 13,350 13,932 (582)

122,577 123,159 (582)

122,577 123,159 (582)

The District applied AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities, and

AASB 16 Leases for the first time. The nature and effect of the changes as a result of adoption of these new accounting

standards are described below.

Several other amendments and interpretations apply for the first time in 2019-20, but do not have an impact on the

financial statements of the District.



AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it applies,

with limited exceptions, to all revenue arising from contracts with customers. AASB 15 establishes a five-step model to

account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that

reflects the consideration to which the District expects to be entitled in exchange for transferring goods or services to a

customer.

AASB 15 requires the District to exercise judgement, taking into consideration all of the relevant facts and circumstances

when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the

incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard

requires relevant disclosures.

Revenue



cumulative effect of initially applying the standard recognised at the date of initial application, i.e. 1 July 2019. The District

has used the transitional practical expedient permitted by the standard to reflect the aggregate effect of all of the

modifications that occur before 1 July 2018 when:

The accounting policies applied in 2019-20 are consistent with those of the previous financial year except as a result of

new or revised Australian Accounting Standards that have been applied for the first time as follows:




Operating result

Net Result







30 June 2020 30 June 2020 30 June 2020

AASB 15 Without

adoption of

AASB 15

Impact of

AASB 15

Notes $'000 $'000 $'000

Liabilities

Other liabilities - 3 (3)

Contract liabilities (a) 585 - 585

585 3 582

(585) (3) (582)

(585) (3) (582)

(a)

*

*


Total liabilities

Equity

Accumulated funds

when the obligations under the transfer is satisfied, for transfers to enable an entity to acquire or construct a

recognisable non-financial asset that will be controlled by the District.


The reason for the changes in grants and other contributions is due to the non-recurring nature of grants and contributions

received and varying nature of performance obligations across grant contracts resulting in different timing of revenue

received.

AASB 1058 replaces most of the existing requirements in AASB 1004 Contributions. The scope of AASB 1004 is now

limited mainly to contributions by owners (including parliamentary appropriations that satisfy the definition of a contribution

by owners), administrative arrangements and liabilities of government departments assumed by other entities.

AASB 1058 applies to income with a donation component, i.e. transactions where the consideration to acquire an asset is

significantly less than fair value principally to enable a not-for-profit entity to further its objectives; and volunteer services.

AASB 1058 adopts a residual approach, meaning that entities first apply other applicable Australian Accounting Standards

(e.g. AASB 1004, AASB 15, AASB 16, AASB 9, AASB 137) to a transaction before recognising income.

Not-for-profit entities need to determine whether a transaction is/contains a donation (accounted for under AASB 1058) or

a contract with a customer (accounted for under AASB 15).




Income from grants were previously recognised upon receipt of cash. Under the new revenue recognition


good or service, is satisfied. This may be at a point in time or over time. This has led to the accrual of grant income

where the entity has satisfied its obligations promised in the contract with the customer.


cumulative effect of initially applying the standard at the date of initial application, i.e. 1 July 2019. The District has adopted

the practical expedient in AASB 1058 whereby existing assets acquired for consideration significantly less than fair value

principally to enable the District to further its objectives, are not restated to their fair value.

AASB 1058 requires recognition of receipt of an asset, after the recognition of any related amounts in accordance with

other Australian Accounting Standards, as income:





30 June 2020 30 June 2020 30 June 2020

AASB 1058 Without

adoption of

AASB 1058

Impact of

AASB 1058

Notes $'000 $'000 $'000

Grants and other contributions (a) 52,764 53,059 (295)

52,764 53,059 (295)

52,764 53,059 (295)

30 June 2020 30 June 2020 30 June 2020

AASB 1058 Without

adoption of

AASB 1058

Impact of

AASB 1058

Notes $'000 $'000 $'000

Other liabilities (a) 6,635 - 6,635

6,635 - 6,635

(6,635) - (6,635)

(6,635) - (6,635)

(a)

Liabilities



Revenue

Operating result


Income from grants to construct non-financial assets to be controlled by the entity were previously recognised upon


recognised over time as the non-financial assets are being constructed. This has led the accrual of grant income

where the entity has satisfied its obligations to construct the assets.

The reason for the changes in grants and other contributions is due to the timing of revenue received to construct non-

financial assets to be controlled by the entity.

AASB 16 Leases

AASB 16 supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease,

Interpretation 115 Operating Leases – Incentives and Interpretation 127 Evaluating the Substance of Transactions

Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation

and disclosure of leases and requires lessees to recognise most leases on the Statement of Financial Position.


Net Result



Total liabilities


Equity

Accumulated funds




*

*

*

*

*

*

not reassess whether a contract is, or contains, a lease at 1 July 2019, for those contracts previously assessed under

AASB 117 and Interpretation 4;


AASB 16 requires the District to account for all leases under a single on-balance sheet model similar to the accounting for

finance leases under AASB 117. As the lessee, the District recognises a lease liability and right-of-use asset at the

inception of the lease. The lease liability is measured at the present value of the future lease payments, discounted using

the interest rate implicit in the lease, or the lessee’s incremental borrowing rate if the interest rate implicit in the lease

cannot be readily determined. The corresponding right-of-use asset is measured at the value of the lease liability adjusted

for lease payments before inception, lease incentives, initial direct costs and estimates of costs for dismantling and

removing the asset or restoring the site on which it is located.

The District has adopted the partial retrospective option in AASB 16, where the cumulative effect of initially applying AASB

16 is recognised on 1 July 2019 and the comparatives for the year ended 30 June 2019 are not restated.

In relation to leases that had previously been classified as ‘operating leases’ under AASB 117, a lease liability is

recognised at 1 July 2019 at the present value of the remaining lease payments, discounted using the lessee’s incremental

borrowing rate at the date of initial application. The weighted average lessee’s incremental borrowing rate applied to the

lease liabilities on 1 July 2019 was 1.50%.

The corresponding right-of-use asset is initially recorded on transition at an amount equal to the lease liability, adjusted by

the amount of any prepaid or accrued lease payments relating to that lease recognised in the Statement of Financial

Position as at 30 June 2019.

The District elected to use the practical expedient to expense lease payments for lease contracts that, at their

commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases),

and lease contracts for which the underlying asset is valued at $10,000 or under when new (low-value assets).


Lessor accounting

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases as

either operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 does not have a significant

impact for leases where the entity is the lessor.

Lessee accounting

For leases previously classified as finance leases the District recognised the carrying amount of the lease asset and lease

liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of

initial application. The measurement principles of AASB 16 are only applied after that date.


relying on its previous assessment on whether leases are onerous immediately before the date of initial application as

an alternative to performing an impairment review;

not recognise a lease liability and right-of-use-asset for short-term leases that end within 12 months of the date of

initial application;





1 July 2019

$'000

-

-

15,362

15,362

15,362

15,362

-

-

1 July 2019

$'000

11,748

922

10,826

1.50%

10,593

(594)

(138)

48

5,659

(180)

(26)

15,362

The lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as of 30 June 2019 as follows:



Borrowings

Total liabilities

Equity

Accumulated funds

Total assets

The effect of adopting AASB 16 on the Statement of Financial Position as at 1 July 2019 (increase / (decrease)) is, as

follows:

Liabilities


Assets

Receivables

Right-of-use assets

The difference between the operating lease commitments disclosed in applying AASB 117 at the end of the annual

reporting period immediately preceding the date of initial application (i.e. 30 June 2019), discounted using the incremental

borrowing rate at the date of initial application; and lease liabilities recognised in the Statement of Financial Position at the

date of initial application (i.e 1 July 2019) is the result of:

* several operating leases being deemed out of scope at transition as they did not meet the criteria for recognition under

AASB 16; and

* renewal periods of leases being updated to reflect changed assumptions on lease terms.

Add: Lease payments relating to renewal periods not included in operating lease

commitments as at 30 June 2019

Add / (Less) : adjustments relating to differences in rental amounts, including changes in

the index or rate affecting variable payments


Operating lease commitments as at 30 June 2019 (GST included)

(Less): GST included in operating lease commitments

Operating lease commitments as at 30 June 2019 (GST excluded)

Weighted average incremental borrowing rate as at 1 July 2019

Discounted operating lease commitments as at 1 July 2019

(Less): commitments relating to short-term leases

Add / (Less) : contracts re-assessed as lease contracts


(Less): commitments including service charges




(ii)


The District has completed its impact assessment of AASB 1059 by reviewing all material arrangements where the private

sector is performing any services on behalf of the District. Any identified arrangements have been assessed whether it falls

within the scope of AASB 1059. If it does meet the scoping guidelines of AASB 1059, financial impacts were calculated.


AASB 1059 Service Concession Arrangements is applicable to public sector entities only and is effective for annual periods

beginning on or after 1 January 2020. This standard requires the grantor to recognise a service concession asset in a

service concession arrangement where it controls the asset. A corresponding financial liability and/or grant of right liability

is also recognised depending on the nature of the consideration exchanged. Service concession assets (including those

provided by the operator, an upgrade to or a major component replacement of an existing asset of the grantor; and existing

assets of the grantor – also applicable to previously unrecognised intangible assets except goodwill) are initially measured

at current replacement cost based on AASB 13 Fair Value Measurement principles. They are subsequently accounted for

under AASB 116 Property, Plant & Equipment or AASB 138 Intangible Assets. Service concession liabilities are initially

measured at the same amount as the service concession asset and subsequently measured using either the 'financial

liability' model applying AASB 9 Financial Instruments or, the 'grant of right' model under AASB 1059 Service Concession

Arrangements. AASB 1059 Service Concession Arrangements requires retrospective application.

The District plans to adopt the new accounting standards on the required effective date in line with the NSW Treasury’s

instructions.

Application Date



NSW public sector entities are not permitted to early adopt new Australian Accounting Standards, unless NSW Treasury

determines otherwise. The following new Australian Accounting Standards, excluding standards not considered applicable

or material to the District have not been applied and are not yet effective. The possible impact of these Accounting

Standards in the period of initial application includes:





2020 2019 2020 2019

$000 $000 $000 $000

Salaries and wages (including annual leave and ADO) 517,287 491,602 - -


Superannuation - defined contribution plans 46,153 44,098 - -

Long service leave 23,086 33,064 - -

Redundancies 768 459 - -

Workers' compensation insurance 5,979 5,283 - -

Fringe benefits tax 110 65 - -

596,563 578,273 - -



2020 2019 2020 2019

$000 $000 $000 $000

Salaries and wages (including annual leave and ADO) - - 517,287 491,602

Superannuation - defined contribution plans - - 46,153 44,098

Long service leave - - 1,154 2,140

Redundancies - - 768 459

Workers' compensation insurance - - 5,979 5,283

Fringe benefits tax - - 110 65

- - 571,451 543,647


Visiting medical officers (VMOs) enhance full-time medical specialist services by providing speciality input in a number of

disciplines throughout the District's hospitals. VMO expenses of $75,510 thousand (2019: $70,819 thousand) represent part of

the day-to-day running costs incurred in the normal operations of the District. These costs are expensed as incurred.

Personnel services of $998 thousand (2019: $904 thousand) have been capitalised in property, plant and equipment assets

and are excluded from the above.

Employee related costs of $998 thousand (2019: $904 thousand) have been capitalised in property, plant and equipment

assets and are therefore excluded from the above.

Personnel services of Western NSW Local Health District were provided by its controlled entity, Western NSW Local Health

District Special Purpose Service Entity.



5.


2020 2019 2020 2019

$000 $000 $000 $000

58 161 58 161

211 319 211 319

3,662 4,068 3,662 4,068

875 862 875 862

2,813 2,955 2,813 2,955

9,025 8,464 9,025 8,464

21,862 22,325 21,862 22,325

9,360 9,054 9,360 9,054

8,991 9,339 8,991 9,339

21,718 23,328 21,718 23,328

19,254 16,183 19,254 16,183

1,349 1,108 1,349 1,108

43,232 32,527 43,232 32,527

32,171 32,116 32,171 32,116

2,320 2,524 2,320 2,524

2,594 3,152 2,594 3,152

1,083 1,347 1,083 1,347

2,201 2,278 2,201 2,278

- 4,146 - 4,146

35,868 33,996 35,868 33,996

5,543 6,785 5,543 6,785

5,445 7,253 5,445 7,253

46,452 45,443 46,452 45,443

276,087 269,733 276,087 269,733

The majority of the costs in relation to drug supplies and medical and surgical supplies expenses relate to the consumption of

inventory held by the District.

Advertising

Auditor's remuneration - audit of financial statements

Blood and blood products

Consultancies

Contractors

Domestic supplies and services

Drug supplies

Food supplies

Fuel, light and power

Patient transport costs

Information management expenses

Postal and telephone costs

Printing and stationery

Rates and charges

Rental

Other expenses

Specialised services (Allied Health, Dental, Dialysis,

Imaging, Pathology)

Staff related costs

Travel related costs

Other (see Note 5(a))

Insurance

Maintenance (see Note 5(b))

Medical and surgical supplies

Motor vehicle expenses



5.


2020 2019 2020 2019

$000 $000 $000 $000

(a) Other

Contract for patient services 4,801 4,488 4,801 4,488

Corporate support services 7,874 7,782 7,874 7,782

Courier and freight 448 441 448 441

Isolated patient travel and accommodation

assistance scheme 5,092 4,768 5,092 4,768

Legal services 323 412 323 412

Membership/professional fees 145 164 145 164

Public private partnership contracted services 21,196 20,405 21,196 20,405

Quality assurance / accreditation 158 61 158 61

Security services 802 711 802 711

Motor vehicle operating lease expense - minimum

lease payments - 2,633 - 2,633

Other operating lease expense - minimum lease

payments - 254 - 254

Expenses relating to short-term leases 2,161 - 2,161 -

Expenses relating to leases of low-value assets 76 - 76 -

Other miscellaneous 3,376 3,324 3,376 3,324

46,452 45,443 46,452 45,443

(b) Reconciliation of total maintenance

Maintenance contracts 14,424 14,443 14,424 14,443

New / replacement equipment under $10,000 18,308 13,725 18,308 13,725

Repairs maintenance / non contract 10,444 4,359 10,444 4,359

Other 56 - 56 -

Maintenance expense - contracted labour and

other (non-employee related) in Note 5

43,232 32,527 43,232 32,527

Employee related/personnel services maintenance 4,989 4,917 4,989 4,917

48,221 37,444 48,221 37,444




5.

Maintenance expense

Operating expenses

●

●

Operating leases


Operating expenses generally represent the day-to-day running costs incurred in the normal operations of the District. These

costs are expensed as incurred. The recognition and measurement policy for non-employee related expenses is detailed in

Note 29.


Up to 30 June 2019, operating lease payments are recognised as an operating expense in the Statement of Comprehensive

Income on a straight-line basis over the lease term. An operating lease is a lease other than a finance lease.

Variable lease payments are not included in the measurement of the lease liability (i.e. variable lease payments that do not

depend on an index or a rate, initially measured using the index or rate as at the commencement date). These payments are

recognised in the period in which the event or condition that triggers those payments occurs.



Day-to-day servicing costs or maintenance are charged as expenses as incurred except where they relate to the replacement

or enhancement of a part or component of an asset, in which case the costs are capitalised and depreciated.

Lease expense

The District's insurance activities are conducted through the NSW Treasury Managed Fund (TMF) Scheme of self insurance for

government entities. The expense / (premium) is determined by the fund manager based on past claims experience. The TMF

is managed by NSW Self Insurance Corporation (SiCorp), a controlled entity of the ultimate parent.

Insurance


Leases that meet the definition of short-term. i.e. where the lease term at commencement of the lease is 12 months or

less. This excludes leases with a purchase option.

From 1 July 2019, the District recognises the lease payments associated with the following types of leases as an expense on a

straight-line basis:





2020 2019 2020 2019

$000 $000 $000 $000

Depreciation - buildings 40,122 35,922 40,122 35,922

Depreciation - plant and equipment 10,455 12,122 10,455 12,122

Depreciation - infrastructure systems 2,768 2,120 2,768 2,120

Depreciation - right-of-use buildings 2,171 - 2,171 -

Depreciation - right-of-use plant and equipment 2,366 - 2,366 -

57,882 50,164 57,882 50,164



2020 2019 2020 2019

$000 $000 $000 $000

Non-government organisations 2,110 2,043 2,110 2,043

Grants to research organisations 14 21 14 21

Grants paid to entities controlled by the immediate

parent149 58 149 58

Other grants 1,715 1,762 1,715 1,762

3,988 3,884 3,988 3,884


Refer to Note 24 Property, plant and equipment and Note 25 Leases for recognition and measurement policies on

depreciation.

Grants and subsidies expense generally comprise contributions in cash or in kind to various local government authorities and

not-for-profit community organisations to support their health-related objectives and activities. The grants and subsidies are

expensed on the transfer of the cash or assets. The transferred assets are measured at their fair value.



8. Finance costs


2020 2019 2020 2019

$000 $000 $000 $000

Interest expense from public private partnership 15,700 16,030 15,700 16,030

Interest expense from lease liabilities 241 - 241 -

Interest expense from financial liabilities at amortised

cost 115 133 115 133

16,056 16,163 16,056 16,163


9. Payments to Affiliated Health Organisations


2020 2019 2020 2019

$000 $000 $000 $000

Recurrent sourced

Lourdes Hospital and Community Services 10,333 10,049 10,333 10,049

St Vincent's Outreach Service 2,080 2,051 2,080 2,051

12,413 12,100 12,413 12,100


General operating expenses/revenues of Catholic Healthcare have only been included in the Statement of Comprehensive

Income prepared to the extent of the cash payments made to the Health Organisation concerned. The District is not deemed

to own or control the various assets/liabilities of the aforementioned Health Organisation and such amounts have been

excluded from the Statement of Financial Position. Any exceptions are specifically listed in the notes that follow.

Finance costs consist of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs are

recognised as expenses in the period in which they are incurred, in accordance with NSW Treasury’s mandate to not-for-profit

NSW General Government Sector entities.

Payments to non-government affiliated health organisations generally comprise contributions in cash or in kind. Non-

government affiliated health organisations support the NSW Ministry of Health's role of 'system manager' in relation to the

NSW public health system. The payments are expensed on the transfer of the cash or assets. The transferred assets are

measured at their fair value.



10. Revenue



Until 30 June 2019, income is recognised in accordance with AASB 111 Construction Contracts, AASB 118 Revenue and

AASB 1004 Contributions.

From 1 July 2019, income is recognised in accordance with the requirements of AASB 15 Revenue from Contracts with

Customers (AASB 15) or AASB 1058 Income of Not-for-Profit Entities (AASB 1058), dependent on whether there is a contract

with a customer defined by AASB 15.

Payments are made by the immediate parent as per the Service Agreement to the District and adjusted for approved

supplementations, mostly for salary agreements and approved enhancement projects. The Service Agreement between the

immediate parent and the District does not contain sufficiently specific enforceable performance obligations as defined by

AASB 15 and are therefore recognised upon the receipt of cash, in accordance with AASB 1058.

Interstate patient flows are funded through the NSW State Pool Account, based on activity and consistent with the price

determined in cross border agreements. The funding is also recognised as part of the NSW Ministry of Health recurrent

allocation from the immediate parent.

The District recognised additional NSW Ministry of Health recurrent allocations of $5,466 thousand and NSW Ministry of Health

capital allocations of $Nil to cover costs incurred with preparation, diagnosis and treatment of COVID-19 patients.

Deemed appropriation money is money received directly by the District which forms part of the consolidated fund and is not

appropriated to the District by an Act.

Under the GSF Act 2018, the District’s own source revenue (which includes but is not limited to receipts from NSW Ministry of

Health recurrent and capital allocations, patient fees, non-patient fees, grants and other contributions, other ancillary services,

proceeds from the sale of property, plant and equipment and the proceeds from the sale of financial assets) meets the

definition of deemed appropriation money under the GSF Act (Section 4.7).



12.



2020 2019 2020 2019

$000 $000 $000 $000

Pharmacy sales 191 211 191 211

Sale of prosthesis 1,604 1,521 1,604 1,521

Other 75 64 75 64

1,870 1,796 1,870 1,796

(b) Rendering of services comprise the following:

Patients

Patient Fees:

- Inpatient fees 54,981 56,077 54,981 56,077

- Nursing home fees 32 28 32 28

- Non inpatient fees 2,633 2,324 2,633 2,324

Department of Veterans' Affairs 6,524 7,643 6,524 7,643

Highly specialised drugs 10,960 10,816 10,960 10,816

Motor Accident Authority third party 3,160 4,266 3,160 4,266

Multi Purpose Service Centre fees 8,223 7,848 8,223 7,848

Patient transport fees 47 66 47 66

Enteral nutrition 4 3 4 3

Staff

Private use of motor vehicles 83 84 83 84

Meals and accommodation 254 273 254 273

General community

Cafeteria / kiosk 17 13 17 13

Clinical services (excluding clinical drug trials) 1,780 1,858 1,780 1,858

Commercial activities 139 146 139 146

Fees for conferences and training 9 14 9 14

Fees for medical records 66 57 66 57

Information retrieval 17 23 17 23

Meals on Wheels 235 176 235 176

Non-NSW Health entities

Services to other organisations 248 351 248 351

Entities controlled by the immediate parent

Hosted service revenues 234 237 234 237

Shared corporate service revenues 5 3 5 3

Other

Infrastructure fees - monthly facility charge 16,643 16,956 16,643 16,956

Other 1,063 964 1,063 964

107,357 110,226 107,357 110,226

109,227 112,022 109,227 112,022




Revenue from the sale of goods is recognised when the District transfers the significant risks and rewards of ownership of the

goods, usually on delivery of the goods.



12.


i.

ii.

iii.

iv.

v.


Revenue from rendering of services is recognised when the District satisfies the performance obligation by transferring the

promised services. Revenue is typically recognised as follows:


Revenue for highly specialised drugs is paid by the Commonwealth in accordance with the terms of the Commonwealth

agreement through Medicare and reflects the recoupment of costs incurred under Section 100 of the National Health Act

1953 for highly specialised drugs. The agreement provides for the provision of medicines for the treatment of chronic

conditions where specific criteria are met in respect of admitted day patients, non admitted patients or patients on

discharge. Revenue is recognised when the drugs have been provided to the patient.


A bulk billing agreement exists in which motor vehicle insurers' effect payment directly to NSW Health for the hospital

costs for those persons hospitalised or attending for inpatient treatment as a result of motor vehicle accidents. The District

recognises the revenue on an accrual basis from the time the patient is treated or admitted into hospital.




Revenue from the sale of goods is recognised when the District satisfies a performance obligation by transferring the promised

goods. Sale of goods comprises of pharmacy sales, sale of prosthesis and other items. The District typically satisfies its

performance obligations when the control of goods is transferred to the customer. The payments are typically due when

invoiced.

Revenue from these sales is recognised based on the price specified in the contract, and revenue is only recognised to the

extent that it is highly probable that a significant reversal will not occur. No element of financing is deemed present as the sales

are made with a short credit term. No volume discount or warranty is provided on the sale.

Patient fees are derived from chargeable inpatients and non-inpatients on the basis of rates specified by the NSW Ministry

of Health. Revenue is recognised on an accrual basis when the service has been provided to the patient.

Patient fees

Revenue is measured at the transaction price agreed under various contracts. No element of financing is deemed present as

payments are due when the service is provided.

Refer to Note 30 for the disclosure of the aggregate amount of the transaction price allocated to performance obligations that

are unsatisfied (or partially unsatisfied) at the end of the reporting period, and when the District expects to recognise the

unsatisfied portion as revenue.

An agreement is in place with the Commonwealth Department of Veterans' Affairs through which direct funding is provided

for the provision of health services to entitled veterans. For inpatient services, revenue is recognised by the District on an

accrual basis by reference to patient admissions. Non admitted patients are recognised by the NSW Ministry of Health in

the form of a block grant.


Specialist doctors with rights of private practice are subject to an infrastructure charge, including service charges where

applicable for the use of hospital facilities at rates determined by the NSW Ministry of Health.







2020 2019 2020 2019

$000 $000 $000 $000

Interest income from financial assets at amortised cost

378 614 378 614

378 614 378 614

Interest income


Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for

financial assets that subsequently become credit impaired. For financial assets that become credit impaired the effective

interest rate is applied to the amortised cost of the financial asset (i.e. after deducting the loss allowance for expected credit

losses).





2020 2019 2020 2019

$000 $000 $000 $000

Commonwealth government grants - 5,475 - 5,475


controlled by the immediate parent - 3,901 - 3,901


by the ultimate parent - 20,795 - 20,795


by the immediate parent - 488 - 488

Research grants - 30 - 30

Other grants - 4,142 - 4,142

Grants to acquire / construct a recognisable non-

financial asset to be controlled by the entity

Grants to acquire / construct non-financial asset 6,250 - 6,250 -

Other grants with sufficiently specific performance

obligations


controlled by the immediate parent 3,979 - 3,979 -

Clinical trials and research grants 513 - 513 -

Commonwealth government grants received for

community based services 5,114 - 5,114 -

Commonwealth government grants other 188 - 188 -

Grants from entities controlled by the ultimate parent

40 - 40 -

Other grants 3,479 - 3,479 -

Grants without specific performance obligations

Clinicals trial and research grants 20 - 20 -

Commonwealth government grants other 6 - 6 -


immediate parent 44,231 - 44,231 -

Other grants 1,421 - 1,421 -

Donations 873 1,264 873 1,264

66,114 36,095 66,114 36,095




- Chaplaincies and Pastoral Care

- Pink Ladies / Hospital Auxiliaries

- Patient Support Groups

- Community Organisations

- Health Education

Revenue from grants with sufficiently specific performance obligations is recognised when the District satisfies a performance

obligation by transferring the promised goods or services. The District typically receives grants in respect of research, clinical

drug trials and other community, health and wellbeing related projects. The District uses various methods to recognise

revenue over time, depending on the nature and terms and conditions of the grant contract. The payments are typically based

on agreed timetable or on achievement of different milestones set up in the contract.

Income from grants to acquire / construct a recognisable non-financial asset to be controlled by the District is recognised

when the District satisfies its obligations under the transfer. The District satisfies the performance obligation under the transfer

over time as the non-financial assets are being constructed. The percentage of cost incurred is used to recognise income,

because this most closely reflects the progress to completion.

Contributions are recognised at their fair value. Contributions of services are recognised when and only when a fair value of

those services can be reliably determined and the services would be purchased if not donated.

Revenue from these grants is recognised based on the grant amount specified in the funding agreement/funding approval,

and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of

financing is deemed present as funding payments are usually received in advance or shortly after the relevant obligation is

satisfied.

Receipt of these services, while important, is not recognised because typically such services would not have been purchased

if not donated.

Receipt of volunteer services is recognised when and only when the fair value of those services can be reliably determined

and the services would have been purchased if not donated. Volunteer services recognised are measured at fair value. The

District receives volunteer services for the below activities:

Volunteer services

Income from grants without sufficiently specific performance obligations is recognised when the District obtains control over

the granted assets (e.g. cash).

Refer to Note 30 for the transaction price allocated to the performance obligations that have not been satisfied at the end of

the year and when it is expected to be recognised as revenue.

- Counselling, Transport, Home Help and Patient Activities

- Practical Support to Patients and Relatives

- Patient Services, Fund Raising

- Patient and Family Support

Income from grants (other than contributions by owners) is recognised when the entity obtains control over the contribution.

The District is deemed to have assumed control when the grant is received or receivable.






15.


2020 2019 2020 2019

$000 $000 $000 $000


Long service leave provision 21,932 30,924 - -

25,112 34,626 - -

16. Other income


2020 2019 2020 2019

$000 $000 $000 $000

Other income comprises the following:

Bad debts recovered 1 2 1 2

Commissions 101 94 101 94

Discounts 18 111 18 111

Insurance refunds 486 453 486 453

Rental income

- other rental income 569 968 569 968

Sale of merchandise, old wares and books 123 132 123 132

Sponsorship 4 64 4 64

Treasury Managed Fund hindsight adjustment - 1,063 - 1,063

Other 3,245 3,693 3,245 3,693

4,547 6,580 4,547 6,580

Other Income




Other income includes rental income arising from operating leases which is accounted for on a straight-line basis over the

lease term under AASB 16 Leases. The rental income is incidental to the purpose for holding the property.

The gross amount of a liability forgiven by a credit provider is recognised by the borrower as other income.

Forgiveness of liabilities





2020 2019 2020 2019

$000 $000 $000 $000

Property, plant and equipment 16,303 11,116 16,303 11,116

Less: accumulated depreciation 15,944 10,741 15,944 10,741

Written down value 359 375 359 375

Less: proceeds from disposal 429 213 429 213

Gain / (Loss) on disposal of property, plant and

equipment

70 (162) 70 (162)

Right-of-use assets 25 - 25 -

Less: accumulated depreciation 6 - 6 -

Written down value 19 - 19 -

Less: lease liabilities extinguished 19 - 19 -

Gain / (Loss) on disposal of right-of-use assets - - - -

Financial assets 45,577 17,779 45,577 17,779

Less: proceeds from disposal 45,577 17,779 45,577 17,779

Gain / (loss) on disposal of financial assets - - - -

Total gains / (losses) on disposal 70 (162) 70 (162)

18. Other gains / (losses)


2020 2019 2020 2019

$000 $000 $000 $000

Impairment losses on assets held for sale (456) - (456) -

(456) - (456) -



● Note 21 Receivables

● Note 24 Property, plant and equipment

● Note 25 Leases


The District receives various types of grants and donations from different grantors / donors, some of which may not have

enforceable performance obligations. The District determines the grantor / donor expectations in determining the externally

imposed restrictions and discloses them in accordance with different types of restrictions. The types of restrictions and income

earned with restrictions are detailed in Note 28 Restricted assets.

Impairment losses may arise on non-financial assets held by the entity from time to time. Accounting for impairment losses is

dependent upon the individual asset (or group of assets) subject to impairment. Accounting Policies and events giving rise to

impairment losses are disclosed in the following notes:

● Note 26 Non-current assets held for sale





2020 2019 2020 2019

$000 $000 $000 $000

Cash at bank and on hand 6,973 3,864 6,973 3,864

Short term deposits - 6,133 - 6,133

6,973 9,997 6,973 9,997

Cash and cash equivalents (per Statement of

Financial Position) 6,973 9,997 6,973 9,997

Closing cash and cash equivalents (per Statement

of Cash Flows) 6,973 9,997 6,973 9,997

Cash and cash equivalent assets recognised in the Statement of Financial Position are reconciled at the end of the financial

year to the Statement of Cash Flows as follows:


For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash at bank, cash on hand, short-term

deposits with original maturities of three months or less, which are subject to an insignificant risk of changes in value.

HealthShare NSW, a controlled entity of the immediate parent makes all payments to employees and most payments to

suppliers of goods and services and grants and subsidies on behalf of the District. These payments are reported as expenses

and operating cash outflows in the financial statements of the District.

HealthShare NSW receives payments directly from the NSW Ministry of Health on behalf of the District to fund these

payments. These payments are reported as revenue (NSW Ministry of Health recurrent allocations) and operating cash

inflows in the financial statements of the District when HealthShare NSW makes these payments on behalf of the District.

Health Infrastructure, a controlled entity of the immediate parent makes most payments to purchase property, plant and

equipment on behalf of the District. These payments are reported as additions to property, plant and equipment and investing

cash outflows in the financial statements of the District.

Health Infrastructure receives payments directly from the NSW Ministry of Health on behalf of the District to fund these

payments. These payments are reported as revenue (NSW Ministry of Health capital allocations) and operating cash inflows in

the financial statements of the District.



21. Receivables


2020 2019 2020 2019

$000 $000 $000 $000

Current

Trade receivables from contracts with customers 5,250 - 5,250 -

Sale of goods and services - 5,657 - 5,657

Intra health receivables 3,910 5,699 3,910 5,699

Goods and Services Tax 5,638 5,572 5,638 5,572

Other receivables 3,589 3,634 3,589 3,634

Sub total 18,387 20,562 18,387 20,562

Less: Allowance for expected credit losses*


- Sale of goods and services - (161) - (161)


Sub total 18,228 20,386 18,228 20,386

Prepayments 1,721 3,263 1,721 3,263

19,949 23,649 19,949 23,649

(a)



Amounts written off during the year 275 - 275 -


net result¹

(271) - (271) -





Amounts recovered during the year - 2 - 2


net result¹

- (147) - (147)


Other receivables




net result (12) 186 (12) 186


(159) (176) (159) (176)






2020 2019 2020 2019

$000 $000 $000 $000

Non-current

Trade receivables from contracts with customers 63 - 63 -

Sale of goods and services - 62 - 62

Other receivables 33 54 33 54

Sub total 96 116 96 116

Less: Allowance for expected credit losses* - -


- Sale of goods and services - (62) (62)


Sub total 10 30 10 30

10 30 10 30

(a)



Amounts recovered during the year (1) - (1) -






net result¹

- 6 - 6


Other receivables




net result - (12) - (12)


(86) (86) (86) (86)






(b)



2020 2019 2020 2019

$000 $000 $000 $000

Patient fees - compensable 821 871 821 871

Patient fees - ineligible 244 262 244 262

Patient fees - inpatient & other 2,079 3,015 2,079 3,015

3,144 4,148 3,144 4,148

Consolidated Parent

2020 2020

$000 $000


8,930 8,930




Impairment

The current and non-current trade receivables from contracts with customers balances above include the following

patient fee receivables:

Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired are


All ‘regular way’ purchases or sales of receivables are recognised and derecognised on a trade date basis. Regular way

purchases or sales are purchases or sales of receivables that require delivery of assets within the time frame established by

regulation or convention in the marketplace.

For lease receivables, the District applies the simplified approach permitted by AASB 9 Financial Instruments, where the loss

allowance is based on lifetime ECLs.

For trade receivables, the District applies a simplified approach in calculating ECLs. The District recognises a loss allowance

based on lifetime ECLs at each reporting date. The District has established a provision matrix based on its historical credit

loss experience for trade receivables, adjusted for forward looking factors specific to the receivable.


through profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the

District expects to receive, discounted at the original effective interest rate.

The District holds receivables with the objective to collect the contractual cash flows and therefore measures them at

amortised cost using the effective interest method, less any impairment. Changes are recognised in the net result for the year

when impaired, derecognised or through the amortisation process.

Receivables are initially recognised at fair value plus any directly attributable transaction costs. Trade receivables that do not

contain a significant financing component are measured at the transaction price.



22. Inventories


2020 2019 2020 2019

$000 $000 $000 $000

Current

Drug supplies 1,734 1,452 1,734 1,452

Medical and surgical supplies 1,776 1,601 1,776 1,601

3,510 3,053 3,510 3,053


The cost of inventories acquired at no cost or for nominal consideration is the current replacement cost as at the date of

acquisition. Current replacement cost is the cost the District would incur to acquire the asset. Net realisable value is the

estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs

necessary to make the sale.

Inventories held for distribution are stated at cost, adjusted when applicable, for any loss of service potential. A loss of service

potential is identified and measured based on the existence of a current replacement cost that is lower than the carrying

amount. Inventories (other than those held for distribution) are stated at the lower of cost and net realisable value. Cost is

calculated using the weighted average cost method.


Market demand has increased the weighted average cost of inventories in medical and surgical supplies due to the outbreak

of COVID-19. Market demand for these items is expected to continue and as a result the carrying amount and current

replacement cost are aligned. At the 30 June 2020, the District has determined that it plans to use the remaining medical and

surgical supplies inventory in a relatively short time period, well before expiry, and there is no available alternative that is more

efficient or effective nor a likelihood of an alternative being on the market in the foreseeable future.



23. Other financial assets


2020 2019 2020 2019

$000 $000 $000 $000

Current


19,633 18,814 19,633 18,814



Impairment


Other financial assets are initially measured at fair value plus any transaction costs. Other financial assets include intra health

loans and deposits with a maturity of three months or more.

Other financial assets are classified and subsequently measured at amortised cost as they are held for collection of

contractual cash flows solely representing payments of principal and interest. Impairment losses are presented as a separate

line item in the Statement of Comprehensive Income. Any gain or loss arising on derecognition is recognised directly in net

results and presented in other gains / (losses) together with foreign exchange gains and losses.

The District uses the ratings from external credit rating agencies both to determine whether there has been a significant

increase in credit risk on the deposits and to estimate ECLs. These estimates are performed at every reporting date.


through profit or loss. ECLs are based on the difference between the contractual cash flows and the cash flows that the

District expects to receive, discounted at the original effective interest rate.

ECLs are recognised in two stages. For credit exposures where there has not been a significant increase in credit risk since

initial recognition, ECLs are based on default events possible within the next 12-months (i.e. a 12-month ECL). If there has

been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over

the remaining life of the exposure, irrespective of the timing of the default (i.e. a lifetime ECL). In addition, the District

considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

All ‘regular way’ purchases or sales of other financial assets are recognised and derecognised on a trade date basis. Regular

way purchases or sales are purchases or sales of other financial assets that require delivery of assets within the time frame

established by regulation or convention in the marketplace.


The District term deposits are issued by financial institutions that have strong credit ratings and therefore considered to be low

credit risk investments. Hence, the District measures the loss allowance for term deposits at an amount equal to a 12-month

ECL. However, when there is a significant increase in credit risk since origination, the allowance will be based on the lifetime

ECL.


Notes to and forming part of the Financial Statements


24.

(a)


Land and

Buildings

Plant and

Equipment¹

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2020



Net carrying amount 1,194,342 45,411 66,654 1,306,407

Land and

Buildings

Plant and

Equipment¹

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2019



Net carrying amount 939,112 51,436 51,405 1,041,953



1For non-specialised assets with short useful lives, recognition at depreciated historical cost is regarded as an acceptable

approximation of fair value, in accordance with Treasury Policy Paper 14-01.

The net carrying amount of privately financed project (PFP) assets included in land and buildings and infrastructure is

$509,433 thousand as at 30 June 2020 (30 June 2019: $454,491 thousand).




24.

(a)


Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000


Net carrying amount at beginning of year 939,112 51,436 51,405 1,041,953

Additions 111,897 12,564 8,263 132,724

Disposals - (359) - (359)


decrements 175,893 - 9,541 185,434


Reclassifications 7,562 (7,775) 213 -

Net carrying amount at end of year 1,194,342 45,411 66,654 1,306,407

Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000



Additions 69,582 5,627 2,166 77,375

Reclassification to assets held for sale (96) - - (96)

Disposals - (375) - (375)


Reclassifications 15,056 (14,997) (59) -

Net carrying amount at end of year 939,112 51,436 51,405 1,041,953









24.

(b)


Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2020



Net carrying amount 1,183,303 45,411 66,654 1,295,368

Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2019



Net carrying amount 928,253 51,436 51,405 1,031,094

Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000



Additions 111,897 12,564 8,263 132,724

Disposals - (359) - (359)


decrements 174,999 - 9,541 184,540


Reclassifications 7,562 (7,775) 213 -

Net carrying amount at end of year 1,183,303 45,411 66,654 1,295,368



A reconciliation of the carrying amount for each class of property, plant and equipment held and used by the entity is set

out below:





24.

(c)


Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2020

Gross carrying amount 28,839 - - 28,839

Less: accumulated depreciation and impairment 17,800 - - 17,800

Net carrying amount 11,039 - - 11,039

Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000

As at 30 June 2019

Gross carrying amount 28,277 - - 28,277

Less: accumulated depreciation and impairment 17,418 - - 17,418

Net carrying amount 10,859 - - 10,859

Land and

Buildings

Plant and

Equipment

Infrastructure

Systems Total

$000 $000 $000 $000


Net carrying amount at beginning of year 10,859 - - 10,859


decrements 894 - - 894

Depreciation expense (714) - - (714)

Net carrying amount at end of year 11,039 - - 11,039


A reconciliation of the carrying amount for each class of property, plant and equipment subject to an operating lease is set

out below:


Property, plant and equipment where the District is the lessor under operating leases





Land and buildings are owned by the Health Administration Corporation. Land and buildings which are operated/occupied by

the District are deemed to be controlled by the District and are reflected as such in the financial statements.

Where payment for an asset is deferred beyond normal credit terms, its cost is the cash price equivalent, i.e. the deferred

payment amount is effectively discounted over the period of credit.


Property, plant and equipment acquired are initially recognised at cost and subsequently revalued at fair value less

accumulated depreciation and impairment. Cost is the amount of cash or cash equivalents paid or the fair value of the other

consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount

attributed to that asset when initially recognised in accordance with the requirements of other Australian Accounting

Standards.


Health Administration Corporation, a controlled entity of the immediate parent, manages the approved major capital works

program for the NSW Ministry of Health and its controlled entities. Health Administration Corporation receives NSW Ministry of

Health Capital Allocations and grants on behalf of the District and makes payments to contractors and suppliers. Health

Administration Corporation initially records all costs incurred as work in progress or expenses and subsequently transfers to

the District. The costs are then accordingly reflected in the District financial statements. The District acquires most assets in

this manner.


Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at

measurement date.

Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition

(see also assets transferred as a result of an equity transfer - Note 40).

When a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a

replacement if the recognition criteria are satisfied.


The present value of the expected cost for the restoration or cost of dismantling of an asset after its use is included in the cost

of the respective asset if the recognition criteria for a provision are met.

Restoration costs

Property, plant and equipment assets costing $10,000 and above individually (or forming part of a network costing more than

$10,000) are capitalised.




24.

Useful lives

Buildings 40 years

Buildings - leasehold improvements 3-10 years

Plant and equipment 4-20 years

Infrastructure Systems 40 years





The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period and

adjusted if appropriate.

'Infrastructure Systems' comprises public facilities which provide essential services and enhance the productive capacity of

the economy including roads, bridges, water infrastructure and distribution works, sewerage treatment plants, seawalls and

water reticulation systems.

'Plant and equipment' comprises, among others, medical, computer and office equipment, motor vehicles, furniture and fittings

and PODS (a detachable or self-contained unit on ambulances used for patient treatment).


Depreciation is provided for on a straight-line basis for all depreciable assets so as to write off the depreciable amount of each

asset as it is consumed over its useful life to the District. Land is not a depreciable asset. All material identifiable components

of assets are depreciated over their useful lives.

Property, plant and equipment acquired under finance leases are depreciated over the asset’s useful life. However, if there is

no reasonable certainty that the lessee entity will obtain ownership at the end of the lease term, the asset is depreciated over

the shorter of the estimated useful life of the asset and the lease term.

Property, plant and equipment at 30 June 2019 includes non-current assets acquired under finance leases only. The assets

are recognised at fair value or, if lower, the present value of the minimum lease payments, at the inception of the lease.

Property, plant and equipment does not include amounts in respect of operating leases.

Until 30 June 2019, AASB 117 Leases (AASB 117) distinguished between finance leases that effectively transfer from the

lessor to the lessee substantially all the risks and rewards incidental to ownership of the leased assets, and operating leases

under which the lessor does not transfer substantially all the risks and rewards.

Subsequent to the adoption of AASB 16, the District, as a lessee, recognises a right-of-use asset at cost and a corresponding

lease liability at the lease commencement date. Right-of-use assets that do not meet the definition of investment properties

are included in Property, Plant and Equipment under the corresponding asset categories. Further information on right-of-use

assets is contained in Note 25.


Therefore, at that date property, plant and equipment recognised under leases previously treated as finance leases under

AASB 117 are derecognised. The right-of-use assets arising from these leases are recognised and included in the separate

line item together with those arising from leases previously treated as operating leases under AASB 117.

From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset for most leases. The

District has elected to present right-of-use assets separately in the Statement of Financial Position.





Revaluations are made with sufficient regularity to ensure the carrying amount of each asset in the class does not differ

materially from its fair value at reporting date. The District conducts a comprehensive revaluation at least every three years for

its land and buildings and infrastructure. Interim desktop revaluations are conducted between comprehensive revaluations for

those assets, where cumulative changes to indicators suggest fair value may differ materially from carrying value. The District

uses an independent professionally qualified valuer for such revaluations.

Privately financed project (PFP) assets accounted for under AASB 117 (until 30 June 2020)

For other assets valued using other valuation techniques, any balances of accumulated depreciation existing at the

revaluation date in respect of those assets are credited to the asset accounts to which they relate. The net asset accounts are

then increased or decreased by the revaluation increments or decrements.

Non-specialised assets with short useful lives are measured at depreciated historical cost, as an approximation of fair value.

The District has assessed that any difference between fair value and depreciated historical cost is unlikely to be material.

Due to the COVID-19 pandemic in early 2020, the District management performed an additional assessment to determine if

the fair value of its property plant and equipment as at 30 June 2020 materially differed from the carrying value. Management

concluded that there is no definitive or conclusive market evidence to support any material adjustments. No adjustments were

applied as a result.

Fair value of property, plant and equipment is based on a market participants’ perspective, using valuation techniques (market

approach, cost approach, income approach) that maximise relevant observable inputs and minimise unobservable inputs.

Also refer to Note 27 for further information regarding fair value.


Property, plant and equipment is measured at the highest and best use by market participant's that is physically possible,

legally permissible and financially feasible. The highest and best use must be available at a period that is not remote and

takes into account the characteristics of the asset being measured, including any socio-political restrictions imposed by

government. In most cases, after taking into account these considerations, the highest and best use is the existing use. In

limited circumstances, the highest and best use may be a feasible alternative use, where there are no restrictions on use or

where there is a feasible higher restricted alternative use.

Physical non-current assets are valued in accordance with the 'Valuation of Physical Non-Current Assets at Fair Value' Policy

and Guidelines Paper (TPP 14-01). This policy adopts fair value in accordance with AASB 13 Fair Value Measurement, AASB

116 Property, Plant and Equipment and AASB 140 Investment Property.


The District has adopted the option to not apply AASB 16 to assets that would be classified as service concession assets in

accordance with AASB 1059 Service Concession Arrangements: Grantors. The District continues to apply its existing

accounting policy to these assets until AASB 1059 is applied. In a privately financed project (PFP), a public-sector entity (the

grantor) arranges for the private sector (the operator) to design, finance and build infrastructure and provide associated

operational or management services for an agreed period (the service period). They are currently accounted for under TPP 06-

8 Privately Financed Projects. Some PFP assets are acquired under a finance lease and accounted for following the principles

of AASB 117 according to TPP 06-8.

Interim revaluations are conducted between comprehensive revaluations where cumulative changes to indicators suggest fair

value may differ materially from carrying value.




24.



Revaluation increments are recognised in other comprehensive income and credited to revaluation surplus in equity.

However, to the extent that an increment reverses a revaluation decrement in respect of the same class of asset previously

recognised as a loss in the net result, the increment is recognised immediately as a gain in the net result.

When revaluing non-current assets using the cost approach, the gross amount and the related accumulated depreciation are

separately restated. Where the income approach or market approach is used, accumulated depreciation is eliminated against

the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.


The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial

year end and adjusted if appropriate.

Where an asset that has previously been revalued is disposed of, any balance remaining in the revaluation surplus in respect

of that asset is transferred to accumulated funds.

After an impairment loss has been recognised, it is reversed only if there has been a change in the assumptions used to

determine the asset’s recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its

recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no

impairment loss been recognised for the asset in prior years. Such reversal is recognised in net result and is treated as a

revaluation increase. However, to the extent that an impairment loss on the same class of asset was previously recognised in

net result, a reversal of that impairment loss is also recognised in net result.

As a not-for-profit entity, an impairment loss is recognised in the net result to the extent the impairment loss exceeds the

amount in the revaluation surplus for the class of asset.

Specialised assets held for continuing use of their service capacity are rarely sold and their cost of disposal is typically

negligible. Their recoverable amount is expected to be materially the same as fair value, where they are regularly revalued

under AASB 13.

The District assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication

exists, or when annual impairment testing for an asset is required, the District estimates the asset’s recoverable amount.

When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down

to its recoverable amount.

As a not-for-profit entity with no cash generating units, impairment under AASB 136 Impairment of Assets is unlikely to arise.

As property, plant and equipment is carried at fair value or an amount that approximates fair value, impairment can only arise

in the rare circumstances such as where the costs of disposal are material.


Property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from

its use or disposal. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the

asset and are included in the consolidated Statement of Comprehensive Income.

As a not-for-profit entity, revaluation increments and decrements are offset against one another within a class of non-current

assets, but not otherwise.

Revaluation decrements are recognised immediately as a loss in the net result, except to the extent that it offsets an existing

revaluation surplus on the same class of assets, in which case, the decrement is debited directly to the revaluation surplus.



25. Leases


Land and

Buildings

Plant and

Equipment Total

$'000 $'000 $'000

10,521 4,841 15,362

452 4,967 5,419

1 - 1

- (19) (19)

(2,171) (2,366) (4,537)

8,803 7,423 16,226

Potential future cash outflows of $0.266 million have not been included in the lease liability because it is not reasonably

certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant

change in circumstances occurs which affects this assessment and that is within the control of the lessee.

During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extensions and

termination options was an increase in recognised lease liabilities and right-of-use assets of $Nil.


2020



Additions

Reassessments

Disposals


From 1 July 2019, AASB 16 Leases (AASB 16) requires a lessee to recognise a right-of-use asset and a corresponding lease

liability for most leases.

The District leases various property, medical equipment and motor vehicles. Lease contracts are typically made for fixed

periods of 1 to 30 years, but may have extension options. Lease terms are negotiated on an individual basis and contain a

wide range of different terms and conditions. The lease agreements do not impose any covenants but leased assets may not

be used as security for borrowing purposes. The District does not provide residual value guarantees in relation to leases.

Extension and termination options are included in a number of property and equipment leases. These terms are used to

maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are

exercisable only by the District and not by the respective lessor. In determining the lease term, management considers all

facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination

option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably

certain to be extended (or not terminated).

The District has elected to recognise payments for short-term leases and low value leases as expenses on a straight line

basis, instead of recognising a right-of-use asset and lease liability. Short-term leases are leases with a lease term of 12

months or less. Low value assets are assets with a fair value of $10,000 or less when new and comprise mainly of small office

and medical equipment items.

The following table presents right-of-use assets. There are no right-of-use assets that meet the definition of investment

property.






Total

$'000

15,362

5,419

241

(4,487)

(19)

16,516

Total

$'000

4,537

241

2,161

76

7,015

Terminations

Payments

Interest expenses

Additions


2020


Lease liabilities



2020


The following amounts were recognised in the Statement of Comprehensive Income for the year ended 30 June 2020 in

respect of leases where the District is the lessee:

Expenses relating to leases of low-value assets

Expenses relating to short-term leases

Interest expense on lease liabilities

Depreciation expense of right-of-use assets







Operating

leases

Finance

leases

2019 2019

$'000 $'000

5,268 -

6,334 -

146 -

11,748 -

922 -

10,826 - Total (excluding GST)

Less: GST recoverable from the Australian Taxation Office

The District entered into a 15 year lease with the Charles Sturt University for the use of a dental and oral health clinic. The

contract specifies lease payments of $Nil per annum. The leased premise is be used by the District to provide different

community health services. The community health buildings account for a small portion of the similar assets the District is

using for the purpose of providing community health services. Therefore it does not have a significant impact on the District's

operations.


Total (including GST)



Within one year




The District recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the

underlying assets, except for short-term leases and leases of low-value assets.

The District assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right

to control the use of an identified asset for a period of time in exchange for consideration.





i.

Useful lives

Buildings 1 to 30 years



ii.

The right-of-use assets are also subject to impairment. The District assesses, at each reporting date, whether there is an

indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is

required, the District estimates the asset’s recoverable amount. When the carrying amount of an asset exceeds its

recoverable amount, the asset is considered impaired and is written down to its recoverable amount. After an impairment

loss has been recognised, it is reversed only if there has been a change in the assumptions used to determine the asset’s

recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable

amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss

been recognised for the asset in prior years. Such reversal is recognised in the net result.

The right-of-use assets are subsequently measured at cost. They are depreciated on a straight-line basis over the shorter

of the lease term and the estimated useful lives of the assets, as follows:

If ownership of the leased asset transfers to the District at the end of the lease term or the cost reflects the exercise of a

purchase option, depreciation is calculated using the estimated useful life of the asset.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,

which is generally the case for real estate leases, the incremental borrowing rate is used. The District does not borrow

funds in the market. Instead they receive an allocation of the appropriations from the Crown Entity and where the Crown

Entity needs additional funding, Treasury Corporation (TCorp) goes to the market to obtain these funds. As a result, the

District is using TCorp rates as their incremental borrowing rates. These rates are published by NSW Treasury on a

regular basis.

Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred

to produce inventories) in the period in which the event or condition that triggers the payment occurs.

Lease liabilities

At the commencement date of the lease, the District recognises lease liabilities measured at the present value of lease

payments to be made over the lease term. Lease payments include:





● payments of penalties for terminating the lease, if the lease term reflects the District exercising the option to

terminate.

Right-of-use assets

The District recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is

available for use). Right-of-use assets are initially measured at the amount of initial measurement of the lease liability

(refer (ii) below), adjusted by any lease payments made at or before the commencement date, lease incentives, any initial

direct costs incurred, and estimated costs of dismantling and removing the asset or restoring the site.







(b) Entity as a lessor

The District applies the short-term lease recognition exemption to its short-term leases of buildings, machinery, motor

vehicles and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and

do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office

equipment that are considered to be low value. Lease payments on short-term leases and leases of low value assets are

recognised as an expense on a straight-line basis over the lease term.

An operating lease is a lease other than a finance lease. Operating lease payments were recognised as an operating expense

in the Statement of Comprehensive Income on a straight-line basis over the lease term.

Property, plant and equipment acquired under finance leases was depreciated over the useful life of the asset. However, if

there is no reasonable certainty that the District will obtain ownership by the end of the lease term, the asset was depreciated

over the shorter of the estimated useful life of the asset and the lease term.

Where a non-current asset was acquired by means of a finance lease, at the commencement of the lease, the asset was

recognised at its fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability was

established at the same amount. Lease payments were apportioned between finance charges and reduction of the lease

liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges were recognised

in finance costs in the Statement of Comprehensive Income.


The initial and subsequent measurement of right-of-use assets under leases at significantly below-market terms and

conditions that are entered into principally to enable the District to further its objectives is the same as normal right-of-use

assets. They are measured at cost, subject to impairment.

The District leases spaces located within the hospital precincts to a variety of non government organisations under operating

leases with rental payable monthly to quarterly. Lease payments generally contain uplift clauses to align to the market

conditions.


After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced

for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification,

a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in

an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the

underlying asset.

Until 30 June 2019, a lease was classified at the inception date as a finance lease or an operating lease. A lease that

transferred substantially all the risks and rewards incidental to ownership to the District was classified as a finance lease.

The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the

inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a

specific asset or assets and the arrangement conveys a right to use the asset (or assets), even if that asset (or those assets)

is not explicitly specified in an arrangement.




Future minimum rentals receivable (undiscounted) under non-cancellable operating lease as at 30 June 2020 are, as follows:

2020 2019

$'000 $'000

191 240

82 142

68 56

69 42

70 44

308 366

788 890

An operating lease is a lease other than a finance lease. Rental income arising is accounted for on a straight-line basis over

the lease terms and is included in revenue in the Statement of Comprehensive Income due to its operating nature. Initial direct

costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the underlying asset and

recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period

in which they are earned.


Finance income arising from finance leases is recognised over the lease term, based on a pattern reflecting a constant

periodic rate of return on the lessor’s net investment in the lease.

At the lease commencement date, the District recognises a receivable for assets held under a finance lease in its Statement

of Financial Position at an amount equal to the net investment in the lease. The net investment in leases is classified as

financial assets amortised cost and equals the lease payments receivable by a lessor and the unguaranteed residual value,

plus initial direct costs, discounted using the interest rate implicit in the lease.

Leases that the District transfers substantially all the risks and rewards incidental to ownership of an asset are classified as

finance leases. From 1 July 2019, subleases are classified by reference to the right-of-use asset arising from the head lease,

rather than by reference to the underlying asset.

Total (excluding GST)


Four to five years

Three to four years

Two to three years


Within one year




Lessor for finance leases






2020 2019 2020 2019

$000 $000 $000 $000

Assets held for sale

Land and buildings 96 552 96 552

96 552 96 552


These assets are not depreciated while they are classified as held for sale. Interest and other expenses attributable to the

liabilities of a disposal group classified as held for sale are continued to be recognised.

The District has certain non-current assets classified as held for sale, where their carrying amount will be recovered principally

through a sale transaction, not through continuing use. Non-current assets held for sale are recognised at the lower of carrying

amount and fair value less costs of disposal.

Non-current assets held for sale comprise land and buildings associated with properties in Warren, Orange and Molong.

These properties were assessed as surplus to the District's needs. During the year properties at Orange and Molong were

impaired as a result of their fair value less costs to dispose being less than the carrying amount. The expected timing and

manner of disposal for each property are still to be finalised as they are dependent on a variety of factors, such as potential

remediation works.




27.

●

●

●

(a)


Total Fair

Value

$000 $000 $000 $000

- 17,758 956,861 974,619

- - 53,082 53,082

- 96 - 96

- 17,854 1,009,943 1,027,797


Total Fair

Value

$000 $000 $000 $000

- 7,433 756,953 764,386

- - 41,903 41,903

- 552 - 552

- 7,985 798,856 806,841



market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to

sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a

principal market, in the most advantageous market for the asset or liability.

A number of the District’s accounting policies and disclosures require the measurement of fair values, for both financial and

non-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevant

observable inputs and minimises the use of unobservable inputs. Under AASB 13 Fair Value Measurement, the District

categorises, for disclosure purposes, the valuation techniques based on the inputs used in the valuation techniques as follows:

Level 1 – quoted (unadjusted) prices in active markets for identical assets / liabilities that the entity can access at the

measurement date.




2020



The District recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the

change has occurred.





2019














(b)

At the end of each reporting period a fair value assessment is made on any movements since the last revaluation, and a

determination as to whether any adjustments need to be made. These adjustments are made by way of application of

indices (refer Note 24 reconciliation).

The non-current assets categorised in (a) above have been measured as either level 2 or level 3 based on the following

valuation techniques and inputs:

For land, the valuation by the valuer is made on a market approach, comparing similar assets (not identical) and

observable inputs. The most significant input is price per square metre.

All commercial and non-restricted land is included in level 2 as these land valuations have a high level of observable

inputs although these lands are not identical.

All of the restricted land has been classified as level 3 as, although observable inputs have been used, a significant level

of professional judgement is required to adjust inputs in determining the land valuations. Certain parcels of land have

zoning restrictions, for example hospital grounds, and values are adjusted accordingly.

For buildings and infrastructure, many assets are of a specialised nature or use, and thus the most appropriate valuation

method is depreciated replacement cost. These assets are included as level 3 as these assets have a high level of

unobservable inputs. However, residential properties are valued on a market approach and included in level 2.

Non-current assets held for sale is a non-recurring item that is measured at the lower of its fair value less cost to sell or its

carrying amount. These assets are categorised as level 2.

For land, buildings and infrastructure systems the District obtains external valuations by independent valuers at least every

three years. The last revaluation was performed by CBRE Pty Ltd for the 2019-20 financial year. CBRE Pty Ltd is an

independent entity and is not an associated entity of the District.





(c)


Land and

Buildings

Infrastructure

Systems

Other

Assets

Total Level 3

Recurring

$000 $000 $000 $000

756,953 41,903 - 798,856

68,908 4,477 - 73,385

165,239 9,305 - 174,544

(37,355) (2,603) - (39,958)

3,116 - - 3,116

956,861 53,082 - 1,009,943

Land and

Buildings

Infrastructure

Systems

Other

Assets

Total Level 3

Recurring

$000 $000 $000 $000

790,799 43,940 - 834,739

(33,846) (2,037) - (35,883)

756,953 41,903 - 798,856


2019

2020






Additions








Reclassification





1 July 2019 2020

Opening Revenue Expense Closing

Category $000 $000 $000 $000

Community welfare - 17 15 2

Facility improvements 14,196 551 4,142 10,605

Patient welfare 1,547 356 121 1,782

Private practice disbursements (No.2 Accounts) 8,575 2,407 1,096 9,886

Public contributions 3,870 480 523 3,827

Research 143 861 679 325

Staff welfare 126 3 4 125

Training and education including conferences 404 43 2 445

28,861 4,718 6,582 26,997

Category

Community welfare


Patient welfare

Private practice disbursements

(No.2 Accounts)


Research

Staff welfare

Training and education including

conferences

Staff specialists’ private practice arrangements to improve the level of clinical services

provided.

Improvements such as medical needs, financial needs and standards for patients’ privacy

and dignity.

The District's financial statements include the following assets which are restricted for stipulated purposes and / or by externally

imposed conditions, eg. donor requirements. The assets are only available for application in accordance with the terms of the

donor restrictions. They consist of cash assets and rights and obligations to receive and make payments as at 30 June 2020.



Improvements to service access, health literacy, public and preventative health care.

Purpose





Unclaimed monies

All money and personal effects of patients which are left in the custody of the District by any patient who is discharged or dies

in the hospital and which are not claimed by the person lawfully entitled thereto within a period of twelve months are

recognised as the property of the District.

All such money and the proceeds of the realisation of any personal effects are lodged to the credit of the Samaritan Fund

which is used specifically for the benefit of necessitous patients or necessitous outgoing patients.



29. Payables


2020 2019 2020 2019

$000 $000 $000 $000

Current

Accrued salaries, wages and on-costs 21,820 17,692 - -

Taxation and payroll deductions 2,259 2,112 - -

Accrued liability - purchase of personnel services - - 24,079 19,804

Creditors 28,460 32,351 28,460 32,351

Other creditors

- Payables to entities controlled by the immediate

parent 4,067 11,158 4,067 11,158

- Other 14,398 13,223 14,398 13,223

71,004 76,536 71,004 76,536


Payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the

District. Gains and losses are recognised in the net result when the liabilities are derecognised as well as through the

amortisation process.

Subsequent measurement is at amortised cost using the effective interest method. Short-term payables with no stated interest

rate are measured at the original invoice amount where the effect of discounting is immaterial.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables are disclosed in

Note 41.

These amounts represent liabilities for goods and services provided to the District and other amounts. Payables are

recognised initially at fair value, net of directly attributable transaction costs.





2020

1 July 2019

adjusted for

AASB 15 2020

1 July 2019

adjusted for

AASB 15

$000 $000 $000 $000

Current

Contract liabilities 585 97 585 97

585 97 585 97

Consolidated Parent

2020 2020

$000 $000

Revenue recognised that was included in the contract

liability balance (adjusted for AASB 15) at the

beginning of the year 97 97

Transaction price allocated to the remaining

performance obligations from contracts with customers 1,277 1,277

2021 2022 2023 ≥ 2024

Specific revenue class $'000 $'000 $'000 $'000

Grants and other contributions 1,277 - - -

1,277 - - -

Contract liabilities relate to consideration received in advance from customers. The balance of the contract liabilities at the 30

June 2020 was impacted by the timing of payments received for grants and other contributions. The satisfaction of the specific

performance obligations within the contract hadn't been met at the 30 June 2020. Revenue from the contract liabilities will be

recognised when the specific performance obligations have been met.

The contract liability balance has significantly increased during the year because of the timing of payments received. These

payments relate to 5 separate grant agreements.

The transaction price allocated to the remaining performance obligations relates to the following revenue classes and is

expected to be recognised as follows:




31. Borrowings


2020 2019 2020 2019

$000 $000 $000 $000

Current

Other loans and deposits 625 607 625 607


Public Private Partnerships 2,131 1,519 2,131 1,519

7,643 2,126 7,643 2,126

Non-current



Public Private Partnerships 156,697 158,828 156,697 158,828

171,275 162,402 171,275 162,402




Final repayment of the Public Private Partnership borrowings is scheduled for September 2035.

Other loans and deposits still to be extinguished represent monies to be repaid to NSW Treasury, an entity controlled by the

ultimate parent.

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings are disclosed in

Note 41.

Borrowings classified as financial liabilities at amortised cost are initially measured at fair value, net of directly attributable

transaction costs. These are subsequently measured at amortised cost using the effective interest method. Gains and losses

are recognised in the net result when the liabilities are derecognised as well as through the amortisation process.

Finance lease liabilities are determined in accordance with AASB 117 Leases until 30 June 2019. From 1 July 2019, lease

liabilities are determined in accordance with AASB 16.

Borrowings are classified as current liabilities unless the District has an unconditional right to defer settlement of the liability for

at least 12 months after the reporting date. Refer to Note 41 (b) for derecognition policy.




(a)


2020 2019 2020 2019

$000 $000 $000 $000

Within one year 16,837 16,816 16,837 16,816


Later than five years 221,121 246,500 221,121 246,500

Minimum lease payments 308,707 334,573 308,707 334,573

Less: Future finance charges 149,879 174,226 149,879 174,226

Present value of minimum lease payments 158,828 160,347 158,828 160,347


2020 2019 2020 2019

$000 $000 $000 $000

Within one year 2,131 1,519 2,131 1,519


Later than five years 140,980 146,144 140,980 146,144

Present value of minimum lease payments

classified as: 158,828 160,347 158,828 160,347

Current 2,131 1,519 2,131 1,519

Non-current 156,697 158,828 156,697 158,828

158,828 160,347 158,828 160,347

In 2008/09, NSW Health requested a contract variation to expand the Orange Hospital and health facilities to

accommodate additional clincial services. Following the change procedures in the Project Deed and subsequently

government approval, the Project Deed was amended through the Deed of Amendment No 1. in June 2010.

Upon construction completion of the new facilities, including the Orange Hospital in March 2011, Western NSW Local

Health District (LHD) recognised these facilities as an asset of $162.1 million under the original PPP financing

arrangements. In addition, the District recognsied the liability to Pinnacle Healthcare, payable over the period to 2035 for

the construction of the new Orange Hospital, Orange Tertiary Mental Health and refurbished facilities.

In December 2007, a private sector company, Pinnacle Healthcare (OAHS) Pty Limited, was engaged to finance, design

and construct the new Orange Hospital and new health facilities including Orange Tertiary Mental Health and other

expansion works. Pinnacle would also refurbish existing buildings and provide facilities management services for these

hospital facilities and the new Bathurst Hospital under a Project Deed.

Minimum lease payments in relation to PPP finance leases recognised under AASB 117 Leases as required by TPP 06-08

are payable as follows:

The present value of PPP finance lease payments is as follows:

The Public, Private Partnership relate to the provision of service-enabling infrastructure that includes private sector

delivering a combination of design, construction, financing, maintenance, operations and delivery of clinical and non-

clinical services. Payments are made by the District to the private sector entities on the basis of delivery of assets or

service delivery. The liability to pay the private sector entities is based on financing arrangements involving Consumer

Price Index (CPI)-linked finance and fixed finance.

Public Private Partnership (PPP) finance leases under AASB 117 Leases





TCorp

borrowings

Other loans

and deposits Leases

Total liabilities

from financing

activities

$000 $000 $000 $000

1 July 2018 - 166,123 - 166,123

Cash flows - (1,595) - (1,595)

30 June 2019 - 164,528 - 164,528

Recognised on adoption of AASB 16 - - 15,362 15,362

1 July 2019 - 164,528 15,362 179,890

Cash flows - (2,126) (4,246) (6,372)

New leases - - 5,400 5,400

30 June 2020 - 162,402 16,516 178,918

Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above borrowings are





32. Provisions


2020 2019 2020 2019

$000 $000 $000 $000

Current


Annual leave - short term benefit 52,612 51,604 - -

Annual leave - long term benefit 11,767 6,832 - -


Provision for other employee benefits 3,585 2,017 - -


82,584 74,011 82,584 74,011

Other Provisions

Make good provision 4,500 - 4,500 -

4,500 - 4,500 -

Total current provisions 87,084 74,011 87,084 74,011

Non-current




Total non-current provisions 1,271 1,179 1,271 1,179

Provisions - current 82,584 74,011 - -

Provisions - non-current 1,271 1,179 - -

Accrued salaries, wages and on-costs, taxation and

payroll deductions (Note 29) 24,079 19,804 - -

Liability - purchase of personnel services - - 107,934 94,994

107,934 94,994 107,934 94,994





Other

Carrying amount at beginning of period - - - -

- Additional provisions recognised 4,500 - 4,500 -

Carrying amount at end of period 4,500 - 4,500 -




Salaries and wages (including non-monetary benefits) and paid sick leave that are expected to be settled wholly within 12

months after the end of the period in which the employees render the service are recognised and measured at the

undiscounted amounts of the benefits.

Annual leave and ADO are not expected to be settled wholly before 12 months after the end of the annual reporting period in

which the employees render the related service. As such, they are required to be measured at present value in accordance

with AASB 119 Employee Benefits (although short-cut methods are permitted).

Actuarial advice obtained by NSW Treasury, a controlled entity of the ultimate parent, has confirmed that using the nominal

annual leave balance plus the annual leave entitlements accrued while taking annual leave can be used to approximate the

present value of the annual leave liability. On-costs of 18.2% are applied to the value of leave payable at 30 June 2020

(comparable on-costs for 30 June 2019 were 18.2%). The District has assessed the actuarial advice based on the District’s

circumstances to both the annual leave and ADO and has determined that the effect of discounting is immaterial. All annual

leave and ADO are classified as a current liability even where the District does not expect to settle the liability within 12

months as the District does not have an unconditional right to defer settlement.

Unused non-vesting sick leave does not give rise to a liability as it is not considered probable that sick leave taken in the

future will be greater than the benefits accrued in the future.


The District's liability for long service leave and defined benefit superannuation (State Authorities Superannuation Scheme

and State Superannuation Scheme) are assumed by the Crown Entity, which is a controlled entity of the ultimate parent. The

District accounts for the liability as having been extinguished, resulting in the amount assumed being shown as part of the non-

monetary revenue item described as 'Acceptance by the Crown Entity of employee benefits'.


A provision has been recognised for a disputed contractual obligation that management expect to be settled in the next

financial year.

Movements in provisions (other than employee benefits)

Movements in other provisions during the financial year, other than employee benefits, are set out below:




Any provisions for restructuring are recognised only when the District has a detailed formal plan, and the District has raised a

valid expectation in those affected by the restructuring that it will carry out the restructuring by starting to implement the plan

or announcing its main features to those affected.

If the effect of the time value of money is material, provisions are discounted at a pre-tax rate that reflects the current market

assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the

provision due to the passage of time (i.e. unwinding of discount rate) is recognised as a finance cost.

Other provisions are recognised when: the District has a present legal or constructive obligation as a result of a past event; it

is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the

amount of the obligation. When the District expects some or all of a provision to be reimbursed, for example, under an

insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually

certain. The expense relating to a provision is presented net of any reimbursement in the Statement of Comprehensive

Income.

The superannuation expense for the financial year is determined by using the formulae specified in the Treasurer’s Directions.

The expense for certain superannuation schemes (i.e. Basic Benefit and First State Super) is calculated as a percentage of

the employee's salary. For other superannuation schemes (i.e. State Superannuation Scheme and State Authorities

Superannuation Scheme), the expense is calculated as a multiple of the employee's superannuation contributions.

Consequential costs to employment are recognised as liabilities and expenses where the employee benefits to which they

relate have been recognised. This includes outstanding amounts of workers’ compensation insurance premiums and fringe

benefits tax.


Long service leave is measured at the present value of expected future payments to be made in respect of services provided

up to the reporting date. Consideration is given to certain factors based on actuarial review, including expected future wage

and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using

the long-term Commonwealth Government bond rate at the reporting date.

Other provisions





2020 2019 2020 2019

$000 $000 $000 $000

Current

Unearned revenue - 97 - 97



3,000 97 3,000 97

Non-current



3,635 - 3,635 -


2020

$'000

-

6,340

6,340

6,545

6,250

6,635

Refer to Note 14 for a description of the District's obligations under transfers received to acquire or construct non-financial

assets to be controlled by the District.

Less: income recognised during the financial year

Closing balance of liabilities arising from transfers to acquire / construct non-financial assets to be

controlled by the entity

Opening balance of liabilities arising from transfers to acquire/construct non-financial assets to be controlled

by the entity

Add: adjustments upon initial application of AASB 1058

Adjusted opening balance

Add: receipt of cash during the financial year

Reconciliation of financial assets and corresponding liabilities arising from transfers to acquire or construct non-

financial assets to be controlled by the District.



34. Commitments



2020 2019 2020 2019

$000 $000 $000 $000

Within one year 47,756 94,582 47,756 94,582


Total (including GST) 55,925 129,926 55,925 129,926

(b)

35. Contingent liabilities and assets


Aggregate capital expenditure for the acquisition of land and buildings, plant and equipment and infrastructure systems,

contracted for at balance date and not provided for:


The total 'Capital expenditure commitments' of $55.9 million as at 30 June 2020 includes input tax credits of $5.1 million

that are expected to be recoverable from the Australian Taxation Office (2019 $11.8 million).

The 'Operating Lease Commitments (Entity as Lessor)' of $1.0 million as at 30 June 2020 includes taxable sales of $0.1

million that are expected to be payable to the Australian Taxation Office (2019: $0.1 million).

Output tax payable related to commitments for revenue

The District is not aware of any contingent liabilities or assets which would have a material effect on the disclosures in these




36. Trust funds


1 July 2019 30 June 2020

Opening equity Revenue Expense

Closing

equity

Category $'000 $000 $000 $'000

Patient Trust 291 400 (260) 431

Refundable Deposits 52 1 - 53

Private Patient Trust Funds - 9,274 (9,274) -



1 July 2018 30 June 2019

Opening equity Revenue Expense

Closing

equity

Category $'000 $000 $000 $'000

Patient Trust 450 259 (417) 291

Refundable Deposits 51 2 (0) 52

Private Patient Trust Funds - 9,581 (9,581) -



Category Purpose

Patient Trust

Refundable Deposits


Third Party Funds

Any amounts drawn down from trust funds under the private practice arrangements are not included in the key management

personnel compensation amounts or disclosed as a related party transaction in Note 42.

The District holds trust funds of $1.5 million (2019: $1.5 million) which are held for the safe keeping of patients' monies,

deposits on hired items of equipment and Private Practice Trusts.

These funds are excluded from the financial statements as the District cannot use them for the achievement of its objectives.

The following is a summary of the transactions in the trust account.




The revenue derived from private patient and other billable services provided by Staff

Specialists.

A sum of money held in trust on behalf of external parties, e.g. external foundations,

volunteer groups and auxiliaries.



37.


2020 2019 2020 2019

$000 $000 $000 $000

Net cash used on operating activities 136,463 82,566 136,463 82,566

Depreciation and amortisation expense (57,882) (50,164) (57,882) (50,164)

Allowance for impairment (283) 32 (283) 32

(Increase) / decrease in unearned revenue (295) (90) (295) (90)

Decrease / (increase) in provisions (8,666) (4,293) (8,666) (4,293)

Increase / (decrease) in prepayments and other assets

(3,234) 4,256 (3,234) 4,256

Decrease / (increase) in payables 1,287 (15,919) 1,287 (15,919)

Decrease / (increase) in contract liabilities (488) - (488) -

Impairment losses on assets held for sale recognised

in 'other gains / (losses)' (456) - (456) -

Net gain / (loss) on sale of property, plant and

equipment 70 (162) 70 (162)

Assets donated or brought to account (Note 38) - 73 - 73

Net result 66,516 16,299 66,516 16,299



2020 2019 2020 2019

$000 $000 $000 $000

Assets donated or brought to account - 73 - 73

Property, plant and equipment acquired by a lease 5,419 - 5,419 -

5,419 73 5,419 73






Net result


Cash flows

$000

Initial allocation, 1 July 2019 768,995

Award increases 12,947

Special Projects:

Child Protection 3,034

Oral Health 1,500

Nurse Strategy 1,093

Palliative Care 580

Research Grants 382

Rural Doctors Obstetric and Anaesthetic Incentive Grants 439

Mental Health, Drug & Alcohol 412

Other:

Aged Care 348

IPTAAS 2,046

Superannuation Adjustment 1,155

Joint Development Phase of Collaborative Commissioning 1,560

Miscellaneous 696

Medical Positions & Training 1,210

19/20 Budget Relief 15,035

Treasury Managed Fund 537


NSW Health's budget is shown at a consolidated level when presented in parliament each year (i.e. in the NSW Government

Budget Papers). The District's budget is not presented in parliament, therefore AASB 1055 Budgetary Reporting is not

applicable. Unlike the requirement in AASB 1055 Budgetary Reporting to present original budget information, the District's

financial statements present adjusted budget information. The adjusted budgeted amounts are drawn from the initial Service

Agreements between the District and the NSW Ministry of Health at the beginning of the financial year, as well as any

adjustments for the effects of additional supplementation provided in accordance with delegations to derive a final budget at

year end (i.e. adjusted budget). The budget amounts are not subject to audit and, accordingly, the relevant budget entries in

the financial statements are unaudited.

Total Assets were $189 million higher than the adjusted budget position, primarily reflective of the uplift in property, plant and

equipment as a result of revaluation of this asset class. Total Liabilities were $11 million higher than budget. The variance to

budget is largely reflected in higher than budgeted borrowings and provisions.

Net cash inflows from operating activities were $4 million higher than budget. This was primarily driven by increases in grants

and other contribution revenue. Net cash outflows from investing activities and financing activities were $3 million higher than

budget due to the scheduled maturation and reinvestment of term deposits, containing additional Restricted Financial Assets

monies, being higher than original estimate, coupled with borrowing repayments being higher than budget.

Movements in the level of the NSW Ministry of Health Recurrent Allocation that have occurred since the time of the initial

allocation on 1 July 2019 are as follows:

The actual Net Result was lower than adjusted budget by $1 million. Increased usage of visiting medical officers led to higher

expenses, with most other expense categories broadly in line with budget. Overall total revenue was aligned to budget.



40. Equity


(a)


(b)


2020 2019

$000 $000

(b) - (970)

- (970)


2020 2019

$000 $000

Liabilities

(b) - 970

Increase / (Decrease) in Net Assets From Equity Transfers - 970


Equity transfers

The transfer of net assets between entities as a result of an administrative restructure, transfers of programs/functions and

parts thereof between entities controlled by the ultimate parent are recognised as an adjustment to 'Accumulated Funds'. This

treatment is consistent with AASB 1004 Contributions and Australian Accounting Interpretation 1038 Contributions by Owners

Made to Wholly-Owned Public Sector Entities.

Transfers arising from an administrative restructure involving not-for-profit entities and for-profit government entities are

recognised at the amount at which the asset was recognised by the transferor immediately prior to the restructure. Subject to

below, in most instances this will approximate fair value.

All other equity transfers are recognised at fair value, except for intangibles. Where an intangible has been recognised at

amortised cost by the transferor because there is no active market, the District recognises the asset at the transferor's carrying

amount. Where the transferor is prohibited from recognising internally generated intangibles, the District does not recognise

that asset.


Nil


entities

An equity transfer was made between NSW Health entities to realign the annual leave liability to the current legal employer

as held in the payroll system (StaffLink) for various employment arrangements, including staff on rotation and

secondment. This has resulted in an increase in net assets of $0.970 million relating to the transfer of Annual Leave

provision balances to other NSW Health entities.

The category 'accumulated funds' includes all current and prior period retained funds.

Accumulated Funds

The revaluation surplus is used to record increments and decrements on the revaluation of non-current assets. This accords

with the District's policy on the revaluation of property, plant and equipment as discussed in Note 24.

Revaluation Surplus






Carrying

Amount

Carrying

Amount

2020 2019

Class Category $000 $000

Financial Assets

6,973 9,997

12,600 14,844

19,633 18,814


Financial Liabilities

178,918 164,528

68,745 74,424

Total Financial Liabilities 247,663 238,952

Notes


The Acting Chief Executive has overall responsibility for the establishment and oversight of risk management and reviews and

agrees policies for managing each of these risks. Risk management policies are established to identify and analyse the risks

faced by the District, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed on a continuous

basis.

The District's principal financial instruments are outlined below. These financial instruments arise directly from the District's

operations or are required to finance its operations. The District does not enter into or trade financial instruments, including

derivative financial instruments, for speculative purposes.

The District's main risks arising from financial instruments are outlined below, together with the District's objectives, policies and

processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout these


Payables (Note 29)²



Cash and cash equivalents (Note 20)

Receivables (Note 21)¹

Other Financial Assets (Note 23)

Amortised cost

Amortised cost

Amortised cost


1 Excludes statutory receivables and prepayments (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).

2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB 7 Financial Instruments: Disclosures).

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is

derecognised when the contractual rights to the cash flows from the financial assets expire; or if the entity transfers its

rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without

material delay to a third party under a pass through arrangement and either:


● The District has neither transferred nor retained substantially all the risks and rewards for the asset, but has transferred

control.

The District determines the classification of its financial assets and liabilities after initial recognition and, when allowed and

appropriate, re-evaluates this at each financial year end.






(d) Financial risk

i.

Collectability of trade receivables, other receivables and contract assets is reviewed on an ongoing basis. Procedures as

established in the Treasurer’s Directions are followed to recover outstanding amounts, including letters of demand.

The District applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected

loss allowance for all trade receivables and other receivables.

Credit risk arises when there is the possibility that the counterparty will default on their contractual obligations, resulting in a

financial loss to the District. The maximum exposure to credit risk is generally represented by the carrying amount of the

financial assets (net of any allowance for credit losses).

Credit risk arises from financial assets of the District, including cash, receivables and authority deposits. No collateral is

held by the District. The District has not granted any financial guarantees.

Credit risk associated with the District's financial assets, other than receivables, is managed through the selection of

counterparties and establishment of minimum credit rating standards. Authority deposits held with NSW TCorp are

guaranteed by the State.

The District considers a financial asset in default when contractual payments are 90 days past due. However, in certain

cases, the District may also consider a financial asset to be in default when internal or external information indicates that

the District is unlikely to receive the outstanding contractual amounts in full before taking into account any credit

enhancements held by the District.

Cash comprises cash on hand and bank balances deposited within the NSW Treasury banking system. Interest is earned

on daily bank balances at rates of approximately 0.00% (Restricted Funds Bank balance: 1.52%) in 2019-20 compared to

0.00% (Restricted Funds Bank balance: 2.31%) in the previous year.


To measure the expected credit losses, trade receivables and other receivables have been grouped based on shared credit

risk characteristics and the days past due.


Receivables - trade receivables and other receivables

Credit risk

When the District has transferred its rights to receive cash flows from an asset or has entered into a pass through

arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. Where the District has

neither transferred nor retained substantially all the risks and rewards or transferred control, the asset continues to be

recognised to the extent of the District's continuing involvement in the asset. In that case, the District also recognises an

associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and

obligations that the entity has retained.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. When

an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an

existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original

liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the net

result.

Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position if

there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net

basis, or to realise the assets and settle the liabilities simultaneously.





i.


30 June 2020 $'000 $'000 $'000 $'000 $'000 $'000



amount 1

7,340 749 197 51 598 8,935



30 June 2019 2

$'000 $'000 $'000 $'000 $'000 $'000



amount 1

7,972 511 312 138 474 9,407


Notes


Receivables - trade receivables and other receivables (continued)


The expected loss rates are based on historical observed loss rates. The historical loss rates are adjusted to reflect current

and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

The District has identified relevant factors, and accordingly has adjusted the historical loss rates based on expected

changes in these factors.

Trade receivables and other receivables are written off when there is no reasonable expectation of recovery. Indicators that

there is no reasonable expectation of recovery include, amongst others a failure to make contractual payments for a period

of greater than 90 days past due.

The loss allowance for trade receivables and other receivables as at 30 June 2020 and 30 June 2019 was determined as

follows:

The District is not materially exposed to concentrations of credit risk to a single trade debtor or group of debtors as at 30

June 2020.

¹ The analysis excludes statutory receivables and prepayments as these are not within the scope of AASB7 Financial Instruments: Disclosures.

Therefore the 'total' will not reconcile to the receivables total in Note 21.

2Prior year balances have been restated to include other receivables.





ii.


For other suppliers, where settlement cannot be affected in accordance with the above, e.g. due to short term liquidity

constraints, contact is made with creditors and terms of payment are negotiated to the satisfaction of both parties.

For small business suppliers, where payment is not made within the specified time period, simple interest must be paid

automatically unless an existing contract specifies otherwise.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced.

Until the 30 June 2019, amounts owing to suppliers (which are unsecured) are settled in accordance with the policy set by

the NSW Ministry of Health in accordance with NSW Treasury Circular 11/12. For small business suppliers, where terms

are not specified, payment is made not later than 5 days from the date of receipt of a correctly rendered invoice. For other

suppliers, if trade terms are not specified, payment is made no later than 30 days from the date of receipt of a correctly

rendered invoice or a statement is received. From 1 July 2019, amounts owing to suppliers (which are unsecured) are

settled in accordance with the policy set by the NSW Ministry of Health in accordance with NSW Treasury. For all suppliers,

that has a correctly rendered invoice, that has a matched purchase order and where goods have been received, an

immediate payment is made irrespective of current contract payment terms.

The District has exposure to liquidity risk. However, the risk is minimised by the service agreement with the NSW Ministry

of Health, as the annual service agreement requires local management to control its financial liquidity and in particular meet

benchmarks for the payment of creditors. Where the District fails to meet service agreement performance standards, the

Ministry as the state manager can take action in accordance with annual performance framework requirements, including

providing financial support and increased management interaction (refer Note 1).


Liquidity risk

Liquidity risk is the risk that the District will be unable to meet its payment obligations when they fall due. The District

continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high

quality liquid assets. The objective is to maintain a balance between continuity of funding and flexibility through the use of

overdrafts, loans and other advances.





ii.

EIR3

Nominal

Amount1

Fixed

Interest

Rate

Variable

Interest

Rate

Non -

Interest

Bearing < 1 Yr 1-5 Yr > 5Yr

% $000 $000 $000 $000 $000 $000 $000

68,745 - - 68,745 68,745 - -

2.9% 3,909 3,909 - - 722 2,395 792

1.8% 16,849 16,849 - - 4,917 9,942 1,990

8.6% 308,707 - 308,707 - 16,837 70,749 221,121

398,210 20,758 308,707 68,745 91,221 83,086 223,903

2019

74,424 - - 74,424 74,424 - -

2.9% 4,632 4,632 - - 722 2,721 1,189

9.1% 334,573 - 334,573 - 16,816 71,257 246,500

413,629 4,632 334,573 74,424 91,962 73,978 247,689

Notes:


- Public Private

Partnership



Payables:

2020



¹ The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities based on the earliest date on which

the District can be required to pay. The tables include both interest and principal cash flows and therefore will not reconcile to the Statement

of Financial Position.

2 Excludes statutory payables and unearned revenue (i.e. not within scope of AASB7 Financial Instruments: Disclosures).

Payables:

- Creditors 2

Borrowings:


- Public Private

Partnership

- Creditors 2

Borrowings:


- Lease liabilities




iii.

Interest Rate Risk

-1% 1% -1% 1%

Net result 1,523 (1,523) 1,357 (1,357)

Equity 1,523 (1,523) 1,357 (1,357)

(e) Fair value measurement

i. Fair value compared to carrying amount

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in market interest rates. Exposure to interest rate risk arises primarily through the District's interest bearing

liabilities. This risk is minimised by undertaking mainly fixed rate borrowings, primarily through NSW TCorp. The District

does not account for any fixed rate financial instruments at fair value through profit or loss or at fair value through other

comprehensive income. Therefore, for these financial instruments, a change in interest rates would not affect profit or loss

or equity. A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates (based on official

Reserve Bank of Australia interest rate volatility over the last five years). The basis will be reviewed annually and amended

where there is a structural change in the level of interest rate volatility.

20192020

$000 $000

Therefore the fair value of the financial instruments does not differ from the carrying amount.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

market prices. The District's exposures to market risk are primarily through interest rate risk on the District's borrowings

and other price risks associated with the movement in the Hour Glass Investment Facilities. The District has no exposure

to foreign currency risk and does not enter into commodity contracts.

The effect on net result and equity due to a reasonably possible change in risk variable is outlined in the information

below, for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after

taking into account the economic environment in which the District operates and the time frame for the assessment (i.e.

until the end of the next annual reporting period). The sensitivity analysis is based on risk exposures in existence at the

Statement of Financial Position date. The analysis is performed on the same basis as for 2019. The analysis assumes that

all other variables remain constant.

Market risk

However, the District is not permitted to borrow external to the NSW Ministry of Health (except energy loans which are

negotiated through NSW Treasury). Both NSW Treasury and NSW Ministry of Health loans are set at fixed rates and

therefore are generally not affected by fluctuations in market rates.



market participants at the measurement date. The fair value measurement is based on the presumption that the

transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in

the absence of a principal market, in the most advantageous market for the asset or liability.

The amortised cost of financial instruments recognised in the Statement of Financial Position approximates the fair value,

because of the short term nature of many of the financial instruments.







2020 2019

$000 $000

Short-term employee benefits 564 547

Post-employment benefits 50 48

614 595

(b)



(d)


●

●

● Various grants and subsidies towards research and other projects

Health Administration Corporation provides some specialised services which includes pathology related costs

The District's key management personnel comprise its board members and chief executive (or acting chief executive)

from time to time during the year.

During the financial year and comparative year, the District entered into the various transactions with other entities

consolidated as part of the NSW Ministry of Health (the immediate parent) and the NSW Total State Sector (the ultimate

parent) within the normal course of business.


Health Administration Corporation provides shared services for the majority of patient transport services, information

management services, domestic supplies and services, food supplies and corporate support services

During the financial year, Western NSW Local Health District obtained key management personnel services from the

immediate parent and incurred $0.382 million (2019: $0.373 million) for these services. This amount does not form part

of the key management personnel compensation disclosed above.

Compensation for the Minister for Health is paid by the Legislature and is not reimbursed by the NSW Ministry of Health

and its controlled entities. Accordingly no such amounts are included in the key management personnel compensation

disclosures above.

Remuneration for the Secretary and Deputy Secretaries are paid by the NSW Ministry of Health and is not reimbursed by

the health entities. Accordingly no such amounts are included in the key management personnel compensation

disclosures above.


The District leased office and residential accommodation from a superannuation fund and a property trust controlled by

one of its key management personnel. The leases are in accordance with standard market terms and conditions. The

total incurred during the period was $0.256 million (2019: $0.248 million).






●

●

●


● Revenue from recurrent and capital allocations

● Hosted Services Provided to Entities Controlled by Immediate Parent' revenue

was received from Far West Local Health District

● Shared Corporate Services' revenue was earned from Health Administration

Corporation, an entity controlled by the immediate parent

● Various grants and contributions towards research and other projects

● Discounts' revenue was received from Health Administration Corporation

● Rental income from Agency for Clinical Innovation, Clinical Excellence

Commission, Health Education and Training Institute and Health Administration

Corporation.


●

●

●

● Revenue from acceptance of long service leave liabilities and defined benefit

superannuation.Assets and liabilities as follows:

●

●

●

●

●

●

●

43.

Insurance costs


Legal and consultancy services

Interest income on TCorp Bank Term Deposit Investment facilities




Some terms deposits are invested with TCorp Bank Term Deposit Investment facilities

Energy Efficient Government Program loans are held with the Crown Finance Entity

Intra-health loans and advances

The majority of the construction of property, plant and equipment is managed and overseen by Health


The majority of capital commitments contracted but not provided for related to capital works overseen by the Health



Land and Buildings include land owned by the Health Administration Corporation but controlled by the District

Insurance refunds

Audit of the statutory financial statements

financial statements - nsw parliament

Documents