RCH FINANCIALS TEXT.indd

Annual Report THE ROYAL CHILDREN’S HOSPITAL 2004–2005 SUMMARY OF CONTENTS Our mission, our vision Year in review Members of the Board Executive staff Organisational chart Statutory statements Health information Financial statements 2 3 5 6 7 8 10 12 C O N TAC T The Royal Children’s Hospital Victoria, Australia, 3052 www.rch.org.au Flemington Road, Parkville Annual Report THE ROYAL CHILDREN’S HOSPITAL 2004–2005 Annual Report 2004–2005 1 Our mission, our vision This report is a reflection of VISION To be a great children’s hospital. CORE PRINCIPLES We are committed to : • Child focused/family centred care – acknowledging that an informed and delivery and patient outcomes Hospital (RCH). It outlines activities from 1 July 2004 to 30 June 2005. activities at The Royal Children’s consultative environment optimises care • Respecting children’s needs – recognising the clinical, social and developmental needs of each child • Striving to provide a pain free experience – minimising pain as much as possible • Care co-ordination – recognising that require a more integrated approach • Developing stronger partnerships – children with chronic conditions often acknowledging that enhanced relationships with GPs and community health agencies ensure a total care package for each child • Valuing each other. 2 Annual Report 2004–2005 Year in review The Royal Children’s Hospital (RCH) COMMUNITY SUPPORT After the devastating Boxing Day tsunami, 150 RCH staff offered their services on a voluntary basis to assist relief efforts. More recently RCH International entered into a non-exclusive agreement with World Vision government and Gadjah Mada University projects. • The Short Stay Unit adjacent to our expectations Emergency department exceeded experienced one of its busiest years ever, with clinical activity high in many areas, particularly Emergency, Neonatal Intensive Care and Paediatric Intensive Care. On behalf of the board, we thank all of our wonderful staff for their dedication and efforts in children and adolescents. tending to the needs and welfare of sick Everyone associated with the hospital was • The co-ordination of Animal Ethics transferred to MCRI • Projects in bed management, the transition of older patients to adult facilities and improving our relationships with GPs and Australia to advise and assist the Indonesian with several post tsunami re-development Following the tsunami the Victorian other service providers enhanced service delivery delighted with the announcement by Premier Steve Bracks that the Victorian government would build a new world class state of the community might have been excused for • The WellCONNECTED program also enabled hospital or recuperating art 340 bed children’s hospital in Parkville and committed $10m towards master planning the new facility. directing its philanthropic support towards victims who lost everything, however their Hospital resulted in yet another record of $10,082,647.20 being raised by the Good Friday Appeal this year. On behalf of the children of Victoria we commitment and love for The Royal Children’s students to continue their studies whilst in • The launch of a new Paediatric Trauma Service Manual and CD for emergency clinicians The government also committed more than $27m for interim works to improve the of the new hospital is expected. present facilities until 2011 when completion The RCH Service Plan, formally endorsed by core principles: • The Paediatric Emergency Transport Service and the RCH Safety Centre celebrated their 25th anniversaries respectively whilst our DHS in August 2004, includes the following lous support we receive each year and to the Good Friday Appeal patrons, organisers and sponsors, particularly The Herald Sun, generosity towards this appeal. Channel 7 and MIX 101.1 for their ongoing extend our heartfelt thanks for the marvel- in-house television program Macadamia celebrated its 10th birthday • The Family Resource Centre extended its • Child focused/family centred care – hours and continues to provide respite for each month acknowledging that an informed and delivery and patient outcomes more than 3000 parents, family and friends • Increased collaboration with the Eye & Ear Hospital around cochlear ear implants in infants consultative environment optimises care • Respect for children – recognising the development needs of each child as possible • Pain free care – minimising pain as much • Care co-ordination – recognising that require a more integrated approach • Developing stronger partnerships – ACHIEVEMENTS The Royal Children’s Hospital regained after nine years as part of Women’s & independent governance with its own board Children’s Health. Under the leadership of • Completion of stage one of our new Atlantic Philanthropies Research Precinct generously funded by children with chronic conditions often CEO has initiated an organisation wide review this new board over the last 12 months the resulting in a new structure and RCH • Sir William Deane, former Governor General launched the Mental Health Service children Charter of Rights for parents, carers and • Our Quality of Care report was again short-listed for the Annual Awards sponsored by DHS. executive team. year include: acknowledging that enhanced relationships with GPs and community health each child. agencies ensure a total care package for Other achievements throughout the • Re-development of new children’s cancer centre and neuroscience centre began development of a statewide service at the Alfred Hospital • New funding for scoliosis patients with the • A new paediatric lung transplant program Annual Report 2004–2005 3 PA R T N E R S Teaching and research are equally important the collaboration and contribution of the components at RCH so we again acknowledge 2004 RCH AWARD WINNERS The strength of The Royal Children’s Hospital lies in its staff. Each year at the annual meeting of the hospital, awards are presented to members of staff who are nominated by to the hospital in their chosen field. Gold Medal • Mr Alex Auldist, Senior Surgeon Chairman’s Medals RCH Foundation CONDOLENCES We extend sympathy to the families of the following who died during the year: of Plastic Surgery • John Sadler Barnett, former Director • Mary Patten, Director of Nursing from 1982 to 1994 • Michael Mitaros, Financial Controller CONCLUSION faces a busy and exciting future. Whilst we RCH had much to celebrate last year and it Murdoch Childrens Research Institute and in RCH’s success. the Universities of Melbourne and LaTrobe colleagues for their outstanding contribution S TA F F AC H I E V E M E N T S in the achievements of our staff particularly: • Mr Alex Auldist, Senior Surgeon, announced Victoria’s Senior Citizen of the Year in November As always we congratulate and take delight • Mr Brian Mallon, Executive Director, • Ms Gigi Williams, Department Head, Educational Resource Centre Laboratory Services • Dr Cathy Crock, Physician, Yvonne Wagner Award acknowledge that building works and master challenges over the next few years, we have • Professor Frank Oberklaid, Director of the Centre for Community Child Health appointed deputy chair of the newly planning for the new hospital will bring many every confidence that RCH staff will respond established Victorian Children’s Council • Dr Jill Sewell, Deputy Director of the Centre for Community Child Health who was appointed President of The Royal Australian College of Physicians and received an AO in January • Professor Paul Monagle, former Director pathologist to be appointed Head of with their usual dedication and commitment and continue to serve the children of Victoria as they have done so capably since 1870. • Ms Elizabeth Cassidy, Secretary, Team Award Child Development & Rehabilitation • Young People’s Health Service, Centre for Adolescent Health Dr William Snowball Award Laboratory Services as the first paediatric Pathology at the University of Melbourne • Dr Dominic Wilkinson, Paediatrician FA R E W E L L A N D T H A N K Y O U The Board and management thank the following long serving staff: • Joyce Alley our longest serving staff Pathology • Professor Dinah Reddihough, Director Child Development and Rehabilitation awarded an Honorary Officer AO in June • Ms Kay Gibbons, Manager of Nutrition and Food Services, one of four appointed the tion of Australia. first ever Fellows of the Dietitians Associa- member after 51 years of service in Speech • Lucy Cuddihy after 26 years outstanding nursing leadership and service to RCH our wonderful volunteers • Robyn Griffiths after 17 years co-ordinating • Sr Dianne Moore, much loved chaplain their families and our staff. after 18 years ministering to sick children, 4 Annual Report 2004–2005 Members of the Board CHAIRMAN M R TO N Y B E D D I S O N AO Mr Beddison is chairman of the Beddison Group, one of Australia’s leading recruitment firms which he founded in 1977, comprising Hoban Recruitment, CCS Technology Recruitchairman of Melbourne 2007 World Swimming Championships and was chair of the Australia Day Committee from 1999 until May 2004. M R PA T R I C K B U R R O U G H S Mr Burroughs is a chartered accountant and retirement in 1998. He now serves as a nonwas a senior partner with KPMG until his MR JOHN RIMMER Mr Rimmer was deputy secretary of the Department of Premier and Cabinet from health policy and more recently in the executive director on the boards of a number of organisations in both the commercial and not for profit sectors and most recently Health Service. 1992 to 1995. He has substantial experience in strategic use of information technology in the public and private sectors through his roles as founding executive director of ers and SACS Executive Solutions. He is acting served as chief financial officer of St Vincent’s Multimedia Victoria, as CEO of the National Office for the Information Economy, as a member of the Australian Health Information Council, as a principal of Joint Technology Australia Pty Ltd. Partners and as a director of Information City D R J U L I E C A L D E C OT T Dr Julie Caldecott is a senior manager in the Melbourne office of the Boston Consulting Group specialising in health and public sector as a medical practitioner. Dr Caldecott has a particular interest in workforce issues, strategy after initially training and working DEPUTY CHAIRMAN MR MAX BECK Mr Beck is executive chairman of Becton to the community. Mr Beck has past and Olympic Committee. M S L I N DA B E R RY Ms Berry is a senior partner with the legal firm of Minter Ellison and is also a nonexecutive director on the board of State experience in the health, finance and Corporation and has a lifetime of contribution continuing commitments with the Australian M S H E AT H E R S C OV E L L Ms Heather Scovell has a background in health and community services, and has initiatives in complex environments. cultural change and organisational design Dr Caldecott is also a non-executive director of the Transport Accident Commission. A S S O C I AT E P RO F E S S O R worked in senior management positions in community organisations, the state government and in local government. She is a past of Melbourne where she led planning and community activities in the city. She is a Alcohol Service, Youth Substance Abuse manager of Community Services at the City implementation of a wide range of social and board member at Turning Point Drug and Service and president of Arts Project Australia. C H R I S T I N E K I L PAT R I C K Associate Professor Christine Kilpatrick is executive director, Medical Services at Melbourne Health and chair of the Victorian Trustees Limited. Ms Berry has extensive technology sectors, including as a former Care Network. director of the Women’s & Children’s Health Quality Council. She was previously director of Ambulatory and Continuing Care, Melbourne Children’s Health Board. MR BARRY NOVY Mr Novy is managing director of Kliger Wood Real Estate, a Fellow of the Real Estate Institute of Chartered Accountants in Institute of Victoria and Associate of the Australia. Mr Novy chairs the Northwestern University Kellogg School of Management Alumni Association in Australia and is chair Health and a member of the Women’s & of The Royal Children’s Hospital Foundation. Annual Report 2004–2005 5 Executive staff Chief Executive Officer & Chief Financial Officer Mr Michael Rhook BBus MBA CPA Chief Medical Officer Dr Tony Cull MRCP (Paeds) Corporate Counsel Ms Elizabeth Kennedy BA LLB (Hons) LLM Grad Dip Medical & Health Law (Melb) Executive Nurse Advisor Ms Bobbie Carroll MNursStud BAppSci RM MRCNA Executive Director Human Resources Mr Frank Rog MBA DipBS DipIR Operations Manager Mr Steve Firman Bachelor Business Studies (accounting), CPA, AHSFMA Executive Director Clinical Analysis and Development Ms Mari-Ann Scott Executive Director Communications Ms Kate Dunstan BA GradDipMgt Board Secretary Mr Peter Bunworth B Ed MBA BEc (Hons) MPhil (Until 10 September 2004) General Services and Redevelopment Mr Alex Campbell BEc MHA CPA AFCHSE Manager Staff Summary The Royal Children’s Hospital full time equivalent (FTE) as at 30 June 2005 Nursing Services Administration/Clerical Ancilliary Support Services Medical Support Services Hotel/Allied Services Medical Officer Hospital Medical Officers Sessional Clinicians Total 2005 820 507 5 511 218 70 198 83 2,412 6 Annual Report 2004–2005 Organisational chart The Royal Children’s Hospital Board Shared Services Functions for RCH and RWH Chief Executive Officer RCH Executive Office • Educational Resource Centre • Engineering • Health Information • Human Resources • Library • Material Resources • Payroll • Redevelopment • Security • Transactional Finance • Board Secretary • Business Strategy • Clinical Support Services • Public Affairs • Principal Nursing Officer Specialist Services Division Division of Surgery Division of Medicine Community Division Laboratory Services Division Clinical and Administrative Support Services Annual Report 2004–2005 7 Statutory statements The Royal Children’s Hospital C O N S U LTAT I V E A R R A N G E M E N T S The following committees provide advice to Hospital: the Board of Directors of The Royal Children’s • Audit & Corporate Risk Management Committee • Community Advisory Committee • Ethics in Human Research Committee • Finance Committee • Intellectual Property Committee • Investment Committee • Primary Care & Population Health Advisory Committee • Quality Committee • Redevelopment Committee • Remuneration Committee. F R E E D O M O F I N F O R M AT I O N This organisation complies with the Victorian Freedom of Information (FOI) Act 1982 which provides members of the public the right to Children’s Hospital. gain access to information held by The Royal PRIVACY Cameron A Barnes, Manager of Health Information Services, is the RCH Privacy was re-established on July 1 2004, following the disaggregation of Women’s & Children’s Health. The hospital is directly accountable to the people of Victoria, through the Minister for Health, The Honourable Bronwyn Pike MP. Officer. Since the Health Records Act became been proactive in endeavouring to ensure all in the work place. In addition to regular legally binding on July 1 2002 the RCH has staff are aware of the Act and its implications presentations at staff orientation, there has RCH also conducts privacy presentations at POWERS AND DUTIES Children’s Hospital are prescribed by the Health Services Act. The powers and duties of The Royal been a steady flow of department education. volunteer orientation. These sessions continue to add to the solid foundation of N AT U R E A N D R A N G E O F S E RV I C E S The Royal Children’s Hospital provides a full range of paediatric clinical and surgical services, including neonatal care, cardiac, plastic and craniofacial, orthopaedic and neurosurgery, cancer and renal services and privacy knowledge in the hospital. The Access issues is still being used and general staff database developed for the logging of privacy enquiries continue in relation to privacy as well as occasional issues needing resolution. Invariably this involves discussion with the good outcomes for those involved. In hospital Consumer Liaison Officer to ensure summary, privacy has become part of the health promotion programs. It is the national paediatric heart transplant centre and is the trauma centre for Victoria, Tasmania and southern New South Wales. The hospital culture at The Royal Children’s and this will in place. continue with the current ongoing education is a major teaching and research centre with key partnerships with the University of Research Institute. Melbourne and the Murdoch Childrens N O M I N AT E D O F F I C E R S Freedom of Information Officer Medico-Legal Physician Requests Received Total Outcome Access Granted No Information Available Application Withdrawn 418 30 93 682 35 62 2004/05 541 2003/04 779 Ms Judith Smith Dr Colin Feekery 8 Annual Report 2004–2005 W H I S T L E B L OW E R S P ROT E C T I O N AC T This Act became law on 1 January 2002. The Royal Children’s Hospital has established a procedure to facilitate disclosures about improper conduct and provide protection for whistleblowers in accordance with the Act and the guidelines issued by the State O C C U PA T I O N A L H E A L T H A N D S A F E T Y Health and safety management systems of organisational risk, including the reand structures for the effective management establishment of the RCH Occupational Health and Safety Consultative Committee Ombudsman. Our Corporate Counsel is the of the Act. There have been no matters under the Act. and management of manual handling risks, organisation. Workplace behaviour and Protected Disclosure Officer for the purposes disclosed to date which qualify for protection have been progressively implemented in the cultural change has been enhanced with the development and implementation of a and staff education programme. COMPLIANCE The Royal Children’s Hospital has complied substantially with the Tax Compliance Framework Certification and Financial Management Compliance Framework Workplace Bullying and Harassment policy COMPLIANCE WITH BUILDING ACT are maintained at an appropriate level at The Royal Children’s Hospital. There is an annual budget allocation which supports the operational and maintenance activities and includes items associated with in keeping with, but not limited to, those scheduled within the Building Act. C O N S U LTA N C I E S There were two consultancies in excess of $113,280 for Corporate Services planning $100,000: Husdon Global Resources (Aus) P/L and reviews; and Billard Leece for Capital Works $236,300. Over the year, 90 other consultancies were employed for minor consultancy work. The RCH building and infrastructure services meeting current standards and requirements ments of the Victorian Public Sector Financial Management Compliance Framework for the year ended 30 June 2005. The Compliance October 2005. Framework will be met by the due date of 31st Certification in accordance with the require- E N V I RO N M E N TA L P E R F O R M A N C E The Royal Children’s Hospital holds all the licences required by environmental legislation and has procedures in place to ensure that the terms of these licences are complied with. Annual Report 2004–2005 9 Health information 2005 1. Elective Surgery Performance Category 1 Proportion of Patients Admitted Within 30 Days % Category 2 Proportion of Patients Admitted Within 90 Days % Average Waiting Time of Category 2 Patients (Days) Total Waiting List 2. Emergency Department Performance 2a. Triage Performance Category 1 Patients Receiving Immediate Attention % Category 2 Patients Receiving Attention Within 10 Minutes % Category 3 Patients Receiving Attention Within 30 Minutes % 2c. % Time on Hospital Bypass 100% 99.4% 35 2,105 2004 100% 100% 27 2,114 100% 84.43% 75.87% 100% 87.67% 76.36% 2b. % of Patients Requiring Admission who are Admitted Within 12 Hours 97.33% 99.15% N/A N/A Admitted Patients Separations Same Day Multi Day Total Separations Emergency Elective Other Including Maternity Total Separations Total WIES Total Bed Days Non Admitted Patients Emergency Department Presentations Outpatient Services – Occasions of Services Other Services – Occasions of Services Total Occasions of Service Victorian Ambulatory Classification System – Number of Encounters Acute Sub Acute Mental Health Other Total 14,604 19,486 34,090 14,877 19,176 37 34,090 36,633 92,593 Acute 42,563 116,508 63,603 222,674 67,089 Sub Acute - Mental Health - - 14,604 19,486 34,090 14,877 19,176 37 34,090 36,633 92,593 Total 42,563 Other - - 116,508 63,603 67,089 - 222,674 10 Annual Report 2004–2005 Financial Analysis of Operating Revenues and Expenses RCH 2005 $'000 Revenues Services Supported by Health Service Agreement Government Grants Indirect Contributions by Human Services Research and Program Grants Patient Fees Private Practice Fees Other Revenue Services Supported by Hospital and Community Initiatives Research and Program Grants Patient Fees Private Practice Fees Donations and Bequests Interest Property Income Other Revenue Expenses Consolidated 2005 $'000 205,017 3,619 775 7,087 5,198 4,400 226,096 1,083 689 9,997 8,481 956 499 7,007 28,712 205,017 3,619 775 7,087 5,198 4,400 226,096 2,569 689 9,997 16,911 3,302 814 7,577 41,859 Services Supported by Health Service Agreement Employee Entitlements Fee for Service Medical Officers Supplies and Consumables Other Expenses Services Supported by Hospital and Community Initiatives Employee Entitlements Fee for Service Medical Officers Supplies and Consumables Other Expenses Surplus/(Deficit) for the Year Before Capital Purpose Income, Depreciation, Amortisation and Specific Revenue and Expenses Capital Purpose Income Proceeds From Sale of Non Current Assets Written Down Value of Assets Sold Depreciation and Amortisation Net Surplus 174,468 912 25,699 32,699 233,778 12,495 379 729 10,538 24,141 (3,111) 174,468 912 25,699 32,719 233,798 14,493 379 789 12,852 28,513 5,643 31,450 97 (76) 19,031 (9,329) 38,245 106 (76) 34,501 (9,417) Annual Report 2004–2005 11 Financial statements THE ROYAL CHILDREN’S HOSPITAL 2004–2005 12 Annual Report 2004–2005 Accountable Officer’s, Chief Finance and Accounting Officer’s and Member of Responsible Body’s Certification We certify that the attached financial statements for The Royal Children’s Hospital and its Controlled Entities have been prepared in accordance with Part 4.2 of the Standing Directions of the Minister for Finance under the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards and other mandatory professional reporting requirements. We further state that, in our opinion, the information set out in the statement of financial performance, statement of financial position, statement of cash flows and notes to and year ended 30 June 2005 and the financial position of the Hospital as at 30 June 2005. financial statements to be misleading or inaccurate. The net result $19.031 million from ordinary for the year ended 30 June 2005. Income for Capital Purposes Capital Expenses Income Support DHS forming part of the financial statements, present fairly the financial transactions during the We are not aware of any circumstances which would render any particulars included in the activities includes the following components $'000 31,450 (9,329) 9,700 31,821 Net cashflows of $19.291 million from operating activities includes the following components. $'000 Capital Grants – Government Capital Income – Non Government 21,777 10,739 32,516 Mr Tony Beddison Chairperson The Royal Children’s Hospital Chief Executive Officer Dr Tony Cull Mr Michael Rhook The Royal Children’s Hospital The Royal Children’s Hospital Chief Finance and Accounting Officer Dated the 30th day of August 2005 at The Royal Children’s Hospital, Melbourne Annual Report 2004–2005 13 14 Annual Report 2004–2005 Statement of Financial Performance for the year ended 30 June 2005 (Note 1v) RCH Note REVENUE FROM ORDINARY ACTIVITIES EXPENSES FROM ORDINARY ACTIVITIES Employee Benefits Fee for Service Medical Officers Supplies and Consumables Depreciation and Amortisation Other Expenses from Ordinary Activities 2,2a 2005 $'000 286,355 Consolidated 2005 $'000 306,306 2b 2b 2b 2b,3 2b 186,963 1,291 26,428 9,329 43,313 267,324 188,962 1,291 26,488 9,417 45,647 271,805 34,501 187 187 NET RESULT FROM ORDINARY ACTIVITIES Increase in Asset Revaluation Reserve 1(e) 13a 19,031 - TOTAL REVENUES, EXPENSES AND VALUATION ADJUSTMENTS RECOGNISED DIRECTLY IN EQUITY TOTAL CHANGES IN EQUITY OTHER THAN THOSE RESULTING FROM CHANGES IN CONTRIBUTED CAPITAL 19,031 34,688 This Statement should be read in conjunction with the accompanying notes. Annual Report 2004–2005 15 Statement of Financial Position as at 30 June 2005 (Note 1v) RCH Note ASSETS Current Assets Cash Assets Receivables Inventory Prepayments Total Current Assets Non Current Assets Receivables Other Financial Assets Total Non Current Assets TOTAL ASSETS LIABILITIES Payables Property, Plant and Equipment 2005 $'000 Consolidated 2005 $'000 4 5 7 7,582 8,229 1,070 306 17,187 62,998 6,450 1,070 306 70,824 5 6 8 7,577 19,969 160,423 187,969 205,156 7,577 21,518 162,139 191,234 262,058 Current Liabilities Employee Benefits Other Liabilities Total Current Liabilities Non Current Liabilities Employee Benefits Other Liabilities Total Non Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY 9 11 12 21,307 22,932 766 45,005 21,994 23,136 929 46,059 Non Interest Bearing Liabilities 10 11 12 5,000 22,198 8,322 35,520 80,525 124,631 5,000 22,359 8,322 35,681 81,740 180,318 Asset Revaluation Reserve General Reserves Restricted Specific Purpose Reserve Contributed Capital Accumulated Surplus TOTAL EQUITY 13a 13a 13a,14 13b 13c 10,131 20,704 82,818 10,978 124,631 1,255 10,131 75,136 82,818 10,978 180,318 This Statement should be read in conjunction with the accompanying notes. 16 Annual Report 2004–2005 Statement of Cash Flows for the year ended 30 June 2005 (Note 1v) RCH Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts Government Grants Capital Grants – Government Capital Income – Non Government Patient Fees Private Practice Fees Donations and Bequests GST Recovered from ATO Consolidated 2005 $'000 2005 $'000 227,770 21,777 10,739 7,430 15,195 8,481 6,741 18,025 316,158 197,200 1,291 25,720 24,228 48,428 296,867 15 19,291 227,770 21,777 17,534 7,430 15,195 16,911 6,964 24,203 337,784 199,174 1,291 26,026 24,576 50,581 301,648 36,136 Other Payments Employee Benefits Fee for Service Supplies and Consumables GST Paid to ATO Other NET CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property, Plant and Equipment Proceeds from Sale of Property, Plant and Equipment Purchase of Investments Proceeds from Sale of Investments NET CASH FLOWS USED IN INVESTING ACTIVITIES (23,186) 96 (23,878) 13,819 (33,149) (23,448) 105 (23,878) 13,795 (33,426) CASH FLOWS FROM FINANCING ACTIVITIES NET CASH FLOWS FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD CASH AT 1 JULY 2004 CASH AT 30 JUNE 2005 4 Contributed Capital 2,500 2,500 (11,358) 18,940 7,582 2,500 2,500 5,210 57,788 62,998 This Statement should be read in conjunction with the accompanying notes. Annual Report 2004–2005 17 Notes to and forming part of the financial statements for the year ended 30 June 2005 Note 1 2 2a 2b 2c 2d 2e 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Statement of Accounting Policies Revenue Analysis of Revenue by Source Analysis of Expense by Source Patient Fees Sale of Non Current Assets Analysis of Expenses of Business Units Depreciation Cash Assets Receivables Other Financial Assets Inventory Property, Plant and Equipment Payables Non Interest Bearing Liabilities Employee Benefits Other Liabilities Equity and Reserves Restricted Specific Purpose Funds to Operating Results Reconciliation of Net Cash Flow From Operating Activities Page 19 23 24 25 27 27 27 28 28 29 30 30 31 32 32 33 33 34 35 35 36 38 39 39 40 40 41 43 Financial Instruments Commitments Superannuation Responsible Persons Related Disclosures Contingent Assets and Liabilities Remuneration of Auditors to The Royal Children’s Hospital Financial Reporting Standards Net Assets and Commitments Allocation of Women’s & Children’s Health Impacts of Adopting Australian Equivalents to International 18 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 : S TAT E M E N T O F AC C O U N T I N G P O L I C I E S (a) Rounding Off All amounts shown in the financial thousand dollars. (b) Accrual Basis (e) Going Concern The financial statements are prepared on a going concern basis. The net result $19.031 million from ordinary for the year ended 30 June 2005. Income for Capital Purposes Capital Expenses Income Support DHS (f) Principles of Consolidation statements are expressed to the nearest The assets, liabilities, revenues and expenses of the controlled entities of The Royal Children’s Hospital have been included activities includes the following components $'000 31,450 (9,329) 9,700 31,821 at the values shown in their audited annual financial statements. Any intra group transactions have been eliminated on consolidation. These financial statements have been prepared on the accrual basis whereby revenues and expenses are recognised when they are earned or incurred, and are brought to account in the period to which they relate recorded on a cash basis. (c) Historical Cost The consolidated financial statements the following controlled entities: include the audited financial statements of • The Royal Children’s Hospital Foundation Hospital Foundation Trust Funds Institute Limited and except for donations and bequests which are Net cashflows of $19.291 million from components. operating activities includes the following $'000 Capital Grants – Government Capital Income – Non Government 21,777 10,739 32,516 Limited as trustee for The Royal Children’s The financial statements have been prepared on the historical cost basis whereby assets are recorded at purchase price plus costs • The Royal Children’s Hospital Education • Communities that Care Limited. The Royal Children’s Hospital Foundation of The Royal Children’s Hospital because Limited is deemed to be a Controlled Entity incidental to their acquisition and do not take into account changing money values nor the current cost of non current assets (unless specifically stated). (d) Incorporation The Department of Human Services has an ongoing commitment to the provision of Children’s Hospital. health services to public patients at The Royal Specific initiatives include: • a commitment by the Department of Human Services to provide adequate cash Hospital to meet current and future period up to September 2006 historically The Royal Children’s Hospital activities. On the 29th June 2004 the Governor-inCouncil on the recommendation of the Minister for Health made orders under is the major beneficiary of it’s fundraising The Royal Children’s Hospital Education Section 248 of the Health Services Act 1988 of Women’s and Children’s Health to either The Royal Women’s Hospital or The Royal Children’s Hospital established under the from 1 July 2004. Institute Limited and Communities that Care Limited are deemed to be Controlled Entities because the majority of the entities’ board positions comprise RCH directors and senior management. of The Royal Children’s Hospital (RCH) which allocated property rights and liabilities flow support to enable The Royal Children’s obligations as and when they fall due for a • the continued work by the Department of Human Services on it’s Financial Sustainability Strategy orders as public health services with effect The total Net Assets of Women’s & Children’s The consolidated general purpose financial and its Controlled Entities have been statements of The Royal Children’s Hospital prepared in accordance with Part 4.2 of the Standing Directions of the Minister for Finance under the Financial Management Health as at 30 June 2004 included net assets contributed to The Royal Children’s Hospital of $103.1m. Refer to Note 22 for a detailed allocation of the Net Assets and Commitments of Women’s & Children’s Health as at 30 June 2004 to The Royal Children’s Hospital. • The Royal Children’s Hospital commitment to submit a Financial Recovery Plan that will assist in achieving a break even result over a period that has been agreed by the Hospital’s Board • The Royal Children’s Hospital Board’s Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards requirements. and other mandatory professional reporting commitment to achieve agreed budget Statement of Priorities in 2005–06. targets and all other requirements of the Annual Report 2004–2005 19 Notes to and forming part of the financial statements for the year ended 30 June 2005 Reporting Standards (IFRS) (g) Adoption of International Financial For reporting periods beginning on or after 1 January 2005, all Australian reporting entities are required to adopt the financial reporting requirements of the Australian equivalents to International Financial Reporting Standards (A-IFRS). ( j) Other Financial Assets and are classified between current and noncurrent assets based on The Royal Children’s Hospital Board’s intention at balance date with respect to the timing of disposal of each investment. Interest revenue from Investments are valued at market value Revaluation decrements are recognised except that, to the extent that a credit immediately as expenses in the net result, balance exists in the asset revaluation reserve are debited directly to the asset revaluation reserve. Revaluation increments and decrements are offset against one another within a class of non-current assets. (l) Depreciation in respect of the same class of assets, they The Royal Children’s Hospital has established A-IFRS, including training of staff and system it is earned. investments is brought to account when a project team to manage the transition to The investment portfolio of The Royal and internal control changes necessary to gather all the required information. The project team has analysed all of the Children’s Hospital is managed by the Victorian Funds Management Corporation through specialist fund managers and a holds the investments and conducts the specialist fund managers. Master Custodian. The Master Custodian settlements pursuant to instructions from (k) Revaluation of Non Current Assets Depreciable assets with a cost in excess of been provided over their estimated useful $1,000 are capitalised and depreciation has lives to The Royal Children’s Hospital using Directions to identify the accounting policy changes that will be required. The known or reliably estimable impacts on the financial report for the year ended 30 are set out in Note 23. (h) Receivables June 2005 had it been prepared under A-IFRS A-IFRS and A-IFRS Financial Reporting the straight-line method. This depreciation Human Services. charge is not funded by the Department of Depreciation rates are reviewed on an annual useful life of the asset. Subsequent to the initial recognition as assets, non-current physical assets, other than plant and equipment, are measured at basis and are adjusted to reflect the expected The following table indicates the expected the depreciation charges are based: Buildings Plant and Equipment Motor Vehicles Medical Equipment Non Medical Equipment Computers and Communications Furniture and Fittings up to 2 years up to 10 years up to 3 years up to 3 years up to 13 years fair value. Plant and equipment are measured at cost. Revaluations are made with sufficient of each asset does not differ materially from its fair value at reporting date. A formal valuation is conducted every three years, regularity to ensure that the carrying amount Receivables are recorded at the amounts expected to be ultimately collected in cash. In accordance with Acute Health Division Long Service Leave”, The Royal Children’s Hospital has recognised a non-current from services provided. Hospital Circular 16/2004, “Accounting for useful lives of non-current assets on which 2005 up to 40 years supplemented by annual reassessments for significant movements. Land and Buildings are considered as two separate classes of asset. Revaluations are conducted in receivable from DHS and non-cash revenue A provision for doubtful debts is raised based ing amounts at balance date. Doubtful debts which have been specifically provided for in previous years are recorded against the on a general and specific review of outstand- accordance with the Victorian Government Policy, Revaluation of Non-Current Physical Assets. Revaluation increments are credited directly to the extent that an increment reverses a (m) Payables These amounts represent liabilities for goods and services provided prior to the end of the financial year and which are unpaid. The normal credit terms are Nett 30 days. provision for doubtful debts. In all other cases, bad debts are written off as an expense. (i) Inventories to the asset revaluation reserve, except that, revaluation decrement in respect of that class of asset previously recognised as an expense immediately as revenue in the net result. in the net result, the increment is recognised Inventories are valued at the lower of cost and net realisable value. Cost is determined principally by the first-in, first-out method. 20 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 (n) Goods and Services Tax Revenues, expenses and assets are recognised net of GST except where the amount of GST incurred is not recoverable, in which case it is recognised as part of the cost of acquisition of an asset or part of an item of expense or the Australian Taxation Office (ATO) is Sick Leave Sick leave entitlements are non-vesting. at year end. Accordingly no provision is recognised (r) Leased Property and Equipment A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains all Superannuation revenue. GST receivable from and payable to The amount charged to the statement of included in the statement of financial nuation represents the contributions made by The Royal Children’s Hospital to Health Super Fund. Termination Benefits financial performance in respect of superan- such risks and benefits. Where a non-current position. The GST component of a receipt or asset is acquired by means of a finance lease, at the interest rate implicit in the lease. The current asset at the beginning of the lease payment is recognised on a gross basis in the statement of cash flows in accordance with Australian Accounting Standard AAS 28. (o) Employee Benefits the minimum lease payments are discounted discounted amount is established as a nonterm and is amortised on a straight-line basis ing liability is established and each lease component and the interest expense. Liabilities for termination benefits are recognised when a detailed plan for the expectation has been raised in those The provisions for employee benefits are termination has been developed and a valid employees affected that the termination will be carried out. The liabilities for termination benefits are recognised in other creditors is uncertain, in which case they are recognised as a provision. Employee Benefit On-Costs over its expected economic life. A correspond- based on the pay rates expected to apply as workcover and superannuation are Long Service Leave when the obligation is settled. On-costs such included in the calculation of leave provisions. The provision for Long Service Leave is payment is allocated between the principal Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are charged are incurred. unless the amount or timing of the payment determined in accordance with AASB 1028. Generally, the entitlement under various awards becomes payable upon completion of ten years’ service. The proportion of Long the next financial year is included in the Service Leave estimated to be payable within Statement of Financial Position under current liabilities. The balance of the provision is measured at the present value of the employees’ service to date. and Accrued Days Off included under non-current liabilities and is estimated future cash outflows arising from Salaries and Wages, Annual Leave against revenue in the periods in which they (s) Revenue Recognition Employee benefit on-costs are recognised and included in employee benefit liabilities and they relate are recognised as liabilities. (p) Borrowing Costs costs when the employee benefits to which Revenue is recognised in accordance with AAS15. Income is recognised as revenue to unearned income at reporting date, it is reported as income in advance. Government Grants the extent that it is earned. Should there be Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of qualifying assets. Borrowing costs include: • Interest on bank overdrafts and short-term and long-term borrowings; and • Finance charges in respect of finance leases recognised in accordance with Australian Accounting Standard AAS17 “Accounting Grants are recognised as revenue when The Royal Children’s Hospital gains control of the cal, revenue is recognised as performance underlying assets. Where grants are recipro- occurs under the grant. Non-reciprocal grants are recognised as revenue when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant. Liabilities for salaries and wages, annual leave and accrued days off are recognised, and measured at the amount unpaid at the reporting date in respect of employees’ for Leases”. services up to the reporting date and are paid when the liabilities are settled. measured at the amounts expected to be Inter-Entity Transactions (q) Inter-Segment and Transactions between the hospital and it’s reflect the extent of the Health Service’s operations as a group. controlled entities have been eliminated to Annual Report 2004–2005 21 Notes to and forming part of the financial statements for the year ended 30 June 2005 Indirect Contributions • Insurance is recognised as revenue of Human Services. (u) Services Supported by Health Services Hospital and Community Initiatives Agreements and Services Supported by following advice from the Department The activities classified as services supported tially funded by the Department of Human by Health Services Agreement are substan- • Long Service Leave revenue is recognised upon finalisation of movements in Long Service Leave liability in line with the Division Hospital Circular 16/2004. Patient Fees and Private Practice Fees Services, while services supported by Health arrangements set out in the Acute Health Service and Community Initiatives are funded by the Health Service’s own activities or local initiatives. (v) Comparative Information Patient fees and private practice fees are are raised. recognised as revenue at the time invoices Donations and Other Bequests Council on the recommendation of the Minister for Health made orders under On the 29th June 2004 the Governor-in- Donations and bequests are recognised as Section 248 of the Health Services Act 1988 of Women’s & Children’s Health to either revenue when the cash is received. Donations also include money receivable by controlled they may be appropriated to a specific purpose reserve. (t) Fund Accounting entities. If donations are for a special purpose which allocated property rights and liabilities The Royal Women’s Hospital or The Royal Children’s Hospital established under the from 1 July 2004. orders as public health services with effect As the order has effect from 1 July 2004 no comparative data is reported. (w) Contingent Asset and Contingent Liability Consistent with AASB 1044 “Provisions, Contingent Liabilities and Contingent Assets”, The Royal Children’s Hospital discloses both contingent assets and contingent liabilities. present value using the pretax rate that The Royal Children’s Hospital operates on a fund accounting basis in accordance with guidelines. Department of Human Services accounting The Royal Children’s Hospital maintains three In essence, the operating fund comprises revenue derived from DHS for providing such services, the specific purpose fund funds: operating, specific purpose and capital. All contingencies will be discounted to their reflects current market assessments of the contingencies. services and the costs incurred in providing comprises earnings from other government from fundraising activities, and the capital time value of money and risks specific to the (x) Asset Revaluation Reserve and non-government sources and donations fund comprises receipts for funding capital expenditure. Specific purpose funds comprise and those that are unrestricted (SPFI). those that are restricted as to their use (SPFR) The asset revaluation reserve is used to record tion of non-current assets. (y) Contributed Capital increments and decrements on the revalua- Consistent with UIG Abstract 38, “Contribu- tions by Owners Made to Wholly-Owned Public Sector Entities”, and Accounting and Financial Reporting Directions 2, “Contributed Capital”, transfers that are in the nature of contribu- tions or distributions, have been designated as contributed capital. 22 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 2 : R E V E N U E HSA Note Revenue from Operating Activities Recurrent Government Contributions Department of Human Services Indirect Contributions by Human Services Insurance Long Service Leave Research and Program Grants Patient Fees Private Practice Fees Donations and Bequests Other Capital Purpose Income 2c 2,838 781 775 7,087 5,198 4,400 1,083 689 9,997 8,481 4,530 2,838 781 1,858 7,776 15,195 8,481 8,930 2,838 781 3,344 7,776 15,195 16,911 9,500 205,017 205,017 205,017 2005 $'000 Non HSA 2005 $'000 RCH 2005 $'000 Consolidated 2005 $'000 State Government Grants Targeted Capital Works and Equipment Other Commonwealth Grants Donations and Bequests Other Capital Grants Revenue from Operating Activities Revenue from Non Operating Activities Interest Property Income Car Park Fees Revenue from Non Operating Activities Total Revenue from Ordinary Activities Proceeds from Sale of Non Current Assets 2d 2a 226,096 9,254 543 10,000 10,739 914 56,230 9,254 543 10,000 10,739 914 282,326 9,254 543 10,000 17,534 914 299,607 226,096 956 499 2,477 97 4,029 60,259 956 499 2,477 97 4,029 286,355 3,302 814 2,477 106 6,699 306,306 The Department of Human Services makes certain payments on behalf of the Health Service. These amounts have been brought to account in determining the operating result for the year by recording them as revenue and expenses. Annual Report 2004–2005 23 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 A : A N A LY S I S O F R E V E N U E B Y S O U R C E Acute Note Revenue from Services Supported by Health Services Agreement Government Grants Department of Human Services Indirect Contributions by Human Services Insurance Long Service Leave Research Program Grants Patient Fees Private Practice Fees Total Revenue from Services Supported by Health Services Agreement Revenue from Services Supported by Hospital and Community Initiatives Business Units Car Park 2d 201,021 9,912 276 2,477 206 898 386 603 102 4,672 138 10,621 4,800 8,481 24,040 97 10,739 20,711 31,547 60,259 75,146 2,477 206 898 386 603 102 4,672 138 10,621 4,800 8,481 24,040 97 10,739 20,711 31,547 60,259 286,355 2,477 206 898 386 603 102 4,672 4,855 10,621 4,800 16,911 37,187 106 17,534 20,711 38,351 80,210 306,306 Other 2,696 742 710 7,015 5,147 3,823 201,021 142 39 16 27 304 9,912 276 49 72 24 273 14,887 2,838 781 775 7,087 5,198 4,400 226,096 2,838 781 775 7,087 5,198 4,400 226,096 180,888 9,384 276 14,469 205,017 205,017 $'000 Mental $'000 Primary $'000 Other $'000 RCH 2005 $'000 Consolidated 2005 $'000 Child Health Information Centre Community Child Care Educational Resource Centre Property Safety Centre Other Activities Other Departmental and General Purpose Funds Private Practice Funds Research Donations and Bequests Other Capital Purpose Income Proceeds from Sale of Non Current Assets Donations and Bequests Capital Capital Purpose Income Total Revenue from Services Supported by Hospital and Community Initiatives Total Revenue from All Sources The Department of Human Services makes certain payments on behalf of the Health Service. These amounts have been brought to account in determining the operating result for the year by recording them as revenue and expenses. 24 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 B : A N A LY S I S O F E X P E N S E B Y S O U R C E Acute $'000 Services Supported by Health Services Agreement Employee benefits Workcover Departure Packages Long Service Leave Superannuation Non Salary Labour Costs Fee for Service Medical Officers Agency Costs – Nursing Agency Costs – Other Supplies and Consumables Drug Supplies Medical and Surgical Supplies Food Supplies and Services Other Expenses Domestic Services and Supplies Fuel, Light, Power and Water Insurance costs funded by DHS Motor Vehicle Expenses Postage and Telephone Stationary Repairs and Maintenance Maintenance Contracts Patient Transport Bad and Doubtful Debts Lease Expenses Other Administrative Expenses Audit Fees Auditor General Total Expenses from Services Supported by Health Services Agreement Other 74 77 208,583 10,278 446 14,471 74 77 233,778 87 84 233,798 2,057 1,653 2,838 287 1,015 1,237 2,891 4,262 193 256 120 3,426 38 46 402 811 1 26 35 25 257 1 1,610 2,121 1,699 2,838 287 1,015 1,237 3,576 4,262 194 256 120 5,882 2,121 1,699 2,838 287 1,015 1,237 3,576 4,262 194 256 120 5,882 11,086 11,421 1,405 3 70 30 1 2 1 73 1,598 9 11,163 13,091 1,445 11,163 13,091 1,445 911 2,085 6,976 1 912 2,085 6,976 912 2,085 6,976 Salaries and Wages 136,176 2,085 265 2,978 12,809 7,894 119 4 147 714 336 7 5 32 10,206 83 8 45 555 154,612 2,294 277 3,175 14,110 154,612 2,294 277 3,175 14,110 Mental $'000 Primary $'000 Other $'000 RCH 2005 $'000 Consolidated 2005 $'000 Annual Report 2004–2005 25 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 B : A N A LY S I S O F E X P E N S E B Y S O U R C E ( C O N T I N U E D ) Acute Note Services Supported by Hospital and Community Initiatives Employee Benefits Workcover Long Service Leave Superannuation Non Salary Labour Costs Fee for Service Medical Officers Agency Costs – Other Supplies and Consumables Drug Supplies Medical and Surgical Supplies Food Supplies and Services Other Expenses Domestic Services and Supplies Fuel, Light, Power and Water Motor Vehicle Expenses Repairs and Maintenance Maintenance Contracts Bad and Doubtful Debts Total Expenses from Services Supported by Hospital and Community Initiatives Total Expenses from Ordinary Activities before depreciation Other Administrative Expenses 208,583 3 2d 208,583 10,278 10,278 446 446 85 26 36 520 295 47 8,505 24,141 38,612 9,329 76 48,017 85 26 36 520 295 47 8,505 24,141 257,919 9,329 76 267,324 86 29 63 808 50 48 10,740 28,513 262,312 9,417 76 271,805 299 125 305 299 125 305 299 125 365 379 1,024 379 1,024 379 1,028 Salaries and Wages 11,227 183 270 815 11,227 183 270 815 12,980 216 317 980 $'000 Mental $'000 Primary $'000 Other $'000 RCH 2005 $'000 Consolidated 2005 $'000 Depreciation Total Expenses from Ordinary Activities Written Down Value of Assets Sold 26 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 C : PA T I E N T F E E S RCH 2005 $'000 Acute Patient Fees Raised Inpatients Outpatients Total Other 6,570 305 901 7,776 6,570 305 901 7,776 Consolidated 2005 $'000 N OT E 2 D : S A L E O F N O N C U R R E N T A S S E T S RCH 2005 $'000 Proceeds from Disposals of Assets Less: Written Down Value of Assets Sold Plant and Equipment Net Gain on Disposal N O T E 2 E : A N A LY S I S O F E X P E N S E S B Y B U S I N E S S U N I T RCH 2005 $'000 Car Park Child Health Information Centre Community Child Care Educational Resource Centre Property Safety Centre Total 628 240 830 654 404 107 2,863 Consolidated 2005 $'000 628 240 830 654 404 107 2,863 Motor Vehicles 60 16 21 60 16 30 97 Consolidated 2005 $'000 106 Annual Report 2004–2005 27 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 3 : D E P R E C I AT I O N RCH 2005 $'000 Depreciation Buildings Plant and Equipment Motor Vehicles Medical Equipment Computers and Communication Non Medical Equipment Furniture and Fittings Total Depreciation N OT E 4 : C A S H A S S E T S For the purpose of the Statement of Cash Flows, cash assets includes cash on hand and in banks, and short-term deposits which are readily convertible to cash on hand, and are subject to an insignificant risk of change in value, net of outstanding bank overdrafts. RCH 2005 $'000 Cash on Hand Cash at Bank Total Cash Deposits at Call 16 7,475 91 7,582 1,223 3,837 1,787 735 7,582 Consolidated 2005 $'000 16 8,584 54,398 62,998 1,223 3,837 1,787 1,844 54,307 62,998 40 3,666 2,322 232 61 9,329 47 3,666 2,387 235 62 9,417 3,008 Consolidated 2005 $'000 3,020 Represented by Cash for Hospital Operations Cash for Capital Committments Cash for Monies Held in Trust Cash at Bank Cash For Restricted Specific Purpose Reserves Cash at Bank Deposits at Call 28 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 5 : R E C E I VA B L E S RCH 2005 $'000 Current Receivables Controlled Entity Debtors Inter Hospital Debtors Trade Debtors Patient Fees Accrued Income – Investment Income Diagnostic Debtors Sundry Debtors Less: Provision For Doubtful Debts Inter Hospital Debtors Trade Debtors Patient Fees Total Current Receivables Non Current Receivables 2,691 909 1,763 1,387 1,335 507 8,592 Consolidated 2005 $'000 909 1,798 1,387 1 1,335 1,383 6,813 (124) (106) (133) (363) 8,229 (124) (106) (133) (363) 6,450 Total Non Current Receivables Total Receivables DHS – Long Service Leave 7,577 7,577 15,806 7,577 7,577 14,027 Bad Debts Written Off Inter Hospital Debtors Total Bad Debts Written Off Sundry Debtors 42 360 402 42 360 402 Annual Report 2004–2005 29 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 6 : OT H E R F I N A N C I A L A S S E T S Operating Fund $'000 Non Current Financial Assets Managed Funds Shares Total Other Financial Assets Represented by Specific Purpose Fund $'000 9,969 9,969 Capital Fund $'000 10,000 10,000 RCH 2005 $'000 19,969 19,969 Consolidated 2005 $'000 19,969 1,549 21,518 Restricted Specific Purpose Reserves Total Other Financial Assets N OT E 7 : I N V E N TO RY - 9,969 9,969 10,000 10,000 19,969 19,969 21,518 21,518 RCH 2005 $'000 Pharmacy Auxiliary Shop Total Inventory 955 115 1,070 Consolidated 2005 $'000 955 115 1,070 30 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 8 : P R O P E R T Y, P L A N T A N D E Q U I P M E N T RCH 2005 $'000 Land Crown Land at Valuation Freehold Land at Valuation Buildings Total Land 33,730 42,773 13,844 13,844 9,043 Consolidated 2005 $'000 34,240 43,853 14,040 14,028 (12) 9,613 Buildings at Cost Less Accumulated Depreciation Buildings at Valuation Less Accumulated Depreciation Building – Work-in-Progress Total Buildings 71,395 (3,008) 71,625 (3,008) 68,387 11,556 93,787 68,617 11,556 94,201 Plant and Equipment Plant and Equipment at Cost Less Accumulated Depreciation Major Medical Equipment at Cost Less Accumulated Depreciation Computers and Communications at Cost Less Accumulated Depreciation Total Plant and Equipment Furniture and Fittings Furniture and Fittings at Cost Total Furniture and Fittings Motor Vehicles Motor Vehicles at Cost Total Motor Vehicles Cultural Assets Less Accumulated Depreciation Less Accumulated Depreciation 3,665 (3,245) 46,112 (28,088) 18,024 12,283 (8,613) 22,114 1,614 (1,037) 577 3,670 420 3,710 (3,262) 46,112 (28,088) 18,024 12,537 (8,776) 22,232 1,627 (1,048) 580 3,761 448 1,098 (439) 659 513 513 160,423 - 1,221 (461) 760 513 513 162,139 - Cultural Assets at Valuation Total Cultural Assets Less Accumulated Depreciation Total Property, Plant and Equipment Valuer General based on fair market value for continuing use. In the year ended 30 June 2004 land and buildings of The Royal Children’s Hospital and it’s Controlled Entities were revalued by the Annual Report 2004–2005 31 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 8 : P R O P E R T Y, P L A N T A N D E Q U I P M E N T ( C O N T I N U E D ) and end of the current financial year is set out below. Reconciliations of the carrying amounts of each class of land, buildings, plant and equipment and cultural assets at the beginning Plant and Furniture Buildings Equipment and Fittings $'000 $'000 $'000 85,169 94,201 (3,020) 12,052 17,422 11,158 (60) 22,232 (6,288) 456 186 580 (62) Motor Vehicles $'000 772 51 760 (47) (16) Cultural Assets $'000 513 513 Cultural Assets $'000 513 513 - Consolidated Carrying Amount at Start of Year Additions Disposals Transfers Carrying Amount at End of Year Depreciation Land $'000 43,853 43,853 - Total $'000 148,185 23,447 162,139 (9,417) (76) The Royal Children’s Hospital Carrying Amount at Start of Year Additions Disposals Transfers Carrying Amount at End of Year N O T E 9 : PA Y A B L E S Depreciation Land $'000 42,773 42,773 - Plant and Furniture Buildings Equipment and Fittings $'000 $'000 $'000 84,940 93,787 (3,008) 11,855 17,265 11,129 (60) 22,114 (6,220) 452 186 577 (61) Motor Vehicles $'000 699 16 659 (40) (16) Total $'000 146,642 23,186 160,423 (9,329) (76) RCH 2005 $'000 Trade Creditors Accrued Expenses Sundry Creditors GST and Related Payments Consolidated 2005 $'000 14,840 3,090 1,025 2,232 764 43 21,994 14,840 2,403 1,025 2,232 764 43 21,307 Department of Human Services Payable Total Payables N OT E 1 0 : N O N I N T E R E S T B E A R I N G L I A B I L I T I E S Deposits RCH 2005 $'000 Non Current Borrowings – Department Of Human Services 5,000 5,000 5,000 Consolidated 2005 $'000 5,000 5,000 5,000 Total Australian Dollar Borrowings Total Non Interest Bearing Liabilities As at 30 June 2005 there were no secured liabilities. 32 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 1 : E M P L OY E E B E N E F I T S RCH 2005 $'000 Current Long Service Leave Accrued Wages and Salaries Annual Leave Accrued Days Off Other Current Employee Benefits Non Current Long Service Leave 1,726 2,962 15,934 727 1,583 22,932 22,198 22,198 45,130 Consolidated 2005 $'000 1,768 2,975 16,075 735 1,583 23,136 22,359 22,359 45,495 Non Current Employee Benefits Total Employee Provisions Movement in Long Service Leave Carrying Amount at Start of Year Provision Made During the Year Carrying Amount at End of Year Settlement Made During the Year 23,143 3,305 (2,524) 23,924 23,322 3,331 (2,526) 24,127 Provision for Long Service Leave is made on a pro-rata basis for all employees. The present value determination of the non current Long Service Leave liability has been based on probability factors for staff being paid Long Service Leave based on state-wide analysis of hospital salaries and at 30 June 2005. a forecast inflationary level of 4.75% per annum discounted by the appropriate bond rates supplied by The Department of Treasury & Finance as N OT E 1 2 : OT H E R L I A B I L I T I E S RCH Consolidated $'000 2005 Current $'000 2005 Income in Advance Rental Income in Advance Other Trust Funds Current Other Liabilities Non Current Income in Advance Rental Income in Advance Trust Funds Non Current Other Liabilities Total Other Liabilities Employee Salary Packaging Funds Held in Trust 1,442 8,322 9,088 1,442 8,322 9,251 6,880 6,880 Patient Monies Held in Trust 345 766 345 929 421 421 163 Annual Report 2004–2005 33 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 3 : E QU I T Y A N D R E S E RV E S RCH 2005 $'000 (a) Reserves Consolidated 2005 $'000 Asset Revaluation Reserve Balance at the Beginning of the Reporting Period Balance at the End of the Reporting Period General Purpose Reserve Increase/(Decrease) of Investments During the Year - 1,068 187 1,255 Balance at the Beginning of the Reporting Period Transfer from Accumulated Surplus Balance at the End of the Reporting Period 13,041 (2,910) 10,131 13,041 (2,910) 10,131 Restricted Specific Purpose Reserve Balance at the Beginning of the Reporting Period Transfer from Accumulated Surplus Total Reserves Balance at the End of the Reporting Period 9,741 10,963 20,704 30,835 48,703 26,433 75,136 86,522 (b) Contributed Capital Balance at the Beginning of the Reporting Period Capital Contribution Received Balance at the End of the Reporting Period 80,318 2,500 82,818 80,318 2,500 82,818 (c) Accumulated Surplus Net Result for the Year Balance at the Beginning of the Reporting Period Transfers to Specific Purpose Funds 19,031 (8,053) 10,978 34,501 (23,523) 10,978 Balance at the End of the Reporting Period (d) Equity Total Equity at the Beginning of the Reporting Period Total Changes in Equity Recognised in the Statement of Financial Performance Transactions with the State Government Total Equity at the Reporting Date 103,100 19,031 2,500 124,631 143,130 34,688 2,500 180,318 34 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 4 : R E S T R I C T E D S P E C I F I C P U R P O S E F U N D S RCH 2005 $'000 Private Practice Major Equipment Replacement Research and Trust Funds Education and Training Controlled Entity Specific Purpose Funds Total Restricted Specific Purpose Funds Represented by Investments Cash Funds Held in Perpetuity 6,745 13,062 425 137 335 20,704 19,969 735 20,704 10,131 30,835 Consolidated 2005 $'000 6,745 13,062 425 137 54,432 335 75,136 21,518 53,618 75,136 11,386 86,522 Total Restricted Specific Purpose Funds Reserves Total Reserves N OT E 1 5 : R E C O N C I L I AT I O N O F N E T C A S H F L OW F RO M O P E R AT I N G AC T I V I T I E S TO O P E R AT I N G R E S U LT S RCH 2005 $'000 Operating Surplus for the Year 19,031 19,031 Less: Income Designated for Capital Purposes Consolidated 2005 $'000 34,501 34,501 Operating Surplus prior to Capital Items Non Cash Movements Depreciation (Profit)/Loss on Sale of Assets 9,329 (21) (99) (10,531) (151) 369 (160) 1,326 198 19,291 9,417 (30) (99) (10,519) (124) 512 (185) 1,326 1,337 36,136 Movement in Provision for Doubtful Debts Increase/(Decrease) in Payables Increase/(Decrease) in Employee benefits (Increase)/Decrease in Other Assets Increase/(Decrease) in Other Liabilities Increase/(Decrease) in Monies Held in Trust (Increase)/Decrease in Receivables Net Cash Flows from Operating Activities Annual Report 2004–2005 35 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 6 : F I N A N C I A L I N S T RU M E N T S (a) Terms, Conditions and Accounting Policies The Health Service’s accounting policies, including the terms and conditions of each class of financial asset and financial liability recognised at balance date, are as follows: Financial Instrument (i) Financial Assets Receivables Other Other Financial Assets 6 Equities are stated at market value as at balance date. Dividend income is recognised when the dividends are receivable. Investments are via Victorian Funds Management Corp. Trade 5 Receivables are carried at nominal amounts due less any provision for doubtful debts. Credit sales are on 30 day terms. Balance Sheet Note Accounting Policies Terms and Conditions (ii) Financial Liabilities Payables 9 Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Health Service. Credit Risk Exposure Trade liabilities are normally settled on 60 days. The following methods and assumptions are used to determine the net market values of financial assets and liabilities: Financial Instruments Cash, Cash Equivalents and Short-Term Investments The carrying amount approximates market Trade Receivables and Payables market value. The Health Service’s maximum exposures to credit risk at balance date in relation to each class of financial asset is the carrying amount of those assets as indicated in the statement of financial position. The Health Service relation to accounts receivable by minimises concentrations of credit risk in undertaking transactions with a large number of customers within various industries. However, the majority of Interest Rate Risk Exposure The Health Service’s exposure to interest rate risk and effected weighted average interest rate by maturity periods is set out in the following timetable. For interest rates applicable to each class the financial statements. Exposure arises bearing variable interest rates. of asset or liability refer to individual notes to predominantly from assets and liabilities value because of their short term to maturity. The carrying amount approximates customers are concentrated in Australia. in the following ways: Credit risk in trade receivables is managed Non Current Investments/Securities For financial instruments traded in organised financial markets, market value is the current quoted market bid price for an asset or offer price for a liability, adjusted for transaction the liability. costs necessary to realise the asset or settle • payment terms are 30 days for Department of Human Services and large corporate clients, 14 days for Murdoch Childrens Research Institute, 7 days for all others • debt collection policies and procedures, including use of debt collection agency after 90 days. 36 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 6 : F I N A N C I A L I N S T RU M E N T S ( C O N T I N U E D ) Floating Interest Rate Consolidated Financial Assets Cash Trade Debtors Other Receivables Total Financial Assets Financial Liabilities Bank Overdraft Other Financial Assets 2005 $'000 9,112 21,518 30,630 30,630 Fixed rate 1 Year or Less 2005 $'000 53,886 53,886 53,886 1 to 5 Years 2005 $'000 Over 5 Years 2005 $'000 Non Interest Bearing 2005 $'000 1,692 12,335 14,027 21,994 9,251 (17,218) 31,245 Weighted Average Effective % 5.23 Total 2005 $'000 62,998 1,692 12,335 21,518 98,543 21,994 9,251 67,298 31,245 7.07 Trade Creditors and Accruals Lease Liabilities Other Liabilities Total Financial Liabilities Net Financial Asset/Liabilities The Royal Children’s Hospital Financial Assets Cash Trade Debtors Other Receivables Total Financial Assets Financial Liabilities Bank Overdraft Other Financial Assets 7,582 19,969 27,551 27,551 - - - - 1,657 14,149 15,806 21,307 9,088 (14,589) 30,395 7,582 1,657 14,149 19,969 43,357 21,307 9,088 12,962 30,395 4.38 7.07 Trade Creditors and Accruals Lease Liabilities Other Liabilities Total Financial Liabilities Net Financial Asset/Liabilities Annual Report 2004–2005 37 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 6 : F I N A N C I A L I N S T RU M E N T S ( C O N T I N U E D ) RCH Book Value $'000 Net Fair Value Financial Assets Cash at Bank Trade Debtors Other Receivables Other Financial Assets Total Financial Assets Financial Liabilities Other Liabilities 2005 Net Fair Value $'000 2005 2005 Consolidated Book Value $'000 Net Fair Value $'000 2005 7,582 1,657 14,149 19,969 43,357 21,307 9,088 30,395 7,582 1,657 14,149 19,969 43,357 21,307 9,088 30,395 62,998 1,692 12,335 21,518 98,543 21,994 9,251 31,245 62,998 1,692 12,335 21,518 98,543 21,994 9,251 31,245 Trade Creditors and Accruals Total Financial Liabilities N OT E 1 7 : C O M M I T M E N T S RCH 2005 $'000 Capital Commitments Plant and Equipment Cancer and Neurosciences Facility RCH/MCRI Research Facility MRI Construction Project Consolidated 2005 $'000 2,513 18,522 18,147 3,411 1,323 815 44,731 33,621 11,110 44,731 2,513 18,522 18,147 3,411 1,323 815 44,731 33,621 11,110 44,731 Electrical Upgrade Other Capital Projects Total Capital Commitments No Later than One Year Later than One Year but not Later than 5 Years Total Capital Commitments Lease Liabilities Commitments Operating Leases Cancellable Not Later than One Year Later than One Year but not Later than 5 Years Later than 5 Years Total Operating Lease Commitments Later than 5 Years 150 491 29 670 159 521 29 709 38 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 1 8 : S U P E R A N N UAT I O N Superannuation contributions for the reporting period are included as part of N OT E 1 9 : R E S P O N S I B L E P E R S O N S R E L AT E D D I S C L O S U R E S (a) Responsible Persons The names of persons who were Responsible Persons of The Royal Children’s Hospital at any time during the financial year are: Responsible Minister Governing Board The Hon Bronwyn Pike MP Mr Tony Beddison AO (Chairman) Mr Max Beck (Deputy Chairman) Ms Linda Berry (from 28 July 2004) Mr Patrick Burroughs Dr Julie Caldecott (from 30 November 2004) Assoc Professor Christine Kilpatrick Mr Barry Novy Mr John Rimmer Ms Heather Scovell Accountable Officer Dr Tony Cull (Chief Executive Officer) Mr Tony Beddison AO is a Director of Hoban These firms rendered services to The Royal Children’s Hospital. All dealings with The course of business and are on normal commercial terms and conditions. Royal Children’s Hospital are in the ordinary A Director of The Royal Children’s Hospital, Total payments made to Hoban Recruitment during 2004/05 amounted to $138,288.63. Total payments made to CCS Technology Recruiters during 2004/05 amounted to $72,519.54. salaries and associated costs in the statement of financial performance of the hospital. The name and details of the major employee superannuation funds and contributions made by the hospital are as follows: Contribution for the year 2005 Fund Health Super Scheme Hesta $'000 13,913 427 Mr Barry Novy is Managing Director of Kliger Wood Real Estate Pty Ltd. This firm renders services to The Royal Children’s Hospital. All dealings with The Royal Children’s Hospital are in the ordinary course of business and are on normal commercial terms and conditions. Total payments made to Kliger Wood Real Estate Pty Ltd during 2004/05 amounted to $22,019.00. A Director of The Royal Children’s Hospital, Contribution outstanding at year end 2005 $'000 1,182 60 The bases for contributions are determined by the various schemes. The unfunded superannuation liability in respect to members of the Health Super Scheme is not recognised in the Statement of Financial Position. The Royal Children’s Hospital total unfunded superannuation The responsible Minister is the Hon Bronwyn Pike, Minister for Health and she received no remuneration from the The Royal Children’s Hospital. Ministerial remuneration is disclosed in the financial statements of the Department of Premier and Cabinet. (b) Remuneration of Responsible Persons The number of Responsible Persons are shown in their relevant income bands: liability in relation to these funds has been statements of the Department of Treasury and Finance. The above amounts were measured at 30 June 2005, or in the case of employer 30 June 2005. assumed by and is reflected in the financial Recruitment and CCS Technology Recruiters. 2005 Number $10,000 – $19,999* $20,000 – $29,999 8 1 9 * One Director is eligible for remuneration in this band but serves pro bono. $ $10,000 – $19,999* $20,000 – $29,999 Total remuneration received or due and receivable by Responsible Persons from the reporting entity amounted to* 100,329 27,500 contributions they relate to the year ended All employees of The Royal Children’s Hospital are entitled to benefits on retirement, disability or death from the Government for several decades prior to Mr Beddison’s appointment as RCH Chairman and the Hoban Recruitment rendered services to RCH Employees Super Fund. This fund provides of service and annual average salary. from the fund: $Nil. nature of these commercial arrangements was declared by Mr Beddison prior to his In Council. appointment as RCH Chairman by Governor Services provided by CCS Technology defined lump sum benefits based on years Details of any loans to the Health Service 127,829 Recruiters were a continuation of existing contracts previously entered into by Women’s & Children’s Health. These contracts preceded and the nature of these commercial arrangements was declared by Mr Beddison prior to his appointment as RCH Chairman by Mr Beddison’s appointment as RCH Chairman * Pro rata amounts have been included for two Directors who were appointed in late July and late November 2004 respectively. The figure also includes eligible remuneration for one Director who serves on the RCH Board pro bono. Governor In Council. Annual Report 2004–2005 39 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 2 0 : C O N T I N G E N T A S S E T S A N D L I A B I L I T I E S (c) Retirement Benefits of Responsible Persons There were no retirement benefits paid to Responsible Persons during the year. Persons and their Related Parties (d) Other Transactions of Responsible There were no contingent assets or liabilities Controlled Entities as at 30 June 2005. Any claims made against The Royal Children’s Hospital are covered by public healthcare being paid by the Department of Human Services. insurance managed by VMIA, with premiums for The Royal Children’s Hospital or its There were no other transactions with (e) Executive Officer Remuneration Responsible Persons or their related parties. The number of Executive Officers whose total remuneration (including termination pay) relevant income bands: exceeded $100,000 are shown below in their 2005 Number Less than $140,000 $140,000 – $149,999 $150,000 – $159,999 $160,000 – $169,999* $170,000 – $179,999 $180,000 – $189,999 $190,000 – $199,999 Greater than $250,000 0 1 2 2 1 0 1 1 8 * Includes persons with less than one year service. Total remuneration received or due and reporting entity amounted to: Actual remuneration Bonuses** receivable by Executive Officers from the $'000 1,401 110 1,511 ** Includes termination bonuses. N OT E 2 1 : R E M U N E R AT I O N O F AU D I TO R S RCH 2005 $'000 Audit Fees Paid or Payable to the Victorian Auditor-General’s Office for Audit Paid at 30 June 2005 Payable as at 30 June 2005 Total Paid and Payable 25 45 70 25 59 84 Consolidated 2005 $'000 40 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 2 2 : N E T A S S E T S A N D C O M M I T M E N T S A L L O C AT I O N O F WO M E N ’ S & C H I L D R E N ’ S H E A LT H TO T H E ROYA L C H I L D R E N ’ S H O S P I TA L RCH Net Assets ASSETS Current Assets Cash Assets Receivables Inventory Prepayments Total Current Assets Non Current Assets Receivables Other Financial Assets Property, Plant and Equipment Total Non Current Assets TOTAL ASSETS LIABILITIES Payables Note 2005 $'000 RCH 2004 $'000 4 5 7 - 7,582 8,229 1,070 306 17,187 18,940 8,829 1,300 445 29,514 5 6 8 7,577 19,969 160,423 187,969 205,156 6,836 9,910 146,639 163,385 192,899 Current Liabilities Employee Benefits Total Current Liabilities Non Current Liabilities Employee Benefits Total Non Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Other Liabilities Other Liabilities 9 11 12 21,307 22,932 766 45,005 32,219 23,701 73 55,993 Non Interest Bearing Liabilities 10 11 12 5,000 22,198 8,322 35,520 80,525 124,631 5,000 21,418 7,388 33,806 89,799 103,100 Asset Revaluation Reserve General Reserves Restricted Specific Purpose Reserve Contributed Capital TOTAL EQUITY Accumulated Surplus 13a 13a 13a,14 13b 13c 10,131 20,704 82,818 10,978 124,631 9,741 13,041 80,318 103,100 Annual Report 2004–2005 41 Notes to and forming part of the financial statements for the year ended 30 June 2005 N OT E 2 2 : N E T A S S E T S A N D C O M M I T M E N T S A L L O C AT I O N O F WO M E N ’ S & C H I L D R E N ’ S H E A LT H TO T H E ROYA L C H I L D R E N ’ S H O S P I TA L ( C O N T I N U E D ) RCH Commitments Net Assets Capital Commitments Plant and Equipment Cancer and Neurosciences Facility RCH/MCRI Research Facility MRI Construction Project RCH 2004 $'000 1,655 1,977 1,806 5,438 5,438 5,438 Note 2005 $'000 2,513 18,522 18,147 3,411 1,323 815 Electrical Upgrade Other Capital Projects Total Capital Commitments No Later than One Year Later than One Year but not Later than 2 Years Later than 5 years Total Capital Commitments 17 17 44,731 33,621 11,110 44,731 42 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 3 : I M PA C T S O F A D O P T I N G A U S T R A L I A N E Q U I V A L E N T S T O I N T E R N A T I O N A L F I N A N C I A L R E P O R T I N G S TA N DA R D S Following the adoption of Australian equivalents to International Financial adopted A-IFRS must record transactions that A-IFRS had always applied. This requirement With certain exceptions, entities that have This financial report has been prepared in accordance with Australian accounting standards and other financial reporting Reporting Standards (A-IFRS), The Royal Children’s Hospital will report for the first are reported in the financial report as though are released. for the financial year ended 30 June 2006 time in compliance with A-IFRS when results also extends to any comparative information included within the financial report. Most accounting policy adjustments to apply of differences between Australian GAAP and having material impact on The Royal A-IFRS have been identified as potentially requirements (Australian GAAP). A number It should be noted that under A-IFRS, there are requirements that apply specifically to not-for-profit entities that are not consistent with IFRS requirements. The Royal Children’s Hospital is established to achieve the contributed capital at the 1 July 2004 opening balance sheet date for the comparative period. The exceptions include deferral until ments for: 1 July 2005 of the application and adjust• AASB 132 Financial Instruments: Disclosure and Presentation; • AASB 139 Financial Instruments: Recognition and Measurement; • AASB 4 Insurance Contracts; • AASB 1023 General Insurance Contracts (revised July 2004); and • AASB 1038 Life Insurance Contracts (revised July 2004). The comparative information for transactions for in accordance with existing accounting standards. A-IFRS retrospectively will be made against Children’s Hospital’s financial position and financial performance on the adoption of A-IFRS. Set out below are key areas where accounting policies are expected to change on adoption of A-IFRS and the best estimate objectives of government in providing services free of charge or at prices significantly below their cost of production for the collective incompatible with generating profit as a principal objective. Consequently, where applies those paragraphs in accounting consumption by the community, which is of the quantitative impact of the changes on net profit, net assets and total equity for the year ended 30 June 2005. The estimates disclosed below are The Royal Children’s Hospital’s best estimates of the quantitative impact of the changes as at the date of preparing the 30 June 2005 financial report. The actual effects of transition to A-IFRS may differ from the estimates appropriate, The Royal Children’s Hospital standards applicable to not-for-profit entities. An A-IFRS compliant financial report will equity in addition to the three existing financial statements, which will all be renamed. The Statement of Financial comprise a new statement of changes in disclosed due to: a) ongoing work being undertaken by the A-IFRS project team; Interpretations; and b) potential amendments to A-IFRS and c) emerging accepted practice in the and UIG Interpretations. affected by theses standards will be accounted ing Statement, the Statement of Financial Balance sheet and the Statement of Cash Flows will be simplified as the Cash Flow Statement. However, for the purpose of Performance will be renamed as the Operat- Position will revert to its previous title as the The Royal Children’s Hospital has taken the to A-IFRS and has achieved the following scheduled milestones: • established a steering committee to tion of the A-IFRS; following steps in managing the transition interpretation and application of A-IFRS disclosing the impact of adopting A-IFRS in the 2004–2005 financial report, which is prepared under existing accounting stand- oversee the transition to and implementa- be retained. ards, existing titles and terminologies will • established a A-IFRS project team to review the new accounting standards to identify from the adoption of A-IFRS; key issues and the likely impacts resulting • delivered an education and training process for stakeholders to raise awareness of the processes to be undertaken; and changes in reporting requirements and the • initiated reconfiguration and testing of requirements. user systems and processes to meet new Annual Report 2004–2005 43 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 3 : I M PA C T S O F A D O P T I N G A U S T R A L I A N E Q U I V A L E N T S T O I N T E R N A T I O N A L F I N A N C I A L R E P O R T I N G S TA N DA R D S ( C O N T I N U E D ) Table 1: Reconciliation of net result as presented under Australian GAAP and that under A-IFRS. RCH Note Net Result as Reported Under Australian GAAP Estimated A-IFRS Impact on Revenue Revenue Items Estimated A-IFRS Impact on Expenses Employee Benefits Depreciation and Amortisation Expenses Supplies and Services Net Result Under A-IFRS 3 7,9 9 41 64 155 19,291 41 62 161 34,765 2005 $'000 19,031 Consolidated 2005 $'000 34,501 Table 2: Reconciliation of total assets and total liabilities as presented under Australian GAAP and that under A-IFRS. RCH Note Total Assets as Reported Under Australian GAAP Estimated A-IFRS Impact on Assets Property, Plant and Equipment Intangible Assets Investment Properties Land and Buildings Total Estimated A-IFRS Impact on Assets Total Assets Under A-IFRS Total Liabilities as Reported Under Australian GAAP Estimated A-IFRS Impact on Liabilities Provisions Total Estimated A-IFRS Impact on Liabilities Total Liabilities Under A-IFRS 3 (41) (41) 80,484 (41) (41) 81,699 7 7 (547) 727 2,378 (2,250) 307 205,463 80,525 (552) 736 3,688 (3,560) 311 262,369 81,740 2005 $'000 205,156 Consolidated 2005 $'000 262,058 44 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 3 : I M PA C T S O F A D O P T I N G A U S T R A L I A N E Q U I V A L E N T S T O I N T E R N A T I O N A L F I N A N C I A L R E P O R T I N G S TA N DA R D S ( C O N T I N U E D ) Table 3: Reconciliation of equity as presented under Australian GAAP and that under A-IFRS. RCH 2005 $'000 Total Equity as Reported Under Australian GAAP Estimated A-IFRS Impact on Equity Contributed Capital Accumulated Fund Total Estimated A-IFRS Impact on Equity Total Equity Under A-IFRS in accumulated surplus/(deficit) at the date of transition to A-IFRS. 88 260 348 124,979 89 264 353 180,671 124,631 Consolidated 2005 $'000 180,318 With limited exceptions The Royal Children’s Hospital will be required to recognise adjustments on first time adoption of A-IFRS directly AASB 136 Impairment of Assets requires 1. Impairment of Assets 2. Property, Plant and Equipment assets to be assessed for indicators of impairment each year. This standard applies assets and assets arising from construction contracts, regardless of whether they are measured on a cost or fair value basis. If Property, Plant and Equipment requires the capitalisation of costs of dismantling and When an asset is initially recognised, AASB 116 to all assets, other than inventories, financial removing an asset and restoring the site on which the asset was created, together with in accordance with AASB 137 Provisions, the recognition of a provision at present value Contingent Liabilities and Contingent Assets. These costs (and the related provisions) are not recognised under Australian GAAP and The Royal Children’s Hospital currently indicators of impairment exist, the carrying value of an asset will need to be tested to ensure that the carrying value does not exceed its recoverable amount, which is the higher of its value-in-use and fair value less costs to sell. For not-for-profit entities, valuereplacement cost. expenses such costs as they are incurred. The Royal Children’s Hospital does not have any assets which fall into this category as at 30 June 2005. 3. Employee Benefits in-use of an asset is generally its depreciated An impairment test was conducted on transition date, 1 July 2004, which indicated needed to be recognised in respect of plant 30 June 2005 as a consequence of A-IFRS no impairment loss. No impairment loss was and equipment for the financial year ended impairment requirements. It is not practica- Under existing Australian accounting standards, employee benefits such as wages and salaries, annual leave and sick leave are required to be measured at their nominal amount regardless of whether they are ble to determine the impact of the change in as any impairment or reversal thereof will be affected by future conditions. expected to be settled within 12 months of accounting policy for future financial reports, distinction is made between short-term and long-term employee benefits and AASB 119 Employee Benefits requires liabilities for short-term employee benefits to be meas- the reporting date. On adoption of A-IFRS, a ured at nominal amounts and liabilities for Annual Report 2004–2005 45 Notes to and forming part of the financial statements for the year ended 30 June 2005 N O T E 2 3 : I M PA C T S O F A D O P T I N G A U S T R A L I A N E Q U I V A L E N T S T O I N T E R N A T I O N A L F I N A N C I A L R E P O R T I N G S TA N DA R D S ( C O N T I N U E D ) long-term employee benefits to be measured employee benefits as employee benefits that fall due wholly within twelve months after the end of the period in which the employees for employee benefits such as wages and salaries, annual leave and sick leave are at present value. AASB 119 defines short-term value of the leased asset, will require an adjustment to The Royal Children’s Hospital lease assets and liabilities at the date of transition. In addition, the guidance on have previously been recognised through the GAAP. In addition, as a result of the election to asset revaluation reserve under Australian render the related service. Therefore, liabilities whether a lease is a finance or operating measure investment properties under the fair value model, investment properties will not be depreciated. there is a greater emphasis on the substance of the transaction when making such a judgement. As a consequence, there may be instances where leases that have previously been classified as operating leases under finance leases under A-IFRS. Australian GAAP may be reclassified as lease is less prescriptive under A-IFRS, and Accordingly, this change in accounting policy is expected to result in an adjustment to the 30 June 2005, with an expected decrease in depreciation expense in the statement of ended 30 June 2005. Financial Performance of $128k for the year 8. Inventories Held for Distribution Statement of Financial Position of $128k as at required to be measured at present value within 12 months of the reporting date. where they are not expected to be settled The effect of the above requirement on The Royal Children’s Hospital’s Statement of Financial Position as at 30 June 2005 will be liability of $41k For the year ended 30 June an estimated decrease in employee benefits 2005, employee benefits expense is expected to decrease by $41k due to the impact of the present value discount on the liability for long-term employee benefits. 4. Capitalised Borrowing Costs The impact of this change in accounting policy is not expected to result in an increase and lease liabilities respectively as at 30 June 2005. 6. Non-Current Assets Held for Sale to The Royal Children’s Hospital’s lease assets Under existing accounting policies, costs of goods and services to be distributed are capitalised as inventories held for distribution and expensed when distributed. Inventories held for distribution are measured at the lower of cost and current replacement cost. There is no effect from the above requireas at 30 June 2005. ment on the Statement of Financial Position 9. Intangible Assets AASB 5 Non-Current Assets Held for Sale and The Royal Children’s Hospital policy is to capitalise borrowing costs related to qualifying assets. The Royal Children’s Discontinued Operations requires an entity to classify a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through its sale rather than through continuing use. A non- Hospital does not have any qualifying assets resulting in the need to immediately expense A-IFRS. As a result, there will be no reduction all borrowing costs on the implementation of in the carrying values of qualifying assets as compared with Australian GAAP with borrowing costs being immediately expensed in the Statement of Financial Performance over the useful life of the asset. 5. Finance Leases rather than being capitalised and depreciated current asset (or disposal group) classified as its carrying amount and fair value less costs Current accounting standards permit costs incurred on research and development projects to be deferred to future periods to the extent that they are expected beyond reasonable doubt to be recoverable. Under held for sale is to be measured at the lower of to sell. In addition, an entity is also required to cease depreciation of an asset that has been classified as held for sale. The Royal Children’s Hospital does not hold 7. Investment Properties AASB 138 Intangible Assets, costs incurred in the research phase are not permitted to be recognised as an asset and are expensed any assets held for resale as at 30 June 2005. In accordance with AASB 140 Investment when incurred. Only expenditures incurred in the development phase are permitted to be satisfy the criteria of AASB 138. Accordingly, recognised as an asset to the extent that they research costs previously capitalised as Existing Australian accounting standards to the present value of minimum lease nise a lease asset and a lease liability equal require a lessee of a finance lease to recog- Property, The Royal Children’s Hospital has elected to measure investment properties under the fair value model. AASB 140 requires the fair value of an investment property to reflect market conditions at the reporting date, with changes in fair value to be recognised in the Statement of Financial intangible assets will be derecognised at the ment made against accumulated funds. The Royal Children’s Hospital does not capitalise research and development projects. Intangidate of transition with the resulting adjust- payments at the beginning of the lease term. On adoption of A-IFRS, the lease asset and lease liability recognised will be equal to the payments and fair value of the leased asset lower of the present value of minimum lease which, in those cases where the present value of minimum lease payments exceeds the fair Performance for the period in which it arises. Changes in the fair values of such properties ment tests under AASB 138. ble assets are also subject to annual impair- 46 Annual Report 2004–2005 Notes to and forming part of the financial statements for the year ended 30 June 2005 Current accounting standards permit costs incurred in the acquisition of computer software to be written off in the year in which Assets, costs incurred in the acquisition of asset and are not to be expensed when costs will be recognised at the date of made against accumulated funds. it is purchased. Under AASB 138 Intangible anticipated that there will be no significant changes in recognition of these assets and liabilities. However, the new standards require market value to be measured at ‘bid’ or ‘offer’ practice of using mid-market rates, which may lead to some changes in value. 11. Insurance Contracts rates as appropriate, compared to the present computer software are to be recognised as an incurred. Accordingly, computer software transition with the resulting adjustment The effect of the above requirement on the 2005 will be an estimated increase in 30 June 2005, goods and services are The Royal Children’s Hospital has elected to apply the first-time adoption exemption transition of the applicable insurance available under AASB 1 to defer the date of Statement of Financial Position as at 30 June intangible assets of $736k. For the year ended expected to reduce by $161k and amortisation expense for the year ended 30 June 2005 will also increase by $66k as a consequence. 10. Financial Instruments standards under A-IFRS until 1 July 2005. Accordingly, there will be no quantitative 2004 and 30 June 2005 and the financial impacts on the financial positions as at 1 July performance for the year ended 30 June 2005. The applicable A-IFRS applying to insurance contracts may have different requirements as to the methodology, prudential margin and outstanding insurance claim liabilities and these liabilities may change. discount rates to be applied when calculating provisions. As a result, the measurement of The Royal Children’s Hospital has elected to apply the first-time adoption exemption Australian Equivalents to International available under AASB 1 First-Time Adoption of Financial Reporting Standards to defer the date of transition to AASB 139 Financial Instruments: Recognition and Measurement quantitative impacts on the financial until 1 July 2005. Accordingly, there will be no positions as at 1 July 2004 and 30 June 2005 and the financial performance for the year ended 30 June 2005. With the exception of receivables and liabilities held by The Royal Children’s payables, the majority of financial assets and Hospital are valued on the Statement of Financial Position at market value with changes in value taken to the statement of Financial Performance. The Royal Children’s Hospital has also entered into derivative contracts for investment and risk manage- ment purposes. Assets and liabilities arising are valued on the Statement of Financial from these contracts are also recognised and Position at market value with changes in Performance. On adoption of A-IFRS, it is value taken to the Statement of Financial Annual Report 2004–2005 47 48 Annual Report 2004–2005 Design: Educational Resource Centre, The Royal Children’s Hospital 052668