Chapter One - Overview > Financial Overview > page 2 of 16
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Financial Overview

Operating Performance

The purpose of the Statement of Financial Performance (the Operating Statement) is to measure and report the result of Defence's activities over the financial year period. It also highlights whether Defence is operating at a sustainable level in the short term.

At the time of the Additional Estimates, Defence anticipated an operating loss of $17.0m. Following the Additional Estimates, there were two supplementary appropriations (for assistance to the Australian Government's response to the 2004 South-East Asian tsunami, and continued operational commitments in Iraq. The operating loss forecast did not change as a result of these Appropriation Acts.

In the event, Defence sustained an operating loss of $869.8m in 2004-05. This was primarily technical in nature as the operating result largely reflects the extensive financial statements remediation work that was undertaken in 2004-05 and which is continuing. This resulted in significant accrual adjustments, in particular write down of assets through inventory stocktaking, stratification of inventory and revaluation of the Defence estate which have all had a major impact on the 2004-05 financial statements. Table 1.2 provides a full comparative Statement of Financial Performance. Explanations of the variation between actual and planned allocation follow Table 1.2.

Table 1.2 Statement of Financial Performance
2004-05
Budget
Estimate
Revised
Estimate
Revised
Additional
Estimate (1)
Actual
Result
Variation
$'000 $'000 $'000 $'000 $'000
Revenues from ordinary activities
Revenue from Government (2) 15,625,941 15,729,698 15,808,399 15,749,688 -58,711
Sales of Goods and Services 245,670 262,789 262,789 264,237 1,448
Interest - - - 33 33
Revenue from Sale of Assets 230,980 206,480 206,480 198,994 -7,486
Net Foreign Exchange Gains - - - 21,152 21,152
Assets Now Recognised - 600,000 600,000 1,007,369 407,369
Other Revenue 86,892 72,046 72,046 206,714 134,668
Revenue from ordinary activities 16,189,483 16,871,013 16,949,714 17,448,188 498,474
Expenses from ordinary activities
(excluding borrowing cost expense)
Employees (3) 6,710,346 6,677,700 6,692,915 6,173,030 -519,885
Suppliers 6,109,274 6,028,823 6,092,309 6,109,997 17,688
Grants 1,250 9,266 9,266 1,941 -7,325
Depreciation and Amortisation 2,984,937 3,134,337 3,134,337 3,069,310 -65,027
Value of Assets Sold 230,980 206,480 206,480 136,163 -70,317
Write down of Assets 100,000 800,000 800,000 2,797,356 1,997,356
Other Expenses - - - 5,111 5,111
Expenses from ordinary activities
(excluding borrowing cost expense)
16,136,787 16,856,606 16,935,307 18,292,908 1,357,601
Borrowing Cost expense 31,446 31,446 31,446 25,121 -6,325
Net surplus / (deficit) from ordinary activities 21,250 -17,039 -17,039 -869,841 -852,802

Notes

  1. The variation is between actual result as disclosed in the 2004-05 audited financial statements and the revised additional estimate which is the full year budget in the Portfolio Additional Estimates Statements 2004-05 including the Portfolio Supplementary Additional Estimates Statements.
  2. Revenue from Government includes resources received free of charge ($5m in 2004-05).
  3. Correlates to Table 3.7.

cont/...

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