Annual Report 2004-05

Financial Overview

Defence's Cash Position

Overview

Defence sources its annual cash from the appropriation for outcomes, from the equity injection, and from own source revenue, capital receipts and cash reserves. The allocations are subject to Government approval as part of the annual budget process. Once funds are appropriated for Defence purposes, they remain in Defence's accounts even if not fully used in the budget year. They are held as an appropriation receivable in the Official Public Account and are available to meet liabilities as they fall due, including employee liabilities, subject to Government approval.

Defence had planned to have cash reserves on hand at 30 June 2005 of $673m including cash at bank ($88m) and the appropriation receivable ($585m). In the event, Defence had cash reserves totalling $793m comprising cash at bank of $254m (see Table 1.5) and the appropriation receivable of $539m (see Table 1.7). Of the $120m increase in cash, an amount of $56m is to be repaid to Government in 2005-06 under no win - no loss arrangements. The remaining $64m will be carried forward in the appropriation receivable in 2005-06 to pay for purchases whose delivery dates were delayed beyond 30 June 2005.

Use of Cash in 2004-05

During 2004-05, Defence had access to $17,757m in cash including cash at bank on 1 July 2004 of $238m. During the course of the financial year Defence used $17,503m leaving it with cash at bank of $254m at 30 June 2005. This was $167m higher than forecast due mainly to a higher than planned level of cash in the United States Foreign Military Sales bank account. Table 1.5 provides details of cash sources and cash usage.

Table 1.5 shows the actual movement of cash in 2004-05.

Notes

1. This figure represents the actual cash at bank of 1 July 2004, rather than what was in the estimates contained in the May Budget.
2. Includes sale of goods and services, other revenue, proceeds from sale of assets and interest revenue.