Notes to the financial statements 

for the year ended 30 June 2005

Table of Notes 1-6

	2005 Actual $000	2005 Main Estimates $000	2005 Supplementary Estimates $000	2004 Actual $000
Note 1: Revenue other
Interest	11,192	9,027	10,919	9,114
Tenancy Tribunal fees	792	907	772	772
Other	4,703	-	4,303	17
Total Other Revenue	16,687	9,934	15,994	9,903
Note 2: Personnel Costs
Salaries and wages	11,028	8,364	13,729	7,635
Other	4,884	1,015	1,886	926
Total Personnel Costs	15,912	9,379	15,615	8,561
Note 3: Operating Costs
Administration	3,727	1,553	5,704	1,335
Communications	707	723	2,653	621
Computer costs	1,109	927	3,401	796
Lease costs	1,291	861	1,116	910
Audit fees for the audit of financial statements	71	33	70	33
Auditor's fees for other services	-	-	-	7
Tenancy Tribunal	1,432	1,431	1,431	1,431
Other	5,545	1,255	4,606	1,078
Total Operating Costs	13,882	6,783	18,981	6,211
Note 4: Depreciation
Office equipment	20	720	17	17
Office renovations	132	136	136	145
Furniture and fittings	7	6	23	7
Computer hardware	324	-	337	242
Computer software	272	-	287	153
Vehicles	29	39	27	45
Total Depreciation	784	901	827	609
Note 5: Capital Charge
The Department pays a capital charge to the Crown based on the taxpayers' funds held by the Department as at 30 June and 31 December each year. The capital charge rate for 2005 was 8.0 percent (2004: 8.5 percent).
Note 6: Debtors and Receivables
Tenancy bond current account	7,787	2,381	6,533	3,973
Trade and other receivables	(46)	-	-	18
GST receivable	360	69	89	217
Debtor Crown	77	55	55	57
Total Debtors and Receivables	8,178	2,505	6,677	4,265

 

Table of Note 7: Property, plant and Equipment

	Cost $000	Accumulated Depreciation $000	Net Book Value $000
Note 7: Property, Plant and Equipment
2005:
Office equipment	370	251	119
Office renovations	1,296	956	340
Furniture and fittings	299	178	121
Computer hardware	2,461	1,724	737
Computer software	1,869	885	984
Vehicles	356	290	66
Leased assets	-	-	-
Work in progress	666	-	666
Total Property, Plant and Equipment	7,317	4,284	3,033
2004:
Office equipment	240	216	24
Office renovations	1,122	805	317
Furniture and fittings	144	125	19
Computer hardware	2,085	1,307	778
Computer software	1,596	594	1,002
Vehicles	313	275	38
Leased assets	95	-	95
Work in progress	48	-	48
Total Property, Plant and Equipment	5,643	3,322	2,321

Table of Notes 8 - 12

	2005 Actual $000	2005 Main Estimates $000	2005 Supplementary Estimates $000	2004 Actual $000
Note 8: Creditors and Payables
Trade creditors	5,604	508	1,013	1,750
Accrued expenses	51	102	584	-
GST payable	277	76	96	79
Other	-	-	21	74
Total Creditors and Payables	5,932	686	1,714	1,903
Note 9: Provision for Restructuring
Opening balance of provision	-	-	-	-
Movement in provision	247	-	-	-
Closing balance of provision for restructuring	247	-	-	-
Note 10: Provision for Repayment of Surplus to Crown
Net surplus/(deficit)	(4,085)	-	(5,833)	747
Less: Memorandum accounts deficits	4,273	-	5,833	-
Net surplus payable to Crown	188	-	-	747
Note 11: Employee Entitlements
Current
Annual leave	590	363	643	351
Total Current	590	363	643	351
Non-Current
Retirement leave	36	30	36	36
Resigning leave	100	82	100	100
Long-service leave	133	109	133	133
Total Non-Current	269	221	269	269
Total Employee Entitlements	859	584	912	620
Note 12: Reconciliation of Net Cash Flows to Surplus from Operating Activities
Net surplus/(deficit) from operations	(4,085)	-	(5,833)	747
Add/(less) non-cash items
Depreciation	784	901	827	609
Add/(less) movements in working capital
(Increase)/decrease in debtors, receivables and prepayments	(3,844)	369	(2,390)	(307)
(Increase)/decrease in Debtor Crown	(20)	1	2	-
Increase/(decrease) in other payables	4,420	(127)	8	969
Add/(less) investing activity items
Net loss on sale of fixed assets	15	-	-	14
Net cash flows from operating activities	(2,730)	1,144	(7,386)	2,032

Note 13: Related party transactions

The Department of Building and Housing is a wholly owned entity of the Crown. The government significantly influences the roles of the Department as well as being its major source of revenue.

The Department enters into numerous transactions with other government departments, Crown agencies and state-owned enterprises on an arm's length basis. These transactions are not considered to be related party transactions.

Table of Note 14: Financial instruments

	2005 Actual $000	2005 Main Estimates $000	2005 Supplementary Estimates $000	2004 Actual $000
Note 14: Financial instruments
Cash on hand	6	4	4	3
Cash held by Westpac	161	80	305	28
Accounts receivable	8,178	2,530	6,702	4,265
Total	8,345	2,614	7,011	4,296

The Department is party to financial instruments as part of its normal operations. These include bank balances, investments and accounts receivable and payable.

Credit Risk
Credit risk is the risk that a third party will default on its obligations to the Department, causing the Department to incur a loss. In the normal course of its business, the Department incurs credit risk from trade debtors, and transactions with financial institutions.

The Department does not require any security to support financial instruments with financial institutions that the Department deals with as these entities have high credit ratings.

Fair Value
The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.

Currency Risk
Currency risk is the risk that the value of debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates.

The Department has no currency risk with regard to cash and accounts receivable, as the financial instruments it deals with are in New Zealand dollars. The Department has no significant exposure to currency risk on accounts payable.

Interest Rate Risk
Interest rate risk is the risk that the Department's return on the funds it has invested will fluctuate due to changes in market interest rates. The Department had no interest rate risk as no money was invested in this financial year.

Note 15: Contingencies

The Department does not have any contingent assets as at 30 June 2005 (2004:nil). Contingent liabilities are separately disclosed in the Statement of Contingent Liabilities.

Statement of financial performance

for the year ended 30 June 2005

Statement of financial performance for the year ended 30 June 2005

	2005 Main Estimates $000	2005 Supplementary Estimates Changes $000	2005 Supplementary Estimates $000
Note 16: Major Budget Variations
Revenue
Revenue - Crown	7,279	6,416	13,695
Revenue - Department	145	51	196
Revenue - Other	9,934	6,060	15,994
Total Operating Revenue	17,358	12,527	29,885
Expenses
Personnel costs	9,379	6,236	15,615
Operating costs	6,783	12,198	18,981
Depreciation	901	(74)	827
Capital charge	295	-	295
Loss/(gain) on sale of fixed assets	-	-	-
Total Expenses	17,358	18,360	35,718
Net Surplus/(Deficit)	-	(5,833)	(5,833)

The increases in personnel and operating costs and the consequential increase in Crown revenue result mainly from the establishment of the Department of Building and Housing in November 2004. The Department's baseline increased as several new functions were transferred to Vote: Housing.

Explanations for major variations from the initial Budget Night Estimates were outlined in the Supplementary Estimates and are detailed below.

Explanations for major variations from the initial budget night estimates

	2005 Main Estimates $000	2005 Structure Changes $000	2005 Other Appropriation Changes $000	2004 Final Appropriation Supplementaries $000
Changes in Appropriation (GST Exclusive)
Departmental Output Classes
Residential Tenancy Services	-	15,614	598	16,212
State Housing Appeals Authority	67	-	-	67
Housing Agency Monitoring	1,677	(1,277)	-	400
Sector and Regulatory Policy	-	1,277	1,964	3,241
Building Act 2004 Implementation	-	-	3,015	3,015
Occupational Licensing	-	-	1,929	1,929
Building Regulation and Control	-	-	10,854	10,854
Administration of Residential Tenancies Bond Monies	3,369	(3,369)	-	-
Residential Tenancies Information and Advice and Dispute Resolution	12,245	(12,245)	-	-
Total (GST exclusive)	17,358	-	18,360	35,718