This report is verified to be accurate for the purposes of annual reporting to the parliament of South Australia.

Submitted on behalf of the Urban Renewal Authority
(trading as Renewal SA) by:

Mark Devine
A/Chief Executive of Renewal SA

From the Chief Executive

Renewal SA is a critical delivery agency that initiates, supports, undertakes and promotes strategic property based initiatives aligned to the Government's policy objectives.

Renewal SA continues to support the government's growth agenda for the state through a focus on property development that build's new industries, infrastructure and communities.

As the State Government's leading urban development agency, Renewal SA has delivered continued progress on flagship developments:

Lot Fourteen - the former Royal Adelaide Hospital site on North Terrace being transformed into a seven-hectare innovation and culture precinct;
Tonsley Innovation District - being the revitalisation of the former Mitsubishi Motors assembly plant on South Road. Tonsley now has more than 1700 FTEs on site, 6,500 students each year and the first residents will move in from July 2019;
Bowden - the rejuvenation of a derelict 16-hectare industrial site off Park Terrace into a thriving residential and mixed-use precinct, now home to more than 1,000 people;
Lightsview - our multi-award-winning residential development in Adelaide's north-east suburbs in joint venture with Peet.
Port Adelaide - this major renewal program to capitalise on the Port's heritage, expansive waterways and diverse cultural attractions achieved a major milestone in 2018-19 with developers Starfish and Cedar Woods commencing residential construction.
Playford Alive - one of Australia's largest urban renewal projects involving the renewal of public housing and public realm in Davoren Park and Smithfield Plains and more than 500 hectares of green development in Andrew Farm and Munno Para.
Woodville West - a renewal project marketed as "The Square" covering 13 hectares for up to 425 new dwellings and new public spaces and roadways.

From a financial perspective, the underlying operating result for 2018-19 before noncash valuation adjustments was a profit of $13.2 million which is $1.7 million better than budget before valuation adjustments. Land sales of $66.8 million were achieved across our projects. Capital expenditure of $108.8 million was invested into activities ranging from civil works, building refurbishment, environmental remediation and road construction, creating significant employment and contracting opportunities for the local property development sector.

The majority of this capital investment ($72 million) supported further development at Lot Fourteen to transform the former Royal Adelaide Hospital site into a neighbourhood of ideas, entrepreneurship, research, art and culture. Significant progress has been made this financial year in refurbishing heritage buildings on Frome Road and North Terrace and undertaking the major demolition program to remove obsolete hospital structures.

The strategic guidance provided by the Urban Renewal Authority Board of Management has been integral to Renewal SA's success. I wish to acknowledge that after serving seven years in the role, Bronwyn Pike will conclude her term as Presiding Member on 30 July 2019. Board Members Phil Baker, David McArdle and Terry Groom will also conclude their terms in July 2019. I would like to again thank the each of them for the valuable contribution they have made to Renewal SA over the years. I also want to acknowledge the important contribution made to the Board by the late Geoff Knight, who continued to attend meetings until August 2018. Following these significant departures, the State Government has announced the appointment of Anne Skipper, Phil Rundle and Kimberley Gillan to the Board of Management, effective from 1 August 2019. Current Board member Con Tragakis will succeed Bronwyn Pike as the new Presiding Member. The Board will continue to benefit from the experience of two other continuing members, Jim McDowell and Helen Fulcher. These new appointments bring to Renewal SA considerable local experience and strategic knowledge of the residential, retail and commercial property sectors in South Australia.

The State Government has a clear growth agenda for South Australia, and Renewal SA will continue to play a critical role in stimulating public and private sector investment in real property to drive economic growth and deliver projects of public interest.

Mark Devine
A/Chief Executive
Renewal SA

Overview: about the agency

Our strategic focus

Our purpose

The Urban Renewal Authority was established under the Urban Renewal Act 1995 with the primary purpose to initiate, undertake, promote and support strategic urban development activity to help deliver key strategic priorities of the South Australian Government, particularly the new urban development directions outlined in the 30 Year Plan for Greater Adelaide. Renewal SA is responsible for leading and coordinating urban renewal activity to ensure that the State's future employment and housing needs are met through well planned, affordable and vibrant urban development located near transport, employment, education and other services. Renewal SA facilitates unique development opportunities for the private sector through access to government land holdings. Sustainable and accelerated urban renewal is achieved through ongoing partnerships with the private sector and a commitment to engagement with federal and state agencies, local communities, councils and, most importantly, individuals.

Our values

Our values convey how we work with each other, our customers and our stakeholders. They provide a framework for making sound decisions and actions that ultimately affect the quality of service we deliver to the South Australian community.

These values are integral to guiding the implementation of our Strategic Plan:

Accountability
We hold ourselves responsible for the work we deliver and how we deliver it.
Unity
We embrace a team spirit. We seek opportunities to support each other's objectives and understand and align ourselves to one vision.
Respect
At Renewal SA we are courteous, listen and communicate openly. We value diversity and model ethical and professional behaviour towards all people.
Excellence
We are committed to excellence in everything we do.
Fun
We have fun at work and celebrate our success.

Our functions

The key functions of Renewal SA as outlined in the Urban Renewal Act 1995 are to:

Initiate, undertake, support and promote residential, commercial and industrial development in the public
interest.
Acquire, assemble and use land and other assets in strategic locations for urban renewal.
Promote community understanding of, and support for, urban renewal by working with government agencies, local government, community groups and organisations involved in development.
Undertake preliminary works (including the remediation of land) to prepare land for development and other functions such as planning and coordination.
Encourage, facilitate and support public and private sector investment and participation in development of the State.
Acquire, hold, manage, lease and dispose of land, improvements in property.

Changes to the agency

During 2018-19, the following changes to the agency's structure and objectives occurred as a result of machinery of government changes:

Social housing functions previously assumed by Renewal SA have been transferred to the SA Housing Trust on 1 July 2018. As part of this change, 165 Renewal SA employees were transferred to the SA Housing Trust.
The dissolution of the Riverbank Authority was gazetted on 19 July 2018. The assets and liabilities of the Authority at the date of dissolution were subsequently transferred to Renewal SA.
Administration of the Capital City Committee transferred to the Department for Premier and Cabinet, effective 1 July 2018.

Our Minister

The Urban Renewal Authority trading as Renewal SA is within the portfolio responsibilities of the Minister for Transport, Infrastructure and Local Government, Hon Stephan Knoll MP.

Legislation administered by the agency

Urban Renewal Act 1995

The agency's performance

Agency contribution to whole of Government objectives

The Government of South Australia is committed to change that creates more jobs, lower costs for families and businesses and better government services.

Renewal SA has a targeted and tangible contribution towards the government's objectives through:

Initiate, undertake, promote and support strategic urban development activity to help deliver key strategic priorities of the South Australian Government.
Foster urban regeneration.
Facilitate the supply of strategically located residential, commercial and industrial land to support South Australia's economic and employment growth.
Enabling development opportunities for the private sector through access to government land holdings;
Conducting detailed precinct planning through consultation with government agencies, local communities, councils and other stakeholders; and
Identifying and assembling development sites and engaging early and often with local communities, local government, other government agencies and the private sector to facilitate quality, well designed, affordable and sustainable developments.

Performance at a glance

Innovation Precincts

Lot Fourteen is being transformed into a world-class neighbourhood for innovation, entrepreneurship and research in technology and creative industries. Renewal SA has worked closely on Lot Fourteen with other key agencies including the Department of the Premier and Cabinet and the Department for Innovation and Skills. These agencies led by Premier Steven Marshall as the lead Minister for Lot Fourteen, have delivered the significant progress now evident on the site.

For its part, Renewal SA has undertaken one of Australia's largest demolition programs over the past 12 months to remove redundant hospital buildings from Lot Fourteen, while also refurbishing and retaining the magnificent heritage buildings fronting Frome Road and North Terrace.

Stage 1 of the demolition program involved the demolition of the 1960s-era East Wing building near the Adelaide Botanic Garden and was completed during the year. Stages 2 and 3 are now underway to create more space for future development activity.

During 2018-19, approximately 70 per cent of available commercial space within these heritage buildings was committed or is in negotiation with prospective tenants aligned to Lot Fourteen's target industry sectors. This included providing accommodation for the Office of the South Australian Chief Entrepreneur and the Defence and Space Landing Pad. Major progress was made in the construction of new headquarters for the Australian Space Agency. By June 2019, there were approximately 250 people working in the Lot Fourteen neighbourhood.

The Adelaide City Deal was announced during the year with the following Commonwealth commitments in relation to Lot Fourteen:

$85 million toward the Aboriginal Art and Cultures Gallery
$30 million toward the International Centre for Food, Hospitality and Tourism Studies
$20 million toward the development of an Innovation Hub for Lot Fourteen
$6 million toward a Mission Control facility associated with the Australian Space Agency, and a further $6 million toward a Space Discovery Centre

Renewal SA is also coordinating the delivery of the Lot Fourteen Master Plan to maximise connectivity to the Botanic Garden and the East End to allow greater public access across the entire site from North Terrace to the River Torrens.

To the south, Renewal SA continues with the redevelopment of the 61-hectare former Mitsubishi Motors manufacturing site, transforming it into the award winning Tonsley Innovation District. This key South Australian Government project is pivotal to facilitating growth in the high value manufacturing sector.

Tonsley brings together leading-edge research and education institutions and established businesses like SAGE Automation and Micro X, in addition to start-ups, business incubators and accelerators who connect and collaborate in Australia's leading innovation district.

The Tonsley project progressed significantly in 2018-19, including commencement of several new developments, securing a number of new tenants and delivering further on the innovation district model, transforming this site into an active and collaborative business and residential community.

Committed and commenced developments include development of Tenancy 8 and 9, the Boiler House adaptive reuse and neighbouring retail development, relocation of Bedford Medical Centre, a short-stay hotel and mixed-use development and development of a multi-deck carpark progressing Tonsley's transport and parking strategy.

In 2018-19 Tonsley has helped expedite business growth with several existing tenants securing additional space at Tonsley to accommodate their growing operations. Micro-X has doubled its assembly line space and secured accommodation in to manufacture cutting-edge carbon nanotube x-ray tubes. AZZO have also acquired additional space and negotiations are ongoing with the SAGE Group to expand at Tonsley. Meanwhile global giant, Tesla, joined the Tonsley business community and set up their Asia Pacific service and maintenance hub, the first of its kind outside of the United States.

The Peet residential development, Tonsley Village, also progressed well during 2018-19 with many apartments and terrace homes sold and under construction and the first residents now living on site. One of these residents also works at Tonsley and is an apprentice at TAFE SA on-site, demonstrating the potential for Tonsley to deliver on new live, work and play standards.

The innovative Tonsley District Energy Scheme was executed with Enwave Australia in 2018-19, which will see a large solar PV installation on the Main Assembly Building (MAB) and TAFE SA roofs, along with battery storage and smart metering technologies. On top of that, the Australian Gas Infrastructure Group continues their work on the Australian-first hydrogen production and distribution facility at Tonsley.

About 12 kilometres north of the city is a similar size innovation precinct also under the stewardship of Renewal SA — Technology Park Adelaide. Technology Park Adelaide is a vibrant world-class business community of innovative, high tech organisations. Anchored by global companies such as Codan, Daronmont Technologies, Lockheed Martin, Ellex Medical Lasers, Saab Australia and Tindo Solar, the park is now home to over 100 companies.

With an established hub of defence and aerospace, advanced electronics, health, training, consulting, and information communication technology companies, Technology Park Adelaide provides a thriving environment for business collaboration and networking located on 65 hectares adjacent to the world-class Mawson Lakes residential development.

Lot Fourteen, Tonsley Innovation District and Technology Park are the backbone of innovation in South Australia, offering opportunities for innovative and entrepreneurial businesses in future industries to collaborate and thrive.

Residential and Mixed Use

During 2018-19, Renewal SA continued to invest heavily in the development of not only Lot Fourteen and the Tonsley Innovation District, but its other flagship projects at Bowden, Port Adelaide, Playford Alive and Woodville West.

While Renewal SA's urban development activity over the past 12 months delivered real economic and employment results for the state's construction-related businesses, the significant investment undertaken successfully leverages new private sector investment (such as residential construction at Bowden, Playford Alive, Woodville West and Tonsley Innovation District).

During the year, significant planning and work has been undertaken toward the rejuvenation of the Bowden Heritage Precinct. The redevelopment of the former Brompton Gasworks site is the next step in transforming this former six-hectare industrial area into a great place to live, work and shop. Demolition of obsolete and non-heritage structures started in late August 2018 and continued through to February 2019, with remediation now the focus.

At the Port, private developers Cedar Woods and Starfish Developments continued to deliver on the plans for their respective Fletcher's Slip/ North West and Dock One/Port Approach (South) precincts. In August 2018, Starfish Developments was appointed to unlock the waterfront Dock One area, making way for 650 new homes, a new pedestrian bridge spanning Dock One, the adaptive reuse of the six storey former Department of Marine and Harbours Building a new community garden and generating in excess of $200 million in private investment. Cedar Woods has commenced construction of stages 1 and 2, the first of four stages totalling approximately 15 hectares. When complete, the four stages will include 500 dwellings, adaptive reuse of the Fletcher's Slip State Heritage Place, more than 20% public open space, affordable homes, and second-road access to the existing New Port Quays development to Semaphore Road.

This activity was further supported by Renewal SA releasing to the market one of the area's last significant land parcels, Port Approach North, through an expression of interest process in June 2019. The relocation of Incitec Pivot from the Port Approach North precinct to outer Port Adelaide has provided the opportunity to release this land for redevelopment.

Commercial and Industrial Land

During the year, Renewal SA continued to supply strategically-located commercial and industrial land to support South Australia's economic and employment growth, including Edinburgh Park, Northern Adelaide Food Park and Seafood Industry Park.

In addition to land held for other identified projects, Renewal SA manages a portfolio of 2,865 hectares of commercial and industrial land on behalf of the Government of South Australia, including 728 hectares within designated industrial projects.

A total of 111.6 hectares of commercial and industrial land valued at $16.736 million was sold in 2018-19 including parcels of land at Gillman, Mawson Lakes, Osborne, Seaford and Wingfield for employment-generating outcomes (totalling 13.9 hectares) and in Bowering Hill for rural living outcomes (totalling 97.7 hectares).

These sales generated hundreds of jobs and tens of millions of dollars of new private sector investment in the State's commercial and industrial sectors.

Community Participation

The past year also saw another excellence performance from Renewal SA's Works Program. This community-based initiative is now in its tenth year and extends the benefits of the agency's urban renewal activities by creating employment, work experience and training placements.

These opportunities were directly linked to the $100 million in contracts awarded by Renewal SA to the private sector. During the 12-month reporting period, the Works Program provided 241 people with pathways to employment through education, engagement, training and work experience across Renewal SA's flagship projects and communities.

Renewal SA engages with organisations and the community to place people at the centre of urban planning and design. Almost 58,000 people were engaged across all of our project activity through face-to-face community forums, newsletters, electronic mail or online tools.

During the 2018-19 financial year Renewal SA led a number of activities across its flagship projects to drive visitation, engagement and future private investment. More than 10,000 visitors were attracted to the Tonsley Innovation District through a major partnership event with Science Alive. Five thousand members of the local community attended the Playford Alive Fun Day in November 2018 as an indication that the community spirit is truly alive.

The Port attracted more than 80,000 people gefting their skates on at the local Winterfest activation in July 2018, while a further 35,000 people visited Lot Fourteen through a range of Renewal SA and externally-led activations and events.

Infrastructure and Planning Activity

During the 2018-19 financial year, Renewal SA also progressed the following significant ongoing programs:

The Adelaide Railway Station is set to transform into a unique destination that excites and connects people. On behalf of the state government, Renewal SA is overseeing and managing the revitalisation of the Adelaide Railway Station, including the $2.7 million restoration of heritage façades and features, the upgrade and expansion of commercial tenancies and the negotiation of future leasing opportunities. Funding for the works was confirmed in the 2019-2020 State budget handed down in June 2019. Renewal SA also agreed a scope of works with the City of Adelaide for upgrades to the North Terrace footpath and public realm adjacent the station.
Extensive community engagement program ahead of proposed structure planning at Aldinga and Oakden/Gilles Plains. Renewal SA owns approximately 94 hectares of land in Aldinga with the potential to support a new community of around 1,000 homes while at Oakden and Gilles Plains, the State Government owns approximately 79 hectares of land which could accommodate some 1,500 homes, subject to rezoning.
Renewal SA's significant landholdings at Osborne are vital to the growth of South Australia's defence sector and the agency continues to work closely with the Commonwealth Department of Defence to ensure the Navy's shipbuilding facilities are accommodated, along with associated maritime industries. During 2018 19, Renewal SA worked closely with Australian Naval Infrastructure and Defence SA to resolve land tenure for the expanded Osborne Naval Shipyard. Renewal SA also commissioned a master plan review by independent planning consultants to prepare an updated Master Plan for the northern LeFevre Peninsula.
The Festival Plaza is currently undergoing major redevelopment with $1 billion of public and private sector investment with DPTI as project lead for the State Government. During the year, Renewal SA worked to finalise the design for the integrated development with DPTI, Walker Corporation and other key stakeholders under Walker's development agreement. Leases have been granted to Walker Corporation for the car park and office building and related demolition, excavation and piling works are well progressed. SkyCity commenced work on site for its expansion project in 2018 and is on track to reach completion in late 2020

Corporate performance summary

The following sections provides a summary of Renewal SA's operational performance in regard to employment opportunity programs; performance management and development systems; work health, safety and return-to-work programs.

Employment opportunity programs

Program name	Performance
Disability Access and Inclusion Plan	Support for employees with a disability is ongoing, in line with Renewal SA's Disability Access and Inclusion Plan. Where applicable, staff are encouraged to access special leave to manage any disability.
Renewal SA Graduate Program	In March 2018, the organisation finalised its two-year Graduate Program. Four graduates successfully attained employment within and outside the public sector whilst another four successfully attained further employment within Renewal SA.

Agency performance management and development systems

Performance management and development system

Performance

Partnering for Performance Program (PPP)

Renewal SA's PPP reinforces the importance of values, behaviours and clarity of roles, responsibilities accountabilities. The program provides staff with the opportunity to discuss a development plan to assist with individual career aspirations. One hundred per cent of Renewal SA eligible employees reported participating in the program, compared to the South Australian Public Sector average of 48.9 per cent (for the reporting period to June 2018).

A Learning and Development Calendar was also implemented to capture and complement the development aspirations of staff.

Work health, safety and return to work programs

Program name	Performance
Work Health Safety (VVHS) Program	Renewal SA follows a risk management approach to its safety program, with extensive consultation through employee and management representation on our WHS committee.
Health and Wellbeing Program	Renewal SA's health and wellbeing program continued to focus on mental health, equality and the prevention of gender based violence, both within and outside of the workplace. Renewal SA has identified support mechanisms for staff impacted by domestic violence, and in 2018-19 implemented a Wellness Program that celebrates selected national and international days aligned with the organisation's core values. Specific examples include International Women's Day, R U OK? Day and International Day for the Elimination of Violence against Women. Renewal SA further offers a preventative health care program, which focuses on skin screening and influenza vaccinations, to provide staff with the option of accessing medical screening at work.
White Ribbon Workplace Program	The launch of Renewal SA's Violence Against Women Strategy incorporated several actions to ensure Renewal SA continues to be a positive influence within the government as well as with key stakeholders on this topic. As a result of the strategy, Renewal SA has a better understanding of how violence against women affects our staff. As an accredited White Ribbon workplace, Renewal SA in 2018-19 continued to build on existing workplace policies to support victims of domestic violence.

Workplace injury claims	2018-19	2017-18	% Change (+ / -)
Total new workplace injury claims	2	2	0%
Fatalities	0	0	0%
Seriously injured workers*	0	0	0%
Significant injuries (where lost time exceeds a working week, expressed as a frequency rate per 1000 FTE)	3.33	3.27	+1.8%

*number of claimants assessed during the reporting period as having a whole person impairment of 30% or more under the Return to Work Act 2014 (Part 2 Division 5)

Work health and safety regulations	2018-19	2017-18	% Change (+ / -)
Number of notifiable incidents (Work Health and Safety Act 2012, Part 3)	0	0	0%
Number of provisional improvement, improvement and prohibition notices (Work Health and Safety Act 2012 Sections 90, 191 and 195)	0	0	0%

Return to work costs**	2018-19	2017-18	% Change (+ / -)
Total gross workers compensation expenditure ($)	$41,408	$57,464	-38.7%
Income support payments (gross) ($)	$20,104	$3,911	+80.5%

**before third party recovery

Data for previous years available at: Data SA - Work Health and Safety and Return to Work Performance.

Executive employment in the agency

Executive classification	Number of executives
Executive	4

Data for previous years is available at Data SA - Executive Employment.

The Office of the Commissioner for Public Sector Employment has a workforce information page that provides further information on the breakdown of executive gender, salary and tenure by agency.

Financial performance

Financial performance at a glance

The underlying operating result for the year ended 30 June 2019 is a profit of $13.2 million, excluding non-cash asset valuation adjustments. After these valuation adjustments, which aggregate to $219.5 million, the reported Comprehensive Result is a loss of $206.3 million.

The asset valuation adjustments are principally driven by non-cash accounting adjustments that flow from the Government's decision to provide capital funding for several development projects by way of equity contributions. In past years, capital funding for those projects was provided to Renewal SA as Community Service Obligation (CSO) payments.

As a result of the change in the character of the funding provided, this funding can no longer be included in the valuation of inventory assets as was the case in prior years. As a result, the carrying book values of the assets concerned have declined.

It is important to note that this change does not adversely impact Renewal SA's future overall cash flow and financial viability in that the required cash funding continues to be provided to Renewal SA and has been included within the 2019-20 State Budget. The Statement of Financial Position shows a Net Asset and Total Equity of negative $63.9 million as at 30 June 2019. This is not reflective of a going concern issue given that Renewal SA's expected future cash flow has not been adversely impacted. In the absence of the non-cash decline in asset values, the net asset position would be positive $155.5 million as at 30 June 2019.

It should also be noted that Renewal SA's inventory assets are recorded at the lower of cost and net realisable value, in accordance with the Accounting Standard AASB 102 - Inventories. The net realisable value of Renewal SA's inventory assets are estimated to be significantly higher than the reported book value.

A summary of the financial result is presented below. Full audited financial statements for the year ended 30 June 2019 are attached to this report.

Statement of Comprehensive Income	2018-19 Actual $000s	2017-18 Actual $000s
Revenue from sales	66,755	87,003
Less: cost of sales	41,195	48,938
Gross profit on sales	25,560	38,095
Other income	95,137	111,656
Operating expenses	66,837	83,045
Borrowing costs	40,683	39,754
Underlying operating result	13,177	26,952
Net gain/(loss) from changes in value of assets	(219,500)	2,442
Comprehensive Result - before Income Tax	(206,323)	29,394
Income Tax	-	8,819
Total Comprehensive Result	(206,323)	20,575

Statement of Financial Position	2018-19 Actual $000s	2017-18 Actual $000s
Current assets	98,528	122,656
Non-current assets	896,613	966,143
Total assets	995,141	1,088,799
Current liabilities	399,507	212,265
Non-current liabilities	659,582	750,228
Total liabilities	1,059,089	962,493
Net assets	(63,948)	126,306
Equity	(63,948)	126,306

Consultants Disclosure

The following is a summary of external consultants that have been engaged by the agency, the nature of work undertaken, and the actual payments made for the work undertaken during the financial year.

Consultancies with a contract value below $10,000 each

Consultancies	Purpose	Expenditure
19 consultants engaged	Various	$76,225

Consultancies with a contract value above $10,000 each

Consultancies	Purpose	Expenditure
Deloitte Access Economics	Economic Development Consultancy	$166,360
Fyfe Pty Ltd	Development Structure Plan	$41,556
Guildhouse Inc	Public Art Strategy Services	$18,638
Hames Sharley	Retail Strategy Master Plan	$28,428
Hannan Duck and Partners	Strategic Plan	$39,000
Holmes Dyer	Development Structure Plan	$19,415
JTWO Solutions Pty Ltd	Development Audit of Conduits and Conduit Paths	$14,250
KPMG	Accounting Advice	$15,208
Lucid Consulting Engineers (SA) Pty Ltd	Fire Services Masterplan	$15,862
Mott MacDonald	Project Management Services	$20,160
PricewaterhouseCoopers	Accounting Advice	$15,000
PricewaterhouseCoopers	Accounting Advice	$15,000
PricewaterhouseCoopers	Business Continuity Planning and Simulation	$11,220
PricewaterhouseCoopers	Goods and Services Tax Advice	$15,000
Right Angle Studio	Retail Vision and Strategy	$76,465
RSM Australia Pty Ltd	Emissions Reduction Fund Audit	$53,960
The Buchan Group Melbourne Pty Ltd	Development Concept Design	$28,000
	Total	$593,522

See also the Consolidated Financial Report of the Department of Treasury and Finance for total value of consultancy contracts across the South Australian Public Sector.

Risk management

Risk and audit at a glance

Renewal SA has in place a robust risk management framework. The objective of this framework is to ensure an appropriate risk culture prevails with a high level of risk awareness throughout the organisation. The framework includes formalised risk management processes to manage risk in line with contemporary risk management standards whereby risks are identified, assessed and assigned to risk owners with risk treatment and mitigating strategies required.

There is also in place appropriate risk reporting to the Executive, the Audit and Risk Committee and the Board of Management.

The Urban Renewal Authority Board of Management has an established Audit and Risk Committee whose principal functions are to:

assess the quality of financial reporting and the effectiveness of internal controls;
oversee the administration of the Risk Management Framework;
maintain an effective and efficient internal control environment; and
advise the Board on procedures and ways of working within Renewal SA to align these with the organisation's overall strategic direction.

The Audit and Risk Committee comprises members of the Board of Management.

Renewal SA's Internal Audit function is provided by the Department of Human Services Internal Audit team, under a Service Level Agreement. The Internal Audit work plan is reviewed and approved by the Audit and Risk Committee, with all findings reported to the Committee.

Strategies implemented to control and prevent fraud

Renewal SA's fraud policies include a range of internal controls to ensure employees, volunteers, agents, contractors, sub-contractors and suppliers of goods and services are aware they must refrain from engaging in any activity that is, or could be perceived as, fraudulent or unethical.

Renewal SA has developed a fraud and corruption control strategy, which includes operational arrangements to improve awareness of obligations and to minimise the chance of fraud such as:

Training for all staff in fraud and corruption control is conducted every 3 years and was conducted in 2018-2019;
Induction is provided to all new starters and includes information on fraud and corruption as well as obligations for employees;
All offers of gifts or benefits (whether or not they are accepted) are centrally recorded and reported to the Executive and the Audit and Risk Committee;
Employees are required to conduct risk assessments, as appropriate, at an enterprise, program, project, operational and transactional level; and
An annual assurance program is undertaken, whereby all Directors and Executives sign statements of compliance regarding fraud and risk management and any breaches are reported to the Audit and Risk Committee.

Whistle-blowers disclosure

Number of occasions on which public interest information has been disclosed to a responsible officer of the agency under the Whistleblower Protection Act 1993:

One

Data for previous years is available at Data SA - Whistleblowers' Disclosure.

Public complaints

Number of public complaints reported

No categories of complaints were received by, or made against, Renewal SA for the 2018-2019 financial year.

The total number of enquiries between 1 July 2018 — 30 June 2019 was 305 (three hundred and five). As a result of these enquires, no specific service improvements were required to be implemented by Renewal SA as part of the response or action as a result of the enquiry.

Financial statements

Statement of comprehensive income

For the year ended 30 June 2019

	Note No.	2019 $’000	2018 $’000
Income
Revenue from sales	9	66,755	87,033
Less: cost of sales	9	41,195	48,938
*Gross profit from sales*		25,560	38,095
Share of net profit in joint ventures	10	2,166	1,110
Revenues from SA Government	11	8,239	9,111
Interest revenues	12	975	268
Property income	13	81,141	79,957
Other revenues	14	2,216	20,635
Net gain from changes in value of non-current assets	26	-	2,442
Net gain from disposal of non-current assets	15	400	250
Total other income		95,137	113,773
Net gain from transferred functions		-	325
Total income		120,697	152,193
Expenses
Employee benefits expenses	7	15,780	31,675
Operating expenditure	16	49,939	50,550
Bad and doubtful debts expense	22	600	325
Borrowing costs	17	40,683	39,754
Depreciation and amortisation	25	518	495
Net loss from disposal of non-current assets	26	219,500	-
Total expenses		327,020	122,799
Profit/(Loss) before income tax equivalent		(206,323)	29,394
Less: Income tax equivalent	19	-	8,819
Profit/(Loss) after income tax equivalent		(206,323)	20,575
Total comprehensive result		(206,323)	20,575

The Profit/Loss After Income Tax Equivalent and Total Comprehensive Result are attributable to the SA Government as owner.

The above statement should be read in conjunction with the accompanying notes.

Statement of financial position

As at 30 June 2019

	Note no.	2019 $’000	2018 $’000
Current Assets
Cash and cash equivalents	21	21,083	42,050
Receivables	22	5,698	4,033
Inventories	23	68,402	73,837
Investment in joint ventures	10	3,345	2,736
Total Current Assets		98,528	122,656
Non-Current Assets
Receivables	22	8,615	6,720
Inventories	23	178,920	241,230
Investment properties	24	706,530	716,160
Property, plant and equipment	25	1,832	1,874
Investment in joint ventures	10	716	159
Total Non-Current Assets		896,613	966,143
Total Assets		995,141	1,088,799
Current Liabilities
Payables	28	21,702	21,375
Unearned income	30	3,554	6,287
Borrowings	29	270,552	174,218
Provisions	31	101,300	5,784
Employee benefits	8	2,247	4,143
Other liabilities	32	2,247	458
*Total current liabilities*		399,507	212,265
Non-Current Liabilities
Payables	28	7,455	7,872
Unearned income	30	15,313	15,530
Borrowings	29	633,150	720,102
Provisions	31	37	23
Employee benefits	8	3,627	6,701
Total non-current liabilities		659,582	750,228
Total liabilities		1,059,089	962,493
Net assets		(63,948)	126,306
Equity
Contributed capital
Retained earnings
Total equity

The total equity is attributable to the SA Government as owner.

Unrecognised contractual commitments: 35
Contingent assets and liabilities: 36

The above statement should be read in conjunction with the accompanying notes.

Statement of changes in equity

For the year ended 30 June 2017

	Note no.	Contributed capital $’000	Retained earnings $’000	Total $’000
Balance at 30 June 2017		356,857	(241,976)	114,881
Total comprehensive result for 2017-18		-	20,575	20,575
Transactions with the SA Government in their capacity as owners:
Dividends paid	20	-	(9,150)	(9,150)
Balance as at 30 June 2018		356,857	(230,551)	126,306
Total comprehensive result for 2018-19		-	(206,323)	(206,323)
Adjustment on adoption of new accounting standards	34	-	(1,798)	(1,798)
Transactions with the SA Government in their capacity as owners:
Equity contribution		25,000	-	25,000
Net assets transferred from administrative restructure	3	-	3,812	3,812
Dividends paid	20	-	(10,945)	(10,945)
Balance as at 30 June 2019		381,857	(445,805)	(63,948)

All changes in equity are attributable to the SA Government as owner.

The above statement should be read in conjunction with the accompanying notes.

Statement of cash flows

For the year ended 30 June 2019

	Note no.	2019 $’000	2018 $’000
Cash Flows from Operating Activities
Cash inflows
Receipts from sales		67,452	96,766
Receipts from SA Government		26,301	28,045
Interest received		495	286
Receipts from tenants (rent and recoveries)		80,088	102,160
Recoveries and sundry receipts		4,638	22,217
Funds held in trust		-	4
Receipts for paid parental leave scheme		33	42
Cash generated from operations		179,008	249,521
Cash outflows
Payments for land purchase and development		(104,168)	(49,792)
Income tax equivalent paid		(4,519)	(4,300)
Land tax paid		(21,955)	(20,955)
Interest paid		(41,044)	(20,955)
Payments to suppliers		(26,835)	(36,399)
Payments for employee benefits payments		(22,099)	(33,826)
Payments of funds held in trust		(306)	-
Payments for paid parental leave scheme		(23)	(46)
GST paid to the ATO		(4,787)	(9,052)
*Cash used in operations*		(225,736)	(195,551)
Net cash (used in)/provided by operating activities	33	(46,728)	53,970
Cash Flows from Investing Activities
Cash inflows
Distributions of profit by joint ventures		1,000	875
Proceeds from the sale of investment properties		1,800	2,100
Cash generated from investing activities		2,800	2,975
Cash outflows
Purchase of plant and equipment		(476)	(308)
Cash used in investing activities		(476)	(308)
Net cash (Used in)/provided by investing activities		2,324	2,667
Cash Flows from Financing Activities
Cash inflows
Equity contributions received from the SA Government		25,000	-
Proceeds from borrowings		183,600	144,700
Cash generated from financing activities		208,600	144,700
Cash Outflows
Repayment of borrowings		(174,218)	(161,281)
Dividends paid to SA Government		(10,945)	(9,150)
Cash used in financing activities		(185,163)	(170,431)
Net cash provided by/(used in) financing activities		23,437	(25,731)
Net (decrease)/increase in cash held		(20,967)	30,906
Cash at the beginning of the financial year		42,050	11,144
Cash at the end of the financial year	21	21,083	42,050

The above statement should be read in conjunction with the accompanying notes.

Note Index

Note 1	Objectives of the Urban Renewal Authority
Note 2	Basis of Preparation
Note 3	Transferred Functions
Note 4	Key Management Personnel
Note 5	Remuneration of Board and Committee Members
Note 6	Related Party Disclosures
Note 7	Employees Benefits Expense
Note 8	Employee Benefits Liability
Note 9	Revenue from Sales and Cost of Sales
Note 10	Joint Ventures
Note 11	Revenues from SA Government
Note 12	Interest Revenues
Note 13	Property Income
Note 14	Other Revenues
Note 15	Net Gain/(Loss) from Disposal of Non-Current Assets
Note 16	Operating Expenses
Note 17	Borrowing Costs
Note 18	Auditors Remuneration
Note 19	Income Tax Equivalent
Note 20	Dividends Paid to SA Government
Note 21	Cash and Cash Equivalents
Note 22	Receivables
Note 23	Inventories
Note 24	Investment Properties
Note 25	Property, Plant and Equipment
Note 26	Net Gain/(Loss) from Changes in Value of Non-Current Assets
Note 27	Fair Value Measurement
Note 28	Payables
Note 29	Borrowings
Note 30	Unearned Income
Note 31	Provisions
Note 32	Other Liabilities
Note 33	Cash Flow Reconciliation
Note 34	Changes in Accounting Policy
Note 35	Unrecognised Contractual Commitments
Note 36	Contingent Assets and Liabilities
Note 37	Impact of Statements and Standards not yet effective
Note 38	Financial Instruments Disclosure/Financial Risk Management
Note 39	Events after the Reporting Period

Note 1 Objectives of the Urban Renewal Authority

The Urban Renewal Authority (trading as Renewal SA) is a statutory corporation established under the Urban Renewal Act 1995 (the Act). In accordance with the Act, Renewal SA's Board of Management is appointed by His Excellency the Governor and comprises up to seven members, including a Presiding Member. The Presiding Member reports to the Minister for Transport, Infrastructure and Local Government (the Minister). Renewal SA's functions contained in the Act include;

The development of residential, commercial and industrial land in the public interest, particularly for urban renewal
purposes
The facilitation of public and private sector investment, undertaking development activities which are attractive to potential
investors and participating in the development of the State
Managing the orderly development of areas through the management and release of land
Holding land and other property to be made available as appropriate for commercial, industrial, residential or other
purposes.

In undertaking its functions, Renewal SA will make a significant contribution to creating a vibrant city, safe communities, healthy
neighbourhoods, an affordable place to live, and growing advanced manufacturing. Renewal SA has the responsibility for leading
and coordinating urban renewal activity to ensure that our future housing needs are met through better planned, affordable and
vibrant mixed use (residential and commercial) urban developments located near to transport, employment, education and other
services.

In performing its functions, Renewal SA provides services to other State Government agencies. The provision of services to the
South Australian Housing Trust and Riverbank Authority ceased during 2018-19 due to machinery of government changes.

Note 2 Basis of preparation

Statement of compliance

These financial statements have been prepared in compliance with section 23 of the Public Finance and Audit Act 1987. The financial statements are general purpose financial statements. The financial statements have been prepared in accordance with relevant Australian Accounting Standards and comply with Treasurer's Instructions and Accounting Policy Statements issued by the Treasurer under the provisions of the Public Finance and Audit Act 1987.

Renewal SA has applied Australian Accounting Standards that are applicable to for-profit entities, as Renewal SA is a for-profit entity.

Basis of preparation

Renewal SA's Statement of Comprehensive Income, Statement of Financial Position and Statement of Changes in Equity have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets that have been revalued.

The Statement of Cash Flows has been prepared on a cash basis.

The financial statements have been prepared based on a twelve month reporting period and presented in Australian currency. The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2019 and
the comparative information presented.

Rounding

All amounts in the financial statements and accompanying notes have been rounded to the nearest thousand dollars ($'000).

Taxation

In accordance with Treasurer's Instruction 22 Tax Equivalent Payments, Renewal SA is required to pay to the SA Government an income tax equivalent. The income tax equivalent liability is based on the State Taxation Equivalent Regime, which applies the accounting profit method. This requires that the corporate income tax rate be applied to the net profit. The current income tax liability, if applicable, relates to the income tax expense outstanding for the current period (refer Note 31).

Renewal SA is liable for payroll tax, fringe benefits tax, goods and services tax (GST), emergency services levy, land tax and local government rate equivalents.

The financial statements are reported net of the amount of GST except:

when the GST incurred on the purchase of goods or services is not recoverable from the Australian Taxation Office, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item applicable;
receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as part of receivables or payables in the Statement of Financial Position.

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

Unrecognised commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
Australian Taxation Office. If GST is not payable to or recoverable from the Australian Taxation Office, the commitments and
contingencies are disclosed on a gross basis.

Going Concern

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

As at 30 June 2019, the financial statements reported a net asset deficiency of $63.9 million. This is due to the operating loss of $206.3 million for the year ended 30 June 2019. The loss results principally from non-cash inventory valuation adjustments. The inventory adjustments arise from a change to the way Renewal SA is funded for development projects. From 1 July 2019, Government funding towards capital expenditure for Renewal SA's development projects will be provided in the form of equity contributions rather than as Community Service Obligations. This means that the balance date valuation of the relevant inventory balances no longer includes the cash flows related to the Community Service Obligations. As a result, the carrying amount of inventory has been written down.

While the form of the funding has changed and is no longer included in the valuation of inventory assets, the underlying cash is still expected to be provided to Renewal SA and has been included within the 2019-20 State Budget, covering the forward estimates period. The nature of the classification of the funding does not impact Renewal SA's future overall cash flow.

Renewal SA's inventory assets are recorded at the lower of cost and net realisable value, in accordance with AASB 102 - Inventories. If all land holdings were recorded at their net realisable value, Renewal SA's net asset position and gearing as at 30 June 2019 would be significantly improved. Additionally, the transfer of the TAFE properties back to the general government sector during the 2019-20 financial year, together with the reduction in the associated debt, will result in an improvement to Renewal SA's overall level of gearing.

Current and Non-Current Classification

Assets and liabilities are characterised as either current or non-current in nature. Renewal SA has a clearly identifiable operating cycle of 12 months. Assets and liabilities that are to be sold, consumed or realised as part of the normal operating cycle, have been classified as current assets or current liabilities. All other assets and liabilities are classified as non-current.

Where asset and liability line items combine amounts expected to be realised within 12 months and more than 12 months, Renewal SA has separately disclosed the amounts expected to be recovered or settled after more than 12 months.

Assets

Assets have been classified according to their nature and have not been offset unless required or permitted by a specific accounting standard, or where offsetting reflects the substance of the transaction or other event.

Acquisition and recognition of non-current assets (other than inventories)

Non-current assets are initially recorded at cost or at the value of any liabilities assumed, plus any incidental cost involved with the acquisition. Non-current assets are subsequently measured at fair value after allowing for accumulated depreciation.

All non-current tangible assets with a value equal to or in excess of $10,000 are capitalised.

All non-current assets, having limited useful life, are systematically depreciated over their useful lives in a Manner that reflects the consumption of their service potential. Depreciation is applied to tangible assets such as property, plant and equipment.

Where non-current assets are acquired at no, or minimal value, they are recorded at fair value in the Statement of Financial Position. However, if the non-current assets are acquired as part of a restructuring of administrative arrangements then the non-current assets are recognised at the book value recorded by the transferor, immediately prior to transfer.

Impairment (other than inventories)

All non-current assets are tested for indications of impairment at each reporting date. Where there is an indication of impairment, the recoverable amount is estimated. The recoverable amount is determined as the higher of the asset's fair value less costs of disposal and depreciated replacement cost. An amount by which the asset's carrying amount exceeds its recoverable amount is recorded as an impairment loss.

Non-financial assets

In determining fair value, Renewal SA has considered the characteristics of the asset (for example condition and location of the asset and any restrictions on the sale or use of the asset) and the asset's highest and best use (that is physically possible, legally permissible and financially feasible). Renewal SA's current use is the highest and best use of the asset unless other factors suggest an alternative use is feasible within the next five years.

The carrying amount of non-financial assets with a 'fair value at the time of acquisition that was less than $1.5 million or an estimated useful life that was less than three years' are deemed to approximate fair value.

Refer to Notes 24, 25 and 27 for disclosure regarding fair value measurement techniques and inputs used to develop fair value measurement for non-financial assets.

Liabilities

Liabilities have been classified according to their nature and have not been offset unless required or permitted by a specific accounting standard, or where offsetting reflects the substance of the transaction or other event.

Note 3 Transferred Functions

Net assets assumed/transferred by Renewal SA as a result of the administrative restructure are the carrying amounts of those assets in the transferor's Statement of Financial Position immediately prior to the transfer. The net assets transferred were treated as a contribution by the government as an owner.

Transfers to the South Australian Housing Trust

Under the Public Sector (Reorganisation of Public Sector Operations - South Australian Housing Trust) Notice 2018, Urban Renewal Authority employees were transferred to the South Australian Housing Trust on the same basis of engagement as applied before the transfer. The effective date of the transfer was 1 July 2018.

The following liabilities were transferred to the South Australian Housing Trust:

	2019 $'000
Transfer of employees
Employee benefits liability	(1,816)
Employee benefits provision	(198)
Total Liabilities Transferred Out	(2,014)
Impact on Equity	2,014

Transfer from the Riverbank Authority

Under the Urban Renewal (Riverbank Authority Dissolution) Regulations 2018, the Riverbank Authority, established by the Housing and Urban Development (Administrative Arrangements) (Riverbank Authority) Regulations 2014 was dissolved. The assets, rights and liabilities of the Riverbank Authority immediately before dissolution were transferred to the Urban Renewal Authority. The effective date of the transfer was 19 July 2018.

The following assets and liabilities were transferred from the Riverbank Authority:

	2019 $'000
Cash and cash equivalents	2,075
Total Assets	2,075
Payables	(277)
Total Liabilities	(277)
Total Net Assets Transferred In	1,798
Impact on Equity	1,798

Transfer to the Department of Premier and Cabinet

In 2018 the Premier agreed to the intended machinery of government transfer of the Capital City Committee Directorate from Renewal SA to the Department of Premier and Cabinet by way of a funding and FTE transfer. The transfer was formally agreed between the two Chief Executives in November 2018, with the effective date being 1 July 2018.

The following assets and liabilities were transferred to the Department of Premier and Cabinet:

	2019 $'000
Cash	(839)
Total Assets Transferred Out	(839)
Administration and other expenditure	839
Net Result	839
Impact on Equity	-
Total Impact on Equity	3,812

Note 3 Transferred Functions

Transfers to the South Australian Housing Trust

The following liabilities were transferred to the South Australian Housing Trust:

	2019 $'000
Transfer of employees
Employee benefits liability	(1,816)
Employee benefits provision	(198)
Total Liabilities Transferred Out	(2,014)
Impact on Equity	2,014

Transfer from the Riverbank Authority

The following assets and liabilities were transferred from the Riverbank Authority:

	2019 $'000
Cash and cash equivalents	2,075
Total Assets	2,075
Payables	(277)
Total Liabilities	(277)
Total Net Assets Transferred In	1,798
Impact on Equity	1,798

Transfer to the Department of Premier and Cabinet

The following assets and liabilities were transferred to the Department of Premier and Cabinet:

	2019 $'000
Cash	(839)
Total Assets Transferred Out	(839)
Administration and other expenditure	839
Net Result	839
Impact on Equity	-
Total Impact on Equity	3,812

Note 4 Key Management Personnel

	2019 $'000	2018 $'000
Salaries and other short-term employee benefits	1,817	1,708
Post-employment benefits	169	159
Total Employee Benefits	1,986	1,867

Key management personnel of Renewal SA include the Minister for Transport, Infrastructure and Local Government, members of the Urban Renewal Authority Board of Management, the Chief Executive and the members of the senior management team that have responsibility for the strategic direction and management of Renewal SA.

Total compensation for key management personnel was $1.986 million in 2018-19 and $1.867 million in 2017-18. The compensation disclosed in this note excludes salaries and other benefits to the Minister. The Minister's remuneration and allowances are set by the Parliamentary Remuneration Act 1990 and the Remuneration Tribunal of SA respectively and are payable from the Consolidated Account (via the Department of Treasury and Finance) under section 6 of the Parliamentary Remuneration Act 1990.

Note 5 Remuneration of Board and Committee Members

Members during the year ended 30 June 2019 were:

Urban Renewal Authority Board of Management

Hon B J Pike, Presiding Member
P A Baker
H M Fulcher
T R Groom
G R Knight (to November 2018)
D J McArdle
J W McDowell* (appointed December 2018)
C Tragakis (appointed December 2018)

Subsequent to the end of the financial year, the terms as members of the Urban Renewal Authority Board of Management of B J Pike, P A Baker, T R Groom and D J McArdle ceased on 31 July 2019. New appointments to the Urban Renewal Authority Board of Management were gazetted on 11 July 2019 for K A Skipper, J P Rundle and K Willits (Gillen), with terms commencing on 31 July 2019. C Tragakis was appointed as Presiding Member commencing 31 July 2019.

Tonsley Steering Committee

T Burgess, Chair
D Coltman"
J Connolly
M Devine*
A Dickson*
M Duffy*
G R Knight (to November 2018)
A Skull*
C Stirling*

*In accordance with the Premier and Cabinet Circular No. 016, government employees did not receive any remuneration for board/committee duties during the financial year.

Board and Committee Remuneration

The number of members whose remuneration received or receivable falls within the following bands:

	2019 No:	2018 No:
$0 to $19,999	9	9
$20,000 to $39,999	5	6
$60,000 to $79,999	2	1
Total Number of Members	16	16

Total remuneration received and receivable by all members for the period they held office was $0.333 million (2018: $0.310 million). Remuneration of members includes sitting fees and superannuation contributions.

Note 6 Related Party Disclosures

Related parties of Renewal SA include all key management personnel and their close family members, all public authorities that are controlled and consolidated into the whole of government financial statements and other interests of the South Australian Government.

Transactions with Key Management Personnel and Other Related Parties

There were no reportable transactions between Renewal SA and any Key Management Personnel and other related parties during the financial year.

Remuneration of Key Management Personnel is described in Note 4.

Significant Transactions with Government Related Entities

Renewal SA had the following significant transactions with South Australian Government entities:

Equity contributions of $25 million and Community Service Obligation funding of $25.2 million (refer Note 11) was received from the Department of Treasury and Finance.

Rental Income of $55.3 million was received from the Department of State Development relating to the TAFE properties.

Inventory property sale of $3.3 million was received from the Department of Planning, Transport and Infrastructure.

Note 7 Employees Benefits Expense

	2019 $'000	2018 $'000
Salaries and wages	14,088	27,098
Long service leave	839	470
Annual leave	1,128	1,661
Skills and experience retention leave	34	173
Employment on-costs - superannuation	1,463	2,888
Employment on-costs - other	949	1,656
Board and committee fees	305	282
Other employee related expenses	22	(176)
Gross Employee Benefits Expense	18,828	34,052
Less: Employee benefits capitalised to inventories	(3,048)	(2,377)
Total Employee Benefits Expenses	15,780	31,675

Employment on-costs - superannuation

The superannuation employment on-cost charge represents Renewal SA's contributions to superannuation plans in respect of
current services of current employees.

Executive remuneration

The number of employees whose remuneration received or receivable falls within the following bands:

	2019 No:	2018 No:
$149,000 to $151,000^	n/a	1
$151,001 to $171,000	8	11
$171,001 to $191,000	4	6
$191,001 to $211,000	1	3
$211,001 to $231,000	6	4
$231,001 to $251,000	2	-
$271,001 to $291,000	1	2
$291,001 to $311,000	1	2
$371,001 to $391,000	1	-
$391,001 to $411,000	-	1
$431,001 to $451,000	1	-
Total Number of Employees	25	30

^This band has been included for the purposes of reporting comparative figures based on the executive base level remuneration rate for 2018-19.

The table includes all employees who received remuneration equal to or greater than the base executive remuneration level during the year. Remuneration of employees reflects all costs of employment including salaries and wages, payments in lieu of leave, superannuation contributions, salary sacrifice benefits and fringe benefits and any fringe benefits tax paid or payable in respect of those benefits. The total remuneration received by these employees for the year was $5.402 million (2018: $6.082 million).

Targeted voluntary separation packages (TVSP)

The number of employees who received a TVSP during the reporting period was 1 (2018: 1).

	2019 $'000	2019 $'000
Amount paid to separated employees:
Targeted Voluntary Separation Packages	78	7
Leave paid to separated employees	8	2
Recovery from the Department of Treasury and Finance	(86)	-
Net Cost to Renewal SA	-	9

Note 8 Employees Benefits Liability

	2019 $'000	2018 $'000
Current
Accrued wages and salaries	274	505
Annual leave	1,784	2,940
Long service leave	142	544
Skills and experience retention leave	42	154
Total Current Employee Benefits	2,247	4,143
Non-Current Employee Benefits
Long service leave	3,627	6,701
Total Non-Current Employee Benefits	3,627	6,701
Total Employee Benefits	5 874	10,844

Employee benefits accrue as a result of services provided up to the reporting date that remain unpaid. Long-term employee benefits are measured at present value and short-term employee benefits are measured at nominal amounts.

Salaries and wages, annual leave, skills and experience retention leave (SERL) and sick leave

The liability for salaries and wages is measured as the amount unpaid at the reporting date at remuneration rates current at reporting date.

The annual leave liability and the SERL liability are expected to be payable within 12 months and is measured at the undiscounted amount expected to be paid.

No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees is estimated to be less than the annual entitlement of sick leave.

Long service leave

The liability for long service leave is measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method.

AASB 119 Employee Benefits contains the calculation methodology for long service leave liability.

The actuarial assessment performed by the Department of Treasury and Finance has provided a basis for the measurement of long service leave and is based on actuarial assumptions on expected future salary and wage levels, experience of employee departures and period of service. These assumptions are based on employee data over SA Government entities.

AASB 119 Employee Benefits requires the use of the yield on high quality corporate or government bonds as the discount rate in the measurement of the long service leave liability. The yield on long-term Commonwealth Government bonds has been used, which has decreased to 1.25% in 2019 from 2.5% in 2018.

This decrease in the bond yield, which is used as the rate to discount future long service leave cash flows, results in an increase in the reported long service leave liability.

The net financial effect of the changes to actuarial assumptions in the current financial year is an increase in the long service leave liability of $0.382 million and employee benefits expense of $0.572 million. The impact on future periods is impracticable to estimate as the long service leave liability is calculated using several demographical and financial assumptions - including the long-term discount rate.

The actuarial assessment performed by the Department of Treasury and Finance left the salary inflation rate at 4% for long service leave liability. As a result, there is no net financial effect resulting from changes in the salary inflation rate.

Employee benefit on-costs

Employee benefit on-costs (payroll tax and superannuation) are recognised separately in payables. (refer Note 28)

Note 9 Revenue from Sales and Cost of Sales

	2019 $'000	2018 $'000
Sales revenue for the reporting period is summarised as follows:
Land sales to:
Joint ventures	7,283	7,689
Entities within the SA Government	3,524	5,085
Other - sales to general public and developers	55,948	74,259
Total Sales Revenue	66,755	87,033

Cost of sales associated with:
Joint ventures	944	888
Entities within the SA Government	2,763	3,275
Other- sales to general public and developers	37,488	44,775
Total Cost of Sales	41,195	48,938

Sales revenue comprises revenue earned from the sale of land for residential, commercial and community purposes, including land made available for joint venture developments. Revenue for land sales is recognised when settlement is completed and legal title transfers to the purchaser.

Cost of sales comprise all direct material acquisition, development and relevant holding costs in respect of inventory sold during the reporting period. The carrying amount of inventories held for sale are expensed as cost of sales when settlement occurs. A portion of future development obligations in respect of land which has been sold is also recognised in cost of sales when settlement occurs, where applicable. Assumptions of future costs and revenues involve an element of professional judgement when estimating cost of sales for long life projects.

Note 10 Joint Ventures

In July 2006 documentation was executed with CIC Northgate Pty Ltd, a wholly-owned subsidiary of CIC Australia Limited, to establish a joint venture to develop the land subdivision component of Precinct One at Northgate Stage 3. The project primarily comprises the subdivision and sale of residential allotments and integrated housing sites together with the development of reserves and associated community facilities.

Renewal SA has a 50% interest in the joint venture. Under the terms of the agreements for the joint venture, Renewal SA will make available to the joint venture land for development and receive progressive land payments as development proceeds. Renewal SA's share of the profit from ordinary activities of the Northgate Stage 3 Joint Venture in which Renewal SA has a participating interest, is as follows:

	2019 $'000	2019 $'000
Revenues	12,886	13,603
Expenses	(10,720)	(12,493)
Profits from Ordinary Activities	2,166	1,110

Movements in Renewal SA's investment in the joint venture during the reporting period is summarized as follows:

	2019 $'000	2018 $'000
Share of investment in joint ventures:
Carrying amount at the beginning of the period	2,895	2,660
Profit for the reporting period	2,166	1,110
Distribution of profit	(1,000)	(875)
Total Carrying Amount of Investment in Joint Ventures	4,061	2,895

Renewal SA's investment in joint ventures is represented by its share of assets and liabilities as follows:

	2019 $'000	2018 $'000
Current assets:
Cash	4,340	5,053
Receivables	351	493
Inventories	8,272	10,765
Total Current Assets	12,963	16,311
Non current assets:
Property, plant and equipment	716	159
Total Non Current Assets	716	159
Total Assets	13,679	16,470

Current liabilities:
Creditors and other payables	9,618	13,575
Total Liabilities	9,618	13,575

Net Assets	4,061	2,895
Net Assets after Impairment	4,061	2,895

Renewal SA's interest in the Northgate Stage 3 Joint Venture is measured by applying the equity method. Renewal SA's share of the assets and liabilities of the joint venture in which it has a participating interest is included in the Statement of Financial Position as investment in joint ventures. Renewal SA's share of net profit from the joint venture is included as revenue in the Statement of Comprehensive Income as share of net profit/(loss) in joint ventures.

Joint venture income is recognised when the right to receive payment is established.

Note 11 Revenues from SA Government

	2019 $'000	2018 $'000
Community service obligations from SA Government	25,188	27,631
Other SA Government revenues	1,113	423
Gross Revenues from SA Government	26,301	28,054
Less: Revenue deferred for inventory development costs	(18,062)	(18,943)
Total Revenues from SA Government	8,239	9,111

Community Service Obligations

Renewal SA is required under its Charter to provide a number of non-commercial services to the community on behalf of the SA Government. The SA Government provides Renewal SA with funding to compensate for these non-commercial activities. Noncommercial activities include the provision of infrastructure, sustainable energy development and precinct and urban planning works.

Community service obligations are recognised at their fair value where there is a reasonable assurance that the funding will be received and Renewal SA will comply with all attached conditions.

Community service obligations relating to costs are deferred and recognised in the Statement of Comprehensive Income over the period necessary to match them with the costs that they are intended to compensate. Inventory development costs funded by community service obligations are capitalised against inventories and recognised in the Statement of Comprehensive Income as cost of sales when inventory is sold during the reporting period.

The Government announced as part of the 2019-20 State Budget, that from 1 July 2019, funding towards capital expenditure for Renewal SA's development projects will be provided in the form of equity contributions rather than as Community Service Obligations. As a result, revenues deferred for inventory development costs will reduce significantly in future years.

Other SA Government Revenues

SA Government revenues relating to costs are deferred and recognised in the Statement of Comprehensive Income over the period necessary to match them with the costs that they are intended to compensate.

Grants from SA Government are recognised at their fair value where there is a reasonable assurance that the grant will be received and Renewal SA will comply with all attached conditions.

Note 12 Interest Revenues

	2019 $'000	2018 $'000
Interest from operating accounts	479	268
Finance debtor interest	496	-
Total Interest Revenues	975	268

Interest revenue includes interest received on bank term deposits, interest from investments and interest on finance lease receivables.

Note 13 Property Income

	2019 $'000	2018 $'000
Rental income	70,467	69,707
Recoveries	10,650	10,249
Other property income	24	1
Total Property Income	81,141	79,957

Property income arising from investment properties is accounted for on a straight line basis over the lease term. Income received in advance is disclosed as unearned income to the extent that it relates to future accounting periods.

Property income from the portfolio of TAFE properties was $58 million for the year ended 30 June 2019. These properties are expected to be transferred to the general government sector in 2019-20 (refer Note 39).

Note 14 Other Revenues

	2019 $'000	2018 $'000
Consulting revenue	677	5,698
Employee services	-	11,160
Recoveries	53	126
Other revenues	1,486	3,651
Total Other Revenues	2,216	20,635

Consulting revenue represents the recovery of costs incurred by Renewal SA on a fee for service basis for services provided to various State Government entities including the South Australian Housing Trust.

Recoveries represents the direct recovery of goods and/or services provided predominately to the South Australian Housing Trust. Employee services revenue represents the direct recovery of employee costs from the South Australian Housing Trust, which ceased on 1 July 2018.

Other revenue is derived from the provision of goods and services to the public and other SA Government agencies. This revenue is recognised upon delivery of the service or by reference to the stage of completion and is brought to account when earned.

Note 15 Net Gain(Loss) from Disposal of Non-Current Assets

	2019 $'000	2018 $'000
Investment properties:
Proceeds from disposal	1,800	2,100
Less net book value of assets disposed	(1,400)	(1,850)
Net Gain from Disposal of Completed Non-Current Assets	400	250
Total Net Gain from Disposal of Non-Current Assets	400	250

Income from the disposal of investments is recognised when control of the asset has passed to the buyer and is determined by comparing proceeds with carrying amount.

Sales revenue from the disposal of investment properties is recognised when settlement is completed and legal title transfers to the purchaser.

Note 16 Operating Expenditure

	2019 $'000	2018 $'000
Property expenditure	15,645	14,369
Land tax	21,955	20,955
Contractors and consultants	1,515	2,155
Accommodation costs	2,207	1,769
Administration and other expenditure	11,705	13,424
Gross Supplies and Service Expenditure	53,027	52,672
Less: Land tax capitalised to inventories	(3,088)	(2,122)
Total Operating Expenditure	49,939	50,550

External Consultants

The number and dollar amount of consultancies paid/payable (included in operating expenditure) that fell within the following bands:

	2019 Number	2019 $'000	2018 Number	2018 $'000
Below $10,000	19	76	7	28
Above $10,000	17	594	8	503
Total Paid/Payable to the Consultants Engaged	36	670	15	531

Note 17 Borrowing Costs

	2019 $'000	2018 $'000
Borrowing costs on Premises SA Scheme loans	428	467
Borrowing costs on other loans	26,279	26,706
Borrowing costs on overdraft	6	10
Guarantee fees on Premises SA Scheme loans	106	116
Guarantee fees on other loans	14,212	14,349
Guarantee fees on overdraft	5	10
Gross Borrowing Costs	41,036	41,658
Less: Borrowing costs capitalised to inventories	(353)	(1,904)
Total Borrowing Costs	40,683	39,754

Borrowing costs include interest expense and guarantee fees paid to the South Australian Government.

In accordance with AASB 123 Borrowing Costs, borrowing costs attributable to the construction of a qualifying asset are capitalised if they are expected to result in a future economic benefit. Borrowing costs are expensed where it is expected that the costs incurred will not be recovered. All other borrowing costs are expensed when incurred.

A qualifying asset is an asset that takes a substantial period of time to be ready for its intended use or sale.

Note 18 Auditors Remuneration

	2019 $'000	2018 $'000
Audit fees paid/payable to the Auditor-General's Department	212	345
Total Audit Fees	212	345

Audit fees paid/payable to the Auditor-General's Department relating to work performed under the Public Finance and Audit Act 1987.

Note 19 Income Tax Equivalent

	2019 $'000	2018 $'000
Income tax equivalent	-	8,819
Total Income Tax Equivalent	-	8,819

In accordance with Treasurer's Instructions issued under the Public Finance and Audit Act 1987, Renewal SA is required to pay to the SA Government an income tax equivalent. The income tax equivalent liability is based on the Treasurer's accounting profit method, which requires that the corporate income tax rate (presently 30%) be applied to the profit for the reporting period. Renewal SA reported a financial loss in 2018-19 and therefore no income tax equivalent is payable.

Renewal SA reported an operating profit in 2017-18 and therefore an income tax equivalent was payable in that reporting period.

Note 20 Dividends Paid to SA Government

	2019 $'000	2018 $'000
Dividends paid	10,945	9,150
Total Dividends Paid to SA Government	10,945	9,150

Pursuant to the Urban Renewal Act 1995, Renewal SA must make a recommendation to the Minister before the end of each year regarding the payment of a dividend for that financial year. In 2018-19 the Minister approved a dividend payment of $9.917 million relating to profit earnt in 2017-18 in excess of the budget. The dividend paid in 2017-18 was based on 90% of budgeted profit due to final sales and property valuation outcomes not being available at the time the dividend was settled. In 2017-18 the Minister approved a dividend payment of $7.588 million. Dividend recommendations are based on budgeted or forecast profit for the financial year.

Renewal SA is required to make special dividend payments associated with the Adelaide Station and Environs Redevelopment (ASER) site. In 2018-19 the Minister approved a dividend payment of $1.028 million. This payment comprised $1.506 million related to profit for 2018-19, reduced by $0.478 million to reflect an overpayment of dividend in 2017-18. In 2017-18 the Minister approved a dividend payment of $1.562 million.

Note 21 Cash and Cash Equivalents

	2019 $'000	2018 $'000
Current
Deposits with the Treasurer	18,657	21,372
Short-term deposits with SAFA	-	18,097
Cash held in Cheltenham trust account	-	306
Cash at bank and on hand	2,426	2,275
Total Cash and Cash Equivalents	21,083	42,050

Cash assets include short-term highly liquid investments with maturities of three months or less that are readily converted to cash and which are subject to insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and equivalents consists of cash and cash equivalents as defined above.

Cash is measured at nominal value.

Deposits with the Treasurer

Includes funds held in Renewal SA's operating account.

Short-term Deposits

Short-term deposits are made for varying periods of between one day and three months. These deposits are lodged with SAFA and earn the respective short-term deposit rates.

Cash at Bank and on Hand

Cash at bank and on hand include petty cash and cash received from property managers for net rental income on Renewal SA properties.

Interest Rate Risk

Cash at bank and on hand is non-interest bearing. Deposits at call and with the Treasurer, and cash held in the Cheltenham Trust Account, earn a floating interest rate based on daily bank deposit rates. The carrying amount of cash and cash equivalents represents fair value.

Note 22 Receivables

	2019 $'000	2018 $'000
Current
Trade and other receivables	3,855	2,013
Lease receivables	5,237	4,152
Employee related services recoverable	-	1,650
GST receivable	737	-
Provision for doubtful debts	(4,139)	(3,794)
Prepayments	8	12
Total Current Receivables	5,698	4 033

Non-Current
Lease receivables	8,864	3,874
Employee related services recoverable	-	2,846
Provision for doubtful debts	(249)	-
Total Non-Current Receivables	8,615	6,720
Total Receivables	14,313	10,753

Movement in the Allowance for Doubtful Debts

The allowance for doubtful debts (allowance for impairment loss) is recognised when there is objective evidence that a receivable is impaired. An allowance for impairment loss has been recognised for specific debtors and debtors assessed on a collective basis for which such evidence exists.

	2019 $'000	2018 $'000
Carrying amount at the beginning of the period	3,794	3,469
Increase in the allowance	594	325
Carrying Amount at the End of the Period	4,388	3,794

Bad debts written off:
Trade debtors	6
Transfer to provision for doubtful debts:
Trade debtors	345	325
Lease receivables	249	-
Total Bad and Doubtful Debts Expense	600	325

Receivables include amounts receivable from goods and services, GST input tax credits recoverable, prepayments and other accruals, measured at historical cost.

Receivables arise in the normal course of selling goods and services to the public and other SA Government agencies. Receivables are generally settled within 30 days after the issue of an invoice or the goods/services have been provided under a contractual arrangement.

Collectability of receivables is reviewed on an ongoing basis. An allowance for doubtful debts is raised when there is objective evidence that Renewal SA will not be able to collect the debt. Bad debts are written off when identified.

Interest Rate and Credit Risk

Receivables are raised for all goods and services provided for which payment has not been received. Receivables are normally settled within 30 days. Trade receivables, prepayments and accrued revenues are non-interest bearing. Other than as recognised in the allowance for doubtful debts, it is not anticipated that counterparties will fail to discharge their obligations. The carrying amount of receivables approximates net fair value due to'being receivable on demand. There is no concentration of credit risk.

Categorisation and Maturity Analysis of Financial Instruments

Refer to table in Note 38.

Ageing Analysis of Financial Assets

Refer to table in Note 38.

Risk Exposure Information

Refer to table in Note 38.

Note 23 Inventories

	2019 $'000	2018 $'000
Current
Land held for sale	23,870	28,860
Development projects	44,532	44,977
Total Current Inventories	68,402	73,837

Non-Current
Land held for sale	171,934	179,388
Development projects	6,986	61,842
Total Non-Current Inventories	178,920	241,230
Total Inventories	247,322	315,067

Movements in Carrying Amounts:

	2019 $'000	2018 $'000
Carrying amount at the beginning of the period	315,067	314,158
Land purchases	-	9,487
Development costs capitalised	108,816	55,367
Community service obligations for development costs	(18,062)	(18,943)
Cost of sales	(41,195)	(48,938)
Transfer to finance receivable	(3,756)	-
Inventory write down	(125,833)	(4,754)
Reversal of inventory write down	12,285	8,690
Carrying Amount at the End of the Period	247 322	315,067

Inventories include land and other property held for sale in the ordinary course of business. It excludes depreciating assets and investment properties.

Inventories are measured at the lower of cost or their net realisable value (NRV). NRV is determined using the estimated sales proceeds less costs incurred in producing, marketing and selling to customers. NRV is determined on each individual asset/project by independent valuation or via an internal cash flow valuation.

Inventories were reviewed at 30 June 2019 to ensure they are carried at the lower of cost and NRV.

The amount of any inventory write-down to NRV or inventory losses are recognised as an expense in the period the write-down or loss occurred. Any write-down reversals are recognised as an expense reduction.

The write-downs of $125.833 million and reversal of previous write downs of $12.285 million in 2018-19 are as a result of the annual review of the recoverable values of inventory and future cash flows for projects.

Renewal SA uses a discounted cash flow methodology to value its inventory balances associated with the Tonsley, Bowden and Lot Fourteen projects. In past years the cash flows used in these valuations included the CSO funding from Government as a positive cash flow. The Government has announced that from 1 July 2019, funding towards capital expenditure for Renewal SA's development projects will be provided in the form of contributions of equity rather than as Community Service Obligations (CSO). Equity contributions are not included in the discounted cash flow valuation as the nature of the payment is of the form of an owner's contribution to the organisation as a whole rather than being of the nature of funding to offset the capital cost of the particular project. The change in the nature of funding has resulted in a significant reduction in the carrying value of the Tonsley, Bowden and Lot Fourteen projects, which is reflected as a write down of inventory.

The year end valuation for the Lot Fourteen project as at 30 June 2019 has been assessed as negative $99.872 million due to the demolition and remediation requirements for the site. Consequently, the inventory asset has been recorded as a zero value and a provision for future expenditure totalling $99.872 million has been recorded (refer Note 31). The total impact on operating profit from the value change for this project is $163.219 million for the financial year ended 30 June 2019.

The total operating profit impact of the cessation of project CSOs in the financial year ending 30 June 2019 is $194.8 million reported as inventory write down of $94.928 million and recognition of provision for future development expenditure of $99.872 million.

The following are specific recognition criteria:

Land held for sale

Land held for sale is carried at the lower of cost or NRV. Costs comprise all direct material acquisition, development and holding costs offset by deferred Government grants relating to these costs. NRV is the estimated selling price in the ordinary course of business less both the estimated costs of completion and the estimated cost necessary to make the sale. Renewal SA reviews its inventory balances at balance date and writes off inventory where the NRV is less than the carrying amount. The NRV for land holdings at risk of being carried in excess of NRV was determined by an independent valuation of its market value less selling costs.

All land inventory is classified as a non-current asset unless its value is anticipated to be realised through sale within 12 months.

Where inventory was acquired at no or nominal consideration as part of a restructuring of administrative arrangements, the inventory was recorded at the value recorded by the transferor, immediately prior to transfer or fair value.

Development Projects

Development Projects are large projects that require significant capital investment in order to realise revenue over an extended period of time. Development Projects are carried at the lower of cost or NRV. Costs comprise all direct material acquisition, development and holding costs offset by deferred Government grants relating to these costs. NRV is the estimated selling price in the ordinary course of business less both the estimated costs of completion and the estimated cost necessary to make the sale. Renewal SA reviews its inventory balances at balance date and writes off inventory where the NRV is less than the carrying amount. The NRV for land holdings at risk of being carried in excess of net realisable value was determined by an internal cash flow valuation based on the current delivery strategy for each project.

In determining the NRV via an internal valuation, the expected net cash flows from the development and sale of land, buildings and improvements in the ordinary course of business are discounted to their present values using a risk-adjusted discount rate. The rate is assessed annually having regard to appropriate risk factors.

The ordinary course of business delivery method and assumptions for each project could change due to market conditions or a change in policy or project strategy which could change the NRV. Where the NRV of a project is below the current inventory value, the difference is recognised as write down of inventory and an expense in the Statement of Comprehensive Income.

All development projects are classified as a non-current asset unless its value is anticipated to be realised through sale within 12 months.

Note 24 Investment Properties

	2019 $'000	2018 $'000
Freehold Land at Fair Value:
Independent valuation	234,600	193,739
Total Freehold land at Fair Value	234,600	193,739

Buildings at Fair Value:
Independent valuation	471,930	522,421
Total Buildings at Fair Value	471,930	522,421
Total Investment Properties	706,530	716,160

Movements in Carrying Amounts

	2019 $'000	2018 $'000
Freehold land at fair value:
Carrying amount at the beginning of the period	192,739	198,099
Transfer from buildings at fair value	42,471	-
Transfer to finance receivable	(2,150)	-
Disposals	(1,200)	(850)
Net gain/(loss) on fair value adjustments	1,740	(3,510)
Carrying Amount at the End of the Period	234,600	193,739

Buildings at fair value:
Carrying amount at the beginning of the period	522,421	521,406
Transfer to freehold land at fair value	(42,471)	-
Disposals	(200)	(1,000)
Net gain/(loss) on fair value adjustments	(7,820)	2,015
Carrying Amount at the End of the Period	471,930	522,421
Total Carrying Amount at the End of the Period	706,530	716,160

Amounts Recognised in the Statement of Comprehensive Income
Property Income (refer to Note 13)	70,093	68,912
Direct operating expenses arising from investment properties that generated rental income (refer Note 16)	(4,677)	(4,529)
Direct operating expenses arising from investment properties that did not generate rental income (refer Note 16)	(12)	(11)
Total Amount Recognised in the Statement of Comprehensive Income	65,404	64,372

Investment properties are held to earn rentals and/or for capital appreciation purposes.

Investment properties are initially recognised at cost. Costs incurred subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to Renewal SA.

Subsequent to initial recognition at cost, investment properties are revalued to fair value with changes in the fair value recognised as income or expense in the period that they arise. Investment properties are not depreciated.

Rental income from the leasing of investment properties is recognised in the Statement of Comprehensive Income as part of property income, on a straight line basis over the lease term.

Any gains or losses on the sale of investment property are recognised in the Statement of Comprehensive Income in the year of sale.

The reallocation between land and buildings of $42.471 million relates to a correction of the allocation of prior year movements in asset values for the TAFE properties.

TAFE SA properties with a value of $601.1 million are expected to be transferred to the general government sector in 2019-20. Refer to note 39.

Valuation Basis

An independent valuation of all Renewal SA's investment properties was conducted as at 30 June 2019. Valuations of all investment properties were undertaken by qualified Certified Practicing Valuers with extensive experience in the local market with equivalent properties. Valuations were carried out in accordance with the relevant provisions of the Australian Property Institute of Australia and New Zealand's Valuation and Property Standards and as per AASB 140 Investment Property. The valuer arrived at fair value using either the direct comparison, capitalisation of net income, depreciated replacement cost or discounted cash flow approach.

Note 25 Property, Plant and Equipment

	2019 $'000	2018 $'000
Leasehold Improvements
At cost (deemed fair value)	3,162	3,162
Accumulated amortisation	(2,445)	(2,107)
Total Leasehold Improvements	717	1,055

Plant and Equipment
At cost (deemed fair value)	1,703	1,277
Accumulated depreciation	(588)	(458)
Total Plant and Equipment	1,115	819

Total property, plant and equipment at cost (deemed fair value)	4,865	4,439
Total accumulated depreciation	(3,033)	(2,565)
Total Property, Plant and Equipment	1,832	1,874

Movements in Carrying Amounts

	2019 $'000	2018 $'000
Leasehold Improvements:
Carrying amount at the beginning of the period	1,055	1,392
Amortisation	(338)	(337)
Carrying Amount at the End of the Period	717	1,055

Plant and Equipment:
Carrying amount at the beginning of the period	819	669
Additions	476	308
Depreciation	(180)	(158)
Carrying Amount at the End of the Period	1,115	819
Total Property, Plant and Equipment	1,832	1,874

Carrying Amount of Leasehold Improvements and Plant and Equipment

The carrying value of these items are deemed to approximate fair value. These assets are classified in level 3, of the fair value hierarchy, as there has been no subsequent adjustments to their value, except for management assumptions about the assets' condition and remaining useful life.

All plant and equipment, having a limited useful life, are systematically depreciated/amortised over their useful lives in a manner that reflects the consumption of their service potential. Amortisation is used in relation to assets such as leasehold improvements, while depreciation is applied to tangible assets such as plant and equipment.

Assets' residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate, on an annual basis.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the time period or method, as appropriate, which is a change in accounting estimate.

Depreciation/Amortisation is calculated on a straight-line basis over the estimated useful life of the following classes of assets as follows:

Class of Asset	Depreciation Method	Useful Life (Years)
Leasehold improvements	Straight Line	Life of Lease
Plant and equipment	Straight Line	5 - 10 years
Furniture and fittings	Straight Line	5 - 10 years
Computer equipment	Straight Line	5 years

Impairment

There were no indications of impairment of leasehold improvements or plant and equipment as at 30 June 2019.

Note 26 Net Gain/(Loss) from Changes in Value of Non-Current Assets

A reconciliation of the net (loss)/gain from changes in the values of non-current assets as follows:

	Note	2019 $'000	2018 $'000
Inventories
Inventory write down	23	(125,833)	(4,754)
Reversal of inventory write down	23	12,285	8,690
Provision for future development expenditure	31	(99,872)	-
Total Gain/(Loss) from Changes in Value of Inventories		(213,420)	3,936

Investment property
Net gain/(loss) on freehold land fair value adjustments	24	1,740	(3,509)
Net gain/(loss) on building fair value adjustments	24	(7,820)	2,015
Total Gain/(Loss) from Changes in Value of Investment Property		(6,080)	(1,494)
Total Net Gain/(Loss) from Changes in Value of Non-Current Assets		(219,500)	2,442

Note 27 Fair Value Measurement

AASB 13 Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, in the principal or most advantageous market, at the measurement date.

Renewal SA classifies fair value measurement using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements, based on the data and assumptions used in the most recent revaluation:

Level 1 - traded in active markets and is based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at measurement date.
Level 2- not traded in an active market and are derived from inputs (inputs other than quoted prices included within level 1) that are observable for the asset, either directly or indirectly.
Level 3 - not traded in an active market and are derived from unobservable inputs.

Fair Value Hierarchy

The fair value of non-financial assets must be estimated for recognition, measurement and disclosure purposes. Renewal SA categorises non-financial assets measured at fair value into a hierarchy based on the level of inputs used in measurement as follows:

Fair Value Measurements at 30 June 2019

	2019 $'000	Level 2 $'000	Level 3 $'000
Recurring Fair Value Measurement
Investment properties (Note 24)	706,530	706,530	-
Leasehold improvements (Note 25)	717	-	717
Plant and equipment (Note 25)	1,115	-	1,115
Total Recurring Fair Value Measurements	708,362	706,530	1,832

Fair Value Measurements at 30 June 2018

	2018 $'000	Level 2 $'000	Level 3 $'000
Recurring Fair Value Measurement
Investment properties (Note 24)	716,160	716,160	-
Leasehold improvements (Note 25)	1,055	-	1,055
Plant and equipment (Note 25)	819	-	819
Total Recurring Fair Value Measurements	718,034	716,160	1,874

Renewal SA's policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period. During 2018 and 2019, Renewal SA had no valuations categorised into level 1 and there were no transfers of assets between level 1 and 2 fair value hierarchy levels during the financial year.

Valuation Techniques and Inputs

Refer to Notes 24 and 25 for valuation techniques and inputs used to derive level 2 and 3 fair values. During 2018 and 2019 there were no changes in valuation techniques. Although unobservable inputs were used in determining fair value, and are subjective, Renewal SA considers that the overall valuation would not be materially affected by changes to the existing assumptions. The following table is a reconciliation of fair value measurements using significant unobservable inputs (level 3).

Reconciliation of Level 3 Recurring Fair Value Measurements as at 30 June 2019

	Leasehold Improvements $'000	Plant & Equipment $'000
Opening Balance at the Beginning of the Period	1,055	819
Acquisitions	-	476
Total gains (losses) for the period recognised in net result:
Depreciation and amortisation expenses	(338)	(180)
Depreciation and amortisation expenses	717	1,155

Reconciliation of Level 3 Recurring Fair Value Measurements as at 30 June 2018

	Leasehold Improvements $'000	Plant & Equipment $'000
Opening Balance at the Beginning of the Period	1,392	669
Acquisitions	-	308
Total gains (losses) for the period recognised in net result:
Depreciation and amortisation expenses	(337)	(158)
Carrying Amount at the End of the Period	1,055	819

Note 28 Payables

	2019 $'000	2018 $'000
Current
Trade creditors	2,899	5.470
Sundry creditors and accrued expenses	18,385	11,741
GST payable	-	3,455
Parental leave scheme	10	-
Employment on costs	408	709
Total Current Payables	21,702	21,375

Payables include creditors, accrued expenses, employment on-costs and Paid Parental Leave Scheme payable.

Creditors represent the amounts owing for goods and services received prior to the end of the reporting period that are unpaid at the end of the reporting period. Creditors include all unpaid invoices received relating to the normal operations of Renewal SA.

Accrued expenses represent goods and services provided by other parties during the period that are unpaid at the end of the reporting period and where an invoice has not been received. The balance of Sundry creditors and accrued expenses has increased this year primarily due to an increase in the level of expenditure on development projects.

The Paid Parental Leave Scheme payable represents amounts which Renewal SA has received from the Commonwealth Government to forward onto eligible employees via Renewal SA's standard payroll processes. Renewal SA acts as a conduit through which the payment to eligible employees is made on behalf of the Family Assistance Office.

All payables are measured at their nominal amount and are normally settled within 30 days from the date of the invoice or date the invoice is first received.

Employment on-costs include payroll tax, WorkCover levies and superannuation contributions and are settled when the respective employee benefits that they relate to are discharged.

Renewal SA makes contributions to several State Government and externally managed superannuation schemes. These contributions are treated as an expense when they occur. There is no liability for payments to beneficiaries as they have been assumed by the respective superannuation schemes. The only liability outstanding at reporting date relates to any contributions due but not yet paid to various superannuation schemes.

As a result of an actuarial assessment performed by the Department of Treasury and Finance, the proportion of long service leave taken as leave was 41% (2018: 41%) and the average factor for the calculation of employer superannuation on-costs was 9.8% (2018: 9.9%). These rates are used in the employment on-cost calculation. The net financial effect of the changes in the current financial year is an increase in the employment on-cost and employee benefits expense of $0.003 million.

Interest Rate and Credit Risk

Creditors and accruals are raised for all amounts incurred but unpaid. Sundry creditors are normally settled within 30 days. Employment on-costs are settled when the respective employee benefits that they relate to are discharged. All payables are noninterest bearing. The carrying amount of payables represents fair value due to the amounts being payable on demand.

Categorisation of Financial Instruments and Maturity Analysis of Payables

Refer to table in Note 38.

Risk Exposure Information

Refer to table in Note 38.

Note 29 Borrowings

	2019 $'000	2018 $'000
Current
Loans - South Australian Government Financing Authority (a)	6,401	618
Loans - South Australian Government Financing Authority (b)	264,151	173,600
Total Current Borrowings	270,552	174,218

Non-Current
Loans - South Australian Government Financing Authority (a)	-	6,401
Loans - South Australian Government Financing Authority (b)	633,150	713,701
Total Non-Current Borrowings	633,150	720,102
Total Borrowings	903,702	894,320

Renewal SA measures financial liabilities including borrowings/debt at historical cost. Financial liabilities that are due to mature within 12 months after the reporting date have been classified as current liabilities. All other financial liabilities are classified as noncurrent.

(a) Comprises borrowings from the South Australian Government Financing Authority (SAFA) in respect of funding for industrial and commercial construction projects under the Premises SA Scheme.

(b) Comprises borrowings from SAFA in respect of other activities of Renewal SA.

Borrowings are recognised at cost and have fixed maturity dates. The interest rate is determined by the Treasurer. The interest rate varied between 1.65% and 6.2% in 2019. (1.9% and 6.2% in 2018).

Categorisation of Financial Instruments and Maturity Analysis of Borrowings

Refer to table in Note 38

Risk Exposure Information

Refer to Note 38.

Defaults and Breaches

There were no defaults or breaches on any of the above borrowings during the year.

Note 30 Unearned Income

	2019 $'000	2018 $'000
Current
Unearned income	3,554	6,287
Total Current Unearned Income	3,554	6,287

Non-Current
Unearned income	15,313	15,530
Total Non-Current Unearned Income	15,313	15,530
Total Unearned Income	18,867	21,817

Unearned income includes rental income and revenues from SA Government received in advance. Rental income from the leasing of inventories and investment properties is recognised in the Statement of Comprehensive Income as part of property income, on a straight-line basis or a constant periodic rate of return. Government grants relating to costs are deferred and recognised in the Statement of Comprehensive Income over the period necessary to match them with the costs that they are intended to compensate.

Unearned income includes rental income of $14.143 million (2018: $21.554 million) and revenues from SA Government of $4.724 million (2018: $0.263 million) received in advance.

Movements in Carrying Amounts

	2019 $'000	2018 $'000
Carrying amount at the beginning of the period	21,817	10,995
Received during the year	5,243	16,844
Recognised in the statement of comprehensive income	(8,193)	(6,022)
Carrying Amount at the End of the Period	18,867	21,817

Note 31 Provisions

	2019 $'000	2018 $'000
Current
Provision for workers compensation	24	15
Provision for income tax equivalent	-	4,519
Provision for future development expenditure	101,276	-
Provision for legal claim	-	1,250
Total Current Provisions	101,300	5,784

Non-Current
Provision for workers compensation	37	23
Total Non-Current Provisions	37	23
Total Provisions	101,337	5,807

Movements in Carrying Amounts

	2019 $'000	2018 $'000
Provision for workers compensation
Carrying amount at the beginning of the period	38	360
Increase/(Decrease) in provisions recognised	23	(266)
Reductions arising from payments	-	(56)
Carrying Amount at the End of the Period	61	38

Provision for income tax equivalent
Carrying amount at the beginning of the period	4,519	-
Additional provisions recognised	-	4,519
Reductions arising from payments	(4,519)	-
Carrying Amount at the End of the Period	-	4,519

Provision for future development expenditure and legal claim
Carrying amount at the beginning of the period	1,250	-
Increase in provision for legal claim	-	1,250
Increase in provision for inventory development expenditure	99,872	-
Increase in provision for lease development expenditure	1,404	-
Reductions arising from payments	(1,250)	-
Carrying Amount at the End of the Period	101,276	1,250
Total Provisions	101,337	5,807

Provisions are recognised when Renewal SA has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation, consistent with the requirements of AASB 137 — Provisions, Contingent Liabilities and Contingent Assets.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date.

Renewal SA has recognised a provision of $99.872 million being the discounted future negative cash flows relating to its obligations under the Lot Fourteen development project. This is because it is probable that an outflow of resources will be required, evidenced by the State Government's public commitments to developing the Lot Fourteen site. This commitment to developing the site is supported by the City Deal between the State Government, Commonwealth Government and the City of Adelaide. As at 30 June 2019 the carrying balance recorded in inventory for Lot Fourteen is zero. The business delivery method and assumptions for
estimating the Lot Fourteen provision could change due to market conditions, government policy or delivery strategy.

Renewal SA uses a discounted cash flow methodology to value its inventory balances associated with the Lot Fourteen project. In past years the cash flows used in project the valuation included the CSO funding from Government as a positive cash flow. The Government has announced that from 1 July 2019 funding towards capital expenditure for Renewal SA's development projects will be provided in the form of contributions of equity rather than as Community Service Obligations (CS0). Equity contributions are not induded in the discounted cash flow valuation as the nature of the payment is of the form of an owner's contribution to the organisation as a whole rather than being of the nature of funding to offset the capital cost of the particular project. The change in the nature of funding has resulted in a significant reduction in the carrying value of the Lot Fourteen project, and the subsequent recognition of a provision for future development expenditure.

A provision has been reported to reflect unsettled workers compensation claims. The workers compensation provision is based on an actuarial assessment of the outstanding liability as at 30 June 2019 provided by a consulting actuary engaged through the Office of the Commissioner for the Public Sector. The provision is for the estimated cost of ongoing payments to employees as required under current legislation.

In accordance with Treasurer's Instructions issued under the Public Finance and Audit Act 1987, Renewal SA is required to pay to the SA Government an income tax equivalent. The income tax equivalent liability is based on the Treasurer's accounting profit method, which requires that the corporate income tax rate (presently 30%) be applied to the profit for the reporting period. Renewal SA made an operating loss for the year ended 30 June 2019 and therefore no income tax equivalent was payable in that reporting period.

A provision of $1.404 million has been recognised for future development expenditure relating to finance leased assets.

Renewal SA has settled the provision raised in June 2018 for $1.25 million relating to a legal claim

Note 32 Other Liabilities

	2019 $'000	2018 $'000
Current
Funds held in trust	-	306
Security deposits	152	152
Total Current Other Liabilities	152	458
Total Other Liabilities	152	458

In October 2018, the Minister for Transport, Infrastructure and Local Government approved the transfer of funds held in trust relating to the Cheltenham Open Space Trust account to Renewal SA for specified projects.

Security deposits are cash bonds held relating to property leases.

Note 33 Cash Flow Reconciliation

	2019 $'000	2018 $'000
Reconciliation of Cash and Cash Equivalents at the End of the Reporting Period:
Statement of Cash Flows	21,083	42,050
Statement of Financial Position	21,083	42,050
Reconciliation of profit/(loss) after income tax equivalent to net cash provided by/(used in) operating activities:
(Loss)/Profit after income tax equivalent	(206,323)	20,575
	(206,323)	20,575
Add/Less Non Cash Items
Inventories write down	125,833	4,754
Transfers from inventories	3,756	-
Adjustments from administrative restructure	2,014	(325)
Depreciation and amortisation	518	495
Provision for doubtful debts	594	325
Transfers from investment properties	2,150	-
Share of net profits of joint ventures	(2,166)	(1,110)
Provision adjustment	-	5,503
Net gain on disposal of investment property	(400)	(250)
Reversal of inventories write-down	(12,285)	(8,690)
Investment property net loss on fair value adjustments	6,080	1,495
	126,094	2,197
Movements in Assets / Liabilities
(Increase)/Decrease in other receivables	(4,158)	4,119
(Increase)/Decrease in prepayments	4	4,452
(Increase)/Decrease in inventories	(49,559)	3,352
Increase/(Decrease) in payables	(90)	7,942
Increase/(Decrease) in unearned income	(2,950)	10,822
Increase/(Decrease) in provisions	95,530	(56)
Increase/(Decrease) in employee benefits	(4,970)	411
Increase/(Decrease) in other liabilities	(306)	156
	33,501	31,198
Net Cash (Used in)/Provided by Operating Activities	(46,728)	53,970

Note 34 Changes in Accounting Policy

Treasurer's Instructions (Accounting Policy Statements)

On 22 March 2019 the Treasurer's Instructions (Accounting Policy Statements) 2019 were issued by the Treasurer under the Public Finance and Audit Act 1987. The Accounting Policy Statements replaced the following Accounting Policy Frameworks:

Purpose and Scope
General Purpose Financial Statements Framework
Asset Accounting Framework
Financial Asset and Liability Framework
Income Framework
Definitions

The new Accounting Policy Statements have largely been prepared on a no-policy change basis. Changes that impact on these financial statements are:

removal of the additional requirement to report transactions with the SA Government
increasing the bands from $10,000 to $20,000 for employee and board member reporting.

These changes do not impact on the amounts reported in the financial statements.

The Accounting Policy Statements also set out requirements in relation to Accounting Standards and Statements not yet effective.
This is further discussed in note 37.

AASB 15 Revenue from Contracts with Customers

AASB 15 Revenue from Contracts with Customers is applied for the first time beginning 1 July 2018 and replaces AASB 18 Revenue and related interpretations. The objective of AASB 15 is that the recognition of revenue depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which Renewal SA expects to be entitled in exchange for those goods and services. It provides extensive guidance as to how to apply this revenue recognition approach to a range of scenarios.

AASB 15 allows a cumulative approach instead of a full retrospective application. The cumulative effect of applying the standard was $1.798 million and is recognised as a reduction to retained earnings at the date of initial application and a corresponding increase to unearned revenue.

AASB 9 Financial Instruments

AASB 9 Financial Instruments replaces the provisions of AASB 139 that relate to recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The adoption of AASB 9 from 1 July 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in financial statements.

As part of the adoption of AASB 9, Renewal SA adopted consequential amendments to other accounting standards and the Treasurer's Instructions (Accounting Policy Statements) arising from the issue of AASB 9 as follows:

AASB 101 Presentation of Financial Statements requires the impairment of financial assets to be presented in a separate line item in the statement of comprehensive income. In prior year, this information was presented as part of operating expenses.
AASB 7 Financial Instruments: Disclosures requires amended disclosures due to changes arising from AASB 9, these disclosures have been provided for the current year because the comparatives have not been restated.

In accordance with transitional provisions and the Treasurer's Instructions (Accounting Policy Statements), AASB 9 Financial Instruments was adopted without restating comparative information for classification and measurement requirements. All adjustments relating to classification and measurement are recognised in retained earnings at 1 July 2018.

The adoption of AASB 9 has not had a significant effect on the recognition, measurement or classification of financial liabilities.

Impairment of Financial Assets

AASB 9 replaces the "incurred loss" model in AASB 139 with the "expected credit loss" model. The following financial assets of Renewal SA are subject to AASB 9's new expected credit loss model.

trade receivables from provisions of services

Trade Receivables

New impairment requirements result in a provision being applied to all receivables rather than only on those receivables that are credit impaired. Renewal SA has adopted the simplified approach under AASB 9 Financial Instruments and measured lifetime expected credit losses on all trade receivables.

There are no additional impairment provisions for State, Territory, or Commonwealth Government receivables due to the Government's high quality credit risk.

Note 35 Unrecognised Contractual Commitments

	2019 $'000	2018 $'000
Operating Lease Receivables
Future minimum rental revenues under non-cancellable operating property leases held but not provided for:
Due within one year	66,785	64,326
Due later than one year not longer than five years	248,295	257,391
Due later than five years	509,898	567,300
Total Operating Lease Receivables	824,978	889,017

These amounts comprise of property leases including TAFE SA. In 2019-20, a number of TAFE SA properties will transfer from Renewal SA which is expected to significantly reduce the operating lease receivables in that year. Refer to Note 39.

	2019 $'000	2018 $'000
Operating Lease Payables
Non-cancellable operating leases contracted but not provided for:
Payable within one year	1,458	1,462
Payable later than one year not longer than five years	6,064	2,417
Payable later than five years	2,349	-
Total Operating Lease Payables	9,871	3,879

These amounts comprise of property leases and leases for motor vehicles. The property leases are non-cancellable over varying terms up to seven years, with rent payable monthly in advance. Motor vehicles are leased over varying terms up to three years.

	2019 $'000	2018 $'000
Capital and Operating Expenditure Commitments
Payable within one year	96,187	14,371
Payable later than one year not longer than five years	17,095	340
Payable later than five years	286	2,793
	113,568	17,504

Commitments include operating and capital commitments arising from contractual or statutory sources and are disclosed at their nominal value.

Unrecognised contractual commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the Australian Taxation Office. If GST is not payable to, or recoverable from the Australian Taxation Office, the commitments and contingencies are disclosed on a gross basis.

Note 36 Contingent Assets and Liabilities

Contingents Assets

There were no contingent assets as at balance date.

Contingent Liabilities

Renewal SA has a potential liability to a developer of up to $0.3 million (being maximum of $0.1 million for each of the three stages of the development) for soil disposal costs if the soil on site is discovered to be unsuitable for the Renewal SA Soil Bank.

Note 37 Impact of Standards and Statements not yet Effective

Renewal SA has assessed the impact of new and changed Australian Accounting Standards Board Standards and Interpretations not yet effective.

Treasurer's Instructions (Accounting Policy Statements) 2019 issued by the Treasurer on 22 March 2019 are effective for 2018-19 reporting period and are addressed below in relation to Standards not yet effective. There are no Accounting Policy Statements that are not yet effective.

The material impacts on Renewal SA are outlined below.

AASB 16 — Leases

Renewal SA will adopt AASB 16— Leases from 1 July 2019.

Objective

AASB 16 sets out a comprehensive model for lease accounting that addresses recognition, measurement, presentation and disclosure of leases. The outcome will be that lease information disclosed will give users of financial statements a basis to assess the effect that leases have on the financial position, financial performance and cash flows of an entity. AASB 16 Leases replaces AASB 117 Leases and Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases — Incentives and Interpretation, and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

Impact on 2019-20 Statements

Renewal SA has assessed the estimated impact on the Statement of Financial Position of adopting AASB 16 with the transition requirements mandated by the Treasurer's Instructions (Accounting Policy Statements).

AASB 16 requires lessees to recognise assets and liabilities for all leases, not subject to a recognition exemption or scoped out of the application of AASB 16. Applying AASB 16 will result in leases previously classified as operating leases having right-of-use assets and related lease liabilities being recognised in the Statement of Financial Position for the first time. Lease incentive liabilities previously recognised will be written off against the right-of-use assets or retained earnings depending on the nature of the incentive.

AASB 16 is expected to have a material impact on the Statement of Financial Position. Renewal SA has estimated the impact of this change and the results as at 1 July 2019.

The estimated impact is based on applying AASB 16's transition approach to those leases identified as leases by Renewal SA prior to 1 July 2019. The incremental borrowing rates applied to estimate the lease liability are the Department of Treasury and Finance's incremental borrowing rates at 1 July 2019.

The estimated impact is set out below.

	as at 1 July 2019 $'000
Assets
Right of Use Assets	8,277
Total Assets	8,277

Liabilities
Lease liabilities	8,277
Total Liabilities	8,277
Net Impact on Equity	-

The amounts disclosed are current estimates only. Renewal SA is continuing to refine its calculations of lease assets and liabilities for 2019-20 financial reporting purposes and expects that those figures will change. This includes accounting for non-lease components and clarifying lease terms and treatment of contractual rent increases.

AASB 16 will also impact on the Statement of Comprehensive Income. The operating lease expense previously included in supplies and services will mostly be replaced with:

a depreciation expense that represents the use of the right-of-use asset; and
borrowing costs that represent the cost associated with financing the right-of-use asset.

The estimated impact on the 2019-20 Statement of Comprehensive Income is set out below.

	2020 $'000
Interest	206
Depreciation	1,324
Gross impact on net cost of providing services	1,530

Existing operating lease treatment	1,281
Net impact on net cost of providing services	(249)

Related Accounting Policies

The Treasurer's Instructions (Accounting Policy Statements) 2019 sets out the key requirements that Renewal SA must adopt for the transition from AASB 117 Leases to AASB 16 Leases. These requirements include that Renewal SA will:

apply AASB 16 retrospectively. The cumulative effect of initially applying the Standard will be recognised at 1 July 2019. Comparatives will not be restated.
only apply AASB 16 to contracts that were previously identified as containing a lease applying AASB 117 and related interpretations.
not transition operating leases for which the lease term ends before 30 June 2020.

The Treasurer's Instructions (Accounting Policy Statements) 2019 also sets out requirements for on-going application. These requirements include that Renewal SA will:

not apply AASB 16 to leases of intangible assets.
adopt $15,000 as the threshold to determine whether an underlying asset is a low value asset and must apply the low value asset recognition exemption to all low value assets.
apply the short-term leases recognition exemption for all classes of underlying asset.
separate non-lease components from lease components.
adopt the revaluation model, where permitted.
where required, apply the relevant lessee's incremental borrowing rate published by the Department of Treasury and Finance.
on initial recognition not record at fair-value leases that have significantly below-market terms and conditions principally to enable Renewal SA to further its objectives, unless they have already been recorded at fair-value prior to 1 July 2019.

Note 38 Financial Instruments Disclosure/Financial Risk Management

Financial Risk Management

Renewal SA is exposed to a variety of financial risks, i.e. market risk, credit risk and liquidity risk. There have been no changes to risk exposure since the last reporting period, and due to the nature of financial instruments held, the financial risks are low. Renewal SA's risk management policies are in accordance with the Risk Management Policy Statement issued by the Premier and Treasurer and the principles established in the Australian Standard Risk Management Principles and Guidelines.

Liquidity Risk

Renewal SA has non-interest bearing assets (cash on hand and receivables) and liabilities (payables) and interest bearing assets (deposits with the Treasurer and SAFA) and interest bearing liabilities (borrowings from the SA Government).

Liquidity risk arises from the possibility that Renewal SA is unable to meet its financial obligations as they fall due. Renewal SA settles undisputed accounts within 30 days from the date of the invoice or the date the invoice is first received. In the event of a dispute, payment is made 30 days from resolution.

Renewal SA's exposure to liquidity risk is insignificant based on past experience and current assessment of risk.

Market Risk

Renewal SA does not trade in foreign currency, nor enter into transactions for speculative purposes, nor for hedging. Market risk for Renewal SA is primarily through price risk. Prices for residential, industrial and commercial property have been depressed as a consequence of slow market conditions within the local South Australian and Adelaide markets.

Exposure to interest rate risk may arise through interest bearing liabilities, including borrowings. Renewal SA's borrowings are managed through the South Australian Government Financing Authority (SAFA) and any movement in interest rates are monitored daily. There is no exposure to foreign currency or other price risks.

Credit Risk

Renewal SA has no significant concentration of credit risk. Renewal SA has policies and procedures in place to ensure that transactions occur with customers with appropriate credit history. No collateral is held as security and no credit enhancements relate to financial assets held by Renewal SA.

Impairment of Financial Assets

Loss allowances for receivables are measured at an amount equal to the lifetime expected credit loss using the simplified approach
in AASB 9.

The maximum period considered when estimating expected credit losses is the maximum contractual period over which Renewal SA is exposed to credit risk.

The expected credit loss of government debtors is nil based on the external credit ratings and nature of the counterparties.

The following table discloses the ageing of financial assets, past due, including impaired assets past due.

	Overdue <30 Days $'000	Overdue 30 - 60 Days $'000	Overdue >60 Days $'000	Carrying Amount $'000
2019
Not impaired:
Receivables	668	1,319	815	2,802
Impaired:
Receivables	46	68	3,961	4,075
Receivables at 30 June 2019	714	1,387	4,776	6 877

2018
Not impaired:
Receivables	664	9	296	969
Impaired:
Receivables	86	2	3,664	3,752
Receivables at 30 June 2018	750	11	3,960	4,721

The following table discloses information about the exposure to credit risk and ECL for non-government debtors.

	Gross carrying amount $'000	Loss %	Lifetime expected losses $'000
Current (not past due)	1,109	0.5	6
1-30 days past due	301	0.5	2
31 -60 days past due	307	0.5	6
61 -90 days past due	732	0.5	4
More than 90 days past due	82	0.5	0
Loss Allowance	2 531		18

Loss rates are based on actual history of credit loss, these rates have been adjusted to reflect the differences between previous economic conditions, current economic conditions, and Renewal SA's view on the forecast economic conditions over the expected life of the receivable.

Impairment losses are presented as net impairment losses within net resulted, subsequent recoveries of amounts previously written off are credited against the same line item.

Receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include the failure of a debtor to enter a payment plan and failure to make contractual payments.

Renewal SA considers that its cash and cash equivalents have a low credit risk based on the external credit ratings of the counterparties and therefore the expected credit loss is nil.

Categorisation of Financial Instruments

Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised with respect to each class of financial asset, financial liability and equity instrument are disclosed in respective notes.

Renewal SA does not recognise any financial assets or financial liabilities at fair value but does disclose fair value in the notes. All the resulting fair value estimates are included in Level 2 as all significant inputs required are observable.

The carrying value less impairment provisions of receivables and payables is a reasonable approximation of their fair values due to the short-term nature of these.

Borrowings are initially recognised at fair value plus any transaction costs attributable to the borrowings, and subsequently held at amortised cost. For the majority of borrowings, their fair values are not materially different from their carrying amounts, since the interest payable on these borrowings is either close to current market rates or the borrowings are of a short-term nature.

Classification Applicable from 1 July 2018 under AASB 9 Financial Instruments

On initial recognition, a financial asset is classified as measured at amortised cost, fair value through other comprehensive income (FVOCI) - debt instrument, FVOCI - equity instrument or fair value through profit and loss.

A financial asset is measured at amortised cost if it meets both of the following conditions:

It is held within a business whose objective is to hold assets to collect contractual cash flows; and
Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest only on the principal and interest only on the principal amount outstanding.

Renewal SA measures all financial instruments at amortised cost.

2019 Contractual Maturities

	Note	Carrying amount $'000	<1 year $'000	1-5 years $'000	>5 years $'000	Fair value $'000
2019
Financial Assets:
Cash and cash equivalents	21	21,083	21,083	-	-	21,083
Loans and receivables:
Receivables	22	17,956	9,092	8,864	-	17,956
Allowance for doubtful debts	22	(4,388)	(4,139)	(249)	-	(4,388)
Total Financial Assets		34,651	26,036	8,615	-	34,651

Financial Liabilities:
Financial liabilities at cost:
Payables	28	28,194	21,072	7,122	-	28,194
Borrowings	29	903,702	270,552	283,150	350,000	815,276
Total Financial Liabilities		931,896	291,624	290,272	350,000	843,470
Net Financial Assets/(Liabilities)		(897,245)	(265,588)	(281,657)	(350,000)	(808,819)

2018 Contractual Maturities

	Note	Carrying Amount $'000	<1 year $'000	1-5 years $'000	>5 years $'000	Fair Value $'000
2018
Financial Assets:
Cash and cash equivalents	21	42,050	42,050	-	-	42,050
Loans and receivables:
Receivables	22	10,040	6,165	697	3,178	9,406
Allowance for doubtful debts	22	(3,794)	(3,794)	-	-	(3,794)
Total Financial Assets:		48,296	44,421	697	3,178	47,662

Financial Liabilities:
Financial liabilities at cost:
Payables	28	24,268	17,013	7,255	-	24,268
Borrowings	29	894,320	174,218	370,102	350,000	758,775
Total Financial Liabilities		918,588	191,231	377,357	350,000	783,043
Net Financial Assets/(Liabilities)		(870,292)	(146,810)	(376,660)	(346,822)	(735,381)

Receivables and Payables

The receivable and payable amounts disclosed here exclude amounts relating to statutory receivables and payables. In government, certain rights to receive or pay cash may not be contractual and therefore, in these situations, the requirements will not apply. Where rights or obligations have their source in legislation such as levies, tax and equivalents, they would be excluded from the disclosure. The standard defines contract as enforceable by law. All amounts recorded are carried at cost (not materially different from amortised cost).

Note 39 Events After Reporting Period

Transfer of TAFE SA Properties to the General Government Sector

As part of the 2019-20 State Budget the Government announced the transfer of a number of TAFE properties owned by Renewal SA to the general government sector for a value of $601.1 million, which is Renewal SA's carrying value as at 30 June 2019. This transfer is expected to be completed in the 2019-20 financial year and will result in a reduction of borrowings for the same amount.

Certification of the Financial Statements

We certify that the attached general purpose financial statements for the Urban Renewal Authority (trading as Renewal SA):

comply with relevant Treasurer's Instructions issued under Section 41 of the Public and Finance Audit Act 1987, and relevant Australian Accounting Standards;
are in accordance with the accounts and records of the Urban Renewal Authority; and
present a true and fair view of the financial position of the Urban Renewal Authority as at 30 June 2019 and the results of its operations and cash flows for the financial year.

Internal controls employed by the Urban Renewal Authority for the financial year over its financial reporting and its preparation of the general purpose financial statements have been effective throughout the financial year and there are reasonable grounds to believe the Urban Renewal Authority will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Urban Renewal Authority Audit and Risk Committee.

(Signed)

M Devine
A/Chief Executive

10 September 2019

(Signed)

D De Luca
General Manager, Corporate Services

10 September 2019

(Signed)

C Tragakis
Presiding Member

10 September 2019

Bowden

Festival Plaza

Tonsley Innovation District

From the Chief Executive

Overview: about the agency

Our strategic focus

Our purpose

Our values

Our functions

Changes to the agency

Our Minister

Legislation administered by the agency

The agency's performance

Agency contribution to whole of Government objectives

Performance at a glance

Corporate performance summary

Employment opportunity programs

Agency performance management and development systems

Work health, safety and return to work programs

Executive employment in the agency

Financial performance

Financial performance at a glance

Consultants Disclosure

Consultancies with a contract value below $10,000 each

Consultancies with a contract value above $10,000 each

Risk management

Risk and audit at a glance

Strategies implemented to control and prevent fraud

Whistle-blowers disclosure

Public complaints

Number of public complaints reported

Financial statements

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Statement of cash flows

Note Index

Note 1 Objectives of the Urban Renewal Authority

Note 2 Basis of preparation

Note 3 Transferred Functions

Transfers to the South Australian Housing Trust

Transfer from the Riverbank Authority

Transfer to the Department of Premier and Cabinet

Note 3 Transferred Functions

Transfers to the South Australian Housing Trust

Transfer from the Riverbank Authority

Transfer to the Department of Premier and Cabinet

Note 4 Key Management Personnel

Note 5 Remuneration of Board and Committee Members

Urban Renewal Authority Board of Management

Tonsley Steering Committee

Board and Committee Remuneration

Note 6 Related Party Disclosures

Transactions with Key Management Personnel and Other Related Parties

Significant Transactions with Government Related Entities

Note 7 Employees Benefits Expense

Employment on-costs - superannuation

Executive remuneration

Targeted voluntary separation packages (TVSP)

Note 8 Employees Benefits Liability

Salaries and wages, annual leave, skills and experience retention leave (SERL) and sick leave

Long service leave

Employee benefit on-costs

Note 9 Revenue from Sales and Cost of Sales

Note 10 Joint Ventures

Note 11 Revenues from SA Government

Community Service Obligations

Other SA Government Revenues

Note 12 Interest Revenues

Note 13 Property Income

Note 14 Other Revenues

Note 15 Net Gain(Loss) from Disposal of Non-Current Assets

Note 16 Operating Expenditure

External Consultants

Note 17 Borrowing Costs

Note 18 Auditors Remuneration

Note 19 Income Tax Equivalent

Note 20 Dividends Paid to SA Government

Note 21 Cash and Cash Equivalents

Deposits with the Treasurer