This annual report will be presented to Parliament to meet the statutory reporting requirements of the Urban Renewal Act 1995 and the requirements of Premier and Cabinet Circular PC013 Annual Reporting.
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:
Stephen Hains
Presiding Member, Urban Renewal Authority Board of Management
From the Chief Executive
This year we made significant strides towards the second-year goals in our Strategic Plan (2020-23). Renewal SA continued demonstrating our value as the South Australian Government’s property development arm.
Through the year, our Strategic Plan (2020-23) continued to be our blueprint for driving economic growth through our people, our pipeline of development opportunities, our partnerships across government and the private sector, and our active renewal projects.
Our efforts remain focused on quality infill developments; city-shaping projects; greenfield land supply; industrial and commercial land; the provision of support to other government agencies; affordable housing and regional renewal.
In the 2021–22 financial year, Renewal SA’s projects and land sales unlocked an estimated $500 million of private sector capital expenditure and contributed in excess of an estimated $400 million in Gross State Product. Our projects also supported more than 2,500 jobs and more than 300 affordable housing outcomes.
Partnerships continue to be fundamental to our success
Over the past year, we have entered into multiple agreements with private industry to develop land at Oakden, Forestville, St Clair and Bowden and help grow the supply of affordable housing in liveable neighbourhoods close to services and amenities.
Renewal SA also released several major development opportunities to the private sector, including those at Aldinga (a project that will now proceed with a preserved rail corridor), the former Brompton Gasworks site and Tonsley Innovation District to drive investment in South Australia and create new places and spaces where communities and businesses can thrive.
Through its usual activities, the organisation also sold approximately 22.5 hectares of industrial land in Adelaide’s north and west to support ongoing growth in the defence, food and logistics sectors, cementing our position as one of the state’s largest suppliers of employment land.
Our civic projects – including the heritage restoration of the Adelaide Railway Station and the launch of the reimagined Festival Plaza – have attracted significant attention and helped to enhance the city experience greatly. The new northern entrance to the station, delivered in partnership with the Department for Infrastructure and Transport, won the prestigious 2022 City of Adelaide Prize in June 2022 and Festival Plaza has attracted more than 50,000 visitors since its launch in March 2022.
In addition to the above, we began community engagement on a proposed new residential community in Prospect, sold the final residential allotment at The Square at Woodville West and completed delivery of the Lightsview project. We also commenced works at the Seaton Demonstration Project on behalf of the SA Housing Authority to bring about a reimagined neighbourhood on former Housing Trust land.
Organisation and Leadership
We represent an industry tied to the land and we know that each of our projects is located on land that has been nurtured by First Nations peoples for thousands of years.
It was with enormous pride that we appointed our first Manager of Reconciliation and Cultural Heritage in September 2021 and launched our Innovate Reconciliation Action Plan (RAP). This RAP outlines a series of actions and deliverables that will help us take our commitment to reconciliation from aspiration to reality.
As part of our commitment to growing our people and motivating them to perform at their best, 20% of our workforce attained internal promotions or moved into new roles, enabling career progression and important professional development.
It has certainly been a year of achievement, underpinned by enormous hard work and change.
Throughout the 2021–22 financial year, along with the sectors we represent and partner with, Renewal SA faced considerable challenges and opportunities associated with the growth of industrial sectors, housing affordability, supply chain and cost escalation, growth in regions, and the future growth of our city.
We know that there is much more to do in the urban property landscape, and we remain committed to unlocking more opportunities to drive the state’s prosperity and supporting our industry to address the challenges associated with enabling jobs, housing supply and affordability, and regional growth.
Together with the Minister for Housing and Urban Development, the Hon. Nick Champion, and the Urban Renewal Authority Board, I am proud to present our annual report for the 2021–2022 financial year. We look forward to continuing to improve the lives of all South Australians through property and projects now and into the future.
Chris Menz
Chief Executive
Renewal SA
About the agency
Our strategic focus
As the South Australian Government’s urban development agency, we lead and coordinate development and urban renewal activity to ensure South Australia’s future employment and housing needs are met through well-planned, affordable urban developments.
Our role is to unlock and develop land in strategic locations in partnership with the private sector and other government agencies in order to address the current and future needs of South Australians.
We focus on property development that builds new industries, infrastructure and communities while driving economic activity, attracting investment, and enhancing liveability in South Australia.
Our purpose and mission
Renewal SA’s purpose is to improve the lives of South Australians now and into the future by leading, supporting and driving investment and growth through property and projects.
Our values
Our values are in line with the South Australian public sector values. They guide our behaviours and practices and apply to everyone at Renewal SA, regardless of position, expertise or location.
Renewal SA’s values reflect our commitment to the ever-changing needs of South Australians, and the role of government in helping to foster the State’s prosperity and wellbeing.
Respect – We all have something to offer at Renewal SA, and that means every member of our team is valued and respected
Trust – We’ve got each other’s backs at Renewal SA. We share information and trust our colleagues are making decisions with the best intent and endeavour
Honesty and Integrity – We are all responsible for creating a positive workplace at Renewal SA – every word, action and behaviour matters
Courage and Tenacity – At Renewal SA we understand that a win for one of us is a win for all of us – and that means we never give up
Collaboration and Engagement – At Renewal SA we believe a collaborative approach delivers the best results and that’s why we’re focused on creating solutions together
Service – We come to work at Renewal SA every day to deliver for the people of South Australia. We proudly serve our Government and our community
Professionalism – A culture of excellence means we hold ourselves to the highest standard at Renewal SA and we’re always looking for ways to do things better
Sustainability – South Australians are at the heart of everything we do at Renewal SA and that means all decisions are made in the best interests of both current and future generations.
Our functions, objectives and deliverables
Renewal SA is the South Australian Government’s leading urban development agency. We coordinate, develop and deliver projects and initiatives through our people and collaborative partnerships to benefit all South Australians
Our Strategic Plan (2020-23) aligns our work to four strategic pillars and associated goals:
People – Renewal SA is an inclusive and dynamic working environment that drives high levels of engagement, market-leading capability, and results-driven performance.
Partnerships – Renewal SA’s strong and collaborative partnerships unlock new opportunities and produces exceptional market-leading results for the State.
Pipeline – We are constantly initiating and contributing to a strong pipeline of development opportunities that enable growth and attract additional investment for the State.
Projects – Alongside our partners, Renewal SA leads the market to deliver economic, social and environmental benefits through excellence in project delivery.
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 the development of the State
- acquire, hold, manage, lease and dispose of land, improvements in property.
Changes to the agency
During the 2021-22 financial year, Renewal SA introduced the new role of General Manager, Business and Systems Transformation, in response to a pressing internal need to update processes that were no longer fit-for-purpose and assist the organisation to be more agile and equipped to deliver on its ambitions in the Strategic Plan (2020–23).
This role commenced on 22 October 2021 for an initial 18-month period.
Beyond this, there were no further changes to the agency’s structure and objectives as a result of internal reviews or machinery of government changes.
Our Minister
The Urban Renewal Authority, trading as Renewal SA began the 2021-22 financial year within the portfolio responsibilities of the Treasurer, the Hon Rob Lucas MLC’s portfolio. In March 2022, it moved to the Hon Nick Champion MP, Minister for Housing and Urban Development.
Our Executive Team
The Chief Executive currently reports to the Minister for Housing and Urban Development and the Urban Renewal Board of Management and oversees the day-to-day operations of our organisation, together with the Executive team.
As at 30 June 2022, Renewal SA’s Executive Team comprised:
- Chris Menz, Chief Executive
- Michael Wood, General Manager, Commercial and Corporate
- Todd Perry, General Manager, Property and Project Delivery
- Tony Cole, General Manager, Major Projects and Pipeline
- Christine Steele, General Manager, Business and Systems Transformation
- Vy Collins, Senior Director, People and Culture.
Braden Naylor, was Acting General Manager, Commercial and Corporate, until February 2022.
Key legislation and governance requirements
Pursuant to section 9 of the Urban Renewal Act 1995, the following Ministerial Directions were implemented:
- Aldinga Rail Corridor - Land Preservation
- Lot Fourteen – Project management of the refurbishment of the Eleanor Harrald and Hanson Buildings.
Other related agencies (within the Minister’s area/s of responsibility)
- Department of Trade and Investment
- Planning and Land Use Services.
The agency's performance
Performance at a glance
Throughout the 2021-22 financial year Renewal SA continued to drive long-term economic growth in South Australia through property development and urban renewal projects of scale.
Renewal SA currently manages a portfolio comprising more than 3,358 hectares of land that generates in excess of $140 million of income each financial year for the South Australian Government.
Our major projects include:
- thirteen residential developments, including Bowden, Playford Alive, Tonsley Village, Oakden, Lightsview, Forestville, The Square at Woodville West, Our Port, Prospect, St Clair, Eyre at Penfield, Kent Town and the Seaton Demonstration Project
- three innovation precincts, including Lot Fourteen, Tonsley Innovation District and Technology Park Adelaide
- three civic projects, including Adelaide Railway Station, Festival Plaza and Adelaide Riverbank
- six industrial/employment land projects, including those at Northern Lefevre Peninsula, Edinburgh Parks, Elizabeth South, Gillman, Osborne North and East Grand Trunkway.
Renewal SA manages a total of $105 million in investment property assets and as part of its role, continues to generate further revenue for the state of South Australia by transacting on government land and assets that has been declared surplus by the state. This financial year, surplus land sales managed through Renewal SA equated to $34.6 million in additional revenue.
Our ongoing activities also seek to contribute to providing consistent land supply for residential, industrial and commercial projects, responding to emerging market opportunities and trends as they arise, and delivering major development opportunities for the private sector.
During 2021-22, we undertook the following:
- launched two new Green Star rated townhouse projects at Bowden, including Tapestry at Bowden (5 Star Green Star) and Tribeca Bowden (6 Star Green Star)
- secured a national developer for the construction of 1,500 homes at Oakden
- released 60 hectares of land in Aldinga for the development of a sustainable, master-planned community (now proceeding with a preserved rail corridor)
- finalised the draft master plan for the creation of a new residential development in Prospect
- facilitated increased affordable housing outcomes at the upcoming redevelopment of the Royal Hotel site in Kent Town, in partnership with Flagship Group
- undertook a national process to identify a preferred proponent for the redevelopment of the former Gasworks site at Brompton (part of the Bowden development)
- renegotiated the Festival Plaza project with various partners and launched the largest section of Festival Plaza’s revitalised public realm including commencing a short-term curated activation program of the new public space
- secured a development partner for the transformation of the former Le Cornu site at Forestville into a new community-focused, mixed-use development including delivery of 300 homes
- completed the heritage restoration and uplift of Adelaide Railway Station
- sold the final residential allotment of the 450-home development at The Square at Woodville West
- opened a new display village at Playford Alive showcasing homes from eight builders
- helped drive delivery of Australian Space Park alongside the Department of Trade and Investment
- sold 3.7 hectares in St Clair for the development of high-quality terraces and apartments
- sold approximately 22.5 hectares of industrial land to support ongoing growth in the defence, food and logistics sector
- leased approximately 45 hectares of industrial land to ANI to allow the Australian Government to investigate an expansion of the Osborne Naval Shipyard to accommodate future AUKUS projects, including the potential construction of nuclear-powered submarines
- secured approximately 16 hectares of land, immediately adjacent to RAAF Edinburgh to facilitate delivery of the Deep Maintenance and Modification Facility which will enable the Department of Defence to service aircraft in South Australia
- delivered new infrastructure and public realm to support existing tenants and enable the future delivery of the Entrepreneur and Innovation Centre, Tarrkarri (Centre for First Nations Cultures) and the Digital Technologies Academy.
Agency response to Covid-19
Our response to the COVID-19 pandemic changed rapidly throughout the financial year to support vulnerable people within Renewal SA workplaces and in the South Australian community.
A dedicated Renewal SA COVID-19 Preparedness Co-ordinating Group met regularly to oversee a response to the COVID-19 pandemic and implement workplace controls across Renewal SA workplaces to meet the regularly updated SA Health COVID-19 guidelines and ensure business continuity.
Effective and timely communication with employees was a focus during the regular changes to the SA Health workplace guideline implemented to ensure the safety and wellbeing of employees. This was not limited to physical health and included the mental health and wellbeing of employees. COVID-19 controls were implemented, monitored and enhanced as required.
| Agency COVID-19 statistics | Current year 2021-21 | Past year 2020-21 | % change (+/-) |
| Staff reports of positive COVID-19 infection | 61 | 0 | +100% |
| Staff reports of Close Contact | 68 | 0 | +100% |
| Potential positive COVID-19 reports due to workplace transmission | 1 | 0 | +100% |
Agency contribution to whole of government objectives
Renewal SA supports the South Australian Government’s vision to make housing more accessible for first time homeowners in South Australia; bolster the trades sector and reverse the state’s labour skills shortage; stimulate jobs and private investment in our state; and secure the long-term liveability and economic prosperity of South Australia.
Agency’s contribution during 2021–22:
- delivered 300+ affordable homes
- generated a pipeline of 820+ future affordable homes to be delivered over the next 5-8 years through our projects
- secured private investment for vibrant new residential developments at Bowden, Oakden and Forestville close to services and amenities
- released major development opportunities to the private sector at Aldinga (now proceeding with a preserved rail corridor) and the former Brompton gasworks site
- supported more than 2,500 FTEs across the construction and related industries
- facilitated 77 accredited training places, 23 traineeships/apprenticeships, 36 work experience placements and six paid employment positions for South Australians across Renewal SA’s flagship projects
- unlocked 22.5 hectares of employment land to support ongoing growth in the defence, food and logistics sectors
- unlocked an estimated $500 million of private sector capital expenditure
- generated an estimated $400 million in Gross State Product
- launched the largest section of Festival Plaza’s revitalised public realm as part of the $1 billion plaza redevelopment project with Walker Corporation and SkyCity Adelaide.
Agency specific objectives and performance
We have continued delivery of our Strategic Plan (2020-23), which guides our focus on driving economic growth in South Australia through property development and urban renewal projects of scale.
Our Strategic Plan (2020-23) is formulated on a foundation of four pillars — people, pipeline, partnerships and projects. These pillars underpin our three-year organisational goals and initiatives, all designed to support ambitious outcomes. They are critical to our success and are the reference points against which we benchmark and measure progress.
During 2021-22, we committed to and invested in a program of work to ensure that our business systems and processes were market leading to enable our people to (a) work more effectively and (b) better respond, more quickly, to the evolving needs of our partners and stakeholders. The Business and Systems Transformation project team has been established to drive this work and is working across the business to deliver significant improvements across the areas of people and organisation, technology and business, policy and processes.
The organisation has also implemented a new governance model to ensure that we have transparency on decision making internally, and structure ourselves to achieve the objectives and goals set out in our Strategic Plan (2020-23). The model supports and enables the successful delivery of our day-to-day work and provides a forum for strategic discussions to inform decision-making, capability building, and business transformation and innovation.
The table below outlines our achievements against our second-year objectives in our Strategic Plan (2020-23).
People
Three-year goal
Renewal SA is an inclusive and dynamic working environment that drives high levels of engagement, market-leading capability and results-driven performance.
| Indicators | Performance |
|---|---|
| Renewal SA and its projects operate incident and injury free, and staff and contractors are engaged with a “safety is how we do business around here” mindset |
|
| Renewal SA has great people in the right positions, at the right time, and creates a positive employee experience so our people are proud to work here and want to stay |
|
| Renewal SA sets clear expectations and engages our people so they are motivated to perform at their best. |
|
| Renewal SA enables our people to reach their potential and develops future capabilities for the business. |
|
| Renewal SA recruits, retains and develops a diverse workforce that reflects the community that we serve, and embraces, respects and values the differences of our people. |
|
Partnerships
Three-Year Goal
Renewal SA’s strong and collaborative partnerships unlock new opportunities and produces exceptional market-leading results for the State.
| Indicators | Performance |
|---|---|
| Be the government ‘partner of choice’ for the public and private sector on property initiatives and projects. |
|
| Develop a Corporate Communications and Partnerships Plan to consult with community, industry and government, build relationships, drive collaboration and build reputation. |
|
| Develop a corporate brand platform to build trust and understanding. |
|
Pipeline
Three-Year Goal
We are constantly initiating and contributing to a strong pipeline of development opportunities that enable growth and attract additional investment for the State.
| Indicators | Performance |
|---|---|
| Renewal SA uses a structured business planning process that results in a tangible and achievable pipeline of opportunities |
|
| Renewal SA is the peak government agency for property and project delivery |
|
| Renewal SA delivers a pipeline of projects annually that leads the market and increases investment into South Australia and Gross State Product (GSP). |
|
| Project origination comes from across the entire organisation. Staff are engaged and active in the process; ‘pipeline is everyone’s responsibility’. |
|
Projects
Three-Year Goal
Alongside our partners, Renewal SA leads the market to deliver economic, social and environmental benefits through excellence in project delivery.
| Indicators | Performance |
|---|---|
| Renewal SA is a market leader in data analysis enabling the organisation to meet and exceed sales and revenue forecasts |
|
| Projects demonstrate excellence in delivery, management and completion/ handover |
|
| The Our Future Housing Strategy 2020-30 objectives and activities for Renewal SA are incorporated within the relevant projects and developments. |
|
| All projects result in job growth. |
|
| Renewal SA leads and delivers on economic recovery initiatives relating to property. |
|
Corporate performance summary
Employment opportunity programs
| Program name | Performance |
Diversity and inclusion | Renewal SA remains committed to fostering a diverse and inclusive workplace that enriches the environment we work in and enhances our ability to deliver great outcomes for South Australia. We support the evolution and advancement of dynamic professionals from diverse heritage. As at 30 June 2022 our workforce comprised:
|
Aboriginal workforce participation | In support of Renewal SA’s strategic objective to embed and progress our Reconciliation Action Plan, we appointed our first Manager of Reconciliation and Cultural Heritage in September 2021. This new position has helped us facilitate new pathways to working collaboratively with First Nation stakeholders. |
Skilling SA | In July 2021 through to April 2022, Renewal SA hosted a trainee through the Skilling SA Public Sector project. The trainee was appointed as a Project Support Officer within the Renewal SA Works Program team and supported the team with administrative duties whilst studying towards their Certificate III in Business. The Skilling SA project allowed the trainee to expand their knowledge and develop their expertise in a supportive and development-focused environment, whilst allowing the team to mentor a new employee and build internal capability. |
Women in Property program | At Renewal SA, we are committed to providing opportunities for women to thrive in their careers and grow into leadership roles. We recognise the importance of promoting and encouraging women to pursue a career in the property industry; creating a diverse, inclusive and psychologically safe environment where employees are all treated equally; providing more opportunities for women in senior leadership roles; and supporting and encouraging women to take a step up in their career. Current initiatives include staff participation in the Property Council of Australia’s 500 Women in Property program and sponsorship of the Girls in Property program. We have recently implemented a leadership development program and are proud to share that 82% of participants are women. |
Agency performance management and development systems
The Renewal SA performance and development framework remained a key focus during 2021-22.
A key objective of this framework has included the creation of performance plans for all employees and the alignment of associated development plans to the Strategic Plan (2020-23). This has ensured that all employees have line-of-sight to the strategic objectives of our agency and their contribution to the delivery of these objectives. In turn, this has enhanced employee engagement and accountability across the business.
| Performance management and development system | Performance |
|---|---|
| Performance plans are facilitated and documented through our Performance Development Conversations framework. The formal performance conversation process is biannual. | During the 2021-22 financial year, 100% of our eligible employees had a performance development conversation and a custom performance plan. |
Work Health, Safety and Return to Work Programs
| Program name | Performance |
|---|---|
| Work Health and Safety framework | Our Work Health and Safety (WHS) framework is based on the Work, Health and Safety Act 2012 (SA) and the international standard for Safety Management systems ISO45001:2018.
In 2021-22 we:
No Return-to-Work Claims were recorded in the 2021-22 financial year across Renewal SA or its work sites. |
| Wellbeing Program | Our Wellbeing Program values the benefits of worker wellbeing and wellness, particularly during the changing working environment throughout the year. We offer holistic worker wellness programs focused on mental health, physical health, fatigue and the financial, emotional and social aspects of worker wellness. In addition to the mandatory Mental Health First Aid requirements, we maintain a fully trained complement of Mental Health First Aiders in the workplace across Renewal SA work sites. |
| Return to Work Program | Renewal SA is committed to the effective management and care of any injured employees with either a compensable injury or non-compensable injury.
We work closely with our Injury Management and Return to Work service provider to ensure employees receive care and support in their return to the workplace following an injury. We consistently maintain 100% performance ratings for:
Renewal SA has a trained Return to Work Coordinator to coordinate the effective return to work of injured employees |
| Workplace injury claims | Current year 2021-22 | Past year 2020-21 | % change (+/-) |
|---|---|---|---|
| Total new workplace injury claims | 0 | 1 | -100% |
| Fatalities | 0 | 0 | 0% |
| Seriously injured workers* | 0 | 0 | 0% |
| Significant injuries (where lost time exceeds a working week, expressed as frequency rate per 1000 FTE) | 0 | 0 | 0% |
*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 | Current year 2021-22 | Past year 2020-21 | % 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** | Current year 2021-22 | Past year 2020-21 | % change (+/-) |
|---|---|---|---|
| Total gross workers compensation expenditure ($) | $0 | $3,944 | -100% |
| Income support payments (gross) ($) | 0 | $0 | 0% |
**Before third party recovery.
Data for previous years is available at Data SA - Work Health and Safety and Return to Work Performance.
Executive employment in the agency
| Executive classification | Number of executives |
|---|---|
| Chief Executive | 1 |
| Executives* | 20 (excluding Chief Executive) |
*In accordance with the workforce information data definition Office of the Commissioner for Public Sector Employment, an Executive is an employee who receives:
- A total salary equivalent to $123,648 per annum or more; or
- Receives a Total Remuneration Package Value type contract equivalent to $157,715 per annum or more; and
- Has professional or managerial ‘executive’ responsibilities
Five of the Executives reported above are in the Executive team supporting the Chief Executive. The remainder of the Executives reported are high level senior
professionals who are responsible for the delivery of key outcomes e.g. project directors or leaders of functional business units.
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 following is a brief summary of the overall financial position of the agency. The information is unaudited. Full audited financial statements for 2021-2022 are attached to this report.
The Comprehensive Result is a profit of $34.9 million, which is an improvement of $41.1 million on the previous financial year. A significant driver of the improved profit position over the prior year was the Oakden sale, which saw $81.1 million of sales and $37.1 million of gross profit being recognised in the current year, due the passing of control from Renewal SA to Villawood.
The Underlying Operating Result is a profit of $39.4 million. This result excludes the impact of one-off valuation adjustments and financing costs resulting from the level of borrowings determined by the South Australian Government for Renewal SA.
The continuation of the buoyant property market has led to strong sales performance for the year, particularly in our residential development projects notably at Playford Alive.
The Statement of Financial Position shows a positive Net Asset and Equity position of $71.0 million, representing a $71.0 million improvement on the minor Net Asset surplus reported for the last financial year. The government provided additional equity contributions during the financial year of $32.5 million, primarily for the Lot Fourteen and Tonsley projects.
It is noted that our 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 and the full audited financial statements for the year ended 30 June 2022 are attached to this report.
| STATEMENT OF COMPREHENSIVE INCOME | 2021-22 ACTUAL $000S | 2020-21 ACTUAL $000S |
| Revenue from sales | $149,020 | $69,115 |
| Less: cost of sales | ($89,683) | ($47,545) |
| Gross profit on sales | $59,337 | $21,570 |
| Other income | $48,326 | $34,649 |
| Operating expenses | ($68,208) | ($58,073) |
| Underlying operating result | $39,455 | ($1,853) |
| Borrowing costs | ($5,650) | ($8,928) |
| Net gain/(loss) from changes in asset values | $16,016 | $4,063 |
| Comprehensive Result - before Income Tax | $49,821 | ($6,719) |
| Income Tax | $14,946 | - |
| Total Comprehensive Result | $34,875 | ($6,179) |
| STATEMENT OF FINANCIAL POSITION | 2021-22 ACTUAL $000S | 2020-21 ACTUAL $000S |
| Current Assets | $143,012 | $88,141 |
| Non-Current Assets | $387,309 | $365,283 |
| Total Assets | $530,321 | $453,424 |
| Current Liabilities | $190,645 | $59,771 |
| Non-Current Liabilities | $268,629 | $393,578 |
| Total Liabilities | $459,274 | $453,349 |
| Net Assets | $71,047 | $75 |
| Total Equity | $71,047 | $75 |
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 $10,000 each
| Consultancies | Purpose | Actual Payment ($) |
|---|---|---|
| 31 consultants engaged | Various | 117,743 |
Consultancies with a contract value above $10,000 each
| Consultancies | Purpose | Actual Payment ($) |
|---|---|---|
| Agon Environmental | Stockpile Sampling – Soilbank | 23,580 |
| Capisce QS Pty Ltd | Cost Estimate – Proposed Stress Ribbon Design – Port Adelaide | 12,000 |
| Ernst & Young | Due Diligence – Oakden | 36,000 |
| GPA Engineering Pty Ltd | Engineering Advice – Former Australia Renewable Fuels Infrastructure Site | 13,061 |
| Greencap – NAA Pty Ltd | Environmental Advice – Forestville | 122,770 |
| Greencap – NAA Pty Ltd | Environmental Advice – 63 Conyngham Street | 12,290 |
| Greenhill Engineers | Cost Analysis – Prospect Infrastructure | 11,537 |
| HAYMAKR | Market Research – Sydney and Melbourne First Home Buyers | 16,450 |
| Jodie Murphy | HR Consulting and Advice | 24,000 |
| Jones Lang LaSalle | Industrial Land Strategy | 44,900 |
| KPMG | Leadership Workshop and Strategic Planning | 12,398 |
| M L Smith Consulting | Policy Governance Advice | 28,635 |
| Metric Marketing Pty Ltd | Market Research and Reporting – WCH North Adelaide | 37,424 |
| Price Waterhouse Coopers | Accounting, Tax and Economic Impact Advice | 115,250 |
| Price Waterhouse Coopers | Bowden Economic Assessment | 46,350 |
| Price Waterhouse Coopers | Business Systems and Processes Review and Digital Strategy | 299,763 |
| Robert Bird Group Pty Ltd | Concept Design – Dock One Pedestrian Bridge | 19,326 |
| Stallard Meek – Flightpath | Feasibility – Adelaide Railway Station – Skybridge Removal and Eastern Balcony | 13,320 |
| Swanbury Penglase | Interior Architecture Advice – Adelaide Railway Station | 22,040 |
| Turner & Townsend | Project Management Framework Review | 59,500 |
| TOTAL | 970,594 | |
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.
The details of South Australian Government-awarded contracts for goods, services, and works are displayed on the SA Tenders and Contracts website. View the agency list of contracts.
The website also provides details of across government contracts.
Risk Management
Risk and audit at a glance
Renewal SA has a robust Risk Management Policy and Framework in place 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. It also ensures that risks are identified, assessed and assigned to risk owners with risk treatment and mitigating strategies required.
The Urban Renewal Authority Board of Management has an established Finance, Risk and Audit Committee. The principal functions of this committee 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
- advise the Board on procedures and ways of working within Renewal SA to align these with the organisation’s overall strategic direction
- oversee financial performance.
The committee comprises members of the Board of Management. The committee met on five occasions during 2021-22.
There is also appropriate risk reporting in place to the Executive, the Finance, Risk and Audit Committee and the Board of Management.
The Department of Human Services Internal Audit team provides Renewal SA’s Internal Audit function under a Service Level Agreement. The annual Internal Audit Work Plan is reviewed and approved by the Finance, Risk and Audit Committee, with all findings reported to the committee.
The Auditor General completed their annual audit of Renewal SA’s financial statements and internal controls for 2021/22 and raised no material concerns.
Strategies implemented to control and prevent fraud
Renewal SA’s two fraud policies – namely the Fraud and Corruption Prevention, Detection and Reporting Policy (for staff) and the Fraud and Corruption Prevention, Detection and Reporting Policy (for suppliers) include a range of internal controls to ensure employees, volunteers, agents, contractors, sub-contractors and suppliers of goods and services are aware that 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.
The strategy encompasses:
- training for all staff in fraud and corruption control every three years
- provision of information on fraud and corruption and employee obligations to all new starters
- maintenance of a central record of all offers of gifts or benefits made to staff (whether or not accepted), which are reported to the Executive and the Finance, Risk and Audit Committee
- regular risk assessments undertaken by staff, as appropriate, at an enterprise, program, project, operational and transactional level
- implementation of an annual assurance program, whereby all Directors and Executives provide statements of compliance regarding fraud and risk management, with any breach reported to the Finance, Risk and Audit Committee.
Fraud detected in the agency
There were no actual (or reasonably suspected) incidents of fraud at Renewal SA for the 2021-22 financial year.
Data for previous years is available at Data SA - Fraud Detected.
Public interest disclosure
Number of occasions on which public interest information has been disclosed to a responsible officer of the agency under the Public Interest Disclosure Act 2018:
0
Data for previous years is available at Data SA - Whistleblowers' Disclosure.
Note: Disclosure of public interest information was previously reported under the Whistleblowers Protection Act 1993 and repealed by the Public Interest Disclosure Act 2018 on 1/7/2019.
Public complaints
Number of public complaints reported
No specific categories of complaints were received by, or made against, Renewal SA for the 2021-22 financial year.
The total number of enquiries during 2021-22 was 392.
Service improvements
Renewal SA has considered its processes for receiving and managing enquires and complaints.
Renewal SA is developing a Complaints and Feedback Policy to manage complaints and feedback in a responsive and effective way.
Further information
For further up-to-date information regarding Renewal SA and its activities, please refer to Renewal SA website.
Financial statements
Statement of comprehensive income
For the year ended 30 June 2022
| Note No. | 2022 $’000 | 2021 $’000 | |
|---|---|---|---|
INCOME | |||
| Revenue from sales | 4 | 149,020 | 69,115 |
| Less: cost of sales | 4 | 89,683 | 47,545 |
| Gross profit from sales | 59,337 | 21,570 | |
| Share of net profit in joint ventures | 5 | 3,046 | 1,668 |
| Revenues from SA Government | 6 | 7,694 | 6,961 |
| Interest revenues | 7 | 6,877 | 477 |
| Property income | 8 | 25,753 | 22,872 |
| Other revenues | 9 | 4,956 | 2,670 |
| Net gain from changes in value of non-current assets | 23 | 16,016 | 4,063 |
| Net gain from disposal of non-current assets | 10 | – | 1 |
| Total other income | 64,342 | 38,712 | |
| Total income | 123,679 | 60,282 | |
EXPENSES | |||
| Employee benefits expenses | 13 | 15,747 | 14,079 |
| Operating expenditure | 15 | 49,769 | 41,015 |
| Bad and doubtful debts expense | 19 | (105) | (137) |
| Borrowing costs | 16 | 5,651 | 8,928 |
| Depreciation and amortisation | 22 | 2,794 | 3,116 |
| Net loss from disposal of non-current assets | 10 | 2 | – |
| Total expenses | 73,858 | 67,001 | |
| Profit/Loss before income tax equivalent | 49,821 | (6,719) | |
| Less: Income tax equivalent | 14,946 | – | |
| Profit/Loss after income tax equivalent | 34,875 | (6,719) | |
| Total comprehensive result | 34,875 | (6,719) | |
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 2022
| Note no. | 2022 $’000 | 2021 $’000 | |
|---|---|---|---|
Current assets | |||
| Cash and cash equivalents | 18 | 14,491 | 12,403 |
| Receivables | 19 | 19,500 | 8,879 |
| Inventories | 20 | 108,802 | 65,271 |
| Investment in joint ventures | 5 | 219 | 1,588 |
| Total current assets | 143,012 | 88,141 | |
NON-CURRENT ASSETS | |||
| Receivables | 19 | 83,048 | 13,129 |
| Inventories | 20 | 182,057 | 255,578 |
| Investment properties | 21 | 105,035 | 83,765 |
| Property, plant and equipment | 22 | 17,134 | 12,326 |
| Investment in joint ventures | 5 | – | 485 |
| Total non-current assets | 387,274 | 365,283 | |
| Total assets | 530,286 | 453,424 | |
CURRENT LIABILITIES | |||
| Payables | 25 | 13,139 | 14,766 |
| Unearned income | 27 | 11,723 | 2,964 |
| Financial liabilities | 26 | 146,266 | 38,681 |
| Provisions | 28 | 16,694 | 26 |
| Employee benefits | 14 | 2,070 | 2,438 |
| Other liabilities | 29 | 746 | 896 |
| Total current liabilities | 190,638 | 59,771 | |
NON-CURRENT LIABILITIES | |||
| Payables | 25 | 163 | 1,967 |
| Unearned income | 27 | 13,569 | 13,576 |
| Financial liabilities | 26 | 252,296 | 375,411 |
| Provisions | 28 | 155 | 65 |
| Employee benefits | 14 | 2,418 | 2,559 |
| Total non-current liabilities | 268,601 | 393,578 | |
| Total liabilities | 459,239 | 453,349 | |
| Net assets | 71,047 | 75 | |
EQUITY | |||
| Contributed capital | 608,007 | 567,856 | |
| Retained earnings | (536,960) | (567,781) | |
| Total equity | 71,047 | 75 | |
The total equity is attributable to the SA Government as owner.
- Unrecognised contractual commitments: 31
- Contingent assets and liabilities: 32
The above statement should be read in conjunction with the accompanying notes.
Statement of changes in equity
For the year ended 30 June 2022
| Note no. | Contributed capital $’000 | Retained earnings $’000 | Total $’000 | |
|---|---|---|---|---|
| Balance at 30 June 2020 | 509,188 | (559,869) | (50,681) | |
| Total comprehensive result for 2020-21 | – | (6,719) | (6,719) | |
| Transactions with the SA Government in their capacity as owners: | ||||
| 58,668 | – | 58,668 | |
| – | – | – | |
| 17 | – | (1,193) | (1,193) |
| Balance as at 30 June 2021 | 567,856 | (567,781) | 75 | |
| Total comprehensive result for 2021-22 | – | 34,875 | 34,875 | |
| Transactions with the SA Government in their capacity as owners: | ||||
| 40,151 | – | 40,151 | |
| 17 | – | (4,054) | (4,054) |
| Balance as at 30 June 2022 | 608,007 | (536,960) | 71,047 | |
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 2022
| Note no. | 2022 $’000 | 2021 $’000 | |
|---|---|---|---|
CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Cash inflows | |||
| Receipts from sales | 74,046 | 69,878 | |
| Receipts from tenants (rent and recoveries) | 30,136 | 23,986 | |
| Receipts from SA Government | 9,347 | 6,911 | |
| Interest received | – | 10 | |
| Recoveries and sundry receipts | 3,515 | 2,420 | |
| GST recovered from the ATO | 10,238 | 5,678 | |
| Cash generated from operations | 127,283 | 108,883 | |
| Cash outflows | |||
| Payments for land purchase and development | (61,578) | (163,715) | |
| Payments in the course of operations for supplies and services | (69,713) | (64,242) | |
| Interest paid | (5,306) | (9,125) | |
| Cash used in operations | (136,597) | (237,082) | |
| Net cash used in operating activities | 30 | (9,314) | (128,199) |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Cash inflows | |||
| Distributions of profit by joint ventures | 4,900 | 3,500 | |
| Proceeds from the sale of plant and equipment | – | 1 | |
| Proceeds from the sale of investment properties | 1,400 | 1 | |
| Cash generated from investing activities | 6,300 | 3,501 | |
| Cash outflows | |||
| Purchase of investment property | (9,019) | – | |
| Purchase of property, plant and equipment | (1,976) | (6,610) | |
| Cash used in investing activities | (10,995) | (6,610) | |
| Net cash (Used in)/provided by investing activities | (4,695) | (3,109) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Cash inflows | |||
| Equity contributions received from the SA Government | 40,151 | 58,668 | |
| Proceeds from borrowings | 6,401 | 348,050 | |
| Cash generated from financing activities | 46,552 | 406,718 | |
| Cash outflows | |||
| Repayment of borrowings | (26,401) | (273,050) | |
| Dividends paid to SA Government | (4,054) | (1,193) | |
| Cash used in financing activities | (30,455) | (274,243) | |
| Net cash provided by/(used in) financing activities | 16,097 | 132,475 | |
| Net increase/(decrease) in cash held | 2,088 | 1,167 | |
| Cash at the beginning of the financial year | 12,403 | 11,236 | |
| Cash at the end of the financial year | 18 | 14,491 | 12,403 |
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 | Significant Transactions with Government Related Entities |
| Note 4 | Revenue from Sales and Cost of Sales |
| Note 5 | Joint Ventures |
| Note 6 | Revenues from SA Government |
| Note 7 | Interest Revenues |
| Note 8 | Property Income |
| Note 9 | Other Revenues |
| Note 10 | Net Gain/(Loss) from Disposal of Assets |
| Note 11 | Key Management Personnel |
| Note 12 | Board and Committee Members |
| Note 13 | Employees Benefits Expenses |
| Note 14 | Employee Benefits Liabilities |
| Note 15 | Operating Expenses |
| Note 16 | Borrowing Costs |
| Note 17 | Dividends Paid to SA Government |
| Note 18 | Cash and Cash Equivalents |
| Note 19 | Receivables |
| Note 20 | Inventories |
| Note 21 | Investment Properties |
Note 22 | Property, Plant and Equipment |
| Note 23 | Net Gain/(Loss) from charges in Value of Non-Current Assets |
| Note 24 | Fair Value Measurement |
Note 25 | Payables |
| Note 26 | Financial Liabilities |
| Note 27 | Unearned Income |
| Note 28 | Provisions |
| Note 29 | Other Liabilities |
| Note 30 | Cash Flow Reconciliation |
| Note 31 | Unrecognised Contractual Commitments |
| Note 32 | Contingent Assets and Liabilities |
| Note 33 | Financial Instruments Disclosure and Financial Risk Management |
Note 34 | Impact of Standards not yet effective |
Note 35 | COVID - 19 Pandemic Outlook |
| Note 36 | 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 Her Excellency the Governor and comprises up to seven members, including a Presiding Member. The Presiding Member reports to the Minister for Housing and Urban Development as the Minister responsible. In accordance with a Ministerial direction issued to Renewal SA, Renewal SA reports to the Premier as responsible Minister in relation to the Lot Fourteen project.
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;
- Facilitating the orderly development of areas through the management and release of land; and
- Holding land and other property to be made available as appropriate for commercial, industrial, residential or other purposes.
Renewal SA improves the lives of South Australians now and into the future by leading, supporting and driving investment and growth through property and projects. As the State Government's leading urban development agency, Renewal SA co-ordinates, develops and delivers projects and initiatives to support urban development activity to deliver on the priorities of the Government of South Australia through our people and collaborative partnerships for the benefit of South Australians.
As the delivery agency for the South Australian Government (SA Government), we provide opportunities for industrial and commercial development on designated lands to support social and economic growth and job creation.
Our focus is on property development that builds new industries, infrastructure and communities while driving economic activity, attracting investment and enhancing the livability and land values in our state.
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 a going concern, 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 are presented in Australian currency The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2022 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.
Renewal SA reported a net profit for the reporting period ending 30 June 2022 and therefore an income tax equivalent is payable.
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;
- 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.
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
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 a limited useful life, are systematically depreciated over their useful lives ln 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 Stc1tement 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 historic cost. An amount by which the asset's carrying amount exceeds its recoverable amount is recorded as an impa1rment 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 $1.500 million or an estimated useful life that was less than three years are deemed to approximate fafr value.
Refer to Notes 21, 22 and 24 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
Impact of COVID-19 Pandemic
Renewal SA has undertaken external valuations and/or undertaken impairment tests for its property holdings as at 30 June 2022. These valuations and impairment tests incorporate known impacts from the current economic conditions on the value of the properties as at that date. Government stimulus measures have had a positive impact on the Adelaide property market, however, the future impact of the COVID-19 pandemic on property values is uncertain.
Note 3 Significant transactions with government related entities
Renewal SA had the following significant transactions with SA Government entities:
Equity contributions of $40.151 million and Community Service Obligation funding of $5.557 million (refer Note 6) were received from the Department of Treasury and Finance during the financial year.
Renewal SA is undertaking the procurement of high voltage electricity and high-pressure gas infrastructure on behalf of the Department for Trade and Investment, to support the rebuild and expansion of the Thomas Foods facility at Murray Bridge. During the 2021-22 financial year, $3.668 million in funding was received from the Department for Trade and Investment.
Renewal SA sold land at Tonsley Innovation District to the Commissioner of Highways for $4.978 million for the Torrens to Darlington project.
In October 2021, Renewal SA took occupation of Level 16 of 11 Waymouth Street, Adelaide under a 10 year lease arrangement from the Department for Infrastructure and Transport. Renewal SA incurred lease interest and depreciation of $0.578 million. Prior to this, Renewal SA had occupied Level 9 of !he Riverside Centre, North Terrace in a holding over arrangement from the Department of Infrastructure and Transport. During the financial year, Renewal SA incurred rental expenses of $0.264 million.
During the financial year, Renewal SA charged the Department for Innovation and Skills $1.034 million for rental of the Biolnnovation building located at 40 to 46 West Thebarton Road, Thebarton.
Renewal SA acquired 400 carparks within the Festival Plaza development via the transfer of a lease agreement for the carparks from the Premier at a cost of $6.000 million. This was funded via an equity contribution from the Department of Treasury and Finance.
Note 4 Revenue from sales and cost of sales
| 2022 $'000 | 2021 $'000 | |
| Sales revenue for the reporting period is summarised as follows: | ||
| Land sales to: | ||
| Joint ventures | 3,353 | 7,112 |
| Entities within the SA Government | 4,978 | - |
| Other - sales to general public and developers | 140,507 | 62,003 |
| Total sales revenue | 149,020 | 69,115 |
| Cost of sales associated with: | ||
| Joint ventures | 1,936 | 4,289 |
| Entities within the SA Government | 3,978 | - |
| Other - sales to general public and developers | 83,769 | 43,256 |
| Total cost of sales | 89,683 | 47,545 |
Sales revenue comprises revenue earned from the sale of land for residential, commercial and community purposes. Revenue from land sales is recognised when Renewal SA has completed its performance obligations in terms of the contract of sale and control of the land has passed to the purchaser, irrespective of cash receipt.
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 the sale occurs. A portion of future development obligations in respect of land which has been sold is also recognised in cost of sales when the sale 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 5 Joint ventures
In July 2006 documentation was executed with CIC Northgate Pty Ltd, a wholly-owned subsidiary of PEET 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 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 the 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:
| 2022 $'000 | 2021 $'000 | |
| Revenues | 6,167 | 12,899 |
| Expenses | (3,121) | (11,231) |
| Profit from ordinary activities | 3,046 | 1,668 |
Movements in Renewal SA's investment in the joint venture during the reporting period is summarised as follows:
| - | 2022 $'000 | 2021 $'000 |
| Share of investment in joint ventures: | ||
| Carrying amount at the beginning of the period | 2,073 | 3,905 |
| Profit for the reporting period | 3,046 | 1,668 |
| Distribution of profit | (4,900) | (3,500) |
| Total carrying amount of investment in joint ventures | 219 | 2,073 |
Renewal SA's investment in joint ventures is represented by its share of assets and liabilities as follows:
| 2022 $'000 | 2021 $'000 | |
| Community service obligations from SA Government | 5,557 | 6,199 |
| Funding from Business & Job Support Fund | - | 1,175 |
| Other SA Government revenues | 4,325 | 2,235 |
| Gross Revenues from SA Government | (4,900) | (3,500) |
| Less: Revenue deferred for development costs | ||
| Total Revenues from SA Government | 219 | 2,073 |
Note 6 Revenues from SA Government
| 2022 $'000 | 2021 $'000 | |
| Community service obligations from SA Government | 5,557 | 6,199 |
| Funding from Business & Job Support Fund | - | 1,175 |
| Other SA Government revenues | 4,325 | 2,235 |
| Gross revenues from SA Government | 9,882 | 9,609 |
| Less: Revenue deferred for development costs | (2,188) | (2,648) |
| Total revenues from SA Government | 7,694 | 6,961 |
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. Non•commercial activities include the provision of infrastructure, sustainable energy development and precinct and urban planning works. Community services obligations are provided for both capital and operating purposes.
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 capital 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.
Business and Support Fund
During 2020·21, Renewal SA received funding from the Government's Business and Support Job Fund to reimburse rent relief provided to Renewal SA's tenants that were severely impacted by the COVID-19 pandemic.
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 7 Interest revenues
| 2022 $'000 | 2021 $'000 | |
| Interest from deferred payment arrangements | 6,403 | - |
| Interest from cash and cash equivalents | - | 8 |
| Finance debtor interest | 474 | 469 |
| Total interest revenues | 6,877 | 477 |
Interest revenue includes interest from deferred payment arrangements, interest received on bank deposits and interest from finance lease arrangements.
Note 8 Property income
| 2022 $'000 | 2021 $'000 | |
| Rental income | 19,605 | 18,007 |
| Recoveries | 5,942 | 5,906 |
| Rent relief provided | - | (1,175) |
| Other property income | 206 | 134 |
| Total property income | 25,753 | 22,872 |
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. Rental income from investment properties was $12.766 million (2020-21 $10.690 million).
In accordance with SA Government policy, Renewal SA provided rent relief of $1.175 million in 2020-21to tenants that were severely impacted by the COVID-19 pandemic. Funding to reimburse the rent relief was provided to Renewal SA from the Business and Jobs Support Fund (refer Note 6).
Note 9 Other revenues
| 2022 $'000 | 2021 $'000 | |
| Consulting revenue | 843 | 534 |
| Recoveries | 7 | 205 |
| Other revenues | 4,106 | 1,931 |
| Total other revenues | 4,956 | 2,670 |
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 represent the direct recovery of goods and services provided to external parties.
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 earnt.
Note 10 Net gain/ loss from disposal of assets
| 2022 $'000 | 2021 $'000 | |
| Plant and equipment: | ||
| Prcoeeds from disposal | - | 1 |
| Net book value of assets disposed | (2) | - |
| Net gain/(loss) from disposal of plant and equipment | (2) | 1 |
| Investment properties: | ||
| Proceeds from disposal | 1,400 | - |
| Less: Net book value of assets disposed | (1,400) | - |
| Net loss from disposal of completed non-current assets | - | - |
| Total net loss from disposal of non-current assets | (2) | 1 |
Income from the disposal of plant and equipment is recognised when control of the asset has passed to the purchaser and is determined by comparing proceeds with the carrying amount.
Sales revenue from the disposal of investment properties is recognised when Renewal SA has completed it's performance obligations in terms of the contract of sale and control of the investment property has passed to the purchaser.
Note 11 Key management personnel
Key management personnel of Renewal SA include the responsible Minister, members of the Urban Renewal,Authority Board of Management, the Chief Executive and the members of the senior management team (including the Chief Executive) that have responsibility for the strategic direction and management of Renewal SA.
Total compensation forkey management personnel was $2.056 million (2020-21: $2.522 million). These amounts include payments to key management personnel for accrued leave entitlements where they were paid on departure from Renewal SA.
The compensation disclosed in this note excludes salaries and other benefits to the responsible 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.
| 2022 $'000 | 2021 $'000 | |
| Salaries and other short-term employee benefits | 1,612 | 1,578 |
| Post-employment benefits | 444 | 306 |
| Other long-term employment benefits | - | 83 |
| Termination benefits | - | 555 |
| Total compensation | 2,056 | 2.522 |
Other long-term employment benefits include payments for long service leave.
Transactions with Key Management Personnel and Other Related Parties
A Director is an employee of a company that Renewal SA leased space from. During the year, the company sold the building Which the space was in. The rental and recoveries paid to the company up to the date of sale was $0.090 million.
Note 12 Board and committee members
Members during the year ended 30 June 2022 were:
Urban Renewal Authority Board of Management
- C Tragakis, Presiding Member HM Fulcher
- A Skipper JP Rundle K Willits
- D Hughes
- N Reade* (resigned 1 April 2022)
S Hains was appointed Presiding Member on 31 July 2022
Urban Renewal Authority Finance, Risk and Audit Committee
- H M Fulcher, Chair (Chair to 22 September 2021, resigned 22 September 2021)
- C Tragakis
- D Hughes (member for the full year, appointed by the Board as Chair 22 September 2021)
Urban Renewal Authority People and Culture Sub-Committee
- A Skipper
- K Willits
*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:
| 2022 $'000 | 2021 $'000 | |
| $0 to $19 999 | 1 | 2 |
| $20 000 to $39 999 | 1 | 5 |
| $40 000 to $59 999 | 4 | - |
| $60 000 to $89 999 | 1 | 1 |
| Total number of members | 7 | 8 |
Total remuneration received and receivable by all members for the period they held office was $0.279 million). Remuneration of members includes sitting fees and superannuation contributions.
Note 13 Employee benefits expenses
| 2022 $'000 | 2021 $'000 | |
| Salaries and wages | 14,175 | 13,270 |
| Long service leave | (60) | (182) |
| Annual leave | 1,236 | 1,154 |
| Skills and experience retention leave | 72 | 35 |
| Employment on-costs - superannuation | 2,104 | 1,761 |
| Employment on-costs - other | 1,051 | 709 |
| Board and committee fees | 274 | 274 |
| Other employee related expenses | 106 | 48 |
| Gross employee benefits expenses | 18,958 | 17,069 |
| Less: Employee benefits capitalised to inventories | (3,211) | (2,990) |
| Total employee benefits expenses | 15,747 | 14,079 |
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.
| - | 2022 No: | 2021 No: |
| The number of employees whose remuneration received or receivable falls within the | ||
| $154 001 to $157 000 | - | 1 |
| $157 001 to $177 000 | 6 | 9 |
| $177 001 to $197 000 | 8 | 5 |
| $197 001 to $217 000 | 4 | 1 |
| $217 001 to $237 000 | 4 | 5 |
| $237 001 to $257 000 | 2 | 2 |
| $257 001 to $277 000 | 1 | 1 |
| $277 001 to $297 000 | 1 | - |
| $297 001 to $317 000 | 1 | 1 |
| $317 001 to $337 000 | 1 | - |
| $417 001 to $437 000 | - | 1 |
| $437 001 to $457 000 | 1 | - |
| $497 001 to $517 000 | - | 1 |
| $537 001 to $557 000 | - | 1 |
| Total number of employees | 29 | 28 |
*This band has been ihcluded for the purpose of reporting comparative figures based on the executive base level remuneration rate for 2020-21.
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 $6.541 million (2020-21: $6.424 million).
Note 14 Employee benefits liabilities
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Accrued wages and salaries | - | 425 |
| Annual leave | 1,799 | 1,649 |
| Long service leave | 193 | 309 |
| Skills and experience retention leave | 78 | 55 |
| Total current employee benefits | 2,070 | 2,438 |
| Non-Current | ||
| Long service leave | 2,418 | 2,559 |
| Total non-current employee benefits | 2,418 | 2,559 |
| Total employee benefits | 4,488 | 4,997 |
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 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 ofTreasury 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 11abllity. The yield on long-term Commonwealth Government bonds has increased to 3.50% in 2021-22 from 1.25% in 2020-21.
Asa result of the actuarial assessment performed by the Department of Treasury and Finance, the salary inflation rate of 2.5% for the 2021-22 financial year remained unchanged from the 2020-21 financial year for long service leave liability.
The net financial effect of the changes to actuarial assumptions in the current financial year is a decrease in the long service leave liability of $0.465 million and employee benefits expense of $0.537 million. The impact on future periods is lmpracticable to estimate as the long service leave liability ls calculated using a number of demographical and financial assumptions, including the long-term discount rate.
The unconditional portion of the Jong service leave provision is classified as current as Renewal SA does not have an uncondl!ional right to defer settlement of the liability for at least 12 months after reporting date. The unconditional portion of long service leave relates to an unconditional legal entitlement to payment arising after 10 years of service.
Employee Benefit On-Costs
Employee benefit on-costs (payroll tax and superannuation) are recognised separately in Payables (refer Note 25).
Note 15 Operating expenditure
| 2022 $'000 | 2021 $'000 | |
| Property expenditure | 18,138 | 16,843 |
| Land tax | 10,533 | 10,933 |
| Contractors and consultants | 7,940 | 3,021 |
| Accommodation costs | 1,467 | 2,052 |
| Administration and other expenditure | 12,030 | 9,198 |
| Gross operating expenditure | 50,108 | 42,047 |
| Less: Land tax capitalised to inventories | (339) | (1,032) |
| Total operating expenditure | 49,769 | 41,015 |
External Consultants
The number and dollar amount of consultancies paid/payable (included in operating expenditure) that fell within the following bands:
| 2022 Number | 2022 $'000 | 2021 Number | 2021 $'000 | |
| Below $10 000 | 31 | 118 | 26 | 109 |
| Above $10 000 | 20 | 971 | 29 | 1,202 |
| Total paid/payable to the consultants engaged | 51 | 1,089 | 55 | 1,311 |
Auditor General Remuneration
Audit fees paid/payable to the Auditor-General's Department relating to work performed under the Public Finance and Audit Act 1987 included in administration and other expenditure total $0.199 million (2020-21 $0.199 million).
Note 16 Borrowing costs
| 2022 $'000 | 2021 $'000 | |
| Borrowing costs on Premises SA Scheme loan | 24 | 88 |
| Borrowing costs on other loans | 1,645 | 4,595 |
| Borrowing costs on overdraft | 129 | 28 |
| Interest expense on lease liabilities | 351 | 266 |
| Guarantee fees on Premises SA Scheme loan | 54 | 64 |
| Guarantee fees on other loans | 3,215 | 4,018 |
| Guarantee fees on overdraft | 233 | 43 |
| Gross borrowing costs | 5,651 | 9,102 |
| Less: Borrowing costs capitalised to inventories | - | (174) |
| Total Borrowing costs | 5,651 | 8,928 |
Borrowing costs include interest expense and guarantee fees paid to the SA 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 17 Dividends paid to SA Government
| 2022 $'000 | 2021 $'000 | |
| Dividends paid | 4,054 | 1,193 |
| Total dividends paid to SA Government | 4,054 | 1,193 |
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. The Minister may, in consultation with the Treasurer, approve the recommendation or detennine that a specified dividend be paid as the Minister and the Treasurer consider appropriate.
The Treasurer has determined that Renewal SA will pay a dividend on the profits from its 2021-22 general activities as part of the 2022-23 dividend declaration process.
Renewal SA are also required to make special dividend payments associated with the Adelalde Station and Environs Redevelopment (ASER) site and Festival Plaza. In 2021-22 the Minister and Treasurer approved a dividend payment of
$4.054 million. This amount is after a decrease in the payment amount by $0.072 million relating to an adjustment of the 2020-21
ASER dividend. In 2020-21 the Minister and Treasurer approved a dividend payment of $1.193 million for the ASER site only.
Note 18 Cash and cash equivalents
| 2022 $'000 | 2021 $'000 | |
| Deposits with the Treasurer | 9,715 | 9,372 |
| Short-term deposits with SAFA | 203 | 203 |
| Cash held for Lot Fourteen car park | 746 | 746 |
| Cash at bank and on hand | 3,827 | 2,082 |
| Total cash and cash equivalents | 14,491 | 12,403 |
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, cash held in term deposit for the Lot Fourteen Car Park and cash held by property managers on behalf of Renewal SA as a working capital float to assist with management of RSA rental properties.
Interest Rate Risk
Cash at bank and on hand is non-interest bearing. Deposits at call and with the Treasurer earn a floating interest rate based on daily bank deposit rates. The carrying amount of cash and cash equivalents represents fair value.
Note 19 Receivables
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Trade and other receivables | 4,824 | 2,782 |
| Lease receivables | 1,673 | 6,340 |
| Deferred payment arrangements | 12,756 | - |
| GST receivable | 1,088 | 5,257 |
| Provision for doubtful debts | (1,053) | (5,516) |
| Prepayments | 212 | 16 |
| Total current receivables | 19,500 | 8,879 |
| Non-current | ||
| Lease receivables | 13,295 | 13,129 |
| Deferred payment arrangements | 69,753 | - |
| Total non-current receivables | 83,048 | 13,129 |
| Total receivables | 102,548 | 22,008 |
Receivables include amounts receivable from goods and services, GST input tax credits recoverable, prepayments and other accruals, measured at historical cost.
Lease receivables include receivables from property leases and finance leases. Finance lease receivables are measured at the present value of minimum lease payments.
Deferred payment arrangements are receivables from purchasers to whom deferred payment terms have been granted for land sales. Control of the land has passed to the purchaser for the purpose of revenue recognition and the full transaction price has not been paid.
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 may not be able to collect the debt. Bad debts are written off when identified.
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 customer debtors and customer debtors assessed on a collective basis for which such evidence exists.
| 2022 $'000 | 2021 $'000 | |
| Carrying amount at the beginning of the period | 5,516 | 5,699 |
| Debts no longer being pursued | (4,357) | (46) |
| (Decrease) in the allowance | (106) | (137) |
| Carrying amount at the end of the period | 1,053 | 5,516 |
| Bad debts written off: | ||
| Trade debtors | 11 | (46) |
| Lease receivables | 4,346 | 46 |
| Transfer (from)/to provision for doubtful debts: | ||
| Trade debtors | (116) | 22 |
| Lease receivables | (4,346) | (159) |
| Total bad and doubtful debts expense | (105) | (137) |
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. There1s no concentration of credit risk.
Categorisation and Maturity Analysis of Financial Instruments
Refer to table in Note 33.
Ageing Analysis of Financial Assets
Refer to table in Note 33.
Risk Exposure Information
Refer to table in Note 33.
Note 20 Inventories
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Land held for sale | 29,413 | 26,254 |
| Development projects | 79,389 | 39,017 |
| Total current inventories | 108,802 | 65,271 |
| Non-current | ||
| Land held for sale | 126,428 | 138,284 |
| Development projects | 55,629 | 117,294 |
| Total non-current inventories | 182,057 | 255,578 |
| Total inventories | 290,859 | 320,849 |
Movements in carrying amounts:
| 2022 $'000 | 2021 $'000 | |
| Carrying amount at the beginning of the period | 320,849 | 236,704 |
| Land purchases | 4,711 | 80,964 |
| Development costs capitalised | 54,755 | 50,370 |
| Capitalised grant funding repaid | 50 | (1,281) |
| Cost of sales | (89,683) | (47,545) |
| Inventory write down | - | (3,264) |
| Reversal of inventory write down | 177 | 4,901 |
| Carrying amount at the end of the period | 290,859 | 320,849 |
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 2022 to ensure they are carried at the lower of cost and NRV.
The amount of any inventory write-down to NRV 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 reversals of previous write downs of $0.177 million in 2021-22 is 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 Bowden, Lot Fourteen Playford Alive, Prospect and Tonsley projects.
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 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 lo 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 a 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 21 Investment properties
| 2022 $'000 | 2021 $'000 | |
| Freehold Land at Fair Value: | ||
| Independent valuation | 70,544 | 56,845 |
| Total freehold land at fair value | 70,544 | 56,845 |
| Buildings at fair value: | ||
| Independent valuation | 34,491 | 26,920 |
| Total buildings at fair value | 34,491 | 26,920 |
| Total investment properties | 105,035 | 83,765 |
Movements in carrying amounts
| 2022 $'000 | 2021 $'000 | |
| Freehold land at fair value: | ||
| Carrying amount at the beginning of the period | 56,845 | 55,473 |
| Disposals | (1,400) | - |
| Net gain on fair value adjustments | 15,099 | 1,372 |
| Carrying amount at the end of the period | 70,544 | 56,845 |
| Buildings at fair value: | ||
| Carrying amount at the beginning of the period | 26,920 | 22,117 |
| Additions | 6,000 | - |
| Capitalised grants received | (2,188) | (2,648) |
| Capitalised expenditure | 3,019 | 6,397 |
| Net (loss)/gain on fair value adjustments | 740 | 1,054 |
| Carrying amount at the end of the period | 34,491 | 26,920 |
| Total carrying amount at the end of the period | 105,035 | 83,765 |
Amounts recognised in the statement of comprehensive income
| 2022 $'000 | 2021 $'000 | |
| Property Income (refer to Note 8) | 12,766 | 10,690 |
| Direct operating expenses arising from investment properties that generated rental income (refer Note 15) | (4,935) | (6,387) |
| Direct operating expenses arising from investment properties that did not generate rental income (refer Note 15) | (318) | (180) |
| Total Amount Recognised in the Statement of Comprehensive Income | 7,513 | 4,123 |
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.
During the financial year, Renewal SA acquired the rights to a carpark bufiding asset for $6.000 million. The carpark is held for the purpose of income generation and is classified as an investment property right of use asset.
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. Net gain on fair value adjustments primarily relates to an increase in reported land value at ASER by $4.348 million, an increase in land value at Northern LeFevre Peninsula by $4.313 million and an increase in land value at Technology Park by $6.510 million.
Valuation basis
An independent valuation of all Renewal SA's investment properties was conducted as at 30 June 2022. 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, or discounted cash flow approach.
Note 22 Property plant and equipment
| 2022 $'000 | 2021 $'000 | |
| Right-of-use buildings | ||
| At cost | 13,063 | 13,756 |
| Accumulated depreciation | (3,489) | (3,010) |
| Total buildings | 9,574 | 10,746 |
| Accommodation and leasehold improvements | ||
| At cost | 1,295 | 3,264 |
| Right-of-use asset at cost | 7,458 | 2,428 |
| Accumulated depreciation | (2,420) | (5,144) |
| Total accommodation and leasehold improvements | 6,333 | 548 |
| Plant and equipment | ||
| At cost | 2,271 | 2,151 |
| Right-of-use asset at cost | 16 | 16 |
| Accumulated depreciation | (1,060) | (1,135) |
| Total plant and equipment | 1,227 | 1,032 |
| Total property, plant and equipment at cost | 3,566 | 5,415 |
| Total right-of-use assets at cost | 20,537 | 16,200 |
| Total accumulated depreciation | (6,969) | (9,289) |
| Total property, plant and equipment | 17,134 | 12,326 |
Movements in carrying amounts
| 2022 $'000 | 2021 $'000 | |
| Buildings: | ||
| Carrying amount at the beginning of the period | 10,746 | 13,472 |
| Right of use asset - remeasurement | 598 | (1,047) |
| Depreciation | (1,770) | (1,679) |
| Carrying amount at the end of the period | 9,574 | 10,746 |
| Accommodation and leasehold improvements: | ||
| Carrying amount at the beginning of the period | 548 | 1,383 |
| Additions | 1,505 | - |
| Right of use asset- additions | 5,030 | 378 |
| Right of use asset- remeasurement | - | (96) |
| Depreciation | (750) | (1,117) |
| Carrying amount at the end of the period | 6,333 | 548 |
| Plant and Equipment: | ||
| Carrying amount at the beginning of the period | 1,032 | 925 |
| Additions | 473 | 427 |
| Disposals | (4) | - |
| Depreciation | (274) | (320) |
| Carrying amount at the end of the period | 1,227 | 1,032 |
| Total property, plant and equipment | 17,134 | 12,326 |
Carrying amount of leasehold improvements and plant and equipment
The carrying value of these items are deemed to approximate fair value unless otherwise specified. 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 ff 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 of $2.794 million (2020-21 $3.116 million) 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) |
| Buildings | Straight Line | Life of lease |
| 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 buildings, leasehold improvements or plant and equipment as at 30 June 2022. Property, plant and equipment leased by Renewal SA are recorded at cost.
Short-term I.eases of 12 months or less and low value leases where the underlying asset value is less than $0.015 million are not recognised as right-of-use assets. The associated lease payments are recognised as an expense and are disclosed in Note 15.
Renewal SA has a limited number of leases:
- Accommodation lease in the Adelaide CBD.
- A lease over a car park on Lot Fourteen in the Adelaide CBD.
- Two leases for accommodation located in Bowden.
- A lease for accommodation located in Port Adelaide.
- A motor vehicle lease with the South Australian Government Financing Authority (SAFA)
Note 23 Net gain/ loss from changes in value of non-current assets
A reconciliation of the net gain from changes in the values of non-current assets as follows:
| Note | 2022 $'000 | 2021 $'000 | |
| Inventories | |||
| Inventory write down | 20 | - | (3,264) |
| Reversal of inventory write down | 20 | 177 | 4,901 |
| Total gain from changes in value of inventories | 177 | 1,637 | |
| Investment property | |||
| Net gain on freehold land fair value adjustments | 21 | 15,099 | 1,372 |
| Net gain on building fair value adjustments | 21 | 740 | 1,054 |
| Total gain from changes in value of investment property | 15,839 | 2,426 | |
| Total net gain from changes in value of non-current assets | 16,016 | 4,063 |
Note 24 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 2022
| 2022 $'000 | Level 2 $'000 | Level 3 $'000 | |
| Recurring fair value measurement | |||
| Investment properties (Note 21) | 105,035 | 105,035 | - |
| Leasehold improvements (Note 22) | 1,405 | - | 1,405 |
| Plant and equipment (Note 22) | 1,227 | - | 1,227 |
| Total recurring fair value measurements | 107,667 | 105,035 | 2,632 |
Fair value measurements at 30 June 2022
| 2021 $'000 | Level 2 $'000 | Level 3 $'000 | |
| Recurring fair value measurement | |||
| Investment properties (Note 21) | 83,765 | 83,765 | - |
| Leasehold improvements (Note 22) | - | - | - |
| Plant and equipment (Note 22) | 1,028 | - | 1,028 |
| Total recurring fair value measurements | 84,793 | 83,765 | 1,028 |
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 2021-22, Renewal SA had no assets 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 21 and 22 for valuation techniques and inputs used to derive Level 2 and 3 fair values. During 2021-22 there were no changes in valuation techniques. Although unobservable inputs were used In determin1ng 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 2022
| Leasehold Improvements $'000 | Plant & Equipment $'000 | |
| Opening balance at the beginning of the period | - | 1,028 |
| Acquisitions | 1,505 | 473 |
| Disposals | - | (4) |
| Depreciation and amortisation expenses | (100) | (270) |
| Carrying amount at the end of the period | 1,405 | 1,227 |
Reconciliation of level 3 recurring fair value measurements as at 30 June 2021
| Leasehold Improvements $'000 | Plant & $'000 | |
| Opening balance at the beginning of the period | 481 | 915 |
| Acquisitions | - | 427 |
| Depreciation and amortisation expenses | (481) | (314) |
| Carrying amount at the end of the period | - | 1,028 |
Note 25 Payables
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Trade creditors | 2,763 | 2,134 |
| Sundry creditors and accrued expenses | 9,943 | 12,265 |
| Employment on costs | 433 | 367 |
| Total current payables | 13,139 | 14,766 |
| Non-current | ||
| Sundry creditors and accrued expenses | - | 1,800 |
| Employment on costs | 163 | 167 |
| Total non-current payables | 163 | 1,967 |
| Total payables | 13,302 | 16,733 |
Payables include creditors, accrued expenses and employment on-costs.
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.
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, ReturnToWorkSA levies and superannuation contributions and are settled when the respective employee benefits that they relate1o 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 42% (2020-21: 42%) and the average factor for the calculation of employer superannuation on-costs was 10.6% (2020-21: 10.1%). These rates are used in the employment on-cost calculation. The net financial effect of the changes in the current financial year is a negligible increase in the employment on-cost and employee benefits expense
Interest Rate and Credit Risk
Creditors and accruals are raised for all amounts billed but unpaid. Sundry creditors are normally settled within 30 days. Employment on-costs are settled when the respective employee benefits that they relate to is discharged. All payables are non interest bearing. The carrying amount of payables represents fair value due to the amounts being payable on demand. As a result, interest and credit risk are limited.
Categorisation of Financial Instruments and Maturity Analysis of Payables
Refer to table in Note 33.
Risk Exposure Information
Refer to table in Note 33.
Note 26 Financial liabilities
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Loans -South Australian Government Financing Authority (a) | 6,401 | 6,401 |
| Loans -South Australian Government Financing Authority (b) | 136,851 | 30,000 |
| Lease Liabilities | 3,014 | 2,280 |
| Total current borrowings | 146,266 | 38,681 |
| Non-current | ||
| Loans - South Australian Government Financing Authority (b) | 238,050 | 364,901 |
| Lease Liabilities | 14,246 | 10,510 |
| Total non-current borrowings | 252,296 | 375,411 |
| Total borrowings | 398,562 | 414,092 |
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 non-current.
Borrowings from SA Government
These are unsecured loans which bear interest. The terms of the loans were agreed by the Minister/Governing body at the time the loan was provided.
- 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.
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 0.18% and 0.91% in 2021-22 (2020-21: 0.20% and 1.08%). In addition, the government guarantee fee rate on new and refinanced borrowings was 0.85% (2020-21: 0.99%).
Categorisation of Financial Instruments and Maturity Analysis of Borrowings
Refer to table in Note 33.
Risk Exposure Information
Refer to Note 33.
Defaults and Breaches
There were no defaults or breaches on any of the above borrowings during the year.
Lease Liabilities
Lease liabilities are finance and operating leases and have been recognised in accordance with AASB 16. All material cash flows are reflected in the lease liabilities disclosed above.
Note 27 Unearned income
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Unearned income | 11,723 | 2,964 |
| Total current unearned income | 11,723 | 2,964 |
| Non-current | ||
| Unearned income | 13,569 | 13,576 |
| Total non-current unearned income | 13,569 | 13,576 |
| Total unearned income | 25,292 | 16,540 |
Movements in carrying amounts
| 2022 $'000 | 2021 $'000 | |
| Carrying amount at the beginning of the period | 16,540 | 17,682 |
| Received during the year | 14,234 | 3,139 |
| Recognised in the statement of comprehensive income | (5,482) | (4,281) |
| Carrying amount at the end of the period | 25,292 | 16,540 |
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 and finance lease interest income of $13.926 million (2020-21: $14.628 million), revenues from SA Government of $2.234 million (2020-21: $1.912 million) and sales and other revenue of $8.662 million (2020-21: nil) received in advance and mainly consist of revenue from sales of property rights that had not transferred to the buyer at 30 June 2022.
Note 28 Provisions
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Provision for workers compensation | 48 | 26 |
| Provision for income tax equivalent | 14,946 | - |
| Provision for contractual claims | 1,700 | - |
| Total current provisions | 16,694 | 26 |
| Non-current | ||
| Provision for workers compensation | 155 | 65 |
| Total non-current provisions | 155 | 65 |
| Total provisions | 16,849 | 91 |
Movements in carrying amounts
| 2022 $'000 | 2021 $'000 | |
| Provision for workers compensation | ||
| Carrying amount at the beginning of the period | 91 | 71 |
| Increase in provisions recognised | 112 | 20 |
| Carrying amount at the end of the period | 203 | 91 |
| Provision for income tax equivalent | ||
| Increase in provisions recognised | 14,946 | - |
| Carrying amount at the end of the period | 14,946 | - |
| Provision for future development expenditure and contractual claims | ||
| Carrying amount at the beginning of the period | - | 27,114 |
| Decrease arising from payments for development expenditure | (27,114) | |
| Increase in provision for potential contractual claims | 1,700 | - |
| Carrying amount at the end of the period | 1,700 | - |
| Total provisions | 16,849 | 91 |
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. 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.
A provision has been recognised to reflect unsettled workers compensation claims. The workers compensation provision is based on an actuarial assessment of the outstanding liability as at 30 June 2022 provided by a consulting actuary engaged through the Office of the Commissioner for Public Sector Employment (a division of the Department Treasury and Finance). The provision is for the estimated cost of ongoing payments to employees as required under current legislation.
A provision has been recognised for the income tax equivalents. 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 (Currently 30%) be applied to the net profit. The provlsion for income tax equivalent relates to the income tax expense outstanding for the current period.
Note 29 Other liabilities
| 2022 $'000 | 2021 $'000 | |
| Current | ||
| Funds held in trust | 746 | 744 |
| Security deposits | - | 152 |
| Total current other liabilities | 746 | 896 |
| Total other liabilities | 746 | 896 |
Funds held in trust relate to the Lot Fourteen Car Park Insurance and Capital Reserve monies.
Security deposits are cash bonds held relating to property leases.
Note 30 Cash flow reconciliation
| 2022 $'000 | 2021 $'000 | |
| Reconciliation of cash and cash equivalents at the end of the reporting period: | ||
| Statement of cash flows | 14,491 | 12,403 |
| Statement of financial position | 14,491 | 12,403 |
| Reconciliation of profit after income tax equivalent to net cash used in operating activities: | ||
| Profit/(Loss) after income tax equivalent | 34,875 | (6,719) |
| Add/less non cash items | ||
| Inventories write down | - | 3,264 |
| Depreciation and amortisation | 2,794 | 3,116 |
| Net gain on disposal of plant and equipment | 2 | - |
| Provision for doubtful debts | (106) | (137) |
| Share of net profits of joint ventures | (3,046) | (1,668) |
| Reversal of inventories write-down | (177) | (4,901) |
| Net gain on Investment property fair value adjustments | (15,839) | (2,426) |
| (16,372) | (2,752) | |
| Movements in assets / liabilities | ||
| Decrease/(Increase) in other receivables | (80,244) | (3,909) |
| Increase in prepayments | (196) | 100 |
| (Increase)/Decrease in inventories | 30,167 | (82,508) |
| Increase/(Decrease) in payables | (3,369) | (4,053) |
| (Decrease)/Increase in unearned income | 8,752 | (1,142) |
| Increase in provisions | 16,646 | (27,114) |
| Increase in employee benefits | 425 | (846) |
| Increase in other liabilities | 2 | 744 |
| (27,817) | (118,728) | |
| Net cash used in operating activities | (9,314) | (128,199) |
Note 31 Unrecognised contractual commitments
| 2022 $'000 | 2021 $'000 | |
| Operating lease receivables | ||
| Future minimum rental revenues under non-cancellable operating property leases held but not provided for: | ||
| Due within one year | 19,674 | 16,813 |
| Due later than one year not longer than five years | 41,463 | 43,950 |
| Due later than five years | 362,220 | 336,899 |
| Total operating lease receivables | 423,357 | 397,662 |
These amounts comprise of property leases. The property leases are non-cancellable over varying tenns up to eighty-five years, with rent payable monthly in advance. The non-cancellable period includes periods covered by an option to extend the lease where Renewal SA is reasonably certain the lessee will exercise that option. A factor considered in determining the reasonable certainty of the option being exercised is the significant leasehold improvements made by the lessee.
| Capital and operating expenditure commitments | ||
| Payable within one year | 59,494 | 30,327 |
| Payable later than one year not longer than five years | 7,833 | 9,246 |
| Payable later than five years | 96 | 4,538 |
| Total capital and operating expenditure commitments: | 67,423 | 44,111 |
These amounts comprise property leases and leases of motor vehicles. The property leases are non-cancellable over varying terms, with rent payable monthly in advance. Motor vehicles are leased over varying terms up to three years.
Commitments include operating, capital and outsourcing arrangements 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 32 Contingent Assets and Liabilities
Contingents Assets
The Department for Infrastructure and Transport has constructed Festival Plaza public realm assets. Further work is required to split the responsibility for the public realm assets between the Department of the Premier and Cabinet, the Adelaide Festival Centre Trust and Renewal SA. Further work is also required to confirm the accounting treatment which will be applied to these assets and the resulting value which will be recognised. It is expected this will be finalised in 2022-23..
Contingent Liabilities
Renewal SA has a potential liability to a developer of up to $0.200 million (being maximum of $0.100 million for each of the two remaining stages of the three-stage development) for soil disposal costs if the soil on site is discovered to be unsuitable for the Renewal SA Soil Bank.
Note 33 Financial instruments disclosure and financial risk management
Financial risk management
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).
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. Renewal SA's borrowings are guaranteed by the Treasurer in accordance with Section 24(3) of the Urban Renewal Act 1995.
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.
Renewal SA undertakes all its borrowings from SAFA therefore its market and liquidity risk for new and maturing borrowings is aligned to that of the SA Government.
Renewal SA's borrowings are guaranteed by the Treasurer in accordance with Section 24(3) of the Urban Renewal Act 1995.
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.
Exposure to interest rate risk may arise through interest bearing liabilities, Including borrowings. Renewal SA's borrowings are managed through the 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 max1mum period considered when estimating expected credit losses is the maximum contractual period over which Renewal SA ls 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 information about the exposure to credit risk and expected credit losses for non-government debtors:
| Gross carrying amount $'000 | Loss % | Lifetime expected losses $'000 | |
Current (not past due) | 1,236 | 0.6 | 7 |
| 1 - 30 days past due | 1,147 | 0.6 | 6 |
| 31 - 60 days past due | 297 | 0.6 | 2 |
| 61 - 90 days past due | 146 | 0.6 | 1 |
| Loss allowance | 2,826 | 16 |
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 with subsequent recoveries of amounts previously written off credited against the same line item. In addition to the expected loss of $0.016 million there are expected losses of $1,037 million for specifically identified customers.
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 counterpartles 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 fa1r 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 their short-term nature.
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.
Renewal SA measures all financial instruments at amortised cost
2022 contractual maturities
| Note | Carrying Amount $'000 | <1 year $'000 | 1-5 years $'000 | > 5 years $'000 | Amortised Cost $'000 | |
| 2022 Financial assets: | ||||||
| Cash and cash equivalents | 18 | 14,491 | 14,491 | - | - | 14,491 |
| Loans and receivables: | ||||||
| Receivables | 19 | 103,601 | 18,803 | 25,848 | 57,200 | 101,851 |
| Allowance for doubtful debts | 19 | (1,053) | (1,053) | - | - | (1,053) |
| Total financial assets | 117,039 | 32,241 | 25,848 | 57,200 | 115,289 |
| Financial liabilities: | - | - | - | - | - | - |
| Financial liabilities at cost: | ||||||
| Payables | 25 | 12,503 | 12,503 | - | - | 12,503 |
| Borrowings | 26 | 381,302 | 142,427 | 224,030 | - | 366,457 |
| Lease liabilities | 26 | 17,295 | 3,021 | 10,636 | 3,638 | 17,295 |
| Total financial liabilities | 411,100 | 157,951 | 234,666 | 3,638 | 396,255 | |
| Net financial assets/(liabilities) | (294,061) | (125,710) | (208,818) | 53,562 | (280,966) |
2021 contractual maturities
| - | Note | Carrying Amount $'000 | <1 year $'000 | 1-5 years $'000 | > 5 years $'000 | Amortised Cost $'000 |
| 2022 Financial assets: | ||||||
| Cash and cash equivalents | 18 | 12,403 | 12,403 | - | - | 12,403 |
| Loans and receivables: | ||||||
| Receivables | 19 | 22,250 | 9,122 | 4,509 | 8,619 | 22,250 |
| Allowance for doubtful debts | 19 | (5,516) | (5,516) | - | - | (5,516) |
| Total financial assets | 29,137 | 16,009 | 4,509 | 8,619 | 29,137 |
| Financial liabilities: | ||||||
| Financial liabilities at cost: | ||||||
| Payables | 25 | 15,999 | 14,131 | 1,868 | - | 15,999 |
| Borrowings | 26 | 401,302 | 36,401 | 360,733 | - | 397,134 |
| Lease Liabilities | 26 | 12,790 | 2,049 | 8,178 | 2,563 | 12,790 |
| Total financial liabilities | 430,091 | 52,581 | 370,779 | 2,563 | 425,923 | |
| Net financial assets/(liabilities) | (400,951) | (36,572) | (366,270) | 6,056 | (396,786) |
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 34 Impact of standards not yet effective
Renewal SA has assessed the impact of new and changed Australian Accounting Standards Board standards and interpretations not yet effective. Renewal SA has early-adopted AASB 2021-2 Amendments to Australian Accounting Standards — Disclosure of Accounting Policies and Definitions of Accounting Estimates. The main requirements of this standard amend requirements and guidance relating to what accounting policy information is disclosed and clarifies the distinction between changes in accounting policy and changes in accounting estimates.
Note 35 COVID-19 pandemic outlook
The COVID-19 pandemic is likely to continue to impact the Adelaide property market in 2022-23. To the date of reporting, the various financial arrangements provided to businesses by the State and Commonwealth Governments has resulted in minimal adverse impacts on Renewal SA's rental income and property sales income as a result of the COVID-19 pandemic.
Note 36 Events after the reporting period
There are no events to report.
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 2022 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 Finance, Risk and Audit Committee.
| (signed) C MENZ 13 SEPTEMBER 2023 | (signed) M WOOD 13 SEPTEMBER 2022 | (signed) S HAINS 13 SEPTEMBER 2022 |