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15 October 2015 The Hon. Robin Scott MLA Minister for Finance Department of Treasury and Finance 1 Macarthur Street East Melbourne VIC 3002 Dear Minister CENITEX ANNUAL REPORT I am pleased to submit the 2014-15 Annual Report of CenITex, including the Financial Statements for the year ended 30 June 2015, for presentation to Parliament, pursuant to Part 7 of the Financial Management Act 1994. Yours sincerely

Randall Straw Chairman

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Our vision A connected and ICT-enabled public sector.

Our goal Deliver customer focussed ICT services that support a modern, agile and productive public service.

How we work Committed to placing the customer at the centre of everything we do, and this underpins our behaviour and decision making.

Our strategic objectives • Improve customer service, performance and efficiency. • Work collaboratively, embracing innovation to rapidly transform our services. • Ensure financial sustainability. • Build capability and high performance in our people.

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Contents  Section

1. From the Chairman 6

2. From the Chief Executive 7

3. CenITex Overview 10

4. Governance & Organisational Structure 12 4.1. Our governance 12 4.2. Relationship to the Minister 12 4.3. Board of Directors 12

4.3.1. CenITex governance – committees 13 4.4. Organisational structure 14 4.5. Executive Leadership Team key roles and responsibilities 14

5. Our Customers 16

5.1. Customer Committee 16 5.2. Machinery of Government changes 16 5.3. Engaging new customers 17 5.4. Customer service improvements 17 5.5. New customer projects 19 5.6. Customer Service Catalogue 20

6. Our Performance 22

6.1. Service Operations 22 6.1.1. Infrastructure Services 22 6.1.2. Workplace and Business Applications Services 22 6.1.3. Service Transition and Improvement Services 23

6.2. Customer Engagement 23 6.3. Highlights and Achievements 24 6.4. Strategy Coordination 26 6.5. Human Resources 28 6.6. Finance Services 29 6.7. Procurement Services 30

7. Our People 31

7.1. Our workforce 31 7.2. Employment and conduct principles 33 7.3. Occupational Health and Safety 34

8. Outlook 35

8.1. Background 35 8.2. The future 36 8.3. Challenges and priorities 36 8.4. Our focus 37

9. Financial Report 38

Auditor General’s Report 88

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10. Other Disclosures 90 10.1. Disclosures 90

10.1.1. Implementation of the Victorian Industry Participation Policy 90

10.1.2. Consultancies 90 10.1.3. Disclosure of major contracts 91 10.1.4. Freedom of Information Act 1982 91 10.1.5. Building and maintenance compliance 91 10.1.6. National Competition Policy 92 10.1.7. Compliance with the Protected Disclosure Act 2012

(formerly the Whistleblowers Protection Act 2001) 92 10.1.8. Office-based environmental impacts 93 10.1.9. Additional information 94

10.2. Disclosure index 95 10.3. Our websites 97 10.4. Glossary of terms 98

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1 From the Chairman The past 12 months has seen CenITex maintain quality ICT services during a time of continued uncertainty, but one of increased demand for our services.

The year-end brought certainty for our hard working and resilient staff with the Government decision to discontinue the full outsourcing of CenITex and maintain our role as a provider of critical, secure and reliable ICT services to Victorian Government departments and agencies.

CenITex realised a significant surplus this year after steady improvement over the previous two years. Service benchmarks were also maintained and investment made in remediating aged infrastructure, which in turn has reduced service risks. CenITex is also realising the operational efficiencies and cost savings from consolidating core ICT services and the transition of Victorian Government department customers onto a shared operating environment (Government Shared Platform), which has enabled CenITex to maintain its customer pricing for 2015-16 at 2014-15 levels. The decision by the Department of Health and Human Services to migrate to the GSP is an endorsement of this investment and hard work.

Despite these solid gains, there is more work to be done to better meet stakeholder expectations. I note the Government’s decision to enhance the CenITex Board with the inclusion of customer representatives, which will strengthen our capacity to build stronger relationships and collaborative planning capabilities.

CenITex faces significant challenges and a paradigm shift in our business model – we intend to be more adaptable, customer-focussed and able to partner with market-based service providers to deliver more timely and cost effective services.

I am confident that CenITex is well placed to further improve the delivery of customer-focussed ICT services to support a modern, agile and productive public service.

Randall Straw Chairman

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2 From the Chief Executive CenITex saw a strong finish to the financial year with a good surplus, a solid balance sheet, a stable operational platform, continuing low staff attrition and key service levels being met.

We ended 2014-15 with a surplus of $8.4 million, our first surplus since 2010. While an element of this related to a change in the accounting treatment of our assets, the major share was achieved by a focus on cost management and cost reduction, and by increased productivity enabled through efficiencies realised from investments in modernising and standardising infrastructure on the Government Shared Platform (GSP). The year also saw greater than budgeted project work driven by our customers.

Our staff demonstrated remarkable resilience and professionalism, particularly in the face of an uncertain future as a result of market testing and potential for outsourcing as an outcome of Project Atlas. The Government’s decision to retain CenITex brought some certainty about our future and renewed vigour to a workforce eager to capitalise on the investment and hard work we have put in over the past several years.

In 2014-15 we again met the service benchmark of 99.8 per cent availability for our workplace and application hosting services. We resolved close to 90 per cent of the 10,000 Service Centre contacts each month in less than the targeted two hours and exceeded our customer satisfaction benchmark among all customers who engaged with our Service Centre or second level support.

In light of the efficiency gains achieved, the CenITex Board agreed to the absorption of both Consumer Price Index (CPI) and Enterprise Bargaining Agreement (EBA) related cost increases, so prices for customer services will remain at 2014-15 levels for 2015-16.

Further efficiencies are anticipated from the decision by the Department of Health and Human Services to migrate from its separate environment to the GSP, which will nearly double the number of users on the GSP to 23,000. The migration will take up to two years to fully realise and will further strengthen our ability to convert economies of scale into better services and lower costs.

Our business planning indicates we will have the capacity to share these efficiencies through reducing prices in 2016-17.

Infrastructure improvement A key factor in our delivery against agreed service levels has been a continued focus on risk management and a targeting of infrastructure refresh investment in those areas that risk assessment identified as most relevant for service availability and customer satisfaction. These improvements have enabled CenITex to deliver benefits to customers through the year, both in improved customer service and reduced costs. Improvements to infrastructure and services include:

• an upgrade to the Storage Area Network (SAN), which brought improved application performance

• an upgrade to the remote access service by migrating Citrix-based virtual desktop infrastructure to a dedicated server and state-of-the-art solid state disk storage, which uses two-thirds less space and 80 per cent less power

• the introduction of the McAfee spam quarantine system and a self-service spam control console to combat the increasing frequency and sophistication of malicious email

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campaigns and allow our customers to release quarantined email messages without having to call or email our Service Centre

• the roll out of self-service password reset features across DELWP, DEDJTR, DTF, DPC and the Victorian Ombudsman’s Office

• the introduction of a phone based RSA remote access security soft token which allows security codes to be downloaded onto mobile phones when working offsite

• a significant price reduction for the Traveler smartphone and tablet service and added mobile access to the Sametime instant messaging feature for Apple and Android devices at no extra charge.

Customer initiatives A total of 531 customer projects valued at $18.3 million were opened during the year. Of those, 204 were larger projects valued at $14.3 million and 327 were minor projects valued at $4 million. Some of our significant customer projects included:

• an upgrade of 1400 customers to Windows 7 on the GSP across the former DTPLI, DSDBI and VicForests in Melbourne and regional offices (all GSP customers will be on Windows 7 by early August)

• completion of an 18-month project to refresh 40 servers with DJR and CSV and migrate their shared Oracle Financials system to the new platform

• completion of a TRIM document management upgrade for 1600 desktops across DTPLI, Public Transport Victoria and the Taxi Services Commission, plus a further 600 users in Land Victoria and the former DPCD

• an upgrade of the Citrix Access Gateway, Lotus Notes email servers and TRIM for the Office of the Chief Parliamentary Counsel

• assisting DTF with the update of its financial management system (SRIMS) development environment, and migration to the Whole of Victorian Government (WoVG) wireless network

• completion of an upgrade to the Integrated Client and Case Management System (ICCMS), a 24/7 application supporting DHHS child protection services

• installation of a new guest wifi network at DPC’s MacArthur Street offices. By leveraging off previous WoVG network investment, wireless guest access has now become a CenITex-supported service and will be offered in the Customer Service Catalogue at 60 per cent below market rate.

Staff In 2014-15 we continued to build capabilities across the organisation and develop staff skills through training and development courses. There was a large focus on programs related to resilience in response to change, and staff also participated in online training programs and courses covering management development, workplace effectiveness, team building, specialist technical areas and occupational health and safety. An externally delivered employee assistance program was also available.

I would like to recognise the professionalism shown by our people during the past year. In the face of uncertainty, they have responded in a manner which you would expect of those who take deep pride in delivering quality services to their customers and through them, to the Victorian community.

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Financial outcome The 2014-15 year has been financially successful.

Earnings before depreciation and amortisation (EBITDA) were $31.7 million, representing a $9.6 million improvement on 2013-14. Importantly, we achieved a surplus of $8.4 million, the first time a surplus has been achieved since 2010.

This year we continued to implement and strengthen our financial controls and accountability, particularly in relation to procurement and recruitment.

Outlook Due in no small part to the hard work and professionalism of our staff, we head into the future on a strong financial and operational platform.

Our primary focus will be on building a closer relationship with our customers, delivering a more contemporary customer workplace environment and exploring the opportunities that the cloud offers for greater efficiency, mobility and lower cost. We are budgeting for a further surplus in the coming year, which will enable us to reduce prices.

We will be investing in the technologies, skills and partnerships needed to best enable our customers to meet the needs of the communities they serve. We will also invest in the people, systems and services needed to ensure the reliability of our platforms with a particular focus on enhanced security, access control and system availability.

The organisation has been well served by the CenITex Board, which remained unchanged this year. Taking up the recommendations of the independent review of the Government’s business support shared services, we look forward to welcoming greater customer representation onto the Board next year.

Management and staff consistently delivered in 2014-15, meeting customer expectations while managing major change. I thank them for that and I also thank our customers for their on-going support.

I am confident that we will continue to deliver a high quality of day-to-day services while embracing innovation and increasing our customer focus. We are heading into an exciting, challenging and rewarding year.

Michael Vanderheide Chief Executive  

 

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3 CenITex Overview CenITex, an information and communications technology (ICT) shared services agency, was created on 16 July 2008 as a state-owned enterprise with the aim of providing Victorian Government departments and agencies with integrated and reliable ICT infrastructure, application hosting and desktop services.

In October 2013, following the release of the then Victorian Government’s IT Strategy earlier that year, CenITex established Program Evolve to test the market for transitioning CenITex services to the private sector on behalf of its customers. Evolve was later re-named Project Atlas and a Request for Proposal for the outsourcing of CenITex services was issued to the market in October 2014.

Project Atlas was placed on hold in March 2015 pending the outcome of an independent review of business support shared services across the Victorian government, commissioned by the Department of Premier and Cabinet.

On 30 June 2015 the Special Minister of State, Gavin Jennings, and the Minister for Finance, Robin Scott, released the findings of the review and the key outcomes, specific to CenITex, were: • Project Atlas - set up to outsource all CenITex services to one vendor - was to be

discontinued; • CenITex is to continue to deliver the critical secure processing and information

management services it currently provides to support Government departments and will be involved in targeted market testing of some commodity services deemed readily available from the market; and,

• The CenITex Board is to be enhanced with the inclusion of customer representatives, remaining accountable for the governance and ongoing performance of the organisation.

Key metrics (as at 30 June 2015)

Revenue – $148.3 million Desktops supported – 30,600 Staff – 493 (including 22 contractors) Data centres - 6 Servers - 2528 (70 per cent virtualised) Average network services availability - 99.87 per cent (99.80 per cent target) Average customer satisfaction rating – 96.18 per cent (95 per cent target)

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What we deliver

Workplace services, including:

• desktop services • file and print services • email and diary services • personal productivity applications • internet access services.

Hosting services, including:

• application hosting • storage and back-up • restore and disaster recovery • database and application server management.

Professional services (customer funded projects), including:

• project management • solution design and build.

CenITex also supplies identity and access management, ICT security services, personnel on-boarding and off-boarding, and directory services.

Our customers

As at 30 June 2015 CenITex provides ICT services to the following 11 Victorian government departments and agencies:

• Department of Economic Development, Jobs, Transport and Resources (DEDJTR) • Department of Environment, Land, Water and Planning (DELWP) • Department of Health and Human Services (DHHS) • Department of Justice and Regulation (DJR) • Department of Premier and Cabinet (DPC) • Department of Treasury and Finance (DTF) • Public Transport Victoria (PTV) • Victorian Ombudsman • VicForests • Environment Protection Authority (EPA) • Taxi Services Commission (TSC) CenITex also services the following customer associated agencies and government entities: • Office of the Governor • Victorian Public Sector Commission • Office of the Chief Parliamentary Counsel • Public Record Office Victoria • Victorian Multicultural Commission • Transport Safety Victoria • Arts Victoria • Metropolitan Waste and Resource Recovery Group • Court Services Victoria  • Linking Melbourne Authority  • Victorian Ministerial offices  

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4 Governance & Organisational Structure 4.1 Our governance

As CenITex provides commercially oriented ICT services, we recognise that our relationship with our customers must be based on sound, commercial arrangements. Our service level agreements and memoranda of understanding are underpinned by a Customer Service Catalogue and transparent prices.

The formal governance role is assigned to the CenITex board, comprising independent members - Randall Straw as chairman and Dr Richard Tait, Conrad Harvey and Johanna Barker as non-executive directors.

Operational responsibility is assigned to the CenITex Executive Leadership Team. These roles are supported by a number of operational and advisory groups, some of which have departmental representation.

During the financial year 1 July 2014 to 30 June 2015 persons who held the positions of Minister and accountable officer responsible for CenITex were:

• The Minister for Technology, the Hon. Gordon Rich-Phillips MLC (to 29 November 2014) • The Minister for Finance, the Hon. Robin Scott MLA (from 4 December 2014) • Chief Executive, Michael Vanderheide.

4.2 Relationship to the Minister

The Victorian Government Minister responsible for CenITex is the Minister for Finance.

It is the responsibility of the board to advise the Minister directly in relation to all matters falling within the Minister’s areas of responsibility as they relate to CenITex.

4.3 Board of Directors

Chairman of CenITex is Randall Straw, appointed to the board on 17 December 2013 for two years and appointed Chair on 9 April 2014. He has over 30 years’ experience in government ICT, formerly serving as Deputy Secretary of Innovation and Technology at the then-Department of Business and Innovation and prior to that as Executive Director Multimedia Victoria and a range of other ICT and technology related positions. He has extensive knowledge of and experience in the management of large scale ICT and technology related reform projects in government.

Dr Richard Tait, appointed to the board on 17 December 2013 for two years, is one of Australia’s most experienced information technology executives, having served in a range of strategically important Chief Technologist and Chief Information Officer roles, including Goldman Sachs, JB Were and ANZ Bank. He is a recognised authority on the delivery of major transformation programs and risk management. He is Managing Director and principal consultant of Aquitaine Consulting.

Conrad Harvey, appointed to the board on 17 December 2013 for two years, brings a wealth of experience in the innovative use of ICT in service delivery. He is a former Group General Manager of Coles, where he led the transformation of service delivery through information technology and digital delivery channels. He is also a member of the Victorian ICT Advisory Committee, where his strategic insights and industry knowledge are highly valued.

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Johanna Barker, appointed to the board on 8 April 2014 for 21 months, has extensive corporate, banking and IT management experience, in particular in the establishment and management of shared services. Johanna (Joh) is a former executive manager of the ANZ Bank and has held senior finance, IT and business positions at SMS Ltd and IBM. She is also a former member of the Victorian Government Shared Services Advisory Board.

Board meetings

There were 11 board meetings during 2014-15. Director Number of meetings

attended Number of meetings eligible to

attend Randall Straw (Chairman) 10 11 Dr Richard Tait 10 11 Conrad Harvey 10 11 Johanna Barker 11 11

4.3.1 CenITex governance – committees Audit and Risk Committee

The Audit and Risk Committee (ARC) is an independent standing committee reporting to the CenITex board. Its purpose is to assist the board to fulfil responsibilities relating to:

• the integrity and quality of CenITex’s financial reporting and disclosures • the adequacy of internal control framework that CenITex uses to identify and manage key

business, financial, fraud and regulatory risks • the external auditor’s annual audit of CenITex’s financial statements • CenITex’s compliance with relevant laws, regulations, standards and codes.

The ARC consists of four non-executive members who are independent of CenITex management.

ARC membership

Dr Richard Tait (Chair)

Johanna Barker (joined the committee at the August 2014 meeting)

Sue Carter (ceased membership after the August 2014 meeting)

Peter Goddard

John Craven

ARC meetings

There were four meetings during the year.

Risk management

CenITex has a well-defined and integrated approach to planning and risk management. Our approach facilitates appropriate identification, assessment and control of risks to our operations and corporate strategy. It provides the framework for our continuous improvement activities and asset refresh programs to ensure that they are focussed on the areas of highest priority.

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Risk management is overseen by the Audit and Risk Committee, which ensures that our risk management approach complies with relevant obligations and meets organisational needs.

CenITex has an enterprise risk management framework that provides a coordinated, organisation-wide approach to risk management and that guides our focus on service delivery reform. Risks are regularly reviewed and monitored, especially those internal and external risks that could have an impact on our ability to achieve our financial, customer and people goals and meet our legal and compliance responsibilities.

Key risks actively managed by CenITex include risks to cybersecurity; service continuity; financial sustainability; and staff retention and engagement.

Remuneration Committee

The Remuneration Committee (RC) is a standing committee of the CenITex Board. Its primary roles include maintaining the Remuneration and Employment Policy, providing recommendations for the annual executive remuneration review, remuneration compliance, and appointment of the CenITex Chief Executive.

RC membership

Randall Straw

Conrad Harvey

RC meetings

There were two meetings during the year.

4.4 Organisational structure

CenITex is arranged in five key business streams:

1. Customer Engagement 2. Service Operations 3. Strategy Coordination 4. Finance 5. Human Resources.

The five stream leaders make up the Executive Leadership Team (ELT), together with the Chief Executive, to whom the members report. The Chief Procurement Officer reports directly to the Chief Executive but is not a member of the ELT.

A forum known as the CenITex Leadership Group is made up of ELT members and their direct reports who are also senior managers. It meets regularly to review and discuss key performance and strategic issues and lead key organisation-wide initiatives.

4.5 Executive Leadership Team key roles and responsibilities

Chief Executive – Michael Vanderheide

• advises the board on the establishment and implementation of a strategy for CenITex and delivers the agreed strategy

• ensures that the necessary people, processes and systems are in place to deliver infrastructure, network, operating system projects and upgrades across the customer departments

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• engages with senior customer stakeholders and industry representatives • provides leadership to the CenITex organisation and builds a constructive and customer-

oriented culture.

Director Customer Engagement – Bill Diamond

• serves as the key enabling interface between CenITex and its customers • responsible for account management, service level agreements, service catalogue and

customer communications.

Director Service Operations – Peter Bon

Coordinates and carries out day-to-day activities to deliver and manage services and projects to agreed levels, including:

• infrastructure services • workplace services • technical support services • operational security • Service Centre, request fulfilment and incident and problem management • service acceptance and improvement.

Director Strategy Coordination – Mike Delaney

• coordinates and manages business strategy, business trends and strategic research • manages corporate communications and liaison • provides business and customer reporting • provides board support, legal services, and risk and compliance services.

Chief Financial Officer – Catherine Ho

Responsible for:

• financial analysis and reporting • cash management • asset management • budgeting and financial modelling • accommodation services.

Director Human Resources – Catherine Proud Responsible for: • strategic people planning • capability development, including learning and development, management and leadership

development • workforce planning, recruitment and staff movement • performance, reward and recognition • occupational health and safety, and employee wellbeing • entitlement management (including payroll) • industrial relations.

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5 Our Customers

In 2014−15 CenITex maintained its key strategic focus on ensuring high levels of customer service. This is fundamental to the effective delivery of reliable, responsive ICT services to Victorian Government departments and state agencies.

5.1 Customer Committee Stakeholder Advisory Committee

The Stakeholder Advisory Committee (SAC) ensures that CenITex develops and maintains strong and open relationships with its customers at a senior management level. This committee is a key forum for CenITex customer departments to raise concerns or initiate advice that may be considered by the CenITex board and management.

The SAC provides a forum for customer departments to discuss collectively all generic service provisioning in relation to:

• future strategic direction • new services • the CenITex service catalogue • pricing and service levels.

SAC membership

CenITex Chief Executive – Michael Vanderheide (chair)

CenITex Director Customer Engagement – Bill Diamond

Relevant departmental senior ICT executives or CIOs.

SAC meetings

Seven SAC meetings were held during the year. Numerous additional meetings were also held by SAC members in relation to Project Atlas, and the State Government’s independent review of business support shared services across departments which commenced on 20 March 2015.

5.2 Machinery of Government changes Post-election support

The November 2014 Victorian State election required significant planning and engagement by CenITex with its customers to enable a successful transition in of the new Government and transition out of the previous Government. CenITex post-election services, which involved over 120 staff from across the business, were delivered at 10 per cent below the estimated cost. The Service Centre resolved 1284 election-based requests, 93 per cent of which were resolved within the agreed service standards.

Machinery of Government changes Following the Victorian State election, the new Government announced a significant departmental restructure i.e. Machinery of Government (MoG) changes, which took effect on 1 January 2015. The MoG changes reduced CenITex’s department customers from eight to six and involved the following reorganisations:

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• The portfolios of the departments of State Development, Business and Innovation (DSDBI), Transport, Planning and Local Infrastructure (DTPLI), Environment and Primary Industries (DEPI) were split across two new departments - the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) and the Department of Environment, Land, Water and Planning (DELWP).

• The departments of Health (DH) and of Human Services (DHS) were merged into the Department of Health and Human Services (DHHS).

• The Department of Justice (DOJ) became the Department of Justice and Regulation (DJR).

5.3 Engaging new customers In 2014−15 CenITex engaged two new customers ─ Court Services Victoria (CSV) and the Taxi Services Commission (TSC). CSV was established as a new independent statutory authority on 1 July 2014 to manage and fund the Supreme Court, County Court, Magistrates Court, Children's Court, Coroners Court, and the Victorian Civil and Administrative Tribunal (VCAT). CSV became a CenITex customer on 4 July 2014. On 23 August 2014 CenITex signed a Memorandum of Understanding (MOU) with the Taxi Services Commission for the supply of ICT services from the Customer Service Catalogue, providing a secure standard desktop, trusted network, integrated directories, a WoVG application hosting environment and Service Centre support.

5.4 Customer service improvements Business Planning Workshops

Two joint business planning workshops which focussed on priorities for the coming financial year were held in April and May 2015 with the CenITex Executive Leadership Team and departmental CIOs. The workshops were designed to enable a shared understanding of the key ICT drivers both within departments and CenITex and to identify areas of common concern and opportunity. Key themes and initiatives that emerged have been incorporated in the Business Plan including:

• the need for a strong focus on cost reduction • the potential for utilising elements of the operating model developed during Project Atlas

to improve governance and customer engagement • CenITex playing a facilitation role in pooling both investment and investment

requirements among departmental customers to ensure the effective use of funding

initiatives to enable/support access to cloud-based services, improve access management, explore migration from the Notes email and calendar service, and enhance mobility solutions. Account management

The account management team continued to support the development and delivery of customer roadmap plans for all customers, outlining key projects, and mapping dependencies within each customer’s project activity list and with other customer projects.

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Customer satisfaction

CenITex uses the QuickPoll customer survey tool to gather customer feedback, improve customer response and support technical and service analysts. Over the past year, the customer satisfaction rating has averaged 98.02 per cent, exceeding the key performance indicator (KPI) of 95 per cent (combining both positive and neutral scores). Customer satisfaction across all Service Operations teams averaged 87.79 per cent positive, 10.24 per cent neutral, and 1.98 per cent negative.

Customer satisfaction

Jul-14 Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Positive % rating

84.36 85.68 88.07 85.39 86.84 86.13 91.27 89.21 87.13 90.49 89.65 89.25

Neutral % rating

13.69 11.93 9.54 12.00 11.14 11.73 7.09 9.14 10.63 8.85 8.52 8.56

Negative % rating

1.96 2.39 2.39 2.61 2.03 2.13 1.65 1.65 2.24 0.66 1.83 2.19

Chart 1 below plots the customer satisfaction rating with the Service Centre over the past year. CenITex has exceeded its KPI of 95 per cent throughout the year.

Chart 1 – CenITex customer satisfaction with the Service Centre 2014-15

ICT Improvements

90%  

92%  

94%  

96%  

98%  

100%  

Jul-­‐14   Aug-­‐14   Sep-­‐14   Oct-­‐14   Nov-­‐14   Dec-­‐14   Jan-­‐15   Feb-­‐15   Mar-­‐15   Apr-­‐15  May-­‐15   Jun-­‐15  Customer  sa7sfac7on   Key  performance  indicator  (KPI)  

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Improvements and upgrades in essential ICT infrastructure have enabled CenITex to deliver benefits to customers through the year, both in improved customer service and reduced costs. Improvements to the CenITex network and data centres include:

• Storage Area Network (SAN) upgrade – an upgrade to the SAN brought improved application performance for customers on the Government Shared Platform (GSP). With the introduction of new storage controllers behind the SAN, CenITex has upgraded storage asset support, improved the speed of response for customer applications accessing stored data, and released a further 140 terabytes of storage for customer use. The upgrade was undertaken as part of the previous year’s Asset Refresh program.

• Virtual Desktop Infrastructure (VDI) – upgraded the GSP remote access service by migrating Citrix-based virtual desktop infrastructure to a dedicated server and state-of-the-art solid state disk (SSD) storage. With 20 terabytes of back-end storage now stored in SSDs, performance has improved by 25 times against the previous storage arrangements, and the VDI uses two-thirds less space and 80 per cent less power.

• Self-service spam management – a self-service spam control console introduced by CenITex’s Operational Security team was made available to all GSP customers following a successful pilot within CenITex and with selected customers. This new feature to the spam filter services allows customers to release quarantined email messages without having to call or email the CenITex Service Centre, which previously received many requests each month to release messages classified as spam.

• RSA remote access security soft token – an application was introduced for customers on the GSP to allow security codes to be downloaded onto mobile phones when working offsite.

• IBM contract renegotiation – the IBM Enterprise Licence Agreement (ELA) extension was finalised by DSDBI and CenITex for the renewal of subscription and support on IBM ELA products to 30 September 2015. The IBM ELA products for which subscription and support was being renewed have been significantly reduced from the previous extension. The finalised extension represents a 40 per cent year-on-year reduction across the CenITex Bill of Materials (including customers).

• Remedy upgrade – completed a major upgrade to Remedy (CenITex’s key Service Centre and system monitoring toolset) to version 8.1.02, introducing a range of new or improved functionality. The upgrade was resourced and driven internally rather than via the vendor, which substantially reduced the cost.

5.5 New customer projects Project Unity Collaborative work by DHHS and CenITex senior teams during the first quarter of 2015 resulted in an agreement for DHHS to migrate from its standalone infrastructure environment to the standardised services from the GSP. A key feature of the move was that the cost of services via the GSP will match or better current DHHS costs.

The transition will take up to 30 months to complete and provide considerable benefit to CenITex and DHHS, both in simplifying necessary staff support and in expected savings (estimated at several million dollars) by leveraging investments already made within the GSP.

In 2014−15 CenITex began a number of major projects to support customers including:

• DTF and DPC Windows 7 Upgrades − DTF and DPC agreed to move to Windows 7 on the GSP. This means that 11,500 users across four departmental customers on the GSP

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will operate on the same Windows 7-based desktop SOE, realising significant time and cost savings.

• DPC wifi network − installed a new guest wifi network (aligned to the GSP) at DPC’s MacArthur Street offices. By leveraging off previous WoVG network investment, wireless guest access has now become a CenITex-supported service and will be offered in the Customer Service Catalogue at 60 per cent below market rate.

• DTF financial management system – assisted DTF with the update of its financial management system (SRIMS) development environment.

• CSV launch – assisted in the launch of CSV involving setting up a new email domain, screen saver, wallpaper and home page. The first phase of the project was delivered to over 2000 individuals and eight business units in less than four weeks, with only a few service calls which were dealt with quickly and successfully. The second stage of the CSV Transition Project has commenced with the customer electing to develop its own Windows 7 SOE.  

• DHHS infrastructure upgrade – an upgrade was completed for the Integrated Client and Case Management System (ICCMS), a 24/7 application supporting DHHS child protection services.

• DTF wireless service – assisted DTF with migrating to the WoVG wireless service. • DSDBI (now DEDJTR) international network contract – an international network

contract was re-signed by the then DSDBI after lengthy negotiation with Telstra. CenITex led this project, ensuring due diligence completion, and has taken on management of the contract.

5.6 Customer Service Catalogue CenITex continued to improve its Customer Service Catalogue in 2014−15 as part of its commitment to providing customers with high-quality ICT services and transparent and cost-effective pricing.

The Customer Service Catalogue provides a list of all CenITex products and services, corporate service levels and pricing available to customers and guidance on how to obtain these services.

During the year CenITex provided catalogue services to four departments (DPC, DTF, DEDJTR and DELWP) and their associated agencies. In addition, the TSC signed an MOU for the supply of ICT services from the service catalogue in August 2014.

The Mallee CMA (Catchment Management Authority), which had been using CenITex services via the DELWP, decided to allow a small number of users located in the DELWP Irymple office to seek an alternative IT provider, and this data was subsequently removed from CenITex infrastructure.

The current service catalogue, which was released on 1 July 2014, included a range of new services designed to meet customer needs and further refinements to ensure the information contained in the catalogue is very accessible for customers.

New features of the 2014−15 catalogue (including price reductions) were:

• the introduction of an RSA remote access software token for use when either renewing an expired RSA token or for new users

• a significant price reduction for the Traveler smartphone and tablet service. In addition, the smartphone and tablet service now provides mobile access to Sametime (instant

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messaging) from the customer’s chosen Apple or Android mobile device with no additional charge

• the release of a service request to make a collaboration mail-in database available from a smartphone or tablet

• the release of an application and infrastructure monitoring service (H10 ─ Hosting Service) in early 2015 following the decommissioning of the legacy Big Brother monitoring facility which had been used by many customers. The service provides for the monitoring of servers, providing real-time and historical information

• the release of a test management service that supports customer releases and updates to business systems.

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6 Our Performance

6.1 Service Operations Victorian Government ICT operates across three infrastructure platforms: The Government Shared Platform (GSP) was developed as part of a Government Efficient Technology Services (ETS) program of works that now hosts the departments of Economic Development, Jobs, Transport and Resources (DEDJTR), Environment, Land, Water and Planning (DELWP), Treasury and Finance (DTF), and Premier and Cabinet (DPC). The departments of Justice and Regulation (DJR) and Health and Human Services (DHHS) are supported on two legacy infrastructure platforms. In April 2015, DHHS agreed to migrate onto the GSP.

The GSP is a modern ICT platform distributed across two enterprise grade data centres via a Multiprotocol Label Switching (MPLS) network that delivers high degrees of service availability and cost efficiencies. Operating under the Information Technology Infrastructure Library (ITIL) service management processes, it also utilises state-of-the-art alerting and monitoring systems to support the delivery of business application hosting and physical or virtual workplaces to customers.

Service Operations manages day-to-day operational support for these platforms and CenITex customers and our staff.

Following an internal reorganisation in July 2014, Service Operations now comprises three groups, each run by a manager responsible for service teams. The groups are:

• Infrastructure Services • Workplace and Business Applications • Service Transition and Improvement Services.

In addition, the Project Delivery and Architecture group was integrated into Service Operations and its Project Delivery and Project Management Office services became part of the Service Transition and Improvement Services group.

6.1.1 Infrastructure Services

Infrastructure Services makes up the backbone of CenITex’s IT provisioning, and includes:

• Data centre facilities – management and maintenance of data centres in operation across Victoria

• Network services – 24/7 management of the GSP • Security operations – information security services ranging from managing and

implementing operational security policy to monitoring intrusion and prevention • Server and OS services – installation and upkeep of CenITex supported operating

systems, Active Directory infrastructure and virtualisation environments • Storage and backup services – performance and capacity based storage at data centres.

6.1.2 Workplace and Business Applications Services

The Workplace and Business Applications Services group delivers the customer facing services of the end user workplace and the hosting of business unit applications. The group is responsible for:

• Business application services – business applications and application platforms, database administration and support services

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• Groupware services – second and third level support for Lotus Notes, Domino systems and other related systems and mobility services

• Identity and access management services – second and third level support services for user identity and access management systems for computer desktop, email, shared network drives and business applications

• IT Service Centre – level one support for IT incidents and requests and users security support

• Workplace technology services – second level desktop support for desktops and printers, installing and removing desktop software, resolving hardware and software faults, network patching, desktop support during state emergencies, Citrix technology platform support, System Centre service delivery, virtual desktop services, desktop systems development, application packaging and project services.

6.1.3 Service Transition and Improvement Services

Service transition and improvement services include:

• Monitoring and automation – comprehensive and systematic monitoring and management of CenITex’s service delivery and production infrastructure

• Operational risk and emergency services – operational risk management and mitigation through a risk register, emergency response activities in the event of disasters and other significant events, and compliance with relevant laws, regulations, standards and codes

• Service transition – controls service introduction, change and decommissioning, ensuring requirements are reached through the delivery of services

• Service planning and improvement – capability to deliver services to customer departments and improve reporting abilities

• Project delivery and Project Management Office – Project delivery provides project management services and performs Program Director functions for our customer projects; Project Management Office services include project methodology and governance services aligned to the strategic business investment model.

6.2 Customer Engagement The Customer Engagement team manages and nurtures relationships with customers in a manner tailored for each organisation. Customer Engagement has the following functions:

• account management incorporating service management and solutions consulting • service strategy and service portfolio management • service development • enterprise architecture.

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6.3 Highlights and Achievements The following is a consolidation of highlights and achievements in FY 2014-15 from Service Operations and Customer Engagement.

• Project Management Office – 531 customer projects to a total value of $18.3 million were opened during the year. Of those, 204 were larger projects to a value of $14.3 million and 327 were minor projects to a value of $4 million.

• Windows 7 upgrades – completed the deployment of Windows 7 to the GSP for 1400 users across DTPLI, DSDBI and VicForests in Melbourne and regional offices.

• DJR and CSV Oracle Financials upgrade – completed an 18-month project to refresh 40 servers within DJR and CSV and cutover of their shared Oracle Financials system to the new platform. The refresh involved a revised storage architecture for the disaster recovery (DR) replication and migration of a new DR capability.

• Fire season preparation – delivered the natural disaster application prior to start of the fire season (and ahead of schedule) following an escalated request from DTF.

• Self-service password reset (SSPR) – rolled out SSPR to DEPI, DEDJTR, DPC, and the Victorian Ombudsman, and Network SSPR to DTF.

• TRIM upgrade – completed a document management upgrade to the latest version of TRIM (7.2) for 1600 desktops across the DTPLI, PTV and TSC, plus a further 600 users in Land Victoria and the former Department of Planning and Community Development.

• Citrix upgrade – upgraded the Citrix Access Gateway, Lotus Notes email servers and TRIM for the Office of the Chief Parliamentary Counsel

• Web content filtering – successfully deployed web content filtering software to DTPLI.

• Windows 8.1 uplift – upgraded CenITex staff to Windows 8.1 and Lotus Notes 9.0.

• Monitoring and automation – added service modelling, end user monitoring and dashboard reporting tools to improve ICT monitoring, intelligence gathering and decision-making capabilities on the GSP.

• Disaster recovery – completed a disaster recovery response framework.

• High severity incidents – process changes by the Incident Management team improved the response to high severity incidents.

• Cyber security – participated in the Digital Government Cyber Security Exercise to review departmental and agency response capability to cyber threats.

• Security incidents – deployed new technologies such as McAfee spam quarantine and self-service spam control improvements to help combat the increase in the frequency and sophistication of malicious email campaigns targeting customer departments.

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Service Centre performance, period ending 30 June 2015

Service SLA Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

Total number of contacts*

20,143 16,828 18,504 19,017 15,906 20,431 18,081 19,404 19,736 16,780 16,640 18,268

Calls answered in 30 seconds (%)

90 90.88 93.20 96.63 93.76 92.08 89.78 81.98 78.90 77.97 83.55 92.56 86.27

Fixed within 2 hours (%)

70 85.67 87.77 87.31 86.40 88.26 88.16 89.09 89.91 89.74 87.70 89.84 92.59

Key: SLA = Service Level Agreement. * = Number of customer contacts to Service Centre doesn’t include DHHS which are tracked by a non-integrated system.

The CenITex Service Centre supports customers with standard and premium service levels. Common to all customer service level agreements (SLAs) is the ability to answer and resolve customer service requests and reported faults quickly.

Chart 2 shows CenITex’s performance in fixing service requests and faults within two hours. Over the past year, the Service Centre has consistently exceeded its SLA.

Chart 2 – Service Request and faults fixed within 2 hours 2014-15

To respond to customers promptly, the Service Centre aims to answer support calls within 30 seconds. Chart 3 shows that from December 2014 to April 2015, the Service Centre did not meet its SLA. An increase in calls resulting from the transition of State Government in December 2014, and the Machinery of Government changes announced in January 2015, combined with short staffing during this period, reduced the Service Centre’s ability to answer 90 per cent of calls within 30 seconds.

65%  

70%  

75%  

80%  

85%  

90%  

95%  

100%  

Jul-­‐14   Aug-­‐14   Sep-­‐14   Oct-­‐14   Nov-­‐14   Dec-­‐14   Jan-­‐15   Feb-­‐15  Mar-­‐15   Apr-­‐15  May-­‐15   Jun-­‐15  

Fixed  within  2  hours  (%)   Service  Level  Agreement  target  

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Chart 3 – Service Centre calls answered within 30 seconds 2014-15

6.4 Strategy Coordination The Strategy Coordination team is responsible for the functions of:

• corporate strategy • reporting • corporate communications • legal • risk management • information management and security.

The team has specific accountability for:

• facilitating the setting of strategic direction across CenITex • ensuring alignment of objectives and priorities throughout CenITex • providing counsel to CenITex on legal and compliance matters • delivering a robust risk management program that addresses both enterprise and

operational risk profiles with agreed mitigation strategies • ensuring that effective communications strategies are deployed throughout the business

in support of strategic outcomes and operational business practices • coordinating board and management performance reporting • providing advice and assisting with the development of options through analysis and

research • managing Freedom of Information requests, Privacy and Protected Disclosure

(whistleblower) processes • fostering an environment that supports effective governance via transparency and clarity

of accountabilities throughout the business.

75%  

80%  

85%  

90%  

95%  

100%  

Jul-­‐14   Aug-­‐14   Sep-­‐14   Oct-­‐14   Nov-­‐14   Dec-­‐14   Jan-­‐15   Feb-­‐15   Mar-­‐15   Apr-­‐15  May-­‐15   Jun-­‐15  

Calls  answered  in  30  seconds  (%)   Service  Level  Agreement  target  

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Highlights and achievements

During the year, Strategy Coordination:

• developed the CenITex Corporate/Business Plan for 2015–16 to 2016–17 • contributed as team members to Program Atlas in the areas of:

• program management • strategic, legal and risk management advice • daily management of key third-party arrangements, such as the commercial advisers • management of due diligence during the Expression of Interest and Collaborative

Dialogue process • strategic communications.

• supported and delivered major corporate publications, including the CenITex Annual Report 2013–14

• maintained social media tools for internal communications and delivered six CenITex-wide online interactive live chat forums

• completed a project to review and update all CenITex web content to meet government website accessibility guidelines level AA

• published the following major internal and external publications: • CenITex Update: 48 weekly online information updates from the Chief Executive • CenITex Notes: 12 issues of an online staff newsletter.

• developed and implemented a security risk management framework to inform CenITex Board and Audit and Risk Committee of the status of security risk and compliance issues

• conducted technical security assessment including penetration tests and social engineering tests to inform technical managers and enable risk mitigation actions

• completed design and development of a Critical Knowledge Catalogue to enable location and discovery of vital documentation and subject matter experts holding critical CenITex information

• ensured all registers under the responsibility of Legal Counsel, including Conflict of Interests Register and Probity Register, were kept up-to-date

• provided support to the CenITex Board and Audit and Risk Committee to facilitate delivery of specific briefs for analysis and decision making

• coordinated the performance of a centralised IT service assurance assessment covering the service aspects of the CenITex environment for customers’ nominated applications

• continued to enhance CenITex project management and time recording system.

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6.5 Human Resources

The key areas of focus for Human Resources are:

• strategic people planning • organisational development, including values and culture • capability development, including learning and development, management and leadership

development • workforce planning, recruitment and staff movement • performance, reward and recognition • occupational health and safety, and employee wellbeing • people management policies and procedures • payroll • employee relations.

Highlights and achievements

During the year, Human Resources:

• conducted Managing Change workshops from September to December 2014 to ensure effective management of the change program and help managers to communicate effectively with their teams during the change. The workshops were attended by 95 per cent of managers and 72 per cent of staff

• developed and implemented a retention and engagement strategy as part of Program Atlas. A key element of the strategy involved implementing the Managing Your Career program, which included a series of workshops and initiatives such as Planning Your Career and Motivated Skills and Networking. The strategy resulted in a voluntary annual attrition rate of 9.2 per cent.

• rolled out a new, cost-effective HR/payroll employee self-service system (ESS), HR21, to replace the previous BMS ESS system. The new system will deliver cost savings of $500,000 per annum and ensure much stronger reporting

• implemented the Resource Initiative 2014, which had commenced in June 2014, to reduce the CenITex workforce by 47 FTE

• 65 people were converted from fixed-term contracts to ongoing positions. This followed a review examining the implications of fixed-term contracts being rolled over for lengthy periods due to uncertainty about the future of the organisation

• maintained the Women in CenITex Network program throughout the year to provide networking opportunities for staff

• ran a Mind Body Life Wellbeing Program to encourage staff to be proactive in managing their own wellbeing. The program included a range of lunchtime activities such as an Amazing Race team challenge, yoga, mental wellbeing sessions and healthy eating.

 

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6.6 Finance Services

Finance Services has responsibility for:

• budgeting and financial aspects of the business plan • financial control • project portfolio reporting • management accounting • accommodation.

Highlights and achievements During the year, Finance Services achieved the following outcomes:

• improved CenITex cash holdings to remain consistently above its KPI threshold through changed invoicing policy and ensuring payment to terms

• continued to improve liquidity and working capital through reducing aged debtors to $1 million in FY 14/15 from $3 million the previous fiscal year

• further strengthened the end-to-end process for invoicing, resulting in more effective cash management

• reformulated the 2015-16 Budget responding quickly to a change in government strategy which discontinued the proposed outsourcing of CenITex services to external vendors

• improved revenue forecasting through stronger collaboration with CenITex Customer Engagement

• changed invoicing policy which resulted in reduced FTE efforts in accounts receivable and enabled a redirection of resources to more productive uses

• proactively engaged in the outsourcing of CenITex’s payroll function to achieve significant cost savings

• met all regulatory reporting and compliance requirements to government and the Board, including management of VAGO on its Annual Financial Report

• successfully managed all internal control reviews, demonstrating strong controls  • successfully  sublet excess accommodation capacity at 80 Collins Street.  

 

 

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6.7 Procurement Services

Procurement Services role is to:

• facilitate quote and tender processes • conduct evaluations and selections • facilitate procurement approval records and variations • support contracting arrangements • be the primary procurer of all CenITex’s material needs • ensure compliance with the Victorian Government Purchasing Board’s (VGPB) policies

and guidelines.

Highlights and achievements

During the year, Procurement Services:

• was approved to transition to the new VGPB supply policies, having met all the mandatory requirements

• published the CenITex Annual Procurement Activity Plan • produced and updated category plans that identified savings opportunities through

contract aggregation or product substitution and economic benefits were realised and captured through internal reporting mechanisms

• supported, via the strategic supplier team, the WoVG extension of the Microsoft enterprise licence agreements and the IBM enterprise licence agreement

• continued to introduce business practices and management controls aimed at decreasing the volume of non-compliant transactions

• supported the migration of the CenITex finance system and introduced a new contract register

• responded to and supported multiple vendor software compliance audits • completed 537 procurement transactions, resulting in the initiation of 626 purchase orders

valued at a total of $91 million.

 

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7 Our People 7.1 Our workforce

Comparative workforce data (i) (ii)

Table 1: Full-time equivalents (FTE) and contractor staffing trends from 2010 to 2015

Full time equivalents (FTE) staffing trends from 2010 to 2015

Jun-15 Jun-14 Jun-13 Jun-12 Jun-11 Jun-10

466.12 FTE* 531.92 FTE* 553.42 FTE* 585.69 FTE* 494.51 FTE* 348.2 FTE*

22 contractors** 9 contractors** 15 contractors** 81 contractors** 251 contractors**

175 contractors**

*This number excludes contractors

** This number includes contractors and temporary staff employed by employment agencies

Table 2: Summary of employment levels in June 2014 and June 2015

Ongoing employees Fixed-term & Casual

Year Total (Headcount)

Full time (Headcount)

Part time (Headcount) FTE FTE

Jun-15 447 431 16 442.12 24

Jun-14 449 435 14 444.89 87.03

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Table 3: Details of employment levels in June 2014 and June 2015

Data distribution

Jun-15 Jun-14

Ongoing Fixed-term & Casual Ongoing Fixed-term

& Casual

Number (Headcount) FTE FTE Number

(Headcount) FTE FTE

Gender

Female 98.0 93.32 5.00 104.00 99.89 16.03 Male 349.00 348.80 19.00 345.00 345.00 71.00 Total 447.00 442.12 24.00 449.00 444.89 87.03 Age

Under 25 15.00 15.00 1.00 4.00 4.00 9.80 25-34 98.00 97.00 7.00 89.00 88.60 34.00 35-44 179.00 176.37 4.00 172.00 169.74 23.63 45-54 101.00 100.80 7.00 116.00 114.85 13.00 55-64 51.00 49.95 5.00 65.00 64.70 5.60 Over 64 3.00 3.00 0.00 3.00 3.00 1.00 Total 447.00 442.12 24.00 449.00 444.89 87.03 Classification

Executive 4.00 4.00 0.00 4.00 4.00 0.00 STS 20.00 19.40 0.00 23.00 22.80 2.00 Grade 6 128.00 127.60 8.00 136.00 136.00 16.00 Grade 5 133.00 132.80 1.00 144.00 143.60 12.00 Grade 4 67.00 66.70 2.00 80.00 79.50 5.00 Grade 3 93.00 89.62 12.00 60.00 57.39 48.63 Grade 2 2.00 2.00 1.00 1.00 1.00 2.80 Grade 1 0.00 0.00 0.00 0.00 0.00 0.00 Legal Officer 0.00 0.00 0.00 1.00 0.60 0.60 Casual 0.00 0.00 0.00 0.00 0.00 0.00 Total 447.00 442.12 24.00 449.00 444.89 87.03

Notes:

(i) All figures reflect employment levels (active employees) during the last full pay period of June 2015.

(ii) Excluded are employees on leave without pay, including secondment, for the whole of the last pay period in June 2015 (0); external contractors/consultants (0); any temporary staff employed through employment agencies (22); and Directors of the Board (4) as defined in the Public Administration Act 2004.  

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7.2 Employment and conduct principles

Organisational and staff development

In the past year, CenITex conducted management and employee development programs, with a focus on building capability during a period of transition. Programs were designed to develop change management and communication skills, career planning skills and improve managers’ ability to provide constructive feedback to staff.

CenITex also offered work experience opportunities for secondary school students and a number of university internships.

Employee relations

CenITex is committed to providing a workplace that encourages open and honest working relationships at all levels in the organisation.

Workplace determination

All non-executive employees are employed under the Victorian Public Service (VPS) Workplace Determination 2012.

Code of conduct

CenITex adheres to the VPS code of conduct, which applies to all employees and contractors. The code of conduct is issued to all new staff on commencement with the organisation and staff notified of changes to the code of conduct through the year, and the latest bulletin of changes being issued in June 2015.

Merit and equity

CenITex maintains the following programs and policies to ensure that the workplace remains free from discrimination:

• Grievance Handling Policy • Human Rights Policy • Appropriate Workplace Behaviour Policy and annual online learning tool • Employee Assistance Program (provides staff with professional and confidential

counselling on work-related or personal problems that affect their work) • a set of values underpinned by the VPS code of conduct to provide staff with details on

the behavioural standards required of CenITex and public service employees • staff induction training.

CenITex’s Diversity Policy is currently under review and the revised Policy will be implemented in 2015-16.

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7.3 Occupational Health and Safety

CenITex is committed to occupational health and safety (OH&S) and aims to ensure that all staff remain safe and healthy at work.

Measure KPI 2014-15 Incidents Number of incidents 15

Rate per 100 FTE 3.2 Claims Number of standard claims (i) (ii) 4

Rate per 100 FTE 0.85 Number and incidence of lost time claims (i) 1

Rate per 100 FTE 0.21 Number and incidence of claims exceeding 13 weeks (i)

1

Rate per 100 FTE 0.21 Fatalities Fatality claims 0 Claim costs Average cost per standard claim (i) (iii) $258,251.07 Estimate of outstanding claim costs (i) $188,438.00 Return to work Percentage of claims with RTW Plan <30

days 0%

Management commitment Evidence of policy statement and objectives Policy statement on Intranet

Regular reporting to senior management Monthly OHS report submitted to Executive Leadership Team

Consultation and participation

Evidence of agreed structure of designated workgroups (DWGs), health and safety representatives (HSRs) and issue resolution procedures (IRPs)

Yes

Compliance with agreed structure on DWGs, HSRs and issue resolution procedures

Yes

Risk management

Number of internal audits/inspections completed.

5

Percentage of issues identified, actioned arising from:

• hazard reports 100%

• internal inspections 0% • HSR provisional improvement

notices 0%

• WorkSafe notices 0% Training

Number of managers and staff that have received OHS training:

• induction/annual 340 • management training 2

Percentage of HSRs training (not a legislative requirement):

• acceptance of role (iv) Of 3 HSRs who commenced in role, 1 completed a 5 day H&S course in FY2014/15

• refresher training Number of eligible HSRs who undertook refresher training: Nil

(i) Source - CGU Insurance (ii) Includes three claims where liability was denied by the CenITex insurer (iii) Increase from 2013-14 due to significant loss claim (iv) All HSRs offered training upon commencement of role

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8 Outlook 8.1 Background

Over the past two years, the key areas of strategic focus for CenITex have been optimising existing infrastructure, improving processes related to service and project delivery, and preparing staff for a possible transition of CenITex services to a private sector provider.

During this period CenITex services have been maintained, staff turnover has declined and there has been a 40 per cent reduction in significant outages. Considerable cost savings and efficiencies have also been achieved, partly due to investments in modernising and standardising infrastructure.

In light of these efficiency gains, the CenITex Board agreed to absorb both the Consumer Price Index (CPI) and Enterprise Bargaining Agreement (EBA) related cost increases so prices for customer services can remain at 2014-15 levels.

Further efficiencies are anticipated in the future due to the continuation of other cost reduction initiatives and the decision by DHHS in April 2015 to migrate from its separate environment to the GSP. The CenITex Board also intends to share these efficiencies through reducing prices.

Despite these solid gains, some stakeholders still have a negative perception of CenITex, which indicates that current levels of customer service and performance do not fully meet stakeholder expectations and must improve.

The project to outsource CenITex services (Project Atlas) was placed on hold in March 2015 while a Review related to shared services opportunities across government was undertaken by DPC. This Review examined how business support services are delivered across government, the quality of work for staff, and opportunities to leverage contemporary approaches to shared business service arrangements. Importantly for CenITex, the Review was also tasked with providing recommendations around the continuation or otherwise of Project Atlas.

The Review findings were released on 30 June 2015 and the key outcomes, specific to CenITex, were:

• Project Atlas - set up to outsource all CenITex services to one vendor - was to be discontinued;

• CenITex is to continue to deliver the critical secure processing and information management services it currently provides to support Government departments and will be involved in targeted market testing of some commodity services deemed readily available from the market; and,

• The CenITex Board is to be enhanced with the inclusion of customer representatives, remaining accountable for the governance and ongoing performance of the organisation.

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8.2 The future

The strategic direction underpinning CenITex’s Corporate Plan 2015/16 – 2016/17 is the need to deliver customer-focussed ICT services that support a modern, agile and productive public service. The Corporate Plan will see CenITex’s transformation from a technology to a customer-focussed organisation, embracing innovation and the rapid roll-out of new services, and better communicating its successes. CenITex will continue to deliver a diverse range of services to customers, including:

Workplace Services Hosting Services Professional Services

• Desktop services • File and print services • Email and diary services • Personal productivity

applications • Internet access services

• Application hosting

• Storage and backup

• Restore and disaster recovery

• Database and application management

• Customer funded projects, including:

- solution design and build - project management

CenITex also supplies Identity and Access Management, ICT security services, personnel on-boarding and off-boarding, and directory services.

8.3 Challenges and priorities

The Government’s decision regarding the future direction for CenITex poses significant challenges and opportunities as well as signalling a shift in approach to ICT service delivery. While CenITex’s focus on consolidation and optimisation will remain important, it will be critical to work with all stakeholders to define a future state roadmap for WoVG ICT transformation.

CenITex has continued to improve its performance and efficiency in the face of substantial change but its business model is facing a paradigm shift. It must become an agile and adaptable customer-focussed organisation to deliver the reform and innovation required to support customer business outcomes in an environment of rapidly emerging technologies and digital transformation.

Operating in a highly complex and dynamic environment, key CenITex challenges include:

• transforming its service delivery model and culture to embrace customer service, innovative cloud and mobile technologies, and agile methods

• extensively partnering with market-based service providers to deliver more timely and cost-effective ICT services

• continuing to deliver reliable shared ICT services essential to customers while CenITex undergoes substantial change

• retaining and recruiting key talent and maintaining employee productivity and morale as the future direction is confirmed

• maintaining a disciplined approach and continuing to drive improvements in performance and efficiency

• ensuring governance structures, processes and monitoring and reporting arrangements support the effective functioning of the shared services model.

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8.4 Our focus

In response to address the challenges and opportunities facing CenITex, its key strategic objectives are to:

• improve customer service, performance and efficiency • work collaboratively, embracing innovation, to rapidly transform our services • ensure financial sustainability • build capability and high performance in our people.

This will be achieved by:

Improve customer service, performance and efficiency

• Transforming CenITex from a technical to a customer focussed organisation

• Implementing an improved Performance Management System • Delivering annual surplus (target $5m surplus)

Work collaboratively, embracing innovation, to rapidly transform our services

• Building stronger relationships and collaborative planning capabilities

• Enabling CenITex customers to adopt new technologies and services, including cloud

• Uplifting project delivery capability to speed up time to market and reduce risk

Ensure financial sustainability • Preserving current customer and revenue base • Revising CenITex cost and pricing models to bring them into line

with market-based offerings • Continuing to work CenITex assets harder

Build capability and high performance in our people

• Building capabilities to support a new operating model • Promoting a customer-focussed work environment for high

performance • Keeping people regularly informed about customer expectations

and CenITex’s performance.

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9 Financial Report Summary of Financial Results

  2013   2014   2015    

  $'000   $'000   $'000    

Services  provided  to  other  Government  entities   146,217     150,516     147,209      

Total  income  from  transactions   152,411     150,969     149,905      

Total  expenses  from  transactions   (153,106)   (151,298)   (139,875)    

Net  results  from  transactions  before  depreciation  &  amortisation   23,156   22,110     31,751      

Net  result  from  transactions   (695)   (329)   10,030      

Net  result  for  the  period   (6,627)   (619)   8,436      

Net  cash  flow  from  operating  and  investing  activities   (6,480)   10,075     24,726      

Total  assets   98,715     97,942     103,750      

Total  liabilities   39,891     40,071     37,443      

               

CenITex has delivered an outstanding result for the year. Despite the challenge of closure, it improved EBITDA by 44%, strengthened its balance sheet and improved liquidity. While a component of improved EBITDA was delivered as a consequence of recognising outcomes of physical stocktakes, in the main these resulted from business as usual operating activities.

Our improvements are primarily attributed to increased productivity from our workforce and the realisation of benefits derived from prior investments in the operating environment through outcomes from the Efficient Technology Services (ETS) program and asset refresh programs. These technical improvements were further augmented with continued service improvement processes, resulting in reduced risks in the operating environment.

In recognition of these results, CenITex maintained pricing to its customers for FY15/16 at FY14/15 levels, absorbing costs associated with CPI price increases and EBA related staff cost increases. Going forward, it will continue to drive productivity and review its investment strategies relative to its forward plans.

The following describes the financial aspects of activities undertaken by the organisation during the year:

• CenITex’s baseline revenue represented as workplace and hosting charges was challenged, reflecting our customers’ desire to reduce their costs by reducing hosting requirements or transferring them to other providers. It also reflects an element of uncertainty caused by Project Atlas.

• Project revenues increased as CenITex assisted customers with migration onto its Win7 platform

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• The onset of Project Atlas caused significant uncertainty to arise in CenITex and its customers’ projection of revenues. Upon consultation with our customers, the organisation reduced its workforce to meet an outlook of reduced demand.

• Continued investment in the technical environment through asset refresh and realisation of prior periods investments saw the delivery of significant savings.

• Proactive engagement with vendors and rationalisation of contracts gave rise to further savings, in particular in areas of software licensing and hardware maintenance.

• Additionally, CenITex migrated to new payroll, financial and procurement platforms, resulting in further efficiency and cost savings.

• Improved collaboration between Finance and Customer Engagement, in conjunction with revised invoice processes, gave rise to much improved liquidity.

• As the workforce size was reduced, the organisation conducted a restack and successfully negotiated accommodation outcomes.

• On account of Project Atlas, CenITex reduced its typical investment in asset refresh. It invested $7m in funding projects which were essentially to manage risks: • an upgrade to the SAN brought improved application performance for customers on

the GSP • significantly improved the outcomes of virtual desktop infrastructure • improved productivity for customers and CenITex alike with the introduction of self-

service spam management and remote access through mobile phones • During the year, CenITex also conducted two physical asset counts. The results of these

counts have given rise to prior year adjustments on the basis that an accounting error was recorded in relation to assets that were transferred to CenITex via Allocation Statements at the time of its creation. Given the time that has passed, it is impractical to allocate the error to any one year, thus they have been treated as a prior year error and reported in accordance with the Accounting Standard on accounting policies, changes in accounting estimates and errors (AASB 108). Because of this, the accounting treatment of prior physical counts was also reassessed, with adjustments being reflected in accordance with AASB 108. The full details of these adjustments are reported in the Comprehensive operating statement, Balance Sheet and Note 19 of the accounts.

  40

CenITex Financial Report for the financial year ended 30 June 2015 Contents

Page Comprehensive operating statement 41

Balance sheet 42

Statement of changes in equity 43

Cash flow statement 44

Notes to the financial statements 45

Statutory Certification 87

Auditor-General’s report 88

This financial report covers CenITex as an individual entity. Its principal address is: CenITex Level 32, 80 Collins Street Melbourne VIC 3000

  41

Comprehensive operating statement for the financial year ended 30 June 2015

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

2015 2014$'000 $'000

restated(1)

Income from transactionsServices provided to other government entities 2(a) 147,209 150,516Interest 2(b) 1,122 453Fair Value of assets and services received free of charge or for nominal consideration (1)

2(c) 1,574 -

Total income from transactions (1) 149,905 150,969

Expenses from transactionsEmployee benefits 3(a) 59,090 62,728ICT expenditure 3(b) 44,143 47,347Depreciation (1) 3(c) 21,721 22,439Other operating expenses 3(d) 14,921 18,784Total expenses from transactions (1) 139,875 151,298Net result from transactions (net operating balance) (1) 10,030 (329)

Other economic flows included in net result Provision for doubtful debts (115) (87)Net gain/(loss) on disposal of non-financial assets (1) (1,054) (172)Net gain/(loss) from revaluation of long service leave liability (425) (31)Total other economic flows included in net result (1) (1,594) (290)Net Result (1) 8,436 (619)

Other economic flows - other comprehensive income - -

Comprehensive result (1) 8,436 (619)

(1) Refer Note 19 for correction of prior year errors related to asset values.

Note

  42

Balance sheet as at 30 June 2015

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

2015 2014 As at 1 July 2013$'000 $'000 $'000

restated (1) restated (1)

AssetsFinancial AssetsCash and deposits 17(a) 38,084 13,383 3,362Receivables 4 4,519 8,408 9,144Total financial assets 42,603 21,791 12,506

Non-Financial AssetsPrepayments 5 13,501 14,058 12,397Property, plant and equipment (1) 6 19,522 27,373 38,975Intangible assets 7 28,124 34,720 34,837Total non-financial assets 61,147 76,151 86,209Total assets 103,750 97,942 98,715

LiabilitiesPayables 8 7,903 9,547 12,896Unearned revenue 9 658 2,807 324Provisions 11 12,738 11,529 10,558Borrowings 10 16,144 16,188 16,113Total liabilities 37,443 40,071 39,891Net assets 66,307 57,871 58,824

EquityAccumulated loss (1) (56,613) (65,049) (64,430)Contribution by Owners 122,920 122,920 123,254Total equity 66,307 57,871 58,824

Commitments for expenditure 14Contingent assets and contingent liabilities 15

(1) Refer Note 19 for correction of prior year errors related to asset values.

Note

  43

Statement of changes in equity for the financial year ended 30 June 2015

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

Accumulated loss

Contributions by Owners

Total

$'000 $'000 $'000 Balance at 1 July 2013 (1) (64,430) 123,254 58,824 Net result for the year (1) (619) - (619)Administrative restructure - net assets transferred - (334) (334)Balance at 30 June 2014 (1) (65,049) 122,920 57,871 Net result for the year 8,436 - 8,436 Administrative restructure - net assets transferred - - - Balance at 30 June 2015 (56,613) 122,920 66,307

(1) Refer Note 19 for correction of prior year errors related to asset values.

  44

Cash flow statement for the financial year ended 30 June 2015

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

Non-cash transactions are disclosed in Note 17.

2015 2014$'000 $'000

restated (1)

152,769 163,7931,122 453

Net GST Received 2,615 448156,506 164,694

(69,072) (84,014)Payments to employees (55,931) (59,496)

(4) (11)(125,007) (143,521)

17(b) 31,499 21,173

(6,863) (11,111)90 13

(6,773) (11,098)

(25) (54)(25) (54)

24,701 10,02113,383 3,362

17(a) 38,084 13,383(1) Refer Note 19 for correction of prior year errors related to asset values.

Cash flows from operating activities

Payments

Note

Interest received

Total Receipts (1)

ReceiptsReceipts from other government entities (1)

Payments to suppliers

Cash flows from investing activitiesPayments for non-financial assets (1)

Proceeds from sale of non-financial assetsNet cash flows from/(used in) investing activities (1)

Interest and other costs of finance paidTotal PaymentsNet cash flows from/(used in) operating activities (1)

Cash and cash equivalents at the beginning of the financial yearCash and cash equivalents at the end of the financial year

Repayment of finance leasesNet cash flows from/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Notes to the financial statements 30 June 2015

  45

Notes to the financial statements

Contents Note Page Page

1. Summary of accounting policies 46

2. Income from transactions 57

3. Expenses from transactions 58

4. Receivables 59

5. Prepayments 59

6. Property, plant and equipment 60

7. Intangible assets 63

8. Payables 64

9. Unearned revenue 64

10. Borrowings 65

11. Provisions 66

12. Superannuation 67

13. Leases 68

14. Commitments for expenditure 70

15. Contingent assets and contingent liabilities 7

16. Financial instruments 71

17. Cash flow information 77

18. Ex gratia payments 77

19. Correction of errors 78

20. Responsible persons 84

21. Remuneration of executives and payments to other personnel with significant management responsibilities 85

22. Related party transactions 86

23. Remuneration of auditors 86 49

24. Events occurring after the balance date 86

 

Notes to the financial statements 30 June 2015

  46

Note 1. Summary of accounting policies These annual financial statements represent the audited general purpose financial statements for CenITex for the period ended 30 June 2015. The purpose of the report is to provide users with information about CenITex’s stewardship of resources entrusted to it.

(a) Statement of compliance The financial report is a general purpose financial report that has been prepared in accordance with the Financial Management Act 1994 and applicable Australian Accounting Standards (AAS), which includes the Australian accounting standards issued by the Australian Accounting Standards Board (AASB), interpretations and other mandatory professional requirements.

Where appropriate, those AASs paragraphs applicable to not-for-profit entities have been applied.

Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events are reported.

Subsequent to the 2013-14 reporting period, AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements and AASB 12 Disclosure of Interests in Other Entities have been published that are mandatory for the 30 June 2015 reporting period. CenITex has assessed the application of these new AASs and determined that they are not applicable to CenITex who is not a parent of another entity nor has interest in another entity. Therefore, there is no change in accounting policies for the 2014-15 reporting period.

The financial report also complies with relevant Financial Reporting Directions (FRDs) issued by the Minister for Finance, and relevant Standing Direction (SD) authorised by the Minister for Finance.

(b) Basis of preparation

These financial statements have been prepared on accrual basis whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The significant estimates and associated assumptions are made for recognition of long service leave liabilities, and the discount rate for the measurement is provided by the Department of Treasury and Finance (DTF). Refer to the DTF for determination of the discount rate.

Judgements and estimates are made for determination of fair value and useful life for property, plant and equipment, refer Note 1 (f) and Note 1 (h) for details.

The accounting policies applied in preparing the financial statements for the year ended 30 June 2015 and the comparative information presented for the year ended 30 June 2014 are set out below.

The financial report has been prepared on a historical cost convention except for plant and equipment where fair value is applied and long service leave which is measured at present value. Cost is based on the fair value of the consideration given in exchange for assets.

Notes to the financial statements 30 June 2015

  47

Note 1. Summary of accounting policies (continued) Consistent with AASB 13 Fair Value Measurement, where it is applicable, assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 – The lowest level input that is significant to the fair value measurement is directly or

indirectly observable; • Level 3 – The lowest level input that is significant to the fair value measurement is unobservable.

The functional currency of CenITex is the Australian dollar, which has also been identified as the presentation currency of CenITex.

(c) Reporting entity CenITex is a State Body established on 16 July 2008 by Order in Council under section 14 of the State Owned Enterprise Act 1992 (the Act) and declared a re-organising body on 24 April 2012 by Order in Council under section 7(1) of the Act.

Objectives and funding CenITex’s mission is to provide information and communication technology (ICT) workplace and hosting services for the whole of Victorian Government in an industry competitive, integrated and reliable manner, delivering efficient and excellent customer service and value. CenITex is predominantly funded by customer departments and agencies for the provision of services. The fees charged for these services are based on a cost recovery model.

(d) Scope and presentation of financial statements As a result of the state-wide policy to improve consistency in public sector reporting, CenITex has prepared its complete set of financial statements to align with the Accounting Standard AASB 1049 Whole of Government and General Government Sector Financial Reporting presentation format used in the Financial Report for the State and the general government sector.

Comprehensive operating statement

CenITex’s Comprehensive operating statement comprises three components, being ‘net result from transactions’, ‘other economic flows included in net result’, as well as ‘other economic flows – other comprehensive income’. . This classification is consistent with the whole of government reporting format and is allowed under Accounting Standard AASB 101 Presentation of Financial Statements.

Income and expenses in the Comprehensive operating statement are classified according to whether they arise from ‘transactions’ or ‘other economic flows’.

‘Transactions’ are those economic flows that are considered to arise as a result of policy decisions, usually interactions between two entities by mutual agreement. Transactions also include flows within an entity, such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the final consideration is cash.

‘Other economic flows included in net result’ are changes in the volume or value of an asset or liability that do not result from transactions.

The net result is equivalent to profit or loss derived in accordance with AAS.

Notes to the financial statements 30 June 2015

  48

Note 1. Summary of accounting policies (continued)

Balance sheet

Assets and liabilities are presented in liquidity order, with assets aggregated into financial assets and non-financial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled more than 12 months after the reporting period) are disclosed in the notes, where relevant.

Statement of changes in equity

The Statement of changes in equity presents reconciliations of each non-owner and owner equity opening balance at the beginning of the reporting period to the closing balance at the end of the reporting period. It also shows separately changes due to amounts recognised in the ‘comprehensive result’ and amounts recognised ‘in other comprehensive income – other movements in equity’ related to transactions with the owner in its capacity as owner.

Cash flow statement

Cash flows are classified according to whether they arise from operating activities, investing activities, or financing activities. This classification is consistent with requirements under AASB 107 Statement of Cash Flows.

For the purposes of the Cash flow statement, cash comprises cash on hand, cash at bank and deposits at call, and highly liquid investments with short periods to maturity that are readily convertible to cash on hand and are subject to an insignificant risk of changes in value.

Rounding of amounts

Amounts in the financial statements (including the notes) have been rounded to the nearest thousand dollars, unless otherwise stated.

(e) Income from transactions

Income is recognised to the extent that it is probable that the economic benefits will flow to the entity and the income can be reliably measured at fair value.

Services provided to other government entities CenITex provides services to government departments and agencies. Revenue is brought to account when services have been provided or when a usage or service charge has been made.

Interest

Interest includes interest received on deposits. Interest income is recognised as revenue using the effective interest method which allocates the interest over the relevant period.

Notes to the financial statements 30 June 2015

  49

Note 1. Summary of accounting policies (continued) (f) Expenses from transactions Expenses from transactions are recognised as they are incurred, and reported in the financial year to which they relate.

Employee benefits See Note 1(i) regarding employee benefit provisions.

Employee benefits expenses include all costs related to employment, including wages and salaries, leave entitlements, redundancy payments and superannuation contributions. They are recognised when incurred, except for contributions in respect of defined benefit plans. These expenses also include payments to contractors.

Superannuation The amount charged to the Comprehensive operating statement in respect of defined benefit superannuation plans represents the contributions made by CenITex to the superannuation plan with regard to the current services of current CenITex staff. Superannuation contributions are made to the plans based on the relevant rules of each plan.

The Department of Treasury and Finance (DTF) in its Annual Financial Statements disclose on behalf of the State as the sponsoring employer, the net defined benefit cost related to the members of these plans as an administered liability. See DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans.

ICT expenditure ICT expenditure includes software licences and maintenance, hardware maintenance, telecommunication expenses and outsourced ICT expenses. They are recognised in the period in which they are incurred.

Depreciation Where assets have separate identifiable components that have distinct useful lives, a separate depreciation rate is determined for each component.

Depreciation is calculated using the straight-line method to allocate the asset’s value less any estimated residual value over its estimated useful life, starting from the time at which the asset is held ready for use. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Unless otherwise stated, the depreciation periods used for current and prior year are listed below:

Building Leasehold improvements 5 to 10 years

Computer equipment 3 to 4 years

Plant and equipment - Facilities 5 to 10 years

Plant and equipment - Network 5 years

Plant and equipment - Servers 5 years

Plant and equipment - Storage 5 years

Plant and equipment - Office machines & equipment 5 years

Motor vehicles under finance lease 3 years

Intangible assets 5 years

Notes to the financial statements 30 June 2015

  50

Note 1. Summary of accounting policies (continued) Interest expense Interest expense represents costs incurred in connection with borrowings. It includes interest components of finance lease repayments.

Interest expense is recognised in the period in which it is incurred.

Other operating expenses Other operating expenses generally represent the day-to-day running costs incurred by CenITex in its normal operations and include:

• Supplies and services

Supplies and services costs are recognised as an expense in the reporting period in which they are incurred.

Other economic flows included in net result Other economic flows included in net result are changes in the volume or value an asset or liability that does not result from transaction. It includes:

• gains and losses from disposals; • gains and losses from revaluation of long service leave liability; and • provision for doubtful debts

(g) Financial assets

Cash and deposits Cash and deposits comprise cash on hand and cash at bank, deposits at call and highly liquid investments with an original maturity of three months or less that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Receivables Receivables consist predominantly of:

• contractual receivables, such as debtors in relation to goods and services, accrued revenue; and • statutory receivables that is GST input tax credits recoverable.

Contractual receivables are classified as financial instruments and categorised as loans and receivables (refer Note 1(j)). Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments because they do not arise from a contract.

Receivables are subject to impairment testing as described below. A provision for doubtful receivables is made when there is objective evidence that the debts will not be collected. Bad debts are written-off when identified.

Impairment of financial assets At the end of each reporting period, CenITex assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets, except those measured at fair value through profit or loss, are subject to annual review for impairment.

Receivables are assessed for bad and doubtful debts on a regular basis. Those bad debts considered as written off by mutual consent are classified as a transaction expense. Bad debts not written off by mutual consent and the allowance for doubtful receivables are classified as other economic flows included in net result.

Notes to the financial statements 30 June 2015

  51

Note 1. Summary of accounting policies (continued) The amount of the allowance is the difference between the financial asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.

(h) Non-financial assets

Prepayments Prepayments represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period. These include software licences and maintenance, other ICT expenditure and accommodation expenses.

Property, plant and equipment All non-current physical assets are initially measured at cost and subsequently revalued at fair value less accumulated depreciation and impairment. A fair value assessment of non-current assets was undertaken during the year.

The fair value of property, plant and equipment is normally determined by reference to the asset’s depreciated replacement cost due to their short-term nature.

The initial cost for non-financial physical assets under a finance lease (refer Note 1 (i)) is measured at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease.

The costs of leasehold improvements are capitalised as assets and depreciated over the shorter of the remaining terms of the leases or the estimated useful lives of the improvements.

Intangible assets Intangible assets represent identifiable non-monetary assets without physical substance.

Purchased intangible assets are initially recognised at cost. Intangible assets with finite useful lives are carried at cost less accumulated depreciation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to CenITex.

When the recognition criteria in Accounting Standard AASB 138 Intangible Assets are met, internally generated intangible assets are recognised and measured at cost less accumulated depreciation and impairment losses.

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an intangible project) is recognised only if all of the following are demonstrated:

(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (b) an intention to complete the intangible asset and use or sell it; (c) the ability to use or sell the intangible asset; (d) the intangible asset will generate probable future economic benefits; (e) the availability of adequate technical, financial and other resources to complete the development and

to use or sell the intangible asset; and (f) the ability to measure reliably the expenditure attributable to the intangible asset during its

development.

Notes to the financial statements 30 June 2015

  52

Note 1. Summary of accounting policies (continued) Impairment of non-financial assets Except for financial assets (refer Note 1(g)), intangible assets with indefinite useful lives (and intangible assets not yet available for use) and all other assets including property, plant and equipment are tested annually for indications of impairment.

If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their possible recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written-off by a charge to the Comprehensive operating statement, except to the extent that the write-down can be debited to an asset revaluation surplus amount applicable to that class of asset.

It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. The recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell.

(i) Liabilities

Payables Payables consist of:

• contractual payables, such as accounts payable. Accounts payable represent liabilities for goods and services provided to CenITex before the end of the financial year that are unpaid, and arise when CenITex becomes obliged to make future payments in respect of purchase of those goods and services;

• statutory payables, such as GST and fringe benefits tax payables.

Contractual payables are classified as financial instruments and categorised as financial liabilities at amortised cost (see Note 13, Note 14 and Note 16). Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from a contract.

Unearned revenue Unearned revenue is recognised as a liability when customer payments of accounts which at report date were billed and paid in advance but the services have not yet been provided to the customer. When the services are provided to the customer, the unearned revenue balance is reduced and the revenue is brought to account.

Borrowings Interest bearing liabilities are recorded initially at fair value, less directly attributable transaction costs.

Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised using the effective interest rate method in the comprehensive result over the period of the interest bearing liability.

Notes to the financial statements 30 June 2015

  53

Note 1. Summary of accounting policies (continued) Provisions Provisions are recognised when CenITex has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recognised from a third party, the receivable is recognised as an asset if recovery is virtually certain and the amount of the receivable can be measured reliably.

Employee benefits (i) Wages and salaries and annual leave

Liabilities for wages and salaries and annual leave are recognised in the provision for employee benefits as ‘current liabilities’.

Depending on the expectation of the timing of settlement, liabilities for wages and salaries and annual leave are measured at:

• undiscounted value – component that CenITex expects to wholly settle within 12 months; or • present value – component that CenITex does not expect to wholly settle within 12 months.

(ii) Long service leave

Liability for long service leave (LSL) is recognised in the provision for employee benefits.

Unconditional LSL is disclosed as a current liability even when CenITex does not expect to settle the liability within 12 months because it does not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.

The components of this current LSL liability are measured at:

• undiscounted value – component that CenITex expects to wholly settle within 12 months • Present value – component that CenITex does not expect to wholly settle within 12 months

Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value.

Any gain or loss following revaluation of the present value of non-current LSL liability is recognised in the ‘net result from transactions’, except to the extent that a gain or loss arises due to changes in bond interest rates for which it is then recognised as an other economic flow.

(iii) Employee benefits on-costs Employee benefits on-costs (payroll tax, workers compensation, superannuation, annual leave and LSL

accrued while on leave taken in service) are recognised and included with annual leave and LSL employee benefits.

Notes to the financial statements 30 June 2015

  54

Note 1. Summary of accounting policies (continued) (iv) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts a voluntary redundancy in exchange for these benefits. CenITex recognises termination benefits when it is demonstrably committed either to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after Balance Sheet date are discounted to present value.

Leases A lease is a right to use an asset for an agreed period of time in exchange for payment. Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and rewards incidental to ownership. Leases of property, plant and equipment are classified as finance infrastructure leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership from the lessor to the lessee. All other leases are classified as operating leases.

Finance leases Finance leases are recognised as assets and liabilities at amounts equal to either the fair value of the leased plant and equipment or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The leased asset is depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum lease payments are allocated between the principal component of the lease liability and the interest expenses calculated using the interest rate implicit in the lease, and are charged directly to the Comprehensive operating statement. Contingent rentals associated with finance leases are recognised as an expense in the period in which they are incurred.

Operating leases

Operating lease payments, including any contingent rentals, are recognised as an expense in the Comprehensive operating statement on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern of the benefits derived from the use of the leased asset. The leased asset is not recognised in the balance sheet.

All incentives for the agreement of a new or renewed operating lease are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive’s nature or form or the timing of payments. In the event that lease incentives are received to enter into operating leases, the aggregate cost of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(j) Financial instruments

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of CenITex’s activities, certain financial assets and financial liabilities arise under statutory obligation rather than a contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in an AASB 132 Financial Instruments: Presentation. For example, statutory receivables arising from taxes do not meet the definition of financial instruments as they do not arise under contract.

Where relevant, for note disclosure purposes, a distinction is made between those financial assets and financial liabilities that meet the definition of financial instruments in accordance with AASB 132 and those that do not.

The following refers to financial instruments unless otherwise stated.

Notes to the financial statements 30 June 2015

  55

Note 1. Summary of accounting policies (continued)

Categories of non-derivative financial instruments

Loans and receivables

Loans and receivables are financial instrument assets with fixed and determinable payments that are not quoted on an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, receivables are measured at amortised cost using the effective interest method, less any impairment.

Loans and receivables category includes trade receivables and other receivables, but not statutory receivables.

Financial liabilities at amortised cost

Financial instrument liabilities are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest-bearing liability, using the effective interest rate method (refer to Note 16).

Financial instruments liabilities measured at amortised cost include all of CenITex’s contractual payables, loan from Government and interest-bearing arrangements other than those designated at fair value through profit or loss.

(k) Equity Contributions by owners Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is, contributed capital and its repayment) are treated as equity transactions and, therefore, do not form part of the income and expenses of CenITex.

Additions to net assets that have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners.

Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners.

(l) Commitments Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable contractual or statutory sources and are disclosed at their nominal value and inclusive of the GST (refer Note 13).

(m) Contingent assets and contingent liabilities Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value and presented inclusive of the GST (refer Note 15).

(n) Goods and Services Tax (GST) Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In the latter case, GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Balance Sheet.

Notes to the financial statements 30 June 2015

  56

Note 1. Summary of accounting policies (continued) Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities that were recovered from, or paid to, the taxation authority, are presented as an operating cash flow.

(o) Events after reporting date Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between CenITex and other parties, the transactions are recognised only when the agreement is irrevocable at or before balance date. Adjustments are made to amounts recognised in the financial statements for events that occur after the reporting date and before the date on which the statements are authorised for issue where those events provide information about conditions that existed at the reporting date. Note disclosure is made about events between the balance date and the date on which the statements are authorised for issue where the events relate to conditions that arose after the reporting date and which may have a material impact on the results of subsequent years.

(p) Australian Accounting Standards (AASs) issued that are not yet effective

As at 30 June 2015, certain new AASs have been published that are not mandatory for the 30 June 2015 reporting period. CenITex assesses the impact of all these new standards for their applicability and early adoption.

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement. CenITex has assessed that this Standard is not applicable as CenITex does not report assets available for sale.

AASB 15 Revenue from Contracts with Customers. This standard provides a single revenue recognition model based on the transfer of goods and services and the consideration expected to be received in return for that transfer, it replaces AASB 111 Construction Contracts, AASB 118 Revenue and ultimately AASB 1004 Contributions. Applicable for annual reporting periods beginning on or after 1 January 2017. Preliminary assessment has not identified any material impact arising from AASB 15, however, ongoing work is being carried out to monitor and assess the impact of this standard.

Notes to the financial statements 30 June 2015

  57

Note 2. Income from transactions

2015 2014$’000 $’000

(a) Services provided to other Government Entities:

Work place support 101,592 112,774Hosting 30,835 24,798Projects 14,487 12,656Victorian Government Electronic Messaging System (VGEMS) 295 288Total revenue from services provided to other Government Entities 147,209 150,516

(b) Interest

- Interest on bank deposits 1,122 453Total interest revenue 1,122 453

(c) Fair Value of assets and services received free of charge or for nominal considerationAssetsPlant and equipment (1) 1,574 -Total fair value of assets and services received free of charge or fornominal consideration (1) 1,574 -

(1) Refer Note 19 for correction of prior year errors related to asset values.

Notes to the financial statements 30 June 2015

  58

Note 3. Expenses from transactions

2015 2014$'000 $'000

restated

(a) Employee benefitsPost employment benefits- Defined contribution superannuation plans 12 4,246 4,526- Defined benefit superannuation expense 12 227 260Termination benefits 924 1,349Salaries, wages, leave entitlements, contractor payments 53,693 56,593Total employee benefits 59,090 62,728

(b) ICT ExpenditureSoftware licences and maintenance 20,424 22,704Hardware maintenance 7,947 7,127Telecommunications 13,803 15,341Outsourced ICT 1,969 2,175Total ICT Expenditure 44,143 47,347

(c) DepreciationDepreciation of non-current assets (1) 6 11,922 14,856Depreciation of non-current intangible assets 7 9,799 7,583Total depreciation and amortisation (1) 21,721 22,439

(d) Other operating expensesOccupancy 13,140 12,959Professional services, travel, stationery (2) 1,777 5,814Interest expense - finance lease costs 4 11Total other operating expenses 14,921 18,784

(1) Refer Note 19 for correction of prior year errors related to asset values.(2) Provision for doubtful debts has been reported as other operating expense in previous years. It has been reclassified under Other Economic Flows and disclosed in the Comprehensive Operating Statement.

Notes to the financial statements 30 June 2015

  59

Note 4. Receivables

 

(b) Ageing analysis of contractual receivables See Note 16(d) for the ageing of contractual receivables.

(c) Nature and extent of risk arising from contractual receivables

See Note16(d) for the nature and extent of credit risk arising from contractual receivables.

Note 5. Prepayments

2015 2014$’000 $’000

Current receivablesContractualTrade receivables 2,018 6,637

(470) (355)Other receivables 1,951 1,398

StatutoryGST input tax credit recoverable 1,020 728 Total current receivables 4,519 8,408 Total receivables 4,519 8,408

Provision for doubtful contractual receivables (See also Note 4(a))

2015 2014$’000 $’000

Balance at beginning of the year 355 268Increase of the provision in the year 115 87Balance at end of the year 470 355

(a) Movement in the provision for doubtful contractual receivables

2015 2014$’000 $’000

Current other assetsPrepayments - Software licences and maintenance, and other ICT expenditure paid inadvance 13,210 13,704Accommodation expenditure paid in advance 291 354Total other assets 13,501 14,058

Notes to the financial statements 30 June 2015

  60

Note 6. Property, plant and equipment

Non-Current assets 2015 2014$'000 $'000

restated (1)

Buildings - leasehold improvements: At fair value 461 2,601 Less accumulated depreciation (217) (2,207) Written down value 244 394

Plant and equipment - Computer equipment (1)

At fair value 1,062 1,261 Less accumulated depreciation (966) (1,178) Written down value 96 83

Plant and equipment - Facilities (1)

At fair value 5,260 5,595 Less accumulated depreciation (4,259) (4,266) Written down value 1,001 1,329

Plant and equipment - Network (1)

At fair value 52,060 52,291 Less accumulated depreciation (45,329) (42,691) Written down value 6,731 9,600

Plant and equipment - Servers (1)

At fair value 43,390 46,888 Less accumulated depreciation (38,755) (39,840) Written down value 4,635 7,048

Plant and equipment - Storage (1)

At fair value 39,167 37,826 Less accumulated depreciation (32,496) (29,107) Written down value 6,671 8,719

Plant and equipment - Office Machines and Equipment (1)

At fair value 28 44 Less accumulated depreciation (26) (33) Written down value 2 11

Motor vehicles under finance lease At fair value 225 287 Less accumulated depreciation (83) (98) Written down value 142 189

Net carrying amount of property, plant and equipment 19,522 27,373

(1) Refer Note 19 for correction of prior year errors related to asset values.

Notes to the financial statements 30 June 2015

  61

Note 6. Property, plant and equipment (continued)

(1) Classified in accordance with the fair value measurement hierarchy as at reporting date. See note 1(b).

(2) Description of unobservable assets to level 3 valuation:

• Plant and equipment is valued at depreciated replacement cost where the weighted average cost per asset is $21,307 and the cost per unit is between $0 to $1,082,767 (2014: $0 to $1,082,767). The useful life of plant and equipment is disclosed in note 1(f).

(3) Refer Note 19 for correction of prior year errors.

(4) Work in progress had been reported as property, plant and equipment and the details had been disclosed in the note for property, plant and equipment in previous financial years. As the majority of work in progress is the development of intangible assets, it is reported as intangibles and the details are disclosed in the note for intangible assets in this financial year, the comparable information of last year have been amended accordingly

Buildings leasehold

improvements

Plant and equipment

(1), (2)

Motor vehicles

under finance

lease

Total

Level 3

Computer Equipment Facilities Network Servers Storage

Office Machines & Equipment

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2015

Opening balance (3) 394 83 1,329 9,600 7,048 8,719 11 189 27,373

Administrative restructure - net assets transferred - - - - - - - - 0

Additions - 86 44 1,758 1,390 1,813 - 32 5,123

Disposals - (1) (45) (496) (472) - (2) (36) (1,052)

Adjustments - (2) (2) 24 (20) - - 0

Transfers - 1 - - - - (1) - 0

Depreciation expense (150) (73) (325) (4,129) (3,355) (3,841) (6) (43) (11,922)Closing balance 244 96 1,001 6,731 4,635 6,671 2 142 19,522

Buildings leasehold

improvements

Plant and equipment

(1), (2)

Motor vehicles

under finance

lease

Total

Level 3

Computer Equipment Facilities Network Servers Storage

Office Machines & Equipment

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2014

Opening balance (3) 808 912 1,652 13,397 9,841 12,232 19 114 38,975

Administrative restructure - net assets transferred - (334) - - - - - - (334)

Additions - 28 198 2,525 2,007 1,102 - 148 6,008 Disposals - (9) - (46) (77) (71) - (18) (221)Adjustments - - - - - - 0 Transfers - 17 (25) (1,217) (323) (649) (1) (1) (2,199)Depreciation expense (414) (531) (496) (5,059) (4,400) (3,895) (7) (54) (14,856)

Closing balance (3) 394 83 1,329 9,600 7,048 8,719 11 189 27,373(3) Refer Note 19 for correction of prior year errors related to asset values.

Movements in carrying amounts

Notes to the financial statements 30 June 2015

  62

Note 6. Property, plant and equipment (continued)

2015 2014$'000 $'000

restated (1)

Buildings leasehold improvements 150 414Plant and equipment - Computer equipment (1) 73 531Plant and equipment - Facilities (1) 325 496Plant and equipment - Network (1) 4,129 5,059Plant and equipment - Servers (1) 3,355 4,400Plant and equipment - Storage (1) 3,841 3,895Plant and equipment - Office machines and equipment (1) 6 7Motor vehicles under finance lease 43 54Total depreciation expense 11,922 14,856(1) Refer Note 19 for correction of prior year errors related to asset values.

Aggregate depreciation recognised as an expense during the year;

Notes to the financial statements 30 June 2015

  63

Note 7. Intangible assets

(1) Work in progress had been reported as property, plant and equipment and the details had been disclosed in the note for property, plant and equipment in previous financial years. As the majority of work in progress is the development of intangible assets, it is reported as intangibles and the details are disclosed in the note for intangible assets in this financial year, the comparable information of last year have been amended accordingly.

(2) CenITex capitalises costs associated with the development, design, build and configuration of desktop, network, server, storage, identity access management, security environments, virtual environments and software that generate future economic benefits to the entity. These assets are amortised over a useful life that is aligned with the underpinning information technology infrastructure assets.

Non-Current assets2015 2014 2015 2014 2015 2014$'000 $'000 $’000 $'000 $'000 $'000

Gross carrying amount

Opening balance 9,411 18,333 43,745 27,357 53,156 45,690Additions - new work in progress 3,495 7,724 - - 3,495 7,724Adjustments - work in progress (202) (258) - - (202) (258)Transfer to capitalised development (8,672) (16,388) - - (8,672) (16,388)Additions - from work in progress - - 8,672 16,388 8,672 16,388Retirements - - (1,787) - (1,787) -Closing balance 4,032 9,411 50,630 43,745 54,662 53,156

Accumulated depreciation and impairment

Opening balance - - (18,436) (10,853) (18,436) (10,853)Depreciation expense - - (9,799) (7,583) (9,799) (7,583)Retirement of intangibles - - 1,697 - 1,697 -Closing balance - - (26,538) (18,436) (26,538) (18,436)

Net book value at the end of the financial year 4,032 9,411 24,092 25,309 28,124 34,720

Capitalised development (2)Work in progress (1) Total

Notes to the financial statements 30 June 2015

  64

Note 8. Payables

(a) Maturity analysis of contractual payables See Note 16(e) for the maturity analysis of contractual payables.

(b) Nature and extent of risk arising from contractual payables See Note 16(f) for the nature and extent of risks arising from contractual payables.

Note 9. Unearned revenue

 

2015 2014$’000 $’000

Current payablesContractualSupplies and services 7,291 9,008Other Current PayablesOther payables 601 525Statutory FBT payable 11 14Total payables 7,903 9,547

2015 2014$'000 $'000

Unearned revenue 658 2,807Total unearned revenue 658 2,807

Notes to the financial statements 30 June 2015

  65

Note 10. Borrowings

(1) Secured by the assets leased. Finance leases are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

(2) Refer Note 13 Leases for details. (3) It is an unsecured loan which bears no interest. The term of a loan is agreed with the Treasurer.

(a) Maturity analysis of interest bearing liabilities See Note16(e) for the maturity analysis of interest bearing liabilities.

(b) Nature and extent of risk arising from interest bearing liabilities See Note 16(f) for the nature and extent of risks arising from interest bearing liabilities.

2015 2014$’000 $’000

Current borrowingsFinance lease liabilities (1) (2) 67 71Loan from Government (3) 16,000 -Total current borrowings 16,067 71

Non-current borrowingsFinance lease liabilities (1) (2) 77 117Loan from Government (3) - 16,000Total non-current borrowings 77 16,117

Total borrowings 16,144 16,188

Notes to the financial statements 30 June 2015

  66

Note 11. Provisions

2015 2014$’000 $’000

CurrentEmployee benefits- Unconditional and expected to be settled within 12 months 3,499 3,574- Unconditional and expected to be settled after 12 months 4,535 3,964

8,034 7,538Provisions related to employee benefit on-costs:- Unconditional and expected to be settled within 12 months 623 543- Unconditional and expected to be settled after 12 months 751 603

1,374 1,146Provision for other employee entitlements - -

Total current provisions 9,408 8,684

Non-currentEmployee benefits 2,871 2,470Provisions related to employee benefit on-costs 459 375Total non-current provisions 3,330 2,845Total provisions 12,738 11,529

(a) Employee benefits and related on-costs2015 2014

$’000 $’000

Current employee benefitsAnnual leave entitlements 4,396 4,169Unconditional long service leave entitlements 3,638 3,369Non-current employee benefitsConditional long service leave entitlements 2,871 2,470Total employee benefits 10,905 10,008Current on-costs 1,374 1,146Non-current on-costs 459 375Total on-costs 1,833 1,521Total employee benefits and related on-costs 12,738 11,529

Notes to the financial statements 30 June 2015

  67

Note 12. Superannuation CenITex employees are entitled to receive superannuation benefits and CenITex contributes to defined benefit as well as contribution plans. The defined benefit plan provides benefits based on years of service and final average salary.

CenITex does not recognise any defined benefit liability in respect of the plans because the entity has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance recognises and discloses the State’s defined benefit liabilities in its financial statements under the note for administered items.

However, superannuation contributions for the reporting period are included as part of employee benefits in CenITex’s Comprehensive Operating Statement.

The basis for contributions is determined by the various schemes.

Certain employees of CenITex employed under the Victorian Public Sector Award are entitled to benefits from the Government Employees Superannuation Fund in the event of retirement, disability or death. This fund provides defined lump-sum benefits based on years of service and final average salary.

Details of the major employee superannuation funds and contributions made by CenITex are as follows:

 

 

Fund Contribution for the year

Contribution outstanding at year end

2015 2015$'000 $'000

Defined benefit plans:227 -

2,543 -Other 1,703 -Total defined contributions 4,246 -Total 4,473 -

Fund Contribution for the year

Contribution outstanding at year end

2014 2014$'000 $'000

Defined benefit plans:260 -

2,751 -Other 1,775 -Total defined contributions 4,526 -Total 4,786 -

State Employees Retirement Benefits Scheme (SERBS)

Defined contribution plans:Victorian Superannuation Fund – VicSuper scheme

State Employees Retirement Benefits Scheme (SERBS)

Defined contribution plans:Victorian Superannuation Fund – VicSuper scheme

Notes to the financial statements 30 June 2015

  68

Note 13. Leases Finance leases

Finance leases relate to motor vehicles with lease terms of three years. CenITex has options to purchase the motor vehicles for a nominal amount at the conclusion of the lease agreements.

(1) Minimum finance lease payments include the aggregate of all lease payments and any guaranteed residual.

Minimum future lease

payments

Present value of

minimum future lease

payments2015 $’000 $’000Finance lease liabilities payable- Not longer than one year 74 67- Longer than one year and not longer than five years 79 77Minimum future lease payments (1) 153 144

Less future finance charges 9 -Present value of minimum lease payments 144 144

Included in the financial statements as;Current interest bearing liabilities (refer to Note 10) - 67Non-current interest bearing liabilities (refer to Note 10) - 77Total interest bearing liabilities 144

Minimum future lease

payments

Present value of

minimum future lease

payments2014 $’000 $’000Finance lease liabilities payable- Not longer than one year 80 71- Longer than one year and not longer than five years 123 117Minimum future lease payments (1) 203 188

Less future finance charges 15 -Present value of minimum lease payments 188 188

Included in the financial statements as:Current interest bearing liabilities (refer to Note 10) - 71Non-current interest bearing liabilities (refer to Note 10) - 117Total interest bearing liabilities 188

Notes to the financial statements 30 June 2015

  69

Note 13. Leases (continued) Operating leases

Leasing arrangements Operating leases relate to buildings with lease terms of three to five years, with an option to extend for a further three years. All operating lease contracts contain market review clauses in the event that CenITex exercises its option to renew. CenITex does not have an option to purchase the leased asset at the expiry of the lease period.

(1)The disclosed amount is inclusive of GST.

2015 2014$’000 $’000

Operating leases payableNot longer than one year 11,834 10,503Longer than one year and not longer than five years 33,014 33,884Longer than five years 1,868 6,962Total operating leases payable(1) 46,716 51,349

Notes to the financial statements 30 June 2015

  70

Note 14. Commitments for expenditure

(1)The disclosed amount is inclusive of GST.

(b) Lease commitments Finance lease liabilities and non-cancellable operating lease commitments are disclosed in Note 13.  

 

Note 15. Contingent assets and contingent liabilities As a result of findings arising from its physical stock takes during the year, CenITex intends to conduct a review of its property plant and equipment. Outcomes of this review may give rise to further material adjustments which at this time cannot be measured.

2015 2014$’000 $’000

(a) Capital expenditure commitments

Plant and equipmentPayable: Not longer than one year 285 138Total capital expenditure commitments(1) 285 138

The following commitments have not been recognised as liabilities in the financial statements:

Notes to the financial statements 30 June 2015

  71

Note 16. Financial instruments

(a) Financial risk management objectives and policies CenITex’s principal financial instruments comprise:

- cash assets

- receivables (excluding statutory receivables)

- payables (excluding statutory payables)

- interest bearing liabilities

- finance lease payables.

Details of significant accounting policies and methods adopted in respect of each class of financial asset, financial liability and equity instrument including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised are disclosed throughout Note 1 to these financial statements.

The main purpose in holding financial instruments is to manage CenITex’s financial risks prudently within the government’s policy parameters.

CenITex’s main financial risks include credit risk, liquidity risk and interest rate risk. CenITex manages these financial risks in accordance with its Financial Risk Management Policy.

CenITex uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and oversight of financial risks rests with CenITex’s Risk and Audit Committee.

 

The amount of financial assets disclosed here excludes statutory receivables (i.e. GST input tax credit recoverable).

The amount of financial liabilities disclosed here excludes statutory payables (i.e. taxes payable).

 

2015 Contractual Financial Assets Contractual Financial Liabilities TotalLoans and Receivables at amortised cost

Contractual financial assetsCash and deposits 38,084 - 38,084Receivables 3,499 - 3,499Total financial assets 41,583 - 41,583Contractual financial liabilitiesPayables - 7,892 7,892Interest bearing liabilities - 144 144Loan from Government - 16,000 16,000Total financial liabilities - 24,036 24,036

2014 Contractual Financial Assets Contractual Financial Liabilities TotalLoans and Receivables at amortised cost

Contractual financial assetsCash and deposits 13,383 - 13,383Receivables 7,680 - 7,680Total financial assets 21,063 - 21,063Contractual financial liabilitiesPayables - 9,533 9,533Interest bearing liabilities - 188 188Loan from Government - 16,000 16,000Total financial liabilities - 25,721 25,721

(b) Categorisation of financial instruments

Notes to the financial statements 30 June 2015

  72

Note 16. Financial instruments (continued)

 

The net holding gains and losses disclosed above are determined as follows:

- For cash and deposits, the net gain or loss is calculated by taking the interest revenue and adding or subtracting foreign exchange gains or losses arising from revaluation of the financial assets minus any impairment recognised in the net result. - For financial liabilities measured at amortised cost, the net gain or loss is calculated by taking the interest expense and adding or subtracting foreign exchange gains or losses arising from the revaluation of financial liabilities at amortised cost. (d) Credit risk exposures

Credit risk arises from the financial assets of CenITex, which comprise cash and deposits, and trade and other receivables. CenITex's exposure to credit risk arises from the potential default of counter parties on their contractual obligations resulting in financial loss to CenITex. Credit risk is measured at fair value and is monitored on a regular basis.

Credit risk associated with CenITex financial assets is minimal because the debtors are government departments.

Provision for impairment of contractual financial assets is recognised when there is objective evidence that CenITex will not be able to collect a receivable. Objective evidence includes financial difficulties of the debtor, default payments, and changes in credit ratings.

The carrying amount of financial assets recorded in the financial report, net of any allowances for losses, represents CenITex’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

2015 2014 $'000 $'000

Contractual financial assetsCash and deposits 1,122 453

1,122 453Contractual financial liabilitiesInterest bearing liabilities (4) (11)Net holding gain/(loss) 1,118 442

(c) Net holding gain/(loss) on financial instruments by category

Notes to the financial statements 30 June 2015  

  73

Note 16.Financial instruments (continued)

(e) Liquidity risk Liquidity risk arises when CenITex is unable to meet its financial obligations as they fall due. CenITex operates under the Victorian Government’s Fair Payments policy of settling financial obligations within 30 days and, in the event of a dispute, making payments within 30 days of the date of resolution.

Maximum exposure to liquidity risk is the carrying amounts of financial liabilities. CenITex manages its liquidity risk by:

• maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligation;

• careful maturity planning of its financial obligations based on forecasts of future cash flows.

Fixed Variable 3 months interest

rateinterest

rate_

1 year2015 ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000)Cash 2.0% 38,084 15,000 23,084 - 38,084 - - - - -Receivables(i) 1,548 - - 1,548 977 180 312 79 - 470Other 1,951 - - 1,951 1,951 - - - - -

41,583 15,000 23,084 3,499 41,012 180 312 79 - 4702014Cash 2.5% 13,383 - 13,383 - 13,383 - - - - - Receivables(i) 6,282 - - 6,282 4,982 427 185 688 - 355 Other 1,398 - - 1,398 1,398 - - - - -

21,063 - 13,383 7,680 19,763 427 185 688 - 355

Table 16.1: Credit risk exposure and ageing analysis of financial assets

Credit risk exposure

Not past due and

not impaired

Past due but not impaired

Impaired Financial

Assets

Weighted average effective interest

rate Carrying amount

Non-interest bearing

Less than 1 Month

1 - 3 months 1-5 years

(i) Ageing analysis of receivables excludes statutory receivables for GST input tax credits recoverable. These amounts are not contractual, andare therefore outside the scope of this disclosure.

Notes to the financial statements 30 June 2015  

  74

Note 16. Financial instruments (continued) Table 16.2: Liquidity risk exposure and maturity analysis of financial liabilities

Nominal Fixed 3 months 1 yearamount (i) interest

rate_

1 year _

5 years2015 ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000) ($ ‘000)Payables:Other payables (1) 7,892 - - 7,892 7,892 - - - -Interest bearing liabilities:Finance lease liabilities 6.4% 153 153 - - 4 9 61 79 -Loan from Government 16,000 - - 16,000 - - 16,000 - -

24,045 153 - 23,892 7,896 9 16,061 79 -2014Payables:

Other payables (1) 9,533 - - 9,533 9,533 - - - -Interest bearing liabilities:Finance lease liabilities 6.6% 203 203 - - 38 8 34 123 -Loan from Government 16,000 - - 16,000 - - - 16,000 -

25,736 203 - 25,533 9,571 8 34 16,123 -(1) The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities

Weighted average effective interest

rateVariable interest

rate

Non-interest bearing

Liquidity risk exposure Maturity dates

Less than 1 month

1 - 3 months > 5 years

Notes to the financial statements 30 June 2015  

  75

Note 16. Financial instruments (continued)

(f) Market risk

CenITex’s exposure to market risk is primarily through interest rate risk with only insignificant exposure to foreign currency risk and other price risks. Objectives, policies and processes used to manage each of these risks are disclosed in the paragraphs below.

Foreign currency risk

CenITex is exposed to insignificant foreign currency risk through its payables relating to purchases from overseas for which the counterparty invoices are in foreign currency.

Based on past and current assessment of economic outlook, it is deemed unnecessary for CenITex to enter into any hedging arrangements to manage the risk.

Interest rate risk

Exposure to interest rate risk relates solely to cash balances held in deposits at variable interest rates. For financial liabilities, CenITex’s exposure to interest rate risk relates solely to motor vehicle leases. CenITex’s interest bearing liabilities are managed by VicFleet at interest rates fixed at the inception of the lease.

CenITex’s exposure to interest rate risk is set out in tables 16.1 and 16.2.

Sensitivity disclosure analysis

Taking into account future expectations, economic forecasts, and management’s knowledge and experience of the financial markets, CenITex believes the following movements are possible over the next 12 months:

A parallel shift of +1.00% and -1.00% in market interest rates (AUD) from year-end rates of 2.00% (2014:2.5%)

Table 16.3 discloses the impact on net operating result and equity for each category of financial instrument held by CenITex at year-end, as presented to key management personnel, if the above movements were to occur.

 

Notes to the financial statements 30 June 2015  

  76

Note 16. Financial instruments (continued) Table 16.3: Market risk exposure

(1) The carrying amount is denominated in Australian Dollars and is non-interest bearing. This item is not subject to the identified risk sensitivities.

(2) Interest bearing liabilities relate solely to finance lease liabilities associated with motor vehicles. Each contract has interest fixed at the inception of the lease. This item is not subject to identified risk sensitivities.

(3) Loan from Government bears no interest. This item is not subject to the identified risk sensitivities.

(g) Fair value

CenITex considers the carrying amount of financial assets and financial liabilities recorded in the financial report to be a reasonable approximation of their fair values, either due to their short-term nature or with the expectation that they will be paid in full.

Carrying amount Profit Equity Profit Equity($‘000) ($‘000) ($‘000) ($‘000) ($‘000)

Financial assets:Cash and deposits 38,084 (381) (381) 381 381 Receivables(1) 3,499 - - - - Financial liab ilities:Payables(1) 7,892 - - - - Interest bearing liabilities (2) 144 - - - - Loan from Government (3) 16,000 - - - - Total increase/ (decrease) (381) (381) 381 381

Carrying amount Profit Equity Profit Equity($‘000) ($‘000) ($‘000) ($‘000) ($‘000)

Financial assets:Cash and deposits 13,383 (134) (134) 134 134 Receivables(1) 7,680 - - - - Financial liab ilities:Payables(1) 9,533 - - - - Interest bearing liabilities (2) 188 - - - - Loan from Government (3) 16,000 - - - - Total increase/ (decrease) (134) (134) 134 134

2015Interest rate risk

-1.00% 1.00%(100 basis points) (100 basis points)

2014Interest rate risk

-1.00% 1.00%(100 basis points) (100 basis points)

Notes to the financial statements 30 June 2015  

  77

Note 17. Cash flow information

Note 18. Ex gratia payments

 

2015 2014$'000 $'000

(a) Reconciliation of cash and cash equivalents

Total cash and deposits disclosed in the Balance Sheet 38,084 13,383 Balance as per Cash Flow Statement 38,084 13,383

2015 2014$'000 $'000

restated (1)

(b) Reconciliation of net result for the period to net cash flows from operating activities

Net result for the period 8,436 (619)

Non-cash movementsNet (gain)/loss on sale or disposal of non-current assets (1) 1,054 (285)Depreciation and amortisation of non-current assets (1) 21,721 22,439Resources provided free of charge or for nominal consideration (1) (1,574) 471Increase/(decrease) in doubtful debts 115 87

Movements in assets and liabilities(Increase)/decrease in receivables 4,044 3,791(Increase)/decrease in prepayments 558 (1,661)Increase/(decrease) in payables (1,911) (6,558)Increase/(decrease) in unearned revenue (2,149) 2,483Increase/(decrease) in provisions 1,205 1,025Net cash flows from/(used in) operating activities (1) 31,499 21,173(1) Refer Note 19 for correction of prior year errors related to asset values.

For the purpose of the Cash Flow Statement, cash includes cash on hand and in banks and investments inmoney market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shownon the Cash Flow Statement is reconciled to the related items in the Balance Sheet as follows:

No ex-gratia payments were made during the year. (2014: NIL)

Notes to the financial statements 30 June 2015  

  78

Note 19. Correction of errors The errors stemming from recording asset stocktake outcomes described below have been adjusted by restating each of the affected financial statement line items for the prior year.

Property, Plant and Equipment transferred to CenITex from other agencies via an Allocation Statement during the period 2008 to 2011 were not subject to a stock take at the time of transfer. Asset stock takes since have shown that the Allocation Statements contained inaccurate or incomplete asset records. As these transfers and stock takes did not occur at the same point in time, it is impractical to determine which year the asset discrepancies actually occurred. Retrospective restatements have been made to the earliest set of financial statements after their discovery.

The net impact of these errors is:

2012-13 closing balances

• overstatement of the operating net loss result by $0.368 million • understatement of property, plant and equipment by $0.368 million

2013-14 closing balance

• understatement of the operating net loss result by $0.614 million • overstatement of property, plant and equipment by $0.246 million • overstatement of accumulated retained earnings by $0.368 million

The below section shows the restatement of each line item affected by the error.

Note 19 Correction of errors

(a) Restatement of financial statements as a result of the correction of errors - 30 June 2014Line items of financial statements affected

Comprehensive operating statement (extract)Correction of Restated

2014 2014 errors 2014Notes $'000 $'000 $'000

Expenses from transactions

Depreciation 3(c) 22,296 143 22,439 Total expenses from transactions 151,155 143 151,298 Net result from transactions (net operating balance) (185) (143) (328)

Other economic flows included in net result Net gain/(loss) on disposal of non-financial assets 299 (471) (172) Total other economic flows included in net result 181 (471) (290) Net Result (5) (614) (619)

Comprehensive result (5) (614) (619)

Notes to the financial statements 30 June 2015  

  79

Note 19. Correction of errors (continued)

Balance sheet (extract)Correction of Correction of Restated

2014 2013 errors 2014 errors 2014Notes $'000 $'000 $'000 $'000

Non-Financial AssetsProperty, plant and equipment 6 27,619 368 (614) 27,373 Total non-financial assets 76,397 368 (614) 76,151 Total assets 98,188 368 (614) 97,942 Net assets 58,117 368 (614) 57,871

EquityAccumulated loss (64,803) 368 (614) (65,049) Total equity 58,117 368 (614) 57,871

Cash flow statement (extract)Correction of Restated

2014 2014 errors 2014Notes $'000 $'000 $'000

Cash flows from operating activitiesReceiptsReceipts from other government entities 164,264 (471) 163,793 Total Receipts 165,165 (471) 164,694 Net cash flows from/(used in) operating activities 17(b) 21,644 (471) 21,173

Cash flows from investing activitiesPayments for non-financial assets (11,582) 471 (11,111) Net cash flows from/(used in) investing activities (11,569) 471 (11,098)

Note 3. Expenses from transactions (extract)Correction of Restated

2014 2014 errors 2014Notes $'000 $'000 $'000

(c) DepreciationDepreciation of non-current assets 6 14,713 143 14,856Total depreciation and amortisation 22,296 143 22,439

Notes to the financial statements 30 June 2015  

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Note 19. Correction of errors (continued)

Note 6. Property, plant and equipment (extract)Correction of Correction of Restated

2014 2013 errors 2014 errors 2014Non-current assets (extract) $'000 $'000 $'000 $'000

Plant and equipment - Computer equipment At fair value 1,536 (275) - 1,261 Less accumulated depreciation (1,447) 242 27 (1,178) Written down value 89 (33) 27 83

Plant and equipment - Facilities At fair value 6,978 435 (1,818) 5,595 Less accumulated depreciation (5,566) (459) 1,759 (4,266) Written down value 1,412 (24) (59) 1,329

Plant and equipment - Network At fair value 60,370 (3,970) (4,109) 52,291 Less accumulated depreciation (49,718) 2,535 4,492 (42,691) Written down value 10,652 (1,435) 383 9,600

Plant and equipment - Servers At fair value 56,942 (1,142) (8,912) 46,888 Less accumulated depreciation (49,544) 1,063 8,641 (39,840) Written down value 7,398 (79) (271) 7,048

Plant and equipment - Storage At fair value 46,217 (1,078) (7,313) 37,826 Less accumulated depreciation (38,743) 3,017 6,619 (29,107) Written down value 7,474 1,939 (694) 8,719

Plant and equipment - Office Machines and Equipment At fair value 46 (2) - 44 Less accumulated depreciation (35) 2 - (33) Written down value 11 - - 11

Net carrying amount of property, plant and equipment 27,619 368 (614) 27,373

Notes to the financial statements 30 June 2015  

  81

Note 19. Correction of errors (continued)

Computer Equipment Facilities Network Servers Storage

Office Machines

& Equipment Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2014Opening balance 945 1,676 14,832 9,920 10,293 19 38,607Correction of 2013 errors (33) (24) (1,435) (79) 1,939 - 368Restated opening balance 912 1,652 13,397 9,841 12,232 19 38,975

Transfers 17 5 (1,042) (220) (486) (1) (1,728)Correction of 2014 errors - (30) (175) (103) (163) - (471)Restated transfers 17 (25) (1,217) (323) (649) (1) (2,199)

Depreciation expense (558) (467) (5,617) (4,232) (3,364) (7) (14,713)Correction of 2014 errors 27 (29) 558 (168) (531) - (143)Restated depreciation expense (531) (496) (5,059) (4,400) (3,895) (7) (14,856)

Restated closing balance 83 1,329 9,600 7,048 8,719 11 27,373

Movements in carrying amounts (extract)

Correction of Restated2014 2014 errors 2014$'000 $'000 $'000

Plant and equipment - Computer equipment 558 (27) 531Plant and equipment - Facilities 467 29 496Plant and equipment - Network 5,617 (558) 5,059Plant and equipment - Servers 4,232 168 4,400Plant and equipment - Storage 3,364 531 3,895Plant and equipment - Office machines and equipment 7 - 7Total depreciation expense 14,713 143 14,856

Aggregate depreciation recognised as an expense during the year:

Note 17. Cash flow information (extract)Correction of Restated

2014 2014 errors 2014$'000 $'000 $'000

Net result for the period (5) (614) (619)

Non-cash movements (extract)Net (gain)/loss on sale or disposal of non-current assets 186 (471) (285)Depreciation and amortisation of non-current assets 22,296 143 22,439Resources provided free of charge or for nominal consideration - 471 471Net cash flows from/(used in) operating activities 21,644 (471) 21,173

Notes to the financial statements 30 June 2015  

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Note 19. Correction of errors (continued)

(b) Restatement of financial statements as a result of the correction of errors - 30 June 2013Line items of financial statements affected

Comprehensive operating statement (extract)Correction of Restated

2013 2013 errors 2013Notes $'000 $'000 $'000

Fair Value of assets and services received free of charge or for nominal consideration (1) 2(c) - 5,809 5,809 Total income from transactions 146,602 5,809 152,411

Other economic flows included in net result Net gain/(loss) on disposal of non-financial assets (594) (5,441) (6,035) Total other economic flows included in net result (491) (5,441) (5,932) Net Result (6,995) 368 (6,627)

Comprehensive result (6,995) 368 (6,627)

Balance sheet (extract)Correction of Restated

2013 2013 errors 2013Notes $'000 $'000 $'000

Non-Financial AssetsProperty, plant and equipment 6 38,607 368 38,975 Total non-financial assets 85,841 368 86,209 Total assets 98,347 368 98,715 Net assets 58,456 368 58,824

EquityAccumulated loss (64,798) 368 (64,430) Total equity 58,456 368 58,824

Notes to the financial statements 30 June 2015  

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Note 19. Correction of errors (continued)

Note 6. Property, plant and equipment (extract)Correction of Restated

2013 2013 errors 2013Non-current assets (extract) $'000 $'000 $'000

Plant and equipment - Computer equipment At fair value 6,637 (275) 6,362 Less accumulated depreciation (5,692) 242 (5,450) Written down value 945 (33) 912

Plant and equipment - Facilities At fair value 4,997 435 5,432 Less accumulated depreciation (3,321) (459) (3,780) Written down value 1,676 (24) 1,652

Plant and equipment - Network At fair value 58,950 (3,970) 54,980 Less accumulated depreciation (44,118) 2,535 (41,583) Written down value 14,832 (1,435) 13,397

Plant and equipment - Servers At fair value 50,710 (1,142) 49,568 Less accumulated depreciation (40,790) 1,063 (39,727) Written down value 9,920 (79) 9,841

Plant and equipment - Storage At fair value 40,959 (1,078) 39,881 Less accumulated depreciation (30,666) 3,017 (27,649) Written down value 10,293 1,939 12,232

Plant and equipment - Office Machines and Equipment At fair value 48 (2) 46 Less accumulated depreciation (29) 2 (27) Written down value 19 - 19

Net carrying amount of property, plant and equipment 38,607 368 38,975

Note 17. Cash flow information (extract)Correction of Restated

2013 2013 errors 2013$'000 $'000 $'000

Net result for the period (6,995) 368 (6,627)

Non-cash movements (extract)Net (gain)/loss on sale or disposal of non-current assets 594 5,441 6,035Resources provided free of charge or for nominal consideration - (5,809) (5,809)Net cash flows from/(used in) operating activities 8,895 - 8,895

Notes to the financial statements 30 June 2015  

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Note 20. Responsible persons

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Persons who held positions of ministers and accountable officers responsible for CenITex during the financial year from 1 July 2014 to 30 June 2015 were:

• The Assistant Treasurer, Minister for Technology and the Minister Responsible for the Aviation Industry, the Hon. Gordon Rich-Phillips MLC, from 1 July 2014 to 3 December 2014

• The Minister for Finance and the Minister for Multicultural Affairs, the Hon. Robin Scott MP, from 4 December 2014 to 30 June 2015

• Chairman, Mr Randall Straw, from 1 July 2014 to 30 June 2015 • Chief Executive, Mr Michael Vanderheide, from 1 July 2014 to 30 June 2015

Remuneration

Remuneration received or receivable by accountable officers in connection with the management of CenITex during the reporting period was:

• Accountable officer: 1 July 2014 to 30 June 2015, $330,000 to $339,999. (2014: $330,000 to $339,999)

Amounts relating to Ministers are reported in the financial statements of the Department of Premier and Cabinet.

Other transactions Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance have been considered and there are no matters to report.

Position Name PeriodBoard member Randall Straw 1 July 2014 to 30 June 2015Board member Johanna Barker 1 July 2014 to 30 June 2015Board member Richard Tait 1 July 2014 to 30 June 2015Board member Conrad Harvey 1 July 2014 to 30 June 2015

Income Band Total Remuneration 2015 Total Remuneration 2014$0 - 10,000 - 3$10,001 - 20,000 - 3$20,001 - 30,000 3 -$30,001 - 40,000 - -$40,001 - 50,000 1 -Total as at 30 June 4 6Total amount $132,108 $49,425

Notes to the financial statements 30 June 2015  

  85

Note 21. Remuneration of executives and payments to other personnel with significant management responsibilities (a) Remuneration of executives

The numbers of executive officers, other than ministers and the accountable officer, and their total remuneration during the reporting period are shown in the table below in their relevant income bands. Base remuneration is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefits. The total annualised employee equivalent provides a measure of full time equivalent executive officers over the reporting period.

(1) Annualised employee equivalent is based on paid working hours of 38 ordinary hours per week over the

52 weeks for a reporting period.

(a) Remuneration of executives

Base remuneration

Total remuneration

Base remuneration

Total remuneration

2015 2015 2014 2014No. No. No. No.

$20,000 - 29,999 1 - - -$110,000 – 119,999 - 1 - -$150,000 – 159,999 - - 1 -$160,000 – 169,999 1 1 - -$180,000 – 189,999 - - - 1$210,000 – 219,999 - 1 1$220,000 – 229,999 1 - - -$230,000 – 239,999 - 1 - -$250,000 – 259,999 - - 1 1$260,000 – 269,999 1 - 1 -$270,000 – 279,999 - 1 - 1Total number of executives 4.0 4.0 4.0 4.0Total annualised employee equivalents (AEE) (1) 3.3 3.3 3.8 3.8Total amount $684,615 $792,876 $888,065 $930,285

Income band

Notes to the financial statements 30 June 2015  

  86

Note 21. Remuneration of executives and payments to other personnel with significant management responsibilities (continued)

(b) Payments to other personnel with significant management responsibilities

There were no payments made to contractors of CenITex charged with significant management responsibilities (2014: NIL).

Note 22. Related party transactions

Randall Straw was appointed as a Director of CenITex Board on 17 December 2013 and subsequently appointed as Chairman effective 9 April 2014. He is also a Director of the Victorian Government Purchasing Board, managed by Department of Treasury and Finance (DTF). Randall Straw is also engaged on contract work with the Department of Economic Development, Jobs, Transport and Resources (DEDJTR). CenITex provides services to both DEDJTR and DTF on normal commercial terms. There were no other transactions between CenITex and responsible persons and their related parties during the financial year.

Note 23. Remuneration of auditors

Note 24. Events occurring after the balance date No matters and/or circumstances have arisen since the end of the reporting period which significantly affect or may significantly affect the operations of CenITex, the results of those operations, or the state of affairs of CenITex in future financial years.

2015 2014$’000 $’000

Victorian Auditor - General’s Office

Audit of the financial report 81 79Total 81 79

 

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Statutory certification

We certify that the Financial Statements for CenITex for the year ended 30 June 2015 have been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the Comprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes to and forming part of the financial statements, present fairly the financial transactions for the year ended 30 June 2015 and the financial position of CenITex as at that date.

We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on 9 October 2015.

Randall Straw Michael Vanderheide Catherine Ho Chairman Chief Executive Chief Financial Officer CenITex CenITex CenITex

Melbourne 9 October 2015

 

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89  

 

 

   

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10 Other Disclosures 10.1 Disclosures  

10.1.1 Implementation of the Victorian Industry Participation Policy

The Victorian Industry Participation Policy Act 2003 requires departments and public sector bodies to report on the implementation of the Victorian Industry Participation Policy (VIPP). Departments and public sector bodies are required to apply VIPP in all procurement activities valued at $3 million or more in metropolitan Melbourne or $1 million or more for procurement activities in regional Victoria.

CenITex did not commence or complete any contracts for which a VIPP was required.

10.1.2 Consultancies

The definition of consultancies was updated, effective from 1 July 2013. Consequently, disclosures on the 2014-15 consultancy expenditure can only be compared with the previous year’s disclosures.

Details of consultancies (valued at $10,000 or greater)

During the financial year ended 30 June 2015 there were three consultancies where the total fee payable to the consultants were $10,000 or greater. Details of the individual consultancies are outlined below.

Consultant Purpose of consultancy Start date End date

Total approved

project fee (excluding

GST)

Expenditure 2014-15

(excluding GST)

Future expenditure

(excluding GST)

DOING BUSINESS BETTER

Lean Specialist

25 Aug 2014 25 Nov 2014 $21,780.00 $19,800.00 Nil

VICTORIAN GOVERNMENT SOLICITOR’S OFFICE

Provision of Legal Services

14 Aug 2014 01 Oct 2015 $89,540.00 $39,400.00 Nil

PITCHER PARTNERS

Provision of Audit Services

09 Sep 2013 08-Sep-2016 $651,938.30 $265,120.00 $386,818.30

Details of consultancies under $10,000

During the financial year ended 30 June 2015 there were five consultancies engaged where total fees payable to the individual consultancies was less than $10,000. Total expenditure incurred during 2014-15 in relation to these consultancies was $16,346.60 (excl. GST).

 

   

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10.1.3 Disclosure of major contracts

CenITex has disclosed, in accordance with the requirements of Government policy and accompanying guidelines, all contracts greater than $10 million in value which it entered into during the year ended 30 June 2015. Details of contracts that have been disclosed in the Victorian Government contracts publishing system can be viewed on the internet at: http://www.contracts.vic.gov.au.

Contractual details have not been disclosed for those contracts for which disclosure is exempted under the Freedom of Information Act 1982 and/or Government guidelines.

10.1.4 Freedom of Information Act 1982

The Freedom of Information Act 1982 allows the public a right of access to documents held by CenITex. For the 12 months ending 30 June 2015, CenITex received one request for access under Freedom of Information. This request was from a Member of Parliament. Under section 18 of the FOI Act 1982 this request was transferred to a Government Department under section 18(2) of the Act to be dealt with by that Department under the Act.

Making a request

Access to documents may be obtained by written request to the Freedom of Information Manager, as detailed in section 17 of the Freedom of Information Act 1982. In summary, the requirements for making a request are:

• It should be in writing; • It should identify as clearly as possible which document is being requested; and • It should be accompanied by the appropriate application fee (the fee may be waived in

certain circumstances).

Requests for documents in the possession of CenITex should be addressed to:

Freedom of Information Manager CenITex PO Box 2750 Melbourne VIC 3001

Requests can also be lodged online at http://www.foi.vic.gov.au.

Access charges may also apply once documents have been processed and a decision on access is made; for example, photocopying and search and retrieval charges.

Further information regarding Freedom of Information can be found at http://www.foi.vic.gov.au.

10.1.5 Building and maintenance compliance

CenITex does not own nor control any government buildings. Consequently it is exempt from notifying its compliance with the building and maintenance provisions of the Building Act 1993.

 

   

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10.1.6 National Competition Policy

Competitive neutrality requires government businesses to ensure that, where services compete (or potentially compete) with the private sector, any advantage arising solely from their government ownership be removed if the services are not in the public interest. Government businesses are required to cost and price these services as if they were privately owned and thus fully cost reflective.

CenITex complies with the requirements of the National Competition Policy by establishing prices for services that are fully cost reflective.

10.1.7 Compliance with the Protected Disclosure Act 2012 (formerly the Whistleblowers Protection Act 2001)

The Protected Disclosure Act 2012 encourages and assists people in making disclosures of improper conduct by public officers and public bodies. The Act provides protection to people who make disclosures in accordance with the Act and establishes a system for matters disclosed to be investigated and for rectifying action to be taken.

CenITex does not tolerate improper conduct by employees, or the taking of reprisals against those who come forward to disclose such conduct. It is committed to ensuring transparency and accountability in its administrative and management practices and supports the making of disclosures that reveal corrupt conduct, conduct involving substantial mismanagement of public resources, or conduct involving a substantial risk to public health and safety or the environment.

CenITex will take all reasonable steps to protect people who make such disclosures from any detrimental action in reprisal for making the disclosure. It will also afford natural justice to the person who is the subject of the disclosure to the extent that this is legally possible.

Reporting procedures

Disclosures of improper conduct or detrimental action by CenITex or any of its employees may be made to:

The Protected Disclosure Officer Ross Gilmour Corporate Communications CenITex Phone: (03) 8688 1507

Disclosures of improper conduct or detrimental action by CenITex or any of its employees may also be made directly to the Independent Broad-based Anti-corruption Commission at:

Level 1, North Tower, 459 Collins Street Melbourne VIC 3000 Phone: 1300 735 135 Internet: www.ibac.vic.gov.au Email: See the website above for the secure email disclosure process, which also provides for anonymous disclosures.

Further information

The Protected Disclosure Policy and Procedures, which outline the system for reporting disclosures of improper conduct or detrimental action by CenITex or any of its employees are available on the CenITex website.

 

   

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Disclosures under the Protected Disclosure Act 2012

2014–15 2013–14

The number of disclosures made by an individual to CenITex and notified to the Independent Broad-based Anti-corruption Commission

Number Number

Assessable disclosures 0 n/a

10.1.8 Office-based environmental impacts

CenITex collects data for environmental impacts reporting. The fourth full year of data collection is reported here. The data includes our office-based environmental impacts in three areas: energy, paper and transport.

Environmental Reporting

2014-15 2013–14

Offices Data centres

Offices Data centres

Electricity consumption (mega joules - MJ)

9,595,448 26,286,719 9,967,316 26,819,432

MJ per square metre (m2) 1043 13,938 1083 14,220

MJ per full-time employee ( FTE) 19,595 N/A 18,448 N/A

Paper consumption (reams) 1884 2332

Reams per FTE 3.77 4.32

Motor vehicle use (kilometres) 135,041 164,968

km per FTE 276 305

Water and waste

CenITex pays indirectly for water consumption and waste disposal as part of the 80 Collins Street lease, billed as a percentage of the whole of the property budget across 50 floors. This is standard practice in leased buildings. Therefore, we do not keep data as we do not process direct accounts from these suppliers.

 

   

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Procurement

Where possible, CenITex buys equipment from WoVG contracts and state purchasing panels to take advantage of environmental requirements covered for all departments in tenders and contracts.

The contracts and panels we purchase from include:

• intra-Government Secured Network (iGSN) • Servers and Storage Equipment contract • Multi-Function Device • Citrix WoVG contract • WoVG Data Centre contract • Microsoft Enterprise Agreement

When we go to market we include:

• clauses in quotes and tender documents requiring tenderers to disclose environmental practices

• appropriate weighting of environmental considerations in quotes and tenders.

10.1.9 Additional information

For additional information contact:

Corporate Communications CenITex PO Box 2750 Melbourne VIC 3001 Australia corporate.communications@cenitex.vic.gov.au

 

   

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10.2 Disclosure index

Legislation Requirement Section reference

Ministerial Directions

Report of operations – FRD guidance Charter and purpose

FRD 22F Manner of establishment and the relevant Ministers 3.1  &  4.1

FRD 22F Purpose, functions, powers and duties 3.1  &  4.1

FRD 8C Departmental objectives, indicators and outputs Preamble

FRD 22F Initiatives and key achievements 5.4 – 6.3

FRD 22F Nature and range of services provided 6.1-6.3

Management and structure FRD 22F Organisational structure 4.4

Financial and other information FRD 10 Disclosure index 10.2

FRD 12A Disclosure of major contracts 10.1.3

FRD 15B Executive officer disclosures Financial Report note 21

FRD 22F Employment and conduct principles 7.2

FRD 22F Occupational health and safety policy 7.3

FRD 22F Summary of the financial results for the year Financial Report

FRD 22F Significant changes in financial position during the year Financial Report

FRD 22F Major changes or factors affecting performance 8.3

FRD 22F Subsequent events Financial Report note 24

Financial Report FRD 22F Application and operation of Freedom of Information Act 1982 10.1.4

FRD 22F Compliance with building and maintenance provisions of Building Act 1993

10.1.5

FRD 22F Statement on National Competition Policy 10.1.6

FRD 22F Application and operation of the Protected Disclosure Act 2012 10.1.7

FRD 22F Details of consultancies over $10 000 10.1.2

FRD 22F Details of consultancies under $10 000 10.1.2

FRD 22F Statement of availability of other information 10.1.9

FRD 24C Reporting of office-based environmental impacts 10.1.8

FRD 25B Victorian Industry Participation Policy disclosures 10.1.1

FRD 29A Workforce Data disclosures 7.1

SD 4.5.5 Risk management compliance attestation See below

SD 4.2(g) Specific information requirements See below

 

   

96  

SD 4.2(j) Sign-off requirements Preamble

Financial statements required under Part 7 of the FMA SD4.2(a) Statement of changes in equity Financial Report

SD4.2(b) Operating statement Financial Report

SD4.2(b) Balance sheet Financial Report

SD4.2(b) Cash flow statement Financial Report

Other requirements under Standing Directions 4.2

SD4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements

Financial Report note 1  

SD4.2(c) Compliance with Ministerial Directions Financial Report note 1  

SD4.2(d) Rounding of amounts Financial Report note 1  

D4.2(c) Accountable officer’s declaration Financial Report  

SD4.2(f) Compliance with Model Financial Report Financial Report note 1  

Other disclosures as required by FRDs in notes to the financial statements

FRD 11A Disclosure of Ex gratia Expenses Financial Report note 18  

FRD 21B Disclosures of Responsible Persons, Executive Officers and other Personnel (Contractors with Significant Management Responsibilities) in the Financial Report

Financial Report note 20,21  

FRD 103E Non-Financial Physical Assets (Pending revision) Financial Report note 6,7  

FRD 106 Impairment of Assets Financial Report note 1  

FRD 109 Intangible Assets Financial Report note 7  

FRD 110 Cash Flow Statements Financial Report  

FRD 112D Defined Benefit Superannuation Obligations Financial Report note 12  

FRD 114A Financial Instruments – General Government Entities and Public Non Financial Corporations

Financial Report note 16  

 

Legislation Freedom of Information Act 1982 10.1.4

Building Act 1983 10.1.5 Protected Disclosure Act 2012 10.1.7 Victorian Industry Participation Policy Act 2003 10.1.1

Financial Management Act 1994 preamble

 

   

97  

10.3 Our websites  

CenITex has an online presence in three website environments:

Website   Audience  

Staff intranet   CenITex staff  insITe   CenITex staff and customers  Internet   General public, CenITex customers and staff  

  www.cenitex.vic.gov.au

 

   

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10.4 Glossary of terms

ARC Audit and Risk Committee

CIO Chief Information Office/r CPI Consumer Price Index

Departments Departments prior to machinery of government changes, effective 4 January 2015:

Department of Environment and Primary Industries (DEPI) Department of Health (DH) Department of Human Services (DHS) Department of Justice (DOJ) Department of Premier and Cabinet (DPC) Department of State Development, Business and Innovation (DSDBI) Department of Treasury and Finance (DTF) Department of Transport, Planning and Local Infrastructure (DTPLI)

New departments created by machinery of government changes, effective 4 January 2015:

Department of Economic Development, Jobs, Transport and Resources (DEDJTR) Department of Environment, Land, Water and Planning (DELWP) Department of Health and Human Services (DHHS) Department of Justice and Regulation (DJR) Department of Premier and Cabinet (DPC) Department of Treasury and Finance (DTF)

EBA Enterprise Bargaining Agreement

ELA Enterprise Licence Agreement

executive In the Victorian Public Service, a person employed as a public service body head or other executive under Part 3, Division 5 of the Public Administration Act 2004. The definition of an executive officer does not include statutory officers unless they are specifically declared to be employed under the executive employment provisions of the Public Administration Act 2004.

ESS Employee self-service system

FTE Full-time equivalent. One FTE is the equivalent of one person working full-time for one financial year. For example, two persons, each working 2.5 days per week (or 0.5 of standard hours) equals one FTE.

GIPS Government Identity Provisioning Service GSP Government Shared Platform

ICT Information and Communications Technology

ITIL Information Technology Infrastructure Library

MoG Machinery of Government

MPLS Multiprotocol Label Switching

MOU Memorandum of Understanding

Project Atlas Program of work to outsource CenITex services to the private sector

Public Sector All organisations (i.e. VPS departments and agencies, as well as public entities) covered by the Public Administration Act 2004.

Remedy Tool for managing internal service desk calls SAC Stakeholder Advisory Committee

 

   

99  

SAN Storage Area Network

SOE Standard operating environment

SSPR Self-service password reset

state agencies Administrative unit of state government providing community and other services. State agencies mentioned in this report: Public Transport Victoria (PTV) Victorian Ombudsman (VO) VicForests Environment Protection Authority (EPA) Taxi Services Commission (TSC) Office of the Governor Victorian Public Sector Commission Office of the Chief Parliamentary Counsel Public Record Office Victoria Victorian Multicultural Commission Transport Safety Victoria Arts Victoria Metropolitan Waste and Resource Recovery Group Court Services Victoria (CSV) Linking Melbourne Authority Victorian Ministerial Offices

Victorian public sector

All Victorian organisations (i.e. Victorian Public Service departments and agencies, as well as public entities) covered by the Public Administration Act 2004.

VDI Virtual Desktop Infrastructure

VPS Victorian Public Service (see also Victorian public sector) WoVG Whole of Victorian Government

 

   

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Insurance attestation1

I, Michael Vanderheide, certify that CenITex has complied with Ministerial Direction 4.5.5.1 –

Insurance.

Michael Vanderheide Chief Executive 27 May 2015

Risk attestation2

I, Michael Vanderheide, certify that CenITex has risk management processes in place

consistent with the Australian/New Zealand International Risk Management Standard (or

designated equivalent), and that an internal control system is in place enabling the executive to understand, manage and satisfactorily control risk exposures.

The Audit and Risk Committee verifies this assurance and that the risk profile of CenITex has been critically reviewed within the last 12 months.

Michael Vanderheide Chief Executive 4 September 2015

CenITex Level 32, 80 Collins Street Melbourne VIC 3000 Australia

Tel: +61 3 8688 1872 Fax: +61 3 8688 1300 Website: www.cenitex.vic.gov.au

Authorised by the Victorian Government, 1 Treasury Place, Melbourne. @Copyright State of Victoria 2015. ISSN: 1837-4913 Published October 2015

                                                                                                                           1 Insurance Attestation approved by the Audit and Risk Committee on 27 May 2015. 2 Risk Attestation approved by the Audit and Risk Committee on 4 September 2015.