How to supply

Date: 18 Dec 2019 - 27 Apr 2020
Updated: 27 Apr 2020
Managed:
Type: Whole of government

How to apply

This scheme is currently not available in NSW eTendering.

Guidelines and conditions

Report templates

FAQs

These questions have been asked during the priority assessment period (January 2013) and are provided to all potential scheme applications for information.

Minor amendments have been made to the report templates accordingly.

1. We acknowledge the Government's intention that all assessors provide their financial capacity assessments in the same format and structure as that outlined within the report templates. The profit and loss table appears to be a formula-driven sheet, however it does not appear to accommodate for other income. If assessors were to include these amounts in revenue, then the gross margin would not provide a true reflection of their actual trading results. As the profit lines are all formula driven (that is, gross nargin, EBITDA, EBIT, NPBT and NPAT) and the existing schedule does not provide for other income, can you please confirm this item should be included within revenue?

The purpose of the templates is to provide a structured approach to financial assessment. However, this does not negate the need for professional judgment to be applied in each case.

The summary tables (P&L, balance sheet and cash flow) included in the templates are for guidance purposes only. The specific lines and ratios presented in an assessment should be reviewed by the assessor on a case-by-case basis and tailored based on what information they deem to be material for the purposes of the decision-making process.

It should also be noted that the templates are considered a summary deliverable document and should not be considered a working paper. Assessors are expected to maintain their own work papers (schedules, calculations and so on) to support the contents of the template delivered.

2. We acknowledge the profit and loss table in the basic and comprehensive report templates records depreciation within overheads. However, in the medium report template the same line is recorded as administration. As the table is formula-driven and these results are used to derive EBITDA, the medium template would appear to be correct. This is supported by reference to a depreciation and amortisation amount recorded later in the table for each of the 3 templates. Can you please confirm the first occurrence of depreciation within the overheads section for 2 of the templates (basic and comprehensive) should be relabeled as administration?

This is an error in the templates which will be updated accordingly. Depreciation should be removed from overheads and presented as depreciation and amortisation below EBITDA. Please note, in accordance with our response above, the template is a guide only and the specific items displayed should be tailored according to the specific review.

3. We note that net interest is not defined within the glossary. Was the Government's intention this item be net of capitalised interest, interest income or both of these amounts? Can you please confirm and define net interest?

Net interest is defined as interest income less interest expense as per the profit and loss statement. Since capitalised interest is not a profit and loss account item, it should not be included in the calculation. The glossary will be updated to include this definition.

4. We note that effective interest rate (%) is not defined within the glossary. Was the Government's intention this item be based on the closing balance of outstanding debt at balance date, or the average debt over that financial period?

As long as the assessor is consistent in their approach (that is, between periods) for a given assessment, either method is permissible. However, the calculation would typically be expected to be based on closing balances to negate the need for additional historical data.

5. We note that days debtors and days creditors are defined within the glossary as being the average number of days. Can you please confirm if these calculations are based on the closing (and not average) balances for receivables and creditors and accruals as the calculation would suggest? Alternatively, should these be calculated on the average balances?

As long as the assessor is consistent in their approach (that is, between periods) for a given assessment, either method is permissible. However, the calculation would typically be expected to be based on closing balances to negate the need for additional historical data.

6. The work on hand pipeline summary table infers that the gap blue sky forecast ($Y-$Xm) is calculated as the forecast revenue ($Ym) less the estimated pipeline value ($Xm). However, it does not appear to accommodate for either work already completed in the interim period, or the amount of secured work that remains to be completed? Can you please confirm that the gap blue sky forecast should incorporate these 2 items within the calculation?

Agreed – the calculation should indeed include year to date revenue and any secured / contracted work remaining in the period. The templates will be updated and circulated accordingly.

7. The cash flow statement appears to be a formula-driven table. As the profit and loss table does not separately identify interest income, investment income, gains/losses on asset sales etc., and as the financial position table does not separately identify investments in associates and JVs, equity recapitalisation/share buy-backs etc. these will inherently be included within cash flow from operating activities (rather than investing or financing). Please confirm this is the Governments desired intention?

See response to question 1 above.

8. We understand that forecasts of the profit and loss, financial position and cash flow statement will only be required in the medium and comprehensive templates. We understand the assessors will use information provided by the assessed entities to assist in preparing these amounts, and may annualise interim financial performance data where full year forecasts are otherwise unavailable. Can you please confirm the basic financial capacity assessments will not require analysis of interim financial statements or forecasts, and will primarily focus on full-year financial statement data?

The basic financial assessment does not specifically require analysis of forecast information. However, if provided with such information the assessor should consider disclosure of high level numbers if deemed material to the user.

With regard to interim financial information, all assessments should be based on the most recent financial information available. The assessor should ensure any interim financial information (such as that obtained from management accounts) is presented on a like-for-like basis (that is, consistent application of accounting policies) with full-year financial statement data for comparative purposes.

For medium and comprehensive reviews where forecasts are not made available or are not produced by the subject, this should be clearly noted. If, as part of the analysis, the assessor extrapolates or prepares a forecast estimate based on results to date, this fact should clearly be noted along with any assumptions made in reaching the forecast.

9. We note that days creditors are defined within the glossary as 'how long it takes to pay creditors'. However, notes the calculation uses creditors and accruals (from the profit and loss table). If that is the Government's intention, it could be argued that the calculation should be extended to include overheads in the denominator, as accruals would most likely relate to these costs. Can you please confirm the Government's preferred treatment of these items?

The definition is intended to apply to trade creditors therefore the reference to creditors and accruals will be updated to trade creditors in the templates.

However, similar to other responses above, this may change dependent on the circumstance therefore as long as the assessor is consistent in their approach (that is, between periods) for a given assessment, professional judgment may be applied.