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TABLE OF CONTENTS

CHAIRMAN’S FOREWORD ........................................................................................................................... 2

AN OPERATIONAL PERSECTIVE ................................................................................................................... 4

INTRODUCTION ...................................................................................................................................... 4 IBIS OPERATIONS.................................................................................................................................... 4 REMOTE LIVING ...................................................................................................................................... 5 HEALTHY FOOD CHOICES PROGRAM ................................................................................................................ 6 IBIS PRICING POLICY ................................................................................................................................... 7 IIB’S CRITICAL ISSUES: ................................................................................................................................ 7 FINANCIAL RESULTS ............................................................................................................................. 10 NEW CHAIRMAN .................................................................................................................................. 10 MEMBERS’ RECOGNITION .................................................................................................................... 10 BOARD COMPOSITION ......................................................................................................................... 11 THE FUTURE ......................................................................................................................................... 13

ISLAND INDUSTRIES BOARD ANNUAL REPORT 2011-2012 ........................................................................ 15

THE ISLAND INDUSTRIES BOARD AND SUB-COMMITTEES ............................................................................ 16 Finance and Audit Committee - FAC................................................................................................. 16 Employment and Training Committee – ETC .................................................................................... 16 Corporate Governance Committee - CGC ......................................................................................... 17 Business Review and Development Committee - BRDC ................................................................... 17 Community and Public Relations Committee - CPRC ........................................................................ 17 Board Member Terms ...................................................................................................................... 18 Attendance at Meetings 2011-2012 ................................................................................................. 18

COMPLIANCE ........................................................................................................................................... 18 EXECUTIVE MANAGEMENT .......................................................................................................................... 19 BUSINESS AND OPERATIONS OVERVIEW ......................................................................................................... 19 TRADING RESULTS ..................................................................................................................................... 20 OTHER .................................................................................................................................................... 20

Overseas Travel ............................................................................................................................... 20 Consultants ...................................................................................................................................... 20 Auditors ........................................................................................................................................... 20 Interpreter Service ........................................................................................................................... 20 Keeping Records .............................................................................................................................. 21 Carers Recognition Act 2008 ............................................................................................................ 21 Glossary ........................................................................................................................................... 22

FINANCIAL STATEMENTS 2011-12 ............................................................................................................. 23

CERTIFICATE OF ISLAND INDUSTRIES BOARD ............................................................................................ 49

INDEPENDENT AUDITOR’S REPORT ........................................................................................................... 50

IIB Annual Report 2011-2012

© State of Queensland (Island Industries Board) 2012

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CHAIRMAN’S FOREWORD

On behalf of the Board, I am pleased to report another solid financial result for IBIS for the 2011-12 year. This year involved significant challenges for the Australian retail sector including greater competition and the effects of a slowing in consumer spending. In addition the impact of natural disasters had an impact on the delivery of stock to the Torres Strait. It is within this environment that the Board continued to commit to significant capital expenditure ($3.253 million in 2011-12) to improve the quality of the retail stores. Quality retail stores are essential component to continuing to improve the quality of retail services to the residents of the Torres Strait and Northern Peninsular Area. This commitment to improved service delivery has worked as IBIS has been able to deliver a profit in this challenging environment on the back of sales growth of 9.4%. In addition IBIS‘ financial accounts were unqualified for the 5th straight year. Fiscal responsibility combined with sound governance and a commitment to meeting and bettering community expectations makes IBIS a quality retailer. The Board will continue to strengthen its medium to long term capacity to deliver a quality retail product through capital investment in our stores, improved purchasing and product ranging, better leadership and management and improved customer service orientation. Next year, IBIS will spend approximately $4 million on assets including new stores on Saibai and Dauan Islands. Contracts for the construction of these stores have been executed with construction at Dauan already commencing. While new stores are needed in these communities, we are also committed to maintaining existing stores in excellent condition. This is building for the future a sign of the greatly improved financial status of IBIS. Our CEO, Ian Copeland, continues to make an enormous contribution to IBIS and we are extremely grateful for his leadership, integrity and commitment. During his tenure there has been great improvement in our relationship with our customers and stakeholders. He has placed great importance on our people and achieved significant improvements in safety, workplace diversity, sustainability, community investment and led our response to environmental issues. The Board wishes to acknowledge our 144 staff members whose dedication and commitment to our customers are essential to our success. The Board also appreciates the support of the Queensland Government which has maintained a keen interest in the Board‘s operations and the welfare of the communities of the Torres Strait and the Northern Peninsula Area. This year, the Queensland Government will assist with the funding of the stores on Saibai and Dauan Islands.



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The support of the Torres Shire Council, the Torres Strait Islands Regional Council, the Northern Peninsular Area Regional Council and Torres Strait Regional Authority has been integral to our success. These relationships continue to strengthen. Finally, I would like to take this opportunity to thank my predecessor Peter Rice who worked tirelessly to make IBIS a sustainable business delivering quality retail services to the residents of the Torres Strait and the Northern Peninsular Area. I have in collaboration with Mr Copeland our CEO, provided an overview of the operations of IBIS. In this we have talked about the critical issues for IBIS. We have also highlighted what we see as the most pressing issue for the communities namely the cost of living. The Board and management remain confident about the outlook for IBIS.

Mark Johnston Acting Chair – Island Industries Board



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AN OPERATIONAL PERSECTIVE

INTRODUCTION

The Islanders Board of Industry and Service (IBIS) is the registered Business Name of the Island Industries Board (IIB), a statutory body included within the Aboriginal and Torres Strait Islander Communities (Justice, Land and Other Matters) Act 1984 (‗the Act‘). The IIB is more commonly known as ―IBIS‖. For the purpose of this report where reference to the ‗Board‘ is made, this refers to the controlling members who constitute the Board under s60 of the Act. It does not refer to the ‗Board‘ as in Island Industries Board. To avoid confusion the statutory body will be referred to as ‗IBIS‘. We are delighted in the 106th year of continuous operation of the Board to provide this operational overview.

IBIS OPERATIONS

The Torres Strait is a body of water that lies between Australia and Papua New Guinea. It is approximately 150 kilometres wide at its narrowest extent. To the south is Cape York Peninsula, the northernmost continental extremity of the Australian state of Queensland. To the north is Papua New Guinea. The Torres Strait links the Coral Sea to the east with the Arafura Sea in the west. Although it is an important international sea lane, it is very shallow, and the maze of reefs and islands make it hazardous to navigate. Several clusters of islands lie in the Strait, collectively called the Torres Strait Islands. There are at least 274 of these islands, 17 of which have present-day permanent settlements. These Islands are grouped into five distinct clusters. These clusters exhibit differences in geology and formation, as well as having individual cultural characteristics and language. IBIS also serves the people of the Western Cape (NPA) with a modern supermarket in Bamaga. The provision of essential services to the Communities of the Torres Strait and NPA presents significant challenges, which are compounded considerably when those services include the supply of food including fresh, chilled and frozen food. IBIS operates 16 retail stores on the islands distributed throughout this region, providing a full range of consumer goods including:

dry grocery

chilled grocery

frozen grocery

fresh fruit and vegetables



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large and small electrical appliances

variety and seasonal goods, and

special orders that meet individual needs. The supply chain to the islands of the Torres Strait and NPA involves multiple freight handlers and is thus complex, with goods generally first, travelling from Brisbane to Cairns by rail (approximately 1750 kilometres); then by line ship to Thursday Island (in excess of 1000 kilometres); where they are reloaded and shipped to landing barges that finally transport the product to the island stores (up to 300 kilometres). This complex supply chain is in total, about 3050 kilometres – the longest and most complex supply route undertaken by any retail organisation within Australia. Freight costs are significant, for example, chilled and frozen products to the outer islands are in excess of $1.45 per kilogram. Every product is handled several times during shipping. It is transhipped from train to truck, to ship to barge, to the stores and re-palleted or containerised in Cairns. The cost of supplying this service is further compounded by many significant issues, including ensuring that:

all food products are safe;

the cold chain for all temperature sensitive products is unbroken;

the goods arrive in good condition - undamaged by mishandling and uncontaminated by other products that are co-shipped with them and/or by seawater;

all food products are reasonably date coded to allow for the extended shipping period; and

the fresh food products are reasonably date coded to ensure a supply of fresh product to the communities for the duration between deliveries.

In many cases, the IBIS store is the only provider of food on an island. Failure in the supply chain caused by issues such as natural disasters (flooded railway lines between Brisbane and Cairns), telecommunication breakdowns (Telstra lines outage at the supply or demand end) or king tides preventing supply barges to land on the islands can have catastrophic results as food cannot be delivered for the residents. The Board‘s link to Queensland Government helps to ensure prompt responses to these supply chain issues by providing seamless liaison with agencies that can assist, such as the Department of Emergency Services.

REMOTE LIVING

The Board recognises that the biggest issue facing the people of the Torres Strait and NPA is the rising cost of living. The Board recognise that this is the single most important issue and have responded to that with the healthy food basket program which has provided a bundle of essential foods at the lowest possible cost to customers. The Board has actually subsidised the cost of this program by approximately $300,000 this financial year. This has meant a substantially lower operating surplus of $118,000 was achieved. The Board is keen to assist our customers as much as we can without putting at risk our financial operations. There is a fine line that the Board must tread. The Board is required to sustain its operations



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so should not operate at a loss. I have set out below under the heading Critical Issues what the costs of sustainability involves. The Board is willing to work jointly with other agencies in the Torres Strait to put a case to State and Commonwealth Governments about the high costs of living and make suggestions for how these pressures can be resolved. In this report we have attempted to set out in a transparent way the issues and challenges that face the Board. Please understand that IBIS has the tax status of a Public Benevolent Institution with the Australian Tax Office and is a Queensland Government Statutory Authority so that all the work that the Board does is for the benefit of the communities of the Torres Strait and NPA. The summary of capital expenditure undertaken by the Board over the past ten years is set out below. The Board draws your attention to the significant increases in capital investment over the last three years and also note the significant increases in money spent on capital maintenance to ensure longevity in terms of our capital assets. These are huge investments made to improve the infrastructure that IBIS uses to provide services to your communities. Additionally IBIS does an enormous amount of work to support the communities that we serve. We have set details of that contribution later in this report.

HEALTHY FOOD CHOICES PROGRAM

IBIS has now been committed to its Healthy Food Choices Program for the past three years. IBIS has utilised the services of a qualified Nutritionist who has lead the program with support from the CEO, management and staff and Queensland Health. The program has achieved the following goals over the past three years:

dedicated upright fruit & vegetable refrigeration in all stores;

improved cold chain with constant temperature monitoring;

stores only sell loose fruit and vegetables which extends freshness and supports customer choice;

produce is inspected before shipping from Cairns;

average Australian sales of sugared drinks sold in remote indigenous communities is 63% of all drinks sold, while the sale of sugared drinks in IBIS stores has been reduced to 61% of total drink sales, however the national average for water is 10% and in the IBIS system it is 22%. In other indigenous communities Queensland wide the average water consumption is still 11%;

healthy food choices are highlighted in-store at point-of-sale and are supported by the IBIS Nutritionist with store visits, food preparation demonstrations and Healthy Food Choices literature including recipes; and

IBIS is due to implement a partnership with Queensland Health this year in promoting Health and Wellbeing along with sporting champions to the Torres Strait and Cape York Peninsular communities.

While IBIS is committed to providing Healthy Food Choices at lower prices (often substantially discounted), it also recognises that it must supply a complete range of retail goods to satisfy community requirements.



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IBIS PRICING POLICY

Due to the high cost of doing business in the Torres Strait and NPA, communities normally would be paying far higher prices for goods and services including healthy food choices than other Australians. IBIS however has a policy where it sells all Healthy Food Choices items at the lowest possible price while operating the business on a sustainable basis. Items that are not in the ‗Healthy Food Choices‘ category, are priced at a level where IBIS‘s prices are the cheapest or equal cheapest in the Torres Strait and NPA. This policy has also proved very successful in the promotion of the IBIS Healthy Food Choices program, and in particular where IBIS advertises fresh fruit and vegetables specials every week at prices that are in line or lower than the chain stores in Cairns.

IIB’S CRITICAL ISSUES:

COST OF SUSTAINABILITY By far IBIS‘s most challenging issue is in the cost of sustainability and the significant factors around sustainability remain:

Freight – the supply chain length and associated costs in delivery goods and services to the NPA and Torres Strait continue to be one of the most challenging costs to incur whilst trying to offer the communities competitive pricing. Freight constitutes approximately 10% of the business operating expenses, this situation contrasts with normal retail practice whereby suppliers deliver free into store. IBIS has the longest supply chain of any remote retail organisation in Australia (3,050 km). With a kilogram of chilled product costing in excess of $1.45 to freight, this has a significant impact on the in-store pricing of groceries. In this regard, IBIS‘ freight cost last financial year was $3.45 million being 9.6% of total revenue.

Power - The cost of electricity has increased by 40% over the past few years and the industry is forecasting a 20% increase in the next couple years without the impact of a 20% carbon tax on cost. IBIS is the second largest consumer of electrical power in the NPA & Torres Strait next to the Hospitals.

Insurance – A lack of competition and the remoteness of the area we work in coupled with the recent natural disasters has led to significantly increased premiums which also need to be absorbed into our operating costs

Duopoly Power of the major retailers – The pressure being applied to the Primary producers by Coles and Woolworths will have an adverse effect on the independent retail sector for price compensation.

Remote cost of living pressure – The financial pressures on families leave less disposable income for food consumption – fuel, transport, rent and power. The cost of providing goods and services to the Torres Strait and NPA is significantly higher than in mainstream Australia.

Communication infrastructure – Telstra has only recently rolled out high speed BDSL communication systems to two thirds of the NPA and Torres Strait



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restricting companies like IBIS in achieving a whole of company Information Technology upgrade

Maintenance- the ongoing cost of maintenance is a major impost to the business because of the extreme environment and tyranny of distance. Store maintenance is a critical issue for grocery retailing, impacting on a range of issues, from customer and staff comfort to food safety and public health risks. Maintaining plant and equipment in remote maritime locations is expensive and a challenge, because of corrosion, and the lack of local tradespeople and flexible and cost effective transport options.

Size of Catchment - A supermarket in Cairns has a potential customer base of 200,000 people. The IBIS store on Dauan Island has a potential customer base of 90 people. The cost of doing business on this scale is significantly higher than in areas with substantially larger populations, and hence the price of goods sold needs to be higher.

On top of these will be the Carbon Tax:

At this time IBIS has not factored in the full impact of myriad of ways in which the Carbon Tax has on its distribution costs and operating system, however it is envisaged that these costs will be significant and will be passed on to IBIS from its suppliers and service providers.

NATIVE TITLE

The 2011/12 Audit report identifies that Native title is a medium risk item to the business. IBIS acknowledged the cooperation and assistance of the Torres Shire Island Regional Council for its support for the Trustee Lease approval process which has supported and enabled the relevant ILUA‘s to proceed without undue delay. This assistance has been invaluable to the progress of the New Store development program. IBIS is in a stronger space in terms of rolling out the remaining Native Title Leases now that a template has been agreed upon by the relevant parties including Traditional Owners, the Prescribed Body Corporate and the Native Title Office. We were successful in securing Native Title agreements or Reserve title for the following sites:

Tamwoy Trustee for Reserve

Rosehill Dept. of Communities Trustee for Reserve

TI Supermarket (Main Store) Freehold lease

TI Service Station – Freehold lease

Blackall street flats – Freehold

Travel Centre Victoria parade – Freehold

Slipway land 12-23 Douglas Street- transferring loan for freehold title

Bamaga Crown Reserve- Dept. of Communities Trustee

Dauan Island – 30 year Trustee lease with 30 year ILUA

Saibai Island – 30 year Trustee lease with 30 year ILUA

Mer (Murray Island) – 30 year Trustee Lease with 30 year ILUA



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Stephen Island – 30 year Trustee lease with 30 year ILUA

Mabuiag Island – 30 year Trustee lease with 30 year ILUA Native Title under negotiation

Erub (Darnley) Island –30 year ILUA & 30 year Lease drafted and awaiting execution

Iama (Yam) Island-30 year ILUA & 30 year Lease drafted and awaiting execution

Masig (Yorke)Island -30 year ILUA & 30 year Lease drafted and awaiting execution

Moa (Kubin) Island -30 year ILUA & 30 year Lease drafted and awaiting execution

Moa (St Pauls) Island -30 year ILUA & 30 year Lease drafted and awaiting execution

Boigu Island -30 year ILUA & 30 year Lease drafted and awaiting execution

Poruma (Coconut) Island-30 year ILUA & 30 year Lease drafted and awaiting execution

Warraber Island - 30 year ILUA & 30 year Lease drafted and awaiting execution

RETENTION OF PEOPLE

The investment in our people specifically in relation to retail training certificates II, III & IV which makes our people very desirable to other indigenous employers especially other Government Departments is a growing cost to IBIS It is difficult to attract and retain experienced people to work in the remote areas we operate in due to the lack of suitable available accommodation and accessibility.

CULTURAL ADOPTION OF MAINSTREAM RETAIL PRACTICES

We need to educate community members to become retail champions within their family influences otherwise it is extremely difficult to provide superior customer service and best practice organizational behavior.

SYSTEMS DEVELOPMENT

The existing Pronto Enterprise Replenishment System needs an upgrade to meet the growing business demands. The current technology available in the retail sector needs to be incorporated into the Pronto system to allow IBIS to continue to develop at the rate it is continuing to achieve.

These factors demonstrate the unique difficulties that IBIS faces in operating a retail service. This business faces challenges that no other retail operation in Australia face. These impose a significant imposts on our operations to deliver goods and services to the communities we work within. This ultimately leads to higher prices for our customers regardless of how determined we are in delivering competitive pricing for our products. The Healthy Value Basket confirms IBIS‘s commitment through its subsidy in the 2012 period of over $300k to promoting a healthy lifestyle choices and thereby delivering on Queensland Government policy.



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FINANCIAL RESULTS

The IBIS management team has delivered sound financial results for the year ending 31 January, 2012. IBIS achieved a surplus of $118,000 (.3 per cent of sales) F2012. This follows on from a surplus in F2011 of $127,000 (.4 per cent of sales) and a surplus in F2010 of $719,000 (2.5 per cent of sales). All results exclude government grants. It is important to note that the global after tax surplus benchmark for supermarkets is 2.0 per cent of sales.

Capital Expenditure

Year Capital

Expenditure $’000

Capital Maintenance

$’000

2003-04 293 236

2004-05 378 228

2005-06 184 245

2006-07 147 514

2007-08 904 363

2008-09 604 387

2009-10 727 399

2010-11 4,719 555**

2011-12 3,253 530

2012-13* 4,471 536

* Significant investment in recent years with more planned for 2012-13 year. ** Increased maintenance expenditure to ensure longevity of assets.

NEW CHAIRMAN

On 31 December, 2011 Peter Rice resigned as Chairman of the IIB and on the 1st January 2012, Terry Waia subsequently resigned as Deputy Chairman due to ill health. The IIB met on 20th January 2012 and I was appointed as Deputy Chairman and in accordance with the legislation I am required fill the role of Acting Chairman. Ian Copeland the Chief Executive Officer of IBIS who commenced on 1st July 2009 has continued in that role.

MEMBERS’ RECOGNITION

I would like to specifically express my great appreciation and thanks to long standing Board members: Deborah Kuchler, Neil Castles and the previous chairman Peter Rice, for their contributions. These Board members have been with IBIS for three terms (ten years) and bring a wealth of expertise in their respective professional backgrounds and they have chosen to give the IIB the benefit of their expertise. It is their skill and experience and input that has played a pivotal role in the turnaround of IBIS. The results are a vindication of the Board‘s strategic planning, prioritisation and goal setting put together in late 2002 and early 2003. It is also a testament to the drive and energy of the Board members that IBIS has been turned around financially.



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I would also like to give my special thanks and great appreciation to three Islander representatives who have served on the Board for the last three years - Terry Waia, Cr Fred Gela and Ron Laifoo. They have made an immeasurable contribution to the Board in the time that they have been members. Terry has ably filled the role of Deputy Chairman and has been of exceptional assistance to the Board in it understanding the perspective of the Torres Strait people and also in communicating the proposed direction of IBIS and soliciting feedback. In additional a fourth Islander representative, Cr Philemon Mosby has also worked in the background to support the Board.

BOARD COMPOSITION

I see the current Board model involving a mix of three or four independent professional members and four Torres Strait Islander representatives is an appropriate model for the immediate future. It has taken six years to re-establish IBIS as a sustainable organisation. IBIS has reduced the breadth of its operations markedly as part of this process and can now benefit from a lengthy period of financial stability that is based on high levels of integrity in financial administration. This is best achieved by the current model which involves an appropriate mix of specialist and Torres Strait Islander representatives. The services that IBIS delivers to the Torres Strait community are too important for IBIS to be governed in any other way. The Board applauds the State Government for increasing Torres Strait Islander involvement on the Board to four members. The model developed by the Board represents best practice in retail service delivery in remote Indigenous Communities, through:

its diverse economic development capabilities;

delivery of compliant, safe, high quality food at the lowest possible prices;

operating at no cost to Government (i.e. consumes no Government financial resource;

providing a source of major employment for Indigenous Australians (the Island Industries Board is the largest employer in the Torres Strait with 89% of staff being Indigenous Australians);

presenting a low cost, fit for purpose model delivering an effective and efficient essential service in an extremely remote environment;

operating with minimum bureaucracy;

arms - length government reporting standards;

complying with best practice consumer retailing and meeting all legislative and regulatory requirements; and operating commercially on a ‗not for loss‘ basis;

managing risk to all stakeholders via its Hazard Analysis Critical Control Point (HACCP) system of risk management – integrated across the organisation through a comprehensive Risk Management Program and accredited Food Safety Program; and

sound governance in that the Board: acts legitimately by complying with all required legislation observes due process in all business activities (i.e. with documented

policies and procedures) and respecting the rights of all stakeholders, and



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meets and exceeds its publicly declared standards of performance in the economic use of resources, supply of outputs and achievement of desired economic, social and environmental outcomes.

COMMUNITY SERVICE OBLIGATION The collective consolidated IBIS financial model enables IBIS to provide ALL communities a sustainable retail offering of quality goods and services at competitive pricing regardless of the individual stores profitability. IBIS has responded favourably to the community requests for a replacement store to be invested in on Stephen (Ugar) Island and this could only be achieved within the structure of the current IBIS financial model knowing that this store will always be operated at a loss. IBIS‘s commitment to subsidising the Healthy Value Basket in 2012 was in excess of $300,000. IBIS through its partnership with Queensland Health and the Department of Communities employs a Nutritionist who provides clinical and is involved at store level in cooking lessons, budgeting, healthier food basket and exercise. IBIS has recently partnered with the Menzies Institute to develop certain protocols and bench marks to be delivered in all Indigenous Communities throughout Australia. IBIS works closely with the Torres Shire Regional Island Council, the Torres Shire Regional Authority and the Northern Peninsula Area Council to be part of the social fabric in terms of delivering consistent outcomes under the health and wellbeing pillar of the current COAG agreement. IBIS has introduced innovative merchandising processes to motivate consumers into healthier purchasing choices – turning buyer hot spots into nutritional placement. Leveraging trade partner relationships we have developed product display units encouraging change in consumer behaviour. IBIS leads the way throughout all of the Australian Indigenous communities in shifting purchases from full sugared soft drinks to non -sugared product. IBIS plays an important role in the healthier lifestyle programs run in the individual communities by way of product sponsorship donating in excess of $20,000 in water and fruit for sporting carnivals, football competitions and other physical activities. IBIS has forged a partnership with Queensland Maritime Safety to provide Safety Grab bags that have an EPIRB, 6 Safety jackets, marine flares, v sheets, reflector mirror and torch for Community travel safety. IBIS will have a shipping/travel log for people who wish to travel between Islands in the Torres Strait, MSQ will service the kits to ensure that they are operable and IBIS will manage the logistics. IBIS is extremely conscious of the environmental impact of its operations and has developed strategies in minimising it footprint in this pristine location. IBIS has secured partial funding from Queensland Waste Management to roll out eight cardboard compactors and are endeavouring to get additional funding for the



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remaining Islands, to date we have removed over 400 tonnes of cardboard for recycling. IBIS worked with Ergon‘s Power Savvy team to reduce the high demand of energy consumed and improve power efficiencies within the group. An investment in excess of $240,000 has returned a saving of $72,000 in operating power costs and a reduction of 200 carbon tons in the first year if the improvement. IBIS has partnered with the BBC‘s Southern Skies Clinic for Aboriginal and Torres Strait Islander children educational and sporting scholarships. IBIS sponsored the clinics on Thursday Island with over 45 children participating in a week long selection process resulting in two students being selected for education at BBC in 2012/13. IBIS conducts an Annual Conference that brings the Islander community into Australian best practice retail training coupled with keynote presentations, service award recognition and a trade show representing the world‘s leading brands and their latest product offering. IBIS now offers as a standard to all of their Island community employees an opportunity to develop their skills that was not afforded to them in the past. We include training modules in Certificate I, II, III and IV in Retailing improving their skill levels and capacity for career enhancement and employability.

THE FUTURE

The Board is confident that IBIS can continue to move forward in a very positive manner. The next 12 months will see continued significant capital expenditure in several areas of IBIS's operations. Our customers will have seen the improvements in the Main Store on Thursday Island and new stores at Bamaga; Mabiuag and Ugar. The Board is committed to major upgrades of the stores at Dauan Island, Saibai Island, and Mer Island. This extensive program of works should be a major signal to our customers and the leaders of the Torres Strait Community that IBIS is moving forward. There remains much to be done. Our experience is that the operating environment is volatile and problematic. It is characterised by equipment breakdowns, supply issues, and a very high cost base. It is the goal of the Board that the following can be achieved:

sustainability of operating profits

ongoing skill development of staff

improved range of grocery and retail offerings

aiding the improvement of the health of the Communities

stable management and staff. The latter will be very positive for IBIS to move forward and better serve the communities of the Torres Strait, and

growing customer and stakeholder satisfaction of IBIS.

The challenge for the Board is how it can act in a way to broaden and improve its economic footprint so as to benefit the Torres Strait communities.



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The Board and Management are tasked with finding effective ways to lower the cost of goods for the communities of the Torres Strait. IBIS is proud to have served the Torres Strait for over 105 years and looks forward to serving the Torres Strait communities over the next 100 years. The Board thanks the State Government for its support in assisting IBIS deliver the significant capital expenditure program. The current Board model has served the communities of the Torres Straits very well. IBIS is an organisation that is vibrant, successful and looking forward to the future with a sense of optimism and pride.

ISLAND INDUSTRIES BOARD ANNUAL REPORT 2011-2012

15 April 2012 The Honourable Jack Dempsey MP Minister for Aboriginal and Torres Strait Islander and Multicultural Affairs and Minister Assisting the Premier GPO Box 2644 Brisbane Qld 4001 Dear Minister Dempsey I am pleased to present the Annual Report 2011-2012 for the Island Industries Board. I certify that this Annual Report complies with:

the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, and

the detailed requirements set out in the Annual Report Requirements for Queensland Government Agencies 2010-11.

A checklist outlining the annual reporting requirements can be accessed at http://www.premiers.qld.gov.au/publications/categories/reports/annual-reports/2009-2010/compliance-checklist.aspx Yours sincerely

Chief Executive Officer Island Industries Board

http://www.premiers.qld.gov.au/publications/categories/reports/annual-reports/2009-2010/compliance-checklist.aspx

http://www.premiers.qld.gov.au/publications/categories/reports/annual-reports/2009-2010/compliance-checklist.aspx



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THE ISLAND INDUSTRIES BOARD AND SUB-COMMITTEES

In accordance with section 60 of the Aboriginal and Torres Strait Islander Communities (Justice, Land and Other Matters) Act 1984, the Board is comprised of at least five, but not more than eight members appointed by the Governor in Council. At a minimum the Board meets bi-monthly. The current Board comprises: Mr Mark Johnston (Deputy Chairman and Acting Chairman - Island

Industries Board; Chair of the Employment and Training Committee)

Mr Terry Waia Mr Neil Castles (Chair of Finance and Audit Committee and the Corporate

Governance Committee) Cr Fred Gela Dr Deborah Kuchler Mr Ron Laifoo Cr Phillemon Mosby The members of the Board have extensive skills and experience in:

operating and managing retail operations and in particular supermarkets;

operating and managing businesses including extensive experience in public and not for profit businesses;

economic and regional development;

local custom and developing Indigenous communities;

multicultural communities;

business and corporate accounting; and

legal matters and mediation. The Board‘s aim is to maximise the Government‘s investment that underwrites IBIS business. The IIB has the following sub-committees that report to the Board on a regular basis. A strategy report for the past year is delivered to the IIB for each committee.

Finance and Audit Committee - FAC

The FAC is responsible for ensuring the internal control and risk management framework is appropriate for the organisation. It monitors the ongoing financial performance of IBIS and is also responsible for ensuring audit recommendations are addressed. The Committee is also responsible for reviewing the financial accounts prior to their release. The FAC has the added task of developing and monitoring the financial section of the IBIS Annual Strategy Action Plan.

Employment and Training Committee – ETC

The ETC considers matters with respect to the management and remuneration of IBIS‘ employees and human resources and industrial relations issues. Its focus is the appropriateness of any new or amended human resource policy, remuneration of



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IBIS staff, the performance and appropriate recognition of IBIS staff, and the training programs for staff and the termination and recruitment of staff. The ETC is also tasked with the development and oversight of the Work Health and Safety and the Employment and Training section of the IBIS Annual Strategy Action Plan

Corporate Governance Committee - CGC

The responsibility of the CGC is the management of risks outside the responsibility of the other Committees. These include operation integrity and transparency, compliance with laws and the management of assets and the insurance thereof. The CGC develops and monitors the Corporate Governance section of the IBIS Annual Strategy Action Plan.

Business Review and Development Committee - BRDC

The BRDC is responsible for coordinating the development and consolidation of the IBIS Annual Strategy Action Plan, the production of the Annual Strategy letter which is delivered to the Minister in April every year, and the production of the IIB Annual Report, which is legislated to be delivered to the Minister in time to be tabled in Parliament on or before the 30 April, each year. The BRDC is further charged with the development and maintenance of the eight documents that comprise the IBIS Financial Management Practice Manual (FMPM). The FMPM documents all the systems, policies and plans of IBIS and the IIB, which is a requirement of the Queensland Financial Accountability Act 2009. In the past year these documents have been placed onto the IBIS SharePoint server, which has made the management and access to these documents far more efficient. For the past eight years much of the writing, editing and formatting of these documents has been done by the BRDC members. The Board recently approved that the IBIS CEO will deliver these documents to the BRDC produced by IBIS staff or outside agencies. The BRDC will continue to monitor this work and seek approval by the Board for all these documents. The BRDC is tasked with the development and oversight of the business review and development section of the IBIS Annual Strategy Action Plan.

Community and Public Relations Committee - CPRC

The responsibility of the CPRC is to engage the community and understand the needs of the people of the Torres Strait and NPA. This committee includes the four Torres Strait representative members of the IIB. The main activities cover the communication strategy of IBIS, which includes the important building of strong long term partnerships with all stakeholders. The CPRC develops and monitors the community and public relations of the IBIS Annual Strategy Action Plan.



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Board Member Terms

Family

Name

Given

Name

Position

Title

Appointment

Start Date

Appointment

End Date

Member

Since

Castles Neil Member 17-05-2009 31-08-2012 2002

Gela Fred Member 05-02-2009 31-08-2012 2009

Johnston Mark Chairman 17-05-2009 31-08-2012 2002

Kuchler Deborah Member 17-05-2009 31-08-2012 2002

Laifoo Ronald Member 01-09-2008 31-08-2012 2008

Mosby Phillemon Member 05-02-2009 31-08-2012 2009

Rice Peter Chairman 17-05-2009 31-12-2011 2002

Waia Terry Member 01-09-2008 31-08-2012 2006

Attendance at Meetings 2011-2012

Meetings Held

IIB 12

FAC 12

ETC

7

CGC

3

BRDC

5

CPRC

6

Neil Castles 12 12 3

Fred Gela 2 2

Mark Johnston 11 11 7 3

Dr Deborah Kuchler 11 11 5 3 3 5

Ron Laifoo 12 12 5 3 4 6

Phillemon Mosby 1 1

Peter Rice 12 12 7 5 6

Terry Waia 7 7 3 1 2

COMPLIANCE

During the year there has been an increased emphasis on compliance across the whole IBIS organisation. This started with the updating early in the year of the IBIS Financial Management Practice Manual. This document details all of the complex Policies and Procedures that IBIS performs. It includes:

IBIS Financial Management Practice Manual Control Document

IBIS Human Resources Induction Manual

IBIS Human Resources Corporate Manual

IBIS Cultural Awareness Manual

IBIS Business Plan 2011-2016

IBIS Operations Manual (Retail Computer System Manual)

IBIS Administration Manual (Computerised Administration Manual)

IBIS Corporate Governance Manual



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IBIS Food Safety Program was developed in 2008 to ensure that IBIS complies with the requirements of the Safe Food Act 2006 and the Food Safety Standards of the Australia New Zealand Food Standards Code. These updated documents have not only formalised and updated a large number of functions carried out by the organisation they have also improved the tools available for the staff in the stores.

EXECUTIVE MANAGEMENT

Ian Copeland is the Chief Executive Officer (CEO) and, has 33 years experience in sales and marketing including over 25 years experience at senior executive level. Other members of the Executive team are:

Sam Roberts CPA, Chief Finance Officer – 25 years experience in corporate accounting.

Randal Crabbe, Supply Chain Manager- over 15 years experience in retail stores

Jennifer Bartlett, Human Resources Manager – 20 years experience in business management, staff development in an adult training area, and extensive experience working and living with Indigenous Australians.

Volker Franz, Chief Information Officer – 20 years experience in the IT industry, mostly in executive roles specialising in organisational networking.

BUSINESS AND OPERATIONS OVERVIEW

IBIS operates 15 retail convenience stores, two supermarkets and a service station. The convenience stores provide groceries, fresh fruit and vegetables, meat, variety products and other items commonly found in general stores or small supermarkets. These stores are located at:

Thursday Island

Main Store (supermarket)

Tamwoy

Rosehill

Northern Peninsula Area (NPA)

Bamaga (Supermarket)

Torres Strait Islands

Boigu

Poruma (Coconut)

Erub (Darnley)

Dauan

Kubin (on Moa Island)

Mabuiag

Mer (Murray)

Saibai

St Pauls (on Moa Island)

Warraber



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Iama (Yam)

Masig (Yorke), and

Ugar (Stephen). The service station is operated on Thursday Island under a Caltex franchise. It is also worth noting that Saibai and Boigu stores also serve Papua New Guinean villagers who live just a short boat trip away. Cross border traffic is sometimes disrupted and the resultant fluctuations in demand add further complexity to servicing Torres Strait communities.

TRADING RESULTS

Sales for the year were up $3,061,000 (9.4 percent) to $35.51 million. At the same time, cost of goods sold increased by $2,848,000 (12.8 percent) to $25,027,000. The decrease in the gross Margin of $152,000 and an increase of $476,000 in expenses from operating activities has led to an operating surplus of $118,000 (excluding government grants) against a budget of $666,000. This follows on from a surplus in F2010-11 of $579,000 and a surplus in F2009-10 of $719,000. This is a good result given the existence of competition and the volatile operating environment over which IBIS has limited control. The surplus from operations for 2012 includes depreciation expense of $1,423,000, which is a significant cost for a business to absorb given IBIS‘ gross margin and expenditure requirements.

OTHER

Overseas Travel

There was no overseas travel undertaken by staff.

Consultants

During this financial year the following were engaged to provide legal advice and consultancy on a range of issues: Solicitors - Macdonnells ($21,266), Paul Williams ($8,790), Chris Ryall ($350) and Benjas Pty Ltd ($6000).

Auditors

In accordance with the provisions of the Auditor-General Act 2009 and the Financial Accountability Act 2009, the Queensland Audit Office is the external auditor for the IIB. The Queensland Audit Office has the responsibility for providing Queensland‘s Parliament with assurances as to the adequacy of IIB‘s discharge of its financial and administrative obligations.

Interpreter Service

The Queensland Government is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds. If you have difficulty in understanding the annual report, you can contact us on (07) 4050 4321 and we will arrange for an interpreter to effectively communicate the report to you.



21

Keeping Records

As a Queensland Government agency, we meet the accountability requirements of the Public Records Act 2002, as well as Information Standard 40: Recordkeeping and Information Standard 31: Retention and Disposal of Public Records.

Carers Recognition Act 2008

As a public authority, IBIS is aware of its responsibilities under the Carers Recognition Act 2008. In compliance with section 9(1)a of the Act, IBIS has ensured that its officers and employees: (a) have an awareness and understanding of the carers charter. This is achieved through the IBIS HR Induction and training policies and implementation; and (b) take action to reflect the principles of the charter in providing services of the authority which affect carers and the persons they care for. IBIS consults with the representative bodies that the authority is satisfied represent the carers affected when making strategic policy or planning decisions relevant to carers and the persons they care for.

Meaning of carer

(1) A carer is an individual who provides, in a non-contractual and unpaid capacity, ongoing care or assistance to another person who, because of disability, frailty, chronic illness or pain, requires assistance with everyday tasks. (2) However, for the purpose of this Act, a person is not a carer— (a) only because the person is the spouse, parent or guardian of a person to whom care is provided; or (b) if the person provides the care or assistance as a volunteer for a voluntary organisation.



22

Glossary

Board Island Industries Board

BRDC Business Review & Development Committee

CEO Chief Executive Officer, Ian Copeland

CGC Corporate Governance Committee

CPA Certified Practising Accountant

CPRC Community and Public Relations Committee

ETC Employment and Training Committee

F2010-11 Financial year ending 31 January 2011

FAC Finance and Audit Committee

FMPM IBIS Financial Management Practice Manual

IIB Island Industries Board

IBIS trading name of Islanders Board of Industry and Service

Islanders Board of Industry

& Service (IBIS) Registered trading name of Island Industries Board

ILUA Indigenous Land Use Agreement

NPA Northern Peninsula Area, Cape York



23

ISLAND INDUSTRIES BOARD (IIB) FINANCIAL STATEMENTS 2011-12

Contents Page No. Statement of Comprehensive Income 2 Statement of Financial Position 3 Statement of Changes in Equity 4 Statement of Cash Flows 5 Notes To and Forming Part of the Financial Statements 6 Management Certificate 27 Audit Report 28 General Information These financial statements cover the Island Industries Board. The Islanders Board of Industry and Service (IBIS) is the registered Business Name of the Island Industries Board (IIB), a statutory body established under the Aboriginal and Torres Strait Islander Communities (Justice, Land and Other Matters) Act 1984 (‗the Act‘). The head office and principal place of business of the IIB is: 149 Spence Street CAIRNS QLD 4870 A description of the nature of the IIB's operations and its principal activities is included in the notes to the financial statements. For information in relation to the IIB's financial statements please call Sam Roberts CPA, Chief Finance Officer on (07) 4050 4329 or email [email protected]

mailto:[email protected]



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ISLAND INDUSTRIES BOARD

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 January 2012

Notes 2012 2011

$'000 $'000

Income from Continuing Operations

Revenue from operating activities 2(a) 35,505 32,444

Other revenue 2(b) 414 779

Total Income from Continuing Operations 35,919 33,223

Expenses from Continuing Operations

Cost of goods 25,027 22,179

Administration expenses 3 1,293 1,388

Depreciation and amortisation expenses 5 1,423 1,099

Employee benefits expense 4 5,825 5,576

Other operating expenses 7 1,993 2,009

Borrowing cost expense 6 91 77

Total Expenses from Continuing Operations 35,652 32,328

Operating Result from Continuing Operations 267 895

Other Comprehensive Income

Increase (decrease) in asset revaluation surplus 16 0 (316)

Total Other Comprehensive Income 0 (316)

Total Comprehensive Income 267 579

The accompanying notes form part of these statements.



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STATEMENT OF FINANCIAL POSITION

as at 31 January 2012

Notes 2012 2011

$'000 $'000

Current Assets

Cash and cash equivalents 8 3,220 4,735

Receivables 9 203 291

Inventories 10 2,706 2,164

Other 11 31 42

Total Current Assets 6,160 7,232

Non Current Assets

Property, plant and equipment 12 24,523 23,114

Total Non Current Assets 24,523 23,114

Total Assets 30,683 30,346

Current Liabilities

Payables 13 3,017 2,907

Other financial liabilities 14 18 19

Provisions 15 100 109

Total Current Liabilities 3,135 3,035

Non Current Liabilities

Other financial liabilities 14 943 959

Provisions 15 50 64

Total Non Current Liabilities 993 1,023

Total Liabilities 4,128 4,058

Net Assets 26,555 26,288

Equity

Accumulated surplus 14,579 14,312

Asset revaluation surplus 16 11,976 11,976

Total Equity 26,555 26,288




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STATEMENT OF CHANGES IN EQUITY


Asset Revaluation

Accumulated Surplus Surplus (Note 16) TOTAL

2012 2011 2012 2011 2012 2011

$'000 $'000 $'000 $'000 $'000 $'000

Balance 1 February 14,312 13,417 11,976 12,292 26,288 25,709

Operating Result from Continuing Operations 267 895 0 0 267 895

Total Other Comprehensive Income

Increase (Decrease) in Asset Revaluation 0 0 0 (316) 0 (316)

Surplus

Balance 31 January 14,579 14,312 11,976 11,976 26,555 26,288




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STATEMENT OF CASH FLOWS


Notes 2012 2011

$'000 $'000

Cash flows from operating activities

Inflows:

Receipts from customers 35,568 31,843

GST input tax credits from the ATO 1,642 1,416

GST collected from customers 1,806 1,805

Grant receipts 149 452

Interest receipts 136 271

Outflows:

Payment to suppliers and employees (33,955) (30,848)

Finance/borrowing costs (91) (77)

GST paid to suppliers (1,681) (1,423)

GST remitted to the ATO (1,824) (1,813)

Net cash provided by (used in) operating activities 17 (b) 1,750 1,626

Cash flows from investing activities

Inflows:

Proceeds from sale of non-current assets 6 0

Outflows:

Payments for property, plant and equipment (3,253) (4,719)

Net cash provided by (used in) investing activities (3,247) (4,719)

Cash flows from financing activities

Outflows:

Finance lease payments (18) (19)

Net cash provided by (used in) financing activities (18) (19)

Net increase (decrease) in cash and cash equivalents (1,515) (3,112)

Cash and cash equivalents at beginning of financial year 4,735 7,847

Cash and cash equivalents at end of financial year 17 (a) 3,220 4,735




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Objectives and Principal Activities of the Statutory Body. The objective of the IIB is to provide high level of quality goods and services in retailing, investment and banking to the Torres Strait Region. The IIB is primarily self funded for the outputs it delivers. It also provides the following on a fee for service basis: (a) Island banking; and (b) Bill payment. The IIB also receives Government funding. 1. Summary of Significant Accounting Policies (a) Statement of Compliance The Island Industries Board has prepared these financial statements in compliance with section 42 of the Financial and Performance Management Standard 2009. These financial statements are general purpose financial statements and have been prepared on an accrual basis in accordance with Australian Accounting Standards and Interpretations. In addition, the financial statements comply with Treasury‘s Minimum Reporting Requirements for the year ending 31 January 2012, and other authoritative pronouncements. With respect to compliance with Australian Accounting Standards and Interpretations, the Island Industries Board has applied those requirements applicable to not-for-profit entities, as the Island Industries Board is a not-for-profit statutory body. Except where stated, the historical cost convention is used. (b) The Reporting Entity The financial statements include the value of all revenues, expenses, assets, liabilities and equity of the IIB. (c) Repairs and Maintenance Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold the cost is capitalised and depreciated. (d) Operating Leases Lease payments for operating leases are recognised as an expense in the years in which they are incurred as this reflects the pattern of the benefits derived by the Entity. (e) Finance Leases Leases of property, plant and equipment where substantially all the risks and benefits incidental to ownership of the asset are assumed by the Entity are classified as finance leases. Finance leases are capitalised, recognising an asset and a liability equal to the present value of the minimum payments, including any guaranteed residual value. Lease payments are allocated between the reduction of the lease liability and the interest expense. (f) Revenue – Goods and Services rendered Revenue from the sales of goods is recognised in the Statement of Comprehensive Income when it is probable that the economic benefits will flow to the entity. Services provided by the IIB are recognised as revenues when invoices for the related services are issued. (g) Grants and Contributions Grants, contributions, donations and gifts that are non-reciprocal in nature are recognised as revenue in the year in which the IIB obtains control over them. Where grants are received that are reciprocal in nature, revenue is accrued over the term of the funding arrangements. Contributed assets are recognised at their fair value. Contributions of services are recognised only when a fair value can be determined reliably and the services would be purchased if they had not been donated. (h) Cash and Cash Equivalents For the purposes of the Statement of Financial Position and the Statement of Cash Flows, cash and cash equivalents comprise all cash and cheques receipted but not banked at 31 January as well as deposits at call with financial institutions. It also includes investments with short periods to maturity that are readily convertible to cash on hand at the IIB‘s or issuer's option and that are subject to a low risk of changes in value.



29

(i) Receivables Trade debtors are recognised at the nominal amounts due at the time of sale or service delivery. Settlement of these amounts is required within 30 days from statement date. The collectability of receivables is assessed periodically with a provision being made for impairment. All known bad debts were written-off as at 31 January. (j) Inventories Inventories held for sale are valued at the lower of cost and net realisable value. Cost is assigned on a weighted average basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition, except for training costs which are expensed as incurred. Net realisable value is determined on the basis of the IIB‘s normal selling pattern. Expenses associated with marketing, selling and distribution are deducted to determine net realisable value. The IIB conducts stocktakes throughout the reporting period. Where a stocktake is not conducted at the end of the reporting period, a provision for expected shrinkage is made based on previously achieved stocktake shrinkage results. Under current arrangements with suppliers, title to inventories passes to the IIB as soon as the inventories are dispatched from the supplier‘s warehouse. Accordingly, goods in transit have been brought to account as at 31 January 2012. (k) Non-Current Physical and Intangible Assets Cost is used for the initial recording of all non-current physical and intangible asset acquisitions. Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use, including architects' fees and engineering design fees. However, any training costs are expensed as incurred. Items of property, plant and equipment with a cost or other value equal to or in excess of the following thresholds are recognised for financial reporting purposes in the year of acquisition: Buildings and Infrastructure $10,000 Land $1 Other (including heritage & cultural) $5,000 Items with a lesser value are expensed in the year of acquisition. Land improvements undertaken by the IIB are included with Buildings. (l) Revaluations of Non-Current Physical Assets Land, buildings and infrastructure are measured at fair value, in accordance with AASB 116 Property, Plant and Equipment and Queensland Treasury‘s Non-Current Asset Accounting Policies for the Queensland Public Sector. In respect of these asset classes, the cost of items acquired during the financial year has been judged by management of the IIB to materially represent their fair value at the end of the reporting period. Plant and equipment are measured at cost. The carrying amounts for plant and equipment at cost should not materially differ from their fair value. Non-current physical assets measured at fair value are comprehensively revalued at least once every five years. These assets are constructed on leasehold Deed of Grant in Trust (‗DOGIT‘) land. In order to ensure that material movements in the value of non-current physical assets are identified between comprehensive revaluations, a suitable index is provided by a registered valuer if there has been significant movement in indexes that include but do not directly relate to the where the assets are located. Any material movement in the valuation since the most recent comprehensive revaluation is disclosed. Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus of the appropriate class, except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus relating to that class. On revaluation, accumulated depreciation is valued to nil and the carrying amounts are revalued to fair value. Separately identified components of assets are measured on the same basis as the assets to which they relate.



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(m) Amortisation and Depreciation of Intangibles and Property, Plant and Equipment Land is not depreciated as it has an unlimited useful life. Property, plant and equipment is depreciated on a straight-line basis so as to allocate the net cost or revalued amount of each asset, less its estimated residual value, progressively over its estimated useful life to the IIB. Assets under construction (work-in-progress) are not depreciated until they reach service delivery capacity. Where assets have separately identifiable components that are subject to regular replacement, these components are assigned useful lives distinct from the asset to which they relate and are depreciated accordingly. Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to the IIB. Major spares purchased specifically for particular assets are capitalised and depreciated on the same basis as the asset to which they relate. Class

Rate%

Buildings 2.5-25 Plant and equipment: 5-100 (n) Impairment of Non-Current Assets All non-current physical assets are assessed for indicators of impairment on an annual basis. If an indicator of possible impairment exists, the IIB determines the asset's recoverable amount. Any amount by which the asset's carrying amount exceeds the recoverable amount is recorded as an impairment loss. The asset's recoverable amount is determined as the higher of the asset's fair value less costs to sell and depreciated replacement cost. An impairment loss is recognised immediately in the Statement of Comprehensive Income, unless the asset is carried at a revalued amount. When the asset is measured at a revalued amount, the impairment loss is offset against the asset revaluation surplus of the relevant class to the extent available. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Refer also note 1(l). (o) Payables Trade creditors are recognised upon receipt of the goods or services ordered and are measured at the agreed purchase/contract price, gross of applicable trade and other discounts. Amounts owing are unsecured and are generally settled on 7 to 30 day terms. (p) Financial Instruments Recognition Financial assets and financial liabilities are recognised in the Statement of Financial Position when the statutory body becomes party to the contractual provisions of the financial instrument. Classification Financial instruments are classified and measured as follows:

- Cash and cash equivalents – held at fair value through the profit and loss - Receivables – held at amortised cost - Held to maturity investment – held at amortised cost - Payables – held at amortised cost - Borrowings – are held at amortised cost.

Borrowings are initially held at fair value, plus any transaction costs initially attributable to the borrowings, then subsequently held at the amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of a financial instrument (or, when appropriate, a shorter period) to the net carrying amount of that instrument.



31

The statutory body does not enter transactions for speculative purposes, nor for hedging. Apart from cash and cash equivalents, the statutory body holds no financial assets classified at fair value through profit and loss. All disclosures relating to the measurement basis and financial risk management of other financial instruments held by the statutory body are included in Note 21. (q) Employee Benefits Wages, Salaries, Recreation Leave and Personal Leave Wages, salaries and recreation leave due but unpaid at reporting date are recognised in the Statement of Financial Position at the remuneration rates expected to apply at the time of settlement. Payroll tax and workers‘ compensation insurance are a consequence of employing employees, but are not counted in an employee‘s total remuneration package. They are not employee benefits and are recognised separately. Employer superannuation contributions and long service leave are regarded as employee benefits. For unpaid benefits expected to be paid within 12 months, the liabilities are recognised at their undiscounted values. For those benefits not expected to be paid within 12 months, the liabilities are classified as non-current liabilities and recognised at their present value, calculated using yields on Fixed Rate Commonwealth Government bonds of similar maturity after projecting the remuneration rates expected to apply at the time of likely settlement. As personal leave is non-vesting, an expense is recognised for this leave as it is taken. Annual Leave Employee entitlements are accrued for annual leave in respect of services provided by employees up to the reporting date, having regard to remuneration rates, employment related on-costs and leave taken prior to the reporting date. Long Service Leave Long service leave benefits payable are assessed at balance date having regard to current employee remuneration rates, employment related on-costs and other factors including accumulated years of employment, future remuneration levels and experience of employee departure per year of service. Long service leave expected to be paid in the next 12 months is recorded as a current liability in the Statement of Financial Position at its nominal value. Long service leave expected to be paid later than one year has been measured at the present value of the estimated future cash flows to be made for these entitlements accrued to balance date and recorded as a non-current liability. Superannuation The default fund of the IIB is QSuper, the superannuation plan for Queensland Government employees. Employees have the right to choose to have their employer contributions paid to other qualifying funds and some employees have exercised this right. Contributions are expensed in the period in which they are paid or payable. The IIB's obligation is limited to the superannuation guarantee charge. Key executive management personnel and remuneration Key executive management personnel and remuneration disclosures are made in accordance with the section 5 Addendum (issued in May 2011) to the Financial Reporting Requirements for Queensland Government Agencies issued by Queensland Treasury. Refer to note 22 for the disclosures on key executive management personnel and remuneration. (r) Financing/Borrowing Costs Finance costs are recognised as an expense in the period in which they are incurred. Finance costs include: - Interest in bank overdrafts and short-term and long-term borrowings; - Finance lease charges; - Ancillary administration charges (s) Insurance The IIB‘s non-current physical assets and other risks are insured with premiums being paid on a risk assessment basis. In addition, the IIB pays premiums to WorkCover Queensland in respect of its obligations for employee compensation.



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(t) Taxation The IIB is a statutory body as defined under the Income Tax Assessment Act 1936 and is exempt from Commonwealth taxation with the exception of Fringe Benefits Tax and Goods and Services Tax (GST). As such, GST credits receivable from/payable to the ATO are recognised and accrued. (u) Issuance of Financial Statements The financial statements are authorised for issue by the Board and Chief Executive Officer at the date of signing the Management Certificate. (v) Judgments and Assumptions The preparation of financial statements necessarily requires the determination and use of certain critical accounting estimates, assumptions and management judgements that have the potential to cause material adjustment to the carrying amounts of assets and liabilities within the next financial year. Such estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods as relevant. Estimates and assumptions that have a potential significant effect are outlined in the following financial statement notes: Inventories – note 10 Valuation of Property, Plant and Equipment – note 12 Provisions – note 15 (w) Rounding and Comparatives Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where the amount is $500 or less, to zero, unless disclosure of the full amount is specifically required. Amounts shown in these financial statements may not add to the correct sub-totals or totals due to rounding. Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period. (x) New and Revised Accounting Standards The statutory body did not voluntarily change any of its accounting policies in 2011-12. The only Australian accounting standard amendments that are applicable for the first time for 2011-12 to the financial statements are AASB 3, 7, 121,128, 131, 132 and 139 as a consequence of AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project, AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2010-5 Amendments to Australian Accounting Standards. A number of the amendments are largely technical, clarifying particular terms, or eliminating unintended consequences. The adoption of these amendments has not resulted in any changes to the Statutory Body‘s accounting policies and have no effect on the amounts reported for the current or prior periods. The statutory body is not permitted to early adopt a new or amended accounting standard ahead of the specified commencement date unless approval is obtained from the Treasury Department. Consequently, the Statutory Body has not applied any Australian accounting standards and interpretations that have been issued but are not yet effective. The statutory body applies standards and interpretations in accordance with their respective commencement dates. (y) Provisions Provisions are recorded when the statutory body has a present obligation, either legal or constructive as a result of a past event. They are recognised at the amount expected at the reporting date for which the obligation will be settled in a future period. Where the settlement of the obligation is expected after 12 or more months, the obligation is discounted to the present value using an appropriate discount rate. The amounts recognised as provisions in relation to the dismantling and removal of assets and the restoration of land on which the assets have been located, have been included in the cost of the assets.



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2012 2011 $’000 $’000 2. Revenue (a) Operating Activities

Sale of goods 34,698 31,696

Rebates 358 392

Commissions received – Island receipts system 197 178

Other revenue 252 178

Total 35,505 32,444

(b) Other Revenues

Interest 136 271

Grants 149 452

Property rental 129 56

Total 414 779

On 23 January 2012, the IIB entered into a Capital Grant Agreement with the Department of Communities to construct a retail store and associated staff accommodation on Saibai Island. The amount of the grant is $1.98M inclusive of GST and construction of the facility is expected to commence in mid-2012 and be completed prior to 31 December 2012. No expenditure has been incurred or funds received in the reporting period in relation to the grant.



34

2012 2011 $’000 $’000 3. Administration Expenses

Auditors remuneration 79 68

Bank fees and charges 69 75

Board meeting expenses 37 77

Cash shortages 0 19

Consultants 15 37

Employee recruitment/training/relocation expenses 47 174

Employee uniforms 11 21

Freight 4 9

Legal fees 31 23

Postage 3 2

Stationery 71 74

Telephone and communications 321 283

Travel expenses 605 526

Total Administration expenses 1,293 1,388

4. Employee Expenses

Wages and salaries 4,961 4,770

Employer superannuation contributions 438 413

Payroll tax 287 270

Employee Incentives 88 44

Fringe Benefits Tax 10 28

Staff amenities 41 51

Total 5,825 5,576

Remuneration of Board Members Board Members Payments in respect of attendance of Meetings 27 38 Payments in respect of special assignments 10 34

Total Payments to Board Members 37 72

Board Members whose income was within the following bands: Earnings in the range $0 - $5,000 1 - Earnings in the range $5,001 - $10,000 1 3 Earnings in the range $10,001 - $15,000 2 - Earnings in the range $15,001 - $ 20,000 - - Earnings in the range $20,001 - $ 25,000 - 2 Earnings in the range $25,001 - $ 30,000 - - The number of employees including both full-time employees and part-time employees measured on a full-time equivalent basis is: Number of Employees 2012 - 99 2011 - 91



35

2012 2011 $’000 $’000 5. Depreciation and Amortisation

Depreciation and amortisation were incurred in respect of:

Buildings and land improvements at cost 32 668

Buildings and land improvements at valuation 826 2

Plant and equipment 565 429

Total 1,423 1,099

6. Finance/Borrowings Costs

Finance charges: leases 91 77

Total 91 77

The IIB does not capitalise finance/borrowings costs. 7. Other Operating Expenses

Advertising 39 65

Conference costs 19 15

Donations 13 3

Electricity 653 682

Equipment hire 7 14

Insurance 203 189

Licences & fees 43 37

Loss on sale of plant and equipment 11 0

Rates 80 74

Rent 108 112

Repairs and maintenance 530 555

Security 33 22

Sundry expenses 15 23

Trade expenses 146 118

Vehicle operating expenses 23 38

Wrapping 70 62

Total 1,993 2,009

8. Cash and cash equivalents

Cash at bank and on hand 1,336 1,515

QTC working capital facility 213 204

QTC cash fund 1,671 3,016

Total 3,220 4,735

Cash deposited with the Queensland Treasury Corporation earned interest at rates of 4.65% (2011: 4.75%) on the working capital facility and 5.26% (2011: 5.57%) on the cash fund.



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2012 2011 $’000 $’000 9. Receivables

Trade debtors 141 88

Less: Provision for impairment (9) (9)

132 79

GST receivable 129 151

GST payable (153) (120)

Other 95 181

Total 203 291

10. Inventories

Inventories on hand 2,274 1,626

Inventories in transit 432 538

Total 2,706 2,164

11. Other Current Assets Prepayments 31 42

Total 31 42



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2012 2011

$’000 $’000

12. Property, Plant and Equipment

Land:

At independent valuation (2011) 5,245 5,245

Buildings:

At cost 2,745 -

Less: Accumulated depreciation (32) -

2,713 -

At independent valuation (2011) 14,769 14,769

Less: Accumulated depreciation (827) (1)

13,942 14,768

Total Buildings 16,655 14,768

Plant and equipment:

At cost 6,899 6,411

Less: Accumulated depreciation (4,436) (3,871)

2,463 2,540

Work in progress 160 561

Total 24,523 23,114

Plant and equipment is valued at cost in accordance with Queensland Treasury‘s Non-Current Asset Accounting Policies for the Queensland Public Sector. The IIB has a crown free holding lease agreement with the Department of Environment and Resource Management for the slipway land located at 15 Douglas Street, Thursday Island which will expire on 01/01/ 2032. It is a term of the lease that at any point during the lease term the IIB can pay the outstanding balance and unconditionally obtain freehold title to the land. Other than non-payment of the lease, there are no circumstances that can arise that would result in the IIB not being granted freehold title and as such the land is valued at fair value. Details of the crown free holding lease commitment are disclosed in Note 19.



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12. Property, Plant and Equipment Reconciliation

Land Buildings Plant & Equipment Work in progress Total

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

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

Carrying amount at 1 February 5,245 4,000 14,768 13,383 2,540 1,866 561 204 23,114 19,453

Acquisitions - - - - - - 2,852 5,076 2,852 5,076

Transfers between classes - - 2,745 3,616 508 1,103 (3,253) (4,719) - -

Disposals - - - - (20) - - - (20) -

Impairment losses charged to reserves - - (810) - - - - (810)

Revaluation 1,245 (751) - - - - 494

Depreciation/Amortisation - - (858) (670) (565) (429) - - (1,423) (1,099)

Carrying amount at 31 January 5,245 5,245 16,655 14,768 2,463 2,540 160 561 24,523 23,114

The Board‘s buildings that are constructed on leasehold Deed of Grant in Trust (DOGIT) land are held in trust by the Torres Strait Island Regional Council for the benefit of the peoples of the Torres Strait. Tenure to the various parcels of land is secured by way of a trustee lease from the Torres Strait Island Regional Council for a periods of ten (10) or thirty (30) years. Under Section 61 of the Land Act 1994, the trustee lease must not contain a covenant, agreement or condition to review the lease. All trustee leases are subject to the approval of the Minister for Natural Resources, Mines and Energy (―the Minister‖). When a lease is due to expire, the Torres Strait Island Regional Council and the Board may negotiate a new lease and approach the Minister for approval of the new lease. Such approval is not expected to be unreasonably withheld, provided the current lease has been complied with and the proposed lease was in accordance with the Land Act 1994. Of the thirteen stores constructed on DOGIT land, five stores have had 30 year trustee leases successfully negotiated. The remaining eight stores are in advanced stages of lease renegotiation. Three stores have leases expiring on 1 April 2012, two stores have leases that expired on 1 February 2012 and three stores have no previously existing native title lease in place. The Board has plant and equipment with an original cost of $2,375,558 that has been written down to a residual value of nil still being used in the provision of services. 40 percent of these assets with a gross cost of $950,223 are expected to be replaced in 2012/13 with the remaining 60% to be replaced in the 2013-14 year. At 31 January 2011 professional valuations of the land and buildings were undertaken by Neil Teeves, Registered Valuer (number 382) of Asset Advance, Regional Investment Consultants in accordance with AASB116 ―Property, Plant and Equipment‖. Land was valued at market value and Buildings were valued at depreciated current replacement cost.


2012 2011 $’000 $’000 13. Payables

Trade creditors 2,301 2,201

Sundry creditors and accruals 415 461

Annual leave 296 240

Money transfers in transit 5 5

Total 3,017 2,907

14. Other Financial Liabilities Current

Finance Lease Liability (see Note 21) 18 19

Total 18 19

Non-Current

Finance Lease liability (see Note 21) 943 959

Total 943 959

During the reporting period, The Department of Environment and Resource Management (DERM) made changes to Section 52 1 (b) of the Land Regulation 2009 whereby the principal and interest repayments are made annually in arrears at the Suncorp-Metway business banking variable lending base rate as at 1 July of the annual billing period. The interest rate applicable to the 2011 billing period was 9.34%. Interest on finance leases is amortised as an expense as it accrues. No assets have been pledged as security for any liabilities. 15. Provisions Current

Long Service Leave 100 109

Total 100 109

Non-Current

Long Service Leave 50 64

Total 50 64

Movements in provisions

Long Service Leave

Balance at 1 February 173 205

Additional provision recognised 10 (17)

Reduction in provision as a result of payments (33) (15)

Balance at 31 January 150 173



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16. Asset Revaluation Surplus by Class Land

Buildings Total

Balance 1 February 2011 2,693 9,283 11,976

Revaluation increments - - -

Revaluation decrements - - -

Impairment losses through equity

- - -

Balance 31 January 2012 2,693 9,283 11,976

Land

Buildings Total

Balance 1 February 2010 1,448 10,844 12,292

Revaluation increments 1,245 - 1,245

Revaluation decrements - (751) (751)

Impairment losses through equity

- (810) (810)

Balance 31 January 2011 2,693 9,283 11,976

The asset revaluation surplus represents the net effect of upwards and downwards revaluations of assets to fair value. 17. Statement of cash flows – disclosures 2012 2011 $’000 $’000 (a) Cash at the end of the year, as shown in the statement of cash flows Cash assets 3,220 4,735

Total 3,220 4,735

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

Operating surplus/(deficit) 267 895

Depreciation and Amortisation expense 1,423 1,099

Loss (profit) on sale of property, plant and equipment 11 0

Change in assets and liabilities:

(Increase)/decrease in trade receivables (53) (44)

(Increase)/decrease in GST input tax credits receivable 22 8

(Increase)/decrease in other receivables 86 (109)

(Increase)/decrease in inventories (542) (505)

(Increase)/decrease in prepayments/other 11 (17)

(Increase)/decrease in capital work in progress 401 (358)

Increase/(decrease) in accounts payable 114 679

Increase/(decrease) in Provisions (23) (32)

Increase/(decrease) in GST payable 33 10

Net cash provided by (used in) operating activities 1,750 1,626



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2012 2011 $’000 $’000 18. Non-Cash Financing and Investing Activities

Assets and liabilities received or donated/transferred by the IIB are recognised as revenues and expenses. 19. Commitments for Expenditure (a) Free Holding Lease Liabilities

Lease liabilities recognised in the Statement of Financial Position

Current 18 19

Non-Current 943 959

Total 961 978

Commitments under finance leases at reporting date are inclusive of anticipated GST and are payable as follows: Not later than one year 107 106

Later than one year and not later than five years 428 424

Later than five years 1,604 1,695

2,139 2,225

Less: Future finance charge (1,178) (1,247)

Total 961 978

A crown free holding lease has been entered into as a means of funding the acquisition of land on Thursday Island. Lease payments are fixed. The crown free holding lease has a purchase option. No Lease arrangements create restrictions on other financing transactions. (b) Non-Cancellable Operating Lease

Commitments under operating leases at the reporting date are inclusive of anticipated GST and are payable as follows:

Not later than one year 109 104

Later than one year and not later than five years 275 384

Later than five years 0 0

Total 384 488

Operating leases are entered into as a means of acquiring access to office accommodation and security monitoring services. Lease payments are fixed, but with inflation escalation clauses on which renewal rental figures will be determined. (c) Capital Expenditure Commitments

Material classes of capital expenditure commitments inclusive of anticipated GST, contracted for at reporting date but not recognised in the accounts are payable as follows:

Buildings

Payable:

Not later than one year 2,289 -

Later than one year and not later than five years - -

Later than five years - -

Total 2,289 0

20. Contingencies The Board is unaware of any material or significant contingent liabilities as at balance date. All known liabilities have been provided for in these statements.



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21. Financial Instruments (a) Categorisation of Financial Instruments The statutory body has the following categories of financial assets and financial liabilities:

2012 2011

Category Note $'000 $'000

Financial Assets



Total 3,423 5,026

Financial Liabilities

Finance lease liabilities 14 961 978

Payables 13 2,721 2,667

Total

3,682 3,645

(b) Financial Risk Management IIB‘s activities expose it to a variety of financial risks – interest rate risk, credit risk, liquidity risk and market risk. Financial risk management is implemented pursuant to Government and IIB policy. The policies focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the financial performance of the IIB. All financial risk is managed by the administration office under policies approved by the IIB. The IIB provides written principles for overall risk management as well as policies covering specific areas. IIB measures risk exposure using a variety of methods as follows –

Risk Exposure Measurement Method

Credit risk Aging analysis

Liquidity risk Sensitivity analysis

Market risk Interest rate sensitivity analysis

(c) Credit Risk Exposure Credit risk exposure refers to the situation where the Statutory Body may incur financial loss as a result of another party to a financial instrument failing to discharge their obligation. The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any provisions for impairment . No significant concentration of credit risks have been identified, as exposure is mostly confined to State and Federal government departments, Councils and organisations receiving State and Federal government funding. The following table represents the Statutory Body‘s maximum risk exposure to credit risk based on contractual amount s

2012 2011

Category Note $'000 $'000

Financial Assets



Total 3,423 5,026



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21. Financial Instruments (cont’d) (c ) Credit Risk Exposure (cont’d) Financial Assets No collateral is held as security and no credit enhancements relate to the assets held by the Statutory Body. The Statutory Body manages credit risk through the use of a credit management strategy. This strategy aims to reduce the exposure to credit default by ensuring that the Statutory Body invests in secure assets and monitors all funds owed on a timely basis. Exposure to credit risk is monitored on an ongoing basis. No financial assets and financial liabilities have been offset and presented net in the Statement of Financial Position. The method of calculating any allowance for impairment is based on past experience and current and expected changes in economic conditions. No loss events affected the current calculation of provisions. No financial assets have had their terms renegotiated so as to prevent them from being past due or impaired, and are stated at the carrying amounts as indicated. Aging of past due but not impaired as well as impaired assets is disclosed in the following tables: 2012 Financial Assets Past Due But Not Impaired Overdue Less than

30 days 30-60 days 61-90 days More than 90 Days Total

$‘000 $‘000 $‘000 $‘000 $‘000 Receivables 14 31 - 5 50

Total 14 31 - 5 50

2011 Financial Assets Past Due But Not Impaired Overdue Less than


$‘000 $‘000 $‘000 $‘000 $‘000 Receivables 21 12 - 10 43

Total 21 12 - 10 43

2012 Individually Impaired Financial Assets Overdue Less than


$‘000 $‘000 $‘000 $‘000 $‘000 Receivables (gross) - 9 - 4 13 Allowance for Impairment (7) (2) (9)

Carrying Amount - 2 - 2 4

2011 Individually Impaired Financial Assets Overdue Less than


$‘000 $‘000 $‘000 $‘000 $‘000 Receivables (gross) - 7 - 6 13 Allowance for Impairment (5) (4) (9)

Carrying Amount - 2 - 2 4



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21. Financial Instruments (cont’d) (d ) Liquidity Risk The IIB manages liquidity risk through the use of a Liquidity Management Strategy. This strategy aims to reduce the exposure to liquidity risk by ensuring the IIB has sufficient funds available to meet employee and supplier obligations at all times. This is achieved by holding surplus cash in a working capital facility with Queensland Treasury Corporation offering real time global settlement. The following table sets out the liquidity risk of financial liabilities held by the IIB. It represents the contractual maturity of financial liabilities, calculated based on cash flows relating to the repayment of the principal amount outstanding at balance date.

2012 Payable in

1 year or less

1 to 5 years

Greater than 5 years

Total

Note $'000 $'000 $'000 $'000

Finance lease liabilities 14 18 92 851 961

Payables 13 2,721 2,721

Total

2,739 92 851 3,682

2011 Payable in

1 year or less

1 to 5 years

Greater than 5 years

Total

Note $'000 $'000 $'000 $'000

Finance lease liabilities 14 17 85 876 978

Payables 13 2,667 2,667

Total

2,684 85 876 3,645

(e) Market Risk The IIB is exposed to interest rate risk through its cash deposited in interest bearing accounts. The IIB does not undertake any hedging in relation to interest risk and manages its risk as per the liquidity risk management strategy. Interest Rate Sensitivity Analysis The following interest rate sensitivity analysis is based on a report similar to that which would be provided to management, depicting the outcome to profit and loss if interest rates would change by +/- 1% from the year end rates applicable to the Statutory Body‘s financial assets and liabilities. With all other variables held constant, the Statutory Body would have a surplus and equity increase/(decrease) of $9,000 (2011: $22,000). This is mainly attributable to the Statutory Body‘s exposure to variable interest rates on its funds held at Queensland Treasury Corporation.

Carrying 2012 Interest rate risk

Financial Instruments Amount -1% +1%

Profit Equity Profit Equity

$'000 $'000 $'000 $'000 $'000

QTC working capital facility 213 (2) (2) 2 2

QTC cash fund 1,671 (17) (17) 17 17

Finance lease liabilities 961 10 10 (10) (10)

Overall effect on profit and equity (9) (9) 9 9

The Statutory Body‘s sensitivity to interest has decreased in the current period due to decreased grant proceeds held at Queensland Treasury Corporation.



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21. Financial Instruments (cont’d) (e) Market Risk (cont’d)

Carrying 2011 Interest rate risk

Financial Instruments Amount -1% +1%

Profit Equity Profit Equity

$'000 $'000 $'000 $'000 $'000

QTC working capital facility 204 (2) (2) 2 2

QTC cash fund 3,016 (30) (30) 30 30

Finance lease liabilities 978 10 10 (10) (10)

Overall effect on profit and equity (22) (22) 22 22

Fair Value The fair value of financial assets and liabilities is determined as follows: - The carrying amount of cash, cash equivalents, receivables, payables and the lease liability approximate their fair value

and are not disclosed separately. The carrying amounts of all financial assets and financial liabilities are representative of their fair value.

22. Key executive management personnel and remuneration

(a) Key executive management personnel The following details for key executive management personnel include those positions that had authority and responsibility for planning, directing and controlling the activities of the statutory body during 2011-12.

Position Responsibilities

Current Incumbents

Date appointed to position (Date resigned from position)

Chief Executive Officer The Chief Executive Officer provides strategic leadership of the statutory body‘s service delivery and is responsible for the efficient, effective and economic administration of the statutory body.

Appointed 1 July 2009

Chief Finance Officer The Chief Finance Officer provides strategic leadership and direction for the financial administration of the statutory body.

Appointed 3 January 2006

Chief Information Officer The Chief Information Officer provides strategic leadership and management of the statutory body‘s information, communication and technology systems.

Appointed 18 April 2007

Retail Operations Manager The Retail Operations Manager provides strategic leadership and management of the statutory body‘s retail service deliver y.

Appointed 10 October 2010

Human Resources Manager The Human Resources manager provides strategic leadership and management of the statutory body‘s human capital and human resources systems.

Appointed 1 March 2010

Supply Chain Manager The Supply Chain Manager provides strategic leadership and management of the statutory body‘s inventory supply chain.

Appointed 15 March 2010

All key executive management personnel are appointed under common law employment contracts.

(b) Remuneration



46

Remuneration policy for the Statutory Body‘s key executive management personnel is set by the IIB Employment and Training Committee in conjunction with the IIB CEO. The remuneration and other terms of employment for the key executive management personnel are specified in employment contracts. The contracts provide for the provision of performance-related cash bonuses. 22. Key executive management personnel and remuneration (cont’d) For the 2011-12 year, remuneration of key executive management personnel increased by between 4% and 9.5% in accordance with the decision of the IIB Employment and Training Committee. Remuneration packages for key executive management personnel comprise the following components: Short term employee benefits which include: Base – consisting of base salary, allowances and leave entitlements paid and provided for the entire year or for that part of the year during which the employee occupied the specified position. Amounts disclosed equal the amount expensed in the Statement of Comprehensive Income. Non-monetary benefits – consisting of provision of vehicle together with fringe benefits tax applicable to the benefit. Long term employee benefits include long service leave accrued. Post employment benefits include superannuation contributions Redundancy payments are not provided for within individual contracts of employment. Contracts of employment provide on for notice periods or payment in lieu of notice on termination, regardless of the reason for termination. Performance bonuses may be paid or payable annually depending on satisfaction of key criteria. Amounts are agreed by the IIB Employment and Training Committee in conjunction with the IIB CEO. Total fixed remuneration is calculated on a ‗total cost‘ basis and includes the base and non-monetary benefits, long term employee benefits and post employment benefits. 1 February 2011 – 31 January 2012

Position (date resigned if applicable)

Short Term Employee Benefits

Long Term Employee Benefits

Post Employment

Benefits

Termination Benefits

Total Remuneration

Base

$’000

Non-Monetary Benefits

$’000

$’000

$’000

$,000

$’000

Chief Executive Officer (1Feb 2011-31 Jan 2012)

234 - 5 21 - 260

Chief Finance Officer (1Feb 2011-31 Jan 2012)

169 - 4 14 - 187

Chief Information Officer (1Feb 2011-31 Jan 2012)

112 - 3 10 - 125

Retail Operations Manager (10 Oct 2011-31 Jan 2012)

33 - 1 3 - 37

Human Resources Manager (1Feb 2011-31 Jan 2012)

105 - 2 9 - 116

Supply Chain Manager (1Feb 2011-31 Jan 2012)

118 - 2 10 - 130

Total Remuneration

771 - 17 67 - 855



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22. Key executive management personnel and remuneration (cont’d) 1 February 2010 – 31 January 2011

Position (date resigned if applicable)

Short Term Employee Benefits

Long Term Employee Benefits

Post Employment

Benefits

Termination

Benefits Total

Remuneration

Base

$’000

Non-Monetary Benefits

$’000

$’000

$’000

$,000

$’000

Chief Executive Officer (1Feb 2010-31 Jan 2011)

221 - 5 17 243

Chief Finance Officer (1Feb 2010-31 Jan 2011)

149 - 2 14 165

Chief Information Officer (1Feb 2010-31 Jan 2011)

93 - 2 9 104

Retail Operations Manager (21 Jun 2010-28 Jan 2011)

44 - - 4 48

Human Resources Manager (1Mar 2010-31 Jan 2011)

69 - 1 6 76

Supply Chain Manager (15 Mar 2010-31 Jan 2011)

91 - 1 8 100

Total Remuneration

667 - 11 58 736

( c) Performance Payments

The basis for performance bonuses paid or payable in the 2011-12 financial year is set out below:

Position Date Paid Basis for payment

Chief Executive Officer 21 March 2011 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Chief Finance Officer 21 March 2011 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Chief Information Officer 21 March 2011 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Human Resources Manager 21 March 2011 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.



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22. Key executive management personnel and remuneration (cont’d) The basis for performance bonuses paid or payable in the 2010-11 financial year is set out below:

Position Date Paid Basis for payment

Chief Executive Officer 24 Dec 2010 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Chief Finance Officer 24 Dec 2010 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Chief Information Officer 24 Dec 2010 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Human Resources Manager 24 Dec 2010 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

Supply Chain Manager 24 Dec 2010 The cash performance bonus was calculated by reference to achievement of key strategic plan deliverables and individual performance in their area of operation.

The aggregate performance bonuses paid to all key executive management personnel are as follows: 2012 2011 $’000 $’000 Key Executive Management Personnel 31 39

23. Events occurring after Balance Date No other event occurred after the balance date that has the potential to significantly affect the ongoing structure and financial activities of the IIB.

CERTIFICATE OF ISLAND INDUSTRIES BOARD


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INDEPENDENT AUDITOR’S REPORT


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