Dear Minister

20. Other transactions with director or director related entities

Mr Ian Trust is a director of Wunan Foundation Inc. The ILC procured services from Wunan Foundation Inc to the value of $3,527 during the financial year (2010: $nil).

Mr Ian Trust is also a Committee member of Kimberley Group Training Incorporated (KGT). The Corporation is the host employer for Indigenous trainees sourced through KGT. The Corporation reimbursed KGT for the cost of the trainees of $171,446 (2010: $244,191). Mr Trust took no part in the relevant decision.

	Consol 2011 $	Consol 2010 $	ILC 2011 $	ILC 2010 $
21. enior Executive remuneration
21A. enior Executive remuneration expense for the reporting period
Short-term employee benefits:
Salary (including leave taken)	2,251,809	1,692,218	1,567,044	1,528,077
Annual leave accrued	43,816	(746)	25,626	(13,291)
Motor vehicle and other allowances	343,104	258,286	343,104	254,629
Total short-term employee benefits	2,638,729	1,949,758	1,935,774	1,769,415
Post-employment benefits:
Superannuation	300,745	257,928	240,395	243,156
Total post-employment benefits	300,745	257,928	240,395	243,156
Other long-term benefits:
Long service leave	94,576	(44,735)	85,774	(46,596)
Total other long-term benefits	94,576	(44,735)	85,774	(46,596)
Total	3,034,050	2,162,951	2,261,943	1,965,975

During the year, the Corporation paid $nil in separation and redundancy benefits to senior executives (2010: $86,349)

Senior Executive remuneration expense for the reporting period was prepared on an accrual basis and excludes acting arrangements and part year service where remuneration expenses was less than $150,000.

21B. Average annual remuneration packages and bonus paid for substantial Senior Executives as at the end of the reporting period

As at 30 June 2011
	Consolidated	ILC
Fixed Elements and Bonus Paid	Senior Executives No.	Salary	Allowance	Total	Bonus paid	Senior Executives No.	Salary	Allowance	Total	Bonus paid
	$	$	$	$	$	$	$	$	$	$
Total remuneration (including part-time arrangements)
$150,000 to $179,999	6	152,732	25,000	177,732	–	4	146,561	25,000	171,561	–
$180,000 to $209,999	1	174,720	25,000	199,720	–	1	174,720	25,000	199,720	–
$210,000 to $239,999	6	203,875	25,000	228,875	–	5	203,893	25,000	228,983	–
$480,000 to $509,999	1	484,801	–	484,801	–	–	–	–	–	–
Total	14					10
As at 30 June 2010
	Consolidated	ILC
Fixed Elements and Bonus Paid	Senior Executives No.	Salary	Allowance	Total	Bonus paid	Senior Executives No.	Salary	Allowance	Total	Bonus paid
	$	$	$	$	$	$	$	$	$	$
	Consolidated					ILC
Total remuneration (including part-time arrangements)
$150,000 to $179,999	5	140,255	25,000	165,255	–	4	132,781	25,000	157,781	–
$180,000 to $209,999	5	156,750	25,000	181,750	–	5	156,750	25,000	181,750	–
$210,000 to $239,999	1	230,465	–	230,465	–	1	230,465	–	230,465	–
Total	11					10

21B. Average annual remuneration packages and bonus paid for substantial Senior Executives as at the end of the reporting period (cont..)

This table reports substantive senior executives who were employed by the entity at the end of the reporting period. Fixed elements were based on the employment agreement of each individual. Each row represents 
an average annualised figure (based on head count) for the individuals in that remuneration band.

Variable elements not included in the above table include superannuation, leave entitlements, car parking and other corporate incentives provided on a reimbursement basis. Two senior executives are entitled to bonuses to a maximum of 15% of his/her base salary. No bonuses were paid during the reporting period.

On average, senior executives were entitled to the following leave benefits; annual leave 20 days per year accumulative, personal leave 18 days per year accrued on the anniversary of service and long services leave 
in accordance with Long Service Leave (Commonwealth Employees) Act 1976 or equivalent state acts.

Salary sacrifice arrangements were available to senior executives.

21C. ther highly paid staff
During the reporting period, there was one employee (2010: nil employees) whose salary plus employment bonuses was $150,000 or more. This was calculated by reference to the gross payment line of the payment summary. This employee did not have a role as a Senior Executive and therefore was not disclosed as a Senior Executives in note 21A and 21B.
	Consol 2011 $,000	Consol 2010 $,000	ILC 2011 $,000	ILC 2010 $,000
22. emuneration of auditors
Remuneration to the Auditor General:
Financial statement audits	157	97	98	97
Other assurance services	7	2	7	2
Total remuneration of auditors	164	99	105	99
	Consol 2011 $,000	Consol 2010 $,000	ILC 2011 $,000	ILC 2010 $,000
23. inancial instruments
23A. Categories of financial instruments
Financial Assets
Fair value through profit and loss
Equities	–	1	–	1
Held-to-maturity investments
Term deposits	25,000	24,986	25,000	24,986
Loans and receivables
Cash	9,511	3,009	2,063	2,650
Receivables	9,898	3,629	3,916	3,523
Other deposits	50,488	129,705	50,488	129,705
Repayable grants / advances	582	746	301,564	2,252
Other receivables	21,224	–	21,224	–
Carrying amount of financial assets	116,703	162,076	404,255	163,117
Financial Liabilities
Financial liabilities measured at amortised cost
Supplier payables	14,231	5,049	8,491	4,621
Other payables	13,498	723	12,893	683
Interest bearing loans	220,520	–	220,520	–
Carrying amount of financial liabilities	248,249	5,772	241,904	5,304
	Consol 2011 $,000	Consol 2010 $,000	ILC 2011 $,000	ILC 2010 $,000
23B. et income and expenses from financial assets
Held-to-maturity investments – interest received
Amortising notes with major banks	–	9,087	–	9,087
Term deposits	5,953	773	5,953	773
	5,953	9,860	5,953	9,860
Loans and receivables – interest received
Cash	287	107	248	107
Other deposits	1,541	1,252	1,541	1,252
Repayable grants/advances	11	16	11	16
	1,839	1,375	1,800	1,375
Loans and receivables – impairment movement
Repayable grants/advances	(91)	(489)	(91)	(489)
Net income from financial assets	7,701	10,746	7,662	10,746
23C. et income and expenses from financial liabilities
Financial liabilities measured at amortised cost
Suppliers	–	–	–	–
Other payables	–	–	–	–
Interest bearing loans	1,520	–	1,520	–
Net income from financial liabilities	1,520	–	1,520	–
	Total Carrying Amount	Aggregate Net Fair Value	Total Carrying Amount	Aggregate Net Fair Value
	2011	2011	2010	2010
	$,000	$,000	$,000	$,000
23D. et fair value of financial assets and liabilities (consolidated)
Financial Assets
Cash	9,511	9,511	3,009	3,009
Receivables	9,898	9,898	3,629	3,629
Other deposits	50,488	50,488	129,705	129,705
Other receivables	21,224	21,224	–	–
Equities	–	–	1	1
Term deposits	25,000	25,000	24,986	24,986
Repayable grants / advances	582	582	746	746
Total financial assets	116,703	116,703	162,076	162,076
Financial Liabilities
Suppliers	14,231	14,231	5,049	5,049
Other payables	13,498	13,498	723	723
Interest bearing loans	220,520	220,520	–	–
Total financial liabilities	248,249	248,249	5,772	5,772
Financial Liabilities (Unrecognised)
Other guarantees	–	–	–	–
Total financial liabilities (unrecognised)	–	–	–	–
The net fair values of cash, deposits on call and non-interest-bearing monetary financial assets approximate their carrying amount. The net fair values of loans receivable and other deposits are based on discounted cash flows using current interest rates. Repayable grants / advances are carried at amortised cost, which estimates their net fair value, because it is intended to hold them to maturity. The net fair value of guarantees are based on discounted cash flows using current interest rates for the liabilities. The net fair value for supplier and other payables are approximated by their carrying amounts.
23E. inancial risk management objectives and policies
The Corporation’s principal financial instruments comprise receivables, payables, repayable grants, cash and short-term deposits. The Corporation manages its exposure to financial risks, in accordance with written policies. The objective of the policies are to maximise the income to the ILC while minimising the downside risk. The Corporation’s activities expose it to normal commercial financial risk. The main risks arising from the Corporations financial instruments are market risk, interest rate risk, price risk, credit risk and liquidity risk. Risks are considered to be low. Primary responsibility for the identification and control of financial risks rests with the Audit and Risk Management Committee under the authority of the ILC Board.
Risk exposures and responses
Market risk The Corporation’s exposure to market risk is through its investment portfolio. Investments are disclosed in note 9C. The Corporation minimises its exposure to market risk by placing the majority of its investment funds in fixed-rate term deposits with major banks, with the remainder being held on short-term deposits with major banks This also considerably diminished its interest rate risk. Price risk The Corporation also has exposure to commodity price risk through the holding of biological asset produce. The Corporation does not hedge this risk. Interest rate risk Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Corporation is exposed to interest rate risk primarily from cash and short term deposits. The Corporation’s policy is to manage its financial assets and liabilities with a mix of fixed rate and variable rate products. Cash, short-term deposits utilise variable rates. As at balance date, the Corporation had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk.
	Consol 2011 $,000	Consol 2010 $,000	ILC 2011 $,000	ILC 2010 $,000
Financial Assets
Cash	9,511	3,078	2,063	2,650
Other deposits	50,488	129,705	50,488	129,705
Term deposits	25,000	24,986	25,000	24,986
	84,999	157,769	77,551	157,341
23E. inancial risk management objectives and policies (cont..) The table below details the interest rate sensitivity analysis of the entity at the reporting date, holding all other variables constant. A 150 basis point change is deemed to be reasonably possible and is used when reporting interest rate risk.
The method used to arrive at the possible risk of 150 basis points was based on both statistical and non-statistical analysis. The statistical analysis has been based on the cash rate for the past five years issued by the Reserve Bank of Australia (RBA) as the underlying dataset. This information is then revised and adjusted for reasonableness under the current economic circumstances.
23E. inancial risk management objectives and policies (cont..)
Credit risk Credit risk arises from the financial assets of the Corporation, which comprise cash, deposits, trade and other receivables and repayable grants. The exposure to credit risk arises from the potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note. The Corporation has a significant concentration to credit risk through its cash and deposits. The concentration is with major banks in Australia. The Corporation ensures that this concentration is managed by the exposure not all being with one particular bank and by utilising banks with high credit ratings. Receivables and repayable grant balances are monitored on an ongoing basis with the result that the Corporation’s exposure to bad debts is not significant. Credit risk of receivables and repayable grants not past due or individually determined as impaired:
	Not Past Due or Impaired	Not Past Due or Impaired	Past Due or Impaired	Past Due or Impaired
	2011	2010	2011	2010
	$,000	$,000	$,000	$,000
Consolidated
Receivables	8,385	3,433	1,572	341
Repayable grants / advances	525	689	323	746
Other receivables	21,224	–	–	–
	30,134	4,122	1,895	1,087
ILC
Receivables	4,726	3,336	712	332
Repayable grants / advances	310,323	2,195	323	746
Other receivables	21,224	–	–	–
	336,273	5,531	1,035	1,078
Repayable grants that are past due but not impaired $57,000 (2010: $57,000).
Ageing of receivables and repayable grants/advances that are past due but not impaired for 2011:

			Effect on	Effect on
			Profit or loss	Equity	Profit or loss	Equity
	Risk	Change in	2011	2011	2010	2010
	variable	variable	$,000	$,000	$,000	$,000
Consolidated
Interest rate risk	Interest	+1.5%	1,275	1,275	2,366	2,366
		–1.5%	(1,275)	(1,275)	(2,366)	(2,366)
ILC
Interest rate risk	Interest	+1.5%	1,163	1,163	2,360	2,360
		–1.5%	(1,163)	(1,163)	(2,360)	(2,360)

	0–30 Days	31–60 days	61–90 days	90+ days	Total
	$,000	$,000	$,000	$,000	$,000
Receivables and repayable grants/advances	961	398	4	213	1,576
Ageing of receivables and repayable grants/advances that are past due but not impaired for 2010:
	0–30 Days	31–60 days	61–90 days	90+ days	Total
	$,000	$,000	$,000	$,000	$,000
Receivables and repayable grants/advances	–	40	27	185	252

23E. inancial risk management objectives and policies (cont..)

Liquidity risk

The Corporation also reduces its exposure to liquidity risk by monitoring its cash flows closely through rolling future cash flows and monitoring the ageing of receivables and payables.

Maturity of financial liabilities as at 30 June 2011:

	On Demand	Within 1 year	1–5 Years	>5 Years	Total
	$,000	$,000	$,000	$,000	$,000
Supplier payables	–	14,231	–	–	14,231
Other payables	–	945	1	12,552	13,498
Interest bearing loans	–	82,520	138,000	–	220,520
Total	–	97,696	138,001	12,552	248,249

Maturity of financial liabilities as at 30 June 2010:

	On Demand	Within 1 year	1–5 Years	>5 Years	Total
	$,000	$,000	$,000	$,000	$,000
Supplier payables	–	5,049	–	–	5,049
Other payables	–	613	110	–	723
Total	–	5,662	110	–	5,772