Reserve Bank of Australia Annual Report – 2013 Financial Statements Note 7 – Loans, Advances and Other Assets

In February 2013, the RBA completed the sale of its 50 per cent shareholding in Securency (now Innovia Security Pty Ltd) to a related entity of Innovia Films, a UK-based film manufacturer and the owner of the remaining 50 per cent shareholding in Securency.

The sale of the RBA's interest in Securency is in accordance with its longstanding intention to exit from its shareholding once Securency had established itself as a viable long-term supplier in the international market for banknote substrate. The sale brings to a conclusion the process that had commenced in late 2010 with the RBA and Innovia Films announcing their intention to undertake a joint sale of Securency. Subsequent to this announcement, Innovia Films advised that it no longer wished to sell its 50 per cent shareholding and made an offer to purchase the RBA's shareholding.

Under the terms of the sale, the RBA has to date received payments of $75.4 million for its shareholding. This amount exceeds the value of the RBA's investment in Securency of $53.9 million recorded in its 2011/12 financial statements. The gain on sale is included as part of Other Income. Additional payments may be made to the Bank over the following years, including if Innovia Security exceeds certain earnings benchmarks. Because the possibility of such additional payments is uncertain, they are not recognised in the Statement of Financial Position.

The RBA may also recover certain funds currently held in escrow to satisfy potential liabilities of Innovia Security relating to events prior to the sale if such liabilities do not materialise. The RBA has provided the purchaser with a number of indemnities for the period during which Securency was jointly owned (refer Note 11).

In conjunction with the sale of Securency, NPA has entered into a long-term supply contract with Innovia Security to supply polymer substrate, including for Australia's next generation of banknotes.

During 2012/13, the RBA acquired $1.8 million of computer software and intangibles ($3.0 million in 2011/12) and amortised $2.8 million ($2.3 million in 2011/12). At 30 June 2013, the gross book value of the RBA's computer software and intangibles amounted to $33.7 million and accumulated amortisation on these assets was $12.6 million ($27.1 million and $10.9 million, respectively, at 30 June 2012). The RBA had contractual commitments of $0.4 million as at 30 June 2013 for the acquisition of computer software and other intangibles (nil at 30 June 2012).

As at 30 June 2013, other assets included receivables of $20.8 million, none of which are impaired (at 30 June 2012 other assets included receivables of $32.2 million).