8155.0 - Australian Industry, 2012-13 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 28/05/2014   
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GLOSSARY


Data presented in this publication have been compiled from the standard financial accounts of businesses. Therefore, the definition of each reported item aligns closely with that adopted in standard business accounting practice. Included in the glossary are published data items and components used to calculate derived items.

Business

A business is generally considered to be a person, partnership, or corporation engaged in business or commerce.

In this publication, the term represents the ABN unit or type of activity unit (TAU), which are the two standard statistical units for the 2012-13 EAS collections. For details, see Explanatory Notes paragraphs 12-13.

Business size

Businesses are categorised as:

  • large businesses, with employment of 200 or more persons
  • medium businesses, with employment of 20 to less than 200 persons
  • small businesses, with employment of less than 20 persons (including non-employing businesses).

Capital expenditure

Total (gross) expenditure on acquiring fixed tangible and intangible assets, before deduction of trade-in allowances, and including expenses (except capitalised interest) incurred during the year in acquiring such assets. Fixed tangible assets include land, dwellings, other buildings and structures, plant, machinery and equipment (including motor vehicles). Intangible assets include capitalised exploration expenditure, patents, licences and goodwill.Capital expenditure on dwellings, other buildings and structures

Capital expenditure incurred acquiring dwellings, other buildings and structures, including roads, factories, warehouses, offices, bridges, mine development, and oil and gas platforms. Represents expenditure before deduction of trade-in allowances, and includes expenses (except capitalised interest) incurred during the year in acquiring such assets.

Capital expenditure on other assets (including land and intangible assets)

Capital expenditure incurred acquiring assets other than dwellings, other buildings and structures and plant, machinery and equipment. Includes land and intangible assets such as exploration expenditure capitalised, patents, licences and goodwill. Also included is computer software capitalised, including capitalised computer software licence fees, installation costs, the purchase or development of large databases, software developed in-house (but excluded is software maintenance expenditure), and capitalised payments to contractors and consultants for software development. Note that if the cost of software and hardware cannot be separated, the total cost is included in acquisition of plant, machinery and equipment.

Capital expenditure on plant, machinery and equipment

Capital expenditure incurred acquiring plant, machinery and other equipment, including motor vehicles.

Capital work done for own use

Capitalised work done by the employees or proprietors of a business in manufacturing, constructing, installing or repairing assets, in mineral and petroleum exploration activities, and the in-house development of computer software, for use by the business or for rental or lease. This work is valued at the capitalised costs of the materials and the wages and salaries involved.Capitalised purchases

Goods drawn from inventories for use as fixed tangible assets in capital work done by the employees or proprietors of a business for use by the business or for rental or lease.

Capitalised wages and salaries

Capitalised payment of wages and salaries for work done by own employees in manufacturing, constructing, installing or repairing assets, mineral and petroleum exploration activities or in developing computer software in-house for use by the business or for rental or lease.

Change in inventories

The value of total closing inventories less total opening inventories.

Closing inventories

The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels and containers at the end of the reporting period.Depreciation and amortisation

Depreciation/amortisation allowed on tangible and intangible assets. Includes, for lessees only, depreciation/amortisation in respect of finance leases.

Disposal of assets

Proceeds from the sale of tangible assets (plant, machinery, equipment, land, dwellings, other buildings and structures), and intangible assets (such as patents, licences and goodwill).

Earnings before interest, tax, depreciation and amortisation (EBITDA)

Profit prior to the deduction of net interest (interest income minus interest expenses), income tax, depreciation and amortisation. Items classifiable to other income are also excluded.

Employer contributions into superannuation

Includes all employer contributions to superannuation funds (including the employer productivity contribution) and provisions for employer contributions to superannuation funds. Also includes expenses relating to employer funded defined benefit schemes. Employee contributions and salary sacrifice contributions are excluded.Employment at end of June

Number of persons working for businesses during the last pay period ending in June of the given year. Includes working proprietors and partners, employees absent on paid or prepaid leave, employees on workers' compensation who continue to be paid through the payroll, and contract workers paid through the payroll. Excludes persons paid by commission only, non-salaried directors, volunteers and self-employed persons such as consultants and contractors.

Fringe benefits tax

Fringe benefits tax is payable by employers when certain benefits in excess of normal wages or salaries (e.g. free or discounted goods or services) are received by their employees (or associates of employees) in connection with their employment.

Funding from government for operational costs

Funding from federal, state and/or local government for operational costs (e.g. wages and salaries, rent, food). Includes bounties, subsidies, export grants, apprenticeship and traineeship schemes, community service obligations, and amounts reimbursed under fuel tax credits. Excludes funding from government for specific capital items.

Funding from government for specific capital items

Includes capital grants, and low interest or interest free loans made by government to businesses to encourage expenditure on specific equipment (e.g. environmental protection equipment).Gross fixed capital formation (GFCF)

Gross fixed capital formation is measured by the total value of a producer's acquisitions, less disposals, of fixed assets during the reference period, plus certain additions to the value of non-produced assets realised by the productive activity of businesses.

Fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly or continuously in other processes of production for more than one year.

The derivation of GFCF is as follows:

Acquisition of
      Road vehicles
      Other transport equipment
      Industrial machinery and equipment
      Computer software capitalised
      Computers and computer peripherals
      Electronic equipment and electrical machinery
      Communications equipment
      Other plant and equipment
      Dwellings, other buildings and structures
      Computer software expensed
      Mining exploration expenditure written off
less disposal of
      Plant, machinery and equipment (including motor vehicles)
      Disposal of dwellings, other buildings and structures
equals GFCFIncome from services

See the entry for sales and service income.

Industry class

The structure of ANZSIC comprises four levels, ranging from industry division (broadest level) to industry class (finest level). Activities are narrowly defined within the industry class level, which is identified by a four-digit code, e.g. Industry Class 1510 Pulp, paper and paperboard manufacturing. Usually, an activity is primarily defined to one class. However, some activities may be primary to more than one class.

Industry division

The structure of ANZSIC comprises four levels, ranging from industry division (broadest level) to industry class (finest level). The main purpose of the industry division level is to provide a limited number of categories which give a broad overall picture of the economy. There are 19 divisions within ANZSIC, each identified by an alphabetical letter, that is, 'A' for Agriculture, forestry and fishing, 'B' for Mining, 'C' for Manufacturing, etc.

Industry subdivision

This is the broadest level category within each industry division of ANZSIC and is identified by a two-digit code, e.g. Industry Subdivision 14 for Wood product manufacturing. Industry subdivisions are built up from industry groups which, in turn, are built up from industry classes.Industry value added (IVA)

IVA is an estimate of the difference between the market value of the output of an industry and the purchases of materials and expenses incurred in the production of that output.

The derivation of IVA for individual businesses depends on whether they are classified as market or non-market producers. Non-market producers are those institutions which provide goods or services either free or at prices that are not economically significant. In other words, their prices are not significantly influenced by the amounts that producers are willing to supply, nor the amounts that users are willing to pay to purchase the goods or services being provided. Conversely, market producers provide goods and services at prices that are economically significant.

For market producers, the derivation of IVA is as follows:
      Sales and service income
plus
      Funding from federal, state and/or local government for operational costs
      Capital work done for own use
      Closing inventories
less
      Opening inventories
      Purchases of goods and materials
      Other intermediate input expenses
equals IVA

However, it should be noted that IVA is a measure of economic activity and is not equivalent to operating profit before tax (OPBT). Wage and salary expenses, and most other labour costs, are not taken into account in the calculation for market producers, neither are interest expenses, depreciation or a number of lesser expenses. On the income side, OPBT includes total income, whereas IVA only includes sales and service income and government funding for operational costs.

As a principle, the output of non-market production is valued at cost, including intermediate input expenses. As shown in the above derivation, purchases and other intermediate input expenses are deducted from output in order to arrive at IVA.

Accordingly, the derivation of IVA for non-market producers can be described as follows:
      Selected labour costs
plus
      Depreciation and amortisation
equals IVA

Estimates of industry value added are obtained by summing the contributions of businesses classified to that industry, both market and (if any) non-market producers. Market producers predominate in most industries.

Industry value added is related to, but different from, the national accounting variable gross value added. For national accounts purposes, gross value added is calculated by adjusting IVA to include General government units and also to account for some other effects.Industry value added per person employed

IVA of businesses which operated in a given industry during the given year, divided by the number of persons employed by businesses in that industry during the last pay period ending in June of that year. Persons employed include working proprietors and partners.

Interest coverage

The number of times that businesses can meet their interest expenses from their earnings before net interest, tax, depreciation and amortisation (EBITDA), i.e. earnings before interest, tax, depreciation and amortisation divided by interest expenses.

Interest expenses

Includes interest paid on loans from banks, finance companies, partners, and related or unrelated businesses, and in respect of finance leases. Also includes interest equivalents such as hedging costs and expenses associated with discounted bills. Excludes bank charges other than interest, and capital repayments.

Interest income

Includes interest received from deposits in banks and non-bank financial institutions, loans, advances, finance leases and earnings on discounted bills. Excludes capital payments received.Investment rate (value added)

The proportion of industry value added (IVA) used to acquire capital, i.e. (capital expenditure divided by IVA) multiplied by 100.

Labour costs

Comprises wages and salaries (including salary sacrificed earnings paid on behalf of employees and employee share based payments and stock options), employer contributions into superannuation, workers' compensation premiums/costs, fringe benefits tax and payroll tax. Also includes capitalised wages and salaries.

Large business

See the entry for business size.

Medium business

See the entry for business size.

Natural resource royalties expenses

Includes payments under mineral lease arrangements, payments under timber and quarrying lease arrangements, and resource rent taxes and royalties. Excludes payments for royalties from intellectual property (e.g. patents and copyrights) and computer software licence fees. Gold tax payments are also excluded.Net capital expenditure

The value of total capital expenditure less proceeds received from the disposal of assets. See the entries for these items.

Opening inventories

The value of all inventories of finished goods (including inventories for resale), work-in-progress (less progress payments billed), raw materials, fuels and containers at the beginning of the reporting period.

Operating profit before tax (OPBT)

Profit before extraordinary items are brought to account and prior to the deduction of income tax and appropriations to owners (e.g. dividends paid), i.e. total income less total expenses plus change in inventories.

Other expenses

Expenditure items not separately itemised. Examples include bad and doubtful debts, natural resource royalty expenses, land tax and land rates, computer software expenses, freight, other royalties expenses, payments to employment agencies for staff and other operating expenses.Other income

Income from sources not separately itemised, including:
  • dividend income
  • donations
  • net profit or loss on share trading, asset sales, variations in exchange rates or resulting from the revaluation of assets in accordance with the Australian International Financial Reporting Standards (AIFRS).

Also includes funding from government for specific capital items in the Industry performance table only.

Other intermediate input expenses

This is a balancing item. It is the difference between the sum of (sales and service income, funding from government for operational costs, capital work done for own use and change in inventories) less purchases of goods and materials and industry value added.

Payroll tax

A tax levied by state and territory governments on the amount of wages and salaries paid by a business. Excludes pay-as-you-go withholding tax.Profit margin

The percentage of sales and service income available as operating profit before tax (OPBT), i.e. (OPBT divided by sales and service income) multiplied by 100.

Purchases

Comprises purchases of materials, components, containers and packaging materials for manufacture or construction, and purchases of finished goods for resale. Excludes delivery charges separately invoiced or itemised by suppliers and capitalised purchases.

Purchases of goods and materials

Purchases of materials, components, explosives, containers, packaging materials, fuels, electricity and water, and purchases of minerals and other goods for resale. Also includes capitalised purchases. Excludes purchases of parts and fuels for on-road motor vehicles, but includes fuels for off-road vehicles, such as mobile plant and quarry dump trucks.Rent, leasing and hiring income

See the entry for sales and service income.

Sales and service income

Includes:

Sales of goods
  • whether produced or not by the business (including goods produced for the business on a commission basis). Includes export sales, sales or transfers to related businesses or to overseas branches of the business, progress payments relating to long term contracts if they are billed in the period, delivery charges not separately invoiced or itemised to customers, sales of goods produced by the business from crude materials purchased, and income from 'specific' rates (e.g. water, sewerage, irrigation and drainage rates). Excludes excise and duties received on behalf of the government (e.g. the petroleum production excise duty), sales of assets, natural resource royalties income, interest income, and delivery charges separately invoiced or itemised to customers. Exports are valued free on board, i.e. export freight charges are excluded.
Income from services
  • includes income from consulting services, income received from transporting goods not owned or sold by this business/organisation, repair, maintenance and service income and fees, contract, subcontract and commission income, management fees/charges from related and unrelated businesses, installation charges, delivery charges separately invoiced or itemised to customers and royalties from intellectual property (e.g. patents and copyrights) and natural resource royalties income. Also includes income from the provision of transport services and fee for service income. Excludes interest income, and delivery charges not separately invoiced to customers.
Rent, leasing and hiring income
  • derived from the ownership of land, dwellings, buildings and other structures, motor vehicles, plant, machinery and other equipment. Excludes royalties from mineral leases, income from finance leases and payments received under hire purchase arrangements. This item is included in sales and service income, and is not separately published.
These are valued net of discounts given and exclusive of goods and services tax (GST). Extraordinary items are also excluded.Sales and service income per person employed

Sales and service income of businesses which operated in a given industry during the given year ended 30 June, divided by the number of persons employed by businesses in that industry during the last pay period ending in June of that year. Persons employed include working proprietors and partners.

Sales of goods

See the entry for sales and service income.

Selected labour costs

Comprises:
  • wages and salaries (including provisions for employee entitlements, salary sacrificed earnings, share based payments and stock options)
  • employer contributions into superannuation
  • workers' compensation premiums/costs.

Small business

See the entry for business size.

Superannuation

See the entry for employer contributions into superannuation. Total expenses

The sum of all expense components.

Total income

Comprises sales and service income, interest income, funding from government for operational costs and other income (for details, see the entries for these items).

Total selected industries

Total selected industries comprises data for all ANZSIC divisions, excluding ANZSIC Division K Financial and insurance services. For a detailed discussion of the scope and coverage of the estimates, see Explanatory Notes paragraphs 6-21. Units classified to the General government institutional sector are excluded from the scope of estimates for most industries that comprise Total selected industries. This limits coverage to private sector entities which particularly affects Public administration and safety, Education and training, and Health care and social assistance divisions.

Wages and salaries

The gross wages and salaries (including capitalised wages and salaries) of all employees of the business. The item includes severance, termination and redundancy payments, salaries and fees of directors and executives, retainers and commissions of persons who received a retainer, bonuses, and annual and other types of leave. Provision expenses for employee entitlements (e.g. provisions for annual leave and leave bonus, long service leave, sick leave, and severance, termination and redundancy payments) are also included, as are salary sacrificed earnings and remuneration of employees in the form of share based payments and stock options. (Note that in issues of this publication prior to 2006-07, salary sacrificed earnings and remuneration of employees in the form of share based payments and stock options were reported under related expense items. For example, salary sacrificed for superannuation was included in employer contributions into superannuation).

Payments related to self-employed persons such as consultants, contractors and persons paid solely by commission without a retainer are excluded. The drawings of working proprietors and partners are also excluded.Wages and salaries per employee

The wages and salaries paid by businesses which operated in a given industry during the given year ended 30 June, divided by the number of employees in that industry during the last pay period ending in June of that year. Working proprietors and partners are not included in employee estimates. The drawings of working proprietors and partners are not included in estimates of wages and salaries.

Wages and salaries to sales and service income ratio

The wages and salaries paid by businesses which operated during the year ended 30 June as a proportion of the sales and service income of businesses which operated during the same year.

Workers' compensation premiums/costs

Workers' compensation is a compulsory insurance cover to be taken out by all employers, except for self-insured workers, according to legislative schemes to cover employees suffering injury or disease in the course of or arising out of employment.