5. Managing Uncertainties
This section analyses how The University manages financial risks within its operating environment.
5.1 Contingent Assets and Liabilities
Consolidated |
University |
||||
2019 |
2018 |
2019 |
2018 |
||
$'000 |
$'000 |
$'000 |
$'000 |
||
Note 5.1A: Contingent Assets |
|||||
Guarantee |
Purpose |
||||
UniLodge Australia Pty Ltd |
Beneficiary of security guarantee for a service agreement |
500 |
500 |
500 |
500 |
Lendlease Building Pty Limited |
Beneficiary of security guarantee for a construction contract |
5,736 |
11,472 |
5,736 |
11,472 |
AMA Project Pty Ltd |
Beneficiary of security guarantee for a construction contract |
93 |
- |
93 |
- |
Spotless Facility Services Pty Ltd |
Beneficiary of security guarantee for a construction contract |
450 |
- |
450 |
- |
Richard Crookes Constructions Pty Limited |
Beneficiary of security guarantee for a construction contract |
2,650 |
5,300 |
2,650 |
5,300 |
Various Commercial Tenants |
Beneficiary of a security guarantee for a Commercial Tenancy Lease |
1,086 |
600 |
1,086 |
600 |
Hindmarsh Construction Pty Ltd |
Beneficiary of security guarantee for a construction contract |
367 |
783 |
367 |
783 |
Shaw Building Group Pty Ltd |
Beneficiary of security guarantee for a construction contract |
1,000 |
500 |
1,000 |
500 |
ISS Facility Services |
Beneficiary of security guarantee for a service agreement |
490 |
490 |
490 |
490 |
Rork Projects Pty Ltd |
Beneficiary of security guarantee for a construction contract |
22 |
- |
22 |
- |
Various Construction Providers |
Beneficiary of security guarantee for a construction contract |
- |
1,025 |
- |
1,025 |
12,394 |
20,670 |
12,394 |
20,670 |
Consolidated |
University |
||||
2019 |
2018 |
2019 |
2018 |
||
$'000 |
$'000 |
$'000 |
$'000 |
||
Note 5.1B: Contingent Liabilities |
|||||
The following guarantees have been provided: |
|||||
Guarantee |
Purpose |
||||
Safety, Rehabilitation and Compensation Commission |
To cover future workers compensation outstanding claims |
36,226 |
50,433 |
36,226 |
50,433 |
Unlisted Investments |
Uncalled Capital relating to investment activities at the University |
61,692 |
69,323 |
54,002 |
69,323 |
Burgmann College |
To guarantee a bank loan |
12,455 |
12,455 |
12,455 |
12,455 |
SHRIMP - Shandong |
International Letter of Credit |
- |
2,800 |
- |
- |
RESOchron - Zinkerr |
International Letter of Credit |
- |
726 |
- |
- |
RESOlution - Tubigen |
Standard Letter of Credit |
- |
811 |
- |
- |
Various |
Standard Letter of Credit |
- |
1,072 |
- |
- |
110,373 |
137,620 |
102,683 |
132,211 |
Unquantifiable contingencies
The University is currently involved in a number of legal matters in the ordinary course of business. The existence of such obligations will only be confirmed by future events not wholly within the control of the University. At the balance sheet date, the liability of the University in respect of these matters cannot be reliably estimated and therefore not included in the financial statements.
The University suffered a flood on 25 February 2018 and is making claims with our insurance companies. The amount of the claims cannot be reliably estimated at this time.
The University was the victim of a cyber attack in 2019 and is making claim with our insurance company. The amount of the claim cannot be reliably estimated at this time.
Accounting Policy
Unrecognised Financial Liabilities/Guarantees, not recognised in the Statement of Financial Position are disclosed in Contingent Liabilities above. At the time of completion of the financial statements, there was no reason to believe that these guarantees would be called upon, and recognition of a liability was therefore not required.
5.2 Financial Instruments
(a) Categories of Financial Assets and Financial Liabilities
Consolidated |
University |
|||
2019 |
2018 |
2019 |
2018 |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
||||
At amortised cost |
||||
Cash and cash equivalents |
492,912 |
190,366 |
488,123 |
181,196 |
Short term deposits |
60,000 |
515,000 |
60,000 |
515,000 |
Unlisted equities |
2,496 |
452 |
2,496 |
452 |
Interest in related parties |
- |
- |
7,200 |
7,200 |
Loans and receivables |
107,499 |
106,398 |
106,306 |
102,304 |
At fair value through statement of other comprehensive income |
||||
Listed debt securities |
147,833 |
145,517 |
147,833 |
145,517 |
Unlisted equities |
47,001 |
- |
47,001 |
- |
At fair value through profit or loss |
||||
Listed equities |
818,490 |
605,911 |
818,490 |
605,911 |
Unlisted equities |
239,106 |
155,613 |
239,106 |
155,613 |
Listed debt securities |
175,957 |
173,197 |
175,957 |
173,197 |
Discount securities |
7,990 |
1,991 |
7,990 |
1,991 |
Derivative instruments |
2,836 |
4,252 |
2,836 |
4,252 |
Carrying Amount of Financial Assets |
2,102,120 |
1,898,697 |
2,103,338 |
1,892,633 |
Financial Liabilities |
||||
At amortised cost |
||||
Payables |
193,869 |
232,939 |
186,906 |
218,087 |
Loans payable |
277,663 |
282,743 |
277,663 |
282,743 |
Lease liabilities |
17,563 |
5,873 |
17,499 |
5,873 |
At fair value through profit or loss |
||||
Derivative instruments |
3,713 |
2,468 |
3,713 |
2,468 |
Carrying Amount of Financial Liabilities |
492,808 |
524,023 |
485,781 |
509,171 |
Accounting Policy
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest rate basis.
Fair value
The fair values of investments and other financial assets are based on quoted prices in an active market. If the market for a financial asset is not active (and for unlisted securities), the University establishes fair value by using valuation techniques, that maximise the use of relevant data. These include reference to the estimated price in an orderly transaction that would take place between market participants at the measurement date. Other valuation techniques used are the cost approach and the income approach based on the characteristics of the asset and the assumptions made by market participants.
(b) Net Income and Expense from Financial Assets
Consolidated |
University |
|||
2019 |
2018 |
2019 |
2018 |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
At amortised cost |
||||
Interest |
16,065 |
22,861 |
16,065 |
22,757 |
Exchange gains/(loss) |
2,307 |
4,861 |
2,307 |
4,861 |
At fair value through statement of other comprehensive income |
||||
Interest |
3,890 |
1,784 |
3,890 |
1,784 |
Dividend |
214 |
166 |
214 |
166 |
Gains/(losses) on disposal |
1,026 |
868 |
1,026 |
868 |
Gains/(losses) recognised in equity |
47,812 |
(1,053) |
47,812 |
(1,053) |
At fair value through profit or loss |
||||
Interest |
5,861 |
2,887 |
5,861 |
2,887 |
Dividend |
45,568 |
55,329 |
45,568 |
55,329 |
Gains/(losses) |
160,734 |
(48,485) |
160,734 |
(48,485) |
Exchange gains/(losses) |
(1,273) |
34,962 |
(1,273) |
34,962 |
Net gains from financial assets |
282,204 |
74,180 |
282,204 |
74,076 |
(c) Net Income and Expense from Financial Liabilities
Consolidated |
University |
|||
2019 |
2018 |
2019 |
2018 |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
At amortised cost |
||||
Borrowing expense |
(11,794) |
(12,447) |
(11,794) |
(12,447) |
Net losses from financial liabilities |
(11,794) |
(12,447) |
(11,794) |
(12,447) |
d) Fair Value
Valuation method used for determining the fair value of financial instruments
The following table identifies for those assets and liabilities carried at fair value (above), as to whether fair value was obtained by reference to market prices (Level 1) or by valuation techniques that employs observable market transactions (Level 2), or by using non- observable market inputs to determine fair value (Level 3).
Consolidated |
Valuation technique utilising |
|||
2019 |
Market Values |
Market Inputs |
Non-Market Inputs |
|
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
||||
At fair value through statement of other comprehensive income |
||||
Listed debt securities |
- |
147,833 |
- |
147,833 |
Unlisted equities |
- |
- |
47,001 |
47,001 |
At fair value through other comprehensive income |
||||
Listed equities |
818,489 |
- |
- |
818,489 |
Unlisted equities |
- |
238,953 |
153 |
239,106 |
Listed debt securities |
- |
175,957 |
- |
175,957 |
Discount securities |
- |
7,989 |
- |
7,989 |
Derivative instruments |
167 |
2,670 |
- |
2,837 |
Total financial assets carried at fair value |
818,656 |
573,402 |
47,154 |
1,439,212 |
Financial Liabilities |
||||
Fair value through profit or loss |
||||
Derivative instruments |
816 |
2,897 |
- |
3,713 |
Total financial liabilities carried at fair value |
816 |
2,897 |
- |
3,713 |
Consolidated |
Valuation technique utilising |
|||
2018 |
Market Values |
Market Inputs |
Non-Market Inputs |
|
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
||||
At fair value through statement of other comprehensive income |
||||
Listed debt securities |
- |
145,517 |
- |
145,517 |
At fair value through other comprehensive income |
||||
Listed equities |
605,911 |
- |
- |
605,911 |
Unlisted equities |
1,241 |
153,752 |
620 |
155,613 |
Listed debt securities |
- |
173,197 |
- |
173,197 |
Discount securities |
- |
1,991 |
- |
1,991 |
Derivative instruments |
2,031 |
2,221 |
- |
4,252 |
Total financial assets carried at fair value |
609,183 |
476,678 |
620 |
1,086,481 |
Financial Liabilities |
||||
Fair value through profit or loss |
||||
Derivative instruments |
357 |
2,111 |
- |
2,468 |
Total financial liabilities carried at fair value |
357 |
2,111 |
- |
2,468 |
University |
Valuation technique utilising |
|||
2019 |
Market Values |
Market Inputs |
Non-Market Inputs |
|
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
||||
At fair value through statement of other comprehensive income |
- |
|||
Listed debt securities |
- |
147,833 |
- |
147,833 |
Unlisted equities |
- |
- |
47,001 |
47,001 |
Fair value through profit or loss |
||||
Listed equities |
818,489 |
- |
- |
818,489 |
Unlisted equities |
- |
238,953 |
153 |
239,106 |
Listed debt securities |
- |
175,957 |
- |
175,957 |
Discount securities |
- |
7,989 |
- |
7,989 |
Derivative instruments |
167 |
2,670 |
- |
2,837 |
Total Financial Assets |
818,656 |
573,402 |
47,154 |
1,439,212 |
Financial Liabilities |
||||
Fair value through profit or loss |
||||
Derivative instruments |
817 |
2,896 |
- |
3,713 |
Total financial liabilities carried at fair value |
817 |
2,896 |
- |
3,713 |
University |
Valuation technique utilising |
|||
2018 |
Market Values |
Market Inputs |
Non-Market Inputs |
|
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
||||
At fair value through statement of other comprehensive income |
||||
Listed debt securities |
- |
145,517 |
- |
145,517 |
At fair value through other comprehensive income |
||||
Listed equities |
605,911 |
- |
- |
605,911 |
Unlisted equities |
1,241 |
153,752 |
620 |
155,613 |
Listed debt securities |
- |
173,197 |
- |
173,197 |
Discount securities |
- |
1,991 |
- |
1,991 |
Derivative instruments |
2,031 |
2,221 |
- |
4,252 |
Total Financial Assets |
609,183 |
476,678 |
620 |
1,086,481 |
Financial Liabilities |
||||
Fair value through profit or loss |
||||
Derivative instruments |
357 |
2,111 |
- |
2,468 |
Total financial liabilities carried at fair value |
357 |
2,111 |
- |
2,468 |
Consolidated |
University |
|||
2019 |
2018 |
2019 |
2018 |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
(e) Reconciliation of Financial Assets Categorised as Level 3 |
||||
Level 3 Financial Assets |
||||
Opening balance |
620 |
429,480 |
620 |
429,480 |
Total gains or losses |
||||
Through profit or loss |
- |
11,983 |
- |
11,983 |
Through Statement of Comprehensive Income |
46,534 |
- |
46,534 |
- |
Reclassification |
- |
(114,300) |
- |
(114,300) |
Purchases |
- |
241 |
- |
241 |
Sales |
- |
(326,784) |
- |
(326,784) |
Closing balance |
47,154 |
620 |
47,154 |
620 |
Gains/(losses) for assets held 31 December |
46,534 |
11,983 |
46,534 |
11,983 |
(f) Credit Risk
Credit risk is defined as "the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation."
Receivables
Loans and Receivables balances are monitored on an ongoing basis. The credit risk exposure on The University’s receivables can be found at Note 2.1B.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in the notes above.
The University evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the University in accordance with the University’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed on an annual basis, and may be updated throughout the year subject to approval of the Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to make payments.
The University invests only in quoted debt securities with very low credit risk.
The University recognised a provision for expected credit losses (ECL) on its debt instruments at fair value through OCI and short term cash deposits at amortised cost of $258,000 as at 31 December 2019 (2018; $251,000).
There are no significant financial assets that have had renegotiated terms that would otherwise, without that renegotiation, have been past due or impaired.
The University’s maximum exposure to credit risk for the components of the statement of financial position at 31 December 2019 and 2018 is the carrying amounts as illustrated in Note 2.1 except for derivative financial instruments. The University’s maximum exposure relating to financial derivative instruments is noted in the liquidity table below.
The University is party to guarantees as identified in Note 5.1 'Contingent Assets and Liabilities'. The maximum exposure to credit risk, if the University was called upon to meet the obligations, is the amount disclosed in Note 5.1.
The University does not hold any collateral or other credit enhancement facilities against these assets or contingent liabilities.
(g) Liquidity Risk
The following tables illustrate the maturities for financial liabilities:
Consolidated |
||||
Within 1 year |
1 - 5 years |
Greater than 5 years |
Total |
|
2019 |
$'000 |
$'000 |
$'000 |
$'000 |
Suppliers |
47,197 |
- |
- |
47,197 |
Other payables |
118,786 |
27,886 |
- |
146,672 |
Interest bearing liabilities |
5,221 |
34,795 |
237,648 |
277,663 |
Lease liabilities |
7,154 |
10,216 |
193 |
17,563 |
Other financial liabilities |
3,380 |
332 |
- |
3,713 |
Total |
181,738 |
73,229 |
237,841 |
492,808 |
2018 |
||||
Suppliers |
48,831 |
- |
- |
48,831 |
Other payables |
159,211 |
27,534 |
- |
186,745 |
Interest bearing liabilities |
4,818 |
31,882 |
246,044 |
282,744 |
Lease liabilities |
2,032 |
3,840 |
- |
5,872 |
Other financial liabilities |
2,175 |
293 |
- |
2,468 |
Total |
217,067 |
63,549 |
246,044 |
526,660 |
University |
||||
2019 |
||||
Suppliers |
44,690 |
- |
- |
44,690 |
Other payables |
114,330 |
27,886 |
- |
142,216 |
Interest bearing liabilities |
5,221 |
34,795 |
237,648 |
277,664 |
Lease liabilities |
7,090 |
10,216 |
193 |
17,499 |
Other financial liabilities |
3,380 |
332 |
- |
3,712 |
Total |
174,711 |
73,229 |
237,841 |
485,781 |
2018 |
||||
Suppliers |
45,035 |
- |
- |
45,035 |
Other payables |
152,535 |
27,534 |
- |
180,069 |
Interest bearing liabilities |
4,818 |
31,882 |
246,044 |
282,744 |
Lease liabilities |
2,032 |
3,840 |
- |
5,872 |
Other financial liabilities |
2,175 |
293 |
- |
2,468 |
Total |
206,595 |
63,549 |
246,044 |
516,188 |
Liquidity risk is defined as the risk that the University would not be able to settle or meet those obligations that are settled by delivering cash or another financial asset, on time or at a reasonable price. The University adopts an active cash management strategy.
The University's investment portfolio allocation profile is determined by the Finance Committee and is structured to ensure sufficient funds are held in investments that can be converted to cash to meet its obligations as they fall due. Equities, other Listed Securities, Cash and Short-term debt securities constitute the significant component of the University's financial instruments. The liquidity risk of Unlisted Securities is managed through holding a diversified portfolio of assets with known investment horizons, different expected exit dates, and ensuring the total exposure of this class is maintained at a level whereby forced sales will not be required.
(h) Market Risk
Market risk is defined as "the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices" and includes interest rate risk, foreign currency risk and "other price risks". Other price risks are further defined as "the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market".
(h)(i) Foreign Exchange Risk
The University derives its revenue streams principally in Australian dollars. Payments to overseas denominated currency sources for the supply of goods and services provided to the University is considered immaterial and as such foreign exchange risk in these transactions is considered insignificant.
The University holds investments in most major overseas markets and as such has exposure to the major currencies. The mix and weighting of currency holdings approximates those utilized in the Trade Weighted Index/AUD calculation and as such the Trade Weighted Index is considered an appropriate measurement for Currency Risk. The University monitors the value of the Australian dollar relative to other major currencies and when the value is considered to be out of alignment with fundamental value common risk management approaches, including forward currency contracts are adopted.
The following table, (iv), demonstrates the sensitivity to a reasonably possible change in the AUD/Trade Weighted Index with all other variables held constant, on the University’s income and the University’s equity.
(h)(ii) Interest Rate Risk
Interest rate risk is the risk that the realisable value of a financial instrument will fluctuate due to the changes in market interest rates. The University's exposure to the risk of changes in market interest relates primarily to long-term investments and bank loans with variable interest rates. The University's outstanding Indexed Annuity Bonds is linked to Consumer Price Index movements.
The University's interest rate risk arises from the investment in cash, fixed and floating interest and short term money market securities. The portfolio consists of a combination of fixed coupon interest payments with repayment of principal on maturity, discounted securities with principal repaid upon maturity and floating rate notes. The portfolio is fully invested in AUD denominated securities. All counterparties are rated as investment grade.
The following table (iv), demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant
(h)(iii) Other Price Risk
The University Loans payable 'Indexed Annuity Bond' is repayable by quarterly instalments that are indexed in alignment with the Australian Consumer Price Index (CPI). The real yield payable on the Bonds is 3.235% with an effective CPI base of 30 September 2004. The calculation of the outstanding liability is based on the historic movement in CPI from the base period to 30 September of the reporting year (3.350% per annum).
The following table, (iv), demonstrates the sensitivity to possible changes in CPI annual rates, with all other variables held constant. The table demonstrates the sensitivity to possible changes in interest rates, foreign exchange rates and market rates.
(h)(iv)Summarised Sensitivity Analysis – Consolidated
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk, foreign exchange risk, and other price risk.
31 December 2019 |
Carrying Amount |
Interest rate risk |
Foreign exchange risk |
Market risk |
Australian CPI risk |
||||||||||||
-0.6% |
+0.6% |
-11.5% |
+11.5% |
-10.0% |
+10.0% |
-10.0% |
+10.0% |
||||||||||
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
||
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Cash and cash deposits |
|||||||||||||||||
Domestic |
511,963 |
(3,072) |
(3,072) |
3,072 |
3,072 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
40,951 |
(246) |
(246) |
246 |
246 |
4,709 |
4,709 |
(4,709) |
(4,709) |
- |
- |
- |
- |
- |
- |
- |
- |
Unlisted equities |
2,496 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
At fair value through statement of other comprehensive income |
|||||||||||||||||
Listed debt securities |
147,833 |
(887) |
(887) |
887 |
887 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Unlisted equities |
47,001 |
(4,700) |
(4,700) |
4,700 |
4,700 |
||||||||||||
Fair value through profit or loss |
|||||||||||||||||
Listed debt securities |
|||||||||||||||||
Domestic |
175,957 |
(1,056) |
(1,056) |
1,056 |
1,056 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Discount securities |
7,989 |
(48) |
(48) |
48 |
48 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Domestic |
401,306 |
- |
- |
- |
- |
- |
- |
- |
- |
(40,131) |
(40,131) |
40,131 |
40,131 |
- |
- |
- |
- |
Overseas |
417,183 |
- |
- |
- |
- |
47,976 |
47,976 |
(47,976) |
(47,976) |
(41,718) |
(41,718) |
41,718 |
41,718 |
- |
- |
- |
- |
Domestic |
186,194 |
- |
- |
- |
- |
- |
- |
- |
- |
(18,619) |
(18,619) |
18,619 |
18,619 |
- |
- |
- |
- |
Overseas |
52,912 |
- |
- |
- |
- |
6,085 |
6,085 |
(6,085) |
(6,085) |
(5,291) |
(5,291) |
5,291 |
5,291 |
- |
- |
- |
- |
Derivative instruments |
2,836 |
- |
- |
- |
- |
326 |
326 |
(326) |
(326) |
- |
- |
- |
- |
- |
- |
- |
- |
Financial Liabilities |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Loans payable |
277,663 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(136) |
(136) |
136 |
136 |
Fair value through profit or loss |
|||||||||||||||||
Derivative instruments |
|||||||||||||||||
Domestic |
1,190 |
- |
- |
- |
- |
137 |
137 |
(137) |
(137) |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
2,522 |
290 |
290 |
(290) |
(290) |
||||||||||||
Total increase/(decrease) |
(5,309) |
(5,309) |
5,309 |
5,309 |
59,523 |
59,523 |
(59,523) |
(59,523) |
(110,459) |
(110,459) |
110,459 |
110,459 |
(136) |
(136) |
136 |
136 |
31 December 2019 |
Carrying Amount |
Interest rate risk |
Foreign exchange risk |
Market risk |
Australian CPI risk |
||||||||||||
-0.6% |
+0.6% |
-11.5% |
+11.5% |
-10.0% |
+10.0% |
-10.0% |
+10.0% |
||||||||||
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
||
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Cash and cash deposits |
|||||||||||||||||
Domestic |
596,752 |
(3,581) |
(3,581) |
3,581 |
3,581 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
108,614 |
(652) |
(652) |
652 |
652 |
12,491 |
12,491 |
(12,491) |
(12,491) |
- |
- |
- |
- |
- |
- |
- |
- |
Unlisted equities |
452 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
At fair value through statement of other comprehensive income |
|||||||||||||||||
Listed debt securities |
145,517 |
(873) |
(873) |
873 |
873 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Fair value through profit or loss |
|||||||||||||||||
Listed debt securities |
|||||||||||||||||
Domestic |
170,814 |
(1,025) |
(1,025) |
1,025 |
1,025 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
2,383 |
(14) |
(14) |
14 |
14 |
274 |
274 |
(274) |
(274) |
- |
- |
- |
- |
- |
- |
- |
- |
Discount securities |
1,991 |
(12) |
(12) |
12 |
12 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Listed equities |
|||||||||||||||||
Domestic |
314,292 |
- |
- |
- |
- |
- |
- |
- |
- |
(31,429) |
(31,429) |
31,429 |
31,429 |
- |
- |
- |
- |
Overseas |
291,618 |
- |
- |
- |
- |
33,536 |
33,536 |
(33,536) |
(33,536) |
(29,162) |
(29,162) |
29,162 |
29,162 |
- |
- |
- |
- |
Unlisted equities |
|||||||||||||||||
Domestic |
119,441 |
- |
- |
- |
- |
- |
- |
- |
- |
(11,944) |
(11,944) |
11,944 |
11,944 |
- |
- |
- |
- |
Overseas |
36,172 |
- |
- |
- |
- |
4,160 |
4,160 |
(4,160) |
(4,160) |
(3,617) |
(3,617) |
3,617 |
3,617 |
- |
- |
- |
- |
Derivative instruments |
4,252 |
- |
- |
- |
- |
489 |
489 |
(489) |
(489) |
- |
- |
- |
- |
- |
- |
- |
- |
Financial Liabilities |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Loans payable |
282,743 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(163) |
(163) |
163 |
163 |
Fair value through profit or loss |
|||||||||||||||||
Derivative instruments |
2,468 |
- |
- |
- |
- |
284 |
284 |
(284) |
(284) |
- |
- |
- |
- |
- |
- |
- |
- |
Total increase/(decrease) |
(6,157) |
(6,157) |
6,157 |
6,157 |
51,234 |
51,234 |
(51,234) |
(51,234) |
(76,152) |
(76,152) |
76,152 |
76,152 |
(163) |
(163) |
163 |
163 |
(h)(v) Summarised Sensitivity Analysis – University
The following table summarises the sensitivity of the University’s financial assets and financial liabilities to interest rate risk, foreign exchange risk, and other price risk.
31 December 2019 |
Carrying Amount |
Interest rate risk |
Foreign exchange risk |
Market risk |
Australian CPI risk |
||||||||||||
-0.6% |
+0.6% |
-11.5% |
+11.5% |
-10.0% |
+10.0% |
-10.0% |
+10.0% |
||||||||||
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
||
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Cash and cash deposits |
|||||||||||||||||
Domestic |
507,174 |
(3,043) |
(3,043) |
3,043 |
3,043 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
40,951 |
(246) |
(246) |
246 |
246 |
4,709 |
4,709 |
(4,709) |
(4,709) |
- |
- |
- |
- |
- |
- |
- |
- |
Unlisted equities |
2,496 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Interest in related parties |
7,200 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
At fair value through statement of other comprehensive income |
|||||||||||||||||
Listed debt securities |
147,833 |
(887) |
(887) |
887 |
887 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Unlisted equities |
47,001 |
(4,700) |
(4,700) |
4,700 |
4,700 |
||||||||||||
Fair value through profit or loss |
|||||||||||||||||
Listed debt securities |
|||||||||||||||||
Domestic |
175,957 |
(1,056) |
(1,056) |
1,056 |
1,056 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Discount securities |
7,989 |
(48) |
(48) |
48 |
48 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Listed equities |
|||||||||||||||||
Domestic |
401,306 |
- |
- |
- |
- |
- |
- |
- |
- |
(40,131) |
(40,131) |
40,131 |
40,131 |
- |
- |
- |
- |
Overseas |
417,183 |
- |
- |
- |
- |
47,976 |
47,976 |
(47,976) |
(47,976) |
(41,718) |
(41,718) |
41,718 |
41,718 |
- |
- |
- |
- |
Unlisted equities |
|||||||||||||||||
Domestic |
186,194 |
- |
- |
- |
- |
- |
- |
- |
- |
(18,619) |
(18,619) |
18,619 |
18,619 |
- |
- |
- |
- |
Overseas |
52,912 |
- |
- |
- |
- |
6,085 |
6,085 |
(6,085) |
(6,085) |
(5,291) |
(5,291) |
5,291 |
5,291 |
- |
- |
- |
- |
Derivative instruments |
2,836 |
- |
- |
- |
- |
326 |
326 |
(326) |
(326) |
- |
- |
- |
- |
- |
- |
- |
- |
Financial Liabilities |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Loans payable |
277,663 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(136) |
(136) |
136 |
136 |
Fair value through profit or loss |
|||||||||||||||||
Derivative instruments |
|||||||||||||||||
Domestic |
1,190 |
- |
- |
- |
- |
137 |
137 |
(137) |
(137) |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
2,522 |
290 |
290 |
(290) |
(290) |
||||||||||||
Total increase/(decrease) |
(5,280) |
(5,280) |
5,280 |
5,280 |
59,523 |
59,523 |
(59,523) |
(59,523) |
(110,459) |
(110,459) |
110,459 |
110,459 |
(136) |
(136) |
136 |
136 |
31 December 2019 |
Carrying Amount |
Interest rate risk |
Foreign exchange risk |
Market risk |
Australian CPI risk |
||||||||||||
-0.6% |
+0.6% |
-11.5% |
+11.5% |
-10.0% |
+10.0% |
-10.0% |
+10.0% |
||||||||||
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
Result |
Equity |
||
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
Financial Assets |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Cash and cash deposits |
|||||||||||||||||
Domestic |
587,582 |
(3,525) |
(3,525) |
3,525 |
3,525 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
108,614 |
(652) |
(652) |
652 |
652 |
12,491 |
12,491 |
(12,491) |
(12,491) |
- |
- |
- |
- |
- |
- |
- |
- |
Unlisted equities |
452 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Interest in related parties |
7,200 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
At fair value through statement of other comprehensive income |
|||||||||||||||||
Listed debt securities |
145,517 |
(873) |
(873) |
873 |
873 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Fair value through profit or loss |
|||||||||||||||||
Listed debt securities |
|||||||||||||||||
Domestic |
170,814 |
(1,025) |
(1,025) |
1,025 |
1,025 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Overseas |
2,383 |
(14) |
(14) |
14 |
14 |
274 |
274 |
(274) |
(274) |
- |
- |
- |
- |
- |
- |
- |
- |
Discount securities |
1,991 |
(12) |
(12) |
12 |
12 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Listed equities |
|||||||||||||||||
Domestic |
314,292 |
- |
- |
- |
- |
- |
- |
- |
- |
(31,429) |
(31,429) |
31,429 |
31,429 |
- |
- |
- |
- |
Overseas |
291,618 |
- |
- |
- |
- |
33,536 |
33,536 |
(33,536) |
(33,536) |
(29,162) |
(29,162) |
29,162 |
29,162 |
- |
- |
- |
- |
Unlisted equities |
|||||||||||||||||
Domestic |
119,441 |
- |
- |
- |
- |
- |
- |
- |
- |
(11,944) |
(11,944) |
11,944 |
11,944 |
- |
- |
- |
- |
Overseas |
36,172 |
- |
- |
- |
- |
4,160 |
4,160 |
(4,160) |
(4,160) |
(3,617) |
(3,617) |
3,617 |
3,617 |
- |
- |
- |
- |
Derivative instruments |
4,252 |
- |
- |
- |
- |
489 |
489 |
(489) |
(489) |
- |
- |
- |
- |
- |
- |
- |
- |
Financial Liabilities |
|||||||||||||||||
At amortised cost |
|||||||||||||||||
Loans payable |
282,743 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(163) |
(163) |
163 |
163 |
Fair value through profit or loss |
|||||||||||||||||
Derivative instruments |
2,468 |
- |
- |
- |
- |
284 |
284 |
(284) |
(284) |
- |
- |
- |
- |
- |
- |
- |
- |
Total increase/(decrease) |
(6,101) |
(6,101) |
6,101 |
6,101 |
51,234 |
51,234 |
(51,234) |
(51,234) |
(76,152) |
(76,152) |
76,152 |
76,152 |
(163) |
(163) |
163 |
163 |
5.3 Fair Value Measurement
5.3.1 Fair Value Measurements
The University measures and recognises the following assets and liabilities at fair value on a recurring basis:
- Financial assets at fair value through profit or loss;
- Derivative financial instruments;
- Financial assets at fair value through other comprehensive income;
- Investments in equity instruments designated at fair value through other comprehensive income;
- Land, buildings and infrastructure; and
- Plant and equipment (Artworks and Rare Library Materials only)
Fair value disclosures relating to financial assets and liabilities at fair value through profit or loss are provided in Note 5.2 Financial Instruments.
Accounting Policy
The fair value of assets and liabilities must be measured for recognition and disclosure purposes.
The University classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements.
The fair value of assets or liabilities traded in active markets (such as publicly traded derivatives, and listed equity instruments) is based on quoted market prices for identical assets or liabilities at the end of the reporting period (level 1). The quoted market price used for assets held by the University is the most representative of fair value in the circumstances within the bid-ask spread.
The fair value of assets or liabilities that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The University uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments (level 2) are used for long-term debt instruments held. Other techniques that are not based on observable market data (level 3) such as estimated discounted cash flows, are used to determine fair value for the remaining assets and liabilities. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the end of the reporting period. The level in the fair value hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.
Fair value measurement of non-financial assets is based on the highest and best use of the asset. The University considers market participants use of, or purchase price of the asset, to use it in a manner that would be highest and best use.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the University for similar financial instruments.
5.3.2 Fair Value Hierarchy
The University categorises assets and liabilities measured at fair value into a hierarchy based on the level of inputs used in measurement:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices within Level 1 that are observable for the asset or liability either directly or indirectly; and
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(i) Recognised Fair Value Measurements
Fair value measurements recognised in the Statement of Financial Position are categorised into the following levels:
Consolidated 2019 |
Total |
Level 1 |
Level 2 |
Level 3 |
Recurring Fair Value Measurements Non-Financial Assets |
$'000 |
$'000 |
$'000 |
$'000 |
Land, Buildings and Infrastructure |
1,362,432 |
- |
123,568 |
1,238,864 |
Plant and Equipment |
69,881 |
- |
69,881 |
- |
Total Non-Financial Assets |
1,432,313 |
- |
193,449 |
1,238,864 |
2018 Recurring Fair Value Measurements Non-Financial Assets |
||||
Land, Buildings and Infrastructure |
1,368,848 |
- |
111,432 |
1,257,416 |
Plant and Equipment |
64,895 |
- |
64,895 |
- |
Total Non-Financial Assets |
1,433,743 |
- |
176,327 |
1,257,416 |
University |
Total |
Level 1 |
Level 2 |
Level 3 |
2019 |
$'000 |
$'000 |
$'000 |
$'000 |
Recurring Fair Value Measurements |
||||
Non-Financial Assets |
||||
Land, buildings and infrastructure |
1,350,530 |
- |
136,268 |
1,214,262 |
Plant and equipment |
69,881 |
- |
69,881 |
- |
Total Non-Financial Assets |
1,420,411 |
- |
206,149 |
1,214,262 |
2018 |
||||
Recurring Fair Value Measurements |
||||
Non-Financial Assets |
||||
Land, buildings and infrastructure |
1,355,148 |
- |
110,532 |
1,244,616 |
Plant and equipment |
64,895 |
- |
64,895 |
- |
Total Non-Financial Assets |
1,420,043 |
- |
175,427 |
1,244,616 |
(ii) Reconciliation of Fair Value Items to Balance Sheet
Consolidated |
Notes |
Total |
Recognised at Cost |
Recognised at Fair Value |
2019 |
$'000 |
$'000 |
$'000 |
|
Recurring Fair Value Measurements |
||||
Non-Financial Assets |
||||
Land, buildings and infrastructure |
1,808,261 |
445,829 |
1,362,432 |
|
Plant and equipment |
206,482 |
136,601 |
69,881 |
|
Total Non-Financial Assets |
2,014,743 |
582,430 |
1,432,313 |
|
2018 |
||||
Recurring Fair Value Measurements |
||||
Non-Financial Assets |
||||
Land, buildings and infrastructure |
1,803,243 |
434,395 |
1,368,848 |
|
Plant and equipment |
153,346 |
88,451 |
64,895 |
|
Total Non-Financial Assets |
1,956,589 |
522,846 |
1,433,743 |
University |
Notes |
Total |
Recognised at Cost |
Recognised at Fair Value |
2019 |
$'000 |
$'000 |
$'000 |
|
Recurring Fair Value Measurements |
||||
Non-Financial Assets |
||||
Land, buildings and infrastructure |
1,796,359 |
445,829 |
1,350,530 |
|
Plant and equipment |
205,886 |
136,005 |
69,881 |
|
Total Non-Financial Assets |
2,002,245 |
581,834 |
1,420,411 |
|
2018 |
||||
Recurring Fair Value Measurements |
||||
Non-Financial Assets |
||||
Land, buildings and infrastructure |
1,789,543 |
434,395 |
1,355,148 |
|
Plant and equipment |
152,244 |
87,349 |
64,895 |
|
Total Non-Financial Assets |
1,941,787 |
521,744 |
1,420,043 |
There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.
For transfers in and out of level 3 measurements see table below.
The University's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period
5.3.3 Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
The following table is a reconciliation of the consolidated level 3 items for the year ended 31 December 2019:
Level 3 Fair Value Measurements 2019 |
Land, Buildings and Infrastructure |
Plant and Equipment |
Investment Properties |
Total |
$'000 |
$'000 |
$'000 |
$'000 |
|
Opening balance |
1,257,416 |
- |
- |
1,257,416 |
Acquisitions |
15,070 |
- |
- |
15,070 |
Total gains/(losses) on revaluation |
5,109 |
- |
5,109 |
|
Accumulated depreciation movement |
(38,731) |
- |
- |
(38,731) |
Closing balance |
1,238,864 |
- |
- |
1,238,864 |
(i) Valuation Inputs, Processes and Relationships to Fair Value for Items Categorised in Level 2 & Level 3
Land
Land (Level 2)
The land of the University has been classified as level 2. The valuation of these parcels of land was based on the condition, location, land area and restrictions on sale or use of the asset (if any).
Key unobservable inputs:
Prices of comparable assets sold within a reasonable timeframe of 31 December 2019.
Interrelationship between key unobservable inputs and fair value measurement:
The estimated fair value increases (decreases) as the value of comparable assets increases (decreases).
Buildings and infrastructure
Buildings and infrastructure (Level 3)
The buildings and infrastructure of the University are considered specialised assets for which there is no active and liquid market and as such have been valued using the cost approach (current replacement cost). This is based on the current construction costs per square metre to replace the asset.
Key unobservable inputs:
Replacement cost per square metre of a modern equivalent asset using published construction data such as Rawlinsons Australia Construction Handbook 2016 encompassing Civil Works and Building costs. Colliers also has a database built up from research of building and site improvement costs. Actual costs of improvements identified during valuation exercises and also through research and contact with suppliers and builders have also been collated.
Interrelationship between key unobservable inputs and fair value measurement:
The estimated fair value increases (decreases) as the estimated replacement cost per square metre increases (decreases).
Commercial property (Level 2)
The commercial property has been valued using the market approach. The valuation model is based on a price per square metre for buildings derived from observable market data in active and transparent market.
Key observable inputs:
Prices per square metre. Premium (discount) on the quality of the building and lease terms.
Plant and equipment
Artworks (Level 2)
The artwork collection has been valued using the market approach. The valuation model looks at specifically comparable sales or sales information including sales of works by artists with a similar standing.
Key observable inputs:
Prices of identical works sold in the market where multiple prints exist.
Prices of similar works or works by artists of a similar standing sold in the market where the items are one off pieces.
Rare Library Materials (Level 2)
The rare library collection has been valued using the market approach. The valuation model looks at Australian and international sales information.
Visit
https://www.transparency.gov.au/annual-reports/australian-national-university/reporting-year/2018-19-87