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Note 5.2: Financial Instruments

2019

2018

$'000

$'000

Note 5.2A - Categories of Financial Instruments

Financial assets

Loans and receivables

Cash and cash equivalents

18,653

14,393

Receivables for goods and services

1,184

1,495

Interest receivable

115

345

Fixed term deposit with a bank

41,580

38,967

Accrued revenue

100

611

Total loans and receivables

61,632

55,811

Total financial assets

61,632

55,811

Financial liabilities

Financial liabilities measured at amortised cost

Supplier payables

1,978

3,203

Grant payables

-

60

Total financial liabilities measured at amortised cost

1,978

3,263

Total financial liabilities

1,978

3,263

Classification of financial assets on the date of initial application of AASB 9

AASB 139 original classification

AASB 9 new classification

AASB 139 carrying amount at 1 July 2018

AASB 9 carrying amount at 1 July 2018

Financial assets class

Note

$'000

$'000

Cash and cash equivalents

2.1A

Loans and receivables

Amortised Cost

14,393

14,393

Receivables for goods for services

2.1B

Loans and receivables

Amortised Cost

1,495

1,495

Interest receivable

2.1B

Loans and receivables

Amortised Cost

345

345

Fixed term deposit with a bank

2.1C

Loans and receivables

Amortised Cost

38,967

38,967

Accrued revenue

Loans and receivables

Amortised Cost

611

611

Total financial assets

55,811

55,811

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

AASB 139 carrying amount at 30 June 2018

Reclassification

Remeasurement

AASB 9 carrying amount at 1 July 2018

$'000

$'000

$'000

$'000

Financial asset at amortised cost

Loans and receivables

Cash and cash equivalents

14,393

-

-

14,393

Receivables for goods and services

1,495

-

-

1,495

Interest receivable

345

-

-

345

Fixed term deposit with a bank

38,967

-

-

38,967

Accrued revenue

611

-

-

611

Total amortised cost

55,811

55,811

There was no change in the carrying amount of financial assets based on the measurement under AASB 139 to AASB 9.

Accounting policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the NLA classifies its financial assets as financial assets measured at amortised cost.
This classification was determined through examination of both the NLA's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the NLA becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Comparatives have not been restated on initial application.

Financial assets at amortised cost

Financial assets included in this category need to meet two criteria:

  1. the financial asset is held in order to collect the contractual cash flows; and
  2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

Amortised cost is determined using the effective interest method.

Effective interest method

Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12‐month expected credit losses if risk has not increased.

The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.

A write-off constitutes a derecognition event where the writeoff directly reduces the gross carrying amount of the financial asset.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value
adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Financial liabilities at amortised cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These
liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

2019

2018

$'000

$'000

Note 5.2B - Net Gains and Losses from financial assets

Loans and receivables

Interest revenue

1,460

1,312

Net gain loans and receivables

1,460

1,312

Net gain on financial assets

1,460

1,312