Annual Report - Campus Living Villages

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1 2 2 Campus Living Villages Annual Report 09/10 Campus Living Overseas Trust NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 A$’000 CLOT y) New accounting standards AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from 1 January 2013) AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect the group’s accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards (effective from 1 January 2011). In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a related party. When the amendments are applied, the Fund will need to disclose any transactions between its subsidiaries and its associates. However, there will be no impact on any of the amounts recognised in the financial statements. AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (effective from 1 July 2010/1 January 2011). In June 2010, the AASB made a number of amendments to Australian Accounting Standards as a result of the IASB’s annual improvements project. The group will apply the amendments from 1 July 2010. It does not expect that any adjustments will be necessary as a result of applying the revised rules. Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2010 reporting period other than those mentioned above. The Fund has assessed the new standards and interpretations as unlikely to have a material impact. 2. Financial risk management The consolidated entity’s activities expose it to a variety of financial risks, which include market risk (currency risk and cash flow interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. CLOT uses derivative financial instruments such as interest rate swaps to mitigate cash flow interest rate risk. CLOT uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risk, age analysis for credit risk,and cash flow forecasts for liquidity risks. CLOT holds the following financial instruments: Notes June 2010 June 2009 Financial assets Cash and cash equivalents 7 6,792 9,237 Trade and other receivables 9 7,522 3,216 Non-current receivables 11 16,997 11,177 31,311 23,630 Financial liabilities Trade and other payables 15 11,640 9,232 Borrowings 17 134,186 126,370 Derivative financial instruments 8 3,845 2,572 149,671 138,174 a) Currency risk Subsidiaries of the Fund operate in the US, NZ and the UK and trade and source external financing in their local currency. Management of the Fund monitors the exchange rate fluctuations between the Australian Dollar and the local currencies of the foreign subsidiaries on a regular basis. Management have not utilised any derivative financial instruments to date to hedge the foreign currency risk of earnings from subsidiaries in accordance with an agreement with the unit holders of the Fund.
Campus Living Villages Annual Report 09/10 1 2 3 Campus Living Overseas Trust NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 A$’000 Management will institute the appropriate action and utilise the necessary derivative financial instruments should significant fluctuations or a change in agreement with the unit holders. CLOT Loans are made between entities within the Fund for purposes of providing funding for capital expenditure or the net investment in subsidiaries. The currency of the loan is generally denominated in the currency of the lender and the loans are valued at balance sheet spot rate at each reporting date. As at 30 June 2010 CLOT did not have any foreign currency denominated loans. b) Credit risk Credit risk arises from cash and cash equivalents, deposits with major banks and financial institutions, as well as credit exposure to students and universities, including outstanding receivables and committed transactions. Credit granted to customers is monitored regularly and past due receivables are followed up with customers. Student deposits are used as security and applied against outstanding amounts. Legal contracts provide the basis for collection of outstanding amounts relating to management and development contracts. Only banks and financial institutions with high credit ratings are used to deposit funds. c) Liquidity risk Cash flow forecasts are utilised to manage liquidity risk. Capital expenditure is funded through borrowings and cash calls from investors. Repayments of borrowings are funded through cash generated from operations and cash calls from investors where required. The financing facilities available are included in note 7 (c). The forecasted payments of principal and interest of borrowings of the remaining contractual liabilities are: due within one year due within 2-5 years due after five years total June 2010 Loans from financial institutions - Variable 3,352 71,740 - 75,092 - Swaps 1,269 1,726 - 2,995 Total loans from financial institutions 4,621 73,466 - 78,087 Lease liabilities - fixed 215 203 6,714 7,132 Loans from related parties - Interest free 26,668 - - 26,668 - Variable 625 27,159 17,366 45,150 Total undiscounted financial liabilities 32,129 100,828 24,080 157,037 June 2009 Loans from financial institutions - Variable 1,801 50,340 - 52,141 - Swaps 2,840 23,086 - 25,926 Total loans from financial institutions 4,641 73,426 - 78,067 Lease liabilities - fixed 53 199 6,603 6,855 Loans from related parties - Interest free - - 34,658 34,658 - Variable 11,459 16,151 - 27,610 Total undiscounted financial liabilities 16,153 89,776 41,261 147,190
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Annual Report - Campus Living Villages

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