Annual Report 10/11 - Campus Living Villages

Campus Living Villages Annual Report 10/11
Campus Living Overseas Trust
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
A$’000
IFRS 13 Fair Value Measurement (effective 1 January 2013). IFRS 13 was released in May 2011. The AASB is expected to
issue an equivalent Australian standard shortly. IFRS 13 explains how to measure fair value and aims to enhance fair value
disclosures. The Fund does not use fair value measurements extensively. It is therefore unlikely that the new rules will
have a significant impact on any of the amounts recognised in the financial statements. However, application of the new
standard will impact the type of information disclosed in the notes to the financial statements. The Fund does not intend
to adopt the new standard before its operative date, which means that it would be first applied in the annual reporting
period ending 30 June 2014.
Revised IAS 1 Presentation of Financial Statements (effective 1 July 2012). In June 2011, the IASB made an amendment to
IAS 1 Presentation of Financial Statements. The AASB is expected to make equivalent changes to AASB 101 shortly. The
amendment requires entities to separate items presented in other comprehensive income into two groups, based on
whether they may be recycled to profit or loss in the future. It will not affect the measurement of any of the items
recognised in the balance sheet or the profit or loss in the current period. The Fund intends to adopt the new standard
from 1 July 2012.
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2011
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 2011 June 2010
Financial assets
Cash and cash equivalents 7 4,526 6,792
Trade and other receivables 9 5,116 7,522
Non-current receivables 11 11,847 16,997
21,489 31,311
Financial liabilities
Trade and other payables 15 10,555 11,640
Borrowings 17 151,125 134,186
Derivative financial instruments 8 4,452 3,845
166,132 149,671
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. If the exchange rates fluctuated by 10% the loss after tax would vary by $0.9m and the net assets would vary by
$1.3m. Management will institute the appropriate action and utilise the necessary derivative financial instruments should
there be a change in agreement with the unit holders.
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