Annual Report 10/11 - Campus Living Villages

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
A$’000
Campus Living Villages Annual Report 10/11
Campus Living Villages Fund
The Delaware Studio Green property was due for refinancing in July 2011. As these borrowings were not refinanced by the
due date, the Fund is in default of the debt facility agreement. The carrying amount of Property, plant and equipment has
been written down to the fair value of the debt outstanding as at 30 June 2011 of US$47.2m. Total impairment for the year
on this property was US$14.7m.
The city of Christchurch (location of University of Canterbury) continues to experience earthquake activity. There is
uncertainty about the extent of economic impact on the city and the university and on the timeframe over which the city
might rebuild and recover.
Sensitivity Analysis
If the discount rate used had been 1% higher than management’s estimate, the Fund would have recognised a further
impairment of $13.9m.
If the budgeted revenue was 5% lower each quarter than management’s estimate, the Fund would have recognised a
further impairment of $13m.
If the budgeted operating expenditure was 5% higher each quarter than management’s estimate, the Fund would have
recognised no further impairment.
15. Intangibles
Goodwill Other intangibles Total
June 2011
Cost or fair value 16,287 29,036 45,323
Accumulated amortisation - (6,170) (6,170)
Net book amount 16,287 22,866 39,153
Reconciliation of opening to closing net book amount
Opening net book amount 19,803 23,932 43,735
Amortisation - (1,788) (1,788)
Foreign currency movements (3,516) 722 (2,794)
Closing net book amount 16,287 22,866 39,153
June 2010
Cost or fair value 19,803 28,191 47,994
Accumulated amortisation - (4,259) (4,259)
Net book amount 19,803 23,932 43,735
Reconciliation of opening to closing net book amount
Opening net book amount 20,744 25,091 45,835
Amortisation - (1,609) (1,609)
Foreign currency movements (941) 450 (491)
Closing net book amount 19,803 23,932 43,735
Goodwill
Goodwill is largely recorded in the US Property and Management businesses. Goodwill is not amortised and is subject to
an annual impairment test. The recoverable amount is determined by value-in-use calculations.
The value-in-use calculations use cash flow projections based on financial budgets in the Fund valuation model adjusted
for latest market conditions and business developments.
The key assumptions in the cash flow forecasts are rental growth, facility management fee income growth, capital
expenditure growth and discount rate. The recoverable amounts of the US Property and Management non-current assets
are $492m and $29m (2010: $579m and $19m) respectively which is in excess of the carrying amount of $419m and $18m
(2010: $561m and $9m) respectively. Management do not consider changes in the underlying assumptions to have a
significant effect on the recoverable amount.
Other Intangibles
Other Intangibles include student and management contracts. Management contracts acquired as part of a business
combination are recognised separately from goodwill. The management contracts are carried at their fair value at the
date of acquisition less accumulated amortisation and impairment losses. Amortisation of management contracts is
calculated based on the timing of projected cash flows of the contracts over their estimated useful lives, which currently
vary from 20 to 30 years.
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