Australian Government - Grains Research and Development Corporation (GRDC) Annual Report 2004-05. Meeting stakeholder needs through cooperative innovation

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Part 4: Financial Statements: Notes to and forming part of the Financial Statements

Note 18: Financial Instruments

For the year ended 30 June 2005

18A - Terms, Conditions and Accounting Policies
18B - Interest Rate Risk
18C - Net Fair Values of Financial Assets and Liabilities
18D - Credit Risk Exposures

Note 18A - Terms, Conditions and Accounting Policies
Financial Instrument	Notes	Accounting Policies and Methods (including recognition criteria and measurement basis)	Nature of underlying instrument (including significant terms and conditions affecting the amount, timing and certainty of cash flows)
Financial Assets		Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured
Deposits at call	7A & 7C	Deposits are recognised at their nominal amounts. Interest is credited to revenue as it accrues.	Temporary surplus funds are placed on deposit at call with the Corporation's banker. Interest is earned on the daily balance at the prevailing daily rate.
Receivables	7B	Receivables are recognised at their nominal amounts.	Terms vary according to the individual contractual arrangements.
Negotiable Certificates of Deposit	7C	Negotiable Certificates of Deposit are recognised at their market values. Interest is credited to revenue as it accrues.	These securities have terms of up to 1 year. Interest is paid on maturity. Interest rates vary between 5.28% and 5.65%.
Floating Rate Note	7C	Floating rate notes are recognised at their market values. Interest is credited to revenue as it accrues.	The securities have a term of up to 2 years. Interest is paid monthly, quarterly and half-yearly. Interest rates are fixed every period at Bank Bill Swap Rate plus a margin. The margin varies between 0.09% and 2.0%.
Individually Managed Funds	7C	Funds in Managed funds are carried at market value. The funds are not listed. Income is recognised when credited to the account.	The funds are available at call. Interest rates will vary to reflect varying market interest rates.
Shares in unlisted companies	7D	The Corporation has purchased shares in unlisted wheat breeding companies. The shares have been revalued using Corporation's proportion of the estimated net asset position of the company.	The return on this investment is uncertain as are the amount, timing and certainty of the cash flows.
Financial Liabilities		Financial Liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
Trade Creditors	10A	Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).	Trade liabilities are normally settled on 30-day terms.
Project liabilities	10B	The Corporation recognises a liability for project payments payable for the current financial year only. Liabilities for future financial years are not recognised. Certain criteria included in the project contracts must be met by the other party before future payments will be made on the contract.	Project payments are usually, but not always, made in one or two payments according to the terms of the individual contracts subject to the other party meeting agreed milestones, producing progress reports and financial reports.

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Note 18B - Interest Rate Risk
Financial Instrument	Notes	Floating Interest Rate		Fixed Interest Rate								Non Interest bearing		Total		Weighted Average Effective Interest Rate
		Floating Interest Rate		1 Year or less		1 to 2 years		2 to 5 years		> 5 years		Non Interest bearing		Total		Weighted Average Effective Interest Rate
		2005 $'000	2004 $'000	2005 $'000	2004 $'000	2005 $'000	2004 $'000	2005 $'000	2004 $'000	2005 $'000	2004 $'000	2005 $'000	2004 $'000	2005 $'000	2004 $'000	2005 %	2004 %
Financial Assets
Cash	7A	10,168	2,397											10,168	2,397	5.36	5.07
Receivables	7B				2,397							3,372	4,474	3,372	4,474	n/a	n/a
Negotiable certificates of deposit	7C			4,163	21,763									4,163	21,763	5.65	5.50
Floating rate notes	7C			17,082	9,289			5,018	12,049					22,100	21,338	6.02	6.05
Managed funds	7C			87,264	82,339									87,264	82,339	6.09	3.29
Shares in unlisted companies	7D											3,264	4,181	3,264	4,181	n/a	n/a
Total		10,168	2,397	108,509	113,391			5,018	12,049			6,636	8,655	130,331	136,492
Financial Liabilities
Trade creditors	10A											793	450	793	450	n/a	n/a
Project liabilities	10B											39,538	37,375	39,538	37,375	n/a	n/a
Contributions not yet utilised	10C											697	153	697	153	n/a	n/a
Total Financial Liabilities												41,028	37,978	41,028	37,978	n/a	n/a

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Note 18C: Net Fair Values of Financial Assets and Liabilities
	2005			2004
		Total carrying amount	Aggregate net fair value	Total carrying amount	Aggregate net fair value
	Note	$'000	$'000	$'000	$'000
Financial Assets
Deposits at call	7A	10,168	10,168	2,397	2,397
Receivables	7B	3,372	3,372	4,474	4,474
Negotiable certificates of deposit	7C	4,163	4,163	21,763	21,763
Floating rate notes	7C	22,100	22,100	21,338	21,338
Managed funds	7C	87,264	87,264	82,339	82,339
Share in unlisted companies	7D	3,264	3,264	4,181	4,181
Total Financial Assets		130,331	130,331	136,492	136,492
Financial Liabilities
Trade creditors	10A	793	793	450	450
Project liabilities	10B	39,538	38,538	37,375	37,375
Contributions not yet utilised	10C	697	697	153	153
Total Financial Liabilities		41,028	41,028	37,978	37,978

Financial Assets
The net fair values of deposits at call and receivables approximate their carrying amounts.
The net fair value of negotiable certificates of deposit is based on discounted cash flows using current interest rates for assets with similar risk profiles.
The net fair value of floating rate notes are based on discounted cash flows using current interest rates for assets with similar risk profiles.
The net fair value of the Individually Managed Fund is the quoted market value at reporting date, adjusted for the transaction costs necessary for realisation.
The net fair value of shares in unlisted companies is the Corporation's proportion of the estimated net asset position of the company.

Financial Liabilities
The net fair values of trade creditors, project liabilities and contributions not yet utilised approximate their carrying amounts.

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Note 18D: Credit Risk Exposures

The Corporation's maximum exposure to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Financial Position.

The Corporation has no significant exposures to any concentrations of credit risk.

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