Australian Government - Grains Research and Development Corporation (GRDC) Annual Report 2004-05.  Meeting stakeholder needs through cooperative innovation
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Part 1 - Overview Part 2 - Our outputs Part 3 - Our organisation Part 4 - Financial statements Appendices Glossary

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

Note 18: Financial Instruments

For the year ended 30 June 2005

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

1 Year
or less

1 to 2
years

2 to 5
years

> 5
years

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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Page last updated: January 3, 2006
© Grains Research and Development Corporation 2005