Page 1

ANNUAL REPORT 2012 | 3


Contents Volume Two Audited Financial Statements for the University of Newcastle and its controlled entities

03

The University of Newcastle

67

GraduateSchool.com Pty Ltd

95

UoN Services Limited

135

UoN Singapore Pte Ltd

169

Newcastle Innovation Ltd

1 | THE UNIVERSITY OF NEWCASTLE


The University of Newcastle ABN 15 736 576 735 Financial Report for the year ended 31 December 2012


THE UNIVERSITY OF NEWCASTLE Contents Financial Report 31 December 2012 Financial Statements Report by Members of Council Income statement Statement of comprehensive income Statement of financial position Financial Statements Income Statement

Statement of changes in equity Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the financial statements Notes to the Financial Statements Directors' Declaration Statement by Members of Council

Statement of cash flows

Independent Audit Report

4 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Report by the Members of Council

The members of the Council present their report on the consolidated entity consisting of the University of Newcastle and the entities it controlled at the end of, or during, the year ended 31 December 2012. Members The following persons were members of the Council during the whole of the year and up to the date of this report unless otherwise specified: Official Members The Chancellor Conjoint Professor Trevor C Waring AM (ceased 30 April 2012) BA, MSc(Newcastle), FAPS The Chancellor Dr Ken Moss AM (appointed 1 May 2012 and ceased 13 October 2012) BE(Hons), PhD(Newcastle), HonFIEAust, FAICD The Acting Chancellor The Hon John Charles Price AM JP (appointed 14 October 2012) OFIE Aust, I.Eng, IMarEng(UK), MIMarEST(UK), GAICD The Vice-Chancellor and President Professor Caroline McMillen MA, DPhil(Oxon), MB, BChir(Cantab) The President of the Academic Senate Professor Val J Robertson BAppSc(Physio)(Lincoln Institute), BA(Hons), PhD(La Trobe) Members appointed by the NSW Minister for Education Ms Sharryn Brownlee (Pro Chancellor appointed 1 May 2012) MAICD Conjoint Professor Geoff Lilliss

BE(Hons), MBA(Merit)(Newcastle), FIEAust, MAICD Dr Ken Moss AM (ceased 30 April 2012) BE(Hons), PhD(Newcastle), HonFIEAust, FAICD The Hon John Charles Price AM JP (Deputy Chancellor) OFIE Aust, I.Eng, IMarEng(UK), MIMarEST(UK), GAICD Senator Arthur Sinodinos AO (ceased 1 September 2012) BCom(Hons)(Newcastle), FAIM Ms Deborah Wright DipTeach(Newcastle), MBA(SCU), FAMI, CPM

Member appointed by Council Mr Brian Kennaugh (Pro Chancellor appointed 1 May 2012) BBus(Newcastle) Elected Members Dr Tom Griffiths (ceased 31 August 2012, appointed 14 September 2012) BEd(Hons), PhD(Newcastle), GradCert TESOL(UTS) Professor John Rostas (ceased 31 August 2012, appointed 14 September 2012) BSc(Hons), PhD(Monash)

5 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Report by the Members of Council

Ms Leanne Holt (ceased 31 August 2012, appointed 14 September 2012) Dip HR(HIT), MME(Newcastle) Ms Heather Richards BMath(Hons)(Manc) Ms Mpontseng Lydia Pama BA(Public Admin and Political Science)(National University of Lesotho) External persons who are members of Convocation appointed by the Council Ms Dianne Allen JP (Pro Chancellor ceased 6 December 2012, appointed Acting Deputy Chancellor on 7 December 2012) BCom(Newcastle), CA, MAICD Mr Peter Cockbain BScEng(Newcastle), FIEAust, CPEng, FIPENZ, FTSE Dr Geoff Leonard AM (Pro Chancellor appointed 7 December 2012) BCom, HonDBus(Newcastle), FCA, FCPA

6 | THE UNIVERSITY OF NEWCASTLE


1/1

4/5

6/6

6/6

5/6

6/6

6/6

0/4

4/6

4/6

Dr Ken Moss AM

The Hon John Charles Price AM JP

Professor Caroline McMillen

Professor Val J Robertson

Ms Sharryn Brownlee

Conjoint Professor Geoff Lilliss

Senator Arthur Sinodinos AO

Ms Deborah Wright

Mr Brian Kennaugh

Council Ordinary meetings

Conjoint Professor Trevor C Waring AM

Members (listed as per order above)

7 | THE UNIVERSITY OF NEWCASTLE

1/1

1/1

0/1

1/1

1/1

1/1

1/1

1/1

1/1

1/1

Council Special meetings

5/6

Not a member

Not a member

Not a member

4/5

Not a member

Not a member

6/6

Not a member

Not a member

Audit and Risk Management Committee

1/1

Not a member

0/1

Not a member

Not a member

1/1

1/1

1/1

1/1

1/1

Audit & Risk Management Committee and Finance Committee

Not a member

Not a member

Not a member

Not a member

2/4

Not a member

4/4

1/1

1/2

1/1

Controlled Entities Sub-Committee

Not a member

Not a member

Not a member

2/4

Not a member

3/4

3/4

4/4

2/2

1/1

Executive Committee of Council

Not a member

Not a member

0/4

Not a member

Not a member

9/10

10/10

6/10

4/8

1/2

Finance Committee

Not a member

Not a member

Not a member

Not a member

4/6

6/6

6/6

1/1

4/4

1/1

Nominations and Legislation Committee

Meetings of Members The number of meetings of the Council and of each Council standing committee meeting held during the year ended 31 December 2012. The number of meetings attended by each member were:

Not a member

3/6

Not a member

3/6

Not a member

5/6

6/6

1/1

2/3

1/2

Strategic Development Committee

THE UNIVERSITY OF NEWCASTLE Report by the Members of Council


8 | THE UNIVERSITY OF NEWCASTLE

5/6

Ms Leanne Holt

Dr Geoff Leonard AM

Mr Peter Cockbain

Ms Dianne Allen JP

Ms Mpontseng Lydia Pama

4/6

2/6

5/6

5/6

4/6

5/6

Professor John Rostas

Ms Heather Richards

4/6

Council Ordinary meetings

Dr Tom Griffiths

Members (listed as per order above)

1/1

1/1

1/1

1/1

1/1

1/1

1/1

1/1

Council Special meetings

5/6

6/6

Not a member

Not a member

Not a member

Not a member

Not a member

Not a member

Audit and Risk Management Committee

1/1

1/1

1/1

Not a member

Not a member

Not a member

Not a member

Not a member

Audit & Risk Management Committee and Finance Committee

Not a member

4/4

Not a member

Not a member

Not a member

3/4

Not a member

Not a member

Controlled Entities Sub-Committee

Not a member

Not a member

4/4

Not a member

Not a member

Not a member

Not a member

Not a member

Executive Committee of Council

4/4

Not a member

10/10

Not a member

Not a member

Not a member

Not a member

3/6

Finance Committee

4/6

Not a member

Not a member

Not a member

Not a member

Not a member

Not a member

Not a member

Nominations and Legislation Committee

Not a member

4/4

Not a member

Not a member

2/4

Not a member

4/5

Not a member

Strategic Development Committee

THE UNIVERSITY OF NEWCASTLE Report by the Members of Council


THE UNIVERSITY OF NEWCASTLE Report by the Members of Council

Principal Activities During the year the principal continuing activities of the University consisted of:  the provision of facilities for education and research  the provision of courses of study across a range of disciplines  the conferring of degrees at Bachelor, Master and Doctoral levels as well as the awarding of other diplomas and certificates  the encouragement, dissemination and advancement of knowledge through free enquiry  participation in public discourse  administration in support of teaching, learning and research activities  community engagement in cultural, sporting, professional, technical and vocational services. There were no significant changes in the nature of the activities of the University during the year. Review of Operations A review of the operations of the University of Newcastle during the year is provided in detail in Volume one of the 2012 Annual Report. Significant Changes in the State of Affairs During the year there were no significant changes in the state of the affairs of the University other than that referred to in the financial statements and notes following. Matters Subsequent to the End of the Financial Year There has not been any matter or circumstance, other than that referred to in the financial statements and notes following, that has arisen, significantly affected, or may significantly affect, the operations of the University, the results of those operations, or the state of affairs in future financial years. Likely Developments and Expected Results of Operations There are no likely developments in the operations of the University and its controlled entities that were not finalised at the date of this report. Environmental Regulation The University is subject to various Commonwealth, State and local government statutes and requirements related to environmental matters. During the year, the University fulfilled its requirements under the National Greenhouse Energy and Reporting Act 2007 to submit its 2011-12 greenhouse gas emissions and energy use reporting totals to the Australian Government by the mandated deadline. Insurance of Officers The University maintains a comprehensive insurance program that is renewed annually. The insurance program includes a  suite  of  directors’  and  officers’  liability  insurances  for  Council  members,  directors  and  officers  of  the   University and its controlled entities. Legal Proceedings on behalf of the University of Newcastle There are a number of matters subject to legal proceedings as at the date of this report. Further details relating to those matters are included in the financial statements and notes following. This report is made in accordance with the resolution of the members of the Council of the University of Newcastle.

The Hon John Price AM Acting Chancellor Dated 26 March 2013

9 | THE UNIVERSITY OF NEWCASTLE

Professor Caroline McMillen Vice-Chancellor and President


THE UNIVERSITY OF NEWCASTLE Income Statement For the year ended 31 December 2012

Note

Consolidated 2012 2011 $’000 $’000

Parent 2012 2011 $’000 $’000

Revenue from continuing operations Australian Government financial assistance Australian Government grants HELP - Australian Government Payment State and local Government financial assistance HECS-HELP - Student payments Fees and charges Investment revenue Royalties, trademarks and licences Consultancies and contracts Other revenue

3 3 4 5 6 7 8 9

Total revenue from continuing operations Other income Gains on disposal of assets Total income from continuing operations Expenses Employee related expenses Depreciation and amortisation Repairs and maintenance Borrowing costs Impairment of assets Loss on disposal of assets Deferred super expense Other expenses

10 11 12 13

14

Total expenses from continuing operations Operating result before income tax Income tax expense

15

Operating result after income tax for the year Operating result attributable to members of the University of Newcastle

34

306,660 110,460 1,964 9,573 100,942 23,354 97 76,067 27,639

279,730 100,623 1,566 9,776 92,808 16,408 65 70,392 27,611

306,660 110,460 1,964 9,573 95,056 33,590 97 61,257 27,354

279,730 100,623 1,566 9,776 87,040 14,251 65 56,380 30,147

656,756

598,979

646,011

579,578

382

112

610

97

657,138

599,091

646,621

579,675

364,751 38,312 23,828 3,439 1,480 44 178 169,499

320,430 42,109 22,611 649 405 429 560 180,083

349,478 37,527 23,511 3,541 1,499 35 178 171,007

306,403 41,486 22,303 550 405 387 560 178,842

601,531

567,276

586,776

550,936

55,607

31,815

59,845

28,739

(1,756)

(2,566)

-

-

53,851

29,249

59,845

28,739

53,851

29,249

59,845

28,739

The accompanying notes form part of these financial statements.

10 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Statement of Comprehensive Income For the year ended 31 December 2012 Consolidated

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Operating result for the year

53,851

29,249

59,845

28,739

Other comprehensive income Gain (loss) on value of available for sale financial assets, net of tax Exchange differences on translating foreign controlled entities Cash flow hedges Net gain on revaluation of property, plant and equipment

9,971 129 (4,649) 16,235

(8,294) (25) -

9,972 (4,649) 16,235

(8,297) -

Other comprehensive income for the year, net of tax

21,686

(8,319)

21,558

(8,297)

Total comprehensive income for the year

75,537

20,930

81,403

20,442

Total comprehensive income attributable to: The University of Newcastle

75,537

20,930

81,403

20,442

Note

The accompanying notes form part of these financial statements.

11 | T H E U N I V E R S I T Y O F N E W C A ST L E


THE UNIVERSITY OF NEWCASTLE Statement of Financial Position For the year ended 31 December 2012

Note

Consolidated 2012 2011 $’000 $’000

Parent 2012 2011 $’000 $’000

ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories Other financial assets

16 17 18 19

Total current assets Non-current assets Trade and other receivables Other financial assets Property, plant and equipment Intangible assets

17 19 20 21

22,122 36,111 148 194,537

16,485 38,090 503 143,951

17,860 35,280 178,587

13,384 37,984 127,527

252,918

199,029

231,727

178,895

308,545 208,082 833,320 2,660

282,806 86,938 816,622 4,222

308,545 207,918 831,071 2,421

282,806 86,435 814,676 3,882

Total non-current assets

1,352,607 1,190,588

1,349,955 1,187,799

Total assets

1,605,525 1,389,617

1,581,682 1,366,694

LIABILITIES Current liabilities Trade and other payables Borrowings Current tax liabilities Provisions Other liabilities

39,929 174 86,437 8,528

33,666 250 2,768 65,180 12,334

35,002 84,581 5,537

41,555 250 63,756 5,620

135,068

114,198

125,120

111,181

494 85,000 354,719 4,649

594 324,186 581

494 85,000 354,173 4,649

594 323,495 581

Total non-current liabilities

444,862

325,361

444,316

324,670

Total liabilities

579,930

439,559

569,436

435,851

1,025,595

950,058

1,012,246

930,843

496,129 529,466

474,443 475,615

496,071 516,175

474,513 456,330

1,025,595

950,058

1,012,246

930,843

22 23 24 26

Total current liabilities Non-current liabilities Trade and other payables Borrowings Provisions Derivative financial instruments

22 23 24 25

Net assets EQUITY Reserves Retained earnings

27 27

Total equity

The accompanying notes form part of these financial statements.

12 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Statement of Changes in Equity For the year ended 31 December 2012

Reserves $’000

Retained earnings $’000

Operating result for the year Other comprehensive income

482,762 (8,319)

446,366 29,249 -

929,128 29,249 (8,319)

Balance at 31 December 2011

474,443

475,615

950,058

Balance at 1 January 2012 Operating result for the year Other comprehensive income

474,443 21,686

475,615 53,851 -

950,058 53,851 21,686

Balance at 31 December 2012

496,129

529,466 1,025,595

Balance at 1 January 2011 Operating result for the year Other comprehensive income

482,810 (8,297)

427,591 28,739 -

910,401 28,739 (8,297)

Balance at 31 December 2011

474,513

456,330

930,843

Balance at 1 January 2012 Operating result for the year Other comprehensive income

474,513 21,558

456,330 59,845 -

930,843 59,845 21,558

Balance at 31 December 2012

496,071

516,175 1,012,246

Note

Total $’000

Consolidated

Balance at 1 January 2011

Parent

The accompanying notes form part of these financial statements.

13 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Statement of Cash Flows For the year ended 31 December 2012 Consolidated

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

3(h)

403,512 1,963 9,573 208,170 4,796 (523,000) 12,410 (3,489) 6,056 (3,555)

340,651 1,566 9,776 218,557 1,005 (522,053) 10,486 (522) 10,805 (41)

403,512 1,963 9,573 185,535 13,252 (513,523) 11,489 (3,489) 6,541 -

340,651 1,566 9,776 197,075 1,005 (499,662) 9,562 (491) 10,807 -

34

116,436

70,230

114,853

70,289

Proceeds from sale of property, plant and equipment Proceeds from sale of available-for-sale financial assets Proceeds from redemption of held to maturity investments Payments for purchase of property, plant and equipment Payments for purchase of available-for-sale financial assets Payments for purchase of held to maturity investments Payments from interest bearing loans Loans from (to) related parties Payments for purchase of intellectual property Proceeds of repayment of loans

312 1,303 371,443 (34,549) (57,849) (476,222) 247 (287) 100

310 1,669 280,600 (44,528) (9,839) (284,300) (409) 135

290 1,188 350,343 (33,772) (57,799) (455,574) 247 100

279 1,302 271,800 (44,028) (8,589) (274,900) (2,033) 135

Net cash used by investing activities

(195,502)

(56,362)

(194,977)

(56,034)

Cash flows from financing activities Proceeds from borrowings Repayment of borrowings

85,000 (400)

(14,051)

85,000 (400)

(13,282)

Net cash used by financing activities

84,600

(14,051)

84,600

(13,282)

Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Effects of exchange rate changes on cash and cash equivalents

5,534 16,485 103

(183) 16,675 (7)

4,476 13,384 -

973 12,411 -

22,122

16,485

17,860

13,384

Note

Cash flows from operating activities Australian Government grants State Government grants HECS-HELP - Student payments Receipts from student fees and other customers Dividends received Payments to suppliers and employees Interest received Interest paid GST recovered (paid) Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities

Cash and cash equivalents at end of financial year

16

The accompanying notes form part of these financial statements.

14 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis of preparation The annual financial statements represent the audited general purpose financial statements of The University of Newcastle. They have been prepared on an accrual basis in accordance with Australian Accounting Standards. Additionally the statements have been prepared in accordance with the following statutory requirements: 

Higher Education Support Act 2003 (Financial Statement Guidelines)

Public Finance and Audit Act 1983, the requirements of the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) and other State/Australian Government legislative requirements.

The University of Newcastle is a not-for-profit entity and these statements have been prepared on that basis. Some of the requirements for not-for-profit entities are inconsistent with the IFRS requirements. Date of authorisation for issue The financial statements were authorised for issue by the members of The University of Newcastle on 26 March 2013. Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment. Critical accounting estimates and judgements The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying The University of  Newcastle’s  accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The University of Newcastle makes estimates and assumptions covering the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below:

(b)

Provision for impairment of receivables – a provision is estimated when there is objective evidence that the Group will not be able to collect all amounts due according to the original forms of the receivables as outlined in note 1(j).

Impairment of Investments and other financial assets – the Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired as outlined in note 1(l).

Employee benefits – Long service leave – the liability for long service leave is measured at the present value of the expected future payments to be made in respect of services provided by employees up to the reporting date as outlined in note 1(v)(iii).

Employee benefits – Defined benefit plans – the liability or asset in respect of defined benefit superannuation plans and pensions is measured at the present value of the defined benefit obligation and pension at the reporting date as outlined in note 1(v)(iv). These benefits are independently valued by an actuary where certain key assumptions are taken into account as outlined in note 36(c).

Useful lives of property, plant and equipment – depreciation of property, plant and equipment is calculated over the assets estimated useful lives. Useful lives are reviewed and adjusted if appropriate at each reporting date as outlined in note 1(o).

Valuation of property, plant and equipment – land, buildings and infrastructure, artworks and rare books are independently valued as outlined in note 1(o). Certain key assumptions are taken into account as outlined in note 20(a).

Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of The University of Newcastle (''parent entity'') as at 31 December 2012 and the results of all subsidiaries for the year then ended. The University of Newcastle and its subsidiaries together are referred to in this financial report as the Group or the Consolidated Entity.

15 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(b)

Principles of consolidation (continued) Subsidiaries are all those entities (including special purpose entities) over which the Group has the ability to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. (ii) Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the parent entity financial statements using the cost method and in the consolidated financial statements using the equity method of accounting, after  initially  being  recognised  at  cost.  The  Group’s  investment  in  associates  includes  goodwill  (net  of  any   accumulated impairment loss) identified on acquisition. The  Group’s  share  of  its  associates’  post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised in the parent  entity’s  income  statement,  while  in  the  consolidated  financial  statements  they  reduce  the  carrying  amount  of  the   investment. When  the  Group’s  share  of  losses  in  an  associate  equals  or  exceeds  its  interest  in  the  associate,  including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. (iii) Joint ventures Joint venture operations Where relevant, the proportionate interests in the assets, liabilities and expenses of a joint venture operation are incorporated into the financial statements under the appropriate headings. (iv) Joint venture entities The interest in a joint venture entity is accounted for in the consolidated financial statements using the equity method and is carried at cost by the parent entity. Under the equity method, the share of the profits or losses of the entity is recognised in the income statement, and the share of movements in reserves is recognised in reserves in the statement of comprehensive income and statement of changes in equity.

(c)

Foreign currency translation (i) Functional and presentation currency Items included in the  financial  statements  of  each  of  the  Group’s  entities  are  measured  using  the  currency  of  the  primary   economic environment in which the entity operates (‘the  functional  currency’).  The  consolidated  financial  statements  are   presented in Australian dollars,  which  is  The  University  of  Newcastle’s  functional  and  presentation  currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Qualifying cash flow hedges and qualifying net investment hedges in a foreign operation shall be accounted for by recognising the portion of the gain or loss determined to be an effective hedge in other comprehensive income and the ineffective portion in profit or loss.

16 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c)

Foreign currency translation (continued) If gains or losses on non-monetary items are recognised in other comprehensive income, translation gains or losses are also recognised in other comprehensive income. Similarly, if gains or losses on non-monetary items are recognised in profit and loss, translation gains or losses are also recognised in profit or loss. (iii) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: 

assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are accounted for by recognising the effective portion in other comprehensive income and the ineffective portion in the income statement. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the gain or loss relating to the effective portion of the hedge that has been recognised in other comprehensive income is reclassified from equity to the income statement as a reclassification adjustment. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. (d)

Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will  flow  to  the  Group  and  specific  criteria  have  been  met  for  each  of  the  Group’s  activities  as  described  below.   The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows: (i) Government Grants The University of Newcastle treats operating grants received from Australian Government entities as income in the year of receipt. Grants from the government are recognised at their fair value where the Group obtains control of the right to receive the grant, it is probable that economic benefits will flow to the Group and it can be reliably measured. (ii) Student fees and charges Fees and charges are recognised as income in the year of receipt, except to the extent that fees and charges relate to courses to be held in future periods. Such income (or portion thereof) is treated as income in advance in liabilities. Conversely, fees and charges relating to debtors are recognised as revenue in the year to which the prescribed course relates. (iii) Human resources Contract revenue is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to labour hours incurred to date as a percentage of estimated total labour hours for each contract. Other human resources revenue is recognised when the service is provided. (iv) Lease income Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

17 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e)

Income tax The University of Newcastle is exempt from income tax under Commonwealth income taxation legislation. Within the consolidated entity however, there are entities that are not exempt from this legislation. The income tax expense or revenue for the period is the tax payable or receivable on the  current  period’s  taxable  income   based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax assets and liabilities relating to the same taxation authority are offset when there is a legally enforceable right to offset current tax assets and liabilities and they are intended to be either settled on a net basis, or the asset is to be realised and the liability settled simultaneously. Current and deferred tax balances attributable to amounts recognised outside profit and loss are also recognised outside profit and loss.

(f)

Leases Leases of property, plant and equipment where the Group as lessee, has substantially all the risks and rewards of ownership are  classified  as  finance  leases.  Finance  leases  are  capitalised  at  the  lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the asset’s  useful  life  and the lease term. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 31). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

(g)

Business combinations The acquisition method shall be applied to account for each business combination; this does not include a combination of entities or businesses under common control, the formation of a joint venture, or the acquisition of an asset or a group of assets. The acquisition method requires identification of the acquirer, determining the acquisition date and recognising and measuring the identifiable assets acquired, liabilities assumed, goodwill gained, a gain from a bargain purchase and any non-controlling interest in the acquiree that are present ownership interests and entitle their holders to a proportionate share of  the  entity’s  net  assets  in  the  event of liquidation. Identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree shall be recognised separately from goodwill as of the acquisition date. Intangible assets acquired in a business combination are recognised separately from goodwill if they are separable, but only together with a related contract, identifiable asset or liability. Acquisition related costs are expensed in the periods in which they are incurred with the exception of costs to issue debt or equity securities, which are recognised in accordance with AASB132 and AASB139. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Measurement of any non-controlling interest in the acquiree is at fair value  or  the  present  ownership  instruments’  proportionate  share  in  the  recognised  amounts  of  the  acquiree’s  identifiable   net assets. All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by Australian Accounting Standards. Contingent liabilities assumed are recognised as part of the acquisition if there is a present obligation arising from past events and the fair value can be reliably measured. The excess at the acquisition date of the aggregate of the consideration transferred, the amount of any non-controlling interest and any previously held equity interest in the acquiree, over the net amounts of identifiable assets acquired and liabilities assumed is recognised as goodwill (refer to 1(p)(ii)). If the cost of acquisition is less than the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement

18 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(g)

Business combinations (continued) of the acquirer, but only after a reassessment of the identification and measurement of the net assets acquired. Consideration transferred in a business combination shall be measured at fair value. Where the business combination is achieved in stages, the acquirer shall remeasure previously held equity interest in the acquiree at its acquisition date fair value and recognise the resulting gain or loss in profit or loss.

(h)

Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An  impairment  loss  is  recognised  for  the  amount  by  which  the  asset’s  carrying amount exceeds its recoverable  amount.  The  recoverable  amount  is  the  higher  of  an  asset’s  fair  value  less  costs  to  sell  and  value  in  use.  For   the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i)

Cash and cash equivalents For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(j)

Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between  the  asset’s  carrying  amount  and  the  present  value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivable are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.

(k)

Inventories (i) Retail stock Retail stock is stated at the lower of cost and net realisable value. Cost comprises direct materials only. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(l)

Investments and other financial assets Classification The Group classifies its investments and other financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

19 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(l)

Investments and other financial assets (continued) (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the  Group’s  management  has  the  positive  intention  and  ability  to  hold  to  maturity.   (iv) Available-for-sale financial assets Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Initial recognition and derecognition Regular purchases of investments and other financial assets are recognised on trade-date, being the date on which the Group commits to purchase or sell the asset. Investments and other financial assets are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments and other financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are included in the income statement as gains and losses from investment securities. Subsequent measurement Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.  Gains  or  losses  arising  from  changes  in  the  fair  value  of  the  ‘financial  assets  at  fair  value  through  profit  or  loss’ category are included in the income statement within other income or other expenses in the period in which they arise. Changes in the fair value of monetary security denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and on monetary securities classified as available-for-sale are recognised in equity. Fair value The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. Impairment The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

20 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(m)

Derivatives Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge) or (2) hedges of highly probable forecast transactions (cash flow hedges). (i) Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. (ii) Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within other income or other expense. Amounts that have been recognised in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement  within  ’finance  costs’.  The  gain  or  loss  relating  to  the  effective  portion  of   forward foreign exchange contracts hedging export sales is recognised in the income statement within sales. However, when the forecast cash flow that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets) the gains and losses previously recognised in other comprehensive income are either reclassified as a reclassification adjustment to the income statement or are included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in profit or loss as cost of goods sold in the case of inventory, or as depreciation in the case of fixed assets. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss that has been recognised in other comprehensive income from the period when the hedge was effective shall remain separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was recognised in other comprehensive income shall be reclassified to profit or loss as a reclassification adjustment. (iii) Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement and are included in other income or other expenses.

(n)

Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. Entities shall classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices for identical assets or liabilities at the reporting date (Level 1). The quoted market price used for financial assets held by the Group is the current bid price. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter-derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments (Level 2) are used for long-term debt instruments held. Other techniques that are not based on observable market data (Level 3) such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the reporting date. The level in the fair value hierarchy shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by

21 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(n)

Fair value estimation (continued) discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

(o)

Property, plant and equipment Land, buildings and infrastructure, artworks and rare books are shown at fair value, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Any additions to land, buildings and infrastructure, artworks and rare books since the valuation by external valuers are shown at historical cost less depreciation. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include gains or losses that were recognised in other comprehensive income on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent costs  are  included  in  the  asset’s  carrying  amount  or  recognised  as  a  separate  asset,  as  appropriate,  only   when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Increases in the carrying amounts arising on revaluation of land, buildings and infrastructure, artworks and rare books are recognised, net of tax, in other comprehensive income and accumulated in equity under the heading of property, plant and equipment revaluation reserve. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit and loss. Decreases that reverse previous increases of the same asset are also firstly recognised in other comprehensive income before reducing the balance of revaluation surpluses in equity, to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the income statement. Land, artworks and rare books are not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: Buildings 40 - 70 years Plant and equipment 2 - 5 years Library collections 2 - 5 years The  assets’  residual  values  and  useful  lives  are  reviewed,  and  adjusted  if  appropriate,  at  each  reporting date. An  asset’s  carrying  amount  is  written  down  immediately  to  its  recoverable  amount  if  the  asset’s  carrying  amount is greater than its estimated recoverable amount. Land, buildings and infrastructure were valued by Global Valuation Services in October 2012.

(p)

Intangible Assets (i) Intellectual property Expenditure on intellectual property, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other intellectual property expenditure is recognised in the income statement as an expense incurred. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, which varies from 10 to 16 years. (ii) Goodwill Goodwill represents the excess of the aggregate of the fair value measurement of the consideration transferred in an acquisition, the amount of any non-controlling interest and any previously held equity interest in the acquire, over the fair value of  the  Group’s  share  of  the  net  identifiable  assets  of  the acquiree at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not amortised, instead it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. (iii) Computer Software Expenditure on software, being software that is not an integral part of the related hardware, is capitalised. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, to a maximum of 5 years.

22 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(q)

Unfunded superannuation An arrangement exists between the Australian Government and the State Government to meet the unfunded liability for the University  of  Newcastle’s  beneficiaries  of  the  State  Superannuation Schemes, on an emerging cost basis. This arrangement is evidenced by the State Grants (General Revenue) Amendment Act 1987, Higher Education Funding Act 1988 and Subsequent amending legislation. Accordingly the unfunded liabilities have been recognised in the Statement of Financial Position under provisions with a corresponding asset recognised under receivables. The Australian Government and the State Government are reviewing the current arrangements relating to unfunded State Superannuation Schemes.

(r)

Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days following the end of the month they are recognised.

(s)

Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and recognised on a straight-line basis over the term of the facility. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date and does not expect to settle the liability for at least 12 months after the reporting date.

(t)

Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are expensed at the time they are incurred.

(u)

Provisions Provisions for legal claims and service warranties are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are  measured  at  the  present  value  of  management’s  best  estimate  of  the  expenditure  required  to  settle  the   present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.

(v)

Employee benefits (i) Wages and salaries Liabilities for short-term employee benefits including wages and salaries and non-monetary benefits due to be settled within 12 months after the end of the period are measured at the amount expected to be paid when the liability is settled and recognised in other payables. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

23 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(v)

Employee benefits (continued) (ii) Annual leave and sick leave The liability for long-term employee benefits such as annual leave and accumulating sick leave are recognised in current provisions for employee benefits as they are expected to be settled within 12 months after the end of the reporting period. It is measured at the amount expected to be paid when the liability is settled. Regardless of the expected timing of settlements, provisions made in respect of employee benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability. (iii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. (iv) Retirement benefit obligations All employees  of  the  Group  are  entitled  to  benefits  on  retirement,  disability  or  death  from  the  Group’s  Superannuation   plan. The Group has a defined benefit section and defined contribution section within its plan. The defined benefit section provides defined lump sum benefits based on years of service and final average salary. The defined contribution section receives  fixed  contributions  from  the  Group  and  the  Group’s  legal  or constructive obligation is limited to these contributions. A significant proportion of the employees of the parent entity are members of the defined contribution section of the Group's plan. A liability or asset in respect of defined benefit Superannuation plans is recognised in the statement of financial position, and is measured as the present value of the defined benefit obligation at the reporting date plus unrecognised Actuarial gains (less unrecognised losses) less the fair value of the Superannuation  fund’s  assets  at  that  date  and  any   unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the income statement in the period in which they occur. Past service costs are recognised immediately in the income statement, unless the changes to the Superannuation plans are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period. Part of the provision of the existing benefit obligation (for example, taxes on investment income and employer contributions) are taken into account in measuring the net liability ort asset. (v) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after reporting date are discounted to present value.

24 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(w)

Rounding of amounts The University of Newcastle is of a kind referred to in Class Order 98/0100 as amended by Class Order 04/667, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with the Class Order, to the nearest thousand dollars, or in certain cases, the nearest dollar.

(x)

Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the cost acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(y)

Comparative amounts Where necessary, comparative information has been reclassified to enhance comparability in respect of changes in presentation adopted in the current year.

(z)

Non-current assets (or disposal groups) held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.

(aa)

New Accounting Standards and Interpretations Certain new Accounting Standards and Interpretations have been published that are not mandatory for 31 December 2012 reporting periods. The University of Newcastle's assessment of the impact of these new Standards and Interpretations is set out below: 

AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013)

AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective 1 January 2013)

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)

Revised AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements (effective 1 January 2013)

25 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 2

RECLASSIFICATION OF COMPARATIVE INFORMATION

(a)

Nature of the reclassification Changes have been made to the classification of certain items in the financial statements. As a result, certain amounts reported for 2011 have been reclassified as set out below. There has been no effect on operating result and net assets.

(b)

(c)

Summary of reclassified comparative information

Consolidated

Parent

Restated 2011 $’000

Previously reported 2011 $’000

Restated 2011 $’000

Previously reported 2011 $’000

Reclassification of Income Statement Australian Government grants Fees and charges Other revenue

279,730 92,808 27,611

256,635 93,811 49,703

279,730 87,040 30,147

256,635 88,081 52,201

Total

400,149

400,149

396,917

396,917

Reason for the reclassification The reclassification has been undertaken to ensure the University is classifying all Income Statement items consistently.

3

AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE INCLUDING HECS-HELP AND OTHER AUSTRALIAN GOVERNMENT LOAN PROGRAMS Consolidated

Note

(a)

Commonwealth Grants Scheme and other grants Commonwealth Grants Scheme Indigenous Support Program Disability Support Program Learning and Teaching Performance Fund Capital Development Pool Diversity and Structural Adjustment Fund Transitional Cost Program Partnership and Participation Program Total Commonwealth Grants Scheme and other grants

(b)

37(a)

Higher Education Loan Programs (HELP) HECS – HELP FEE – HELP SSAF – HELP Total Higher Education Loan Programs

26 | THE UNIVERSITY OF NEWCASTLE

37(b)

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

206,657 2,268 185 93 6,145

172,711 2,150 163 3,163 778 70 172 4,263

206,657 2,268 185 93 6,145

172,711 2,150 163 3,163 778 70 172 4,263

215,349

183,470

215,349

183,470

96,052 13,438 970

88,387 12,236 -

96,052 13,438 970

88,387 12,236 -

110,460

100,623

110,460

100,623


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 3

AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE INCLUDING HECS-HELP AND OTHER AUSTRALIAN GOVERNMENT LOAN PROGRAMS (continued) Consolidated

Note

(c)

(d)

(f)

Parent

2012 $’000

2011 $’000

5,550 512 796 428 314 76

4,806 493 1,262 169 36

5,550 512 796 428 314 76

4,806 493 1,262 169 36

Total Scholarships

7,676

6,766

7,676

6,766

8,686 15,074 5,971 3,660

8,539 14,707 5,482 2,913

8,686 15,074 5,971 3,660

8,539 14,707 5,482 2,913

33,391

31,641

33,391

31,641

Education Investment Fund

14,143

15,857

14,143

15,857

Total other capital funding

14,143

15,857

14,143

15,857

9,351 3,636 199

8,436 2,010 179

9,351 3,636 199

8,436 2,010 179

DIISRTE research Joint Research Engagement Program Research Training Scheme Research Infrastructure Block Grants Sustainable Research Excellence in Universities 37(d)

Other capital funding

Australian Research Council Discovery Projects Fellowships Indigenous Researchers Development Total discovery Linkages Infrastructure Projects

13,186

10,625

13,186

10,625

890 3,204

1,430 3,104

1,430 3,104

Total linkages

4,094

890 3,204

4,534

4,094

4,534

2,215

3,376

2,215

3,376

Networks and Centres Centres Total Networks and Centres

(g)

2011 $’000

Scholarships Australian Postgraduate Awards International Postgraduate Research Scholarships Commonwealth Education Costs Scholarship Commonwealth Accommodation Scholarships Indigenous Access scholarships Indigenous Staff Scholarships

Total DIISRTE research (e)

2012 $’000

2,215

3,376

2,215

3,376

Total Australian Research Council

19,495

18,535

19,495

18,535

Other Australian Government financial assistance Non-capital Indigenous Tutorial Assistance Scheme Miscellaneous government grants

594 11,770

368 10,224

594 11,770

368 10,224

Total non-capital Capital Miscellaneous government grants Total capital Total other Australian Government financial assistance

27 | THE UNIVERSITY OF NEWCASTLE

12,364 4,242

10,592

12,364

12,869

4,242

10,592 12,869

4,242

12,869

4,242

12,869

16,606

23,461

16,606

23,461


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 3

AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE INCLUDING HECS-HELP AND OTHER AUSTRALIAN GOVERNMENT LOAN PROGRAMS (continued) Consolidated

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Total Australian Government financial assistance

417,120

380,353

417,120

380,353

Reconciliation Australian Government Grants (a + c + d + e + f + g) HECS - HELP FEE - HELP Student Services Amenities Fee (SSAF) - HELP

306,660 96,052 13,438 970

279,730 88,387 12,236 -

306,660 96,052 13,438 970

279,730 88,387 12,236 -

Total Australian Government financial assistance

417,120

380,353

417,120

380,353

Australian Government grants received – cash basis CGS and Other DISSRTE Grants Higher Education Loan Programs Scholarships DISSRTE research Other capital funding ARC grants - Discovery ARC grants - Linkages ARC grants - Networks and Centres

216,516 110,558 8,287 33,390 14,143 13,186 4,094 2,215

183,084 98,968 7,431 31,640 15,857 10,625 4,534 3,376

216,516 110,558 8,287 33,390 14,143 13,186 4,094 2,215

183,084 98,968 7,431 31,640 15,857 10,625 4,534 3,376

Total Australian Government grants received - cash basis

402,389

355,515

402,389

355,515

Note

(h)

OS-Help (Net) Total Australian Government funding received - cash basis 4

Parent

1,123

1,464

1,123

1,464

403,512

356,979

403,512

356,979

STATE AND LOCAL GOVERNMENT FINANCIAL ASSISTANCE Government grants were received during the reporting period for the following purposes: Non-Capital State Government Contributions Local Government Contributions

1,068 -

1,252 10

1,068 -

1,252 10

Total

1,068

1,262

1,068

1,262

Capital State Government Capital Contributions

896

304

896

304

Total

896

304

896

304

1,964

1,566

1,964

1,566

Total State and Local Government financial assistance

28 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 5

FEES AND CHARGES Consolidated

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Course fees and charges Fee-paying overseas students Fee-paying domestic postgraduate students Fee-paying domestic undergraduate students Fee-paying domestic non-award students Course and conference fees Course materials

73,401 9,334 196 387 2,127 666

68,786 8,279 269 361 1,817 701

67,516 9,334 196 387 2,126 666

63,022 8,279 269 361 1,813 701

Total course fees and charges

86,111

80,213

80,225

74,445

184 2,223 9,012 597 1,501 1,314

214 2,197 8,267 555 1,362 -

184 2,223 9,012 597 1,501 1,314

214 2,197 8,267 555 1,362 -

14,831

12,595

14,831

12,595

100,942

92,808

95,056

87,040

Dividends Distributions Interest Net amortisation of bonds

4,340 2,916 16,026 72

195 5,627 10,586 -

15,831 2,916 14,771 72

195 5,627 8,429 -

Total investment revenue

23,354

16,408

33,590

14,251

Licence fees

97

65

97

65

Total royalties, trademarks and licences

97

65

97

65

Other non-course fees and charges Library fines Parking fees Student accommodation Music tuition Other fees and charges Student Services Amenities Fees (SSAF) Total other fees and charges Total fees and charges 6

7

8

Parent

INVESTMENT REVENUE

ROYALTIES, TRADEMARKS AND LICENCES

CONSULTANCIES AND CONTRACTS Consultancies Contract research National Health & Medical Research Council Hunter Medical Research Institute Co-operative research centre Industry research Other contract revenue

1,042

14,534

1,019

643

14,958 6,746 1,410 14,630 37,281

15,201 5,355 1,847 427 33,028

14,958 6,746 1,410 192 36,932

15,201 5,355 1,847 427 32,907

Total consultancies and contracts

76,067

70,392

61,257

56,380

29 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 9

OTHER REVENUE Note

Consolidated

2012 $’000

Parent

2012 $’000

2011 $’000

2011 $’000

Cost recoveries Donations and bequests Insurance recoveries Other related party revenue Scholarships and prizes Sponsorship Advertising Sale of goods Rents Other revenue

11,406 810 283 1,362 3,685 1,212 1,838 2,531 4,512

9,891 2,271 1,979 1,063 4,451 1,125 2,025 2,196 2,610

12,054 809 283 2,591 1,363 3,700 1,209 1,099 4,246

9,798 4,460 1,978 4,873 405 4,238 1,125 1,040 2,230

Total other revenue

27,639

27,611

27,354

30,147

Distributions from the trustee of the Kelver Hartley Trust are recorded in scholarships and prizes. 10

EMPLOYEE RELATED EXPENSES Academic Salaries Contribution to funded superannuation and pension schemes Payroll tax Workers compensation Long service leave Annual leave Other Parental leave Contract severance Voluntary separation Total academic Non-academic Salaries Contribution to funded superannuation and pension schemes Payroll tax Workers compensation Long service leave Annual leave Other Parental leave Contract severance Voluntary separation

126,636

112,675

125,177

110,520

20,101 9,454 1,012 9,899 12,076

21,052 7,070 610 7,747 10,561

20,034 9,452 1,011 9,899 12,070

20,980 7,068 610 7,747 10,556

1,891 1,822 603

1,017 (2,733) 574

1,891 1,822 603

1,017 (2,733) 574

183,494

158,573

181,959

156,339

127,801

117,527

116,790

108,233

18,045 8,001 724 9,604 12,962

17,185 7,419 574 8,313 12,158

17,035 7,481 683 9,337 12,075

16,319 6,948 546 8,021 11,366

1,810 1,311 999

1,077 (2,733) 337

1,808 1,311 999

1,041 (2,733) 323

Total non-academic

181,257

161,857

167,519

150,064

Total employee related expenses Deferred government employee benefits for superannuation

364,751

320,430

349,478

306,403

Total employee related expenses, including deferred government employee benefits for superannuation

30 | THE UNIVERSITY OF NEWCASTLE

36

178

364,929

560

178

320,990

349,656

560 306,963


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 11

DEPRECIATION AND AMORTISATION Consolidated

2012 $’000 Depreciation Buildings and infrastructure Plant and equipment Artworks and libraries Total depreciation

2011 $’000

2011 $’000

20,936 14,356 10

20,927 17,543 16

20,881 14,040 10

20,903 17,265 16

35,302

38,486

34,931

38,184

3,010

3,623

2,596

3,302

38,312

42,109

37,527

41,486

Buildings Cleaning Repairs and maintenance - general

8,597 5,158 10,073

7,062 5,189 10,360

8,553 4,990 9,968

7,051 4,939 10,313

Total repairs and maintenance

23,828

22,611

23,511

22,303

Impairment losses - financial assets Trade receivables Other financial assets - Available for sale

891 624

367 -

891 624

365 -

Reversal of impairment losses - Financial assets Trade receivables Intangibles

(37) 2

38 -

(16) -

40 -

Amortisation Intangibles Total depreciation and amortisation 12

13

REPAIRS AND MAINTENANCE

IMPAIRMENT OF ASSETS

Total impairment of assets 14

Parent

2012 $’000

1,480

405

1,499

405

4,045 25,281 16 1,950 10,807

4,929 24,760 118 1,694 10,648

3,273 22,612 11 1,828 10,418

3,822 22,947 116 1,642 10,551

4,097 37,410 37,579 3,521 19,441 7,101 18,251

349 4,206 55,127 36,568 3,765 18,602 6,381 12,936

4,070 35,949 37,496 3,375 18,663 7,078 8,465 17,769

349 4,186 51,689 34,394 3,588 17,384 6,363 8,148 13,663

169,499

180,083

171,007

178,842

OTHER EXPENSES Advertising, marketing and promotions Consumables Donations Insurances Minor equipment Net loss on revaluation of financial assets at fair value through the income statement Operating lease rental Professional services Scholarships, grants and prizes Telecommunications Travel, staff development and entertainment Utilities Related party expenses Other expenses Total other expenses

31 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 15

INCOME TAX EXPENSE Consolidated

2012 $’000 (a)

Income tax expense Current tax Deferred tax Adjustments for current tax of prior periods

2011 $’000

Parent

2012 $’000

2011 $’000

1,756 -

1,143 (2) 1,425

-

-

1,756

2,566

-

-

Operating result from continuing operations

1,756

2,566

-

-

Aggregate income tax expense

1,756

2,566

-

-

58,118 17,435

31,815 9,545

62,356 18,707

28,739 8,622

(15,540) (139) -

(8,402) 1,423

(18,707) -

(8,622) -

1,756

2,566

-

-

Cash at bank and on hand and cash equivalents

22,122

16,485

17,860

13,384

Total cash and cash equivalent

22,122

16,485

17,860

13,384

Cash and cash equivalents

22,122

16,485

17,860

13,384

Balance as per cash flow statement

22,122

16,485

17,860

13,384

Income tax expense is attributable to:

(b)

Numerical reconciliation of income tax expense to prima facie tax payable Operating results from continuing operations before income tax expense Tax at the Australian rate of 30% (2011: 30%) Tax effect of amounts which are not (taxable) deductible in calculating taxable income Difference in overseas tax rates Adjustment for current tax of prior periods Income tax expense

16

(a)

(b)

CASH AND CASH EQUIVALENTS

Reconciliation to cash and cash equivalents at the end of the year in the Statement of cashflows The above figures are reconciled to cash at the end of the year as shown in the statement of cash flows as follows:

Cash at bank Cash at bank is interest bearing with the floating rates being determined by the daily balance of funds held in the account. This was 4.23% for 2012 (2011: 6.40%).

32 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 17

RECEIVABLES Consolidated

(b)

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Current Trade receivables Provision for impairment Prepayments Related party receivables Other receivables

23,580 (1,667) 10,848 3,350

26,404 (778) 9,104 3,360

20,451 (1,649) 10,741 2,432 3,305

23,713 (739) 9,006 3,412 2,592

Total current receivables

36,111

38,090

35,280

37,984

Non-current Deferred government contribution for superannuation Other receivables

307,826 719

282,029 777

307,826 719

282,029 777

Total non-current receivables

308,545

282,806

308,545

282,806

Impaired receivables As at 31 December 2012 current receivables of the Group with a nominal value of $1,666,921 (2011: $778,000) were impaired. The amount of the provision was $1,666,921 (2011: $778,000). The individually impaired receivables mainly relate to student fees. The aging of these receivables is as follows: Less than 3 months Over 3 months

1,667

1,667

778 778

1,649

1,649

739 739

As of 31 December 2012, trade receivables of the Group with a nominal value of $7,025,949 (2011: $2,665,000) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging of these receivables is as follows: Less than 3 months Over 3 months

7,200 -

7,200

Movements in the provision for impaired receivables are as follows: At 1 January Provision for impairment recognised during the year Recovery of impaired receivables Receivables written off during the year as uncollectable

18

778 898 (38) 29

5,034 342 5,376 813 96 (103) (28)

5,353 -

5,353 739 898 (16) 28

3,212 3,212 707 57 (25)

1,667

778

1,649

739

Current Retail stock on hand

148

503

-

-

Total current inventories

148

503

-

-

INVENTORIES

33 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 19

OTHER FINANCIAL ASSETS Consolidated

20

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Current Available-for-sale financial assets Held to maturity investments Total current other financial assets

10,737 183,800

10,527 133,424

10,527 117,000

194,537

10,587 168,000

143,951

178,587

127,527

Non-current Available-for-sale financial assets Held to maturity investments Total non-current other financial assets

137,195 70,887

71,938 15,000

137,055 70,863

71,435 15,000

208,082

86,938

207,918

86,435

Land At independent valuation At cost

51,440 90

48,765 1,536

51,440 90

48,765 1,536

Total land

51,530

50,301

51,530

50,301

Buildings At independent valuation At cost Accumulated depreciation

643,973 13,243 (5,568)

612,982 47,898 (22,497)

643,973 13,243 (5,568)

612,982 47,898 (22,497)

Total buildings

651,648

638,383

651,648

638,383

PROPERTY, PLANT AND EQUIPMENT

Infrastructure At independent valuation At cost Accumulated depreciation Accumulated impairment

55,630 12,678 (4,571) (5,395)

63,148 12,528 (7,578) (5,395)

55,630 2,301 (752) -

63,148 2,461 (3,791) -

Total Infrastructure

58,342

62,703

57,179

61,818

Capital works in progress At cost

16,275

9,665

16,259

9,570

Total capital works in progress

16,275

9,665

16,259

9,570

Plant and equipment At cost Accumulated depreciation

150,419 (99,866)

138,650 (87,992)

147,946 (98,461)

136,520 (86,827)

Total plant and equipment

50,553

50,658

49,485

49,693

Artworks and library At fair value At cost Accumulated depreciation

4,100 1,090 (218)

4,100 1,020 (208)

4,100 1,087 (217)

4,100 1,018 (207)

Total artworks and library

4,972

4,912

4,970

4,911

833,320

816,622

831,071

814,676

Total property, plant and equipment

34 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 20

PROPERTY, PLANT AND EQUIPMENT (continued) Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current year: Capital Artwork InfraWorks in Plant and and Land Buildings structure Progress equipment Libraries Total Consolidated Balance at 1 January 2011 Additions (transfers) Assets included in a disposal group classified as held for sale and other disposals Depreciation expense Balance at 31 December 2011 Balance at 1 January 2012 Additions (transfers) Assets included in a disposal group classified as held for sale and other disposals Depreciation expense Revaluation decrease recognised in equity Revaluation increase recognised in equity Balance at 31 December 2012 Parent Balance at 1 January 2011 Additions (transfers) Assets included in a disposal group classified as held for sale and other disposals Depreciation expense Balance at 31 December 2011 Balance at the 1 January 2012 Additions (transfers) Assets included in a disposal group classified as held for sale and other disposals Depreciation expense Revaluation decrease recognised in equity Revaluation increase recognised in equity Balance at 31 December 2012

(a)

$’000

$’000

48,765 1,536 -

$’000

$’000

$’000

624,308 37,111 (4,924)

65,239 278 -

14,884 (5,219) -

48,813 19,859 (471)

(18,112)

(2,814)

50,301

638,383

62,703

9,665

50,658

4,912

816,622

50,301 -

638,383 13,409 -

62,703 1,402 -

9,665 6,610 -

50,658 14,680 (406)

4,912 70 -

816,622 36,171 (406)

(18,237) -

(2,699) (3,087)

-

(14,356) -

-

-

$’000

(17,543)

$’000

4,905 24 (17)

(10) -

806,914 53,589 (5,395) (38,486)

(35,302) (3,087)

1,229

18,093

-

-

-

-

19,322

51,530

651,648

58,342

16,275

50,553

4,972

833,320

48,765 1,536 -

624,308 37,112 (4,922)

64,386 223 -

14,884 (5,314) -

47,825 19,546 (414)

4,904 21 -

805,072 53,124 (5,336)

(18,115)

(2,791)

50,301

-

638,383

61,818

9,570

49,693

4,911

814,676

50,301 -

638,383 13,409 -

61,818 1,093 -

9,570 6,689 -

49,693 14,155 (323)

4,911 68 -

814,676 35,414 (323)

(18,237) -

(2,644) (3,087)

-

(14,040) -

-

-

(17,264)

(14)

(10) -

(38,184)

(34,931) (3,087)

1,229

18,093

-

-

-

-

19,322

51,530

651,648

57,179

16,259

49,485

4,970

831,071

Valuations of land and buildings The University's land and buildings were revalued at 30 September 2012 by independent valuers Global Valuation Services. Valuations were made on the basis of open market value. The revaluation surplus net of applicable deferred income taxes were credited to an asset revaluation reserve in equity. The valuation basis of land is the estimated amount for which an asset should exchange on the valuation date between a willing buyer and seller in  an  arm’s  length   transaction, after proper marketing and where the parties had acted knowledgably, prudently and without compulsion.

35 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 21

INTANGIBLE ASSETS Consolidated

Computer software Cost Accumulated amortisation and impairment Net carrying value Intellectual property Cost Accumulated amortisation and impairment Net carrying value Total intangibles

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

23,026 (20,563)

21,719 (17,802)

22,793 (20,372)

21,678 (17,796)

2,463

3,917

2,421

3,882

3,655 (3,458)

3,662 (3,357)

-

-

2,660

4,222

2,421

3,882

197

305

-

-

Movement in the carrying amounts for each class of intangible assets between the beginning and the end of the current year: Computer Intellectual software property Total $’000 Consolidated Balance at 1 January 2011 Additions Work in progress Amortisation expense Closing value at 31 December 2011 Balance at 1 January 2012 Additions Work in progress Amortisation expense Impairment loss in income Closing value at 31 December 201231 December 2011 Parent Balance at 1 January 2011 Additions Work in progress Amortisation expense Closing value at 31 December 201131 December 2012 Balance at 1 January 2012 Additions Work in progress Amortisation expense Closing value at 31 December 201231 December 2011

36 | THE UNIVERSITY OF NEWCASTLE

$’000

$’000

11,610 858 (5,238) (3,313)

206 409 (310)

11,816 1,267 (5,238) (3,623)

3,917

305

4,222

3,917 1,112 51 (2,617) -

305 287 (393) (2)

4,222 1,399 51 (3,010) (2)

2,463

197

2,660

11,610 811 (5,237) (3,302)

-

11,610 811 (5,237) (3,302)

3,882

-

3,882

3,882 1,084 51 (2,596)

-

3,882 1,084 51 (2,596)

2,421

-

2,421


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 22

TRADE AND OTHER PAYABLES Consolidated

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Current Unsecured liabilities Trade creditors OS-HELP liability to Australian Government Related party payables Other payables

34,360 634 4,935

31,552 371 1,743

32,734 634 1,634

29,971 371 10,019 1,194

Total current trade and other payables

39,929

33,666

35,002

41,555

494

594

494

594

Non-current Unsecured liabilities Other non current payables Total non-current trade and other payables

494

494

594

594

The carrying amounts of the Group's and parent entity's trade and other payables are denominated in the following currencies: 34 34 US Dollars 485 485 11 11 Euro Dollars 6 6 Great British Pound 18 18 40,427 35,495 Australian Dollar 33,757 42,146 Total

40,478

34,260

35,546

42,649

For an analysis of the sensitivity of trade and other payables to foreign currency risk refer to note 35. 23

BORROWINGS Current Unsecured liabilities Bank loans Total current borrowings Non-current Unsecured liabilities Bank loans Total non-current borrowings

(a)

-

-

85,000

85,000

250 250

-

-

-

85,000

85,000

250 250

-

Financing arrangements Unrestricted access was available at reporting date to the following lines of credit: Bank loan facilities Total facilities Used at balance date Unused at balance date

37 | THE UNIVERSITY OF NEWCASTLE

95,000 (85,000) 10,000

92,250 (250) 92,000

95,000 (85,000) 10,000

92,250 (250) 92,000


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 23

BORROWINGS (continued)

(b)

Fair value The carrying amounts and fair values of borrowings at reporting date are: 2012

Carrying amount $’000

2011

Fair value $’000

Carrying amount $’000

Fair value $’000

Consolidated On-balance sheet Non-traded financial liabilities Unsecured bank loan

85,000

85,000

85,000

85,000

250

250

250

250

Other than those classes of borrowings denoted as ''traded'', none of the classes are readily traded on organised markets in standardised form. (i) On-balance sheet The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values of non-current borrowings are based on cash flows discounted using a borrowing rate of 5.4%, (2011: 6.4%). 24

PROVISIONS Consolidated

Current provisions expected to be settled within 12 months Employee benefits Annual leave Long service leave Contract severance Short-term provisions Maternity leave Redundancy Pension entitlements Current provisions expected to be settled after more than 12 months Employee benefits Annual leave Long service leave Contract severance Total current provisions

38 | THE UNIVERSITY OF NEWCASTLE

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

17,604 11,031 500

13,773 7,323 500

16,878 10,870 500

13,100 7,303 500

1,938 127 2,099

724 117 2,041

1,937 127 2,099

724 117 2,041

33,299

24,478

32,411

23,785

5,868 44,152 3,118

4,565 35,436 701

5,626 43,426 3,118

4,367 34,903 701

53,138

40,702

52,170

39,971

86,437

65,180

84,581

63,756


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 24

PROVISIONS (continued) Consolidated

Non-current provisions Employee benefits Long service leave Pension entitlements Deferred government benefits for superannuation Total non-current provisions

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

10,983 32,227 311,509

9,880 28,772 285,534

10,437 32,227 311,509

9,189 28,772 285,534

324,186

354,173

323,495

354,719

Provision for annual leave This provision is for outstanding annual leave liabilities that employees have not yet taken. It is assumed the majority of leave will be taken in the next twelve months. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report. Provision for long service leave This provision is for outstanding long service leave liabilities that employees have not yet taken. The calculation of the present value of future cash flows in respect of long service leave being taken has been calculated by independent third parties based on historical data provided by the University. Provision for contract severance This provision is for payouts of contracts expected to occur during the next twelve months. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report. Provision for parental leave A provision has been recognised for employee entitlements relating to parental leave. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report. Provision for redundancy This provision is for costs relating to the redundancy of employees. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report. Provision for pension entitlements A provision has been recognised for employee pension entitlements. Refer to note 36 for detail. Provision for deferred government benefits for superannuation A provision has been recognised for employee entitlements relating to deferred government benefits for superannuation. Refer to note 36 for detail. Movements in each class of provision during the year, are set out below:

Consolidated Current Opening balance at 1 January 2012 Additional provisions Provisions used Balance at 31 December 2012

39 | THE UNIVERSITY OF NEWCASTLE

Annual leave

Long service leave

Redundancy

Pensions

Other

Total

$’000

$’000

$’000

$’000

$’000

$’000

18,338 25,321 (20,187)

42,912 18,662 (6,391)

117 126 (116)

2,041 2,099 (2,041)

1,925 6,426 (2,795)

65,333 52,634 (31,530)

23,472

55,183

127

2,099

5,556

86,437


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 24

PROVISIONS (continued) Long service leave $’000 Consolidated Non-current Opening balance at 1 January 2012 Additional provisions Provisions used Balance at 31 December 2012

25

9,718 1,290 (25) 10,983

Deferred superPensions annuation $’000

Total

$’000

$’000

28,772 3,513 (58)

285,533 25,976 -

324,023 30,779 (83)

32,227

311,509

354,719

DERIVATIVE FINANCIAL INSTRUMENTS Consolidated

2012 $’000

2011 $’000

Parent

2012 $’000

2011 $’000

Non-current Interest rate swap - held for trading Interest rate swap - cash flow hedge

4,649

581 -

4,649

581 -

Total derivative financial instruments

4,649

581

4,649

581

(i) Interest rate swap contract – cash flow hedges During the year the University drew down on its variable rate bank loan. It is policy to protect the loan from exposure to increasing interest rates. Accordingly, the group has entered into an interest rate swap contract under which it is obliged to receive interest at the variable loan rate and to pay interest at a fixed rate. The swap contract has been nominated as a cash flow hedge. The swap covers 100% of the variable loan principal outstanding and is timed to expire as the bank loan expires. The fixed interest rate is 5.42% and the variable rate is at the end of the reporting period was 4.11%. The contracts require settlement of net interest receivable or payable quarterly. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis. The gain or loss from remeasuring the hedging instrument at fair value is recognised in other comprehensive income and deferred in equity in the hedging reserve to the extent that the hedge is effective. There was no hedge ineffectiveness during the year. (ii) Interest rate swap contract – held for trading During the year the University held an interest rate swap, which was an economic hedge but did not satisfy the requirements for hedge accounting. This contract was subject to the same risk management policies as all other derivative contracts (see note 35 for details), however, it was accounted for as held for trading. This swap contract was terminated and settled during the year. 26

OTHER LIABILITIES Current Income received in advance Total current other liabilities

40 | THE UNIVERSITY OF NEWCASTLE

8,528

8,528

12,334 12,334

5,537

5,537

5,620 5,620


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 27

RESERVES AND RETAINED SURPLUS Consolidated

(a)

(b)

2012 $’000 Reserves Property, plant and equipment revaluation Foreign currency translation surplus Cash flow hedge Available-for-sale investments revaluation

2011 $’000

2011 $’000

489,600 (47) (4,649) 11,225

473,365 (176) 1,254

489,600 (4,649) 11,120

473,365 1,148

Total reserves

496,129

474,443

496,071

474,513

Movements in reserves Property, plant and equipment revaluation Balance as at 1 January Revaluation increment (decrement)

473,365 16,235

473,365 -

473,365 16,235

473,365 -

489,600

473,365

489,600

473,365

Cash flow hedge Revaluation increment (decrement) Available-for-sale investments revaluation Balance as at 1 January Revaluation increment (decrement) Transfers to income statement Foreign currency translation surplus Balance as at 1 January Currency translation differences arising during the year

(c)

(c)

Parent

2012 $’000

(4,649)

-

(4,649)

-

(4,649)

-

(4,649)

-

1,254 9,347 624

9,549 (8,295) -

1,148 9,348 624

9,445 (8,297) -

11,225

1,254

11,120

1,148

(176) 129

(151) (25)

-

-

(47)

(176)

-

-

Total reserves

496,129

474,443

496,071

474,513

Retained earnings Retained earnings at the beginning of the year Operating result for the year

475,615 53,851

446,366 29,249

456,330 59,845

427,591 28,739

Retained earnings at end of the year

529,466

475,615

516,175

456,330

Nature and purpose of reserves Property, plant and equipment revaluation - used to record increments and decrements on the revaluation of property, plant and equipment, as described in note 1. In the event of a sale of an asset, any balance in the reserve in relation to the asset is transferred to retained earnings. Available-for-sale investment revaluation - changes in the fair value and exchange differences arising on translation of investments, such as equities, classified as available-for-sale financial assets, are recognised in other comprehensive income, as described in note 1 and accumulated in a separate reserve within equity. Amounts are reclassified to profit or loss when the associated assets are sold or impaired. Cash flow hedge - the hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in other comprehensive income, as described in note 1. Amounts are reclassified profit or loss when the associated hedged transaction affects profit or loss. Foreign currency translation surplus - exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 1 and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

41 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 28

KEY MANAGEMENT PERSONNEL DISCLOSURES

(a)

Names of responsible persons and executive officers The following persons were members of the Council of The University of Newcastle during the financial year: Official Members Conjoint Professor Trevor C Waring AM, Chancellor (ceased 30 April 2012) Dr Ken Moss AM – Appointed, Chancellor (appointed 1 May 2012, deceased 13 October 2012) The Hon John Charles Price AM, Acting Chancellor (appointed 14 October 2012) Professor Caroline McMillen, Vice Chancellor and President Professor Val J Robertson, President of the Academic Senate Members appointed by the NSW Minister for Education and Training The Hon John Charles Price AM, Deputy Chancellor Ms Sharryn Brownlee, Pro Chancellor (appointed 1 May 2012) Conjoint Professor Geoff Lilliss Dr Ken Moss AM (ceased 30 April 2012) Senator Arthur Sinodinos AO (ceased 1 September 2012) Ms Deborah Wright Member appointed by Council Mr Brian Kennaugh, Pro Chancellor (appointed 1 May 2012) Elected Members Academic staff member elected by academic staff body Dr Tom Griffiths (ceased 31 August 2012, appointed 14 September 2012) Professor John Rostas (ceased 31 August 2012, appointed 14 September 2012) Non-academic staff member elected by non-academic staff body Ms Leanne Holt (ceased 31 August 2012, appointed 14 September 2012) Undergraduate student elected by undergraduate student body Ms Heather Richards Postgraduate student elected by postgraduate student body Ms Mpontseng Lydia Pama External persons who are members of Convocation appointed by the Council Ms Dianne Allen, Acting Deputy Chancellor (appointed 7 December 2012), Pro Chancellor (ceased 6 December 2012) Mr Peter Cockbain Dr Geoff Leonard AM, Pro Chancellor (appointed 7 December 2012) By virtue of their office all of the above persons were key management personnel during the year ended 31 December 2012.

42 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 28 (b)

KEY MANAGEMENT PERSONNEL DISCLOSURES (continued) Other key management personnel The following persons were members of the Executive Committee of The University of Newcastle and as such also had authority and responsibility for planning, directing and controlling the activities of The University of Newcastle during the financial year: Professor Caroline McMillen, Vice Chancellor and President Professor Michael Calford, Deputy Vice-Chancellor (Research) Mr Trevor Gerdsen, Acting Deputy Vice-Chancellor (Services) (ceased 4 November 2012) Mr Nat McGregor, Acting Deputy Vice-Chancellor (Services) (appointed 5 November 2012) Dr Susan Gould, Deputy Vice-Chancellor (Services) (ceased employment 30 November 2012) Professor Kevin McConkey, Deputy Vice-Chancellor (Academic and Global Relations) (ceased 29 October 2012) Professor Andrew Parfitt, Deputy Vice-Chancellor (Academic) (appointed 15 December 2012) Professor John Carter AM, Pro Vice-Chancellor (Engineering and Built Environment) Professor Stephen Crump, Pro Vice-Chancellor (External Relations) Professor Richard Dunford, Pro Vice-Chancellor (Business and Law) (appointed 16 July 2012) Professor John Germov, Pro Vice-Chancellor (Education and Arts) Professor Bill Hogarth, Pro Vice-Chancellor (Science and IT) Professor Amir Mahmood, Acting Pro Vice-Chancellor (Business and Law) (appointed 1 January 2012, ceased 15 July 2012) Professor Nicholas Talley, Pro Vice-Chancellor (Health) Mr Craig Wallis, Chief Financial Officer Dr Peter Waring, Acting Pro Vice-Chancellor (International) (appointed 1 November 2012) Professor Val Robertson, President of Academic Senate

(c)

Remuneration of key management personnel

Council and Board Members $nil $1 to $9,999 $10,000 to $19,999 $20,000 to $29,999 $40,000 to $49,999 $100,000 to $109,999 $120,000 to $129,999 $130,000 to $139,999 $150,000 to $159,999 $210,000 to $219,999 $220,000 to $229,999 $250,000 to $259,999 $300,000 to $309,999 $800,000 to $809,999

43 | THE UNIVERSITY OF NEWCASTLE

Consolidated

2012 Number 16 10 8 3 1 1 1 1 -

Parent

2011 Number

2012 Number

2011 Number

16 15 9 1 1 1 1 1 1 1 1

2 7 3 1 1 1 -

1 7 8 1 1 1 1 1 1 1


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 28

KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)

(c)

Remuneration of key management personnel (continued)

Other key management personnel $nil $50,000 to $59,999 $100,000 to $109,999 $160,000 to $169,999 $220,000 to $229,999 $230,000 to $239,999 $240,000 to $249,999 $250,000 to $259,999 $280,000 to $289,999 $300,000 to $309,999 $310,000 to $319,999 $320,000 to $329,999 $340,000 to $349,999 $350,000 to $359,999 $360,000 to $369,999 $390,000 to $399,999 $410,000 to $419,999 $420,000 to $429,999 $430,000 to $439,999 $490,000 to $499,999 $510,000 to $519,999 $570,000 to $579,999 $590,000 to $599,999 $1,030,000 to $1,039,999

Consolidated

Parent

2012 Number

2011 Number

2012 Number

2011 Number

1 1 1 1 1 2 1 2 1 1 1 1 2 1 1 1

1 2 1 1 1 1 1 2 1 1 -

1 1 1 1 1 1 2 1 1 1 1 2 1 1 1

1 2 1 1 1 1 1 2 1 1 -

Remuneration bands for the Vice-Chancellor and the President of Academic Senate appear in both tables above as these positions are members of both Council and the Executive Committee. (d)

Key management personnel compensation

Consolidated

2012 $’000

2011 $’000

Parent

2012 $’000

2011 $’000

Short-term employee benefits Termination benefits

6,692 798

6,859 538

5,854 799

5,857 538

Total key management personnel compensation

7,490

7,397

6,653

6,395

44 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 29

REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms. Consolidated

2012 $’000

30

2011 $’000

Parent

2012 $’000

2011 $’000

Audit services Audit and review of financial statements Audit Office of NSW KPMG

406 23

394 14

308 -

275 -

Total remuneration for audit services

429

408

308

275

CONTINGENCIES Contingent liabilities The University has a $500,000 bank guarantee as security for a rental bond which expires on 31 November 2014. The University currently has a number of legal matters outstanding, which, if they result in a financial settlement, are not expected to exceed $1 million. It is estimated that all of the matters will be resolved by the end of 2013. Contingent assets The University has no contingent assets as at 31 December 2012.

31

COMMITMENTS Consolidated

2012 $’000 (a)

2012 $’000

2011 $’000

Capital commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities are: Property, plant and equipment Within one year Later than one year Total

(b)

2011 $’000

Parent

84,972 58,013

29,571 9,471

84,972 58,013

29,571 9,471

142,985

39,042

142,985

39,042

Lease commitments Operating leases Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year Between one year and five years

3,410 2,814

3,328 2,445

3,155 2,736

3,175 2,400

Total future minimum lease payments

6,224

5,773

5,891

5,575

The weighted average interest rate implicit in the non-cancellable operating leases is nil% (2011:nil%): (c)

Other expenditure commitments (GST excl.) Commitments in existence at the reporting date but not recognised as liabilities payable: 61,072 Due within one year 51,433 870 Due after one year, but within five years 1,639 Net commitments

45 | THE UNIVERSITY OF NEWCASTLE

61,942

53,072

61,072 870

51,433 1,639

61,942

53,072


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 32

SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b): Equity interest

Name of entity Newcastle Innovation Ltd GraduateSchool.com Pty Ltd UoN Services Limited UON Singapore Pte Ltd 33

Country of incorporation

Class of shares

Australia Australia Australia Singapore

Not applicable Ordinary Not applicable Ordinary

2012 % 100 100 100 100

2011 % 100 100 100 100

EVENTS OCCURRING AFTER REPORTING DATE No matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

34

RECONCILIATION OF OPERATING RESULT AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES Consolidated

Parent

2012 $’000

2011 $’000

2012 $’000

2011 $’000

53,851

29,249

59,845

28,739

38,312 624 44 (382)

42,109 (4) 158 (97)

37,527 624 35 (610)

41,485 387 (97)

Operating result for the year Add non-cash items: Depreciation and amortisation Impairment of available-for-sale financial assets Net (gain) loss on sale of property, plant and equipment Net (gain) loss on disposal of financial assets Fair value losses (gains) on other financial assets at fair value through the income statement Fair value of assets donated to the Group Net exchange differences Net amortisation of bond premiums (discounts) Changes in operating assets and liabilities: (Increase) decrease in trade debtors (Increase) decrease in other receivables (Increase) decrease in related party receivables (Increase) decrease in inventories (Increase) decrease in other financial assets Increase (decrease) in other operating assets Increase (decrease) in trade creditors Increase (decrease) in related party payables Increase (decrease) in other operating liabilities Increase (decrease) in provision for income taxes payable Increase (decrease) in other provisions

45 (72)

367 (478) (22) -

(72)

3,939 (35,562) 355 (688) 6,347 2,240 (2,558) (1,897) 51,838

(10,946) (91,556) (50) (4,870) (3,548) 8,388 (808) 2,585 99,753

3,476 (28,348) 979 (757) 11 (13) (10,019) 673 51,502

(10,997) (97,405) 5,926 (4,816) 9 3,525 4,076 (381) 99,489

Net cash provided by operating activities

116,436

70,230

114,853

70,289

46 | THE UNIVERSITY OF NEWCASTLE

349 -


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 35

FINANCIAL RISK MANAGEMENT The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group'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. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures. The Group 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, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk. Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the University Council. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with  the  Group’s   operating units. The University Council provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(a)

Market risk (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Singapore and US dollars. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in  a  currency  that  is  not  the  entity’s  functional  currency.  The  risk  is  measured  using  sensitivity  analysis  and   cash flow forecasting. Management has set up a policy requiring group companies to manage their foreign exchange risk against their functional currency. The  Group  Treasury’s  risk  management  position  is  not  to  hedge  the  cash  flows  at  present,  because  the  amount of exposure has been determined to be immaterial in terms of the possible impact on the income statement or total equity. It has therefore not been included in the sensitivity analysis. (ii) Price risk The Group and the parent entity are exposed to equity securities price risk. This arises from investments held by the Group and classified on the statement of financial position either as available-for-sale or at fair value through the income statement. Neither the Group nor the parent entity is exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group. The  majority  of  the  Group’s  and  the  parent  entity’s  equity  investments  are  publicly  traded  and  are  included  either  in  the   ASX200 Index or NYSE International 100 index. The price risk for unlisted securities is immaterial in terms of the possible impact on the income statement or total equity. It has therefore not been included in the sensitivity analysis. (iii) Cash flow and fair value interest rate risk The Group's main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain approximately 100% of its borrowings at fixed rates using interest rate swaps to achieve this when necessary. During 2012 and 2011, the Group's borrowings at variable rate were denominated in Australian Dollars. The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on the income statement of a defined interest rate shift. The scenarios are run only for liabilities that represent the major interest-bearing positions. Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. The Group has raised long-term borrowings at floating rates and swapped them into fixed rates that are lower than those that were available if the Group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other parties to exchange, at monthly intervals, the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts. At 31 December 2012, if interest rates had changed by ± 1% from the year end rates with all other variables held constant, the result for the year would have changed by ± $3.618 million (2011: ± $156,540), mainly as a result of the impact on interest income from cash and cash equivalents.

47 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 35

FINANCIAL RISK MANAGEMENT (continued)

(a)

Market risk (continued) (iv) Summarised sensitivity analysis The following table summarises the sensitivity of the Group's financial assets and financial liabilities to interest rate risk, foreign exchange risk and other price risk.

31 December 2012

Interest rate risk Foreign exchange risk Other prince risk Carrying -1% +1% -1% +1% -1% +1% amount Result Equity Result Equity Result Equity Result Equity Result Equity Result Equity $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Financial assets Cash and cash equivalents Trade and other receivables Financial assets Available-for-sale Financial assets - Held to maturity

22,122

(221)

(221)

221

221

(33)

(33)

32

32

-

-

-

-

-

-

-

344,656

-

-

-

-

(1)

(1)

2

2

-

147,932

-

-

-

-

-

-

-

-

- (1,507)

- 1,507

(2,547) (2,547) 2,547

2,547

-

-

-

-

-

-

-

-

254,687

Financial liabilities Trade and other payables Bank loans Derivative financial instruments

40,423 85,000

850

850

(850)

(850)

(1) -

(1) -

1 -

1 -

-

-

-

-

4,649

(850)

(850)

850

850

-

-

-

-

-

-

-

-

(2,768) (2,768) 2,768

2,768

(35)

(35)

35

35

- (1,507)

- 1,507

165

165

(27)

(27)

27

27

-

-

-

-

-

-

-

-

825

Total increase (decrease) 31 December 2011 Financial assets Cash and cash equivalents - at bank Trade and other receivables Financial assets Available-for-sale Financial assets - Held to maturity

16,486

(165)

(165)

321,674

-

-

-

-

(2)

(2)

2

2

-

82,465

-

-

-

-

-

-

-

-

-

148,424

-

-

-

-

-

-

-

-

-

-

-

-

34,259 250

3

3

(3)

(3)

12 -

12 -

(12) -

(12) -

-

-

-

-

(6)

(6)

6

6

-

-

-

-

-

-

-

-

(168)

(168)

168

168

17

17

-

-

825

(825)

Financial liabilities Trade and other payables Bank loans Derivative financial instruments

581

Total increase (decrease)

(b)

(17)

(17)

(825)

Credit risk Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘BBB+’ are  accepted.  If  wholesale  customers  are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Council. Fees from students are settled in cash or using major credit cards, mitigating credit risk. The carrying amount of financial assets (as contained in the table in subnote (d) below) represents the groups maximum exposure to credit risk.

48 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 35

FINANCIAL RISK MANAGEMENT (continued)

(c)

Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available. The following  tables  summarise  the  maturity  of  the  Group’s  financial  assets  and  financial  liabilities: Average interest rate % 31 December 2012 Financial assets Cash and cash equivalents Trade and other receivables Other financial assets

4.2 -

Total financial assets

Financial liabilities Trade and other payables Borrowings Derivative financial instruments

5.4 -

Total financial liabilities 31 December 2011 Financial assets Cash and cash equivalents Trade and other receivables Other financial assets

6.4 6.4

Total financial assets

Financial liabilities Trade and other payables Borrowings Derivative financial instruments Total financial liabilities

(d)

6.4 -

Variable interest rate $’000

Within 1 year $’000

1 – 5 years $’000

22,122 -

183,800

22,122

Greater than 5 years $’000

Noninterest $’000

Total $’000

70,887

-

344,656 147,932

22,122 344,656 402,619

183,800

70,887

-

492,588

769,397

85,000 -

-

4,649

-

40,423 -

40,423 85,000 4,649

85,000

-

4,649

-

40,423

130,072

16,485 148,424

-

-

-

311,791 82,464

16,485 311,791 230,888

164,909

-

-

-

394,255

559,164

581

250 -

594 -

-

33,665 -

34,259 250 581

581

250

594

-

33,665

35,090

Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price. The fair values of unlisted shares are based on cash flows discounted using a rate based on the market interest rate and the risk premium specific to the unlisted securities (2012: nil%; 2011: nil%). Derivative contracts classified as held for trading are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining period to maturity.

49 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 35

FINANCIAL RISK MANAGEMENT (continued)

(d)

Fair value estimation (continued) The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. Due to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value and based on credit history it is expected that the receivables that are neither past due nor impaired will be received when due. The carrying amounts and aggregate net fair values of financial assets and liabilities at balance date are: Carrying amount

Fair value

2012 $’000

2011 $’000

2012 $’000

2011 $’000

Financial assets Cash and cash equivalents Trade and other receivables Financial assets - Available-for-sale Financial assets - Held-to-maturity

22,122 344,656 147,932 254,687

16,486 321,674 82,465 148,424

22,122 344,656 147,932 254,687

16,486 321,674 82,465 148,424

Total financial assets

769,397

569,049

769,397

569,049

40,423 85,000 4,649

33,294 250 581

40,423 85,000 4,649

33,294 250 581

130,072

34,125

130,072

34,125

Financial liabilities Trade and other payables Bank loan Derivative financial instruments Total financial liabilities

Fair value measurements recognised in the statement of financial position are categorised into the following levels:

31 December 2012 Financial assets Financial assets – available-for-sale

Total $’000

Level 1 $’000

Level 2 $’000

Level 3 $’000

147,932

147,295

637

-

Total

147,932

147,295

637

-

Financial liabilities Derivative financial instruments

4,649

4,649

-

-

Total

4,649

4,649

-

-

50 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 35

FINANCIAL RISK MANAGEMENT (continued)

(d)

Fair value estimation (continued) Total $’000

Level 1 $’000

Level 2 $’000

Level 3 $’000

31 December 2011 Financial assets Financial assets – available-for-sale

82,464

70,826

11,638

-

Total

82,464

70,826

11,638

-

Financial liabilities Derivative financial instruments

581

581

-

-

Total

581

581

-

-

36

DEFINED BENEFITS PLANS

(a)

Fund specific disclosures The University of Newcastle incurs an obligation for deferred contributions which become payable on and after retirement of staff in respect of the following defined benefit schemes: State Superannuation Scheme (SSS) State Authorities Superannuation Scheme (SASS) State Authorities Non-Contributory Superannuation Scheme (SANCS) Pension entitlements arising from the former University of Newcastle Staff Superannuation Scheme (Pension) The University expects to make a contribution of $nil (2011: $nil) to the defined benefit plan during the next financial year. As an unfunded, non-contributory entitlement, the University will not make a contribution to the pension entitlement during the next financial year.

(b)

Present value obligations 2012 Present value of defined benefit obligations Opening present value of defined benefit obligations Current service cost Interest cost Contributions from plan participants Actuarial losses (gains) Benefits paid

SASS $’000

SANCS $’000

SSS $’000

Pension $’000

Total $’000

53,099 1,795 1,865 833 4,320 (5,039)

9,439 386 323 451 (1,190)

356,214 346 12,829 706 23,771 (17,773)

30,813 1,102 1,206 (2,099)

449,565 2,527 16,119 1,539 29,748 (26,101)

Closing present value of defined benefit obligations

56,873

9,409

376,093

31,022

473,397

Fair value of plan assets Opening fair value of plan assets Expected return on plan assets Actuarial gains (losses) Contributions from the employer Contributions from plan participants Benefits paid

45,478 3,679 2,735 1,913 833 (5,039)

5,934 568 126 289 (1,191)

81,806 6,220 3,976 606 706 (17,773)

-

133,218 10,467 6,837 2,808 1,539 (24,003)

Closing fair value of plans assets

49,599

5,726

75,541

-

130,866

51 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 36

DEFINED BENEFITS PLANS (continued)

(b)

Present value obligations (continued)

2012 Net liability Present value of defined benefit obligations Fair value of plan assets Total net liability (asset) in the statement of financial position Expense recognised Current service cost Interest on obligation Actuarial losses (gains) Expected return on plan assets

SASS $’000

SANCS $’000

SSS $’000

Pension $’000

Total $’000

56,873 (49,599)

9,409 (5,726)

376,093 (75,541)

31,022 -

473,397 (130,866)

7,274

3,683

300,552

31,022

342,531

386 323 (567)

346 12,829 (6,219)

1,102 1,206 -

2,527 16,119 1,206 (10,465)

142

6,956

2,308

9,387

5,360

695

9,196

-

15,251

Present value of defined benefit obligations Opening present value of defined benefit obligations Current service cost Interest cost Contributions from plan participants Actuarial losses (gains) Benefits paid

49,697 1,700 2,656 780 2,215 (3,949)

9,247 405 482 287 (982)

287,052 241 15,548 862 69,214 (16,703)

28,567 1,540 2,747 (2,041)

374,563 2,346 20,226 1,642 74,463 (23,675)

Closing present value of defined benefit obligations

53,099

9,439

356,214

30,813

449,565

Fair value of plan assets Opening fair value of plan assets Expected return on plan assets Actuarial gains (losses) Contributions from the employer Contributions from plan participants Benefits paid

46,902 3,846 (3,727) 1,626 780 (3,949)

6,302 618 (728) 725 (983)

98,490 7,704 (9,130) 582 862 (16,702)

-

151,694 12,168 (13,585) 2,933 1,642 (21,634)

Closing fair value of plans assets

45,478

5,934

81,806

-

133,218

Net liability Present value of defined benefit obligations Fair value of plan assets

53,099 (45,478)

9,439 (5,934)

356,214 (81,806)

30,813 -

449,565 (133,218)

Total net liability (asset) in balance sheet

7,621

3,505

274,408

30,813

316,347

Expense (income)

1,795 1,865 (3,679) (19)

Actual returns Actual return on plan assets 2011

52 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 36

DEFINED BENEFITS PLANS (continued)

(b)

Present value obligations (continued) 2011 Expense recognised Current service cost Interest on obligation Actuarial losses (gains) Expected return on plan assets Expense (income)

SASS $’000

1,700 2,656 (3,845)

SANCS $’000

SSS $’000

Pension $’000

Total $’000

405 482 (617)

241 15,548 (7,706)

1,540 2,748 -

2,346 20,226 2,748 (12,168)

511

270

8,083

4,288

13,152

(913)

(110)

(1,900)

Actual returns Actual return on plan assets (c)

-

(2,923)

Principal assumptions The principal assumptions used for the purposes of the actuarial valuations were as follows (expressed as weighted averages): 2012 2011 % % Discount rate(s) Expected return on plan assets (not applicable to Pension) Expected rate(s) of salary increase

(d)

3.30 8.60 3.00

3.70 8.60 2.50

Analysis of plan assets The analysis of the plan assets for the State Schemes (SASS, SANCS, SSS) and the expected rate of return at the reporting date is as follows: 2012 % Australian equities Overseas equities Australian fixed interest securities Overseas fixed securities Property Cash Other

31.00 24.30 6.20 2.40 8.70 13.40 14.00

100.00

2011 % 32.10 29.00 5.60 2.60 9.50 6.60 14.60 100.00

The overall expected rate of return is a weighted average of the expected returns of the various categories of plan assets held. The University's assessment of the expected returns is based on historical return trends and actuarial predictions of the market for the asset in the next twelve months.

53 | THE UNIVERSITY OF NEWCASTLE


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 36

DEFINED BENEFITS PLANS (continued)

(e)

History of experience adjustments The history of experience adjustments for State Schemes (SASS, SANCS, SSS) is as follows: SASS, SANCS, SSS

2012

2011

2010

2009

442,375 (130,866)

418,752 (133,218)

345,996 (151,694)

332,033 (159,917)

311,509

285,534

194,302

172,116

Experience adjustments on plan liabilities

28,542

71,715

12,994

(31,774)

Experience adjustments on plan assets

(6,837)

13,585

3,891

(5,119)

Pension

2012

2011

2010

2009

Present value of defined benefit obligation Fair value of plan assets

31,022 -

30,813 -

28,567 -

27,095 -

Surplus (deficit)

31,022

30,813

28,567

27,095

Present value of defined benefit obligation Fair value of plan assets Surplus (deficit)

The history of experience adjustments for the Pension is as follows:

54 | THE UNIVERSITY OF NEWCASTLE


55 | THE UNIVERSITY OF NEWCASTLE

#3

#2

#1

3(a)

3(a)

2012 $’000 2011 $’000

-

175,874 (175,874)

175,874 -

175,327 547

-

19 (19)

19

-

19

70 (51)

70 -

70 -

Diversity and Structural Adjustment #3 Fund

-

206,658 (206,658)

206,658 -

207,623 (965)

-

92 (92)

92 -

109 (17)

-

172 (172)

172 -

333 (161)

-

3,101 (3,101)

2,150 951

2,150 -

Transitional Cost Program

-

2,268 (2,268)

2,268 -

2,150 118

#2

2011 $’000

223

4,797 (4,574)

4,263 534

4,263 -

(25)

(25)

-

304 (304)

-

-

-

-

Promotion of Excellence in Learning and Teaching

-

6,368 (6,368)

6,145 223

6,145 -

Partnership & Participation Program

2012 $’000 2011 $’000

61

216,145 (216,084)

215,349 796

216,516 (1,168)

51

196 (145)

163 33

163 -

796

189,310 (188,514)

183,470 5,840

183,084 386

Total

86

237 (151)

186 51

185 -

Disability Support Program

2012 $’000 2011 $’000

-

503 (503)

503

-

503

5,100 (4,597)

778 4,322

778 -

Capital Development Pool

2012 $’000

Basic CGS grant amount, CGS – Regional loading, CGS – Enabling loading, maths and science transition loading, full fee places transition loading, and Higher Education performance funding Includes Equity Support Program. Includes Collaboration and Structural Adjustments Program

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Revenue for the period Surplus (deficit) from the previous year

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Net accrual adjustments

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Revenue for the period Surplus (deficit) from the previous year

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Net accrual adjustments

Parent (University) only

2011 $’000

Commonwealth Grants Indigenous Support #1 Program Scheme

2012 $’000

DIISRTE – CGS and other DIISRTE grants

(a) Note

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

37

THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012


56 | THE UNIVERSITY OF NEWCASTLE

#4

3(b)

2011 $’000

137

(96,052) 523

(88,387)

88,910

88,910

96,189 96,189

-

-

HECS-HELP (Australian Government payments only)

2012 $’000

49

(13,439)

13,488

13,488

-

(2,177)

(12,236)

10,059

10,059

#4

2011 $’000

FEE-HELP

2012 $’000

Program is in respect of FEE-HELP for Higher Education only and excludes funds received in respect of VET FEE-HELP

Cash payable (receivable) at the end of the year

Revenue earned

Cash available for the period

Cash payable (receivable) at the beginning of the year Financial assistance received in cash during the reporting period

Parent (University) only

Higher education loan programmes (excl OS-HELP)

(b) Note

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

37 2011 $’000

(89)

(970)

881

881

-

SSAF-HELP

2012 $’000

-

-

-

-

-

97

(110,461)

110,558

-

-

98,969

98,969

2011 $’000

(1,654)

(100,623)

Total

110,558

2012 $’000

THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012


57 | THE UNIVERSITY OF NEWCASTLE

#5

3(c)

3(c)

1,222

6,920 (5,698)

5,550 1,370

5,550 -

1,370

6,164 (4,794)

4,806 1,358

4,806 -

2011 $’000

(6)

512 (518)

512 -

512 -

-

493 (493)

493 -

493 -

International Postgraduate Research Scholarships

2012 $’000

Includes Grandfather Scholarships, National Priority and National Accommodation Priority Scholarships respectively

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Revenue for the period Surplus (deficit) from the previous year

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Net accrual adjustments

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Revenue for the period Surplus (deficit) from the previous year

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Net accrual adjustments

Parent (University) only

2011 $’000

Australian Postgraduate Awards

2012 $’000

Scholarships

(c) Note

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

37 2011 $’000

168

825 (657)

796 29

1,550 (754)

29

2,043 (2,014)

1,261 782

1,927 (666)

Commonwealth Education Cost #5 Scholarships

2012 $’000 2011 $’000

2

112 (110)

76 36

76 -

-

32

110 (78)

110

36

36 -

36 -

36 -

Indigenous Staff Scholarships

107

460 (353)

428 32

285 143

Commonwealth Accommodation #5 Scholarships

2012 $’000 2011 $’000

1,668

9,130 (7,462)

7,676 1,454

8,287 (611)

Total

175

301 (126)

314 (13)

314 -

1,454

9,031 (7,577)

6,765 2,266

7,431 (666)

(13)

185 (198)

169 16

169 -

Indigenous Access Scholarship

2012 $’000

THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012


58 | THE UNIVERSITY OF NEWCASTLE 3(d)

3(d)

2011 $’000

1,761

10,072 (8,311)

8,686 1,386

1,386

9,589 (8,203)

8,539 1,050

Joint Research #6 Engagement

2012 $’000 2011 $’000

798

16,096 (15,298)

15,074 1,022

1,022

16,119 (15,097)

14,707 1,412

Research Training Scheme

2012 $’000 2011 $’000

784

6,255 (5,471)

5,482 773

-

3,660 (3,660)

3,660 -

-

2,913 (2,913)

2,913 -

Sustainable Research Excellence in Universities

1,008

6,755 (5,747)

5,971 784

Research Infrastructure Block Grants

2012 $’000 2011 $’000

3,854

36,870 (33,016)

33,391 3,479

Total

287

287 -

287

3,479

35,163 (31,684)

31,641 3,522

#7

287

287 -

287

Commercialisation Training Scheme

2012 $’000

Includes Institutional Grants Scheme The reported surplus for Joint Research Engagement, Research Training Scheme, Research Infrastructure Block Grants, and Commercialisation Training Scheme) ($3.854 million) for 2012 is requested as a rollover

#6

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Surplus (deficit) from the previous year

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Surplus (deficit) from the previous year

Parent (University) only

#7

DISSRTE Research

(d) Note

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

37

THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012


59 | THE UNIVERSITY OF NEWCASTLE

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Surplus (deficit) from the previous year

Parent (University) only

Other capital funding

(e)

3(e)

Note

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

37 2011 $’000

-

32 (32)

32

32

6,366 (6,334)

6,366

Better Universities Renewal Fund

2012 $’000 2011 $’000

2012 $’000 2011 $’000

3,297

5,988 (2,691)

5,988

5,988

10,566 (4,578)

10,566

17,699

27,895 (10,196)

14,143 13,752

13,752

15,857 (2,105)

15,857 -

Teaching and Learning Education Investment Capital Fund Fund

2012 $’000

20,996

33,915 (12,919)

Total

14,143 19,772

2012 $’000

19,772

32,789 (13,017)

15,857 16,932

2011 $’000

THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012


60 | THE UNIVERSITY OF NEWCASTLE

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Surplus (deficit) from the previous year

(iii) Networks and Centres

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Surplus (deficit) from the previous year

821

1,378 (557)

890 488

488

1,586 (1,098)

1,430 156

Infrastructure

(ii) Linkages

4,427

11,582 (7,155)

5,497

13,778 (8,281)

9,351 4,427 8,436 3,146

2011 $’000

Projects

2012 $’000

Surplus (deficit) for the reporting period

Total revenue including accrued revenue Less expenses including accrued expenses

Financial assistance received in CASH during the reporting period (total cash received from Australian Government for the program) Surplus (deficit) from the previous year

Parent (University) only (i) Discovery

Australian Research Council Grants

(f) Note

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

37 2011 $’000

-

-

-

-

7 (7)

7

1,103

2,667 (1,564)

2,010 657

International

2,322

4,739 (2,417)

3,636 1,103

Fellowships

2012 $’000 2011 $’000

942

3,622 (2,680)

2,215 1,407

3,104 1,065

47

217 (170)

179 38

1,407

3,622 (2,215)

3,376 246

1,919

4,169 (2,250)

Centres

2,901

5,123 (2,222)

3,204 1,919

Projects

125

246 (121)

199 47

Indigenous Researchers Development

2012 $’000

942

3,622 (2,680)

2,215 1,407

Total

3,722

6,501 (2,779)

4,094 2,407

Total

7,944

18,763 (10,819)

Total

13,186 5,577

2012 $’000

1,407

3,622 (2,215)

3,376 246

2,407

5,762 (3,355)

4,534 1,228

5,577

14,466 (8,889)

10,625 3,841

2011 $’000

THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012


THE UNIVERSITY OF NEWCASTLE Notes to the Financial Statements For the year ended 31 December 2012 37

ACQUITTAL OF AUSTRALIAN GOVERNMENT FINANCIAL ASSISTANCE

(g)

OS-HELP Note

22

Student Services and Amenities Fee (SSAF) Note

Unspent (overspent) revenue from previous period SSAF-HELP Student Services Fee Total amounts available to be expended Student services expenses during the period Unspent (overspent) Student Services and Amenities Fee

END OF AUDITED FINANCIAL STATEMENTS

61 | THE UNIVERSITY OF NEWCASTLE

1,464 (1,350)

326 371

Net cash received Cash surplus (deficit) from the previous period

(h)

2011 $’000

1,123 (797)

Cash received during the reporting period Cash spent during the reporting period

Cash surplus (deficit) for the reporting period

Parent

2012 $’000

3(b) 5

114 257

697

371

Parent

2012 $’000

2011 $’000

970 1,314

2,284 (2,284) -

-


THE UNIVERSITY OF NEWCASTLE Statement by Members of Council For the year ended 31 December 2012 In accordance with a resolution of the members of Council under s.16 of the University of Newcastle Act, 1989 and pursuant to Section 41C of the Public Finance & Audit Act 1983, we state that to the best of our knowledge and belief: 1. The attached general purpose financial reports present a true and fair view of the financial position of the University at 31 December 2012 and its financial performance for the year then ended 2. The financial reports have been prepared in accordance with the provisions of the New South Wales Public Finance & Audit Act 1983, the Public Finance & Audit Regulations 2010 and the Financial Statement Guidelines for Australian Higher Education Providers for the 2012 Reporting Period issued by the Australian Government Department of Industry, Innovation, Science, Research and Tertiary Education 3. The financial reports has been prepared in accordance with Australian Accounting Standards (AASB), AASB Interpretations and other mandatory professional reporting requirements 4. We are not aware of any circumstances which would render any particulars included in the financial reports to be misleading or inaccurate 5. There are reasonable grounds to believe that the University will be able to pay its debts as and when they fall due 6. The amount of Australian Government financial assistance expended during the reporting period was for the purpose for which it was intended and the University has complied with applicable legislation, contracts, agreements and programme guidelines in making expenditure 7. The University of Newcastle charged Student Services and Amenities Fees strictly in accordance with the Higher Education Support Act 2003 and the Administration Guidelines made under the Act. Revenue from the fee was spent strictly in accordance with the Act and only on services and amenities specified in subsection 19-38(4) of the Act. On Behalf of the Council of the University of Newcastle.

The Hon John Price AM Chancellor Dated 26 March 2013

62 | THE UNIVERSITY OF NEWCASTLE

Professor Caroline McMillen Vice-Chancellor and President


6 3 | THE UNIVERSITY OF NEWCASTLE


64 | THE UNIVERSITY OF NEWCASTLE


65 | THE UNIVERSITY OF NEWCASTLE


GraduateSchool.com Pty Ltd ABN 72 092 374 546 Financial Report for the year ended 31 December 2012


GRADUATESCHOOL.COM PTY LTD Contents For the year ended 31 December 2012 Financial Statements Directors' Report Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report

68 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Directors’ Report For the year ended 31 December 2012 Directors The names of the directors in office at any time during, or since the end of, the year are: Names Position Term Susan Mary Gould Bradley Wilson Clinton Marquet Val Robertson

Chairperson Director (Chairperson from 30/11/2012) Director Director

Resigned 30/11/2012 Full year Full year Full year

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Meetings of directors During the financial year, 2 meetings of directors were held. Attendances by each director during the year were as follows: Directors' Meetings

Susan Mary Gould Bradley Wilson Clinton Marquet Val Robertson

Number eligible to attend

Number attended

2 2 2 2

2 1 2

Principal Activities The principal activities of the company during the financial year were the development, promotion and administration of the University of Newcastle's online postgraduate coursework programs. The company ceased operating on 11 September 2012. An application was made to the Australia Securities and Investments Commission in February 2013 to deregister the company. Review of operations During the year the company's parent, The University of Newcastle, resolved to transfer the company's activities to the University and commence the deregistration of GraduateSchool.com Pty Ltd. Significant changes in state of affairs The company ceased trading on 11 September 2012 and all activities were transferred to the University of Newcastle. There was no gain or loss to the Company on this transfer. Matters subsequent to the end of the financial year There has not been any matter or circumstance, other than referred to in the financial statements and notes following, that has arisen, significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs in future financial years.

69 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Directors’ Report For the year ended 31 December 2012 Likely development and expected results of operations It is expected that the company's deregistration will be finalised by mid 2013. Environmental regulation During the year there were no significant environmental regulations of GraduateSchool.com Pty Ltd other than that referred to in the financial statements and notes following. Insurance of officers University of Newcastle maintains comprehensive insurance policies in relation to Directors and Officers, Industrial Special Risk, Professional Indemnity, Motor Vehicle and Personal Accident (including travel). All of these policies include GraduateSchool.com Pty Ltd as an insured party and are current. Directors’ and  Officers’  Liability  insurance  covers  damages  (not  fines  and  penalties)  and  legal  expenses  incurred due to a breach or alleged breach of duty, misleading statement or wrongful act by a director or officer acting in that capacity. Directors’  and  Officers’  Supplementary  Legal  Expenses  covers  legal  expenses  on  behalf  of  directors,  employees  and   organisations  defending  against  actions  which  are  not  covered  in  the  standard  Directors’  and  Officers’  Liability  Policy. Proceedings on behalf of GraduateSchool.com Pty Ltd Nil. Declaration of Audit Independence A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is attached to this report. This report is made in accordance with a resolution of the Board of Directors of GraduateSchool.com Pty Ltd.

Bradley Wilson Director

26 March 2013 Newcastle

70 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Income Statement For the year ended 31 December 2012 2012 $

2011 $

8,103,294 272,464 70,465

6,879,719 592,021 105,312

8,446,223

7,577,052

Gains on disposal of assets

-

11,109

Total revenue and income

8,446,223

7,588,161

734,450 27,572 2,268 2,003 234 2,277,636

615,748 74,249 222 8,550 3,319,796

3,093,198

4,018,565

5,402,060 (1,592,313)

3,569,596 (1,105,607)

Operating result after income tax for the year

3,809,747

2,463,989

Operating result attributable to members of GraduateSchool.com Pty Ltd

3,809,747

2,463,989

Revenue Fees and charges Investment revenue Other revenue

2 3 4

Total revenue

Employee benefits expenses Depreciation and amortisation Repairs and maintenance Impairment of intangible assets Loss on disposal of assets Other expenses

5 6 7

8

Total expenses Operating result before income tax Income tax expense

9

The accompanying notes form part of these financial statements.

71 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Statement of Comprehensive Income For the year ended 31 December 2012 2012 $

2011 $

Operating result after income tax for the year

3,809,747

2,646,989

Total comprehensive income for the year attributable to members

3,809,747

2,646,989

The accompanying notes form part of these financial statements.

72 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Statement of Financial Position For the year ended 31 December 2012

Note

2012 $

2011 $

ASSETS Current assets Cash and cash equivalents Receivables Inventories

3 -

94,722 10,037,011 408,783

3

10,540,516

-

44,477 22,559

Total non-current assets

-

67,036

Total assets

3

10,607,552

-

188,730 2,684,270 29,161

-

2,902,161

-

24,897

Total non-current liabilities

-

24,897

Total liabilities

-

2,927,058

Net assets

3

7,680,494

10 11 12

Total current assets Non-current assets Property, plant and equipment Intangible assets

13 14

LIABILITIES Current liabilities Trade and other payables Current tax liabilities Provisions

15 16 17

Total current liabilities Non-current liabilities Provisions

17

EQUITY Issued capital Retained Earnings

18 19

Total equity

The accompanying notes form part of these financial statements.

73 | THE UNIVERSITY OF NEWCASTLE

3 -

3 7,680,491

3

7,680,494


GRADUATESCHOOL.COM PTY LTD Statement of Changes in Equity For the year ended 31 December 2012 Issued Capital $ Balance at 1 January 2011

Retained Earnings $

Total $

Total comprehensive income

3 -

5,216,501 2,463,990

5,216,504 2,463,990

Sub-total

3

7,680,491

7,680,494

Balance at 31 December 2011

3

7,680,491

7,680,494

Issued Capital $

Balance at 1 January 2012

Retained Earnings $

Total $

Total comprehensive income

3 -

7,680,491 3,809,747

7,680,494 3,809,747

Sub-total Dividends paid or provided for

3 -

11,490,238 (11,490,238)

11,490,241 (11,490,238)

Balance at 31 December 2012

3

-

3

The accompanying notes form part of these financial statements.

74 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Statement of Cash Flows For the year ended 31 December 2012

Note Cash flows from operating activities Receipts from customers Investment income Payments to suppliers and employees (incl. of GST) Income taxes paid Net cash provided by operating activities

24

Cash flows from investing activities Proceeds from sale of property, plant and equipment Payments for purchase of property, plant and equipment Net cash used by investing activities Cash flows from financing activities Payment of dividends Net cash used by financing activities Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Cash and cash equivalents at end of financial year

10

The accompanying notes form part of these financial statements.

75 | THE UNIVERSITY OF NEWCASTLE

2012 $

2011 $

14,742,632 28 (2,890,675) (3,478,898)

3,288,468 58 (3,263,836) (7,232)

8,373,087

17,458

(11,809)

11,109 (40,928)

(11,809)

(29,819)

(8,456,000)

-

(8,456,000)

-

(94,722) 94,722

(12,361) 107,083

-

94,722


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies GraduateSchool.com Pty Ltd (the Company) is a registered company limited by shares, and is a controlled entity of the University of Newcastle. GraduateSchool.com Pty Ltd is a not for profit entity. The principal place of business is: GraduateSchool.com Pty Ltd University Drive Callaghan NSW 2308 Australia The principal activities of the Company were to administer the delivery, promotion and development of online post graduate coursework on behalf of the University of Newcastle. On 11 September 2012, the Company ceased trading and transferred all assets and liabilities to the parent entity, The University of Newcastle. Subsequent to year end an application has been made to deregister the Company (refer to note 23). The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation The annual financial statements represent the audited general purpose financial statements of GraduateSchool.com Pty Ltd. They have been prepared on an accrual basis in accordance with Australian Accounting Standards. Additionally the statements have been prepared in accordance with following statutory requirements:  Higher Education Support Act 2003 (Financial Statement Guidelines)  Public Finance and Audit Act 1983, the requirements of the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) and other State/Australian Government legislative requirements. The Company is a not-for-profit entity and these statements have been prepared on that basis. Some of the requirements for not-for-profit entities are inconsistent with the IFRS requirements. Date of authorisation for issue The financial statements were authorised for issue on 26 March 2013. Historical cost convention These financial statements have been prepared under the historical cost convention. Critical accounting estimates The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting  policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in the relevant notes to the financial statements.

76 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(b) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances rebates and amounts collected on behalf of third parties. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria  have  been  met  for  each  of  the  Company’s  activities  as   described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows (i) Service fees Service fees are recognised as income in the year of receipt, except to the extent that fees and charges relate to courses to be held in future periods. Such income is treated as income in advance. (c) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s  taxable  income  based  on   the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses, only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. (d) Impairment of assets Assets that are subject to amortisation are reviewed annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed annually for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised  for  the  amount  by  which  the  asset’s  carrying  amount  exceeds  its  recoverable  amount. The recoverable amount  is  the  higher  of  an  asset’s  fair  value  less  costs  to  sell  and  value  in  use.  For  the  purposes  of  assessing   impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

77 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(e) Cash and cash equivalents For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. (f)

Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision  is  the  difference  between  the  asset’s  carrying  amount  and  the  present  value  of  estimated  future  cash   flows. Cash flows relating to short-term receivable are not discounted if the effect of discounting is immaterial. The amount of the impairment loss is recognised in the income statement in impairment of assets. When a trade receivable for which an impairment had been recognised becomes uncollectible in a subsequent period, it is written off. Subsequent recoveries of amounts previously written off are credited against impairment of assets.

(g) Inventories Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on a first-in-first-out basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. (h) Property, plant and equipment All items of plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment losses. Subsequent costs  are  included  in  the  asset’s  carrying  amount  or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is calculated using the straight line method to allocate the cost, net of any residual values, over their estimated useful life of the asset. The estimated useful life of each asset class are as follows: Plant and equipment 5 years Motor vehicle 8 years The  assets’  residual  values  and  useful  lives  are  reviewed,  and  adjusted  if  appropriate, at each reporting date.

78 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(h) Property, plant and equipment (continued) An asset’s  carrying  amount  is  written  down  immediately  to  its  recoverable  amount  if  the  asset’s  carrying  amount  is   greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in the income statement. (i)

Intangible Assets (i)

Website redevelopment

Expenditure on website redevelopment has been capitalised as it is expected to return future economic benefits to the Company. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services and direct labour. Capitalised expenditure is stated at cost. Amortisation has been calculated from the date of commission, using the straight-line method to allocate the cost over the period of the expected benefit, being 3 years. (j) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (k) Employee benefits (i) Wages and salaries Liabilities for short-term employee benefits including wages and salaries and non-monetary benefits due to be settled within 12 months after the end of the year are measured at the amount expected to be paid when the liability is settled and recognised in other payables. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Annual leave and sick leave The liability for long-term employee benefits such as annual leave are recognised in current provisions for employee benefits as they are expected to be settled within 12 months after the end of the reporting period. It is measured at the amount expected to be paid when the liability is settled. Regardless of the expected timing of settlements, provisions made in respect of employee benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability. (iii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the outstanding long service leave liabilities that employees have not yet taken and are measured at the amounts payable in respect of services provided by employees at the reporting date. The measurement of long service leave employee benefits has not been calculated using the present value of expected future payments to be made in respect of services provided by employees as the financial impact of doing so has been determined to be immaterial. (l)

Rounding of amounts All amounts rounded in the financial report have been rounded to the nearest dollar.

79 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012

1

Summary of significant accounting policies continued

andofservices tax accounting (GST) 1(m) Goods Summary significant policies continued Revenues, assets and certain liabilities are recognised net of the amount of GST, except where the amount (m) Goods andexpenses, services tax (GST) of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost acquisition of the asset or as part of the expense. Revenues, expenses, assets and certain liabilities are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the statement of financial position. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the Cash flowsofare presented on a gross basis. The GST components of cash flows arising from investing or financing statement financial position. activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flows. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash (n) New flows.accounting standards and interpretations Certain new Accounting Standards and Interpretations have been published that are not mandatory for 31 December (n) New accounting standards and interpretations 2012 reporting periods. GraduateSchool.com Pty Ltd's assessment of the impact of these new Standards and Interpretations is set out below: Certain new Accounting Standards and Interpretations have been published that are not mandatory for 31 December  AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from 2012 reporting periods. GraduateSchool.com Pty Ltd's assessment of the impact of these new Standards and AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December Interpretations is set out below: 2010) (effective from 1 January 2013)  AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December  AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in 2010) (effective from 1 January 2013) Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation  AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in and Joint Arrangements Standards(effective 1 January 2013) Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation  AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising and Joint Arrangements Standards(effective 1 January 2013) from AASB 13 (effective 1 January 2013)   

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising Revised AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013) from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements (effective 1 January 2013) Revised AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements (effective 1 January 2013)

2

Fees and charges

2

Fees and charges Service fees Total fees and charges Service fees

2012 $ 8,103,294 2012 $ 8,103,294 8,103,294

3

Total fees and charges Investment revenue

8,103,294

6,879,719

3

Investment revenue Interest

272,464

592,021

Total investment revenue Interest

272,464 272,464

592,021 592,021

Total investment revenue

272,464

592,021

80 | THE UNIVERSITY OF NEWCASTLE

2011 $

6,879,719 2011 $ 6,879,719

6,879,719


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 4

Other revenue and income 2012 $

5

2011 $

Recovery of costs Other revenue

70,465

Total other revenue

70,465

105,312

81,513 8,107 4,884 766 1,670 5,664 454 86

36,315 2,818 2,081 363 -

Total academic

103,144

41,577

Non-academic Salaries Superannuation Payroll tax Worker's compensation Long service leave expense Annual leave Maternity leave

486,949 54,614 29,808 1,918 8,639 48,250 1,128

448,323 40,053 28,435 4,336 11,017 42,007 -

Total non-academic

631,306

574,171

Total employee benefits expenses

734,450

615,748

41,578 63,734

Employee benefits expenses Academic Salaries Superannuation Payroll tax Worker's compensation Long service leave expense Annual leave Maternity leave Fixed-term contract separation

81 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 6

7

8

Depreciation and amortisation

2012 $

2011 $

Depreciation Plant and equipment Motor vehicles

3,896 3,120

4,285 2,235

Total depreciation

7,016

6,520

Amortisation Website redevelopment costs

20,556

67,729

Total amortisation

20,556

67,729

Total depreciation and amortisation

27,572

74,249

Repairs and maintenance - general

2,268

222

Total repairs and maintenance

2,268

222

Advertising, marketing and promotions Course development expenditure General consumables Interest Non-capitalised equipment Other expenses Professional services Scholarships, grants and prizes Service fees - related entities Telecommunications Travel, staff development and entertainment

621,280 1,401,066 (98,027) 16,704 38,425 135,856 54,039 10,382 97,911

866,082 393,600 1,131,447 98,027 26,677 66,444 169,571 27,279 441,734 33,040 65,895

Total other expenses

2,277,636

3,319,796

Repairs and maintenance

Other expenses

82 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 9

Income tax expense (a)

Income tax expense

2012 $ 1,592,313 -

2011 $

1,592,313

1,105,607

Income tax expense is attributable: Operating result from operations

1,592,313

1,105,607

Aggregate income tax expense

1,592,313

1,105,607

5,402,060 1,620,618

3,569,597 1,070,879

(28,305) -

440 34,288

1,592,313

1,105,607

Cash at bank and on hand

-

94,722

Total cash and cash equivalent

-

94,722

Current tax Deferred tax Adjustments for current tax of prior periods

(b)

Numerical reconciliation of income tax expense to prima facie tax payable

Operating result from operations before income tax expense Tax at the Australian tax rate of 30% (2011: 30%) Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Adjustment for current tax of prior periods

10

1,070,879 (2,130) 36,858

Cash and cash equivalents

(a)

Reconciliation to cash and cash equivalents at the end of the year in the statement of cash flows

The above figures are reconciled to cash and cash equivalents at the end of the year as shown in the statement of cash flows as follows: Balances as above

-

94,722

Balance as per cash flow statement

-

94,722

8 3 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 11

12

13

Receivables

2012 $

2011 $

Current Related parties Prepayments Other receivables

3 -

10,013,428 3,434 20,149

Total current receivables

3

10,037,011

Inventories Current Course materials

-

408,783

Total current inventories

-

408,783

Property, plant and equipment

At 1 January 2011 Cost Accumulated depreciation

Motor Vehicles $

Plant and Equipment $

Total $

15,909 (6,413)

19,846 (10,723)

35,755 (17,136)

9,496

9,123

18,619

Year ended 31 December 2011 Opening net book amount Additions Disposals Depreciation charge

9,496 33,254 (7,671) (2,235)

9,123 7,674 (879) (4,285)

18,619 40,928 (8,550) (6,520)

Closing net book amount

32,844

11,633

44,477

At 31 December 2011 Cost Accumulated depreciation

33,254 (410)

18,896 (7,263)

52,150 (7,673)

Net book amount

32,844

11,633

44,477

32,844 (29,724) (3,120)

11,633 11,806 (19,543) (3,896)

44,477 11,806 (49,267) (7,016)

Closing net book amount

-

-

-

At 31 December 2012 Cost Accumulated depreciation

-

-

-

Net book amount

-

-

-

Net book amount

Year ended 31 December 2012 Opening net book amount Additions Disposals Depreciation charge

84 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 14

Intangible Assets

Website Re-development Cost Accumulated amortisation and impairment

2012 $

2011 $ -

203,186 (180,627)

Net carrying value

-

22,559

Total Intangibles

-

22,559

Movements in the carrying amount of intangible assets between the beginning and the end of the year: Website Redevelopment $ Year ended 31 December 2012 Opening net book amount Additions Impairment expense Amortisation expense

22,559 (2,003) (20,556)

Closing value at 31 December 2012

-

Year ended 31 December 2011 Opening net book amount Amortisation expense

90,287 (67,728)

Closing value at 31 December 2011

15

16

Trade and other payables

22,559

2012 $

2011 $

Current Trade payables Other current payables

-

188,543 187

Total current trade and other payables

-

188,730

Current tax payable

-

2,684,270

Total current tax liabilities

-

2,684,270

Current tax liabilities

85 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 17

Provisions 2012 $

2011 $

Current provisions expected to be settled within 12 months Employee benefits Annual leave

-

29,161

Total current provisions

-

29,161

Employee benefits Long service leave

-

24,897

Total non-current provisions

-

24,897

Total Provisions

-

54,058

Non-Current provisions

Provision for Annual Leave This provision is for outstanding annual leave liabilities that employees have not yet taken. It is assumed the leave will be taken in the next twelve months. The measurement and recognition criteria relating to employee benefits had been included in note 1 to this report. Provision for Long Service Leave This provision is for outstanding long service leave liabilities that employees have not yet taken. The measurement and recognition criteria relating to the employee benefits has been included in note 1 to this report. (a)

Movements in provisions

Movements in each class of provision during the year are set out below:

Long Service Leave $

Annual Leave $ Carrying amount at start of year Additional provisions recognised Amounts used Amounts transferred to the University of Newcastle

29,161 31,931 (11,630) (49,462) -

86 | THE UNIVERSITY OF NEWCASTLE

Total $

24,897 4,989 (29,886) -

54,058 36,920 (11,630) (79,348) -


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 18

Issued Capital

2012 $

2011 $

Share capital (3 ordinary shares of $1 each)

3

Total

3

3

7,680,491 3,809,747 (11,490,238)

5,216,501 2,463,990 -

-

7,680,491

3

The parent entity of the Company is The University of Newcastle, by virtue of its full ownership. 19

Retained Earnings

Movements in retained earnings were as follows: Retained earnings at 1 January Operating result for the year Dividends paid Retained earnings at 31 December

20

Key management personnel disclosures (a)

Names of responsible persons and executive officers

The following persons were responsible persons and executive officers of GraduateSchool.com Pty Ltd for the year, or part thereof: Dr Susan Mary Gould - Chairperson Mr Bradley Stephen Wilson - Director Mr Clinton Marquet - Director Mr Val Robertson - Director

(b)

Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of GraduateSchool.com Pty Ltd during the year: Professor Kevin McConkey - Chief Executive Officer No Board members or Executive officers receive any remuneration.

87 | THE UNIVERSITY OF NEWCASTLE


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 21

Remuneration of Auditors During the year, the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms: Assurance Services

(a)

Audit services Fees paid or payable to Audit Office of NSW: Auditing or reviewing the financial report

2012 $

2011 $

26,500

16,000

26,500

16,000

The auditor remuneration has been paid for by the parent entity.

22

Related Parties (a)

Parent entities The ultimate parent entity is the University of Newcastle, by virtue of its full ownership of the Company's issued share capital.

(b)

Key management personnel Disclosures relating to directors and specified executives are set out in Note 20.

(c)

Transactions with related parties The following transactions occurred with related parties: Transactions during the year

i) The University of Newcastle Services provided to the University Course service fees Recovery of academic salaries Interest on receivable

Services provided by the University Program course development activities Consumables and overseas agent commissions Payment for seconded staff salaries

88 | THE UNIVERSITY OF NEWCASTLE

8,198,242 24,253 272,436

6,893,901 41,578 591,963

8,494,931

7,527,442

42,705 113,727 281,834

393,600 187,628 441,734

438,266

1,022,962


GRADUATESCHOOL.COM PTY LTD Notes to the Financial Statements For the year ended 31 December 2012 22

Related parties continued (c)

Transactions with related parties

ii) Newcastle Innovation

2012 $

Payments for contract teaching

iii) UoN Services Limited Payments for advertising

(d)

2011 $ -

2,800

-

2,800

-

6,000

-

6,000

Outstanding balances The following balances are outstanding at the reporting date in relation to transactions with related parties:

23

Current receivables (sale of services) The University of Newcastle

-

10,019,427

Current Payables (purchase of services) UoN Services Limited

-

6,000

Events occurring after the reporting date Application was made to the Australian Securities and Investments Commission to deregister GraduateSchool.com Pty Ltd in February 2013. The Company is not aware of any other material financial impacts or changes after 31 December 2012.

24

Reconciliation of operating results after income tax to net cash flows from operating activities Operating result for the year Depreciation and amortisation Impairment of intangible assets Net (gain) loss on sale of non-current assets Changes in operating assets and liabilities: (Increase) decrease in inventories (Increase) decrease in other operating assets Increase (decrease) in trade creditors Increase (decrease) in other operating liabilities Increase (decrease) in income taxes payable Increase (decrease) in deferred tax liability Net cash provided by (used in) operating activities

89 | THE UNIVERSITY OF NEWCASTLE

3,809,747 27,572 2,003 234

2,463,990 74,249 (2,559)

408,783 6,331,997 (19,013) (203,625) (1,984,612) -

(150,584) (3,676,908) 22,573 90,295 1,198,532 (2,130)

8,373,087

17,458


GRADUATESCHOOL.COM PTY LTD Directors’ Declaration

The directors of the Company declare that: 1.

2.

The financial statements and notes are in accordance with the Corporations Act 2001 and: a.

comply with Accounting Standards and the Corporations Regulations 2001; and

b.

comply with the Public Finance and Audit Act 1983, and the Public Finance and Audit Regulations 2010; and

c.

give a true and fair view of the company's financial position as at 31 December 2012 and of its performance for the year ended on that date.

In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors pursuant to s.41C of the Public Finance and Audit Act 1983.

Bradley Wilson Director 26 March 2013 Newcastle

90 | THE UNIVERSITY OF NEWCASTLE


91 | THE UNIVERSITY OF NEWCASTLE


92 | THE UNIVERSITY OF NEWCASTLE


9 3 | THE UNIVERSITY OF NEWCASTLE


UoN Services Limited ABN 22 121 393 306 Financial Report for the year ended 31 December 2012


UON SERVICES LIMITED Contents For the year ended 31 December 2012 Financial Statements Directors' Report Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Independent Audit Report

96 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Directors’ Report 31 December 2012 Directors The following persons were Directors of UoN Services Limited during the whole of the year and up to the date of this report: Sharon Waterhouse – Chairperson Tim Shanley – Independent Director Kelly Lofberg – Independent Director Kristen Perry – Independent Director Peter Cockbain – University Council Appointed Director Ian Baker - University Council Appointed Director The following persons were appointed Director during the year and continue in office at the date of this report: Liam Sanders - Student Director (appointed 01 April 2012) Lara Field - Student Director (appointed 01 April 2012) Emily Wood - Student Director (appointed 01 April 2012) The following persons were Directors from the beginning of the year until end of their term: Adriana Sung - Student Director (term expired 31 March 2012) Nicholas Williams - Student Director (term expired 31 March 2012) Jeffrey Evans - Student Director (term expired 31 March 2012)

Board Meetings The numbers of meetings of the Board of Directors the year ended 31 December 2012, and the numbers of meetings attended by each member were: Board Meetings

Sharon Waterhouse Tim Shanley Kelly Lofberg Kristen Perry Peter Cockbain Ian Baker Liam Sanders Lara Field Emily Wood Adriana Sung Nicholas Williams Jeffrey Evans

A 7 3 4 6 3 7 5 5 4 2 2 -

B 8 8 8 8 8 8 6 6 6 2 2 2

A = Number of meetings attended B = Number of meetings held during the time the member held office or was a member of the committee during the year Contributions on winding up In the event of the company being wound up, members are required to contribute a maximum of $20 each. Auditor's independence declaration A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is attached to this report.

97 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Directors’ Report 31 December 2012 Principal Activities The principal activities of the company during the financial year were to enhance the shared University experience and academic pursuits of the University community through the commercially responsible provision of facilities and services; and Principal to provide Activities a common meeting ground and social centre for Members, Students, graduates and staff of the University. The principal activities of the company during the financial year were to enhance the shared University experience and academic pursuits of the University community through the commercially responsible provision of facilities and services; and Review of operations to provide a common meeting ground and social centre for Members, Students, graduates and staff of the University. This was the sixth year of operations for UoN Services Limited (UoNS). UoNS commenced trade on 1 April 2007. UoNS is effectively the replacement organisation for University of Newcastle Union Limited (UNUL) on the University of Newcastle’s Review of and operations Callaghan City campuses. This was the sixth year of operations for UoN Services Limited (UoNS). UoNS commenced trade on 1 April 2007. UoNS is effectively the replacement organisation for University of Newcastle Union Limited (UNUL) on the University of Newcastle’s Significant changes in state of affairs Callaghan and City campuses. During the year there was no significant change in the state of the affairs of the company. Significant changes in state of affairs Matters subsequent to the end of the financial year During the year there was no significant change in the state of the affairs of the company. There has not been any matter or circumstance, other that referred to in the financial statements and notes following, that has arisen, significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the Matters subsequent the endyears. of the financial year state of affairs in futuretofinancial There has not been any matter or circumstance, other that referred to in the financial statements and notes following, that has arisen, significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the Likely development and expected results of operations state of affairs in future financial years. The company will continue to operate in accordance with its Constitution and Objects therein. Likely development and expected results of operations Environmental regulation The company will continue to operate in accordance with its Constitution and Objects therein. During the year there were no significant environmental regulations of UoNS other than that referred to in the financial statements and notes following. Environmental regulation During the year there were no significant environmental regulations of UoNS other than that referred to in the financial Insurance of officers statements and notes following. University of Newcastle maintains comprehensive insurance policies in relation to Directors and Officers, Industrial Special Risk, Professional Indemnity, Motor Vehicle and Personal Accident (including travel). Insurance of officers University Newcastle maintains insurance policies in relation to Directors and Officers, Industrial Special All of theseofpolicies include UoNS comprehensive as an insured party and are current. Risk, Professional Indemnity, Motor Vehicle and Personal Accident (including travel). Directors' and Officers' Liability insurance covers damages (not fines and penalties) and legal expenses incurred due to a All of these policies include as an insured party and are current. breach or alleged breach of UoNS duty, misleading statement or wrongful act by a director or officer acting in that capacity. Directors' and Officers' Supplementary Liability insurance covers damages (notlegal finesexpenses and penalties) and legal expenses incurred and due to a Legal Expenses covers on behalf of directors, employees breach or alleged breachagainst of duty,actions misleading or wrongful by a director or officer acting inLiability that capacity. organisations defending whichstatement are not covered in theact standard Directors' and Officers' Policy. Directors' and Officers' Supplementary Legal Expenses covers legal expenses on behalf of directors, employees and Proceedings on behalf of UoN Services Limited organisations defending against actions which are not covered in the standard Directors' and Officers' Liability Policy. UoNS has no legal proceedings in process. Proceedings on behalf of UoN Services This report is made in accordance with the Limited resolution of the Board of Directors of UoN Services Limited. UoNS has no legal proceedings in process. This report is made in accordance with the resolution of the Board of Directors of UoN Services Limited. Sharon Waterhouse Chair Sharon Waterhouse Newcastle Chair 26 March 2013 Newcastle 26 March 2013

98 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Income Statement For the year ended 31 December 2012 2012 $

2011 $

1,857,573 237,279 1,436,991 3,341,630 635,433

1,943,474 255,917 1,192,969 350,000 732,624

Total revenue from continuing operations

7,508,906

4,474,984

Total revenue and income from continuing operations

7,508,906

4,474,984

Expenses from continuing operations Cost of goods sold Employee related benefits Depreciation and amortisation Repairs and maintenance Impairment of assets Net losses on disposal of property, plant and equipment Other expenses

742,573 3,057,281 185,927 342,153 2,540,536

919,863 1,933,153 147,556 293,763 (54) 29,699 1,029,085

6,868,470

4,353,065

640,437 -

121,919 218,193

Operating result for the year Operating result attributable to non-controlling interest

640,437 -

340,112 -

Operating result attributable to members of UoN Services Ltd

640,437

340,112

Operating result attributable to members from: Continuing operations Discontinued operations

640,437 -

121,919 218,193

Total

640,437

340,112

Note Revenue from continuing operations Sale of goods Investment revenue Rental revenue Contributions - related entities Other revenue

3 4 5 6

8 9 10 11 12

Total expenses from continuing operations Operating result from continuing operations Operating result from discontinued operations

7

The accompanying notes form part of these financial statements.

99 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Statement of Comprehensive Income For the year ended 31 December 2012 2012 $

2011 $

640,437

340,111

-

-

Total comprehensive income Total comprehensive income attributable to non-controlling interest

640,437 -

340,111 -

Total comprehensive income attributable to members of UoN Services Ltd

640,437

340,111

640,437

340,111

Operating result for the year Other comprehensive income

The accompanying notes form part of these financial statements.

100 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Statement of Financial Position For the year ended 31 December 2012 2012 $

2011 $

576,120 709,782 148,008 3,900,000

249,861 373,781 94,608 4,200,000

5,333,910

4,918,250

1,000 1,822,057 39,904

1,000 1,454,649 34,688

TOTAL NON-CURRENT ASSETS

1,862,961

1,490,337

TOTAL ASSETS

7,196,871

6,408,587

666,493 209,924 113,808

638,731 58,896 98,128

990,225

795,755

28,900

75,523

TOTAL LIABILITIES

1,019,125

871,278

NET ASSETS

6,177,746

5,537,309

6,177,746

5,537,309

6,177,746

5,537,309

Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other financial assets

13 14 15 16

TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets Property, plant and equipment Intangible assets

16 17 18

LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions Other liabilities

19 20 21

TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions

EQUITY Retained earnings

20

22

TOTAL EQUITY

The accompanying notes form part of these financial statements.

101 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Statement of Changes in Equity For the year ended 31 December 2012 Retained Earnings $

Total $

Balance at 1 January 2011 Operating result for the year Other comprehensive income

5,197,198 340,111 -

5,197,198 340,111 -

Balance at 31 December 2011

5,537,309

5,537,309

Balance at 1 January 2012 Operating result for the year Other comprehensive income

5,537,309 640,437 -

5,537,309 640,437 -

Balance at 31 December 2012

6,177,746

6,177,746

The accompanying notes form part of these financial statements.

102 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Statement of Cash Flows For the year ended 31 December 2012

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Interest received Payments to suppliers and employees (inclusive of GST) GST recovered (paid)

2012 $

2011 $

5,719,038 175,938 (5,212,018) (99,261)

5,350,423 200,118 (4,937,394) (168,432)

583,697

444,715

(557,438) 8,100,000 (7,800,000)

20,155 (256,313) 366,453 8,800,000 (9,400,000)

(257,438)

(469,705)

Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year

326,259 249,861

(24,990) 274,851

Cash and cash equivalents at end of year

576,120

249,861

Net cash provided by (used in) operating activities

28

CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property, plant and equipment Payments for purchase of property, plant and equipment Proceeds from sale of other financial assets Proceeds from redemption of held to maturity investments Payments for purchase of held to maturity investments Net cash provided by (used) in investing activities

The accompanying notes form part of these financial statements.

103 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UoN Services Limited (the Company) is a registered company limited by guarantee and is a controlled entity of the University of Newcastle. UoN Services Limited is a not for profit entity. The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The Company was established on 21 December 2006 and commenced trading on 1 April 2007. The Company has its domicile in Australia. The principal place of business is: Level 5, Shortland Building University of Newcastle University Drive Callaghan NSW 2308 The principal activities of the Company are: To enhance the shared University experience and academic pursuits of the University community through the commercially responsible provision of facilities and services. (a)

Basis of preparation The annual financial statements represent the audited general purpose financial statements of UoN Services Limited. They have been prepared on an accrual basis in accordance with Australian Accounting Standards. Additionally the statements have been prepared in accordance with the following statutory requirements: •

Higher Education Support Act 2003 (Financial Statement Guidelines)

Public Finance and Audit Act 1983, the requirements of the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) and other State/Australian Government legislative requirements.

UoN Services Limited is a not-for-profit entity and these statements have been prepared on that basis. Some of the requirements for not-for-profit entities are inconsistent with the IFRS requirements. Date of authorisation for issue The financial statements were authorised for issue by the members of UoN Services Limited on 26 March 2013. Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property. Critical accounting estimates The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying UoN Services Limited’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below:

104 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED (a)

Basis of preparation continued Impairment of Investments and other financial assets – The Company assesses at each reporting date, whether there is objective evidence that a financial asset or group of financial assets is impaired as outlined in note 1 (j). Employee benefits – long service leave – the liability for long service leave is measured at the present value of the expected future payments to be made in respect of services provided by employees up to the reporting date as outlined in note 1 (p) (iii). Useful lives of property, plant and equipment – depreciation of property, plant and equipment is calculated over the assets estimated useful lives as outlined in note 1 (l).

(b)

Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances rebates and amounts collected on behalf of third parties. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows (i) Trading income Food and beverage, and retail income are recognised as income in the year of receipt. (ii) Contributions - Related Entities University Contribution to student services and capital expenditure are recognised at their fair value when the Company obtains control of the right to receive the contribution, it is probable that economic benefits will flow to the Company and it can be reliably measured. (iii) Rental income Leasing contracts are recognised as income in the year they relate to, except to the extent that they relate to future periods. Such income is treated as income in advance in liabilities.

(c)

Income Tax The Company is exempt from income tax under subdivision 50-B of the Income Tax Assessment Act 1997.

(d)

Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 26). Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

105 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued (e)

Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(f)

Cash and cash equivalents For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown with interest bearing liabilities in current liabilities on the balance sheet.

(g)

Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivable are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.

(h)

Inventories Beverage, food and retail are stated at the lower of average cost and net realisable value. Cost comprises direct materials. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

(i)

Non-current assets (or disposal groups) held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

106 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued (i)

Non-current assets (or disposal groups) held for sale and discontinued operations continued Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

(j)

Investments and other financial assets The Company classifies its investments and other financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that management has the positive intention and ability to hold to maturity. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or are not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Initial recognition and derecognition Regular purchases and sales of investments and other financial assets are recognised on trade-date, being the date on which the Company commits to purchase or sell the asset. Investments and other financial assets carried are fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Investments and other financial assets are derecognised when the rights to receive cash flows from the investments and other financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are included in the income statement as gains and losses from investment securities.

107 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued (j)

Investments and other financial assets continued Subsequent measurement Available-for-sale financial assets and financial assets at fair value though profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments, are carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are included in the Income Statement within other income or other expenses in the period in which they arise. Changes in the fair value of monetary security denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and on monetary securities classified as available-for-sale are recognised in equity. Fair value The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. Impairment The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss) is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

(k)

Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. Entities shall classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices for identical assets or liabilities at the reporting date (Level 1). The quoted market price used for financial assets held by the Company is the current bid price.

108 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued (k)

Fair value estimation continued The fair value of financial instruments that are not traded in an active market (for example, over-the-counter-derivatives) is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments (Level 2) are used for long-term debt instruments held. Other techniques that are not based on observable market data (Level 3) such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. The level in the fair value hierarchy shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.

(l)

Property, Plant and Equipment Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Art Works are not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, is as follows: Motor vehicles

7 years

Plant and equipment

3 - 10 years

Lease hold improvements

40 years

The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. (m)

Intangible Assets (i) Software Expenditure on software, being software that is not an integral part of the related hardware, is capitalised. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, to a maximum of 5 years.

109 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued (n)

Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition occurred.

(o)

Provisions Provisions for legal claims and service warranties are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.

(p)

Employee benefits (i) Wages and salaries Liabilities for short-term employee benefits including wages and salaries, non-monetary benefits and profit-sharing bonuses due to be settled within 12 months after the end of the period are measure at the amount expected to be paid when the liability is settled and recognised in other payables. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Annual leave and sick leave The liability for long-term employee benefits such as annual leave and accumulating sick leave is recognised in current provisions for employee benefits as it is not due to be settled within 12 months after the end of the reporting period. It is measured at the amount expected to be paid when the liability is settled. Regardless of the expected timing of settlements, provisions made in respect of employee benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability. (iii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(q)

Rounding of amounts All amounts appearing in the financial report have been rounded to the nearest dollar.

11 0 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued (r)

Goods and services tax (GST) Revenues, expenses, assets and certain liabilities are recognised net of the amount of associated GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In this case, it is recognised as part of the cost of acquisition of the asset or part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(s)

New accounting standards and interpretations Certain new Accounting Standards and Interpretations have been published that are not mandatory for 31 December 2012 reporting periods. The Company’s assessment of the impact of these new Standards and Interpretations is set out below: AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective 1 January 2013) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013) Revised AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements (effective 1 January 2013) The Company has assessed the impact of these new standards and Interpretations and considers the impact to be insignificant.

111 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 2

RECLASSIFICATION OF COMPARATIVE INFORMATION (a)

Nature of the reclassification Changes have been made to the classification of certain items in the financial statements. As a result, certain amounts reported for 2011 have been reclassified as set out below. There has been no effect on operating result and net assets.

(b)

Summary of reclassified comparative information (i)

Reclassification of Income Statement items 2011 Restated $

3

Expenses from continuing operations Impairment of assets Other expenses

1,714 -

1,714

Total reclassification of Income Statement

1,714

1,714

2012 $ 237,279

2011 $ 255,917

237,279

255,917

Rental revenue Hire income Tenant outgoings

1,293,859 10,475 132,657

1,032,835 59,990 100,144

Total revenue income

1,436,991

1,192,969

Service fees from The University of Newcastle

3,341,630

350,000

Total contributions - related entities

3,341,630

350,000

INVESTMENT REVENUE

Interest received Total investment revenue 4

5

2011 Previously Reported $

RENTAL REVENUE

CONTRIBUTIONS - RELATED ENTITIES

11 2 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 6

OTHER REVENUE

Advertising income Commissions received Event revenue Merchandise Rebates from unrelated parties Sponsorship Student membership fees Workers compensation insurance refunded Other revenue Total other revenue

7

2012 $ 90,982 288,877 54,456 48,223 19,613 133,282

2011 $ 68,339 277,442 77,381 10,581 47,092 24,812 24,436 107,844 94,697

635,433

732,624

DISCONTINUED OPERATIONS (a)

Description of discontinued operation (i) Description In November 2010, the directors of the Company decided to sell the Shortland U Shop and Post Office retail business and initiated an active program to locate a buyer and complete the sale. The business was sold on 31 January 2011 with effect from 1 February 2011 and the outlet disposed of is reported in these financial statements as a discontinued operation. Financial information relating to the discontinued operation for the period to date of disposal is set out below. (ii) Financial performance and cash flow information The financial performance and cash flow information presented are for the month ending 31 January 2011 (2011 column) and the year ended 31 December 2010.

(b)

Profit (loss) of discontinued operations Revenue Expenses

-

100,373 141,256

Profit (loss) of discontinued operations Gain on sale of division

-

(40,883) 259,076

Gain on sale of division

-

259,076

Profit from discontinued operation

-

218,193

113 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 7

DISCONTINUED OPERATIONS continued (b)

Profit (loss) of discontinued operations continued

Profit attributable to owners of the parent entity relates to: Profit from continuing operations Profit from discontinued operations

8

2012 $

2011 $ -

121,918 218,193

-

340,111

392,847 33,058 6,700 2,404 8,670

464,702 36,313 7,250 (6,693) 6,860

443,679

508,432

2,145,662 211,410 11,304 35,130 6,686 201,013

1,104,661 130,075 20,861 18,553 24,361 109,145

2,397 -

2,371 14,694

Total non-academic

2,613,602

1,424,721

Total employee related expenses

3,057,281

1,933,153

EMPLOYEE RELATED EXPENSES Employee related expense - Trading Salaries Contribution to funded superannuation Worker's compensation Long service leave expense Annual leave Other Total trading Employee related expense - Non-Academic Salaries Contribution to funded superannuation Payroll tax Worker's compensation Long service leave expense Annual leave Other Maternity leave Voluntary separation

11 4 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 9

10

11

DEPRECIATION AND AMORTISATION

2012 $

2011 $

Depreciation Leasehold improvements Plant and equipment

31,856 133,352

23,553 120,024

Total depreciation

165,208

143,577

Amortisation Intangibles – computer software

20,719

3,979

Total amortisation

20,719

3,979

Total depreciation and amortisation

185,927

147,556

REPAIRS AND MAINTENANCE Buildings Cleaning Repairs and maintenance - general

44,254 218,498 79,401

10,875 242,198 40,690

Total repairs and maintenance

342,153

293,763

Impairment losses - financial assets Trade receivables

-

1,714

Reversal of impairment losses - Financial assets Trade receivables

-

(1,768)

Total impairment of assets

-

(54)

IMPAIRMENT OF ASSETS

115 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 12

13

OTHER EXPENSES

2012 $

2011 $

Advertising, marketing and promotions General consumables Insurances Minor equipment Student support Operating lease rental Professional services Scholarships, grants and prizes Telecommunications Travel, staff development and entertainment Utilities Other expenses

104,414 1,052,400 (5,364) 157,915 551,595 25,665 168,479 118,647 45,045 87,033 182,725 51,982

62,928 61,682 426 65,799 270,943 9,544 177,253 19,505 35,398 152,027 151,458 22,122

Total other expenses

2,540,536

1,029,085

Cash at bank and on hand

576,120

249,861

Total cash and cash equivalent

576,120

249,861

CASH AND CASH EQUIVALENTS

(a)

Reconciliation to cash and cash equivalents at the end of the year in the statement of cash flows The above figures are reconciled to cash at the end of the year as shown in the statement of cash flows as follows: Balances as above 576,120 249,861 Balance as per cash flow statement

(b)

576,120

249,861

Cash at bank Cash at bank is interest bearing with the floating rates being determined by the daily balance of funds held in the account. This was 2.56% for 2012 (2011:0.88%).

14

RECEIVABLES Current Trade receivables Prepayments Related party receivables Other receivables

292,936 50,386 358,661 7,799

325,871 26,721 6,000 15,189

Total current receivables

709,782

373,781

116 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 14

RECEIVABLES continued (a)

Impaired trade receivables As at 31 December 2012 current trade receivables of the Company with a nominal value of $nil (2011: $nil) were impaired. During 2012 the amount of the provision was $nil (2011: $nil). Movements in the provision for impaired receivables are as follows: 2012 $ At 1 January Provision for impairment recognised during the year Receivables written off during the year as uncollectable Unused amounts reversed

-

2011 $ 3,169 (1,768) (1,401)

-

-

The creation and release of the provision for impaired receivables has been included in 'impairment of assets' in the income statement. Amounts charged to the provision are generally written off when there is no expectation of recovering additional cash. (b) Past due but not impaired As of 31 December 2012, trade receivables of $101,045 were past due but not impaired. These relate to a number of customers for whom there is no history of recent default or expectation of same. The ageing of these receivables is: 2 to 3 months Over 3 months

117 | T H E U N I V E R S I T Y O F N E W C A ST L E

101,045 -

75,469 -

101,045

75,469


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 15

16

INVENTORIES

2011 $

Retail inventory - at cost Inventory

148,008

94,608

Total inventories

148,008

94,608

3,900,000

4,200,000

1,000

1,000

3,901,000

4,201,000

10,376,809 (5,394,963) (3,818,881)

10,067,627 (5,394,963) (3,787,025)

1,162,965

885,639

Capital works in progress At cost

15,933

94,324

Total capital works in progress

15,933

94,324

Plant and equipment Cost Accumulated depreciation

1,258,163 (616,814)

956,338 (483,462)

Total plant and equipment

641,349

472,876

Artwork and Libraries Cost Accumulated depreciation

2,800 (990)

2,800 (990)

Total artworks and libraries

1,810

1,810

1,822,057

1,454,649

OTHER FINANCIAL ASSETS

Current Held-to-maturity investments Non-current Available for sale financial assets Total other financial assets 17

2012 $

PROPERTY, PLANT AND EQUIPMENT Leasehold improvements Cost Accumulated impairment adjustment Accumulated depreciation Total leasehold improvements

Total property, plant and equipment

118 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 17

PROPERTY, PLANT AND EQUIPMENT continued Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current year: Capital Leasehold works in Plant and Artwork and improvements progress equipment Libraries Total $ $ $ $ $ Balance at 31 December 2011 Balance at the beginning of year Additions Disposals Depreciation expense

853,329 55,863 (23,553)

94,324 -

565,834 76,918 (49,853) (120,024)

1,810 -

1,420,973 227,105 (49,853) (143,577)

Balance at 31 December 2011

885,639

94,324

472,876

1,810

1,454,649

Balance at 31 December 2012 Balance at the beginning of year Additions Transfers Depreciation expense

885,639 230,791 78,391 (31,856)

94,324 (78,391) -

472,875 301,826 (133,353)

1,810 -

1,454,648 532,617 (165,208)

1,162,965

15,933

641,349

1,810

1,822,057

Balance at 31 December 2012

119 | T H E U N I V E R S I T Y O F N E W C A ST L E


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 18

INTANGIBLE ASSETS

Computer software Cost Accumulated amortisation

2012 $

2011 $

66,652 (26,748)

40,718 (6,030)

Net carrying value

39,904

34,688

Total Intangibles

39,904

34,688

Movement in the carrying amounts of intangible assets between the beginning and the end of the current year: Computer software $ Year ended 31 December 2011 Balance at the beginning of the year Additions Amortisation expense

249 38,418 (3,979)

249 38,418 (3,979)

Closing value at 31 December 2011

34,688

34,688

34,688 25,935 (20,719)

34,688 25,935 (20,719)

39,904

39,904

Year ended 31 December 2012 Balance at the beginning of the year Additions Amortisation expense Closing value at 31 December 2012

19

Total $

TRADE AND OTHER PAYABLES

2012 $

2011 $

Current Trade payables Related party payables Other current payables

666,255 238

270,715 364,055 3,961

Total current trade and other payables

666,493

638,731

120 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 20

PROVISIONS

2012 $

2011 $

Current provisions expected to be settled within 12 months Employee benefits: Annual leave Long service leave Short-term provisions Parental leave

110,012 11,100

44,275 14,621

1,041

-

Subtotal

122,153

58,896

Employee benefits: Annual leave Long service leave

36,671 51,100

-

Subtotal

87,771

-

209,924

58,896

Non-current Employee benefits: Long service leave

28,900

75,523

Total non-current provisions

28,900

75,523

238,824

134,419

Current provisions expected to be settled after more than 12 months

Total current provisions

Total provisions Provision for annual leave

This provision is for outstanding annual leave liabilities that employees have not yet taken. It is assumed the leave will be taken in the next twelve months. The measurement and recognition criteria relating to employee benefits has been included in note 1 to these financial statements. Provision for long service leave This provision is for outstanding long service leave liabilities that employees have not yet taken. The measurement and recognition criteria relating to employee benefits has been included in note 1 these financial statements. The calculation of the present value of future cash flows in respect of long service being taken has been calculated by independent third parties based on historical data provided by the Company.

121 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 20

PROVISIONS continued (a)

Movements in provisions

Current Carrying amount at 1 January 2012 Additional provisions recognised Amounts Used Balance at 31 December 2012

(b)

Movements in provisions - Non current

Non-current Opening balance at 1 January 2012 Amounts transferred to current Balance at 31 December 2012

21

Parental Leave $

Annual leave $

Long service leave

44,275 210,722 (108,315)

14,621 76,123 (28,544)

1,041 -

58,896 287,886 (136,859)

146,682

62,200

1,041

209,924

Long service leave $

Total $

Total $

75,523 (46,623)

75,523 (46,623)

28,900

28,900

OTHER LIABILITIES 2012 $

2011 $

Current Income received in advance

113,808

98,128

Total current other liabilities

113,808

98,128

122 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 22

23

RETAINED EARNINGS

2012 $

2011 $

Movements in retained earnings were as follows: Balance as at 1 January Operating result for the year

5,537,309 640,437

5,197,198 340,111

Retained earnings at 31 December

6,177,746

5,537,309

KEY MANAGEMENT PERSONNEL DISCLOSURES (a)

Names of responsible persons and executive officers The following persons were responsible persons and executive officers of the Company for the year, or part thereof: Sharon Waterhouse – Independent Director and Chairperson Peter Cockbain – University Council Representative Ian Baker – University Council Representative Nicholas Williams - Student Director (term expired 31 March 2012) Jeffrey Evans - Student Director (term expired 31 March 2012) Adriana Sung - Student Director (term expired 31 March 2012) Liam Sanders - Student Director (appointed 01 April 2012) Emily Wood - Student Director (appointed 01 April 2012) Lara Field - Student Director (appointed 01 April 2012) Tim Shanley - Independent Director Kelly Lofberg - Independent Director Kristen Perry - Independent Director

(b)

Other key management personnel The following persons also had authority and responsibility for planning, directing and controlling the activities of the Company during the year: Nat McGregor - Chief Executive Officer (1January 2012 to 4 November 2012) Noel McMahon - Acting Chief Executive Officer (17 November 2012 to 31 December 2012)

123 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 23

KEY MANAGEMENT PERSONNEL DISCLOSURES continued (c)

Remuneration of Board members and Executives

Nil (d)

12

11

1 -

1

2012 $ 240,921

2011 $ 261,620

240,921

261,620

Key management personnel compensation

Short-term employee benefits Total

24

2011 Number

Remuneration of other key management personnel $240,000 to $249,999 $260,000 to $269,999

(e)

2012 Number

REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms. 2012 2011 $ $ Assurance services - Audit services - Fees paid to Audit Office of NSW - Audit and review of financial statements

25

28,500

25,000

28,500

25,000

CONTINGENCIES The Company has agreed to indemnify and keep indemnified, the University of Newcastle Union Limited and its directors in respect of any act, matter or thing, arising under or connected with, the transfer of the assets, liabilities and undertakings, from University of Newcastle Union Limited to UoN Services Limited on the 1 April 2007. There were no other contingent assets or liabilities at the end of the reporting period.

124 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 26

COMMITMENTS (a)

Operating lease commitments (GST excl.) (i) Operating Leases Expenditure contracted for at the reporting date but not recognised as liabilities is as follows: 2012 $

2011 $

Operating lease commitments Commitments for minimum lease payments in relation to non-cancellable operations leases are payable as follows: - within one year - Later than one year but not later than five years

27

39,082 20,090

24,685 35,908

59,172

60,593

EVENTS OCCURRING AFTER REPORTING DATE No matters or circumstances have arisen since the end of the year which significantly affected or could significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future years.

125 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 28

RECONCILIATION OF OPERATING RESULT TO NET CASH FLOWS FROM OPERATING ACTIVITIES

Operating result for the year Depreciation and amortisation Impairment loss Net (gain) loss on sale of non-current assets Gain on disposal of retail outlet

2012 $ 640,437 185,927 -

2011 $ 340,111 147,557 (1,768) 29,699 (259,076)

Changes in operating assets and liabilities: (Increase) decrease in trade debtors (Increase) decrease in related party receivables (Increase) decrease in inventories Increase (decrease) in other operating assets Increase (decrease) in trade creditors Decrease (increase) in related party payables Increase (decrease) in other operating liabilities Increase (decrease) in other provisions

32,935 (352,660) (53,400) (40,699) (12,769) (364,055) 443,577 104,404

(96,428) 20,627 100,723 164,901 (61,129) 171,234 (111,736)

583,697

444,715

Net cash provided by operating activities

29

FINANCIAL RISK MANAGEMENT The Company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company'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 Company. The Company 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 other price risks. Risk management is carried out under direction by the Board of Directors. The Company has engaged the University of Newcastle's Treasury to administer, provide management services and engage expert consultants to maximise the returns on the Company's cash and other investments in accordance with the University's Investment Policy. (a)

Market risk (i) Price risk The Company does not have any investments in equity securities and as such is not exposed to price risk. (ii) Cash flow and fair value interest rate risk The Company's main interest rate risk arises from cash and cash equivalents and held to maturity investments. At 31 December 2012, if interest rates had changed by Âą 1% from the year end rates with all other variables held constant, post-tax profit for the year would have been Âą $44,761.

126 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 29

FINANCIAL RISK MANAGEMENT continued (a)

Market risk (iii) Summarised sensitivity analysis 31 December 2012

Interest rate risk -1% 2012 $

Financial assets Cash and Cash Equivalents Other financial assets - Held to maturity investments

576,120 3,900,000

Total increase (decrease)

Result $

Equity $

5,761 39,000

5,761 39,000

(44,761) (44,671)

44,761

44,761

-1%

(b)

Equity $

Interest rate risk 2011 $

Total increase (decrease)

Result $

(5,761) (5,671) (39,000) (39,000)

31 December 2011

Cash and Cash Equivalents - at bank Other financial assets - Held to maturity investments

+1%

249,861 4,200,000

Result $

Equity $

+1% Result $

Equity $

(2,499) (2,499) (42,000) (42,000)

2,499 42,000

2,499 42,000

(44,499) (44,499)

44,499

44,499

Credit risk Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as outstanding receivables and committed transactions. Credit risk management is carried out by the University of Newcastle's Treasury under appointment by the Board of Directors.

127 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 2012 29

FINANCIAL RISK MANAGEMENT continued (c)

Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available. The following tables summarise the maturity of Company’s financial assets and financial liabilities:

31 December 2012 Financial assets Cash and cash equivalents Receivables Other financial assets Total financial assets Financial liabilities Trade and other payables Total financial liabilities 31 December 2011 Financial assets Cash and cash equivalents Receivables Other financial assets Total financial assets Financial liabilities Trade and other payables Total financial liabilities

(d)

Average Interest rate %

Variable interest rate $’000

Within 1 year $’000

Non Interest $’000

Total $’000

2.56 5.92

576 576

3,900 3,900

710 1 711

576 710 3,901 5,187

-

-

-

666 666

666 666

0.88 6.01

250 250

4,200 4,200

374 1 375

250 374 4,201 4,825

-

-

-

639 639

639 639

Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. The carrying value of financial assets less impairment provision of trade receivables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.

128 | THE UNIVERSITY OF NEWCASTLE


UON SERVICES LIMITED Notes to the Financial Statements For the year ended 31 December 20122 29

FINANCIAL RISK MANAGEMENT continued (d)

Fair value estimation continued The carrying amounts and aggregate net fair values of financial assets and liabilities at reporting date are:

Carrying Amount 2012 $'000

Fair Value

2011 $'000

2012 $'000

2011 $'000

Financial assets Cash and cash equivalents Receivables Other financial assets

576 710 3,901

250 374 4,201

576 710 3,901

250 374 4,201

Total Financial Assets

5,187

4,825

5,187

4,825

666

639

666

639

666

639

666

639

Financial liabilities Trade and other payables

Fair value measurements recognised in the balance sheet are categorised into the following levels:

Financial assets - available for sale Total

Financial assets - available for sale Total

129 | THE UNIVERSITY OF NEWCASTLE

2012 $ 1,000

Level 1 $

1,000

2011 $ 1,000 1,000

-

Level 2 $ 1,000

-

1,000

-

Level 2 $ 1,000

-

1,000

Level 1 $

Level 3 $ -

Level 3 $ -


UON SERVICES LIMITED Directors’ Declaration For the year ended 31 December 2012 The directors of the company declare that;

1.

2.

The financial statements and notes are in accordance with the Corporations Act 2001 and: a)

comply with Accounting Standards and the Corporations Regulations 2001; and

b)

comply with the Public Finance and Audit Act 1983, and the Public Finance and Audit Regulation 2005; and

c)

give a true and fair view of the company’s financial position as at 31 December 2012 and of its performance for the year ended on that date.

In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of the Directors pursuant to s.41C of the Public Finance and Audit Act 1983.

Sharon Waterhouse Director

Newcastle 26 March 2013

130 | THE UNIVERSITY OF NEWCASTLE


131 | THE UNIVERSITY OF NEWCASTLE


132 | THE UNIVERSITY OF NEWCASTLE


133 | THE UNIVERSITY OF NEWCASTLE


UoN Singapore Pte Ltd Financial Report for the year ended 31 December 2012


UON SINGAPORE PTE LTD Contents For the year ended 31 December 2012 Financial Statements Financial Statements Income Statement Income Statement Statement of Comprehensive Income Statement of Financial Comprehensive Income Statement of Position Statement of Financial Position Statement of Changes in Equity Statement of of Cash Changes in Equity Statement Flows Statement of Cash Flows Notes to the Financial Statements Notes to the Financial Statements Directors' Declaration Directors' Declaration Independent Audit Report

136 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Income Statement For the year ended 31 December 2012

Note

2012

2011

$

$

Revenue from continuing operations Australian Government financial assistance Fees and charges Investment revenue Consultancy and contracts Other revenue

5,887,623 166 52,570 170,254

5,766,799 272 183,652 265,675

6,110,613 2,183,497 27,940 10,032 9,353 2,818,044

6,216,398 2,875,178 33,041 15,457 31,440 2,634,139

5,048,866

5,589,255

1,061,747 (163,723)

627,143 (72,216)

Operating result after income tax for the year

898,024

554,927

Operating result attributable to members of UoN Singapore Pte Ltd

898,024

554,927

Total revenue from continuing operations Employee Related Expenses Depreciation Repairs and maintenance Borrowing costs Loss on disposal of assets Other expenses

3 4 5 6 7 8 9

10

Total expenses from continuing operations Operating result before income tax Income tax expense

11

The accompanying notes form part of these financial statements.

137 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Statement of Comprehensive Income For the year ended 31 December 2012 2012

2011

$

$

Operating result after income tax for the year

898,024

554,927

Other comprehensive income: Exchange differences on translation of foreign operations

124,511

(25,440)

Other comprehensive income for the year, net of tax

124,511

(25,440)

1,022,535

529,487

Total comprehensive income for the year

The accompanying notes form part of these financial statements.

138 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Statement of Financial Position For the year ended 31 December 2012

Note

2012

2011

$

$

ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables

3,151,971 239,939

2,124,624 213,254

3,391,910

2,337,878

24,508 33,197

23,556 30,537

57,705

54,093

3,449,615

2,391,971

848,196 173,833 95,124

908,829 83,592 89,623

TOTAL CURRENT LIABILITIES

1,117,153

1,082,044

TOTAL LIABILITIES

1,117,153

1,082,044

NET ASSETS

2,332,462

1,309,927

86,036 (51,244) 2,297,670

86,036 (175,755) 1,399,646

2,332,462

1,309,927

2,332,462

1,309,927

12 13

TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other financial assets Property, plant and equipment

14 15

TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Current tax liabilities Provisions

16 17

EQUITY Issued Capital Reserves Retained Earnings

27 19 19

TOTAL EQUITY

The accompanying notes form part of these financial statements.

139 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Statement of Changes in Equity For the year ended 31 December 2012 2011 Issued Capital Note

$

Foreign Currency Translation Reserve $

Retained Earnings $

Total $

Balance at 1 January 2011 Operating results for the year Other comprehensive income

86,036 -

(150,315) (25,440)

844,719 554,927 -

780,440 554,927 (25,440)

Balance at 31 December 2011

86,036

(175,755)

1,399,646

1,309,927

2012

Note

Issued Capital

Foreign Currency Translation Reserve

Retained Earnings

Total

$

$

$

$

Balance at 1 January 2012 Operating results for the year Other comprehensive income

86,036 -

(175,755) 124,511

1,399,646 898,024 -

1,309,927 898,024 124,511

Balance at 31 December 2012

86,036

(51,244)

2,297,670

2,332,462

The accompanying notes form part of these financial statements.

140 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Statement of Cash Flows For the year ended 31 December 2012

Note CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from student fees and other customers Payments to suppliers and employees Interest received Interest paid GST recovered (paid) Income taxes paid Net cash provided by (used in) operating activities

26

CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchase of property, plant and equipment Net cash used by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of borrowings Net cash used by financing activities Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at beginning of year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year

12

The accompanying notes form part of these financial statements.

141 | THE UNIVERSITY OF NEWCASTLE

2012

2011

$

$

6,507,465 (5,083,004) 166 (383,574) (78,483)

5,955,735 (5,530,674) 272 (31,440) (500,108) (33,581)

962,570

(139,796)

(38,692)

(8,857)

(38,692)

(8,857)

-

(771,140)

-

(771,140)

923,878 2,124,624 103,469

(919,793) 3,050,230 (5,813)

3,151,971

2,124,624


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies (a)

Basis of Preparation The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The amounts presented are in Australian Dollar. The Company was established and has its domicile in the Republic of Singapore. The principal place of business is: 491B River Valley Road #04-02 Valley Point Singapore 248373 The principal activities of the Company are: Creating, developing and delivering educational programmes business, management and related fields on behalf of The University of Newcastle. The annual financial statements represent the audited general purpose financial statements of UON Singapore Pte Ltd. They have been prepared on an accrual basis in accordance with Australian Accounting Standards. Additionally the statements have been prepared in accordance with following statutory requirements: •

Higher Education Support Act 2003 (Financial Statement Guidelines)

•

Public Finance and Audit Act 1983, the requirements of the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) and other State/Australian Government legislative requirements.

UON Singapore Pte Ltd is a for-profit entity and these statements have been prepared on that basis. Date of authorisation for issue The financial statements were authorised for issue by the members of UON Singapore Pte Ltd on 26 March 2013. Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property. Critical accounting estimates The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in the relevant notes to the financial statements. Financial assets - managements makes judgements in determining whether assets are classified as available-for-sale, held-to-maturity or other.

142 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies continued

(b)

Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment (Singaporean) in which the entity operates (‘the functional currency’). The Company's financial statements are presented in Australian dollars, which is The University of Newcastle's functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Qualifying cash flow hedges and qualifying net investment hedges in a foreign operation shall be accounted for by recognising the portion of the gain or loss determined to be an effective hedge in other comprehensive income and the ineffective portion in profit or loss. If gains or losses on non-monetary items are recognised in other comprehensive income, translation of gains or losses are also recognised in other comprehensive income. Similarly, if gains or losses on non-monetary items are recognised in profit and loss, translation of gains or losses are also recognised in profit or loss.

(c)

Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances rebates and amounts collected on behalf of third parties. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows (i) Student fees and charges Fees and charges are recognised as income in the year of receipt, except to the extent that fees and charges relate to courses to be held in future periods. Such income (or portion thereof) is treated as income in advance in liabilities. Conversely, fees and charges relating to debtors are recognised as revenue in the year to which the prescribed course relates.

(d)

Income Tax The Company is subject to income tax under Singaporean Legislation. The income tax expense or revenue for the period is the tax payable/receivable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

143 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies continued (d)

Income Tax continued Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects either accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses, only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax assets and liabilities relating to the same taxation authority are offset when there is a legally enforceable right to offset current tax assets and liabilities and they are intended to be either settled on a net basis, or the asset is to be realised and the liability settled simultaneously. Current and deferred tax balances attributable to amounts recognised outside profit and loss are also recognised outside profit and loss.

(e)

Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

(f)

Cash and cash equivalents For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(g)

Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are due for settlement no more than 30 days after end of month from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivable are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement.

144 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies continued (h)

Investments and other financial assets Classification The Company classifies its investments and other financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company’s management has the positive intention and ability to hold to maturity. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or are not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date.

Initial recognition and derecognition Regular purchases and sales of investments and other financial assets are recognised on trade-date - the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments and other financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are included in the income statement as gains and losses from investment securities. Subsequent measurement Available-for-sale financial assets and financial assets at fair value though profit and loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method. Gains or losses arising from changed in the fair value of the 'financial assets at fair value through profit or loss' category are included in the income statement within other income or other expenses in the period in which they arise.

145 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies continued (h)

Investments and other financial assets continued Subsequent measurement continued Changes in the fair value of monetary security denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and on monetary securities classified as available-for-sale are recognised in equity. Fair value The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. Impairment The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

(i)

Property, Plant and Equipment Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: Plant and equipment - Furniture and fittings - Other equipment

3 years 1 - 3 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

146 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies continued (i)

Property, Plant and Equipment continued Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(j)

Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(k)

Provisions Provisions for legal claims and service warranties are recognised when: the Company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.

(l)

Employee benefits (i) Wages and salaries Liabilities for short-term employee benefits including wages, salaries and non-monetary benefits due to be settled within 12 months after the end of the period are measured at the amount expected to be paid when the liability is settled and recognised in other payables. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Annual leave and sick leave The liability for long-term employee benefits such as annual leave and accumulating sick leave is recognised in current provisions for employee benefits as it is not due to be settled within 12 months after the end of the reporting period. It is measured at the amount expected to be paid when the liability is settled. Regardless of the expected timing of settlements, provisions made in respect of employee benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability.

147 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of Significant Accounting Policies continued (m)

Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the cost acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(n)

Comparative Amounts Where necessary, comparative information has been reclassified to enhance comparability in respect of changes in presentation adopted in the current year.

(o)

New Accounting Standards and Interpretations Certain new Accounting Standards and Interpretations have been published that are not mandatory for 31 December 2012 reporting periods. UON Singapore Pte Ltd's assessment of the impact of these new Standards and Interpretations is set out below: • AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013) • AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards(effective 1 January 2013) • AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013) • Revised AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements (effective 1 January 2013)

148 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 2

RECLASSIFICATION OF COMPARATIVE INFORMATION (a)

Nature of the reclassification Changes have been made to the classification of certain items in the financial statements. As a result, certain amounts reported for 2011 have been reclassified as set out below. There has been no effect on operating result and net assets.

(b)

Summary of reclassified comparative information (i)

Reclassification of Income Statement items Restated

Previously Reported

2011

2011

$

$

183,652 265,675

449,327

Expenses from continuing operations Repairs and maintenance Borrowing costs Other expenses

(15,457) (31,440) (2,634,139)

(2,681,036)

Total reclassification of Income Statement

(2,231,709)

(2,231,709)

Revenue from continuing operations Consultancy and contracts Other revenue

(c)

Reason for the reclassification The reclassification has been undertaken to ensure the Company is classifying all Income Statement items consistently with its parent entity, The University of Newcastle.

3

4

FEES AND CHARGES

2012

2011

$

$

Course Fees and Charges Fee-paying overseas students Course and conference fees

5,885,863 1,760

5,763,900 2,899

Total Fees and Charges

5,887,623

5,766,799

INVESTMENT REVENUE Interest

166

272

Total investment revenue

166

272

149 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 5

6

7

CONSULTANCY AND CONTRACTS

2012

2011

$

$

Consultancy Contract research Other contract revenue

23,184

62,677

29,386

120,975

Total consultancy and contracts

52,570

183,652

Sponsorship Other revenue

170,254

2,121 263,554

Total other revenue

170,254

265,675

Academic Salaries Contribution to funded superannuation and pension schemes Annual leave

1,438,026 65,360 6,037

2,118,715 69,992 12,577

Total academic

1,509,423

2,201,284

Non-academic Salaries Contribution to funded superannuation and pension schemes Annual leave

609,264 65,984 (1,174)

595,317 67,661 10,916

Total non-academic

674,074

673,894

2,183,497

2,875,178

OTHER REVENUE

EMPLOYEE RELATED EXPENSES

Total employee related expenses

150 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 8

9

DEPRECIATION

2011

$

$

Depreciation Furniture and fittings Office equipment

22,787 5,153

25,878 7,163

Total depreciation

27,940

33,041

1,393 8,343 296

8,116 7,341

10,032

15,457

Advertising, marketing and promotions Rent General consumables Insurances Minor equipment Operating lease rental Professional services Scholarships, grants and prizes Service fees (Parent) Telecommunications Travel, staff development and entertainment Utilities Other expenses

15,495 144,964 38,835 17,462 18,098 12,405 620,768 11,504 1,563,210 24,890 258,082 12,997 79,334

85,570 112,319 52,480 16,583 32,797 10,469 232,857 3,413 1,746,988 22,677 284,196 13,146 20,644

Total other expenses

2,818,044

2,634,139

REPAIRS AND MAINTENANCE Buildings Cleaning Repairs and maintenance - general Total repairs and maintenance

10

2012

OTHER EXPENSES

151 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 11

INCOME TAX EXPENSE

(a)

(b)

12

2012

2011

$

$

Income tax expense Current tax Deferred tax

163,723 -

72,216 -

Total income tax expense

163,723

72,216

Income tax expense is attributable: Operating result from continuing operations

163,723

72,216

Aggregate income tax expense

163,723

72,216

1,061,746

627,143

Numerical reconciliation of income tax expense to prima facie tax payable Operating result from continuing operations before income tax expense Tax at the Singaporean tax rate of 17% (2011 - 17%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income

180,497

106,614

(16,774)

(34,398)

Income tax expense

163,723

72,216

Cash at bank and on hand

3,151,971

2,124,624

Total cash and cash equivalents

3,151,971

2,124,624

CASH AND CASH EQUIVALENTS

(a)

Reconciliation to cash and cash equivalents at the end of the year The above figures are reconciled to cash at the end of the year as shown in the statement of cash flows as follows: Balances as above 3,151,971 2,124,624 Balance as per cash flow statement

152 | THE UNIVERSITY OF NEWCASTLE

3,151,971

2,124,624


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 13

RECEIVABLES

2012

2011

$

$

Current Trade receivables Prepayments Other receivables

174,703 7,852 57,384

170,054 14,569 28,631

Total current receivables

239,939

213,254

(a)

Past due but not impaired As at 31 December 2012, trade receivables of $174,308 were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows: Less than 3 months

14

174,308

-

174,308

-

Non-Current Held to maturity investments

24,508

23,556

Total other financial assets

24,508

23,556

OTHER FINANCIAL ASSETS

(a)

Held to Maturity Investments A deposit of SGD$31,121 is assigned to the Comptroller of Goods and Services Tax (GST) of Singapore for the purposes of obtaining status under the Singaporean GST Scheme. The deposit will be held until 29 November 2014.

153 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 15

PROPERTY, PLANT AND EQUIPMENT

PLANT AND EQUIPMENT At cost Accumulated depreciation Total property, plant and equipment

2012

2011

$

$

135,891 (102,694)

176,533 (145,996)

33,197

30,537

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Plant and equipment Total $ Balance at 31 December 2011 Balance at the beginning of year Additions Depreciation expense Foreign exchange movements Balance at 31 December 2011 Balance at 31 December 2012 Balance at the beginning of year Additions Disposals Depreciation expense Foreign exchange movements Balance at 31 December 2012

16

$

54,685 8,694 (33,041) 199

54,685 8,694 (33,041) 199

30,537

30,537

30,537 39,428 (9,532) (27,940) 704

30,537 39,428 (9,532) (27,940) 704

33,197

33,197

255,163 556,336 36,697

413,199 483,463 12,167

848,196

908,829

848,196

908,829

TRADE AND OTHER PAYABLES Current Unsecured liabilities Trade creditors Related party payables Other payables

Total current trade and other payables

154 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 16 TRADE AND OTHER PAYABLES continued (a)

Foreign currency risk The carrying amounts of the Company's trade and other payables are denominated in the following currencies: 2012 Singapore Dollars

17

2011

$

$

848,196

908,829

848,196

908,829

PROVISIONS Current provisions expected to be settled within 12 months Employee benefits Annual leave

95,124

89,623

Total current provisions

95,124

89,623

Provision for annual leave This provision is for outstanding annual leave liabilities that employees have not yet taken. It is assumed the majority of leave will be taken in the next twelve months. The measurement and recognition criteria relating to employee benefits has been included in note 1 to this report. Movements in each class of provision during the year is set out below:

Current Opening balance at 1 January 2012 Additional provisions Provisions used Balance at 31 December 2012

155 | THE UNIVERSITY OF NEWCASTLE

Annual leave

Total

$

$

89,623 123,587 (118,086)

89,623 123,587 (118,086)

95,124

95,124


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 18

CURRENT TAX LIABILITIES 2012

Income tax payable

$ 173,833

Total current tax liabilities

173,833

19

2011 $ 83,592 83,592

RESERVES AND RETAINED EARNINGS (a)

Reserves

2012

2011

$

$

Reserves Foreign currency translation reserve

(51,244)

(175,755)

Total Reserves

(51,244)

(175,755)

(175,755) 124,511

(150,315) (25,440)

(51,244)

(175,755)

Movements in retained earnings Retained earnings at the beginning of the year Operating result for the year

1,399,646 898,024

844,719 554,927

Retained earnings at end of the financial year

2,297,670

1,399,646

(b)

Movements

Foreign currency translation reserve Balance as at 1 January Currency translation differences arising during the year

(c) Nature and purpose of reserves Foreign currency translation reserve - exchange differences arising on translation of the Singapore dollar financial statements into Australian dollars are taken to the foreign currency translation reserve. 20

KEY MANAGEMENT PERSONNEL DISCLOSURES (a)

Names of responsible persons and executive officers The following persons were responsible persons and executive officers of UON Singapore Pte Ltd during the financial year: (i) Chairman and Executive Council members Professor John Phillip Carter - Chairperson Mr Robert John Cochrane - Director, Chief Executive Officer Mr Craig John Waliis - Director (appointed 23 March 2012) Dr Susan Mary Gould - Director (resigned 28 June 2012 Mr Tao Yeoh Chi - Independent Director Mr Peter Tay Buan Huat - Independent Director Ms Sandra Davie D/O Persasmy - Independent Director Mr Michael Grenville Gray - Independent Director

156 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 20

KEY MANAGEMENT PERSONNEL DISCLOSURES continued

(b)

Remuneration of key management personnel

2012

2011

Number

Number

Remuneration of executive officers Nil $1 to $9,999 $310,000 to $319,999 $380,000 to $389,999 (c)

3 4 1 -

Remuneration of key management personnel 2012

21

3 4 1

2011

Short-term employee benefits

$ 307,277

$ 389,662

Total key management personnel compensation

307,277

389,662

REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms. 2012 2011 $

$

Assurance services Audit services - Audit and review of financial reports - Fees paid to KPMG for Singaporean statutory requirements - Fees paid to NSW Audit Office for Audit of financial report

157 | THE UNIVERSITY OF NEWCASTLE

23,277 25,300

26,990 14,200

48,577

41,190


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 22

CONTINGENCIES Contingent liabilities UON Singapore Pte Ltd currently has no contingent liabilities as at 31 December 2012 (2011: NIL). Contingent assets UON Singapore Pte Ltd currently has no contingent assets as at 31 December 2012 (2011: NIL).

23

COMMITMENTS (a)

Operating lease commitments (GST excl.) (i) Operating Leases Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities: 2012 2011 Due within one year Due after one year, but within five years Net commitments

24

$ 216,545 56,722

$ 128,109 8,949

273,267

137,058

RELATED PARTIES (a)

Parent entity The ultimate parent entity is The University of Newcastle, by virtue of its full ownership of the Company's issued share capital.

(b)

Key management personnel Disclosures relating to responsible officers and specified executives are set out in note 20

(c)

Transactions with related parties The following transactions occurred with related parties: 2012

2011

$

$

i) The University of Newcastle Services provided to the University Service fees charged on services rendered

158 | THE UNIVERSITY OF NEWCASTLE

1,521,212

1,746,990

1,521,212

1,746,990


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 24

RELATED PARTIES continued

(d)

Outstanding balances The following balances are outstanding at the reporting date in relation to transactions with related parties: 2012

2011

$

$

556,336

483,463

556,336

483,463

Current Payables (purchase of services) The University of Newcastle

(e)

Terms and Conditions All transactions with related parties were conducted under normal terms and conditions.

25

EVENTS OCCURRING AFTER REPORTING DATE No matters or circumstances have arisen since the end of the year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future years.

26

RECONCILIATION OF OPERATING RESULT AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES 2012 2011 Operating result for the year Add non-cash items: Depreciation Net (gain) loss on sale of non-current assets Net exchange differences Changes in operating assets and liabilities: (Increase) decrease in trade debtors (Increase) decrease in other receivables Increase (decrease) in trade creditors Increase (decrease) in related party payables Increase (decrease) in other operating liabilities Increase (decrease) in provision for income taxes payable Increase (decrease) in other provisions Net cash provided by (used in) operating activities

27

ISSUED CAPITAL Fully paid ordinary shares (2 shares)

159 | THE UNIVERSITY OF NEWCASTLE

$

$

898,024

554,927

27,940 9,354 45,031

33,041 (21,857)

2,226 (18,571) (19,682) 62,248 (132,740) 86,862 1,878

(65,319) (62,062) (511) (695,467) 23,509 70,883 23,060

962,570

(139,796)

86,036

86,036


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 28

FINANCIAL RISK MANAGEMENT (a)

Introduction The Company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company'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 Company. Risk management is carried out under the direction of the Board of Directors.

(b)

Market risk (i) Foreign exchange risk The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Singapore and Australian dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the Company's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. Management has set up a policy to manage their foreign exchange risk against their functional currency. At 31 December 2012, had the Australian Dollar weakened/strengthened by 10% against the Singapore Dollar with all other variables held constant, post-tax profit for the year would have been $55,634 higher/ $55,634 lower (2011:$48,346 higher/lower), mainly as a result of foreign exchange gains/losses on translation of Singapore dollar denominated related party payables and financial assets at fair value through profit or loss. (ii) Price risk The Company does not have any investments in equity securities and as such is not exposed to price risk. (iii) Cash flow and fair value interest rate risk The Company's main interest rate risk arises from cash and cash equivalents. At 31 December 2012, if interest rates had changed by -/+ 1% from the year end rates of with all other variables held constant, the result for the year would have been $31,520 lower/$31,520 higher (2011: $21,246 higher/lower), mainly as a result of higher interest income from cash and cash equivalents.

160 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 28

FINANCIAL RISK MANAGEMENT continued (b)

Market risk continued

(iv) Summarised sensitivity analysis The following table summarises the sensitivity of Company's financial assets and financial liabilities to interest rate risk and foreign exchange risk. 31 December 2012

Interest rate risk -1%

Financial assets Cash and Cash Equivalents - at bank

+1% Equity

Result

Equity

Result

Equity

Result

Equity

$

$

$

$

$

$

$

$

$

(31,520)

556,336

(31,520)

(31,520)

31 December 2011

31,520

31,520

-

-

-

(55,634)

31,520

31,520

(55,634)

(31,520)

Interest rate risk -1%

-

-

-

(55,634)

55,634

55,634

(55,634)

55,634

55,634

Foreign exchange risk +1%

-1%

+1%

2011

Result

Equity

Result

Equity

Result

Equity

Result

Equity

$

$

$

$

$

$

$

$

$

(21,246)

(21,246)

Financial assets Cash and Cash Equivalents - at bank

2,124,624

Financial liabilities Related party payables (nominated in $SGD)

(483,463)

Total increase/(decrease)

+1%

Result

Total increase/(decrease)

(c)

-1%

2012

3,151,971

Financial liabilities Related party payables (nominated in $SGD)

Foreign exchange risk

(21,246)

21,246 21,246 -

(21,246)

-

-

-

48,346

48,346

(48,346)

(48,346)

21,246 21,246

48,346

48,346

(48,346)

(48,346)

-

-

-

Credit risk Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as outstanding receivables and committed transactions.

(d)

Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, The board aims at maintaining flexibility in funding by keeping sufficient cash reserves on hand.

161 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 28

FINANCIAL RISK MANAGEMENT continued (d)

Liquidity risk continued

The following tables summarise the maturity of the Company’s financial assets and financial liabilities:

Average Interest rate

Variable interest rate

Within 1 year

Non Interest

2012

2011

2012

2011

2012

2011

2012

2011

2012

2011

%

%

$

$

$

$

$

$

$

$

Financial Assets: Cash and cash equivalents

-

-

3,152

2,125

-

-

-

-

3,152

2,125

Receivables

-

-

-

-

-

-

238

213

238

213

0.70

0.92

-

-

25

24

-

-

25

24

3,152

2,125

25

24

238

213

3,415

2,362

Other financial assets Total Financial Assets Financial Liabilities: Payables

-

-

-

-

-

-

290

425

290

425

Amounts payable to related parties

-

-

-

-

-

-

556

483

556

483

-

-

-

-

846

909

846

909

Total Financial Liabilities

(e)

Total

Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded derivatives) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. The carrying value less impairment provision of trade receivables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments. Due to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value and based on credit history it is expected that the receivables that are neither past due nor impaired will be received when due.

162 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Notes to the Financial Statements For the year ended 31 December 2012 28

FINANCIAL RISK MANAGEMENT continued (e)

Fair value estimation continued

The carrying amounts and aggregate net fair values of financial assets and liabilities at reporting date are:

Carrying Amount

Fair Value

2012

2011

2012

2011

$

$

$

$

Financial Assets Cash and Cash Equivalents Receivables Other financial assets

3,151,971 239,938 24,508

2,124,624 213,254 23,556

3,151,971 239,938 24,508

2,124,624 213,254 23,556

Total Financial Assets

3,416,417

2,361,434

3,416,417

2,361,434

Financial Liabilities Trade and other payables

848,194

908,829

848,194

908,829

Total Financial Liabilities

848,194

908,829

848,194

908,829

16 3 | THE UNIVERSITY OF NEWCASTLE


UON SINGAPORE PTE LTD Directors’ Declaration For the year ended 31 December 2012 The directors declare that; 1. In the directors opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; 2. In the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Public Finance and Audit Act, 1983, including compliance with accounting standards, and giving a true and fair view of the financial position and performance of the company; 3. The financial reports have been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Interpretations, and other mandatory professional requirements. Signed in accordance with a resolution of the directors made pursuant to s.41C of the Public Finance and Audit Act, 1983. On behalf of the Directors.

Professor John Carter Director and Chairperson 26 March 2013

164 | THE UNIVERSITY OF NEWCASTLE


165 | THE UNIVERSITY OF NEWCASTLE

ANNUAL REPORT 2012 | 165


166 | THE UNIVERSITY OF NEWCASTLE


Newcastle Innovation Ltd ABN 97 000 710 074 Financial Report for the year ended 31 December 2012


NEWCASTLE INNOVATION LTD Contents For the year ended 31 December 2012 Financial Statements Directors' Report Income Statement Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report

170 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Directors’ Report 31 December 2012 Your directors present their report on Newcastle Innovation Ltd for the financial year ended 31 December 2012. Directors The following persons were directors of Newcastle Innovation Ltd during the whole of the year and up to the date of this report: Names Geoffrey James Leonard (Chairman) – resigned 31 January 2013 Glenn Thurston Turner (Deputy Chairman) John Coyle John James O'Brien Lisa Maree Suttton Gardener Michael Brian Calford The particulars of the qualifications, experience and special responsibilities of each director are as follows: Geoffrey James Leonard (Chairman - resigned) B.Com. (NCLE, NSW) Hon.D.Bus (NCLE, NSW) F.C.A., F.C.P.A.Chartered Accountant. Graduate University of Newcastle in Commerce 1968. Director, Council University of Newcastle, 2006-2012. Member, Audit and Risk Management Committee, University of Newcastle 2006-2012. Chair, Faculty of Business and Law Advisory Board 2006-2012. Chairman, Newcastle Innovation 2006-2012. Chairman, The Salvation Army Newcastle Advisory Board 2001 - 2012. Chairman, Special Names Salvation Army Red Shield Appeal. Director, The University of Newcastle Foundation Advisory Committee 2004-2012. Chair, The University of Newcastle Endowment & Bequest Committee, 2005 – 2006. Awarded Hon. Doctor of Business, The University of Newcastle, 2002. Awarded the University of Newcastle Newton-John Award 1999. Awarded Member of Order of Australia (AM) 2009. Glenn Thurston Turner (Deputy Chairman) B Comm, FCPA, Chairman Hunter Medical Research Institute. Chairman, Hunter Medical Research Foundation. Newcastle Innovation (formerly TUNRA) Director since May, 1995, Deputy Chairman since 2006. John Coyle Commerce (Ecs) (Uni of NSW), Varley Group Ltd - Director, HunterNet Co-operative Ltd - Past Chairman, HunterNet Group Training Company - Director, Australian Industry Group NSW - Selection Councillor, Australian Industry Group, Hunter Manufacturing Council - Member and Past Chairman, Hunter Export Centre - Past Vice Chairman. TAFE NSW – Hunter Institute Advisory Council - Deputy Chairman, Hunter Community Foundation - Director. The Salvation Army 2008 Red Shield Appeal Central Committee - Member, Hunter Manufacturing Association - Director, NSW Co-operatives Federation - Director, Graduate of the Institute of Company Directors, Newcastle Innovation (formerly TUNRA) Director since October 2005. John James O'Brien B.V.Sc (Sydney). Managing Director of Jurox Pty Ltd. Past Chairman of the listed fashion group, Palmer Corporation (1994-2000). Past Chair of the Hunter Area Consultative Committee, Past Director of the National Basketball League representing Singapore, Director of Basketball Enterprises, Singapore and Director of the Hunter Founders Forum. Newcastle Innovation (formerly TUNRA) Director since August 2007.

171 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Directors’ Report 31 December 2012 Lisa Maree Sutton Gardner Business owner and Managing Director Enigma Group (1992-current). Young Business Person of the Year (2003) Hunter Business Chamber. Newcastle Innovation (formerly TUNRA) Director since August 2007. Michael Brian Calford Deputy Vice-Chancellor (Research) (2009 - current), Pro Vice-Chancellor of the Faculty of Health, University of Newcastle (2006-2009), Professor of Human Physiology. Has held research academic appointments at The University of Melbourne, City University of New York, Oxford, The University of Queensland, The University of California at Irvine, and The Australian National University. Director NEURA Ltd, Director Hunter Medical Research Institute. Newcastle Innovation (formerly TUNRA) Director since March 2009. Meetings of Directors The numbers of meetings of the members of Newcastle Innovation Ltd and of each board committee held during the year ended 31 December 2012, and the numbers of meetings attended by each member were:

Board Meetings

Geoffrey James Leonard Glenn Thurston Turner John Coyle John James O'Brien Lisa Maree Sutton Gardner Michael Brian Calford

Number of Meetings Attended 5 3 4 4 4 3

Number of Meetings Held 5 5 5 5 5 5

The Company is a company limited by guarantee and has no share capital. Newcastle Innovation currently has 6 directors. Objectives and strategies The objective of the company is to create value from knowledge transfer from the University of Newcastle to industry and government partners. The main strategies involve building internal resources to access intellectual property and research capabilities at the University and connecting these opportunities to target markets both in Australia and internationally. Performance measures and key performance indicators Performance is measured in relation to financial performance against budget for key business lines, but also against measures such as the number of new IP disclosures and research projects operated, as well as occupational health and safety standards.

172 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Directors’ Report 31 December 2012 Principal activities The principal activities of the entity during the financial year were the undertaking of research and consulting projects and the commercialisation of intellectual property (IP). No significant changes in the nature of these activities occurred during the year. These activities are necessary to enable economic value to be created from the knowledge and capabilities residing at the University of Newcastle. Dividends The Company, has not paid a dividend during the year ended 31 December 2012 (2011: $Nil). Review of operations Operations of the entity during the financial year were consistent with those of prior years. The entity achieved a surplus of $22,161 (2011: $318,083) for the year. The main source of income was from research, consulting and testing services provided to industry and commerce. Significant changes in state of affairs No significant changes in the company's state of affairs occurred during the financial year. Likely development and expected results of operations The entity will continue to pursue continuing viability of its major divisions and projects in the next financial year. Further information is not included on the likely developments of the operations of the entity and the expected results of those operations because disclosure of the information would be likely to result in unreasonable prejudice to the entity. Matters subsequent to the end of the financial year There are no matters to report subsequent to the end of the financial year. Insurance of officers During the year the Company paid a premium for the Directors and Officers Liability insurance policy. This insurance policy provides cover for the Directors named in this report, the Company Secretary, Officers and former Directors and Officers of the Company. The contract prohibits the disclosure of the nature of the liability and the amount of the premium. Contributions on winding up In the event of the company being wound up, members are required to contribute a maximum of $20 each. Auditor's independence declaration A copy of the Auditor's Independence Declaration as required under section 307C of the Corporations Act 2001 is attached to this report. This report is made in accordance with a resolution of the Board of Directors, pursuant to s.296(2) of the Corporations Act 2001.

Glenn Thurston Turner Director Newcastle 26 March 2013

173 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Income Statement For the year ended 31 December 2012

Note Revenue from continuing operations Consultancy and contracts Investment revenue

2012 $

2011 $

15,223,679 744,793

14,786,781 722,661

15,968,472

15,509,442

116,430

-

16,084,902

15,509,442

9,821,465 543,592 35,551 961 5,661,172

9,027,860 368,407 9,339 5,785,753

16,062,741

15,191,359

Operating result for the year

22,161

318,083

Operating result attributable to members of Newcastle Innovation Ltd

22,161

318,083

3 4

Total revenue from continuing operations Other income Net gain on sale of available-for-sale financial assets Total income from continuing operations Employee benefits expenses Depreciation and amortisation Repairs and maintenance Impairment of assets Net loss on disposal of plant and equipment Other expenses

5 6 7 8

Total expenses from continuing operations

The accompanying notes form part of these financial statements.

174 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Statement of Comprehensive Income For the year ended 31 December 2012 2012 $

2011 $

Operating result for the year

22,161

318,083

Other comprehensive income: Gain (loss) on value of available-for-sale financial assets, net of tax

40,092

2,190

Total comprehensive income

62,253

320,273

The accompanying notes form part of these financial statements.

175 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Statement of Financial Position For the year ended 31 December 2012

Note

2012 $

2011 $

ASSETS Current assets Cash and cash equivalents Trade and other receivables Other financial assets

9 10 11

Total current assets Non-current assets Other financial assets Plant and equipment Intangible assets

11 12 13

Total non-current assets Total assets

683,013 2,871,804 11,900,000

631,205 3,559,401 12,200,000

15,454,817

16,390,606

542,209 391,840 197,084

588,018 416,707 283,380

1,131,133

1,288,105

16,585,950

17,678,711

6,745,604 1,550,753 2,864,604

8,424,620 1,408,262 2,571,093

11,160,961

12,403,975

517,000

429,000

517,000

429,000

11,677,961

12,832,975

4,907,989

4,845,736

145,490 4,762,499

105,398 4,740,338

4,907,989

4,845,736

4,907,989

4,845,736

LIABILITIES Current liabilities Trade and other payables Provisions Other liabilities

14 15 16

Total current liabilities Non-current liabilities Provisions

15

Total non-current liabilities Total liabilities Net assets EQUITY Reserves Retained surplus

17 17

Total equity

The accompanying notes form part of these financial statements.

176 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Statement of Changes in Equity For the year ended 31 December 2012

Reserves $

Retained Earnings $

Total $

Balance at 1 January 2011 Total comprehensive income for the year

103,208 2,190

4,422,255 318,083

4,525,463 320,273

Balance at 31 December 2011

105,398

4,740,338

4,845,736

Reserves $

Retained Earnings $

Total $

Balance at 1 January 2012 Total comprehensive income for the year

105,398 40,092

4,740,338 22,161

4,845,736 62,253

Balance at 31 December 2012

145,490

4,762,499

4,907,989

The accompanying notes form part of these financial statements.

177 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Statement of Cash Flows For the year ended 31 December 2012

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees (incl. GST) Interest received Net cash provided by operating activities

22

Cash flows from investing activities Proceeds from sale of plant and equipment Proceeds from sale of available-for-sale financial assets Proceeds from redemption of held to maturity investments Payments for purchase of plant and equipment Payments for purchase of available-for-sale financial assets Payments for purchase of held to maturity investments Payments for purchase of intellectual property Net cash used by investing activities

Net increase (decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

9

The accompanying notes form part of these financial statements.

178 | THE UNIVERSITY OF NEWCASTLE

2012 $

2011 $

10,490,745 (11,206,777) 744,793

15,709,925 (14,538,065) 722,661

28,761

1,894,521

21,818 115,219 13,000,000 (168,434) (50,000) (12,700,000) (195,556)

(193,589) (1,250,000) (409,088)

23,047

(1,852,677)

51,808 631,205

41,844 589,361

683,013

631,205


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies Newcastle Innovation Ltd (the Company) is a registered company limited by guarantee and is a controlled entity of the University of Newcastle. The Company is a not-for-profit entity (as profit is not its principal object) and it has no cash generating units. The company was established and has its domicile in Australia. The principal place of business is: The University of Newcastle Industry Development Centre Callaghan NSW 2308 Australia The principal activities of the Company are to undertake research and consulting projects. The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a)

Basis of preparation The annual financial statements represent the audited general purpose financial statements of Newcastle Innovation Ltd. They have been prepared on an accrual basis in accordance with Australian Accounting Standards. Additionally the statements have been prepared in accordance with the following statutory requirements: •

Higher Education Support Act 2003 (Financial Statement Guidelines)

Public Finance and Audit Act 1983, the requirements of the Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) and other State/Australian Government legislative requirements.

Newcastle Innovation Ltd is a not-for-profit entity and these statements have been prepared on that basis. Some of the requirements for not-for-profit entities are inconsistent with the IFRS requirements. Date of authorisation for issue The financial statements were authorised for issue by the members of Newcastle Innovation Ltd on 26 March 2013. Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property. Critical accounting estimates and judgements The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Newcastle Innovation makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed below: •

Impairment of investments and other financial assets – the Company assesses at each reporting date whether there is effective evidence that a financial asset or group of financial assets is impaired as outlined in note 1 (g).

179 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(a)

Basis of preparation (continued)

(b)

Employee benefits – long service leave – the liability for long service leave is measured at the present value of the expected further payments to be made in respect of services provided by employees up to the reporting date as outlined in note 1 (m)(iii).

Useful lives of property, plant and equipment – depreciation of plant and equipment is calculated over the assets estimated useful life as outlined in note 1 (i).

Useful lives of intangible assets – amortisation of intangible assets is calculated over the assets estimated useful lives as outlines in note 1 (j).

Financial assets – management makes judgements in determining whether assets are classified as availablefor-sale, held to maturity or other.

Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The amount of revenue is not considered to be reliably measured until all contingencies relating to the sale have been resolved. The company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows: (i) Consultancy and research contracts Revenue from consultancy and research contracts is recognised in the period in which the consultancy/research is provided, except to the extent that revenue relates to consultancy/research to be undertaken in future periods. Such revenue is treated as income in advance in liabilities. Revenue derived from certain consulting activities in which the Company does not take significant risk in the outcomes will not be included as principal revenue of the Company. (ii) Interest Interest income is recognised as it accrues.

(c)

Income tax The Company is exempt from income tax under subdivision 50-B of the Income Tax Assessment Act 1997.

(d)

Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

180 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(e)

Cash and cash equivalents For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(f)

Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivable are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against impairment of assets in the income statement.

(g)

Investments and other financial assets Classification The company classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position. (i) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the company’s management has the positive intention and ability to hold to maturity.

181 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(g)

Investments and other financial assets (continued) (ii) Available-for-sale financial assets Available-for-sale financial assets, comprising principally of marketable equity securities, are non-derivatives that are either designated in this category or are not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Initial recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date - the date on which the company commits to purchase or sell the asset. Investments and other financial assets are initially recognised at fair value plus transactions costs for all financial assets not carried are fair value through profit or loss. Financial assets carried are fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the company has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are included in the income statement as gains and losses from investment securities. ! Subsequent!measurement! Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement within other income or other expenses in the period in which they arise. Changes in the fair value of monetary security denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and on monetary securities classified as available-for-sale are recognised in equity. Fair!value! The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include reference to the fair values of recent arm's length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer's specific circumstances. Impairment! ! The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

(h)

Fair value estimation The fair value of financial assets and financial liabilities have been estimated for recognition and measurement or for disclosure purposes.

182 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(h)

Fair value estimation (continued) The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the company is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discontinuing the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.

(i)

Plant and equipment Plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The useful life of asset classes is: Equipment and vehicles

3 - 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. (j)

Intangible assets (i) Intellectual property Expenditure on intellectual property, being the application of research findings or other knowledge to a plan or design for the production of new or substantially improved products or services before the start of commercial production or use, is capitalised if the product or service is technically and commercially feasible and adequate resources are available to complete development. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate production of overheads. Other intellectual property expenditure is recognised in the Income Statement as an expense incurred. Capitalised expenditure is stated at cost over the period of the expected benefit; calculations start from 10 years. Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of trademarks and licences over their estimated useful lives, which vary from 3-10 years.

18 3 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(j)

Intangible assets (continued) (ii) Software Expenditure on software, being software that is not an integral part of the related hardware, is capitalised. Capitalised expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over the period of the expected benefit, which is 3-5 years.

(k)

Trade and other payables These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year, which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(l)

Provisions Provisions for legal claims and service warranties are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.

(m) Employee benefits (i) Wages and salaries, annual leave and sick leave Liabilities for short-term employee benefits including wages and salaries and non-monetary benefits due to be settled within 12 months after the end of the period are measured at the amount expected to be paid when the liability is settled and recognised in other payables. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. ii) Annual leave and sick leave The liability for long-term employee benefits such as annual leave and accumulating sick leave are recognised in current provisions for employee benefits as they are expected to be settled within 12 months after the end of the reporting period. It is measured at the amount expected to be paid when the liability is settled. Regardless of the expected timing of settlements, provisions made in respect of employee benefits are classified as a current liability, unless there is an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date, in which case it would be classified as a non-current liability.

184 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 1

Summary of significant accounting policies (continued)

(m) Employee benefits (continued) (iii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. (n)

Rounding of amounts All amounts appearing in the financial report have been rounded to the nearest dollar. The company is of a kind referred to in Class order 98/0100 as amended by Class order 04/667, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial report.

(o)

Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the cost acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows

(p)

New accounting standards and interpretations Certain new Accounting Standards and Interpretations have been published that are not mandatory for 31 December 2012 reporting periods. Newcastle Innovation Ltd's assessment of the impact of these new Standards and Interpretations is set out below: •

AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013)

AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards(effective 1 January 2013)

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)

Revised AASB 119 Employee Benefits, AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) and AASB 2011-11 Amendments to AASB 119 (September 2011) arising from Reduced Disclosure Requirements (effective 1 January 2013)

185 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 2

Reclassification of comparative information

(a)

Nature of the reclassification Changes have been made to the classification of certain items in the financial statements. As a result, certain amounts reported for 2012 have been reclassified as set out below. There has been no effect on operating result or net assets.

(b)

Summary of reclassified comparative information (i)

Reclassification of Income Statement items

2011 Restated

5,785,753

2011 Previously reported $ 3,745,461 2,040,292 -

5,785,753

5,785,753

$ Project expenses and consumables Professional services Other expenses

(ii)

Reclassification of Statement of Financial Position items

2011 Restated $

Trade and other payables Other liabilities

(c)

2011 Previously reported $

8,424,620 2,571,093

4,790,493 6,205,220

10,995,713

10,995,713

Reason for the reclassification The reclassification has been undertaken to ensure the company is classifying all income, expense and Statement of Financial Position items consistently with its parent entity, The University of Newcastle.

186 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 3

Consultancy and contracts 2012 $

4

Consultancy and research contracts income

15,223,679

14,786,781

Total consultancy and contracts

15,223,679

14,786,781

2012 $ 744,793

2011 $ 722,661

744,793

722,661

Salaries Superannuation Payroll tax Long service leave Annual leave

2012 $ 7,705,416 695,112 499,480 258,903 662,554

2011 $ 6,984,910 657,803 444,500 279,662 660,985

Total employee benefits expenses

9,821,465

9,027,860

2012 $

2011 $

Investment revenue

Interest Total investment revenue 5

6

7

2011 $

Employee benefits expenses

Depreciation and amortisation

Depreciation Equipment and vehicles

170,522

126,539

Total depreciation

170,522

126,539

Amortisation Intangibles

373,070

241,868

Total amortisation

373,070

241,868

Total depreciation and amortisation

543,592

368,407

Impairment losses – financial assets Other financial assets – Available for sale

-

9,339

Total impairment of assets

-

9,339

Impairment of assets

187 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 8

9

Other expenses

Advertising, marketing and promotions Donations General consumables Impairment of available-for-sale financial assets Insurances Minor equipment Rental, hire and other leasing fees Operating lease rental Professional services Scholarships, grants and prizes Telecommunications Travel, staff development and entertainment Utilities Other expenses

2012 $ 133,199 5,282 308,821 101,874 109,664 236,505 5,423 4,110,658 42,008 63,789 465,182 137 78,630

2011 $ 102,211 2,155 584,509 34,677 93,965 4,017,853 47,212 66,867 789,125 3,112 44,067

Total other expenses

5,661,172

5,785,753

2012 $

2011 $

Cash and cash equivalents

Cash at bank and on hand

683,013

631,205

Total cash and cash equivalents

683,013

631,205

(a)

Reconciliation to cash and cash equivalents at the end of the year in the statement of cash flows The above figures are reconciled to cash and cash equivalents at the end of the year as shown in the statement of cash flows as follows: Balances as above 683,013 631,205 Balance as per cash flow statement

(b)

683,013

631,205

Cash at bank Cash at bank is interest bearing with the floating rates being determined by the daily balance of funds held in the account. This was 2.89% for 2012 (2011:4.61%).

10

Receivables Current Trade receivables Provision for impairment Prepayments Related party receivables Other receivables

2,659,518 (17,885) 49,570 180,601 -

3,089,620 (39,526) 54,000 42,252 413,055

Total current receivables

2,871,804

3,559,401

188 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 10

Receivables (continued) (a)

Impaired receivables

As at 31 December 2012 current receivables of the company with a nominal value of $17,885 (2011: $39,526) were impaired. The amount of the provision was $17,885 (2011: $39,526). The individually impaired receivables relate to those debtors that are in unexpectedly difficult economic situations.

The aging of these receivables is as follows: Over 3 months

2012 $ 17,885

2011 $ 39,526

17,885

39,526

As of 31 December 2012, trade receivables of the company with a nominal value of $1,571,951 (2011: $2,163,604) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows: Less than 3 months Over 3 months

1,571,951 -

1,821,723 341,881

1,571,951

2,163,604

39,526 7,245 (28,886)

103,180 39,526 (103,180)

17,885

39,526

Current Held to maturity investments

11,900,000

12,200,000

Total current other financial assets

11,900,000

12,200,000

Non-current Available-for-sale financial assets

542,209

588,018

Total non-current other financial assets

542,209

588,018

Movements in the provision for impaired receivables are as follows: At 1 January Provision for impairment recognised during the year Recovery of impaired receivables

11

Other financial assets

(a)

Investments held on behalf of third parties

Included as part of available-for-sale financial assets is $316,648 of investments held by the company on behalf of third parties. A current liability of $316,648, relating to these investments, has been recognised as part of trade and other payables (refer to note 14).

189 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 12

Plant and equipment

At cost Accumulated depreciation Total plant and equipment

2012 $ 1,078,794 (686,954)

2011 $ 853,309 (436,602)

391,840

416,707

Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current year: Plant and equipment $ Balance at 31 December 2012 Balance at the beginning of year Additions Disposals Depreciation expense

416,707 168,436 (22,781) (170,522) 391,840

Balance at 31 December 2012 Balance at 31 December 2011 Balance at the beginning of year Additions Depreciation expense

349,657 193,589 (126,539) 416,707

Balance at 31 December 2011

13

Intangible assets

Computer software Cost Accumulated amortisation and impairment

2012 $

2011 $

91,218 (91,218)

91,218 (91,218)

-

-

3,654,790 (3,457,706)

3,459,234 (3,175,854)

Net carrying value

197,084

283,380

Total Intangibles

197,084

283,380

Net carrying value Intellectual property Cost Accumulated amortisation and impairment

190 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 13

Intangible assets (continued) Movement in the carrying amounts of intangible assets between the beginning and the end of the current year: Intellectual property $ Year ended 31 December 2012 Balance at the beginning of the year Additions Amortisation

283,380 195,556 (281,852)

Closing value at 31 December 2012

197,084

Year ended 31 December 2011 Balance at the beginning of the year Additions Amortisation

116,160 409,088 (241,868)

Closing value at 31 December 2011

14

15

Trade and other payables

283,380

2012 $

2011 $

Current Unsecured liabilities Trade creditors Related parties Investments held in trust for third parties Other payables

3,888,209 2,234,588 316,648 306,159

4,617,564 3,094,216 407,260 305,580

Total current trade and other payables

6,745,604

8,424,620

Provisions

Current provisions expected to be settled within 12 months Employee benefits Annual leave Long service leave

2012 $

2011 $

544,571 150,000

509,858 106,000

694,571

615,858

181,524 674,658

198,278 594,126

856,182

792,404

1,550,753

1,408,262

Current provisions expected to be settled after more than 12 months Employee benefits Annual leave Long service leave

Total current provisions

191 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 15

Provisions (continued)

2012 $

2011 $

Non-current provisions Employee benefits Long service leave

517,000

429,000

Total non-current provisions

517,000

429,000

Provision for annual leave This provision is for outstanding annual leave liabilities that employees have not yet taken. It is assumed the majority of leave will be taken in the next twelve months. The measurement and recognition criteria relating to employee benefits has been included in note 1 to these financial statements. Provision for long service leave This provision is for outstanding long service leave liabilities that employees have not yet taken. The calculation of the present value of future cash flows in respect of long service leave being taken has been calculated by independent third parties based on historical data provided by the Company. Movements in each class of provision during the year are set out below:

Annual leave $ Opening balance at 1 January 2012 Additional provisions Provisions used Balance at 31 December 2012

16

17

Long service leave $

Total $

708,135 671,497 (653,537)

1,120,721 267,308 (46,371)

1,828,856 938,805 (699,908)

726,095

1,341,658

2,067,753

Other liabilities 2012 $

2011 $

Current Income received in advance

2,864,604

2,571,093

Total other liabilities

2,864,604

2,571,093

2012 $

2011 $

Reserves and retained earnings (a)

Reserves

Reserves Available-for-sale financial assets revaluation reserve

145,490

105,398

Total reserves

145,490

105,398

192 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 17

Reserves and retained surplus (continued) (a)

Reserves (continued)

2012 $

2011 $

Movements Available-for-sale financial assets reserve Balance as at 1 January Revaluation increment (decrement)

105,398 40,092

103,208 2,190

Balance at 31 December

145,490

105,398

Retained earnings at the beginning of the year Operating result for the year

4,740,338 22,161

4,422,255 318,083

Retained earnings at end of the year

4,762,499

4,740,338

(b)

(c)

Retained earnings

Nature and purpose of reserves

The available-for-sale financial assets reserve is used to record gains and losses arising from changes in the fair value of available-for-sale financial assets, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss recognised in the reserve is included in the income statement for the year. 18

Key management personnel disclosures (a)

Names of responsible persons and executive officers

The following persons were responsible persons and executive officers of the Company during the year: (i) Board members Geoffrey James Leonard Glenn Thurston Turner John Coyle John James O'Brien Lisa Maree Sutton Gardner Michael Brian Calford (ii) Other key management personnel The following persons also had authority and responsibility for planning, directing and controlling the activities of the company during the year: Brent Alan Jenkins (Chief Executive Officer)

19 3 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 18

Key management personnel disclosures (continued)

(b)

Remuneration of board members and other key management personnel Board members receive remuneration for their services to the Company, details of amounts paid in the current and prior years are as follows: 2012 2011 Number Number Remuneration of Board Members $nil $1 to $9,999 $10,000 to $19,999

1 4 1

1 4 1

Certain key management personnel receive remuneration for their services to the Company details of amounts paid in the current and prior year are as follows: 2012 2011 Number Number Remuneration of other key management personnel $230,000 to $239,999 $240,000 to $249,999 (c)

1 -

Key management personnel compensation

Short-term employee benefits Total (d)

1

2012 $ 289,900

2011 $ 238,200

289,900

238,200

Other transactions with key management personnel A director, Mr J Coyle, was Chief Executive Officer of HunterNet during the year. The Company paid membership fees to HunterNet during the year. The membership fee is based on normal commercial terms and conditions. Directors, Dr GJ Leonard and Mr GT Turner, are Directors of Hunter Medical Research Institute (HMRI). The Company provided services to HMRI during the year and sponsored HMRI to undertake certain research activities. Both transactions were based on normal commercial terms and conditions, and were subject to approval by the CEO. Aggregate amounts of the above types of other transactions with key management personnel of the Company:

2012 $ Amounts recognised as revenue Service fees

Amounts recognised as expense Membership fees Sponsorships

194 | THE UNIVERSITY OF NEWCASTLE

2011 $

2,135

-

2,135

-

3,590 5,500

6,858 7,800

9,090

14,658


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 19

Remuneration of auditors During the year, the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms:

2012 $

2011 $

Assurance services Audit services Fees paid to The Audit Office of NSW

20

44,000

51,000

44,000

51,000

Contingencies The company has no contingent assets or liabilities as at 31 December 2012.

21

Events occurring after reporting date No matters of circumstances have arisen since the end of the year which significantly affected or could significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future years.

22

Reconciliation of operating result after income tax to net cash flows from operating activities 2012 Reconciliation of net cash from operating activities to net operating result $ Operating result for the year 22,161 Depreciation and amortisation 543,592 Net (gain) loss on sale of plant and equipment 961 Fair value losses (gains) on other financial assets at fair value through profit and loss Net (gain) loss on sale of available-for-sale financial assets (116,429) Impairment of available-for-sale financial assets 101,874 (Increase) decrease in trade receivables 249,501 (Increase) decrease in other receivables (421,532) Increase (decrease) in trade payables (279,796) Increase (decrease) in other operating liabilities (302,062) Increase (decrease) in other provisions 230,491

2011 $ 318,083 368,407 18,309 (682,443) (54,000) 1,573,621 352,544

Net cash provided by (used in) operating activities

1,894,521

195 | THE UNIVERSITY OF NEWCASTLE

28,761


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 23

Financial risk management The company's activities expose it to a variety of financial risks: market risk including currency risk (price risk, cash flow interest rate risk and fair value risk), credit risk and liquidity risk. The company'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 Company. The Company 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 other price risks. Risk management is carried out under guidance provided by the Board of Directors. (a)

Market risk (i) Foreign exchange risk As the company does not operate internationally the risk is minimal. The company makes small, infrequent transactions in foreign currencies which do not pose a significant financial risk. (ii) Price risk The Group is exposed to equity securities risk. This arises from investments held by the Company and classified on the Statement of Financial Position as available-for-sale financial assets. The risk is managed by management obtaining regular updates from those companies which the Company holds equity, and making regular assessments on whether to hold or sell these securities. The Company is not exposed to commodity price risk. (iii) Cash flow and fair value interest rate risk The Company’s main interest rate risk arises from cash and cash equivalents and held to maturity investments. At 31 December 2012, if interest rates had changed by ¹ 1% from the year end rates with all other variables held constant, post tax profit for the year would have been ¹ $125,830. (iv) Summarised sensitivity analysis Interest rate risk

31 December 2012 2012

-1%

+1%

$

Profit $

Equity $

Financial assets Cash and cash equivalents Financial assets - Held to maturity investments

683,013 11,900,000

(6,830) (119,000)

Total increase (decrease)

12,583,013

(125,830)

196 | THE UNIVERSITY OF NEWCASTLE

Profit $

Equity $

(6,830) (119,000)

6,830 119,000

6,830 119,000

(125,830)

125,830

125,830


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 23

Financial risk management (continued) (a)

Market risk (continued) 31 December 2011

Interest rate risk 2011

(b)

-1%

+1%

$

Profit $

Equity $

Profit $

Equity $

Financial assets Cash and cash equivalents Financial assets - Held to maturity investments

631,205 12,200,000

(6,312) (122,000)

(6,312) (122,000)

6,312 122,000

6,312 122,000

Total increase (decrease)

12,831,205

(128,312)

(128,312)

128,312

128,312

Credit risk Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of 'BBB+' are accepted. The company has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.

(c)

Liquidity risk The company maintains sufficient liquid assets to meet its short term obligations. Sufficient cash reserves are kept in our 24 hour access account. These cash accounts are reviewed regularly by management to ensure all payments can be made when they fall due.

The following tables summarise the maturity of the company’s financial assets and financial liabilities:

31 December 2012

Financial assets: Cash and cash equivalents Receivables Held to maturity investments Available-for-sale financial assets Financial liabilities: Trade and other payables

197 | THE UNIVERSITY OF NEWCASTLE

Average Variable Less than 1 Non Interest interest rate interest rate year % 2.89 -

$ 683,013 -

-

-

2.89

$

$ - 11,900,000

Total $

2,871,804 -

683,013 2,871,804 11,900,000

-

542,209

542,209

683,013

11,900,000

3,414,013

15,997,026

-

-

-

6,745,604

6,745,604

-

-

-

6,745,604

6,745,604


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 23

Financial risk management (continued) (c)

Liquidity risk (continued) 31 December 2011

Financial assets: Cash and cash equivalents Receivables Held to maturity investments Available-for-sale financial assets Financial liabilities: Trade and other payables

(d)

Average Variable Less than 1 Non Interest interest rate interest rate year %

$

$

$

4.61 -

631,205 -

-

-

Total

- 12,200,000

$

3,559,401 -

631,205 3,559,401 12,200,000

-

588,018

588,018

631,205

12,200,000

4,147,419

16,978,624

-

-

-

8,424,620

8,424,620

-

-

-

8,424,620

8,424,620

Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as publicly traded shares) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Company is the current bid price. The carrying value of financial assets less impairment provision of trade receivables is a reasonable approximation of their fair values due to the short-term nature of trade receivables. Due to the short-term nature of financial liabilities, their carrying value is assumed to approximate their fair value. Due to the short-term nature of the current receivables, their carrying value is assumed to approximate their fair value and based on credit history it is expected that the receivables that are neither past due nor impaired will be received when due. The carrying amounts and aggregate net fair values of financial assets and liabilities at reporting date are:

Carrying amount

Fair value

Financial assets Cash and cash equivalents Receivables Other financial assets

2012 $ 683,013 2,871,804 12,442,209

2011 $ 631,205 3,559,401 12,788,018

2012 $ 683,013 2,871,804 12,442,209

2011 $ 631,205 3,559,401 12,788,018

Total financial assets

15,997,026

16,978,624

15,997,026

16,978,624

Financial liabilities Trade and other payables

6,745,604

8,424,620

6,745,604

8,424,620

Total financial liabilities

6,745,604

8,424,620

6,745,604

8,424,620

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

198 | THE UNIVERSITY OF NEWCASTLE


NEWCASTLE INNOVATION LTD Notes to the Financial Statements For the year ended 31 December 2012 23

Financial risk management (continued) (d)

Fair value estimation (continued) The following table presents the Company's assets and liabilities measured and recognised at fair value at the reporting date into the following levels: 2012 Level 1 Level 2 Level 3 $ $ $ $ Available-for-sale financial assets Equity securities

542,209

492,209

-

50,000

Total

542,209

492,209

-

50,000

2011 $ 588,018

Level 1 $ 452,116

-

Level 3 $ 135,902

588,018

452,116

-

135,902

Equity securities Total

Refer to note 1(h) for the accounting policy of fair value estimation.

199 | THE UNIVERSITY OF NEWCASTLE

Level 2 $


NEWCASTLE INNOVATION LTD Directors’ Declaration For the year ended 31 December 2012 The directors of the Company declare that: 1.

2.

The financial statements and notes are in accordance with the Corporations Act 2001 and: a.

comply with Accounting Standards and the Corporations Regulations 2001; and

b.

comply with the Public Finance and Audit Act 1983, and the Public Finance and Audit Regulations 2010; and

c.

give a true and fair view of the company's financial position as at 31 December 2012 and of its performance for the year ended on that date.

In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors pursuant to s.41C of the Public Finance and Audit Act 1983.

Glenn Thurston Turner Director Newcastle 26 March 2013

200 | THE UNIVERSITY OF NEWCASTLE


201 | THE UNIVERSITY OF NEWCASTLE


202 | THE UNIVERSITY OF NEWCASTLE


203 | THE UNIVERSITY OF NEWCASTLE


Access and Printing Costs: Volume One and Volume Two The University welcomes feedback and enquiries from the public by telephone, postal mail, email or in person. Office hours 9am to 5pm Monday to Friday Postal address University Secretary The University of Newcastle Callaghan NSW 2308 Australia T +61 2 4921 5000 (General Enquiries) T +61 2 4921 6934 (Media Unit) F +61 2 4921 7417 (Secretariat, Council Services and Chancellery) E secretariat@newcastle.edu.au W www.newcastle.edu.au This Annual Report is available in electronic form at the following address: www.newcastle.edu.au/service/annual-reports

Edited by Rebecca Thurlow and Ellen Carlson, Secretariat, Council Services and Chancellery, The University of Newcastle Design Marketing & Public Relations, The University of Newcastle Photography Murray McKean Photography Intervision Photography Conor Ashleigh ABN 15 736 576 735 Printed by NCP CD produced by NCP Print run 400 copies (Volume One), 100 copies (Volume Two), 400 copies (CD Volume Two) Total external cost $16,955.80 ($18,651.38 inclusive of GST) ISSN 0313-007x (print) ISSN 2200-4572 (online) UoN 2013/1002 | CRICOS Provider 00109J

UoN Annual Report 2012 Volume 2  

Volume 2 of the 2012 Annual Report for the University of Newcastle, Australia.

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