23. notes to the financial statements
TRANSCRIPT
75Annual Report 2014
Note 1: Statement of accounting policies for the year ended 31 December 2014
The Reporting EntityTheUniversityofWaikato(theUniversity)isapublicbenefitentity,domiciledinNewZealand,constitutedasauniversityunder
theUniversityofWaikatoAct1963fortheadvancementofknowledgeandthedisseminationandmaintenancethereofby
teachingandresearch.
ThefinancialstatementswereauthorisedforissuebyCouncilon18March2015.
ThefinancialstatementscoveralltheactivitiesoftheUniversityandGroupincludingthoseof:
» WaikatoLinkLimitedandGroup,awhollyownedsubsidiarycompany,andtheresultsfortheyearended31December2014havebeenfullyconsolidatedintotheUniversitygroupresults.
» TheUniversityofWaikatoFoundation,incorporatedasaCharitableTrustin1992,andtheresultsfortheyearended31December2014havebeenfullyconsolidatedintotheUniversitygroupresults.
» TheUniversityofWaikatoAlumniAssociation,incorporatedin1990,andtheresultsfortheyearended31December2014havebeenfullyconsolidatedintotheUniversitygroupresults.
» TheStudentCampusBuildingFundTrust,incorporatedasaCharitableTrustin1971,andtheresultsfortheyearended31December2014havebeenfullyconsolidatedintotheUniversitygroupresults.
» TheUniversityofWaikatoResearchTrust,incorporatedasaCharitableTrustin2007,andtheresultsfortheyearended31December2014havebeenfullyincorporatedintotheUniversitygroupresults.
» iEngagEdLimited,awhollyownedsubsidiarycompany,andtheresultsfortheyearended31December2014havebeenfullyconsolidatedintotheUniversitygroupresults.
» ULeisureLimitedis50%ownedbytheUniversity.Theremaining50%isownedbytheWaikatoStudents’Union(Incorporated).ULeisureLimitedcommencedoperationsfrom1August1996,replacingtheStudentUnionServicesManagementBoard.EquityAccountingmethodshavebeenusedtoreporttheresultsofULeisureLimitedwhichhasabalancedateof31December.
» LCoNewZealandLimitedis25%ownedbytheUniversity.Theremaining75%isownedbythreeotherNewZealanduniversities.LCoNewZealandLimitedwasincorporatedDecember2003.EquityAccountingmethodshavebeenusedtoreporttheresultsofLCoNewZealandLimitedwhichhasabalancedateof31December.
AlloftheUniversity’ssubsidiariesandassociatesareincorporatedinNewZealand.
Basis of PreparationStatement of Compliance
TheseaccompanyingfinancialstatementsarepresentedinaccordancewithSection203oftheEducationAct1989whichrefers
totheprovisionsoftheCrownEntitiesAct2004,andGenerallyAcceptedAccountingPracticeinNewZealand(NZGAAP).They
complywiththeNewZealandEquivalentstoInternationalFinancialReportingStandards(NZIFRS)andotherapplicablefinancial
reportingstandardsasappropriateforpublicbenefitentities.
Theaccountingpoliciessetoutbelowhavebeenappliedinpreparingthefinancialstatementsfortheyearended31December
2014andthecomparativeinformationpresentedinthesefinancialstatementsfortheyearended31December2013.
Measurement Basis
Thefinancialstatementshavebeenpreparedonanhistoricalcostbasis,adjustedbytherevaluationofcertainproperty,plant
andequipment.
Notes to the Financial Statements for the year ended 31 December 2014
76 The University of Waikato
Functional and Presentation Currency
ThefinancialstatementsarepresentedinNewZealanddollarsandallvaluesareroundedtothenearestthousanddollars($’000).
ThefunctionalcurrencyoftheUniversityisNewZealanddollars.Foreigncurrencytransactionsaretranslatedintothefunctional
currencyusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfromthe
settlementofsuchtransactionsarerecognisedintheStatementofComprehensiveIncome.
Changes in Accounting Policies
Therehavebeennochangesinaccountingpoliciesfortheyearended31December2014.TheUniversityhasnotadoptedany
revisionstoaccountingstandardsduringthefinancialyear.
Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted
Standards,amendments,andinterpretationsissuedbutnotyeteffectivethathavenotbeenearlyadopted,andarerelevanttothe
UniversityandGroupare:
» NZIFRS9FinancialInstrumentswilleventuallyreplaceNZIAS39FinancialInstruments:RecognitionandMeasurement.NZIAS39isbeingreplacedthroughthefollowing3mainphases:Phase1ClassificationandMeasurement,Phase2ImpairmentMethodology,andPhase3HedgeAccounting.Phase1ontheclassificationandmeasurementoffinancialassetshasbeencompletedandhasbeenpublishedinthenewfinancialinstrumentstandardNZIFRS9.NZIFRS9usesasingleapproachtodeterminewhetherafinancialassetismeasuredatamortisedcostorfairvalue,replacingthemanydifferentrulesinNZIAS39.TheapproachinNZIFRS9isbasedonhowanentitymanagesitsfinancialinstruments(itsbusinessmodel)andthecontractualcashflowcharacteristicsofthefinancialassets.ThefinancialliabilityrequirementsarethesameasthoseofNZIAS39,exceptforwhenanentityelectstodesignateafinancialliabilityatfairvaluethroughthesurplusordeficit.Thenewstandardisrequiredtobeadoptedfortheyearended31December2017.However,asanewAccountingStandardsFrameworkwillapplybeforethisdate,thereiscurrentlynocertaintywhenanequivalentstandardtoNZIFRS9willbeappliedbypublicbenefitentities.
TheMinisterofCommercehasapprovedanewAccountingStandardsFramework(incorporatingaTierStrategy)developedby
theExternalReportingBoard(XRB).UnderthisAccountingStandardsFramework,theUniversityisclassifiedasaTier1reporting
entityanditwillberequiredtoapplyfullpublicsectorPublicBenefitEntityAccountingStandards(PAS).Thesestandards
developedbytheXRBaremainlybasedoncurrentInternationalPublicSectorAccountingStandards.Theeffectivedateforthe
newstandardsforpublicsectorentitiesisforreportingperiodsbeginningonorafter1July2014.ThismeansthattheUniversity
willtransitiontothenewstandardsinpreparingits31December2015financialstatements.TheUniversityisintheprocessof
assessingtheimplicationsofthenewAccountingStandardsFramework.
DuetothechangeintheAccountingStandardsFrameworkforpublicbenefitentities,itisexpectedthatallnewNZIFRSand
amendmentstoexistingNZIFRSwillnotbeapplicabletopublicbenefitentities.ThereforetheXRBhaseffectivelyfrozen
thefinancialreportingrequirementsforpublicbenefitentitiesupuntilthenewAccountingStandardFrameworkiseffective.
Accordingly,nodisclosurehasbeenmadeaboutneworamendedNZIFRSthatexcludepublicbenefitentitiesfromtheirscope.
Notes to the Financial Statements for the year ended 31 December 2014
77Annual Report 2014
Significant Accounting PoliciesBasis of Consolidation
Thepurchasemethodisusedtopreparetheconsolidatedfinancialstatements,whichinvolvesaddingtogetherlikeitemsofassets,
liabilities,equity,income,expensesandcashflowsonaline-by-linebasis.Allsignificantintragroupbalances,transactions,income
andexpensesareeliminatedonconsolidation.
TheUniversity’sinvestmentsinitssubsidiariesarecarriedatcostintheUniversity’sown“parententity”financialstatements.
Subsidiaries
TheUniversityconsolidatesassubsidiariesinthegroupfinancialstatementsallentitieswheretheUniversityhasthecapacityto
controltheirfinancingandoperatingpoliciessoastoobtainbenefitsfromtheactivitiesoftheentity.Thispowerexistswherethe
Universitycontrolsthemajorityvotingpoweronthegoverningbodyorwheresuchpolicieshavebeenirreversiblypredetermined
bytheUniversityorwherethedeterminationofsuchpoliciesisunabletomateriallyimpactthelevelofpotentialownership
benefitsthatarisefromtheactivitiesofthesubsidiary.
TheUniversitymeasuresthecostofabusinesscombinationastheaggregateofthefairvalues,atthedateofexchange,of
assetsgiven,liabilitiesincurredorassumed,inexchangeforcontrolofthesubsidiaryplusanycostsdirectlyattributableto
thebusinesscombination.
AnyexcessofthecostofthebusinesscombinationovertheUniversity’sinterestinthenetfairvalueoftheidentifiableassets,
liabilitiesandcontingentliabilitiesisrecognisedasgoodwill.IftheUniversity’sinterestinthenetfairvalueoftheidentifiable
assetsliabilitiesandcontingentliabilitiesrecognisedexceedsthecostofthebusinesscombination,thedifferencewillbe
recognisedimmediatelyintheStatementofComprehensiveIncome.
Associates
TheUniversityaccountsforaninvestmentinanassociateinthegroupfinancialstatementsusingtheequitymethod.Anassociate
isanentityoverwhichtheUniversityhassignificantinfluenceandthatisneitherasubsidiarynoraninterestinajointventure.
Theinvestmentinanassociateisinitiallyrecognisedatcostandthecarryingamountisincreasedordecreasedtorecognisethe
University’sshareofthesurplusordeficitoftheassociateafterthedateofacquisition.TheUniversity’sshareofthesurplusor
deficitoftheassociateisrecognisedintheUniversity’sStatementofComprehensiveIncome.Distributionsreceivedfroman
associatereducethecarryingamountoftheinvestment.
IftheUniversity’sshareofdeficitsofanassociateequalsorexceedsitsinterestintheassociate,theUniversitydiscontinues
recognisingitsshareoffurtherdeficits.AftertheUniversity’sinterestisreducedtozero,additionaldeficitsareprovidedfor,and
aliabilityisrecognised,onlytotheextentthattheUniversityhasincurredlegalorconstructiveobligationsormadepaymentson
behalfoftheassociate.Iftheassociatesubsequentlyreportssurpluses,theUniversitywillresumerecognisingitsshareofthose
surplusesonlyafteritsshareofthesurplusesequalstheshareofdeficitsnotrecognised.
TheUniversity’sshareintheassociate’ssurplusordeficitsresultingfromunrealisedgainsontransactionsbetweentheUniversity
anditsassociatesiseliminated.
TheUniversity’sinvestmentsinassociatesarecarriedatcostintheUniversity’sown“parententity”financialstatements.
Joint venture
InvestmentsinjointlycontrolledentitiesareaccountedforbytheGroupbyusingtheequitymethodofaccountingandare
initiallyrecognisedatcost.
Notes to the Financial Statements for the year ended 31 December 2014
78 The University of Waikato
Budget Figures
BudgetfiguresarethoseapprovedbytheFinanceCommitteeperminutesof24September2013fortheUniversityentity.
Howeversomelineitemshavebeensubsequentlyre-classifiedtoalignwiththeannualreportingformatandtoreflectopening
balancesfollowingcompletionofthe2013financialstatements.ThebudgetfigureshavebeenpreparedinaccordancewithNZ
GAAPandareconsistentwiththeaccountingpoliciesadoptedbytheCouncilforthepreparationofthefinancialstatements.
Cash flow Statement
Cash and Cash Equivalents
Cashmeanscashbalancesonhand,heldinbankaccounts,demanddepositsandotherhighlyliquidinvestmentsinwhichthe
Universityinvestsaspartofitsday-to-daycashmanagement.Cashequivalentsarenotsubjecttoasignificantriskofchangein
value,andhaveashortmaturityofthreemonthsorless.
Operating activities
OperatingactivitiesincludecashreceivedfromallincomesourcesoftheUniversityandrecordthecashpaymentsmadeforthe
supplyofgoodsandservices.
Investing activities
Investingactivitiesarethoseactivitiesrelatingtotheacquisitionanddisposalofnoncurrentassets.
Financing activities
FinancingactivitiescomprisethechangeinequityanddebtcapitalstructureoftheUniversity.
Revenue
Revenueismeasuredatthefairvalueofconsiderationreceivedorreceivable.DonationsandBequeststotheUniversityare
recognisedasincomewhenmoneyisreceived,orentitlementtoreceivemoneyisestablished;exceptwherefulfillmentofany
restrictionsattachedtothesemoniesisnotprobable.
ResearchrevenuederivedfromresearchcontractsisrecognisedintheStatementofComprehensiveIncomebasedonthestageof
completionoftheresearchprojectatBalanceSheetdate.TheunearnedrevenueisrecordedasaliabilityintheBalanceSheetto
recognisethefutureobligationtocompletetheresearchproject.
Surpluses,generatedfromexternallyfundedresearchprojectsandwhicharecommittedtofundcontinuingresearch,are
transferredtotheUniversityofWaikatoResearchTrustasagrant.TheUniversityofWaikatoResearchTrustaccountsforthese
grantsasrevenue.
GovernmentGrantsandstudenttuitionfeesarerecognisedasrevenueonacoursepercentageofcompletionbasis.
Interestincomeisrecognisedusingtheeffectiveinterestmethod.
Dividendsarerecognisedwhentherighttoreceivepaymenthasbeenestablished.
Borrowing Costs
TheUniversityhaselectedtodefertheadoptionoftherevisedNZIAS23BorrowingCosts(Revised2007)inaccordancewiththe
transitionalprovisionsofNZIAS23thatareapplicabletopublicbenefitentities.Consequently,allborrowingcostsarerecognised
asanexpenseintheperiodinwhichtheyareincurred.
Notes to the Financial Statements for the year ended 31 December 2014
79Annual Report 2014
Trade and Other Receivables
Tradeandotherreceivablesareinitiallymeasuredatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffective
interestmethod,lessanyprovisionforimpairment.
AprovisionforimpairmentofreceivablesisestablishedwhenthereisobjectiveevidencethattheUniversitywillnotbeableto
collectallamountsaccordingtotheoriginaltermofthereceivables.Theamountoftheprovisionisthedifferencebetweenthe
asset’scarryingamountandthepresentvalueoftheestimatedfuturecashflows,discountedusingtheeffectiveinterestmethod.
Employee entitlements
ProvisionismadeforbenefitsaccruingtostaffinrespectoftheUniversity’sliabilityforwagesandsalaries,andannualandsick
leavewhereitisprobablethatsettlementwillbemadeandtheyarecapableofbeingmeasuredreliably.Theseprovisionsare
calculatedusingthecurrentratesofpay.
TheUniversityrecognisesaliabilityforsickleavetotheextentthatabsencesinthecomingyearareexpectedtobegreaterthan
thesickleaveentitlementsearnedinthecomingyear.Theamountiscalculatedbasedontheunusedsickleaveentitlementthat
canbecarriedforwardatbalancedate,totheextentthattheUniversityanticipatesitwillbeusedbystafftocoverthosefuture
absences.Thesickleaveprovisionisonlycalculatedforthosestaffwithafixedsickleaveprovisionintheiremploymentcontracts.
ThemajorityofUniversitystaffhaveanunlimitedsickleaveentitlement.
Additionallyprovisionhasbeenmade,whereapplicable,usinganactuarialvaluationforretirementgratuitiesandlongservice
leave.Thisvaluation,asat31December2014,wasundertakenbyMercer(NZ)Limited(Actuaries).Thecalculationsarebasedon:
» Likelyfutureentitlementsaccruingtostaff,basedonyearsofservice,yearstoentitlement,thelikelihoodthatstaffwillreachthepointofentitlement,andcontractualentitlementinformation;and
» Thepresentvalueoftheestimatedfuturecashflows.
Expectedfuturepaymentsarediscountedusingmarketyieldsongovernmentbondsatbalancedatewithtermstomaturitythat
match,ascloselyaspossible,theestimatedfuturecashoutflowsforentitlements.Theinflationfactorisbasedontheexpected
long-termincreaseinremunerationforemployees.
ObligationsforcontributionstodefinedcontributionsuperannuationschemesarerecognisedasanexpenseintheStatementof
ComprehensiveIncomeasincurred.
Insufficientinformationisavailabletousedefinedbenefitaccounting,asitisnotpossibletodeterminefromthetermsofthe
NationalProvidentFundschemetheextenttowhichthesurplus/deficitwillaffectfuturecontributionsbyindividualemployers,
asthereisnoprescribedbasisforallocation.Theschemeisthereforeaccountedforasadefinedcontributionscheme.Further
informationontheseschemesisdisclosedinnote5.
Totheextentthatitisanticipatedthattheliabilitywillariseduringthefollowingyeartheentitlementsarerecordedascurrent
liabilities.Theremainderoftheanticipatedentitlementsarerecordedasnon-currentliabilities.
Equity
Equityisthecommunity’sinterestintheUniversityandGroupandismeasuredasthedifferencebetweentotalassetsandtotal
liabilities.Equityisdisaggregatedandclassifiedintoanumberofreservestoenablecleareridentificationofthespecifiedusesthat
CouncilandGroupmakeofitsaccumulatedsurpluses.Thecomponentsofequityare:
» GeneralEquity
» AssetRevaluationReserve
» RestrictedReserves
Notes to the Financial Statements for the year ended 31 December 2014
80 The University of Waikato
Accounting for derivative financial instruments, hedging activities and foreign currency transactions
TheUniversityusesderivativefinancialinstrumentstomanageitsexposuretoforeignexchangeriskarisingfromitsoperational
activities.TheUniversitydoesnotholdorissuethesefinancialinstrumentsfortradingpurposes.TheUniversityhasnotadopted
hedgeaccounting.
Derivativesareinitiallyrecognisedatfairvalueonthedateaderivativecontractisenteredintoandaresubsequentlyre-measured
totheirfairvalueateachbalancedate.Movementsinthefairvalueofderivativefinancialinstrumentsarerecognisedinthe
StatementofComprehensiveIncome.
Foreigncurrencytransactions(includingthoseforwhichforwardexchangecontractsareheld)aretranslatedintoNewZealand
dollarsusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfrom
thesettlementofsuchtransactionsandfromthetranslationatyearendexchangeratesofmonetaryassetsandliabilities
denominatedinforeigncurrenciesarerecognisedintheStatementofComprehensiveIncome.
Income tax
IncomeTaxhasnotbeenprovidedforintheseaccountsastheUniversityhasbeenrecognisedasacharitableorganisationbythe
IRDandisthereforeexemptfromincometax.
Goods and services tax
GoodsandServicesTax(GST)isexcludedfromthesefinancialstatements,withtheexceptionofaccountsreceivableandaccounts
payable.WhereGSTisnotrecoverableasinputtaxthenitisrecognisedaspartoftherelatedassetorexpense.
ThenetamountofGSTrecoverablefrom,orpayableto,theInlandRevenueDepartment(IRD)isincludedaspartofreceivablesor
payablesintheBalanceSheet.
ThenetGSTpaidto,orreceivedfromtheIRD,includingtheGSTrelatingtoinvestingandfinancingactivities,isclassifiedasanet
operatingcashflowinthestatementofcashflows.
CommitmentsandcontingenciesaredisclosedexclusiveofGST.
Inventories
Inventoriesheldfordistributionorconsumptionintheprovisionofservicesthatarenotsuppliedonacommercialbasisare
measuredatcost(determinedonaweightedaveragebasis)adjustedwhenapplicableforanylossofservicepotential.This
valuationincludesallowancesforslowmovingandobsoleteinventories.Noaccountistakenofotherminorstocksinacademic
schoolsandadministrativedepartments,whichareexpensedasissued.
Inventoriesheldforuseintheproductionofgoodsandservicesonacommercialbasisarevaluedatthelowerofcostandnet
realisablevalue.ThecostofpurchasedinventoryisdeterminedusingtheFIFOmethod.
ThewritedownfromcosttonetrealisablevalueisrecognisedintheStatementofComprehensiveIncome.
Financial Assets
TheUniversityclassifiesitsfinancialassetsintothefollowingfourcategories:financialassetsatfairvaluethroughsurplusor
deficit,held-to-maturityinvestments,loansandreceivablesandfinancialassetsatfairvaluethroughothercomprehensive
income.Theclassificationdependsonthepurposeforwhichtheinvestmentswereacquired.Managementdeterminesthe
classificationofitsinvestmentsatinitialrecognitionandre-evaluatesthisdesignationateveryreportingdate.
Notes to the Financial Statements for the year ended 31 December 2014
81Annual Report 2014
Financialassetsareinitiallymeasuredatfairvalueplustransactioncostsunlesstheyarecarriedatfairvaluethroughsurplusor
deficitinwhichcasethetransactioncostsarerecognisedinsurplusordeficit.
Purchasesandsalesofinvestmentsarerecognisedontrade-date,thedayonwhichtheUniversitycommitstopurchaseorsellthe
asset.Financialassetsarede-recognisedwhentherightstoreceivecashflowsfromthefinancialassetshaveexpiredorhavebeen
transferredandtheUniversityhastransferredsubstantiallyalltherisksandrewardsofownership.
ThefairvalueoffinancialassetstradedinactivemarketsisbasedonquotedmarketpricesattheBalanceSheetdate.Thequoted
marketpriceusedisthecurrentbidprice.
Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarketisdeterminedusingvaluationtechniques.The
Universityusesavarietyofmethodsandmakesassumptionsthatarebasedonmarketconditionsexistingateachbalancedate.
Quotedmarketpricesordealerquotesforsimilarinstrumentsareusedforlong-termdebtinstrumentsheld.Othertechniques,
suchasestimateddiscountedcashflows,areusedtodeterminefairvaluefortheremainingfinancialinstruments.
Thefourcategoriesoffinancialassetsare:
» Financialassetsatfairvaluethroughsurplusordeficit
Thiscategoryhastwosub-categories:financialassetsheldfortrading,andthosedesignatedatfairvaluethroughsurplusordeficitatinception.Afinancialassetisclassifiedinthiscategoryifacquiredprincipallyforthepurposeofsellingintheshorttermorifsodesignatedbymanagement.Derivativesarealsocategorisedasheldfortradingunlesstheyaredesignatedashedges.Assetsinthiscategoryareclassifiedasnon-currentassetsunlesstheUniversityintendstodisposeoftheseinvestmentswithin12monthsoftheBalanceSheetdate.
Afterinitialrecognitiontheyaremeasuredattheirfairvalues.Gainsorlossesonre-measurementarerecognisedthroughsurplusordeficit.
Assetsinthiscategoryforthegroupincludelistedsecurities.
» Loansandreceivables
Thesearenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.
Afterinitialrecognitiontheyaremeasuredatamortisedcostusingtheeffectiveinterestmethod.GainsandlosseswhentheassetisimpairedorderecognisedarerecognisedintheStatementofComprehensiveIncome.TheUniversityincludesinloansandreceivables,cashandcashequivalents,otherfinancialassets,tradeandotherreceivables,andloanstoULeisureLtdandLCoNZ.
» HeldtoMaturityInvestments
HeldtomaturityinvestmentsareassetswithfixedordeterminablepaymentsandfixedmaturitiesthattheUniversityhasthepositiveintentionandabilitytoholdtomaturity.
Afterinitialrecognitiontheyaremeasuredatamortisedcostusingtheeffectiveinterestmethod.GainsandlosseswhentheassetisimpairedorderecognisedarerecognisedintheStatementofComprehensiveIncome.
DerivativesheldbytheUniversityareclassifiedasheldtomaturity.
» Financialassetsatfairvaluethroughothercomprehensiveincome.
Financialassetsatfairvaluethroughothercomprehensiveincomearethosethataredesignatedasfairvaluethroughothercomprehensiveincomeorarenotclassifiedinanyoftheothercategoriesabove.
Thiscategoryencompasses:
–InvestmentsthattheUniversityintendstoholdlong-termbutwhichmayberealisedbeforematurity;and
–ShareholdingsthattheUniversityholdsforstrategicpurposes.
–TheUniversityandGroup'sinvestmentsinitssubsidiaries,associatecompaniesandjointventuresarenotincludedinthiscategoryastheyareheldatcost(asallowedbyNZIAS27ConsolidatedandSeparateFinancialStatementsandNZIAS28InvestmentsinAssociates)whereasthiscategoryistobemeasuredatfairvalue.
Afterinitialrecognition,theseinvestmentsareheldattheirfairvaluewithgainsandlossesrecogniseddirectlyinothercomprehensiveincomeexceptforimpairmentlosses,whicharerecognisedinthesurplusordeficit.Onde-recognitionthecumulativegainorlosspreviouslyrecognisedinothercomprehensiveincomeisreclassifiedfromequitytothesurplusordeficit.
Notes to the Financial Statements for the year ended 31 December 2014
82 The University of Waikato
Impairment of Financial Assets
AteachBalanceSheetdatetheUniversityassesseswhetherthereisanyobjectiveevidencethatafinancialassetorgroupof
financialassetsisimpaired.Anyimpairmentlossesarerecognisedthroughsurplusordeficit.
Leases
Financeleases,whicheffectivelytransfertotheUniversitysubstantiallyalltherisksandbenefitsincidentaltoownershipofthe
leaseditem,arecapitalisedattheloweroffairvalueorpresentvalueoftheminimumleasepayments.Theleasedassetsand
correspondingliabilitiesaredisclosedandtheleasedassetsaredepreciatedovertheperiodtheUniversityisexpectedtobenefit
fromtheiruse.
Operatingleasepayments,wherethelessorseffectivelyretainsubstantiallyalltherisksandbenefitsofownershipoftheleased
items,areincludedinthedeterminationoftheoperatingprofitinequalinstalmentsovertheleaseterm.
Property, Plant and Equipment:
Land
In1996thelandoccupiedbytheUniversitycampuswastransferredbytheCrowntoWaikato-Tainui,aspartoftheCrown’s
settlementoftheRaupatuclaim.TheUniversityleasesbackthelandfromWaikato-Tainui.Compensationwaspaidtothe
Universityin1996bytheCrowntofundtheUniversity’sfinancialobligationsunderthelease.
Buildings
Themajorityofbuildingsrecognisedinthefinancialstatements,includingthepreviousHamiltonTeachers’Collegebuildings,
arestillsubjecttothelegaltransferofownershipfromtheMinistryofEducation.TheUniversityisoftheopinionthatasat31
December2014itisinsubstancetheowneroftheseBuildingsandassumesallthenormalrisksandrewardsofownership.
Landandbuildingsarerevaluedwhentherehasbeenasignificantmovementinthefairvalue.Thefairvaluesarerecognisedin
thefinancialstatementsandarereviewedattheendofeachreportingperiodtoensurethecarryingvalueoflandandbuildings
isnotmateriallydifferentfromtheirfairvalue.Landandbuildingswererevaluedasat31December2014byDarrochValuations
(registeredvaluers),onafairvaluebasis.Thevalueoflandandnonspecialisedbuildingswasdeterminedusingmarketbased
evidence.Allotherbuildingswerevaluedatoptimiseddepreciatedreplacementcost.
Infrastructural assets
Universityownedinfrastructuralassetsarerevaluedwhentherehasbeenasignificantmovementinthefairvalue.Thefairvalues
arerecognisedinthefinancialstatementsandarereviewedattheendofeachreportingperiodtoensurethecarryingvalueof
Infrastructuralassetsarenotmateriallydifferentfromtheirfairvalue.Infrastructuralassetswererevaluedasat31December
2014byOpusInternationalConsultantsLimitedonafairvaluebasisusingtheoptimiseddepreciatedreplacementcostmethod.
Library
TheLibrarycollectionisvaluedonthebasisofhistoricalcostlessaccumulateddepreciation.
Assets Under Construction/Work in Progress
Assetsunderconstruction/workinprogressisvaluedonthebasisofexpenditureincurredandcertifiedgrossprogressclaim
certificatesupto31December.WorkinProgressisnotdepreciated.Thetotalcostofaprojectistransferredtotherelevantasset
classonitscompletionandthenitisdepreciated.
Other Property, Plant and Equipment
Allotherproperty,plantandequipmentarevaluedathistoricalcostlessaccumulateddepreciation.
Notes to the Financial Statements for the year ended 31 December 2014
83Annual Report 2014
Depreciation
Propertyplantandequipmentisdepreciatedoneitherastraightline(SL)ordiminishingvalue(DV)basisasfollows:
Asset Class Basis Useful Life/Rate
Land N/A N/A
Buildings
–Structure SL 1-82years
–Services SL 1-39years
–Fitout SL 1-31years
Infrastructure SL 2-80years
Library
–Books SL 35years
–Periodicals SL 15years
Teaching/ResearchEquipment DV 15%
ComputerEquipment(excludingservers) SL 3-4years
ComputerServers SL 5years
OtherPropertyPlantandEquipment DV 5-20%
Revaluations
Revaluationofplant,propertyandequipmentiscarriedoutonaclassofassetsbasis.Thenetrevaluationresultsarecredited
ordebitedtoothercomprehensiveincomeandareaccumulatedtoanassetrevaluationreserveinequityforthatclassofasset.
Wherethiswouldresultinadebitbalanceintheassetrevaluationreserve,thisbalanceisnotrecognisedinothercomprehensive
incomebutisrecognisedinthesurplusordeficit.Anysubsequentincreaseonrevaluationthatreversesapreviousdecreasein
valuerecognisedinthesurplusordeficitwillberecognisedfirstinthesurplusordeficituptotheamountpreviouslyexpensed,
andthenrecognisedinothercomprehensiveincome.
Disposals
Gainsandlossesondisposalsaredeterminedbycomparingthedisposalproceedswiththecarryingamountoftheasset.Gains
andlossesondisposalsarereportednetinthesurplusordeficit.Whenrevaluedassetsaresold,theamountsincludedinproperty
revaluationreservesinrespectofthoseassetsaretransferredtogeneralfunds.
Intangible assets
Patents, trademarks and licences
Patents,trademarksandlicencesarefinitelifeintangiblesandarerecordedatcostlessaccumulatedamortisationandimpairment.
Amortisationischargedonastraightlinebasisovertheirestimatedusefulliveswhichrangebetweensevenandtwentyyears.The
estimatedusefullifeandamortisationmethodisreviewedattheendofeachannualreportingperiod.
Notes to the Financial Statements for the year ended 31 December 2014
84 The University of Waikato
Computer Software
Computersoftwareisamortisedonastraightlinebasisthatwillwriteoffthecostwithinthreetofouryears.Computersoftwareforthefinancial,studentenrolmentandlibrarysystemsareamortisedonastraightlinebasisthatwillwriteoffthecostwithintenyears.
Internallygeneratedintangibleassetsforfinitelifeintangiblesarestatedatcostlessaccumulatedamortisationandimpairment,
andareamortisedonastraight-linebasisovertheirusefullivesasfollows:
Research
Expenditureonresearchactivitiesisrecognisedasanexpenseintheperiodinwhichitisincurred.
Intellectual Property Development
Developmentcostsincurredondevelopmentprojects(relatingtothedesignandtestingofneworimprovedproducts)are
recognisedasintangibleassetswhenthefollowingcriteriahavebeenfulfilled:
» Itistechnicallyfeasibletocompletetheintangibleassetanduseorsellit;
» Managementintendstocompletetheintangibleassetanduseorsellit;
» Thereisanabilitytouseorselltheintangibleasset;
» Itcanbedemonstratedhowtheintangibleassetwillgenerateprobablefutureeconomicbenefits;
» Adequatetechnical,financialandotherresourcestocompletethedevelopmentandtouseorselltheintangibleassetareavailable;and
» Theexpenditureattributabletotheintangibleassetduringitsdevelopmentcanbereliablymeasured.
Otherdevelopmentexpendituresthatdonotmeetthesecriteriaarerecognisedasanexpenseasincurred.Developmentcostspreviouslyrecognisedasanexpensearenotrecognisedasanassetinasubsequentperiod.Capitaliseddevelopmentcostsarerecordedasintangibleassetsandamortisedfromthepointatwhichtheassetisreadyforuseonastraight-linebasisoveritsusefullife.
Impairment of non-current assets
Ateachreportingdate,theUniversityreviewsthecarryingamountsofitstangibleandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Wheretheassetdoesnotgeneratecashflowsthatareindependentfromotherassets,theUniversityestimatestherecoverableamountofthecash-generatingunittowhichtheassetbelongs.
Recoverableamountisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimatesoffuturecashflowshavenotbeenadjusted.
Iftherecoverableamountofanasset(orcash-generatingunit)isestimatedtobelessthanitscarryingamount,thecarryingamountoftheasset(cash-generatingunit)isreducedtoitsrecoverableamount.AnimpairmentlossisrecognisedintheStatementofComprehensiveIncomeimmediately,unlesstherelevantassetiscarriedatfairvalue,inwhichcasetheimpairmentlossistreatedasarevaluationdecrease.
Whereanimpairmentlosssubsequentlyreverses,thecarryingamountoftheasset(cash-generatingunit)isincreasedtotherevisedestimateofitsrecoverableamount,butonlytotheextentthattheincreasedcarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheasset(cash-generatingunit)
inprioryears.AreversalofanimpairmentlossisrecognisedintheStatementofComprehensiveIncomeimmediately,unlessthe
relevantassetiscarriedatfairvalue,inwhichcasethereversaloftheimpairmentlossistreatedasarevaluationincrease.
Notes to the Financial Statements for the year ended 31 December 2014
85Annual Report 2014
Provisions
ProvisionsarerecognisedwhentheUniversityhasapresentobligationasaresultofapastevent,thefuturesacrificeofeconomicbenefitsisprobable,andtheamountoftheprovisioncanbemeasuredreliably.
Theamountrecognisedasaprovisionisthebestestimateoftheconsiderationrequiredtosettlethepresentobligationatreportingdate,takingintoaccounttherisksanduncertaintiessurroundingtheobligation.Whereaprovisionismeasuredusingthecashflowsestimatedtosettlethepresentobligation,itscarryingamountisthepresentvalueofthosecashflows.
Whensomeoralloftheeconomicbenefitsrequiredtosettleaprovisionareexpectedtoberecoveredfromathirdparty,the
receivableisrecognisedasanassetifitisvirtuallycertainthatrecoverywillbereceivedandtheamountofthereceivablecanbe
measuredreliably.
Restructuring
ProvisionsforrestructuringarerecognisedwhentheUniversityhasdevelopedadetailedformalplanfortherestructuringandhas
raisedavalueexpectationinthoseaffectedthatitwillcarryouttherestructuringby:
» Startingtoimplementtheplan–OR
» Announcingitsmainfeaturestothoseaffectedbyit
Trade and Other Payables
Tradeandotherpayablesareinitiallymeasuredatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffective
interestmethod.
Borrowings
Borrowingsareinitiallyrecognisedattheirfairvalue.Afterinitialrecognition,allborrowingsaremeasuredatamortisedcostusing
theeffectiveinterestmethod.
Critical accounting estimates and assumptions
InpreparingthesefinancialstatementstheUniversityhasmadeestimatesandassumptionsconcerningthefuture.Theseestimatesandassumptionsmaydifferfromthesubsequentactualresults.Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsorfutureeventsthatarebelievedtobereasonableunderthecircumstances.Theestimatesandassumptionsthathaveasignificantriskofcausingmaterialadjustmentto
thecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow:
» ActuarialvaluationshavebeenobtainedinordertodeterminethevalueofLongServiceLeaveandRetirementLeaveprovisions.
» Estimateshavebeenmadeastothecompletedportionofexternalresearchprojectsindeterminingthevalueofincomeinadvance.
» AteachbalancedatetheUniversityreviewstheusefullivesofthoseassetsthataresubjecttorevaluation.
» Note17providesinformationabouttheestimatesandassumptionsexercisedinthemeasurementofrevaluedland,buildings,andinfrastructure.
Critical judgements in applying the University’s accounting policies
ManagementhasexercisedthefollowingcriticaljudgementsinapplyingtheUniversity’saccountingpoliciesfortheperiodended
31December2014:
» MostCrownfundingreceivedisoperationalinnatureandisprovidedbytheCrownundertheauthorityofanexpenseappropriationandisrecognisedasrevenue.WherefundingisreceivedfromtheCrownundertheauthorityofacapitalappropriation,theUniversityaccountsforthefundingasacapitalcontributiondirectlyinequity.
Notes to the Financial Statements for the year ended 31 December 2014
86 The University of Waikato
Note 2: Government Funding and Grants
Note 3: Tuition Fees
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
BlockGrants 85,862 86,792 85,862 86,792
AdvisoryServicesGrants 12,928 13,839 12,928 13,839
OtherGrants 1,029 992 1,029 992
Total Government Funding and Grants 99,819 101,623 99,819 101,623
TherearenounfulfilledconditionsorcontingenciesrelatingtotheaboveGovernmentgrants.
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
GovernmentFundedStudents 44,628 44,182 44,628 44,182
FullCostInternationalStudents 27,372 26,197 27,372 26,197
Total Fees 72,000 70,379 72,000 70,379
Notes to the Financial Statements for the year ended 31 December 2014
87Annual Report 2014
Note 4: Other Income
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
StudentAccommodationandOtherServices 11,300 10,473 11,300 10,473
Rental 767 878 767 901
CarbonDating 595 674 595 674
PrintingandCopyingServices 837 970 837 970
TeachingResourceSales 570 632 570 632
OtherIncome 11,390 13,450 9,045 9,077
Total Other Income 25,459 27,077 23,114 22,727
Notes to the Financial Statements for the year ended 31 December 2014
88 The University of Waikato
Note 5: Employee Entitlements
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
PERSONNEL COSTS $000 $000 $000 $000
EmployeeBenefitExpenses–Academic 76,854 78,734 76,190 78,533
EmployeeBenefitExpenses–General 51,166 50,294 49,074 47,689
MovementinActuarialValuation 1,321 (741) 1,321 (741)
Total Personnel Costs 129,341 128,287 126,585 125,481
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
EMPLOYEE ENTITLEMENTS $000 $000 $000 $000
StaffAnnualandLongServiceLeaveVested 9,048 9,164 9,048 9,164
SickLeave 7 7 7 7
OtherEmployeeEntitlements 1,636 1,473 1,336 1,086
ActuarialValuationofAnticipatedRetirementGratuitiesandLongServiceLeave
14,875 13,554 14,875 13,554
Total Employee Entitlements 25,566 24,198 25,266 23,811
CurrentPortion 13,318 12,659 13,018 12,272
NonCurrentPortion 12,248 11,539 12,248 11,539
Total Employee Entitlements 25,566 24,198 25,266 23,811
Notes to the Financial Statements for the year ended 31 December 2014
89Annual Report 2014
Thepresentvalueoftheretirementobligationsdependsonfactorsthataredeterminedonanactuarialbasisusinganumberof
assumptions.Twokeyassumptionsusedincalculatingthisliabilityincludethediscountrateandthesalaryinflationfactor.Any
changesintheseassumptionswillimpactonthecarryingamountoftheliability.
ExpectedfuturepaymentsarediscountedusingforwarddiscountratesderivedfromtheyieldcurveofNZgovernmentbonds.
Thediscountratesusedmatch,ascloselyaspossibletheestimatedfuturecashoutflows.Thesalaryinflationfactorhasbeen
determinedafterconsideringhistoricalsalaryinflationpatternsandafterobtainingadvicefromanindependentactuary.
Ifthesalaryinflationfactorweretoincreaseordecreaseby1%fromthatused,withallotherfactorsheldconstant,thecarrying
amountofthegratuityliabilitywouldbeanestimated$941,000higher/lower(2013–$844,000).
Ifthediscountratesweretoincreaseordecreaseby1%fromthatused,withallotherfactorsheldconstant,thecarryingamount
ofthegratuityliabilitywouldbeanestimated$934,000lower/higher(2013–$832,000).
TheUniversitymakescontributionstodefinedcontributionplanswhichincludecontributionstoKiwisaver,NZUniversities’
SuperannuationScheme,NationalProvidentFundandtheGovernmentSuperannuationFund.Thefollowingisincludedinthe
EmployeeBenefitExpenses–AcademicandEmployeeBenefitExpensesGeneral:
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
DefinedContributionPlanEmployerContributions 4,778 4,593 4,778 4,593
EmployeeBenefitExpenses–AcademicandEmployeeBenefitExpenses–Generalalsoincludes$403,971inrestructuringcosts
fortheyearended31December2014(2013–$452,230).
Notes to the Financial Statements for the year ended 31 December 2014
90 The University of Waikato
Note 6: Other Costs
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
AuditFeesforFinancialStatementAudit 194 196 194 194
AuditFeesforAssuranceServices 10 10 10 10
LossonDisposalofPropertyPlantandEquipment 62 38 62 38
ForeignExchange(Gain)/Loss (71) 69 (68) 69
ImpairmentofReceivables 44 (195) (45) (51)
ImpairmentofInvestments - 946 - 946
TravelandAccommodation 4,967 5,886 4,966 5,111
OperatingLeases 3,822 4,048 3,799 4,048
Scholarships 9,583 9,803 9,583 9,622
Hirage 1,129 995 1,129 1,011
RepairsandMaintenance 2,503 2,557 2,503 2,550
TeachingandResearchMaterials 2,608 2,911 2,608 2,691
Utilities 3,869 4,114 3,854 4,101
Otheroperatingexpenses 39,670 41,394 40,767 40,618
Total Other Costs 68,390 72,772 69,362, 70,958
AuditfeesforassuranceserviceswerefortheauditoftheUniversity’sdeclarationtotheMinistryofEducationonthe
Performance-basedResearchFundexternalresearchincome.
Notes to the Financial Statements for the year ended 31 December 2014
91Annual Report 2014
Note 7: Investments in Associates and Joint Ventures
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
ULeisureLimited 1,816 1,717 374 374
LCoNewZealandLimited 162 170 93 93
LigarPolymersLimited 304 - - -
LigarLimitedPartnership 300 - - -
LigarGPLimited - - - -
AduroBiopolymersLimitedPartnership 899 - - -
Total Investments in Associates and Joint Ventures 3,481 1,887 467 467
LigarPolymersLimited,LigarLimitedPartnershipandLigarGPLimitedareassociatesofWaikatoLinkLtd.2014isthefirstyear
thattheseinvestmentsofWaikatoLinkLtdhavebeenclassifiedasassociatesintheUniversity’sconsolidatedaccounts.Aduro
BiopolymersLimitedPartnershipisajointlycontrolledentityofWaikatoLinkLtd.2014isthefirstyearthatthisinvestmentof
WaikatoLinkLtdhasbeenclassifiedasajointlycontrolledentityintheUniversity’sconsolidatedaccounts.
Associates
Ownership Balance Date
U Leisure Limited (previously known as Campus Services Limited)
50% 31December
PrincipalActivity:ProvisionofsportandrecreationfacilitiesandfoodandentertainmentoutletsfortheUniversitystudentsandstaff.
CONSOLIDATED
This Year Last Year
$000 $000
The University’s share of the results of U Leisure Limited is as follows:
Investment in Associate
OpeningBalance 1,717 1,557
Shareofretainedsurplus/(loss) 99 160
Closing Balance 1,816 1,717
Represented by
Share of increase in net assets of associate (Carrying Value)
1,816 1,717
Notes to the Financial Statements for the year ended 31 December 2014
92 The University of Waikato
Note 7: Investments in Associates and Joint Ventures continued
Ownership Balance Date
LCoNewZealandLimited(LCoNZ) 25% 31December
PrincipalActivity:AconsortiumoffourNewZealanduniversitiesprovidinglibrarysolutionstothoseuniversities.
CONSOLIDATED
This Year Last Year
$000 $000
The University’s share of the results of LCoNZ is as follows:
Investment in Associate
OpeningBalance 170 616
Shareofretainedsurplus/(loss) (8) (13)
Dividendpaid - (25)
ReturnofCapital - (408)
Closing Balance 162 170
Represented by
Share of increase in net assets of associate (Carrying Value)
162 170
Notes to the Financial Statements for the year ended 31 December 2014
93Annual Report 2014
Ownership Balance Date
Ligar Polymers Limited 40% 31December
PrincipalActivity:todevelopmolecularlyimprintedpolymerstofilter,extractordetectspecificmoleculesofinterest.
CONSOLIDATED
This Year Last Year
$000 $000
WaikatoLink’s share of the results of Ligar Polymers is as follows
Investment in Associate
OpeningBalance (4) -
Shareofretainedsurplus/(loss) 308 (4)
Closing Balance 304 (4)
Represented by
Share of increase in net assets of associate (Carrying Value)
304 (4)
Ownership Balance Date
Ligar Limited Partnership 20% 30September
PrincipalActivity:todevelopmolecularlyimprintedpolymerstofilter,extractordetectspecificmoleculesofinterest.
CONSOLIDATED
This Year Last Year
$000 $000
WaikatoLink’s share of the results of Ligar Limited Partnership is as follows:
Investment in Associate
OpeningBalance - -
Investment 300 -
Shareofretainedsurplus/(loss) - -
Closing Balance 300 -
Represented by
Share of increase in net assets of associate (Carrying Value)
300 -
Notes to the Financial Statements for the year ended 31 December 2014
94 The University of Waikato
Joint Venture
Ownership Balance Date
AduroBiopolymersLimitedPartnership 55% 31March
PrincipalActivity:Todevelopandcommercialisearangeofbiopolymermaterialsforuseinplastics,composites,agriculture,horticulture,manufacturingandconstruction.
CONSOLIDATED
This Year Last Year
$000 $000
WaikatoLink’s share of the results of Aduro Biopolymers Limited Partnership as follows:
Investment in Joint Venture
OpeningBalance 1,151 1,351
Shareofretainedsurplus/(loss) (252) (200)
Closing Balance 899 1,151
Represented by
Share of increase in net assets of Joint Venture (Carrying Value)
899 1,151
Summarised Financial Information of Associates and Joint Ventures.
Assets 9,161 5,287
Liabilities 1,963 1,161
NetAssets 7,198 4,126
Revenue 2,170 4,639
Net Surplus/(Loss) 471 267
ShareofAssociates’andJointVenturessurplus/(loss)
147 147
TheGroup’sassociatesandjointventuresareunlistedentities,accordinglythereisnopublishedpricequotationstodeterminethe
fairvalueoftheinvestments.
Detailsofcontingentliabilitiesarisingfromthegroupinvolvementintheassociatesandjointventuresaredisclosedseparatelyin
note26.
Note 7: Investments in Associates and Joint Ventures continued
Notes to the Financial Statements for the year ended 31 December 2014
95Annual Report 2014
Note 8: Equity
CONSOLIDATED UNIVERSITY
Ref This Year Last Year This Year Last Year
GENERAL EQUITY $000 $000 $000 $000
OpeningBalance 218,204 208,031 200,997 191,536
NetSurplus/(Deficit) 11,587 9,694 9,188 9,350
StaffShareOptionsIssued i (667) 724 - -
MinorityInterestShareRepurchase - (80) - -
SurplusattributabletoNon-ControllingInterest
750 (276) - -
Less appropriations of net surplus to:
RestrictedReserves
Prizes,ScholarshipsandTrustFunds (585) (749) (585) (749)
Plus transfers from
Prizes,ScholarshipsandTrustFunds 467 860 467 860
Closing Balance 229,756 218,204 210,067 200,997
CONSOLIDATED UNIVERSITY
Ref This Year Last Year This Year Last Year
OTHER RESERVES $000 $000 $000 $000
AssetRevaluationReserve ii 152,429 131,557 152,429 131,557
RestrictedReserves iii 2,907 2,789 2,907 2,789
Total Other Reserves 155,336 134,346 155,336 134,346
Total Equity before Non-Controlling Interest
385,092 352,550 365,403 335,343
i) Staff Share Options IssuedDuring2013,11AntsAnalyticsLimited,asubsidiaryofWaikatoLink,terminatedtheirshareoptionprogrammeandreplacedit
withanewprogrammethatentitleskeypersonneltopurchasesharesinthecompany.Inaccordancewiththisprogrammeoptions
areexercisableatthemarketpriceofthesharesatthedateofgrant.Allpreviouslyrecognisedexpensesrelatingtotheprior
shareoptionprogrammewerereversedin2013andareincludedinEmployeeBenefitcosts(note5).
During2013,ObodiesLimited,asubsidiaryofWaikatoLink,establishedashareoptionprogrammethatentitledthecompany'skey
scientisttopurchasesharesinthecompany.In2014thekeyscientistceasedhisemploymentwithObodiesLtd.Inresponsethe
employeeshareschemewasterminatedeffectivefrom4July2014.
Notes to the Financial Statements for the year ended 31 December 2014
96 The University of Waikato
ii) Asset Revaluation Reserve
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
OpeningBalance 131,557 131,557 131,557 131,557
Revaluation 20,872 - 20,872 -
Transferondisposalofassets - - - -
NetIncreaseinAssetRevaluationReserve 20,872 - 20,872 -
Closing Balance 152,429 131,557 152,429 131,557
Represented by:
Land
OpeningBalance 730 730 730 730
Revaluation 185 - 185 -
Closing Balance 915 730 915 730
Buildings
OpeningBalance 115,766 115,766 115,766 115,766
Revaluation 21,842 - 21,842 -
Transferondisposalofassets - - - -
Closing Balance 137,608 115,766 137,608 115,766
InfrastructuralAssets
OpeningBalance 15,061 15,061 15,061 15,061
Revaluation (1,155) - (1,155) -
Closing Balance 13,906 15,061 13,096 15,061
Note 8: Equity continued
Notes to the Financial Statements for the year ended 31 December 2014
97Annual Report 2014
iii) Restricted ReservesThePrizes,ScholarshipsandTrustFundsReservesrepresentfundsheldbytheUniversityonbehalfofothersandfundsprovided
totheUniversitybyvariouspeopleforspecificpurposes.Revenuereceivedfortheseitemsanddisbursementstoauthorised
recipientsarerecordedintheStatementofComprehensiveIncomeFundbalancesremainingareshownasrestrictedreserves.
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
PRIZES, SCHOLARSHIPS AND TRUST FUNDS $000 $000 $000 $000
OpeningBalance 2,789 2,900 2,789 2,900
AddappropriationofNetSurplus 585 749 585 749
LessapplicationtoPrizes,ScholarshipsandTrustFunds
(467) (860) (467) (860)
Closing Balance 2,907 2,789 2,907 2,789
Note 9: Cash and Cash Equivalents
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
Cashatbankandinhand 1,407 883 667 652
Termdepositsmaturingthreemonthsorlessfromdateofacquisition
9,170 4,369 9,100 4000
10,577 5,252 9,767 4,652
Thecarryingvalueofcashatbankandtermdepositswithmaturitydatesofthreemonthsorlessapproximatestheirfairvalue.
Refertonote24forweightedaverageeffectiveinterestrateforcashandcashequivalents.
Notes to the Financial Statements for the year ended 31 December 2014
98 The University of Waikato
Note 10: Trade and Other Receivables
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
TradeReceivables 7,841 11,296 6,463 9,636
StudentFeeReceivables 11,535 12,216 11,535 12,216
ReceivablesfromSubsidiaries - - 72 243
ReceivablesfromRelatedParties 1,908 1,435 239 72
ImpairmentofDebtors (419) (464) (153) (198)
20,865 24,483 18,156 21,969
IncludedinStudentFeeReceivablesis$10.8M(2013–$11.5M)of2015feeswhichhavebeeninvoicedbutarenotdueforpayment
until2015.Alsorefernote18.
Thecarryingvalueofreceivablesapproximatestheirfairvalue.Nointerestischargedontradereceivables.Anallowancehasbeen
madeforestimatedirrecoverableamountsfromdebtors,determinedbyreferencetoindividualdebtors,pastdefaultexperience
andtheageofthedebt.ThemovementforimpairmentisrecognisedintheStatementofComprehensiveIncomeforthecurrent
year(refernote6).
TheUniversityofWaikatodoesnothaveanyreceivablesthatwouldotherwisebepastdue,butnotimpaired,whosetermshave
beenrenegotiated.
Asat31December2014and2013,alloverduereceivableshavebeenassessedforimpairmentandappropriateprovisionsapplied,
asdetailedbelow:
UNIVERSITY
This Year Last Year
Gross Impairment Net Gross Impairment Net
$000 $000 $000 $000 $000 $000
Notpastdue 11,585 - 11,585 13,203 - 13,203
Pastdue1-30days 5,573 - 5,573 6,322 - 6,322
Pastdue31-60days 624 - 624 545 - 545
Pastdue61+days 527 (153) 374 2,097 (198) 1,899
Total 18,309 (153) 18,156 22,167 (198) 21,969
Notes to the Financial Statements for the year ended 31 December 2014
99Annual Report 2014
CONSOLIDATED
This Year Last Year
Gross Impairment Net Gross Impairment Net
$000 $000 $000 $000 $000 $000
Notpastdue 13,363 - 13,363 14,587 - 14,587
Pastdue1-30days 5,574 - 5,574 6,322 - 6,322
Pastdue31-60days 624 - 624 566 - 566
Pastdue61+days 1,723 (419) 1,304 3,472 (464) 3,008
Total 21,284 (419) 20,865 24,947 (464) 24,483
Movementsintheprovisionforimpairmentofreceivablesareasfollows:
CONSOLIDATED UNIVERSITY
2014 2013 2014 2013
$000 $000 $000 $000
At1January 464 269 198 249
Provisionsmadeduringtheyear (25) 225 (25) (21)
Receivableswrittenoffduringtheyear (20) (30) (20) (30)
At 31 December 419 464 153 198
TheUniversityholdsnocollateralassecurityorothercreditenhancementsoverreceivablesthatareeitherpastdueorimpaired.
Loans and Other ReceivablesIn2013WaikatoLinkLtdheldanoncurrentreceivableof$30,000.
Notes to the Financial Statements for the year ended 31 December 2014
100 The University of Waikato
Note 11: Derivative Financial Instruments
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
Current Asset Portion
Forwardforeignexchangecontracts 2 - 2 -
Total derivative financial instrument assets 2 - 2 -
Fair ValueThefairvaluesofforwardforeignexchangecontractshavebeendeterminedusingadiscountedcashflowsvaluationtechnique
basedonquotedmarketprices.Theinputsintothevaluationmodelarefromindependentlysourcesmarketparameterssuchas
currencyrates.Mostmarketparametersareimpliedfrominstrumentprices.
ThenotionalprincipalamountofoutstandingforwardforeignexchangecontractsinNZDwas$168,394(2013–$0).Theforeign
currencyprincipalamountwasUSD$130,000.
Note 12: Intercompany Balances
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
UniversityofWaikatoFoundationTrust - - (50) (7)
UniversityofWaikatoAlumniAssociation - - - (5)
StudentCampusBuildingFundTrust - - (1,559) (1,341)
LCoNewZealandLimited - - (110) (110)
iEngagEdLimited - - 99 (25)
WaikatoLinkLimited - - 8,516 8,516
UniversityofWaikatoResearchTrust - - (13,511) (14,230)
Total Intercompany Balances - - (6,615) (7,202)
Notes to the Financial Statements for the year ended 31 December 2014
101Annual Report 2014
Note 13: Other Financial Assets
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
OTHER FINANCIAL ASSETS – CURRENT $000 $000 $000 $000
TermDepositswithmaturitiesof4-12months 23,213 14,357 22,014 14,000
EndowmentPortfolio(CIP) 2,129 1,760 - -
Total Other Financial Assets 25,342 16,117 22,014 14,000
INVESTMENT INCOME
Interest 1,931 1,667 1,775 1,549
Dividends 91 3 32 142
Gains/(Losses)onEquityInvestments 92 (16) - -
Total Investment Income 2,114 1,654 1,807 1,690
TheweightedaverageeffectiveinterestratesontermdepositsaredisclosedinNote24:FinancialInstruments.Termdepositsare
valuedatamortisedcostusingtheeffectiveinterestmethod.
TheendowmentportfolioismanagedbyCraigsInvestmentPartners(CIP),equitiesandfixedinterestinvestmentswithinthe
portfolioarevaluedusingquotedmarketprice,thebalanceoftheportfolioisvaluedatamortisedcostusingtheeffectiveinterest
method.Seenote24.
Therewasnoimpairmentprovisionforinvestments.
TheintercompanybalancesareacumulativerecordofthetransactionsbetweentheUniversityanditssubsidiaries.
Allintercompanycurrentaccountsareclassifiedascurrent.TheUniversityofWaikatoResearchTrustloanhasbeenreclassified
fromnon-currenttocurrentinthe2014accountsasitisdeemedappropriateinlinewiththenatureofthearrangementsofthe
Trust.ThisreclassificationissupportedbyadvicereceivedfromPwC,CharteredAccountants.
Intercompanybalancesareunsecured,non-interestbearing,andarerepayableondemand.Thefairvalueoftheondemand
accountscannotbelessthantheamountrepayableondemand.Therefore,thecarryingvalueoftheaccountsondemandreflects
theirfairvalue.
Asat31December2014theUniversityhadadvancedtoWaikatoLinkLtdatotalof$8,516,215bywayofshareholderloan.Theloan
isinterestfreeandrepayableondemand.TheUniversityhasundertakennottodemandrepaymentuntilWaikatoLinkhassufficient
freecashavailabletomakerepayments.
Notes to the Financial Statements for the year ended 31 December 2014
102 The University of Waikato
Note 14: Inventories
Note 15: Investments
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
HeldforSale 257 293 257 293
HeldforDistribution/Use 757 777 757 777
1,014 1,070 1,014 1,070
Noinventoriesarepledgedassecurityforliabilitiesorsubjecttoretentionoftitleclauses(2013–$nil).
$1kofstockheldforsalewaswrittendownforobsolescencein2014(2013–$nil).
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
STRATEGIC INVESTMENTS $000 $000 $000 $000
NZSynchrotronGroupLimited 198 198 198 198
TitanoxDevelopmentLimited 205 205 - -
INVESTMENTS IN SUBSIDIARIES
WaikatoLinkLimited - - 2,000 2,000
403 403 2,198 2,198
Investmentsinunlistedentities,andsubsidiariesabovearecarriedatcostlessimpairmentaseitherthefairvalueofthe
investmentcannotbereliablydeterminedusingastandardisedvaluationtechniqueorduetocostnotbeingmaterially
differenttofairvalue.
Notes to the Financial Statements for the year ended 31 December 2014
103Annual Report 2014
Note 16: Intangible Assets
CONSOLIDATED UNIVERSITY
Software Purchased
Software Internally
Generated
Non Software Development
Costs
Consolidated Total
Software Purchased
Software Internally Generated
University Total
THIS YEAR $000 $000 $000 $000 $000 $000 $000
Opening Balance at 1 January 2014
Cost 19,181 925 11,858 31,964 19,166 925 20,091
AccumulatedAmortisationandImpairment
(13,090) (846) (5,225) (19,161) (13,075) (846) (13,921)
Opening Carrying Amount
6,091 79 6,633 12,803 6,091 79 6,170
Year Ended 31 December 2014
Additions 904 - 464 1,368 904 - 904
Disposals - - (625) (625) - - -
AmortisationandImpairmentCharge
(1,344) (60) (671) (2,075) (1,344) (60) (1,404)
Closing Carrying Amount
5,651 19 5,801 11,471 5,651 19 5,670
Closing Balance at 31 December 2014
Cost 20,085 925 11,697 32,707 20,070 925 20,995
AccumulatedAmortisationandImpairment
(14,434) (906) (5,896) (21,236) (14,419) (906) (15,325)
Closing Carrying Amount
5,651 19 5,801 11,471 5,651 19 5,670
LAST YEAR $000 $000 $000 $000 $000 $000 $000
Opening Balance at 1 January 2013
Cost 17,614 925 11,537 30,076 17,599 925 18,524
AccumulatedAmortisationandImpairment
(12,110) (770) (4,913) (17,793) (12,095) (770) (12,865)
Opening Carrying Amount
5,504 155 6,624 12,283 5,504 155 5,659
Notes to the Financial Statements for the year ended 31 December 2014
104 The University of Waikato
Note 16: Intangible Assets continued
CONSOLIDATED UNIVERSITY
Software Purchased
Software Internally
Generated
Non Software Development
Costs
Consolidated Total
Software Purchased
Software Internally Generated
University Total
LAST YEAR $000 $000 $000 $000 $000 $000 $000
Year Ended 31 December 2013
Additions 1,567 - 321 1,888 1,567 - 1,567
Disposals - - - - - - -
AmortisationandImpairmentCharge
(980) (76) (312) (1,368) (980) (76) (1,056)
Closing Carrying Amount
6,091 79 6,633 12,803 6,091 79 6,170
Closing Balance at 31 December 2013
Cost 19,181 925 11,858 31,964 19,166 925 20,091
AccumulatedAmortisationandImpairment
(13,090) (846) (5,225) (19,161) (13,075) (846) (13,921)
Closing Carrying Amount
6,091 79 6,633 12,803 6,091 79 6,170
Non Software Development CostsCostincurredondevelopmentofprojects(relatingtothedesignandtestingofneworimprovedproducts)arerecognised
asassetswhenthefollowingcriteriahavebeenfulfilled:
» Itistechnicallyfeasibletocompletetheintangibleassetanduseorsellit;
» Managementintendstocompletetheintangibleassetanduseorsellit;
» Thereisanabilitytouseorselltheintangibleasset;
» Itcanbedemonstratedhowtheintangibleassetwillgenerateprobablefutureeconomicbenefit;
» Adequatetechnical,financialandotherresourcestocompletethedevelopmentandtouseorselltheintangibleassetareavailable;and
» Theexpenditureattributabletotheintangibleassetduringitsdevelopmentcanbereliablymeasured.
Theamountofintangibleassetsthatareworkinprogressfornonsoftwaredevelopmentis$2,924,000(2013–$2,574,000)
Theamountofintangibleassetsthatareworkinprogressforsoftwarepurchasedis$1,597,000(2013–$1,381,000)
TherearenorestrictionsoverthetitleoftheUniversity’sintangibleassets,norareanyintangibleassetspledgedassecurityforliabilities.
Notes to the Financial Statements for the year ended 31 December 2014
105Annual Report 2014
Note 17: Property, Plant and Equipment for University and Consolidated
CONSOLIDATED
THIS YEAR
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Land 1,765 - 1,765 - - - - 185 1,950 - 1,950
InfrastructuralAssets
26,000 (1,427) 24,573 1,587 - - (753) (1,155) 24,252 - 24,252
Buildings 290,147 (18,607) 271,540 6,004 - - (9,830) 21,842 289,556 - 289,556
LeaseholdBuildingImprovements
1,704 (1,158) 546 17 - - (66) - 1,721 (1,224) 497
LibraryCollection 67,054 (38,714) 28,340 3,512 - - (2,641) - 70,565 (41,354) 29,211
PlantandEquipment 45,827 (31,850) 13,977 3,429 (1,366) - (2,378) - 46,695 (33,033) 13,662
ComputerEquipment 30,131 (23,071) 7,060 2,711 (779) - (2,488) - 31,287 (24,783) 6,504
ArtCollection 643 - 643 461 - - - - 1,104 - 1,104
MotorVehicles 4,437 (2,181) 2,256 1,142 (852) - (497) - 4,125 (2,076) 2,049
WorkinProgress 5,180 - 5,180 6,217 - - - - 11,397 - 11,397
Total 472,888 (117,008) 355,880 25,080 (2,997) - (18,653) 20,872 482,652 (102,470) 380,182
Cos
t/V
alua
tion
1 Ja
n 14
Acc
umul
ated
Dep
reci
atio
n an
d Im
pair
men
t C
harg
es
1 Ja
n 14
Car
ryin
g A
mou
nt 1
Jan
14
Cur
rent
Yea
r A
ddit
ions
Cur
rent
Yea
r D
ispo
sals
Cur
rent
Yea
r Im
pair
men
t C
harg
es
Cur
rent
Yea
r D
epre
ciat
ion
Reva
luat
ion
Mov
emen
t
Cos
t/ R
eval
uati
on 3
1 D
ec 1
4
Acc
umul
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Dep
reci
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d Im
pair
men
t C
harg
es
31 D
ec 1
4
Car
ryin
g A
mou
nt 3
1 D
ec 1
4
Notes to the Financial Statements for the year ended 31 December 2014
106 The University of Waikato
Note 17: Property, Plant and Equipment for University and Consolidated continued
CONSOLIDATED
LAST YEAR
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Land 1,765 - 1,765 - - - - - 1,765 - 1,765
InfrastructuralAssets
24,736 (702) 24,034 1,264 - - (725) - 26,000 (1,427) 24,573
Buildings 269,985 (9,056) 260,929 20,162 - - (9,551) - 290,147 (18,607) 271,540
LeaseholdBuildingImprovements
2,592 (1,977) 615 926 (923) - (73) - 1,704 (1,158) 546
LibraryCollection 63,657 (36,164) 27,493 3,397 - - (2,550) - 67,054 (38,714) 28,340
PlantandEquipment 43,095 (29,335) 13,760 2,888 (127) - (2,543) - 45,827 (31,850) 13,977
ComputerEquipment 28,547 (21,525) 7,022 3,653 (1,038) - (2,577) - 30,131 (23,071) 7,060
ArtCollection 465 - 465 178 - - - - 643 - 643
MotorVehicles 4,188 (1,950) 2,238 930 (380) - (531) - 4,437 (2,181) 2,256
WorkinProgress 13,745 - 13,745 (8,565) - - - - 5,180 - 5,180
Total 452,775 (100,709) 352,066 24,833 (2,468) - (18,550) - 472,888 (117,008) 355,880
The$11,000(2013–$43,000)differencebetweentheProperty,PlantandEquipmentCarryingamount,representedintheBalance
SheetfortheUniversityascomparedtothevalueunderConsolidated,istheProperty,PlantandEquipmentheldbyTheUniversityof
WaikatoFoundationof$0(2013–$0)andWaikatoLinkLimitedof$11,000(2013–$43,000).
Land and Buildings Specialisedbuildings(egcampuses)arevaluedatfairvalueusingoptimiseddepreciatedreplacementcostbecausenoreliable
marketdataisavailableforbuildingsdesignedforeducationdeliverypurposes.
Depreciatedreplacementcostisdeterminedusinganumberofsignificantassumptions.Significantassumptionsinclude:
» Thereplacementassetisbasedonthereproductioncostofthespecificassetswithadjustmentswhereappropriateforobsolescenceduetoover-designorsurpluscapacity.
» ThereplacementcostsisderivedfromrecentconstructioncontractsofsimilarassetsandPropertyInstituteofNewZealandcostinformation.
» Theremainingusefullifeofassetsisestimated.
» Straight-linedepreciationhasbeenappliedindeterminingthedepreciatedreplacementcostvalueoftheasset.
Cos
t/V
alua
tion
1 Ja
n 13
Acc
umul
ated
Dep
reci
atio
n an
d Im
pair
men
t C
harg
es
1 Ja
n 13
Car
ryin
g A
mou
nt 1
Jan
13
Cur
rent
Yea
r A
ddit
ions
Cur
rent
Yea
r D
ispo
sals
Cur
rent
Yea
r Im
pair
men
t C
harg
es
Cur
rent
Yea
r D
epre
ciat
ion
Reva
luat
ion
Mov
emen
t
Cos
t/ R
eval
uati
on 3
1 D
ec 1
3
Acc
umul
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Dep
reci
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men
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harg
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31 D
ec 1
3
Car
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mou
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1 D
ec 1
3
Notes to the Financial Statements for the year ended 31 December 2014
107Annual Report 2014
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
ResearchIncome 6,787 5,766 6,787 5,766
Commercial 497 443 490 424
TuitionFees 23,183 20,499 23,183 20,499
Total Income in Advance 30,467 26,708 30,460 26,689
Includedintuitionfeesis$10.8M(2013–$11.4M)of2015feeswhichhavebeeninvoicedbutarenotdueforpaymentuntil2015.
Alsorefernote10.
Note 18: Income in Advance
Non-specialisedbuildingandlandarevaluedatfairvalueusingmarket-basedevidence.Marketrentsandcapitalisationrateswere
appliedtoreflectmarketvalue.
LandandBuildingswererevaluedasat31December2014byDarrochValuationsLimited(RegisteredValuers),onafairvalue
basis.ThetotalfairvalueofLandandBuildingsvaluedbyDarrochValuationsLtdat31December2014was$291,506,471.
InaccordancewiththelandleaseagreementwithTainuiGroupHoldingsLimitedtheUniversityisabletosubletupto25%ofthe
grossfloorareaofthebuildings.
InfrastructureInfrastructureassetssuchasroads,carparks,footpaths,undergroundutilites(egwatersupplyandseweragesystems),andsite
drainagehavebeenindependentlyvaluedatOptimiseddepreciatedreplacementcost.Thevaluationshavebeenperformedin
accordancewiththeNewZealandValuationandDepreciationGuidelinesissuedbytheNAMSGroup.Thesignificantassumptions
appliedindeterminingthedepreciatedreplacementcostofinfrastructureassetsaresimilartothosedescribedabovefor
specialisedbuildings.
InfrastructuralAssetswererevaluedasat31December2014byOpusInternationalConsultantsLimitedonafairvaluebasis.
ThetotalfairvalueofinfrastructurevaluedbyOpusat31December2014was$24,252,000.
ThenetcarryingamountofProperty,Plantandequipmentheldunderfinanceleasesis$1,762,251(2013–$1,813,238).
Restrictions on titleUndertheEducationAct1989,theUniversityandgroupisrequiredtoobtaintheconsentfromtheMinistryofEducationto
disposeorsellofpropertywherethevalueofthepropertyexceedsanamount.
Notes to the Financial Statements for the year ended 31 December 2014
108 The University of Waikato
Note 20: Borrowings
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
OpeningBalance 1,329 1,333 1,329 1,333
LessBorrowingsRepaid (3) (4) (3) (4)
Closing Balance 1,326 1,329 1,326 1,329
CurrentPortion–FinanceLease 4 3 4 3
NonCurrentPortion–FinanceLease 1,322 1,326 1,322 1,326
1,326 1,329 1,326 1,329
TheFinanceleasewasfairvaluedatinceptionusingadiscountrateof12.07%.
Note 19: Trade and Other Payables
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
TradePayables 5,582 5,021 7,696 6,588
PayablestoRelatedParties(seenote25) 1,734 1,669 50 334
GSTPayable 3,909 3,923 3,499 3,806
Accruals 3,847 6,903 3,315 6,371
Trade and Other Payables 15,072 17,516 14,560 17,099
Tradepayablesandotherpayablesarenon-interestbearingandarenormallysettledon30-dayterms,thereforethecarryingvalueof
tradepayablesandotherpayablesapproximatestheirfairvalue.
Notes to the Financial Statements for the year ended 31 December 2014
109Annual Report 2014
Finance lease(a) Leasing arrangements
TheFinanceleaserelatestoUniversitybuildingswhichbecomethepropertyoftheUniversityattheconclusionofthelease
termin2046.
(b) Finance lease liabilities
Minimum Future Lease Payments
Present Value of Minimum Future Lease Payments
CONSOLIDATED UNIVERSITY CONSOLIDATED UNIVERSITY
This Year
Last Year
This Year
Last Year
This Year
Last Year
This Year
Last Year
$000 $000 $000 $000 $000 $000 $000 $000
Nolaterthan1year 164 164 164 164 154 154 154 154
Between1and5years 655 655 655 655 459 459 459 459
Laterthan5years 4,370 4,534 4,370 4,534 713 716 713 716
MinimumLeasePayments 5,189 5,353 5,189 5,353 1,326 1,329 1,326 1,329
Lessfuturefinancecharges (3,863) (4,024) (3,863) (4,024) - - - -
Present value of minimum lease payments
1,326 1,329 1,326 1,329 1,326 1,329 1,326 1,329
Notes to the Financial Statements for the year ended 31 December 2014
110 The University of Waikato
Note 21: Reconciliation of the Net Surplus/(Deficit) to the Net Cash Flows from Operating Activities
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
NetSurplus/(Deficit) 11,587 9,694 9,188 9,350
Add/(Less) Non Cash Items:
DepreciationandAmortisation 20,727 20,193 20,045 19,610
Increase/(Decrease)inTermPortionofEmployeeEntitlements
708 (356) 708 (356)
LossonDisposalofPPE 62 19 62 -
IntercompanyAccounts - - (584) 115
NonCashAdvancefromAssociates (300) - - -
MovementinDeferredIncome 12 - - -
IssueofEmployeeShareOptions (2) 44 - -
InterestAccrued (23) - - -
Associates (91) (147) - -
Other (159) 3 - -
20,934 19,756 20,231 19,369
Add/(Less) Movements in Other Working Capital Items:
(Increase)/DecreaseinTradeandOtherReceivables 3,648 (3,900) 3,813 (3,640)
Increase/(Decrease)inTradeandOtherPayables (2,455) (1,109) (2,539) (897)
(Increase)/DecreaseinInventories 56 (50) 57 (50)
Increase/(Decrease)inIncomeinAdvance 3,771 (615) 3,771 (563)
Increase/(Decrease)inEmployeeEntitlements 659 (74) 746 (92)
(Increase)/DecreaseinPrepayments 940 247 940 247
6,619 (5,501) 6,788 (4,995)
Notes to the Financial Statements for the year ended 31 December 2014
111Annual Report 2014
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
Add/(Less) Items Classified as Investing and Financing Activities:
LongTermInvestment 474 - - -
CapitalGainonSaleofInvestment (186) - - -
EquityDistributionfromSubsidiary - 248 - -
AssociateLossesRecognised 147 41 - -
WaikatoLinkEquityAdjustment - (80) - -
CashDividendfromSubsidiary - - (32) (142)
435 209 (32) (142)
Net Cash Flow from Operating Activities 39,575 24,158 36,175 23,582
Note 22: Key Mananagement Personnel Compensation
ThecompensationofthemembersofCouncil,andemployeesreportingdirectlytotheVice-Chancellor,beingthekeymanagement
personneloftheentity,issetoutbelow:
UNIVERSITY
This Year Last Year
$ $
Short-TermEmployeeBenefits 4,217,502 3,741,659
CouncillorRemuneration 78,892 71,950
Post-EmploymentBenefits 153,684 157,287
TerminationPayments - -
Total 4,450,078 3,970,896
Notes to the Financial Statements for the year ended 31 December 2014
112 The University of Waikato
Note 23: Leases
Operating Leases as Leasee(a) Leasing Arrangements
FINAL EXPIRY 2014 ACTUAL COMMENTARY
PROPERTY LEASES $000
Waikato-TainuiCampusLand Inperpetuity 1,462 Subjecttoleasecondition
TaurangaCampus 2015to2025 596 8SeparateLeases
RuakuraSatelliteCampus 2015to2029 212 2SeparateLeases
OtherHamiltonLeases 2015to2034 302 5Leases
Other 2015to2022 127 6Leases
EQUIPMENT LEASES 2015to2017 1,099 3Leases
Total 3,799
TheUniversityleasesthelandfortheHamiltoncampusfromTainuiGroupHoldingsLimited.Theuseofthislandisrestricted
totertiaryeducation,researchoranyotheractivitypermittedbytherulesoftheRegionalandDistrictplansorbyaResource
Consent.TheUniversitymaysubletupto25%ofthelandforperiodsofnolongerthan10years.
TheUniversityhasenteredintoaMasterLeaseagreementwithaFinancierforthefinancingofindividualstudenttechnology
equipment.TheUniversityisindemnifiedagainstanydefaultpaymentsoranybreachofanycovenantbyastudenttorepair
ortoreturntheEquipmenttotheLessor.
TTheUniversityhasenteredintoaprepaidleaseagreement.Thefutureaggregateminimumleasepaymentsunderthenon-
cancellableoperatingleaseare$150,000notlongerthan1year,$262,500longerthan1yearandnotlongerthan5years,andnil
longerthan5years.TheseamountswillbeexpensedthroughtheStatementofComprehensiveIncomeintherelevantperiods.
Thefutureaggregateminimumleasepaymentspayableundernon-cancellableoperatingleaseareasfollows:
(b) Non-Cancellable Operating Lease Payments
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
Notlongerthan1year 3,245 2,805 3,245 2,805
Longerthan1yearandnotlongerthan5years 8,469 7,043 8,469 7,043
Longerthan5years 42,552 43,358 42,552 43,358
54,266 53,206 54,266 53,206
Notes to the Financial Statements for the year ended 31 December 2014
113Annual Report 2014
(c) Sub-leases
Thetotalminimumfuturereceiptsthattheuniversityexpectstoreceivefromitstenantsonleasedlandis$7.6M,(2013$7.9M).
Theminimumrenewalperiodsrangefrom1to32years.
Lessor Disclosures
Operating Leases as Lessor(a) Leasing Arrangements (Receivables)
Operatingleasesrelatetoshopsoncampus,campuslandandresidentialpremisesadjacenttotheUniversity.Leasetermsarefor
termsofbetween5monthsand49yearswithvariousoptionstorenew.Thelesseesdonothavetheoptiontopurchaseatthe
expiryoftheleaseperiod.
Thefutureaggregateminimumleasepaymentstobecollectedundernon-cancellableoperatingleasesareasfollows:
(b) Non-Cancellable Operating Lease Receivables
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
Notlongerthan1year 475 634 475 634
Longerthan1yearandnotlongerthan5years 1,533 1,513 1,533 1,513
Longerthanfiveyears 5,992 6,304 5,992 6,304
8,000 8,451 8,000 8,451
NocontingentrentshavebeenrecognisedintheStatementofComprehensiveIncome.
Notes to the Financial Statements for the year ended 31 December 2014
114 The University of Waikato
Note 24: Financial Instruments
24A: Financial Instrument CategoriesTheaccountingpoliciesforfinancialinstrumentshavebeenappliedtothelineitemsbelow:
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
FINANCIAL ASSETS $000 $000 $000 $000
Fair value through surplus or deficit
Held for trading
ForwardForeignExchangeContracts 2 - 2 -
NewZealandEquities 571 398 - -
AustralianEquities 424 228 - -
OtherOffshoreEquities 456 249 - -
FixedInterestInstruments 162 46 - -
Totalheldfortrading 1615 921 2 -
Loans and Receivables
CashandCashEquivalents 10,577 5,252 9,767 4,652
TradeandOtherReceivables 20,865 24,483 18,156 21,969
InterCompanyBalances - - 6,896 7,028
OtherFinancialAssets 23,729 16,025 22,014 14,000
InvestmentsinAssociatesandJointVentures 3,481 1,887 467 467
Investments 403 403 2,198 2,198
TotalLoansandReceivables 59,055 48,050 59,498 50,314
FINANCIAL LIABILITIES
Fair value through surplus or deficit
Financial Liabilities at Amortised Cost
TradeandOtherPayables 11,163 13,593 11,061 13,293
UniversityofWaikatoResearchTrustPayable - - 13,511 14,230
Total Financial Liabilities at Amortised Cost 11,163 13,593 24,572 27,523
Notes to the Financial Statements for the year ended 31 December 2014
115Annual Report 2014
24B: Fair Value Hierarchy DisclosuresForthoseinstrumentsrecognisedatfairvalueontheBalanceSheet,fairvaluesaredeterminedaccordingtothe
followinghierarchy:
» Quotedmarketprice–Financialinstrumentswithquotedpricesforidenticalinstrumentsinactivemarkets.
» Valuationtechniqueusingobservableinputs–Financialinstrumentswithquotedpricesforsimilarinstrumentsinactivemarketsorquotedpricesforidenticalorsimilarinstrumentsininactivemarketsandfinancialinstrumentsvaluedusingmodelswhereallsignificantinputsareobservable.
» Valuationtechniqueswithsignificantnon-observableinputs–Financialinstrumentsvaluedusingmodelswhereoneormoresignificantinputsarenotobservable.
TheUniversityandGroupcurrentlyhas$2K(2013–$0K)offorwardforeignexchangecontracts,$1,451K(2013–$875K)of
equitiesand$162K(2013–$46K)offixedinterestinstrumentsmeasuredatfairvalueontheBalanceSheet.(seenotes11and13).
24C: Financial Instrument RisksTheUniversity’sactivitiesexposeittoavarietyoffinancialinstrumentrisks,includingmarketrisk,creditriskandliquidityrisk.
TheUniversityhasaseriesofpoliciestomanagetherisksassociatedwithfinancialinstrumentsandseekstominimiseexposure
fromfinancialinstruments.Thesepoliciesdonotallowanytransactionsthatarespeculativeinnaturetobeenteredinto.
Market risk
Theeffectiveinterestratesoninvestmentsrangefrom3.53%to4.70%(2013–3.60%to4.30%).Therewasafinancelease
recognisedin2006withaneffectiveinterestrateof12.07%in2014.(2013–12.07%).Therewerenotermloansfor2014
(2013–none).
Fair Value Interest Rate Risk
TheestimatedfairvalueoftheUniversity’sfinancialinstrumentsareequivalenttotheircarryingamountsinthefinancial
statements.TheUniversity’sexposuretofairvalueinterestrateriskislimitedtoitsbankdepositswhichareheldatfixedrates
ofinterest,andafinancelease.
Cash Flow Interest Rate Risk
Cashflowinterestrateriskistheriskthatthecashflowsfromafinancialinstrumentwillfluctuatebecauseofchangesinmarket
interestrates.InvestmentsissuedatvariableinterestratesexposetheUniversitytocashflowinterestraterisk.
TheUniversityholdsamixtureoffixedrateandfloatingcallratedeposits.At31DecembertheUniversityhad$9.1M
(2013–$4.0M)investedinvariableratedepositsandthebalanceinfixedratedeposits.
Sensitivity analysis
Thetablesoppositeillustratethepotentialeffectonthesurplusordeficitandequity(excludinggeneralfunds)forreasonably
possiblemarketmovements,withallothervariablesheldconstant,basedonfinancialinstrumentexposuresatbalancedate.
Notes to the Financial Statements for the year ended 31 December 2014
116 The University of Waikato
Note 24: Financial Instruments continued
INTEREST RATE RISK
University This Year Last Year
Instrument +100bps -100bps +100bps -100bps
$000 $000 $000 $000
Variableratedeposits 91 (91) 40 (40)
Consolidated This Year Last Year
Instrument +100bps -100bps +100bps -100bps
$000 $000 $000 $000
Variableratedeposits 99 (99) 43 (43)
CURRENCY RISK
University This Year Last Year
InstrumentsheldinUSD +10% -10% +10% -10%
$000 $000 $000 $000
Creditors 93 (113) 3 (4)
Debtors - - (2) 2
USdollaraccount (59) 69 (29) 35
Consolidated This Year Last Year
InstrumentsheldinUSD +10% -10% +10% -10%
$000 $000 $000 $000
Creditors 95 (116) 4 (5)
Debtors (2) 3 (5) 6
USdollaraccount (59) 73 (29) 35
Equities (28) 35 (12) 14
Notes to the Financial Statements for the year ended 31 December 2014
117Annual Report 2014
CURRENCY RISK continued
University This Year Last Year
InstrumentsheldinAUD +10% -10% +10% -10%
$000 $000 $000 $000
Creditors 17 21 - -
Debtors - - - -
AUDdollaraccount (2) 2 (7) 8
Consolidated This Year Last Year
InstrumentsheldinAUD +10% -10% +10% -10%
$000 $000 $000 $000
Creditors 17 (21) - -
Debtors - - (1) 2
AUDdollaraccount (2) 2 (7) 8
Equities (39) 48 (21) 26
University and Consolidated This Year Last Year
InstrumentsheldinEUR +10% -10% +10% -10%
$000 $000 $000 $000
Creditors 1 (2) - -
Debtors - - - -
University and Consolidated This Year Last Year
InstrumentsheldinGBP +10% -10% +10% -10%
$000 $000 $000 $000
Creditors 6 (8) 2 (2)
GBPAccount (1) 2 (1) 2
Equities (32) 39 (19) 24
Explanation of interest rate risk sensitivity
Theinterestratesensitivityisbasedonareasonablepossiblemovementininterestrate,withallothervariablesheldconstant,measuredasabasispoints(BPS)movement.Forexampleadecreasein100bpsisequivalenttoadecreaseininterestratesof1%.
Explanation of currency risk sensitivityTheforeignexchangesensitivityisbasedonareasonablepossiblemovementinforeignexchangerates,withallothervariablesheldconstant,measuredasapercentagemovementintheforeignexchangerate.
Notes to the Financial Statements for the year ended 31 December 2014
118 The University of Waikato
Note 24: Financial Instruments continued
Credit RiskCreditriskistheriskthatathirdpartywilldefaultonitsobligationtotheUniversitycausingtheUniversitytoincuraloss.
FinancialinstrumentswhichpotentiallysubjecttheUniversitytocreditriskprincipallyconsistofbankbalances,intercompanybalancesandaccountsreceivable.CreditriskinrespectofbankandshorttermdepositsisreducedbyspreadingdepositsovermajorNewZealandregisteredtradingbankswithminimumS&PlongtermcreditratingofA+orminimumMoody’sInvestorslongterm
creditratingofA.Receivablesareunsecured,butaresubjecttocreditcontrol.Nocollateralisheld.
Credit quality of financial assets
ThecreditqualityoffinancialassetsthatareneitherpastduenorimpairedcanbeassessedbyreferencetoStandardandPoor’scredit
ratings(ifavailable)ortohistoricalinformationaboutcounterpartydefaultrates:
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
COUNTERPARTIES WITH CREDIT RATINGS $000 $000 $000 $000
Cash at Bank and Term Deposits
AA- 35,919 21,370 31,781 18,652
COUNTERPARTIES WITHOUT CREDIT RATINGS
Debtors and Other Receivables
Existingcounterpartywithnodefaultsinthepast 20,865 24,483 18,156 21,969
Existingcounterpartywithdefaultsinthepast - - - -
Total debtors and other receivables 20,865 24,483 18,156 21,969
LOANS TO RELATED PARTIES
Existingcounterpartywithnodefaultsinthepast - - 6,896 7,028
Existingcounterpartywithdefaultsinthepast - - - -
Total loans to related parties - - 6,896 7,028
Liquidity RiskLiquidityriskistheriskthattheUniversitywillencounterdifficultyraisingliquidfundstomeetcommitmentsastheyfalldue.Prudentliquidityriskmanagementimpliesmaintainingsufficientcash,theavailabilityoffundingthroughanadequateamountofcommittedcreditfacilities.
TheUniversityisexpectedtomaintaincombinedcashreservesandcommittedcreditlinesavailabletoaminimumof120%oftheforecastpeakfundingrequirementsatanyonepointoftimeinthefollowing12monthperiod.ThetablebelowanalysestheUniversity’sfinancialliabilitiesintorelevantmaturitygroupingsbasedontheremainingperiodattheBalanceSheetdatetothecontractualmaturitydate.Theamountsdisclosedarethecontractualundiscountedcashflows.
Notes to the Financial Statements for the year ended 31 December 2014
119Annual Report 2014
UNIVERSITY
Less than 6 months
Between 6 months
and 1 year
Between 1 and 5 years
ThisYear $000 $000 $000
Creditorsandotherpayables 11,061 - -
Borrowings 82 82 655
CurrentEmployeeEntitlements 2,649 1,314 -
LastYear $000 $000 $000
Creditorsandotherpayables 13,293 - -
Borrowings 82 82 655
CurrentEmployeeEntitlements 2,094 1,008 0
CONSOLIDATED
Less than 6 months
Between 6 months
and 1 year
Between 1 and 5 years
ThisYear $000 $000 $000
Creditorsandotherpayables 11,163 - -
Borrowings 82 82 655
CurrentEmployeeEntitlements 2,999 1,314 -
LastYear $000 $000 $000
Creditorsandotherpayables 13,593 - -
Borrowings 82 82 655
CurrentEmployeeEntitlements 2,441 1,008 -
Notes to the Financial Statements for the year ended 31 December 2014
120 The University of Waikato
Note 25: Related Party Transactions
ThefollowingrelatedpartytransactionsoccurredbetweentheUniversityandWaikatoLinkLimited,ULeisureLimited(ULL)andtheir
subsidiaryBoathouseEventsLimited(Boathouse),TheUniversityofWaikatoFoundation(Foundation),TheStudents’CampusBuilding
FundTrust(SCBFT),LCoNewZealandLimited(LCoNZ),TheUniversityofWaikatoAlumniAssociationIncorporated(Alumni)(No
relatedpartytransactionsfor2013or2014),UniversityofWaikatoResearchTrust(UoWRT)andiEngagEdLimited,duringtheyear:
WaikatoLink ULL Boathouse Foundation SCBFT LCoNZ UoW RT iEngagEd
$ $ $ $ $ $ $ $
Paymentsin2014to: 1,750,000 752,016 96,500 - 28,339 31,203 1,393,000 752,699
(2013) 2,245,368 713,466 75,000 - 1,844 419,727 1,349,000 105,870
Receiptsin2014from:
117,459 281,768 3,418 726,894 246,309 - 19,857 -
(2013) 280,220 268,117 798 783,775 237,328 433,031 83,452 -
AccountsReceivableat31December2014owingfrom:
8,587,825 31,010 - - - - - 98,645
(2013) 8,686,851 47,399 - - - 17,000 - -
AccountsPayableat31December2014owingto:
- - - 49,824 1,559,153 - 13,467,000 -
(2013) 63,405 - - 11,308 1,341,182 233,574 14,229,000 25,491
Significant Transactions with Government-related EntitiesThegovernmentinfluencestherolesoftheUniversityaswellasbeingamajorsourceofrevenue.TheUniversityhasreceivedfunding
andgrantsfromtheTertiaryEducationCommissiontotalling$87.082M(2013–$87,822M)toprovideeducationandresearchservices
fortheyearended31December2014.TheUniversityalsoreceivesresearchfundingfromtheMinistryofBusiness,Innovationand
Employmenttotalling$10.1M(2013–$11.18M).TheUniversityreceivedfundingfromtheMinistryofEducationtotalling$21.7M
(2013–$15.2M)toprovideschoolsupportservices.TheUniversitypurchaseddomesticandinternationaltravelfromAirNewZealand
totalling$1.68M(2013–$1.80M).TheUniversityreceivedincomefromWINTECtotalling$1.29M(2013–$1.16M)fortheprovisionof
teachingservices.TheUniversitymadepaymentstoBayofPlentyPolytechnic(BOPP)totalling$1.53M(2013–$1.61M)tofacilitate
UniversityteachingintheBayofPlenty.TheUniversityalsosuppliedservicestotalling$127K(2013–$149K)toBOPP.
Notes to the Financial Statements for the year ended 31 December 2014
121Annual Report 2014
Collectively, but not individually, significant transactions with Government-related Entities.Inconductingitsactivities,theUniversityisrequiredtopayvarioustaxesandlevies(suchasGST,PAYEandACClevies)tothe
CrownandentitiesrelatedtotheCrown.Thepaymentofthesetaxesandleviesisbasedonthestandardtermsandconditions
thatapplytoalltaxandlevypayers.TheUniversityisexemptfrompayingincometax.TheUniversitypurchasesgoodand
servicesfromentitiesrelatedtotheCrownanditalsoprovidesservicestoentitiesrelatedtotheCrown.Thepurchaseand
provisionofgoodsandservicestogovernmentrelatedentitesfortheyearended31December2014aresmallwhencomparedto
theUniversity’stotalexpenditureandrevenueandhaveallbeenconductedonanarms’lengthbasis.Thepurchaseofgoodsand
servicesincludedthepurchaseofelectricityfromMercuryEnergy,airtravelfromAirNewZealand,andpostalservicesfromNew
ZealandPost.Theprovisionofservicestogovernment-relatedentitiesmainlyrelatedtotheprovisionofeducationalcourses.
Key Management PersonnelTheUniversityhasdefinedkeymanagementpersonnelasalldirectreportstotheVice-Chancellor,andmembersofCouncil.
TherearesomeclosefamilymembersofkeymanagementpersonnelemployedbytheUniversityandsomeenrolledasstudents.
ThetermsandconditionsofthosearrangementsarenomorefavourablethantheUniversitywouldhaveadoptediftherewere
norelationshiptokeymanagementpersonnel.KeyManagementPersonnel,andtheirclosefamilymembers,havealsohadthe
followingspecifictransactionswiththeUniversity:
1. AmemberofCouncilisadirectorofAduroGPLtd.DuringtheyeartheUniversityprovidedservicestotalling$51,642(2013–$2,701)andthebalanceowingatyearendwas$5,195(2013–$0).
2. TheUniversityreceivesvariousdonations,researchrevenueandconsultancyfeesfromGallagherGroupLtdandGallagherCharitableTrust,inwhichamemberofCouncilisadirector.Thesetotalled$172,656(2013–$164,172).Thebalanceoutstandingatyearendwas$0(2013–$0).
3. AmemberofCouncilisadirectorofTheNewZealandInstituteforPlantandFoodResearchLtd.DuringtheyeartheUniversityprovidedservicestotalling$24,327(2013–$22,538)andthebalanceowingatyearendwas$1,840(2013–$0).
4. AmemberofCouncilisadirectorofNewZealandVeterinaryPathologyLtd.DuringtheyeartheUniversityreceivedservicestotalling$592(2013–$431)andthebalanceowingatyearendwas$0(2013–$0).
5. AmemberofCouncilisCEOofTainuiGroupHoldings.DuringtheyeartheUniversityleasedpropertyfromTainuiHoldingstotalling$1,452,459(2013–$1,565,401)andthebalanceowingatyearendwas$0(2013–$0).DuringtheyeartheUniversityalsoreceived$1,167,001(2013–$0)andthebalanceowingatyearendwas$0(2013–$0).
6. AmemberofCouncilisadirectorofTeRunanganuiONgatiPorou.DuringtheyeartheUniversityprovidedservicestotalling$0(2013–$2,430)andthebalanceowingatyearendwas$0(2013–$0).TheUniversityalsopurchasedservicesfromTeRunangauiONgatiPoroutotalling$1,822(2013–$1,122),thebalanceoutstandingatyearendwas$0(2013–$0).
7. AmemberofCouncilisadvisertotheCEOofTeWānangaoAotearoa.DuringtheyeartheUniversityprovidedservicestotalling$17,643(2013:$81,944)andthebalanceoutstandingatyearendwas$0.TheUniversityalsopurchasedservicestotalling$800(2013–$2,317),thebalanceoutstandingatyearendwas$0.
8. AdirectreportoftheVice-ChancellorisadirectorofCognitionEducationLtd.DuringtheyeartheUniversityprovidedservicestoCognitionfor$1,881,440(2013–$1,665,704)andthebalanceowingatyearendwas$200,888(2013–$0).TheUniversityalsopurchasedservicestotalling$1,478,986(2013–$332,613)fromCognitionEducationLtdandthebalanceowingatyearendwas$133,939(2013–$99,465).
9. AdirectreportoftheVice-ChancellorisadirectorofHamilton&WaikatoTourismLimited.TheUniversitypurchasedservicestotalling$600(2013–$690)duringtheyearfromHamilton&WaikatoTourismLimitedandsuppliedservicestotalling$1,511(2013–$200).Therewerenooutstandingbalancesatyearend.
Notes to the Financial Statements for the year ended 31 December 2014
122 The University of Waikato
10. AdirectreportoftheVice-ChancellorisadirectorofPriorityOne.DuringtheyeartheUniversityprovidedservicestoPriorityOnefor$5,200(2013–$10,331)andthebalanceowingatyearendwas$0(2013–$7,331).TheUniversityalsopurchasedservicestotalling$25,000(2013–$10,000)fromPriorityOneandthebalanceowingatyearendwas$0(2013–$0).
11. AdirectreportoftheVice-ChancellorhasaspousewhoisCEOofTeWhareWānangaOAwanuiarangi.DuringtheyeartheUniversityprovidedservicestoTeWhareWānangaOAwanuiarangifor$217(2013–$12,327)andthebalanceowingatyearendwas$0(2013–$0).TheUniversityalsopurchasedservicestotalling$1,139,410(2013–$421,517)fromTeWhareWānangaOAwanuiarangiandthebalanceowingatyearendwas$0(2013–$0).
12. AmemberofCouncilresignedasCFOofZespriInternationalLtdin2013.During2013theUniversityprovidedservicestotalling$9,450andthebalanceowingatyearendwas$0.
13. AdirectreportoftheVice-ChancellorrentedahousefromtheUniversityduring2013,totalreceived$9,147,amountoutstandingatyearendwas$0.
14. TheUniversityalsohaskeymanagementpersonnelservingontheboardofWaikatoLinkLimitedandULeisure.TheUniversity’sdealingswithWaikatoLinkLimitedandUleisureLtdaredisclosedabove.
Noprovisionshavebeenrequired,norexpenserecognisedforimpairmentofreceivablesforanyotherloansorotherreceivables
torelatedparties(2013–$946,246).
Note 25: Related Party Transactions continued
Notes to the Financial Statements for the year ended 31 December 2014
123Annual Report 2014
Note 26: Contingent Liabilities
University Contingent LiabilitiesAguaranteehasbeengiventotheBankofNewZealandforanoverdraftfacilityof$53,000.
(2013–$53,000)onacontinuingbasistotheCampusCrecheTrust.
TheUniversityroutinelymonitorsthefinancialperformanceofCampusCrecheTrust.
Thelikelihoodoftheguaranteebeingcalleduponisestimatedtobeverylow.
TheUniversityisawareofpotentialpaymentstotwostaffmembersofapproximately$30,000.
Therearenootherknowncontingentliabilities.
Share of Subsidiaries’, Associates’ and Joint Ventures Contingent LiabilitiesForthesubsidiariesandassociatesincludedintheconsolidatedfinancialstatementstherearenootherknowncontingentliabilities.
Note 27: Capital Management
TheUniversity’scapitalisitsequity,whichcomprisesretainedearningsandreserves.Equityisrepresentedbynetassets.
TheUniversityissubjecttothefinancialmanagementandaccountabilityprovisionsoftheEducationAct1989,whichincludes
restrictionsinrelationtodisposingofassetsandinterestsinassets,abilitytomortgageorotherwisechargeassetsorinterests
inassets,grantingleasesoflandorbuildingsorpartsofbuildings,andborrowings.
TheUniversitymanagesitsrevenues,expenses,assets,liabilities,investmentsandgeneralfinancialtransactionsprudentlyto
ensuretheresponsibleuseof,andaccountabilityforpublicresources.
TheUniversity’splanningprocessincludesthedevelopmentoftheUniversityStrategy,AcademicPlan,InvestmentPlanand
budgets.TheseplanssetouttheUniversity’sactivitiesforthenextonetothreeyears.TheUniversity’soperationalbudgetis
setannuallyandensuresthattheplannedactivitiesareappropriatelyfundedandthatexpenditurerequirementsoftheplanned
activitieshavebeenidentified.TheUniversity’sbudgetissetataleveltoensurethattheUniversity’soperatingactivitiesare
fundedfromoperatingcashflowsandalsothattheUniversity’soperatingactivitiesgeneratesufficientcashflowstofundthe
capitalexpenditurerequirementsoftheUniversity.
TheUniversityhasinplaceassetmanagementplansformajorclassesofassetsincludingmaintenanceandrenewalprogrammes.
AbudgetforcapitalexpenditureissetannuallyandisfundedfromcashgeneratedfromtheUniversity’soperatingactivities.
TheUniversityhascreatedareservewithinequity,forPrizes,scholarshipsandTrustFunds.Thisreserverepresentsfundsheldby
theUniversityonbehalfofothersandfundsprovidedtotheUniversitybyvariouspeopleandarerestrictedforspecificpurposes.
Notes to the Financial Statements for the year ended 31 December 2014
124 The University of Waikato
Note 28: Commitments
Capital CommitmentsTheUniversityhasthefollowingcapitalexpenditurecontracted:
CONSOLIDATED UNIVERSITY
This Year Last Year This Year Last Year
$000 $000 $000 $000
CapitalCommitments 19,882 2,552 19,882 2,552
Notes to the Financial Statements for the year ended 31 December 2014
125Annual Report 2014
Note 29: Explanations of Major Variances against Budget
Note 30: Events after Balance Sheet Date
Explanationsformajorvariationsagainstthebudgetinformationatthestartofthefinancialyearareasfollows:
Statement of Comprehensive IncomeGovernment Funding and Grants
GovernmentfundingandgrantsreceivedbytheUniversitywere$3.6millionmorethanbudget.Thisfavourablevariancewaslargely
duetotheInstituteofProfessionalLearningandDevelopment(IPLD)receiving$3millionmorethanexpectedincontracts.The
UniversitywasalsograntedadditionalStudentAchievementFunding(SAC)afterthe2014budgetwasset.
Tuition Fees
Tuitionfeeswere$1.8millionlessthanbudgetduetodisappointinginternationalenrolmentsin2014.TheUniversityenrolled104
lessequivalentfull-timeinternationalstudentsthanwashoped.
Research Revenue
OnceagaintheUniversityreceivedmoreresearchrevenuethanbudget.Theadditional$2.1millionreceivedwaspredominantlyin
theareasofEducationandScience.
Investment income
DuetotheslowerthanexpectedstarttoconstructionoftheLaw/ManagementbuildingtheUniversityheldhigherbankdepositsthan
expected,thisresultedin$0.5millionmoreinterestthanbudgeted.
Other Income
Manyareasfellshortoftheirotherincomebudgetin2014,someexampleswerePathwayscollege,studentaccommodationand
carbondatinganalysis.Forabreakdownofthesignificantitemscomprisingotherincomeseenote4.
Personnel Costs
Universitypersonnelcostswere$1.7millionmorethanbudget,$0.9millionofthiswastheactuarialvaluation(seenote5)being
higherthanexpected,and$0.8millionbeingretirementcosts,duetotheunpredictablenatureofthesecoststheUniversitydoesn’t
budgetforthem.
Other Costs
TheUniversityspent$3.6millionmorethanbudgetedinothercosts,theadditionalincomebroughtinbyIPLD,FacultyofEducation
andFacultyofScience&Engineeringresultedinanincreaseinthecostsintheseareas.TheUniversityalsospent$1.2millionmore
thanbudgetonadvertisingaspartofanongoingcampaigntoattractnewstudentstotheUniversityofWaikato.Forabreakdownof
thesignificantitemscomprisingothercostsseenote6.
11AntsAnalyticsLimited,asubsidiaryofWaikatoLinkLimited,hasexecutedasaleandpurchaseagreementforthesaleofits
physicalandintangibleassets.
Notes to the Financial Statements for the year ended 31 December 2014