Department of Foreign Affairs and Trade
Notes to and Forming Part of the Financial Statements

Note 26: Administered – Financial Instruments

2015 2014
$’000 $’000
Note 26A: Categories of Financial Instruments
Financial Assets
    Cash and cash equivalents 1,832 16,414
Loans and receivables
    Goods and services receivables 11,223 1,801
    Concessional loan receivable 141,221 120,394
    Net position of Efic – National Interest Account (NIA) 8,291 485
    Traveller Emergency Loans 1,023 912
    Passport fee, Passport Act fines and consular fees 1,507 1,406
Total loans and receivables 163,265 124,998
Available-for-sale financial assets
    Non-monetary available for sale debt instrument – fair value 1,936,071 1,544,835
    Efic – Commercial Account 436,800 225,926
    Tourism Australia 19,502 16,323
Total available for sale 2,392,373 1,787,084
Total financial assets 2,557,470 1,928,496
Financial Liabilities  
Financial liabilities measured at amortised cost  
    Trade creditors and accruals 156,851 134,940
    Other suppliers 2,169 165
Total financial liabilities measured at amortised cost 159,020 135,105
Financial liabilities at fair value through profit or loss
Multilateral grants payable  
    International Development Association 231,785 272,412
    Asian Development Fund 117,264 144,077
    Multilateral Fund for implementation of the Montreal Protocol 8,844 –
    The Global Environment Facility 117,452 53,240
    Heavily Indebted Poor Countries 25,001 36,580
    International Fund for Agricultural Development 804 918
    Multilateral Debt Relief Initiative 89,299 83,298
Total multilateral grants payable 590,449 590,525
Multilateral contributions payable
    International Development Association 562,044 630,225
    Asian Development Fund 330,316 438,628
Total multilateral contributions payable 892,360 1,068,853
Total financial liabilities at fair value through profit or loss 1,482,809 1,659,378
Total financial liabilities 1,641,829 1,794,483
   

 

 

 
2015 2014
$’000 $’000
Note 26B: Net Gains or Losses on Financial Assets
Loans and receivables
    Interest revenue 13,289 12,233
    Concessional costs for loans (17,740) (29,221)
    Impairment 19 (243)
    Write-off (159) –
Net loss on loans and receivables (4,591) (17,231)
Available-for-sale financial assets  
    Dividend revenue 18,153 11,250
    Gains recognised in profit or loss for reversal of impairment 391,236 42,541
    Revaluation gain recognised in equity 14,053 26,009
Net gain on available for sale financial assets 423,442 79,800
Net gain on financial assets 418,851 62,569

 

Note 26C: Net Gains or Losses on Financial Liabilities
Financial liabilities measured at amortised cost
Other revenue 30,686 25,986
Exchange gains/(loss) (11,022) 168
Interest expense (1,784) (1,972)
Administered costs (629) (1,566)
Net gain on financial liabilities measured at amortised cost 17,251 22,616
Financial liabilities at fair value through profit or loss (held for trading)  
Unwinding of discount (59,165) (50,630)
Loss on remeasuring at fair value through profit or loss (49,645) (314,652)
Net loss on financial liabilities at fair value through profit or loss (held for trading) (108,810) (365,282)
Net loss on financial liabilities (91,559) (342,666)

 

 

 
Note 26D: Fair Value of Financial Instruments
 
Carrying amount Fair value Carrying amount Fair value
2015 2015 2014 2014
$’000 $’000 $’000 $’000
Financial Assets
Cash and cash equivalents 1,832 1,832 16,414 16,414
Receivables for goods and services 11,223 11,223 1,801 1,801
Concessional loans receivable 141,221 141,221 120,394 120,394
Net position of Efic – NIA 8,291 8,291 485 485
Traveller emergency loans 1,023 1,023 912 912
Accrued Revenue – Passport fees, Passport Act fines and consular fees 1,507 1,507 1,406 1,406
Investments – available for sale 1,936,071 1,936,071 1,544,835 1,544,835
Investments – Efic 436,800 436,800 225,926 225,926
Investments – Tourism Australia 19,502 19,502 16,323 16,323
Total financial assets 2,557,470 2,557,470 1,928,496 1,928,496
Financial liabilities
Trade creditors 159,020 159,020 156,851 156,851
Grants payable – at fair value through profit or loss 590,449 590,449 590,525 590,525
Multilateral contributions payable IDA/ADF at fair value through profit or loss 892,360 892,360 1,068,853 1,068,853
Total financial liabilities 1,641,829 1,641,829 1,816,229 1,816,229
         
Fair value measurements categorised by fair value hierarchy
The table at Note 19A provides an analysis of financial instruments that are measured at fair value, by valuation method.
The different levels are defined below:
    Level 1: Fair value obtained from unadjusted quoted prices in active markets for identical instruments.
    Level 2: Fair value derived from inputs other than quoted prices included within Level 1 that are observable for the instrument, either directly or indirectly.
    Level 3: Fair value derived from inputs that are not based on observable market data.

 

 

 

Note 26E: Credit Risk
           
Recognised in the DFAT Administered Accounts
The department’s senior executive has endorsed policies and procedures for debt management (including the provision of credit terms) to reduce the incidence of credit risk. Collateral is not required on any loan.
Credit risk is the possibility that a debtor will not repay all or a portion of a loan or will not repay in a timely manner and will therefore cause a loss to the department. The department has exposure to concentrations of credit risk with regard to the ‘loan receivable’ and the ‘non-monetary available for sale debt instrument at fair value’. The maximum exposure the department has to credit risk at reporting date in relation to each class of recognised financial assets is presented in the following table excluding any collateral or credit enhancements.
   
Maximum exposure to credit risk (excluding any collateral or credit enhancements)  
  2015 2014
        $’000 $’000
Financial assets carried at amount not best representing maximum exposure to credit risk
    Loans and receivables 163,265 124,998
    Available for sale 2,392,373 1,787,084
Total financial assets carried at amount not best representing maximum exposure to credit risk 2,555,638 1,912,082
Financial liabilities carried at amount not best representing maximum exposure to credit risk
    At amortised cost 159,020 135,105
    Through profit or loss 1,482,809 1,659,378
Total financial liabilities carried at amount not best representing maximum exposure to credit risk 1,641,829 1,794,483
   
Credit quality of financial assets not past due or individually determined as impaired
    Not past due Not past due Past due or Past due or
    or impaired or impaired impaired impaired
    2015 2014 2015 2014
    $’000 $’000 $’000 $’000
Loans and receivables 161,290 123,264 1,975 1,734
Available for sale 2,392,373 1,787,084 – –
Total     2,553,663 1,910,348 1,975 1,734
Ageing of financial assets that were past due but not impaired for 2015
  0 to 30 31 to 60 61 to 90 90 +  
  days days days days Total
  $’000 $’000 $’000 $’000 $’000
Not impaired          
    Loans and receivables   107 2 15 994 1,118
    Available for sale   – – – – –
Total   107 2 15 994 1,118
Ageing of financial assets that were past due but not impaired for 2014
0 to 30 31 to 60 61 to 90 90 +
days days days days Total
$’000 $’000 $’000 $’000 $’000
Not impaired          
    Loans and receivables 377 44 339 98 858
    Available for sale – – – – –
Total 377 44 339 98 858

 

 

 

Note 26F: Liquidity Risk
The continued existence of the department in its present form and with its present programs is dependent on government policy and on continuing appropriations by Parliament for the department’s administration and programs. The probability of the Government encountering difficulties meeting its administered financial obligations is less than remote.
Maturities for non-derivative financial liabilities 2015
On demand Within 1 year Between 1 to 2 years Between 2 to 5 years More than 5 years Total
$’000 $’000 $’000 $’000 $’000 $’000
    Financial liabilities measured at amortised cost – 159,020 – – – 159,020
    Financial liabilities at fair value through profit or loss – 278,043 335,667 594,594 274,505 1,482,809
Total – 437,063 335,667 594,594 274,505 1,641,829
Maturities for non-derivative financial liabilities 2014
On demand Within 1 year Between 1 to 2 years Between 2 to 5 years More than 5 years Total
$’000 $’000 $’000 $’000 $’000 $’000
    Financial liabilities measured at amortised cost – 135,105 – – – 135,105
    Financial liabilities at fair value through profit or loss – 283,320 285,117 696,719 394,222 1,659,378
Total – 418,425 285,117 696,719 394,222 1,794,483
The department had no derivative financial liabilities in both the current and prior financial year.

 

   
Note 26G: Market Risk  
   
Market risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises the following types of risk, either alone or in combination: interest rate risk, sovereign risk and liquidity risk (for the purposes of discounting the future value of the non-monetary ‘available for sale’ debt instrument); currency risk (for the purposes of converting to Australian dollars the discounted United States dollar value of the non-monetary ‘available for sale’ debt instrument); and the 10-year government bond rate for the purposes of discounting future liabilities relating to multilateral loan and grant commitments. The following sensitivity analysis discloses the effect that a reasonable possible change in each risk variable, either alone, or in total, would have on the department’s administered income and expenses.
The following table illustrates the effect on the department’s administered net income less expenses and equity as at 30 June 2015 from 10.9% (2014: 11.5%) increase or decrease against the AUD in the currencies in which the financial instruments were administered by the department with all other variables held constant.
Sensitivity analysis of the risk that the entity is exposed to for 2015
  Risk variable Change in risk variable Effect on
Profit and loss Equity
% $’000 $’000
Currency risk $/USD + 10.9% (191,076) (191,076)
Currency risk $/USD – 10.9% 237,827 237,827
Interest rate risk * + 0.4% (33,320) (33,320)
Interest rate risk * – 0.4% 40,033 40,033
Sensitivity analysis of the risk that the entity is exposed to for 2014
Risk variable Change in risk variable Effect on
Profit and loss Equity
% $’000 $’000
Currency risk $/USD + 11.5% (159,336) (159,336)
Currency risk $/USD – 11.5% 200,782 200,782
Interest rate risk * + 0.6% (58,433) (58,433)
Interest rate risk * – 0.6% 62,932 62,932
All other items are denominated in AUD and are not subject to market risk due to exchange fluctuations.