Comcare - Australian Government
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Note 15: Financial Instruments

  2011
$’000
2010
$’000
 

15A Categories of financial instruments

Financial assets
Loans and receivables:

Cash and cash equivalents

211,003 199,122

Receivables for goods and services

1,129 4,681

Other receivables and claim recoveries

4,732 3,537
Total 216,864 207,340

Financial liabilities
At amortised cost:

Trade creditors

3,456 2,520

Workers’ compensation payables

3,474 3,975
Total 6,930 6,495
 
 

15B Net Income and Expense from Financial Assets

Loans and receivables
Interest revenue 19,553 15,569
Net gain from loans and receivables 19,553 15,569
Net gain from financial assets 19,553 15,569

15C Net Income and Expense from Financial Liabilities

There were no income or expense from financial liabilities during the year (2010: nil).

15D Fair value of financial instruments

The fair value of each class of Comcare’s financial assets and financial liabilities equal their carrying amounts in both the current and immediately preceding reporting periods and none of these financial assets or liabilities are readily traded on organised markets in a standardised form.

  Carrying amount 2011
$’000
Fair value 2011  
$’000
Carrying amount 2010
$’000
Fair value 2010  
$’000
Financial Assets 216,864 216,864 207,340 207,340
Total 216,864 216,864 207,340 207,340
Financial Liabilities 6,930 6,930 6,495 6,495
Total 6,930 6,930 6,495 6,495

15E Credit risk

Comcare is exposed to minimal credit risk as the majority of loans and receivables are cash on deposit with banks. The maximum exposure to credit risk is the risk that arises from the potential default by a bank(s) on these deposits. This amount is equal to the total amount of cash at bank (2011: $211.0m and 2010: $199.1m). Comcare’s Investment Policy states that an investment made for greater than 12 months must have a minimum credit rating of BBB+. Any investments made for less than 12 months requires a minimum credit rating of A-2.  All credit ratings are as published by Standard and Poors. 

As at 30 June 2011

CREDIT RATING
  AAA
$’000
AA
$’000
A
$’000
BB/BBB
$’000
Speculative grade
$’000
Not rated
$’000
Total
$’000
Cash and cash equivalents - 14,003 120,000 77,000 - - 211,003
Receivables - - - - - 1,129 1,129
Other receivables - - - - - 4,732 4,732

As at 30 June 2010

CREDIT RATING
  AAA
$’000
AA
$’000
A
$’000
BB/BBB
$’000
Speculative grade
$’000
Not rated
$’000
Total
$’000
Cash and cash equivalents - 39,122 90,000 70,000 - - 199,122
Receivables - - - - - 4,681 4,681
Other receivables - - - - - 3,537 3,537

Comcare holds no collateral to mitigate against credit risk.

Credit quality of financial instruments not past due or individually determined as impaired:

  Not past due nor impaired
2010/11
$’000
Not past due nor impaired
2009/10
$’000
Past due or impaired 2010/11
$’000
Past due or impaired 2009/10
$’000
Cash and cash equivalents 14,003 39,122 - -
Term deposits 197,000 160,000 - -
Receivables for goods and services 847 4,566 282 115
Other receivables 201 295 4,531 3,242
Total 212,051 203,983 4,813 3,357

Ageing of financial assets that are past due but not impaired for 2011:

  0 to 30 days
$’000
31 to 60 days
$’000
61 to 90 days
$’000
90+ days
$’000
Total
$’000
Receivables for goods and services 63 133 52 34 282
Other receivables 374 - 148 4,009 4,531
Total 437 133 200 4,043 4,813

Ageing of financial assets that are past due but not impaired for 2010:

  0 to 30 days
$’000
31 to 60 days
$’000
61 to 90 days
$’000
90+ days
$’000
Total
$’000
Receivables for goods and services 25 64 - 26 115
Other receivables 280 151 77 3,029 3,537
Total 305 215 77 3,472 4,069

15F Liquidity risk

Comcare’s financial liabilities were trade creditors, workers’ compensation payables and other payables. The exposure to liquidity risk is based on the notion that Comcare will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to its high levels of cash at bank, sources of appropriation funding and other mechanisms available to it. There are also internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations. These include the Comcare Investment Policy that states “1.4 Comcare will invest funds so as to maximise returns within appropriate risk and liquidity constraints, so that Comcare can meet its funding and cash flow requirements.”

The following table illustrates the maturities for financial liabilities 2011:

  On demand
$’000
Within 1 year
$’000
1 to 2
years
$’000
2 to 5
years
$’000
> 5
Years
$’000
 

Total
$’000

Trade creditors - 3,456 - - - 3,456
Workers’ compensation claims payable - 3,474 - - - 3,474
Total - 6,930 - - - 6,930

The following table illustrates the maturities for financial liabilities 2010:

  On demand
$’000
Within 1 year
$’000
1 to 2
years
$’000
2 to 5
years
$’000
> 5
Years
$’000
 Total
$’000
Trade creditors - 2,520 - - - 2,520
Workers’ compensation claims payable - 3,975 - - - 3,975
Total - 6,495 - - - 6,495

Comcare has no derivative financial liabilities in either the current or prior years

15G Market risk

Comcare holds basic financial instruments that do not expose it to certain market risks. Comcare is not exposed to 'currency risk' or 'other price risk'.

Interest rate risk

The only interest bearing item on the balance sheet is 'cash and cash equivalents'. 'Cash and cash equivalents' comprises investments in both term deposit accounts and standard banking transaction accounts. Those investments held in term deposit accounts bear interest at a fixed rate and will not fluctuate with changes in market interest rates. Cash balance in standard banking transaction account is stated at nominal amount and is not subject to interest rate risk.