Financial Statements Year ended 31 March 2016

Transcription

1 (Registered under the Act, Chapter 323A) Financial Statements KPMG LLP (Registration No. T08LL1267L), an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A) and a member firm of the KPMG network of Independent member firms affiliated with KPMG International Cooperative ("KPMG International ), a Swiss entity.

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12 Notes to the financial statements These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Governors on 23 June Domicile and activities (the Polytechnic ) was established in 1990 under the Temasek Polytechnic Act (Chapter 323A). It is domiciled in the Republic of Singapore and its campus is situated at 21 Tampines Avenue 1, Singapore The principal activities of the Polytechnic are to provide instruction, training and research in technology, science, commerce, arts and other subjects of learning. 2 Basis of preparation 2.1 Statement of compliance The financial statements have been prepared in accordance with the applicable requirements of Act, Chapter 323A, the Singapore Charities Act, Chapter 37 (the Charities Act ) and Singapore Statutory Board Financial Reporting Standards ( SB-FRS ). SB-FRS includes Statutory Board Financial Reporting Standards, Interpretations of SB-FRS ( INT SB-FRS ) and SB-FRS Guidance Notes as promulgated by the Accountant-General. 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities which are stated at fair value. 2.3 Functional and presentation currency The financial statements are presented in Singapore dollars which is the Polytechnic s functional currency. All financial information is presented in Singapore dollars, unless otherwise stated. 2.4 Use of estimates and judgements The preparation of financial statements in conformity with SB-FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. FS7

13 Measurement of fair values A number of the Polytechnic s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Polytechnic uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 : inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement (with Level 3 being the lowest). 3 Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. 3.1 Investments in subsidiaries Subsidiaries Subsidiaries are entities controlled by the Polytechnic. The Polytechnic controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Investments in subsidiaries are stated in the Polytechnic s statement of financial position at cost less accumulated impairment loss. 3.2 Foreign currency transactions Transactions in foreign currencies are translated to the functional currency of the Polytechnic at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. FS8

14 Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss. 3.3 Financial instruments Non-derivative financial assets The Polytechnic initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Polytechnic becomes a party to the contractual provisions of the instrument. The Polytechnic derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Polytechnic is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Polytechnic has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Polytechnic classifies non-derivative financial assets into the following categories: loans and receivables and available-for-sale financial assets. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise cash and cash equivalents, and trade and other receivables. Cash and cash equivalents Cash and cash equivalents comprise cash balances, bank deposits and demand deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified in any of the above categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in accumulated surplus and reserve. When an investment is derecognised, the gain or loss accumulated in accumulated surplus and reserves is reclassified to profit or loss. FS9

15 3.4 Funds Available-for-sale financial assets comprise equity securities, debt securities and funds managed by fund managers. Non-derivative financial liabilities Financial liabilities (including financial liabilities designated at fair value through profit or loss) are recognised initially on trade date, which is the date that the Polytechnic becomes a party to the contractual provisions of the instrument. The Polytechnic derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Polytechnic has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Polytechnic classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise trade and other payables. General funds Income and expenditure relating to the main accounts of the Polytechnic are accounted for through the General Fund in the Statement of Comprehensive Income. Restricted funds Income and expenditure relating to funds set up for contributions received and expenditure incurred for specific purposes are accounted for through the Restricted Fund in the Statement of Comprehensive Income. The assets and liabilities of these funds are accounted for separately. However, for presentation purposes, they are pooled together with those of the General Fund. Other funds Funds are set up to account for contributions received from external sources for specific purposes. The assets and liabilities of funds Funds for student loans, Ministry of Education Opportunity Fund and Khoo Teck Puat International Opportunity Programme Fund held in trust for Ministry of Education and Campus Care Network Fund held in trust for the staff and students of the Polytechnic are presented as a line item under the capital and other funds section on the face of statement of financial position of the financial statements as prescribed by SB-FRS Guidance Note 1. Income and expenditure relating to these funds are accounted for directly in these funds. Details of income, expenditure, net assets relating to these funds are disclosed in Note 11 to the financial statements. FS10

16 3.5 Property, plant and equipment Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes: the cost of materials and direct labour; any other costs directly attributable to bringing the assets to a working condition for their intended use; when the Polytechnic has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Polytechnic and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Property, plant and equipment costing less than $2,000 are charged to statement of comprehensive income in the year of purchase. Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. Depreciation is recognised as an expense in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. FS11

17 Depreciation is recognised from the date that the property, plant and equipment are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use. The estimated useful lives for the current and comparative years are as follows: Leasehold land - Over lease term of 99 years Leasehold buildings - 30 to 50 years Building improvements - 5 years Furniture, fittings and equipment - 5 years Computer hardware and software - 3 to 5 years Workshop equipment and machinery - 5 to 10 years Vehicles - 5 years Plant and machinery - 10 years Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate. 3.6 Impairment Non-derivative financial assets A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Polytechnic on terms that the Polytechnic would not consider otherwise, indications that a debtor will enter bankruptcy, adverse changes in the payment status of borrowers and economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Polytechnic considers a decline of 20% to be significant and a period of 9 months to be prolonged. Loans and receivables The Polytechnic considers evidence of impairment for loans and receivables at a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant loans and receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics. In assessing collective impairment, the Polytechnic uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. FS12

18 An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When the Polytechnic considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit and loss. Available-for-sale financial assets Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in accumulated surplus and reserve to profit or loss. The cumulative loss that is reclassified from accumulated surplus and reserve to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed. The amount of the reversal is recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income. Non-financial assets The carrying amounts of the Polytechnic s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the losses have decreased or no longer exist. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. FS13

19 3.7 Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. 3.8 Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Polytechnic has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 3.9 Provisions 3.10 Revenue A provision is recognised if, as a result of a past event, the Polytechnic has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Student fees Tuition and other fees for an academic year are recognised over the period of service in a financial year. Income from courses/projects Revenue from courses/projects is recognised based on percentage of completion, determined on straight-line basis over the period of the courses/projects. Donations Donations are recognised upon receipt. Rental income Rental income is accounted for on a straight line basis over the lease terms. FS14

20 3.11 Finance income Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in profit or loss, using the effective interest method Government grants 3.13 Tax Government grants related to assets in which the Polytechnic has discretionary management power are taken directly to the Deferred Capital Grant account, or to the Statement of Comprehensive Income for assets which are expensed off in the year of purchase. Other government grants related to assets are initially taken to Government grant received in advance account and upon their utilisation for the purchase of assets, they are transferred to the Deferred Capital Grant account, or to the Statement of Comprehensive Income for assets which are written off in the year of purchase. The deferred capital grants are recognised in the Statement of Comprehensive Income over the periods necessary to match the depreciation and write off of the property, plant and equipment purchased with the related grants. Upon the disposal of the property, plant and equipment, the balance of the related deferred capital grants is recognised in the Statement of Comprehensive Income to reflect the net book value of the assets disposed. Government grants to meet the current year s operating expenses are taken to the Statement of Comprehensive Income for the year. Government grants are accounted for on an accrual basis. The Polytechnic is registered as a charitable institution with effect from the Year of Assessment 2008 or the financial year ended 31 March 2007, all registered charities will enjoy automatic income tax exemption without having the need to meet the 80% spending rule and there is no need to file income tax returns by virtue of Section 13(1)(zm) of the Income Tax Act, Chapter New standards and interpretations not adopted A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning on or after 1 April 2015, and have not been applied in preparing these financial statements. The Polytechnic is currently assessing the potential impact of adopting these new standards and interpretations, on the financial statements of the Polytechnic. These new standards include, among others, SB-FRS 115 Revenue from Contracts with Customers and SB-FRS 109 Financial Instruments which are mandatory for adoption by the Polytechnic on 1 January 2017 and 1 January 2018 respectively. FS15

21 SB-FRS 115 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It also introduces new cost guidance which requires certain costs of obtaining and fulfilling contracts to be recognised as separate assets when specified criteria are met. When effective, SB-FRS 115 replaces existing revenue recognition guidance, including SB-FRS 18 Revenue, SB-FRS 11 Construction Contracts, INT SB-FRS 113 Customer Loyalty Programmes, INT SB-FRS 115 Agreement Agreements for the Construction of Real Estate, INT SB-FRS 118 Transfers of Assets from Customers and INT SB-FRS 31 Revenue Barter Transactions Involving Advertising Services. SB-FRS 109 replaces most of the existing guidance in SB-FRS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. As SB-FRS 115 and SB-FRS 109, when effective, will change the existing accounting standards and guidance applied by the Polytechnic in accounting for revenue and financial instruments, these standards are expected to be relevant to the Polytechnic. The Polytechnic is currently assessing the potential impact on its financial statements and to implement the standards. The Polytechnic does not plan to adopt these standards early. FS16

22 4 Property, plant and equipment Workshop equipment and Leasehold land Leasehold Buildings Buildings improvements Furniture fittings and equipment Computer hardware machinery Vehicles Computer software Plant and machinery Capital work-inprogress Total $ 000 Cost At 1 April , ,905 27,207 77,677 71,450 47, , ,273 66,387 1,039,889 Additions 6,264 5,970 2,229 6,722 2,678 2, , ,626 Transfers 25, ,650 2, ,329 (46,258) Disposals (538) (2,036) (7,275) (4,236) (1,533) (1,032) (482) (17,132) At 31 March , ,716 31,953 79,281 76,484 49, , ,137 95,947 1,125,383 Additions 175 7,284 15,831 6,519 2,333 1,084 1,849 26,488 61,563 Transfers 51,595 14,643 3, ,294 (89,831) Disposals (1,667) (2,856) (5,939) (594) (4,677) (15,733) At 31 March , ,486 52,213 96,045 77,484 50, , ,280 32,604 1,171,213 Accumulated depreciation At 1 April , ,728 21,922 56,276 62,666 42, ,244 88, ,780 Depreciation ,379 2,202 7,475 6,735 2, ,967 5,448 40,523 Disposals (177) (2,037) (7,271) (4,215) (1,510) (1,000) (479) (16,689) At 31 March , ,930 22,087 56,480 65,186 43, ,211 93, ,614 Depreciation ,620 5,173 10,513 7,313 2, ,167 7,502 49,368 Disposals (1,667) (2,856) (5,939) (594) (4,677) (15,733) At 31 March , ,550 25,593 64,137 66,560 44, , , ,249 Carrying amounts At 1 April , ,177 5,285 21,401 8,784 5, ,939 33,202 66, ,109 At 31 March , ,786 9,866 22,801 11,298 6, ,429 38,097 95, ,769 At 31 March , ,936 26,620 31,908 10,924 6, ,436 51,738 32, ,964 During the year, the amount of property, plant and equipment acquired by the Polytechnic which remains unpaid as at year-end amounts to $6,352,000 (2015: $4,098,000) (Note 16). The cash outflow on acquisition of property, plant and equipment amounted to $55,211,000 (2015: $98,528,000). FS17

23 5 Investments in subsidiaries $ $ Unquoted equity shares, at cost 2 2 Details of subsidiaries are as follows: Name of subsidiary Held by the Polytechnic: Principal activities Country of registration and operation Equity interest held % % TP Innovation Holdings Pte Ltd Investment company to promote and commercialise Temasek Polytechnic s research and development results, technology, design or business innovations Singapore Held by the subsidiary: TP Education Services Pte Ltd Company dealing with matters relating to and connected to education, course know-how, training of personnel, on the job training and/or internship placements for students and granting licences and franchises Singapore At the reporting date, the Polytechnic had given an undertaking to provide continuing financial support to the subsidiaries. The assets, liabilities and results of the subsidiaries have not been consolidated as they are not considered to be material to the Polytechnic s financial statements. FS18

24 6 Available-for-sale investments Non-current At cost: Unquoted equity shares At fair value: Financial assets available-for-sale Quoted debt securities 10,943 28,691 11,401 29,149 Current At fair value: Financial assets available-for-sale Quoted debt securities 9,293 23,615 Quoted securities managed by fund managers - equity 20,581 24,088 - unit trust/real estate investment trusts 36,928 47,070 66,802 94,773 As at the reporting date, the quoted debt securities bear interest rate of 3.6% to 5.75% (2015: 3.25% to 5.75%) per annum. Interest is receivable on a semi-annual basis. The maturity dates of debt securities range from 10 May 2016 to perpetual (2015: 15 December 2015 to perpetual). Investments managed by fund managers form part of the Polytechnic s funds which are administered by asset management companies (fund managers). The fund managers are given discretionary powers within certain guidelines to invest the funds. The Polytechnic s available-for-sale investments that are not denominated in its functional currency are as follows: Australian dollar 1,622 Hong Kong dollar 1,526 1,160 United States dollar 35,382 49,161 Japanese Yen 3,029 (203) Euro 2, Others 2,857 3,249 FS19

25 7 Trade and other receivables Trade receivables 1,373 1,048 Deposits Singapore Totalisator Board grant ( Tote grant ) Loans due from subsidiaries Fund manager 109 Sundry debtors 6, ,555 8,577 Loans due from subsidiaries are non-trade in nature, unsecured, interest-free and repayable on demand. The Polytechnic s exposure to credit risk and impairment losses related to trade and other receivables is disclosed in note Cash and cash equivalents Fixed deposits with financial institutions 2,800 Cash at bank and on hand (2,484) (1,188) Cash with the AGD 227, ,953 Total cash and bank balances 228, ,765 Less: Cash and cash equivalents managed by fund managers: - Fixed deposits (2,800) - Cash at bank and on hand (370) (1,056) Net cash and cash equivalents in cash flow statement 225, ,709 Cash with the Accountant-General s Department ( AGD ) refers to cash that are managed by the AGD under Centralised Liquidity Management ( CLM ) as set out in the Accountant- General's Circular No.4/2009 Centralised Liquidity Management for Statutory Boards and Ministries. The interest rate of cash with AGD, defined as the ratio of the interest earned to the average cash balance, is 1.02% (2015: 0.79%) or ranges from 1.06% to 1.46% (2015: 0.64% to 0.99%) per annum. FS20

26 9 Accumulated surplus and reserve General Fund As at the reporting date, the Polytechnic has capital commitments of approximately $9 million (2015: $29 million). Restricted Funds Restricted Funds comprise the following funds: Name of Fund Bursary, Scholarship and Awards Fund Staff Apartment Fund Endowment Fund Purpose Providing financial assistance to needy students, scholarships to students and book prizes and medals to students and graduates who excel academically and in extra-curricular activities. Maintaining and upgrading of the Polytechnic s staff apartments. Providing financial support for: (a) staff development; (b) student development, focusing on international exchange; (c) promotion of innovation; (d) bringing relevant world-class expertise to the Polytechnic; (e) scholarships to outstanding students; and (f) bursaries to deserving needy students Miscellaneous Fund Self Financing Project Fund Provision of continuing education courses; upgrading Polytechnic s teaching facilities; and providing welfare and wellness activities for the Polytechnic s students and staff. Special Projects Fund Providing training and placement for working adults with funding from Government agencies and external parties. The Bursary, Scholarship and Awards Fund and Endowment Fund are included in the General Education Fund (See Note 21). FS21

27 Restricted Funds Bursary, Scholarship and Awards Fund Staff Apartment Fund Endowment Fund Miscellaneous Fund Total Operating income Courses, projects, seminars and talks 2,328 1,793 2,328 1,793 Donations: - Tax deductible Non-tax deductible Other income ,103 1, ,346 1,800 3,983 3,463 Operating expenditure Courses, projects, seminars and talks 2,715 1,819 2,715 1,819 Depreciation IT maintenance and subscription IT and information communication Other expenditure 1, ,372 1,694 Property, plant and equipment expensed off Rental Repairs and maintenance Salaries, CPF and other related costs 1,818 1,307 1,818 1,307 Teaching materials and resources 2 2 1, , ,161 4,188 7,867 5,829 FS22

28 Restricted Funds Bursary, Scholarship and Awards Fund Staff Apartment Fund Endowment Fund Miscellaneous Fund Total Operating surplus/(deficit) (671) (11) (404) (170) (2,815) (2,388) (3,884) (2,366) Non-operating income Interest income , Surplus/(deficit) before grants (671) (11) (2,637) (2,208) (2,764) (1,531) Grants Deferred Capital Grant Amortised - Government Operating Grant - Government 4,871 2,807 4,871 2,807 Surplus/(deficit) for the year (671) (11) , ,108 1,317 Accumulated surplus at 1 April 1, ,245 3,256 1, ,413 29,773 35,759 34,442 Accumulated surplus at 31 March 1,077 1,047 2,574 3,245 1,568 1,054 32,648 30,413 37,867 35,759 Represented by: Property, plant and equipment 1, , Government grant receivables 4,202 2,555 4,202 2,555 Trade and other receivables , Cash and bank balances 1,365 1,415 1,343 3,267 1, ,309 27,739 32,407 33,310 Government grants received in advance (136) (142) (136) (142) Trade and other payables (304) (381) (181) (44) (543) (459) (1,028) (884) Deferred capital grant - Government (1) (1) (1) (1) 1,077 1,047 2,574 3,245 1,568 1,054 32,648 30,413 37,867 35,759 FS23

29 10 Endowment Fund Donations and contributions made to the Endowment Fund are retained as principal capital to be kept intact to earn income. Income and expenditure of the fund are taken to "Restricted Funds" in the Statement of Comprehensive Income. At 1 April 17,798 10,359 Donations received 620 3,500 Matching grant received from Government 1,962 3,939 At 31 March 20,380 17,798 Represented by: Investment in debt securities 20,230 13,709 Cash and bank balances 150 4,089 20,380 17,798 During the year, a matching grant was received from MOE amounting to $1,032,000 (2015: $939,000) for non-endowed donations received which were recognised in the Statement of Comprehensive Income. 11 Other funds (a) Tuition Fee Loan Tuition fee loan comprises advances from the Government, which provides tuition fee loans to students. The tuition fee loans are administered by a financial institution. Loans given to students are interest-free until the year of their graduation, or for those with National Service obligation, in the year in which they finish their National Service. Thereafter, loans are repayable by monthly instalments with interest based on the average prime rates of banks or such other rate as may be determined by the Polytechnic. Repayment of the loans will eventually be returned to the Government. Accordingly, the carrying amounts of staff and student loans approximate their fair values. At 1 April 5,740 5,871 Amount contributed by Government 1,158 1,357 Amount refunded to Government (1,512) (1,488) At 31 March 5,386 5,740 Represented by: Outstanding loans: Tuition fee loans 5,386 5,740 FS24

30 (b) Campus Care Network Fund The campus care network ("CCN") fund was set up to provide crisis assistance, emergency assistance as well as education assistance to needy students. The source of fund comes mainly from proceeds collected through fund raising activities among students and staff within the campus on CCN days. The fund is managed by a CCN committee. At 1 April Contribution received Other income 4 4 Relief to students (77) (66) At 31 March Represented by: Cash and bank balances (c) Khoo Teck Puat International Opportunity Programme Fund The Estate of Tan Sri Khoo Teck Puat launched the Khoo Teck Puat International Opportunity Programme ( KTPIOP ) on 18 December The KTPIOP is supported by this fund. This programme aims to provide needy students from the Polytechnic an opportunity to obtain an overseas education experience. The fund is managed and disbursed by MOE to the Polytechnic which will administer the application and award processing on behalf of the donor. At 1 April 53 3 Contribution received Financial assistance to students (43) (60) At 31 March Represented by: Cash and bank balances (d) Ministry of Education Opportunity Fund During FY13/14, the Ministry of Education extended the Ministry of Education Opportunity Funds ( MOEOF ) to Polytechnics. These grants are to be used to level up co-curriculum development opportunities for Singaporean students from lower income households. In FY15/16, MOE confirmed that interest earned by the unutilised funds since the inception of MOEOF need not be refunded. Previous and future interest earned from unutilised MOEOF funds will be recognized as the Polytechnic s interest income and no further interest will need to be accrued. FS25

31 At 1 April 3,202 3,349 Contribution received 3,374 Amount refunded (2,879) Financial assistance to students (343) (168) Interest earned from unutilised funds 21 At 31 March 3,354 3,202 Represented by: Cash and bank balances 3,354 3,202 Total other funds 9,125 9,285 Total net assets of other funds (9,125) (9,285) 12 Fees received in advance At 1 April 13,087 13,562 Amortisation of fees received in advance (452) (475) At 31 March 12,635 13,087 Fees received in advance from Singapore Institute of Technology ( SIT ) for the usage of the Polytechnic's facilities by SIT students will be amortised over a 30-year period commencing from 14 March 2014 in accordance with the service agreement between the Polytechnic and SIT. 13 Deferred capital grants - Government Note Grants utilised as at 1 April 619, ,280 Grants utilised on property, plant and equipment: Development grants 5 70 Operating grants 20 40,450 90,169 Furniture and equipment ( F&E ) and Information Technology ( IT ) grants 18,953 12, , ,397 Amortisation (48,257) (40,919) Grants utilised as at 31 March 630, ,478 FS26

32 14 Deferred capital grants - others At 1 April 2,279 2,825 Grants utilised on property, plant and equipment Total 2,988 3,444 Amortisation (1,039) (1,165) At 31 March 1,949 2, Government grants received in advance Non-current: F&E and IT grants unutilised as at 1 April 58,805 49,373 Grants received 24,537 25,476 Grants utilised (25,615) (16,044) F&E and IT grants unutilised as at 31 March 57,727 58,805 Current: Others ,203 59, Trade and other payables Note Trade payables 5,005 4,629 Fund manager 171 Sundry creditors 14,034 12,966 Accruals for property, plant and equipment projects 4 6,352 4,098 Other accruals 17,205 15,769 Deferred income for courses in progress 3,007 2,391 45,774 39, Operating deficit The item has been arrived at after charging/(crediting): Contribution to defined contribution plan included in salaries 24,152 21,273 Exchange gains (27) (33) FS27

33 18 Interest income Current accounts with financial institutions 1,426 1,247 Debt securities 3,064 3,831 Fixed deposits ,504 5, Investment income Dividend income from available-for-sale investments Gain/(Loss) on disposal of available-for-sale investments 3,323 (298) 3, Operating grants - Government Note Operating grants received/receivable during the year 222, ,052 Less: Operating grants utilised on property, plant and equipment transferred to deferred capital grants - Government 13 (40,450) (90,169) 182, ,883 During the financial year, the Polytechnic received a grant of $19,658,000 (2015: $19,611,000) from the Ministry of Education to settle the outstanding goods and services tax payable to the Inland Revenue Authority of Singapore. This amount has not been included in the operating grants received from the Government as disclosed above. 21 The General Education Fund In November 2002, the Board of Governors of the Polytechnic approved the setup of the General Education Fund. The Fund was subsequently granted the membership by the Ministry of Education under the Education Central Fund. The membership was renewed for a period of three years with effect from 1 April Under this membership, the Polytechnic is allowed to issue tax-deductible receipts to donors for donations contributed towards Bursary, Scholarship and Awards Fund, Endowment Fund and other education related activities which qualify for tax deduction. The Polytechnic has set up a Management Committee to administer the receipts and disbursement of the donations given by the donors. FS28

34 The financial statements of the General Education Fund are given below: Income Donations received: Bursaries, scholarships and awards - Tax deductible Non tax deductible General donations Donations in-kind 1 1 Interest income Deferred capital grant amortised for donated assets ,332 2,091 Expenditure Disbursements: Endowment Fund (404) (170) Bursaries, scholarships and awards (1,097) (882) General donations (18) (19) Property, plant and equipment expensed off (1) (1) Depreciation (267) (318) (1,787) (1,390) Net surplus for the year Accumulated surplus at 1 April 2,135 1,434 Accumulated surplus at 31 March 2,680 2,135 The disbursements were made from donations received in current and prior years. The reserves set aside are to provide financial stability and to ensure a continuous supply of funds to meet the objectives of the Fund. The target is to maintain the reserves at a level equivalent to one year s disbursements and expenses. The reserves will be used to provide financial assistance to needy students, scholarships, bursaries, book prizes and for other education related activities. The Management Committee will review the reserves on a yearly basis to ensure they are adequate to fulfil the objectives of the Fund. The donations and disbursements are recorded in the respective funds in the financial statements. 22 Financial risk management Overview The Polytechnic has exposure to the following risks from its use of financial instruments: credit risk liquidity risk interest rate risk equity price risk currency risk This note presents information about the Polytechnic s exposure to each of the above risks, the Polytechnic s objectives, policies and processes for measuring and managing risk. FS29

35 Risk management framework Risk management is integral to the whole business of the Polytechnic. The Polytechnic has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Polytechnic s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Polytechnic s activities. Credit risk Credit risk is the potential loss resulting from the failure of a student or a counterparty to settle its financial and contractual obligations to the Polytechnic, as and when they fall due. At the reporting date, there was no significant concentration of credit risk except for Government grant receivables, funds managed by fund managers and quoted debt securities. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Cash and fixed deposits and funds are placed with banks and financial institutions which are regulated. The cash with AGD under Centralised Liquidity Management ( CLM ) are placed with high credit quality financial institutions, and are available upon request. The average credit period on trade receivable from student fees is 14 to 30 days (2015: 14 to 30 days). No interest is charged on the outstanding trade receivables. The Polytechnic has not recognised any allowance for doubtful debts as the management are of the view that these receivables are recoverable and that the credit quality is at an acceptable risk. Included in the Polytechnic s trade receivable balance are debtors with a carrying amount of $1,179,000 (2015: $866,000) which are past due at the reporting date for which the Polytechnic has not provided as there has not been a significant change in the credit quality and the amounts are still considered recoverable. The aging profile of the trade receivables are as follows: Impairment The ageing of trade and other receivables at the reporting date was: Gross 2015/16 Impairment losses 2015/16 Gross 2014/15 Impairment losses 2014/15 Neither past due nor impaired Less than 3 months past due months to 12 months More than 12 months , , FS30

36 Liquidity risk The Polytechnic monitors its liquidity risk and maintain a level of cash and cash equivalents deemed adequate to finance the Polytechnic s operations and to mitigate the effects of fluctuations in cash flow. The total contractual undiscounted cash flow of the Polytechnic s non-derivative financial liabilities are the same as their carrying amounts and are due within one year. Interest rate risk As the Polytechnic does not have any financial assets and liabilities which bear interest at floating rates, no sensitivity analysis is prepared. The interest rates for cash with AGD disclosed in Note 8 to the financial statements are based on deposit rates determined by the financial institutions with which the cash are deposited and are expected to move in tandem with market interest rate movements. Equity price risk The Polytechnic is exposed to equity risks arising from equity investments classified as available-for-sale investments. Available-for-sale investments are held for strategic rather than trading purposes. Equity price sensitivity The sensitivity analysis below has been determined based on the exposure to equity price risks at the reporting date. 10% is the sensitivity rate used when reporting equity price sensitivity internally to key management personnel and represents management s assessment of the possible change in equity price. In respect of available-for-sale investments, if the market value of the quoted investments had been 10% higher: the Polytechnic s fair value reserves for the year ended 31 March 2016 would increase by $8 million (2015: increase by $12 million). In respect of available-for-sale investments, if the market value of the quoted investments had been 10% lower: the Polytechnic s fair value reserves for the year ended 31 March 2016 would decrease by $8 million (2015: decrease by $12 million). Currency risk Some of the Polytechnic s underlying investments are denominated in various foreign currencies, including United States dollars, Hong Kong dollars, Japanese Yen and Euro. The exchange exposures in these foreign currency denominated investments are managed by the Polytechnic s fund managers through forward foreign exchange contracts. These forward foreign exchange contracts form part of the respective investment portfolio managed by the fund managers as disclosed in Note 6 to the financial statements and therefore are not separately disclosed. FS31

37 Fair value hierarchy Level 1 Level 2 Level 3 Total 31 March 2016 Unquoted equity shares Quoted debt securities 20,236 20,236 Quoted securities managed by fund manager - equity 20,581 20,581 - unit trust/real estate investment trust 36,928 36,928 77, , March 2015 Unquoted equity shares Quoted debt securities 52,306 52,306 Quoted securities managed by fund manager - equity 24,088 24,088 - unit trust/real estate investment trust 47,070 47, , ,922 Accounting classifications and fair values Fair values versus carrying amounts The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position are as follows: Loans and Availablefor-sale Other financial Total carrying receivables liabilities amount Fair value Note $ March 2016 Available-for-sale securities 6 78,203 78,203 78,203 Trade and other receivables 7 8,555 8,555 8,555 Cash and cash equivalents 8 228, , ,211 Government grant receivable 17,186 17,186 17, ,952 78, , ,155 Trade and other payables 16 (45,774) (45,774) (45,774) 31 March 2015 Available-for-sale securities 6 123, , ,922 Trade and other receivables 7 8,577 8,577 8,577 Cash and cash equivalents 8 199, , ,765 Government grant receivable 14,595 14,595 14, , , , ,859 Trade and other payables 16 (39,853) (39,853) (39,853) FS32

38 Estimation fair values Available-for-sale securities The unquoted equity shares is measured at the net asset value of the investee entity. There were no changes in the fair values of unquoted equity shares. Other financial assets and liabilities The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values. 23 Other income Grants and awards 1,575 1,344 Rental income 1,211 1,015 School/department income 1,689 2,206 Others 2,218 2,013 6,693 6, Commitments Minimum lease payments under operating leases included in the statement of comprehensive income At the reporting date, the Polytechnic has outstanding commitments under non-cancellable operating leases, which fall due as follows: Within one year After one year but within five years ,391 Operating lease payments represent rentals payable by the Polytechnic for its office premises and office equipment. Leases are negotiated and rentals are fixed for an average term of 1 to 5 years (2015: 1 to 5 years). 25 Appropriation of accumulated surplus The Polytechnic received a memorandum from the Ministry of Education dated 3 July 2002 which confirmed that the Ministry of Finance ("MOF") had no objection for the Polytechnic to retain the unutilised surpluses generated prior to financial year ended 31 March 2001 as working capital. FS33