Page 160 - DUT Annual Report 2020

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DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
DURBAN UNIVERSITY OF TECHNOLOGY
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020
22. RISK MANAGEMENT (continued) 22.5 Capital risk management
The capital of the University comprises restricted funds designated for specific purposes, fair value reserves and Council controlled funds.
The University’s objectives when managing capital are to safeguard the ability of itself to continue as a going concern and to maintain an optimal structure to reduce the cost of capital. In order to maintain the capital structure, the University has ensured a sound financial position by limiting exposure to debt and increasing investments and cash balances. This objective is met by a well-planned budget process each year.
23. CONTINGENT LIABILITIES
During the ordinary course of its business, the University enters into a wide range of programmes, contracts and transactions that expose it to varying types and degrees of risk. As far as it is practicable to do so, provisions are made for known liabilities that are expected to materialise. Possible obligations and known liabilities where no reliable estimate can be made or it is considered improbable that an outflow will result, are noted as contingent liabilities in accordance with International Financial Reporting Standard IAS 37: Provisions, Contingent Liabilities and Contingent Assets.
Contingent liabilities in respect of 2020 financial year is described briefly below. Claims against the University are either pending or in progress.
23.1 Indumiso College of Education
The Department of Education and Training handed over the Indumiso College of Education to the former Natal Technikon. The operations of this college have been incorporated into the Durban University of Technology subsequent to the merger. The land and buildings have been capitalised in the accounting records of the University and no liability has been raised for the land and buildings.
The Department of Education has not given an undertaking to indemnify the University against any liability in respect of land and buildings of this college or against any future claims or liabilities that may exist in respect of this college.
The Department of Education is currently in the process of subdividing the property and transferring this property in the name of the Durban University of Technology. Management is uncertain if the subdivision will result in any possible obligations, which may have to be settled in the future from the University’s resources. Furthermore, management is unable to determine the quantum of such a liability and has been unable to obtain any further clarity from the Department of Higher Education and Training in this regard.
23.2 Claims by professional consultants involved on infrastructure projects
The following claims for damages were lodged during the previous and post the financial period against the University in respect of damages allegedly for either premature cancellation of contracts, dispute over current existing contracts or non-renewal of contracts:
Previous financial period claims:
 UKUZA Consulting (Pty) Ltd – R2,2m
 Raj Maharaj Associates Architects – R5,2m
The University has disclaimed liability and is defending the actions. Legal advice obtained indicates that it is unlikely that any significant liability will arise other than for UKUZA Consulting (Pty) Ltd which is still subjudice.