Note 1. Summary of significant accounting
policies
The principal accounting policies adopted in the preparation of this
general purpose financial report are set out below. These policies have
been consistently applied to all the periods presented, unless otherwise
stated. The financial report includes financial statements for the
consolidated entity consisting of Transfield Services Limited and its
controlled entities (Transfield Services or the Group).
Presentation of financial statements
The Group has applied revised AASB 101 Presentation of Financial
Statements (2007), which became effective for financial periods
commencing on or after 1 January 2009. The Group presents in the
consolidated statement of changes in equity all owner related changes in
equity and all non-owner related changes in equity are presented in the
consolidated statement of comprehensive income.
The Group has also applied the revisions in the Corporations Act 2001
effective for financial years ending on or after 30 June 2010 and has
removed full parent entity financial statements in respect of Transfield
Services Limited as an individual entity. Additional financial information
relating to Transfield Services Limited as an individual entity is set out in
Note 43.
Comparative information in respect of these changes has been
re-presented so as to conform with the revised standard and legislation.
The changes only impact presentation and disclosure in the financial
report and therefore have no impact on earnings per share.
(a) Basis of preparation of the financial report
This general purpose financial report has been prepared in accordance
with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board including
Interpretations and the Corporations Act 2001.
Compliance with International Financial Reporting Standards
(IFRS)
The financial report of Transfield Services Limited also complies with IFRS
as issued by the International Accounting Standards Board (IASB).
Historical cost convention
These financial statements have been prepared under the historical cost
convention as modified by the revaluation of certain financial assets and
liabilities such as derivative instruments and cash settled share based
payment arrangements which are recorded at fair value.
Critical accounting estimates
The preparation of financial statements in conformity with Australian
Accounting Standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the financial statements, are disclosed in
Note 3.
(b) Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and
liabilities of Transfield Services Limited (‘Company’ or ‘Parent entity’) as
at 30 June 2010 and the results of all subsidiaries for the year then
ended. Transfield Services Limited and its controlled entities together are
referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over
which the Group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one half of
the voting rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing
whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that
control ceases. The acquisition method of accounting is used to account
for business combinations by the Group (refer Note 1(h)).
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are
shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and the statement of financial
position respectively. The Group applies a policy of treating transactions
with non-controlling interests as transactions with parties external to the
Group. Disposals to non-controlling interests result in gains and losses
for the Group that are recorded in the statement of comprehensive
income. Purchases from non-controlling interests result in goodwill; being
the difference between any consideration paid and the relevant share
acquired of the carrying value of identifiable net assets of the subsidiary.
Investments in subsidiaries are accounted for at cost in the summarised
statement of financial position of Transfield Services Limited.
Associates
Associates are all entities over which the Group has significant influence
but not control or joint control, generally accompanying a shareholding of
between 20 per cent and 50 per cent of the voting rights. Investments in
associates are accounted for in the Parent entity’s summarised statement
of financial position using the cost method and in the consolidated
financial statements using the equity method of accounting, after initially
being recognised at cost.
The Group’s share of post-acquisition profits or losses from its associates
are recognised in the statement of comprehensive income, and its share
of post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. Dividends and distributions receivable from
associates are recognised in the Parent entity’s statement of
comprehensive income, while in the consolidated financial statements
they reduce the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured receivables, the
Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates
are eliminated to the extent of the Group’s interest in the associates.
Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies
of associates have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Joint venture entities and partnerships
The interest in a joint venture entity or partnership is accounted for in the
consolidated financial statements using the equity method and is carried at
cost by the Parent entity. Under the equity method, the share of the profits
or losses of the joint venture entity or partnership are recognised in the
statement of comprehensive income, and the share of movements in
reserves are recognised in reserves in the statement of financial position.