draw-down of the facility, are recognised as capitalised costs and
amortised on a straight line basis over the term of the facility.
Loans and borrowings are removed from the statement of financial
position when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a
financial liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in other income or other
expenses.
Loans and borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at least
12 months after the statement of financial position date.
(x) E mployee benefits
Annual leave, sick leave and Directors’ retirement benefits
Liabilities for annual leave, accumulating sick leave expected to be
settled within 12 months and Directors’ retirement benefits (including
non-monetary benefits) are recognised in provision for employee benefits
in respect of employees’ or Directors’ services up to the reporting date
and are measured at the amounts expected to be paid when the liabilities
are settled. Liabilities for non-accumulating sick leave are recognised
when the leave is taken and measured at the rates paid or payable.
Long service leave
The liability for long service leave is recognised in the provision for
employee benefits and measured at the present value of the expected
future payments to be made in respect of services provided by employees
up to the reporting date. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market yields at
the reporting date of national government bonds with terms to maturity
and currency that match, as closely as possible, the estimated future
cash outflows.
Short-term incentive plans
A liability for employee benefits in the form of short-term incentives is
recognised in other payables when there is no realistic alternative but to
settle the liability and at least one of the following conditions is met:
• there are formal terms in the plan for determining the amount of the
benefit,
• the amounts to be paid are determined before the time of completion
of the financial report, or
• past practice gives clear evidence of the amount of the obligation.
Liabilities for short-term incentives are expected to be settled within 12
months and are measured at the amounts expected to be paid when they
are settled.
Superannuation
Contributions to defined contribution superannuation funds are charged
as an expense as the contributions are paid or become payable.
Employee benefit on-costs
Employee benefit on-costs, including payroll tax are recognised and
included in provision for employee benefits and are measured at amounts
expected to be paid when the liabilities are settled, discounted to net
present value.
Termination benefits
Liabilities for termination benefits, not in connection with the acquisition
of any entity or operation, are recognised when a detailed plan for the
termination has been developed and a valid expectation has been raised
in those employees affected that terminations will be carried out. The
liabilities for termination benefits are recognised in other payables unless
the amount or timing of the payments is uncertain, in which case they are
recognised as provisions.
Equity-based compensation benefits
Equity-based compensation benefits are provided to employees through the
TranShare Executive Performance Awards Plan, the Transfield Services
Executive Options Scheme and the Deferred Retention Incentive Scheme.
(i) Share Options and Performance Awards granted before
7 November 2002 and/or vested before 1 January 2005.
No expense is recognised in respect of these Options or
Performance Awards. The shares are recognised when the
Options or Performance Awards are exercised and the proceeds
received are allocated to share capital.
(ii) Share Options and Performance Awards granted after
7 November 2002 and vested after 1 January 2005.
The fair value of Options and Performance Awards granted
under the Transfield Services Executive Options Scheme or the
TranShare Executive Performance Awards Plan are recognised
as an employee benefit expense with a corresponding increase
in equity. The fair value is measured at grant date and
recognised over the period during which the employees become
unconditionally entitled to the Options or Performance Awards.
(iii) Shares under the Deferred Retention Incentive Scheme
Shares acquired under the Deferred Retention Incentive Scheme
are held by the TranShare PlanTrust and included in treasury
shares as a reduction in equity until they are allocated to
individual employees. The expense is recognised and liability
accrued over the vesting period.
The fair value at grant date of Options and Performance Awards is
independently determined using a binomial and Monte Carlo model that
takes into account the exercise price, the term of the Option or
Performance Award, the vesting and performance criteria, the impact of
dilution, the non-tradable nature of the Option or Performance Award, the
share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the
term of the Option or Performance Award.
The fair value of the Options or Performance Awards granted excludes
the impact of any non-market vesting conditions (for example, profitability
and sales growth targets). Non-market vesting conditions are included in
assumptions about the number of Options or Performance Awards that
are expected to become exercisable. At each statement of financial
position date, the entity revises its estimate of the number of Options or
Performance Awards that are expected to become exercisable. The
employee benefit expense recognised each period takes into account the
most recent estimate.
Upon the exercise of Options or Performance Awards, the balance of the
share-based payments reserve relating to those Options or Performance
Awards is transferred to share capital.
The difference between the market value of shares issued to employees
and the employee’s consideration under the employee share scheme is
recognised as an employee benefit expense with a corresponding
increase in equity when the employee becomes entitled to the shares.
(y) Provisions
Provisions for legal claims, lease ‘make good’ and service warranties are
recognised when: the Group has a present legal or constructive obligation
as a result of past events; it is probable that an outflow of resources will
be required to settle the obligation; and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.