Notes to and forming part of the consolidated financial
statements for the year ended 30 June 2010
Note 1. Summary of significant accounting
policies (continued)
Where there are a number of similar obligations, the likelihood that an
outflow will be required on settlement is determined by considering the
class of obligations as a whole. A provision is recognised even if the
likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of management’s best
estimate of the expenditure required to settle the present obligation at
the statement of financial position date. The discount rate used to
determine the present value reflects current market assessments of the
time value of money and the risks specific to the liability. The increase in
the provision due to the passage of time is recognised as interest
(z) O nerous contracts
A provision for onerous contracts is recognised when the expected benefits
to be derived from a contract are less than the unavoidable costs of
meeting the obligations under that contract, and only after any impairment
losses to assets dedicated to that contract have been recognised.
The provision recognised is based on the excess of the estimated cash
flows to meet the unavoidable costs under the contract over the
estimated cash flows to be received in relation to the contract, having
regard to the risks of the activities relating to the contract. The net
estimated cash flows are discounted using market yields at statement of
financial position date of national government guaranteed bonds with
terms to maturity and currency that match, as closely as possible, the
expected future payment, where the effect of discounting is material.
(aa) Finance costs
Finance costs are recognised as an expense in the period in which they
are incurred (except where they are incurred in the cost of qualifying
assets – refer Note 1(r)) and include:
• interest on bank overdraft and short-term and long-term borrowings
• amortisation of discounts or premium relating to borrowings
• amortisation of ancillary costs incurred in connection with the
arrangement of borrowings and
• finance lease charges.
Finance costs incurred for the construction of any qualifying asset are
capitalised during the period of time that is required to complete and
prepare the asset for its intended use. The capitalisation rate used to
determine the amount of finance costs to be capitalised is the weighted
average interest rate applicable to the Group’s outstanding borrowings
during the year.
(ab) G overnment Grants
Government grants are recognised initially as deferred income when there
is reasonable assurance that they will be received and that the Group will
comply with the conditions attached. Grants that compensate the Group for
expenses are recognised in the statement of comprehensive income as
other income in the same period as the expense that they compensate is
recognised. Grants that compensate the Group for the cost of an asset are
recognised in the statement of comprehensive income on a systematic
basis over the useful life of the asset.
(ac) C ontributed equity
Ordinary shares
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares,
Options or Performance Awards are shown in equity as a deduction, net
of tax, from the proceeds.
Treasury shares
Any amounts of unvested shares held by the TranShare Plan Trust are
controlled by the Group until they vest and are recorded as a reduction
in equity.
(ad) Dividends
Provision is made for the amount of any dividend declared, being
appropriately authorised and no longer at the discretion of the entity, on
or before the end of the year but not distributed at statement of financial
position date.
(ae) E arnings / (loss) per share
Basic earnings / (loss) per share
Basic earnings / (loss) per share is calculated by dividing the profit or loss
attributable to equity holders of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the year, adjusted for
bonus elements in ordinary shares issued during the year.
Diluted earnings / (loss) per share
Diluted earnings / (loss) per share adjusts the figures used in the
determination of basic earnings / (loss) per share to take into account the
after income tax effect of interest and financing costs associated with
dilutive potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
(af) Financial instrument transaction costs
Transaction costs that are directly attributable to the acquisition or issue
of a financial asset or liability are included in the value of the financial
asset or liability on initial recognition.
(ag) G oods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of
associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST
receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority on the date of the statement of
financial position is included with other receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash
flows arising from investing or financing activities, which are recoverable
from, or payable to the taxation authority, are presented as operating
cash flow.
(ah) Rounding of amounts
The Company is of a kind referred to in Class order 98/0100 issued by the
Australian Securities and Investments Commission, relating to the
‘rounding off’ of amounts in the financial report. Amounts in the financial
report have been rounded in accordance with that Class Order to the
nearest thousand dollars or, in certain cases, the nearest dollar.
(ai) N ew accounting standards and interpretations
Certain new accounting standards and interpretations have been
published that are not mandatory for the 30 June 2010 reporting period.
The Group’s assessment of the impact of these new standards and
interpretations is set out below.
AASB 2009-8 Amendments to Australian Accounting Standards – Group
Cash-Settled Share based Payment Transactions [AASB 2] (effective from
1 January 2010)