The amendments made by the AASB to AASB 2 confirm that an entity
receiving goods or services in a group share-based payment arrangement
must recognise an expense for those goods or services regardless of
which entity in the group settles the transaction or whether the
transaction is settled in shares or cash. They also clarify how the group
share-based payment arrangement should be measured, that is, whether
it is measured as an equity or a cash-settled transaction. The Group will
apply these amendments retrospectively for the financial reporting period
commencing on 1 July 2010. There will be no impact on the Group’s
financial statements.
AASB 2009-10 Amendments to Australian Accounting Standards –
Classification of Rights Issues [AASB 132]
(effective from 1 February 2010)
In October 2009 the AASB issued an amendment to AASB 132 Financial
Instruments: Presentation which addresses the accounting for rights
issues that are denominated in a currency other than the functional
currency of the issuer. Provided certain conditions are met, such rights
issues are now classified as equity regardless of the currency in which
the exercise price is denominated. Previously, these issues had to be
accounted for as derivative liabilities. The amendment must be applied
retrospectively in accordance with AASB 108 Accounting Policies,
Changes in Accounting Estimates and Errors. The Group will apply the
amended standard from 1 July 2010. As the Group has not made any
such rights issues, the amendment will not have any effect on the Group’s
financial statements.
AASB 9 Financial Instruments and AASB 2009-11 Amendments to
Australian Accounting Standards arising from AASB 9
(effective from 1 January 2013)
AASB 9 Financial Instruments addresses the classification and
measurement of financial assets and is likely to affect the Group’s
accounting for its financial assets. The standard is not applicable until
1January 2013 but is available for early adoption. The Group is yet to
assess its full impact. The Group has not yet decided when to adopt
AASB 9.
Revised AASB 124 Related Party Disclosures and AASB 2009-12
Amendments to Australian Accounting Standards
(effective from 1 January 2011)
In December 2009 the AASB issued a revised AASB 124 Related Party
Disclosures. It is effective for accounting periods beginning on or after 1
January 2011 and must be applied retrospectively. The amendment
removes the requirement for government-related entities to disclose
details of all transactions with the government and other governmentrelated
entities and clarifies and simplifies the definition of a related
party. The Group will apply the amended standard from 1 July 2011.
When the amendments are applied, the Group will need to disclose any
transactions between its subsidiaries and its associates. This will result
in additional disclosure but have no fundamental impact on the Group’s
financial report
AASB Interpretation 19 Extinguishing financial liabilities with equity
instruments and AASB 2009-13 Amendments to Australian Accounting
Standards arising from Interpretation 19 (effective from 1 July 2010)
AASB Interpretation 19 clarifies the accounting when an entity
renegotiates the terms of its debt with the result that the liability is
extinguished by the debtor issuing its own equity instruments to the
creditor (debt for equity swap). It requires a gain or loss to be recognised
in profit or loss which is measured as the difference between the carrying
amount of the financial liability and the fair value of the equity
instruments issued. The Group will apply the interpretation from 1 July
2010. It is not expected to have any impact on the Group’s financial
statements since it is only retrospectively applied from the beginning of
the earliest period presented (1 July 2009) and the Group has not entered
into any such debt for equity swaps since that date.
(aj) Presentation of comparative information
Where applicable, comparative information has been restated or
repositioned to align with current year presentation.
Note 2. Financial, capital and other risk
management
The ultimate goal of financial and capital risk management in Transfield
Services is to contribute to the creation of shareholder value. In order to
achieve this goal, the Group applies the following principles in managing
its capital resources and position as well as in managing its risks.
Financial risk management
The Group’s activities expose it to a variety of financial risks; market risk
(including currency risk, fair value interest rate risk and price risk), credit
risk, liquidity risk and cash flow interest rate risk. The Group’s overall risk
management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial
performance of the Group. From time to time the Group uses derivative
financial instruments such as foreign exchange contracts and interest
rates swaps to hedge certain risk exposures.
Financial risk is managed by a central treasury department (Group
Treasury) under policies approved by the Board of Directors. Group
Treasury identifies, evaluates and hedges financial risks in close
co-operation with the Group’s operating units. Group Treasury provides
written principles for overall risk management, endorsed by the Board,
covering areas such as mitigating foreign exchange, interest rate and
credit risks, use of derivative financial instruments and investing excess
liquidity.
The Group has chosen not to acquire a credit rating from an
internationally accredited agency there being no immediate benefit from
doing so. In order to ensure good credit quality the Group monitors and
estimates its financial position with measurements such as equity ratio
and gearing.
(a) Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and
recognised assets and liabilities are denominated in a currency that is not
the entity’s functional currency.
Forward exchange contracts, transacted with Group Treasury, are used to
manage foreign exchange risk. Group Treasury is responsible for
managing exposures in each foreign currency by using external forward
exchange contracts where economically viable.
The Group operates internationally and is exposed to foreign exchange
risk arising from currency exposures to the world currencies, principally
United States dollars. Foreign exchange risk on borrowings not
denominated in Australian dollars is principally managed through “natural
hedges” as borrowings are drawn in the currency of foreign operating
subsidiaries.
Foreign exchange risk
Most Group financial assets and financial liabilities are denominated in
the same currency as the functional currency of the particular country
where they are held.
The Group’s exposure to foreign exchange risk in respect of cash at bank
at 30 June was limited to: