Note 3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that
may have a financial impact on the consolidated entity and that are believed to be reasonable under the circumstances.
(a) C ritical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
Estimated impairment of goodwill, other intangible assets and equity accounted investments
The recoverable amounts of cash-generating units and equity accounted investments have been determined based on the higher of fair value and
value-in-use. These calculations require the use of assumptions relating to future cashflows, discount rates and growth rates. Refer to Note 16 for details of
these assumptions in relation to goodwill and the potential impact of changes to the assumptions.
Income taxes
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the
consolidated entity provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which
the ultimate tax determination is uncertain and on which professional judgement, based on relevant tax law, is exercised. The Group recognises liabilities
for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from
the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is
made.
Rehabilitation and ‘make-good’ costs
The Group recognises provisions for estimated resources required to rehabilitate and ‘make-good’ leasehold properties, in which it operates under contracts
with third parties. The timeframe may vary between 2-30 years and the terminal liability requires management estimates of future costs based on current
and future considerations, including environmental considerations. The Group records these provisions using discounted cash flows and reassesses them
annually. Refer to Note 23 for further details of these provisions.
Workers’ compensation provisions
The Group is self-insured for workers’ compensation in certain States in Australia and manages the risks associated with this through the use of actuarial
techniques and engaging external experts however these estimates by their nature are complex and are revised annually.
(b) C ritical judgements in applying the entity’s accounting polices
Status of debt refinancing and going concern
Tranche B of the Group’s multi-currency corporate debt facility with a facility limit of $60,000,000 matured on 12 July 2010. This facility was undrawn at 30
June 2010. This debt facility was replaced by facilities totalling $65,000,000 with the following banks: Bank of Tokyo-Mitsubishi UFJ, Ltd and JP Morgan
Chase Bank, N.A. along with a facility extension with Westpac Banking Corporation.
Revenue recognition
The Group engages in performance-related contracts with its customers. Under the terms of these contracts the Group is entitled to receive Key
Performance Indicator (KPI) income. The Group’s policy is to recognise KPI income on a pro-rata basis to the extent that the Group is capable of achieving the
desired outcomes under the terms of the contract and the value of the KPI revenue can be reliably estimated.
Note 4. Revenue
2010 2009
$’000 $’000
Operating revenue
Operations and maintenance outsourcing services 3,135,424 3,376,901
Wind farm infrastructure development revenue - 9,000
3,135,424 3,385,901
Other revenue
Management and other fees 1,253 2,080
Total revenue 3,136,677 3,387,981