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(r) Provisions
Provisions for legal claims, service warranties
and make good obligations 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 can be reliably
estimated. Provisions are not recognised
for future operating losses.
Where there are a number of similar
obligations, the likelihood that an outflow will
be required in 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 obligation
at the reporting date.
(s) Employee benefits
(i) Short term obligations
Liabilities for wages and salaries, including
non-monetary benefits expected to be settled
within twelve months of the reporting date
are recognised in respect of employees’
services up to the reporting date and are
measured at the amounts expected to be
paid when the liabilities are settled.
(ii) Long term obligations
The liability for long service leave and
associated on-costs is accumulated from
the date of commencement. They are
measured at the amounts expected to be
paid when the liabilities are settled and
discounted to determine their present value.
Consideration is given to expected future
wage and salary levels with an allowance
for expected future increases.
As not all annual leave is expected to
be taken within twelve months of the
respective service being provided, annual
leave obligations are classified as long term
employee benefits in their entirety. Annual
leave is measured on a discounted basis
utilising corporate bond market rate as per
the G100 when discounting employee
benefit liabilities.
(t) Financial Instruments
The Group’s principal financial instruments
comprise receivable, payables, borrowings,
bonds, cash, funds on deposit and derivatives.
Non-derivative financial assets
Receivables are financial assets with fixed or
determinable payments that are not quoted in
an active market. Such assets are recognised
initially at fair value plus any directly
attributable transaction costs. Subsequent
to initial recognition they are measured at
amortised cost using the effective interest
method. Receivables comprise cash and cash
equivalents and trade and other receivables.
Cash and cash equivalents in the balance
sheet includes cash on hand, funds on
deposit with financial institutions, other short
term, highly liquid investments with original
maturities of 180 days or less that are readily
convertible to known amounts of cash and
which are subject to an insignificant risk of
changes in value. Investments in shares are
held at cost and reviewed for impairment.
Non-derivative financial liabilities
Financial liabilities are recognised initially on the
trade date and derecognised when contractual
obligations are discharged, cancelled or
expired. Such liabilities are recognised at fair
value less any directly attributable transaction
costs, subsequently measured at amortised
cost using the effective interest method.
Other financial liabilities comprise loan facilities
(see note 12), bonds, bank overdrafts and
trade and other payables.
NOTE 21 (CONTINUED)
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
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