2009-10 Annual Report - Australia Post

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notes to And ForminG PArt oF the FinAnCiAl rePort For the year ended 30 June 2010 Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements. investment property the group obtains independent third party valuations of its investment property portfolio annually. the basis of these valuations is outlined in note 15 and includes certain significant assumptions. impairment of jointly controlled entities, goodwill and intangibles with indefinite useful lives the group determines whether jointly controlled entities, goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. this requires an estimation of the recoverable amount of jointly controlled entities and cash generating units, to which the goodwill and intangibles with indefinite useful lives are allocated. recoverable amount is assessed using a value in use discounted cashflow methodology. the assumptions used in the estimation of recoverable amount of goodwill and intangibles with indefinite useful lives are discussed in note 16. make good provisions Management have made assumptions in arriving at their best estimate of the likely costs to “make good” premises which are currently occupied under operating lease. such estimates involve management forecasting the average restoration cost per square metre and are dependent on the nature of the premises occupied. the provision recognised is periodically reviewed and updated based on the facts and circumstances available at the time. changes to the estimated future costs are recognised in the balance sheet by adjusting both the expense or asset (if applicable) and provision. the related carrying amounts are disclosed in note 20. employee benefits Various assumptions are required when determining the group’s superannuation, separation and redundancy, long service leave, annual leave and workers’ compensation obligations. note 12 describes the key assumptions used in calculating the group’s superannuation obligation, whilst note 1(ee) details the basis and certain significant assumptions for the other employee benefits. unearned postage revenue the group makes allowance for the assessed amount of revenue from postage sales as at balance date in respect of which service has not yet been provided. actuarial valuations are obtained every three years and the provision is reassessed every six months based on factors provided by the group’s external actuaries. (ii) significant accounting judgements investment property classification the group has determined that those properties classified as investment properties are primarily held to earn rentals or for capital appreciation. Where a property is also used for internal use, the group has determined whether this is an insignificant portion of total floor space and, if so, classified the property as investment property. operating lease commitments – group as lessor the group has commercial property leases on its investment property portfolio. the group has determined that it retains all the significant risks and rewards of ownership of these properties and has thus classified the leases as operating leases. 50 AustrAliA Post AnnuAl rePort 2009–10 | Financial and statutory reports (e) Business combinations Subsequent to 1 January 2009 Business combinations are accounted for using the acquisition method. the consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. acquisition-related costs are expensed as incurred. When the group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the group’s operating or accounting policies and other pertinent conditions as at the acquisition date. this includes the separation of embedded derivatives in host contracts by the acquiree. if the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is measured at fair value as at the acquisition date through profit or loss. any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognised in accordance with aasB 139: Financial Instruments: Recognition and Measurement, either in profit or loss or in other comprehensive income. if the contingent consideration is classified as equity, it shall not be remeasured. Prior to 1 January 2009 Business combinations were accounted for using the purchase method. transaction costs directly attributable to the acquisition formed part of the acquisition costs. the non-controlling interest was measured at the proportionate share of the acquiree’s identifiable net assets. (f) revenue recognition revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. the following specific recognition criteria must also be met before revenue is recognised: (i) sale of goods and services revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. recognition is at point of sale in the case of postage items and provision of agency services, point of lodgement in the case of bulk mail and when control of goods has passed to the buyer in the case of retail products. allowance is made for the assessed amount of revenue from postage sales as at balance date in respect of which service had not yet been provided. (ii) interest revenue revenue is recognised as interest accrues using the effective interest method. this is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
(iii) dividends revenue is recognised when the group’s right to receive the payment is established. (iv) rental income rental income from investment properties is accounted for on a straight-line basis over the lease term. contingent rental income is recognised as income in the periods in which it is earned. lease incentives granted are recognised as an integral part of the total rental income. (g) operating segment an operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. Management will also consider other factors in determining operating segments, such as the level of segment information presented to the board of directors. operating segments have been identified based on the information provided to the chief operating decision-makers – being the executive management team. operating segments that meet the quantitative criteria as prescribed by aasB 8 are reported separately. information about other business activities and operating segments that are below the quantitative criteria are combined and disclosed in a separate category as an “unallocated” segment. (h) Government grants Government grants are recognised when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. the grants are not credited directly to shareholders’ equity. When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of comprehensive income over the expected useful life of the relevant asset by equal annual instalments. (i) leases the determination of whether an arrangement is or contains a lease is based on the substance of the arrangement. it also requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. (i) Group as a lessee Finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss. capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the group will obtain ownership by the end of the lease term. operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term. operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expenditure and reduction of the liability. (ii) Group as a lessor leases in which the group retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as rental income. (j) Cash and cash equivalents cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the cashflow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdrafts. Bank overdrafts are included within interest-bearing liabilities in current liabilities on the balance sheet. (k) trade and other receivables trade receivables, which generally have 30–90 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. other receivables are initially recorded at the fair value of the amounts to be received and are subsequently measured at amortised cost. collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. individual debts that are known to be uncollectible are written off when identified. an impairment provision is recognised when there is objective evidence that the group will not be able to collect the receivable. Financial difficulties of the debtor, default payments or outstanding debts more than 60 days overdue may be considered objective evidence of impairment. the amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cashflows, discounted at the original effective interest rate. (l) inventories inventories including raw materials, work in progress and finished goods are valued at the lower of cost and net realisable value. costs incurred in bringing each product to its present location and condition are accounted for as follows: • raw materials – purchase cost on a first-in, first-out basis. the cost of purchase comprises the purchase price, including the transfer from equity of gains and losses on qualifying cashflow hedges of purchases of raw materials, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), transport, handling and other costs directly attributable to the acquisition or raw materials. Volume discounts and rebates are included in determining the cost of purchase; and • finished goods and work-in-progress – cost of direct materials and labour and a proportion of variable and fixed manufacturing overheads based on normal operating capacity. costs are assigned on the basis of weighted average costs. net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. AustrAliA Post AnnuAl rePort 2009–10 | Financial and statutory reports 51
Page 1: gETTing fuTuRE REAdY AuSTRAliA PoST
Page 4 and 5: AUSTRALIA POST HAS ALWAYS BEEN IN T
Page 6 and 7: OUR BUSINESS OUR CAPABILITIES AND B
Page 8 and 9: OUR BUSINESS THE YEAR IN REVIEW 6 A
Page 10 and 11: OUR BUSINESS CHAIRMAN’S REPORT Da
Page 12 and 13: OUR BUSINESS FINANCIAL REPORT Perfo
Page 14 and 15: our Business Key Business results O
Page 16 and 17: CORE BUSINESSES In 2009-10, our 4,4
Page 18 and 19: CORE BUSINESSES LETTERS & ASSOCIATE
Page 20 and 21: CORE BUSINESSES AGENCY SERVICES & R
Page 22 and 23: core Businesses aGenCY seRViCes & R
Page 24 and 25: CORE BUSINESSES PARCELS & LOGISTICS
Page 30 and 31: CORPORATE RESPONSIBILITY Some key r
Page 32 and 33: CorPorAte governAnCe General austra
Page 34 and 35: CorPorAte governAnCe incentive rewa
Page 36 and 37: BOARD OF DIRECTORS David A Mortimer
Page 38 and 39: FINANCIAL AND STATUTORY REPORTS 36
Page 40 and 41: FinAnCiAl And stAtutory rePorts for
Page 42 and 43: FinAnCiAl stAtements Audit rePort f
Page 44 and 45: stAtement oF ComPrehensive inCome f
Page 46 and 47: CAshFlow stAtement for the year end
Page 48 and 49: sChedule oF Commitments as at 30 Ju
Page 50 and 51: notes to And ForminG PArt oF the Fi
Page 100 and 101: Community serviCe oBliGAtions for t
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Auditor-GenerAl’s rePort - PerFor
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domestiC letter serviCe monitor (co
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survey CertiFiCAtion (continued) fo
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stAtutory rePortinG reQuirements in
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stAtutory rePortinG reQuirements in
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stAtutory rePortinG reQuirements (c
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stAtutory rePortinG reQuirements (c
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AustrAliA Post - the stAtistiCs (co
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index (CONTINUED) courier services;
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index (continued) r raw materials 5
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ABout tHis AnnuAl rePort editor/pro
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STAmP gAllERY 2009-10 Kokoda 20 Apr
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AuSTRAliA PoST AnnuAl REPoRT 2009-1
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2009-10 Annual Report - Australia Post

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