Australia Post Annual Report 2008–09

is increased to its recoverable amount.
That increased amount cannot exceed
the carrying amount that would have been
determined, net of depreciation, had no
impairment loss been recognised for the asset
in prior years. Such reversal is recognised
in profit or loss unless the asset is carried at
revalued amount, in which case the reversal
is treated as a revaluation increase. After such
a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised
carrying amount, less any residual value,
on a systematic basis over its remaining
useful life.
(aa) Trade and other payables
Trade payables and other payables are carried
at amortised cost; however, due to their
short-term nature, they are not discounted.
They represent liabilities for goods and
services provided to the group before the
end of the financial year that are unpaid and
arise when the group becomes obliged to
make future payments in respect of the
purchase of these goods and services.
(bb) Interest-bearing liabilities
All borrowings are initially recognised at the
fair value of the consideration received less
directly attributable transaction costs. After
initial recognition, interest-bearing borrowings
are subsequently measured at amortised cost
using the effective interest method.
Borrowings are classified as current liabilities
unless the group has an unconditional right
to defer settlement of the liability for at least
12 months after the balance sheet date.
(cc) Finance costs
Finance costs are recognised as an expense
when incurred. The group does not currently
hold qualifying assets but, if it did, the
borrowing costs directly associated with this
asset would be capitalised (including any other
associated costs directly attributable to the
borrowing and temporary investment income
earned on the borrowing).
(dd) Provisions (excluding
employee benefits)
Provisions are recognised when the group
has a present obligation (legal or constructive)
as a result of a past event, it is probable that
an outflow of resources embodying economic
benefits will be required to settle the
obligation and a reliable estimate can
be made of the amount of the obligation.
When the group expects some or all of a
provision to be reimbursed – for example,
under an insurance contract – the
reimbursement is recognised as a separate
asset but only when the reimbursement is
virtually certain. The expense relating to any
provision is presented in the income statement
net of any reimbursement.
Provisions are measured at the present
value of management’s best estimate of the
expenditure required to settle the present
obligation at the balance sheet date using a
discounted cashflow methodology. The risks
specific to the provision are factored in to the
cashflows and hence a risk-free government
bond rate relative to the expected life of the
provision is used as a discount rate. If the
effect of the time value of money is material,
provisions are discounted using a current
pre-tax rate that reflects the time value of
money and the risks specific to the liability.
When discounting is used, the increase in
the provision due to the passage of time is
recognised as a financing cost. The increase
in the provision resulting from the passage
of time is recognised in finance costs.
(ee) Employee leave benefits
(i) Wages, salaries, annual leave
and sick leave
Liabilities for wages and salaries (including
non-monetary benefits) expected to be settled
within 12 months of the reporting date are
recognised in other payables in respect of
employees’ services up to the reporting date.
Liabilities for annual leave where the
corporation does not have an unconditional
right to defer settlement of the liability for at
least 12 months after the reporting date are
recognised in current provisions at the
amounts expected to be paid when the
liabilities are settled.
No liability is recognised for sick leave as
benefits lapse with termination of employment
and experience indicates that the pattern of
sick leave taken is less than the entitlement
accumulating.
(ii) Long-service leave
The liability for long-service leave is
recognised and measured as the present
value of expected future payments to be
made in respect of services provided by
employees up to the reporting date using
the projected unit credit method.
Consideration is given to expected future
wage and salary levels, experience of
employee departures, and periods of service.
Expected future payments are discounted
using market yields at the reporting date on
national government bonds with terms to
maturity and currencies that match, as
closely as possible, the estimated future
cash outflows.
(iii) Workers’ compensation
The corporation is a licence holder under the
Safety, Rehabilitation and Compensation Act
1988 (SRC Act). The corporation self-insures
its liability for workers’ compensation. Claims
are recognised in the financial statements
and measured by the discounted value of
an annuity. The adequacy of the provision
is established by reference to the work
of an actuary as at balance date, with the
estimate of present value taking into account
pay increases, attrition rates, interest rates
and the time over which settlement is made.
In accordance with its SRC Act licensing
conditions, the corporation has a bank
guarantee to cover its outstanding actuarial
established claims liability (see Schedule of
Contingencies). The corporation also complies
with a requirement to maintain reinsurance
to limit its workers’ compensation liabilities.
The corporation has recognised a liability
for workers’ compensation of $111.3 million
at balance date (see note 20), of which
$7.8 million relates to claims made in the
2008–09 financial year (2007–08: $4.8 million).
(iv) Separation and redundancy
A liability is recognised for separation
and redundancy benefit payments for
ongoing major restructuring only where
the corporation is demonstrably committed
to the restructuring and the cost can be
reliably measured (see note 20). Generally
such assessments do not exceed the certainty
of initiatives planned for the following year.
(ff) Pensions and other
post-employment benefits
The defined benefit plan requires contributions
to be made to a separately administered fund.
The cost of providing benefits under the
defined benefit plans is determined using the
projected unit credit actuarial valuation
method. Actuarial gains and losses are
recognised in retained earnings.
Past service cost is recognised immediately
to the extent that the benefits are already
vested; otherwise it is amortised on a
straight-line basis over the average period
until the benefits become vested.
The defined benefit asset or liability recognised
in the balance sheet represents the present
value of the defined benefit obligation,
adjusted for unrecognised past service cost,
net of the fair value of the plan assets. Any
asset resulting from this calculation is limited
to past service cost, plus the present value of
available refunds and reductions in future
contributions to the plan.
Australia Post Annual Report 2008–09 | Financial and statutory reports 69