Financial Report 2009 - Leighton Holdings

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Notes continued for the year ended 30 June 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED The contributions are payable as set out in the agreement and reflect the timing of the head entity’s obligations to make payments for tax liabilities to the relevant tax authorities. The assets and liabilities arising under the tax funding agreement are recognised as intercompany assets and liabilities with a consequential adjustment to current income tax. Inventories Inventories are carried at the lower of cost and net realisable value. Inventories comprise: Property developments Cost includes the costs of acquisition, development and holding costs such as rates, taxes and finance costs. Holding costs on property developments not under active development are expensed as incurred. Raw materials and consumables Cost is based on the first-in, firstout principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition and location. Investments Controlled entities Investments in controlled entities are carried in the Company’s financial statements at cost less impairment. Equity accounted investments Investments in entities over which the Group has the ability to exercise significant influence but not control, and jointly controlled entities are accounted for using equity accounting principles. These investments are carried at cost plus post-acquisition changes in the net assets of the investment. The consolidated income statement reflects the Group’s share of the result of these investments. Where there has been a change recognised directly in equity, the Group recognises its share of that change. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation and amortisation Depreciation and amortisation is calculated so as to write-off the net book value of property, plant and equipment over their estimated effective useful lives as follows: • freehold buildings: straight line method - up to 40 years; • major plant and equipment: cumulative number of hours worked - up to 10 years; • major plant and equipment - component parts: cumulative number of hours worked - up to 10 years; • leased plant and equipment: straight line method, over the terms of the leases - up to 10 years; • waste management assets: straight line method, economic life of the waste operations - up to 20 years; • office and other equipment: diminishing value method - up to 10 years; • leasehold buildings and improvements: straight line method, over the terms of the leases - up to 40 years. Subsequent costs Subsequent costs are included in the carrying amount of property, plant and equipment only when it is probable that the associated future economic benefits will flow to the Group. All other costs are recognised in the income statement. Leased assets Leases under which the Group assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases. Finance leases A lease asset and a lease liability equal to the lower of the fair value of the leased property and the present value of the minimum lease payments is recorded at the inception of the lease. The finance lease liability is the net present value of future finance lease rentals and residuals. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Contingent rentals, which are potential incremental lease payments not fixed in amount as they relate to future changes, are expensed as incurred. Operating leases Payments made under operating leases are expensed on a straight line basis over the term of the lease. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired controlled entity or business at the date of acquisition. Goodwill on acquisitions of associates is included in investments in associates. Goodwill acquired in business combinations is not amortised. Goodwill is allocated to related cash-generating units and is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Leighton Holdings Limited FINANCIAL REPORT 2009 9
Notes continued for the year ended 30 June 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED Negative goodwill arising on an acquisition is recognised in the income statement. Acquisition of assets Assets acquired are initially recorded at their cost of acquisition being the fair value of the consideration plus incidental costs directly attributable to the acquisition. Impairment The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The recoverable amount of goodwill is reviewed at each reporting date irrespective of an indication of impairment. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The recoverable amount for an asset that does not generate largely independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognised in the income statement unless the asset has been previously revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised in the income statement. Reversals of impairment losses other than in respect of goodwill and available-for-sale assets, are recognised in the income statement. Any increase above original cost of the asset is treated as a revaluation increase in equity. Employee benefits Liabilities in respect of employee benefits which are not expected to be settled within twelve months are discounted using the rates attaching to national government securities at reporting date, which most closely match the terms of maturity of the related liabilities. Wages, salaries, annual and long service leave The provision for employee entitlements to wages, salaries and annual and long service leave represents the amount which the Group has a present obligation to pay resulting from employees’ services provided up to the reporting date. Provisions have been calculated based on expected wage and salary rates and include related on-costs. In determining the liability for these employee entitlements, consideration has been given to estimated future increases in wage and rates, and the Group’s experience with staff departures. Related on-costs have been included in the liability. Superannuation Defined benefit and defined contribution superannuation plans exist to provide benefits for eligible employees or their dependants. Contributions by the Group are expensed to the income statement as incurred. Actuarial gains and losses may arise in relation to defined benefit superannuation plans. To the extent that any cumulative unrecognised actuarial gain or loss exceeds 10 per cent of the greater of the present value of the defined benefit obligation and the fair value of fund assets, that portion of the actuarial gain or loss is recognised in the income statement over the expected average remaining working lives of the active employees participating in the fund. Otherwise, the actuarial gain or loss is not recognised. Share-based payment transactions Ownership based remuneration is provided to employees via the Leighton Senior Executive Share Option Plan. These shares are recognised when the options are exercised and the proceeds received are allocated to share capital. Under the Leighton Management Share Plan, the Company is permitted to grant selected executives shares which the Company acquires on market. Under the Leighton Employees Share Plan, the Company is permitted to make an annual offer of shares in the Company to eligible employees. The maximum value of shares which may be offered to any employee in any one year is $1,000. These share offers are recognised as an expense at the time the shares are granted. Retention arrangements Retention arrangements are in place ranging from three years to retirement for certain key employees which are payable upon completion of the retention period. The provisions are accrued on a pro-rata basis during the retention period and have been calculated based on current salary rates, including related oncosts. Leighton Holdings Limited FINANCIAL REPORT 2009 10
Page 1 and 2: LEIGHTON 2009Financial Report Leigh
Page 3 and 4: Income Statements for the year ende
Page 5 and 6: Balance Sheets as at 30 June 2009 G
Page 7 and 8: Notes to the Financial Statements f
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Statutory Statements continued INDE
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Financial Report 2009 - Leighton Holdings

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