annual report 2011

IOOF | annual report 2011
Notes to the financial statements (cont’d)
For the year ended 30 June 2011
with other receivables or payables in the Statement of
Financial Position.
Cash flows are presented in the statement of cash flows on a
gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from,
or payable to, the Australian Taxation Office are presented as
operating cash flows.
(q) Deferred acquisition costs
Deferred acquisition costs relate to service fees paid, and are
deferred as an asset in recognition that they relate to a future
economic benefit. Deferred acquisition costs are initially
measured at historical cost and are written down immediately
to their recoverable amount if the carrying amount is greater
than its estimated recoverable amount.
Deferred acquisition costs are progressively amortised in profit
or loss by a systematic allocation over the period of time the
future economic benefits are expected to be received. The
amortisation period is between 5 and 7 years.
(r)
(i)
Investment contract liabilities and claims
expense
Investment contracts with Discretionary
Participation Features (DPF)
The value of these liabilities changes in relation to the change
in unit prices for unit linked contracts, and are decreased by
management fee charges. In accordance with the rules of the
funds, any remaining surplus is attributed to the policyholders.
Adjustments to the liabilities at each reporting date are
recorded in profit or loss.
(ii)
Other investment contracts
The value of these liabilities changes in relation to the change
in unit prices for unit linked contracts, and are decreased by
management fee charges. In accordance with the rules of the
funds, any remaining surplus is attributed to the members of
the fund. Amounts distributable to members are recorded in
profit or loss as an expense.
There is no claims expense in respect of life investment
contracts. Surrenders and withdrawals which relate to life
investment contracts are treated as a movement in life
investment contract liabilities. Surrenders are recognised when
the policyholder formally notifies of their intention to end the
policy previously contracted.
(s)
Insurance contract liabilities and claims
expense
Life insurance contract liabilities are calculated in accordance
with actuarial standards.
A claim expense is recognised when the liability to the
policyholder under the policy contract has been established,
or upon notification of the insured event. Withdrawal
components of life insurance contracts are not expenses and
are treated as movements in life insurance contract liabilities.
(t)
Shareholders entitlement to monies held in
statutory funds
Monies held in the life insurance Statutory Funds (including
the Benefit Funds) are subject to the distribution and transfer
restrictions and other requirements of the Life Insurance Act
1995. Monies held in the benefit funds and controlled trusts
are held for the benefit of the members of those funds, and are
subject to the constitution and rules of those funds.
(u) Earnings per share
The Group presents basic and diluted earnings per share data
for its ordinary shares. Basic earnings per share is calculated by
dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary
shares outstanding during the year, adjusted for treasury shares
held.
Diluted earnings per share is determined by adjusting the
profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding,
adjusted for treasury shares held, for the effects of all dilutive
potential ordinary shares, which comprise performance rights
and share options granted to employees.
(v) Segment reporting
Determination and presentation of operating
segments
An operating segment is a component of the Group that
engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses
that relate to transactions with any of the Group’s other
components. All operating segments’ operating results are
regularly reviewed by the Group’s Managing Director to make
decisions about resources to be allocated to the segment
and assess its performance, and for which discrete financial
information is available.
Segment results that are reported to the Managing Director
include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated
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