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2012 Annual Report
For the year ended June 2012
Borrowings are subsequently measured at
amortised cost. Any difference between the
proceeds (net of transaction costs) and the
redemption amount is recognised in the statement
of comprehensive income over the period of the
borrowings using the effective interest method.
Fees paid on the establishment of loan facilities,
which are not incremental costs relating to the
actual draw-down of the facility, are recognised as
prepayments and amortised on a straight-line basis
over the estimated term of the facility.
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 reporting date. This policy also applies to
inter-company borrowings within the Group.
(w) Finance Costs
Borrowing costs are recognised as expenses in
the period in which they are incurred. These
costs include:
• interest on bank overdrafts, short and
long-term borrowings;
• interest on new vehicle bailment
arrangements; and
• amortisation of ancillary costs incurred in
connection with the arrangement
of borrowings
(x) Provisions – refer notes 19 and 20
Provisions for legal and other claims are recognised
when the Group has a present legal or constructive
obligation as a result of past events, it is more
likely than not that an outflow of resources will be
required to settle the obligation and the amount
has been reliably estimated.
An extended mechanical warranty is offered on the
majority of the Group’s retail used vehicle sales.
The majority of the Group’s operations pay a fee
to an independent third party to administer the
warranty program and an amount is set aside as a
provision for future warrantable repairs in respect
of all policies taken up. All warrantable repairs are
submitted to the administrator for approval and,
once approved, are charged against the provision.
Where an independent third party is not used
to determine the warranty provision the Group
makes a best estimate of the expenditure required
to settle the present obligation at reporting date.
Where the effect of the time value of money is
material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate
that reflects current market assessments of the
time value of money and where appropriate the
risks specific to the liability.
(y) Employee Benefits –
refer notes 19 and 20
Wages, salaries and annual leave
The provision for employee entitlements, salaries
(including non-monetary benefits) and annual leave
expected to be settled within 12 months of the
reporting date are recognised in current liabilities 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.
Long Service Leave
The liability for long service leave expected to
be settled within 12 months of the reporting date
is recognised as current and is measured at the
amount of long service leave to which employee
are currently entitled.
Where the liability for long service leave is expected
to be settled more than 12 months from the
reporting date, the associated obligations are still
presented as a current liability in the statement of
financial performance if the entity does not have an
unconditional right to defer settlement for at least
twelve months after the reporting date, regardless
of when the actual settlement is expected to occur.
For those long service leave liabilities that are a
non current liability within employee entitlements,
they are measured as the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting date.
Consideration is given to anticipated future
wage and salary levels, experience of employee
departures and periods of service.
Profit-sharing and bonus plans
The Group recognises a liability and an expense
for bonuses and profit-sharing based on a formula
that takes into consideration the profit attributable
to the Company’s shareholders after agreed
adjustments. The Group recognises a provision
where contractually obliged or where there is a past
practice that has created a constructive obligation.
Share-based payments
Share-based compensation benefits are provided
to eligible senior executives of the Company via the
AHG Performance Rights Plan. Information relating
to this scheme is set out in note 30.
The fair value of performance rights are recognised
as an employee benefit expense based on
the probability of certain executives meeting
performance hurdles during a performance period.
At each reporting date, the Group revises its
estimate of the number of performance rights that
are expected to become exercisable. The employee
benefit expense recognised each period takes into
account the most recent estimates.
(z) Contributed Equity – refer note 22
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares are shown in equity as a deduction,
net of tax, from the proceeds. Consideration
paid for treasury shares is deducted from equity
attributable to owners until the shares are re-issued.
(aa) Dividends – refer note 9
Provision is made for the amount of any dividend
declared, being appropriately authorised and no
longer at the discretion of the entity, on or before
the end of the reporting period but not distributed
at the end of the reporting period.
Automotive Holdings Group 77