AWB Limited - 2003 Annual Report

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2003
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of preparation
The financial report is a general purpose financial report which has
been prepared in accordance with Accounting Standards, Urgent
Issues Group Consensus Views, other authoritative
pronouncements of the Australian Accounting Standards Board
and the Corporations Act 2001.
It has been prepared on the basis of historical costs and except
where stated, does not take into account fair values of non–current
assets.
(b) Changes in accounting policies
Accounting policies have been consistently applied by each entity
in the consolidated entity and are consistent with those of the
previous year except for the accounting policies with respect to the
provision for dividends and employee benefits. Comparative
information has been repositioned or reclassified where appropriate
to ensure comparability with the current reporting period.
Provision for dividend
The consolidated entity has adopted the new Australian Accounting
Standard AASB 1044: Provisions, Contingent Liabilities and
Contingent Assets which has resulted in a change in the
accounting for the dividends provision. Previously, the consolidated
entity recognised a provision for dividend based on the amount that
was proposed or declared after the reporting date. In accordance
with the requirements of the new Standard, a provision for
dividends will only be recognised at the reporting date where the
dividends have been declared, determined or publicly
recommended prior to the reporting date. In accordance with the
new Standard, no provision for dividend has been recognised for
the year ended 30 September 2003.
Employee benefits
The consolidated entity has applied the revised AASB 1028:
Employee Benefits issued June 2001 for the first time from
1 October 2002.
The liability for wages and salaries, and annual leave is now
calculated using the remuneration rates AWB Limited expects to
pay as at each reporting date, not wage and salary rates current at
reporting date. The effect of the revised policy is not material.
(c) Principles of consolidation
Controlled entities
The financial statements of controlled entities are included from
the date control commences until the date control ceases.
Outside interests in the equity and results of the entities that are
controlled by the company are shown as a separate item in the
consolidated financial statements.
Associates
Associates are those entities, other than partnerships, over which
the consolidated entity exercises significant influence and which
are not intended for sale in the near future.
In the consolidated financial statements, investments in associates
are accounted for using equity accounting principles. Investments
in associates are carried at the lower of the equity accounted
amount and recoverable amount. The consolidated entity’s equity
accounted share of the associates’ net profit or loss is recognised
in the consolidated statement of financial performance from the
date significant influence commences until the date significant
influence ceases. Other movements in reserves are recognised
directly in consolidated reserves.
Joint venture operations
Joint venture operations are jointly controlled by the consolidated
entity. The consolidated entity’s interests in unincorporated joint
ventures are brought to account by including its proportionate
share of the joint ventures’ assets, liabilities and expenses and the
consolidated entity’s revenue from the sale of its share of output
on a line–by–line basis, from the date joint control commences to
the date joint control ceases.
Transactions eliminated on consolidation
Unrealised gains and losses and inter–entity balances resulting
from transactions with or between controlled entities are eliminated
in full on consolidation.
Unrealised gains resulting from transactions with associates and
joint ventures, including those relating to contributions of
non–monetary assets on establishment, are eliminated to the
extent of the consolidated entity’s interest. Unrealised gains
relating to associates and joint ventures are eliminated against the
carrying amount of the investment. Unrealised losses are
eliminated in the same way as unrealised gains, unless they
evidence a recoverable amount impairment.
AWB National Pools
As in previous years, the activities of the AWB National Pools have
not been recognised in the financial statements of the consolidated
entity. The economic benefit from the activities of the AWB
National Pools are derived by pool participants rather than the
consolidated entity.
(d) Revenue recognition
Revenues are recognised at fair value of the consideration received
net of the amount of goods and services tax payable to the
Australian Taxation Office.
Sales
Revenue from sales made on commercial terms is recognised
when title for the commodity transfers to the customer. In the case
of export sales, the bill of lading (shipment) date is taken as
transaction date unless title is to pass at a materially different time.
Management fee revenue
Management fee revenue is recognised according to when the
costs of providing the services are incurred.
Interest revenue
Interest revenue is recognised as it accrues taking into account the
effective yield of the financial asset.
Underwriting fee
The underwriting fee charged on loan products is a fee for the
service of providing a non–recourse loan. The recourse on this
loan is limited to a percentage of the estimated pool return at a
53