AWB Limited - 2004 Annual Report

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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER <strong>2004</strong> 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Revenue recognition (continued) Underwriting fee The underwriting fee charged on loan products is a fee for the service of providing a non–recourse loan. Underwriting fee revenue is recognised on a basis consistent with the pattern of the incidence of risk covered by the service provided. Sale of non–current assets The gross proceeds of non–current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal. (e) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (f) Income tax Income tax expense is calculated at current rates on the accounting profit adjusted for permanent differences. Future income tax benefits and liabilities arise because some items are included in accounting profit in a period different from that in which the items are assessed for income tax and are included in the statement of financial position as a non–current asset and non–current liability respectively. As provided for in Australian Accounting Standard AASB 1020: Income Taxes, these deferred tax balances have been offset where applicable. Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Tax consolidation The company is the head entity in the tax–consolidated group comprising all the Australian wholly–owned subsidiaries set out in Note 33. The implementation date for the tax–consolidated group is 1 October 2003. The head entity recognises all of the current and deferred tax assets and liabilities of the tax–consolidated group (after elimination of intragroup transactions). The tax–consolidated group has entered into a tax funding agreement that requires wholly owned subsidiaries to make contributions to the head entity for: – deferred tax balances recognised by the head entity on implementation date, including the impact of any relevant reset tax cost bases; and – current tax assets and liabilities and deferred tax balances arising from external transactions occurring after the implementation of tax consolidation. Under the tax funding agreement, the contributions are calculated on a “stand–alone basis” so that the contributions are equivalent to the tax balances generated by external transactions entered into by wholly–owned subsidiaries. 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 income tax expense/revenue. (g) Foreign currencies Transactions Transactions in foreign currencies are converted to Australian currency at the rate of exchange ruling at the date of the transaction. Amounts receivable and payable in foreign currencies at reporting date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts receivable and payable in foreign currencies are brought to account as exchange gains or losses in the statement of financial performance in the financial year the exchange rates change, except where hedging specific anticipated transactions. (See Note 1(h) Derivatives) Translation of controlled foreign operations The assets and liabilities of foreign operations, including controlled entities and associates, that are self sustaining are translated at the rates of exchange ruling at balance date. Equity items are translated at historical rates. The statements of financial performance are translated at either a weighted average rate for the year or transaction date. Exchange differences arising on translation are taken directly to the foreign currency translation reserve until the disposal, or partial disposal, of the operations. The assets and liabilities of foreign operations, including controlled entities and associates, that are integrated are translated using the temporal method. Monetary assets and liabilities are translated into Australian currency at rates of exchange current at balance date, while non–monetary items and revenue and expense items are translated at exchange rates current when the transactions occurred. Exchange differences arising on translation are brought to account in the statement of financial performance. (h) Derivatives The consolidated entity is exposed to changes in interest rates, foreign exchange rates and commodity and freight prices from its activities. The consolidated entity uses the following derivative financial instruments to hedge these risks: interest rate swaps, interest rate futures, interest rate swaptions, forward rate agreements, interest rate options, forward foreign exchange contracts, foreign exchange options, forward commodity price contracts, commodity futures, commodity options and forward freight agreements. Hedges Where hedge transactions are designated as a hedge of an anticipated specific purchase or sale of goods or an anticipated interest transaction, gains and losses on the hedge arising up to the date of the anticipated transaction, together with any costs or gains arising at the time of entering into the hedge, are deferred and included in the measurement 64
(h) Derivatives (continued) of the anticipated transaction when the transaction occurs as designated. Any gains or losses on the hedge transaction after that date are included in the statement of financial performance. The net amounts receivable or payable under forward foreign exchange contracts, open swaps, forward rate agreements and futures contracts and the associated deferred gains or losses are recorded on the statement of financial position from the date of inception of the hedge transaction. The net receivables or payables are revalued using the foreign currency, interest or commodity rates current at reporting date. When the anticipated transaction is no longer expected to occur as designated, the deferred gains and losses relating to the hedged transaction are recognised immediately in the statement of financial performance. Where a hedge transaction is terminated early and the anticipated transaction is still expected to occur as designated, the deferred gains and losses that arose on the hedge prior to its termination continue to be deferred and are included in the measurement of the purchase or sale or interest transaction when it occurs. Where a hedge transaction is terminated early because the anticipated transaction is no longer expected to occur as designated, deferred gains and losses that arose on the hedge prior to its termination are included in the statement of financial performance for the period. Where a hedge is redesignated as a hedge of another transaction, gains and losses arising on the hedge prior to its redesignation are only deferred where the original anticipated transaction is still expected to occur as designated. When the original anticipated transaction is no longer expected to occur as designated, any gains or losses relating to the hedge instrument are included in the statement of financial performance for the period. Other derivatives All other derivative transactions are initially recorded at the relevant rate at the date of the transaction. Derivatives outstanding at balance date are valued at the rates ruling on that date and any gains or losses are brought to account in the statement of financial performance. The exception is those interest rate derivatives detailed in Note 31(f ). (i) Cash For the purpose of the statement of cash flows, cash includes cash on hand and in banks, net of outstanding bank overdrafts. Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues. (j) Receivables The collectability of debts is assessed at balance date and specific provision is made for any doubtful accounts. Trade debtors Terms of trade receivables generally require settlement within 30 days. Receivables from related parties have been discounted to their present value using a market determined discount rate. (k) Inventories Inventories are valued at the lower of cost or net realisable value. Associates Investments in unlisted shares of associates are carried in the company's financial statements at the lower of cost or recoverable amount. Joint venture operations Investments in joint venture operations are accounted for in the financial statements as set out in Note 1(c) Principles of consolidation. Other entities Investments in other entities are carried at the lower of cost or recoverable amount. (m) Lease assets Finance leases Finance leases are capitalised. A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Operating leases Payments made under operating leases are expensed on a straight line basis over the term of the lease. (n) Constructed non–current assets The cost of non–current assets constructed by the consolidated entity includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of overheads. (o) Research and development expenditure Research and development expenditure is expensed as incurred except to the extent that its recoverability is assured beyond any reasonable doubt, in which case it is deferred. (p) Intangible assets Goodwill On acquisition of some, or all, of the assets of another entity, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired is brought to account as goodwill and will be amortised so that it is recognised as an expense in the statement of financial performance on a straight line basis over a period of 20 years or the expected useful life. Licence fees Costs associated with licence fees are deferred and amortised on a straight line basis over the period of their expected benefit. (q) Recoverable amount of non–current assets Non–current assets are not carried at an amount above their recoverable amount, and where carrying values exceed their recoverable amount, assets are written down to their recoverable amounts. (l) Investments Controlled entities Investments in controlled entities are carried in the company’s financial statements at the lower of cost or recoverable amount. 65
Page 1 and 2:
Annual Report 2004
Page 3 and 4:
Who We Are AWB Limited (AWB) is Aus
Page 5 and 6:
Finance AWB harvest finance book pe
Page 7 and 8:
Five Year Summary 2004 2003 2002 20
Page 9 and 10:
Chairman’s and Managing Director
Page 11 and 12:
To continue building its capability
Page 13 and 14:
Pool Management Services Highlights
Page 15 and 16: AWB National Pool participants. AWB
Page 17 and 18: Landmark Highlights Integrated Land
Page 19 and 20: the integration, Landmark has reloc
Page 21 and 22: Finance and Risk Management Highlig
Page 23 and 24: Finance Limited, a wholly owned, ba
Page 25 and 26: Grain Acquisition and Trading Highl
Page 27 and 28: through the AWB Geneva office, both
Page 29 and 30: Supply Chain & Other Investments Hi
Page 31 and 32: The Five Star Feed Mill, located on
Page 33 and 34: Our People AWB employs over 2,700 p
Page 35 and 36: More than 70% of AWB’s employees
Page 37 and 38: Our Social Commitment Together with
Page 39 and 40: Social service providers While not
Page 41 and 42: 7. Richard Fuller General Manager,
Page 43 and 44: Independence All of the current 11
Page 45 and 46: Services Agreement Committee The Se
Page 47 and 48: its observance provides the foundat
Page 49 and 50: Promotion Committee and Founding Ch
Page 51 and 52: 1. Brendan Stewart Chairman, Non-ex
Page 54 and 55: DIRECTORS' REPORT Your directors su
Page 56 and 57: DIRECTORS' REPORT (continued) REMUN
Page 58 and 59: DIRECTORS' REPORT (continued) DIREC
Page 60 and 61: DIRECTORS' REPORT (continued) DIREC
Page 62 and 63: STATEMENT OF FINANCIAL PERFORMANCE
Page 64 and 65: STATEMENT OF CASH FLOWS FOR THE YEA
Page 68 and 69: NOTES TO AND FORMING PART OF THE FI
Page 106 and 107: INDEPENDENT AUDIT REPORT TO THE MEM
Page 108 and 109: SHAREHOLDER COMMUNICATION FINANCIAL
Page 110 and 111: GLOSSARY AWB Basis Pool AWB Basis P
Page 112: Head Office 380 La Trobe Street Mel
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AWB Limited - 2004 Annual Report

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