4.78 MB - Perth Airport

NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2005 (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Lease Franchise Fee and Expenditure Carried Forward
(i) Lease Franchise Fee
The franchise fee paid on acquisition of the Perth Airport lease, which represents the difference between the Perth Airport purchase
price and the fair value of the net tangible assets acquired, is amortised on a straight line basis over the life of the lease, being 99 years
from 2 July 1997.
(ii) Capitalised Bid Costs
The costs incurred in relation to the Perth Airport bid and acquisition have been capitalised and are amortised on a straight-line basis
over the life of the lease, being 99 years from 2 July 1997.
(iii) Capitalised Finance Costs and Capitalised US Note Issue Finance Costs
All fees and costs incurred in establishing the funding facilities for the acquisition of the Perth Airport lease and in refinancing the debt
structure have been capitalised and are amortised on a straight line basis according to the term to maturity of the relevant debt.
(iv) Capitalised Masterplan Costs
All fees and costs incurred in the development of the masterplan have been capitalised and are amortised on a straight-line basis over
5 years. This represents the statutory period over which the masterplan is required to be prepared.
(v) Aviation Development Programme
Costs incurred relate to feasibility analysis and runway upgrades and are currently being amortised over a period of 3 years.
(l)
Payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the reporting date and which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(m) Borrowing Costs
Borrowing costs are recognised as expenses in the period in which they are incurred, except as noted in note 1(k)(iii). Borrowing costs include:
• interest on bank overdraft and long term borrowings
• interest on long term subordinated debt
• interest on bonds payable (including capitalised interest component)
• ancillary costs incurred in connection with the ongoing conduct of borrowings.
(n) Derivative Financial Instruments
(i) Forward exchange contracts
The consolidated entity enters into forward exchange contracts where it agrees to sell specified amounts of foreign currencies in the future
at a predetermined exchange rate. The objective is to match the contract with anticipated future cash flows from payments and receipts
in foreign currencies, to reduce the impact on the consolidated entity against the possibility of loss from future exchange rate fluctuations.
The accounting policy for currency swaps is detailed in note 1(d).
(ii) Interest rate swaps
The consolidated entity enters into interest rate swap agreements that are used to convert the floating interest rates payable on a
portion of its debt to fixed interest rates. The swaps are entered into with the objective of reducing impact on the consolidated entity
from future interest rate fluctuations.
It is the company’s policy not to recognise interest rate swaps in the financial statements. Net receipts and payments are recognised as
an adjustment to interest expense.
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