2009 GMHBA Annual Report - GMHBA Health Insurance

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GMHBA Limited ABN 98 004 417 092NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 20091. Summary of significant accounting policiesGMHBA Limited ABN 98 004 417 092NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2009 (CONTINUED)1. Summary of significant accounting policies (continued)The Company’s financial statements are a general purpose financial report prepared inaccordance with the requirements of the Corporations Act 2001 and the Australian AccountingStandards (AASBs) (including Australian Interpretations) adopted by the Australian AccountingStandards Board (AASB).AASB amendmentAffectedstandard(s)Nature of changeto accounting policyApplicationdate ofstandardApplicationdate forGMHBAThe Company’s financial statements were authorised for issue on 25 August 2009 by the GMHBALimited Board. The signatories on the authorisation were the Chairman of the Board, Michael JDowling and the Chairman of the Audit & Compliance Committee, James E Walsh.The Company’s financial statements were prepared in accordance with the historical costsconvention, except for the following:• Financial instruments are measured at fair value through the income statement• Land and Buildings are recorded at fair value with movements in value taken to an assetrevaluation reserve• Connect Rewards benefit provision is carried at present valueThe presentation currency used for the preparation of these financial reports is Australian dollars.AASB 101: Presentation ofFinancial Statements.AASB 2007-8 Amendments toAustralian AccountingStandards arising from AASB101.AASB 2009 – 5 ImprovementProject.AASB 2009 – 2 Amendments toAustralian AccountingStandards- Improvingdisclosures about FinancialInstruments.Upon adoption, it will impact the presentation of theincome statement, and statement of recognisedincome and expense, and may affect thepositioning of the statement of changes in equity.Retrospective application will be required.This Standard is the culmination of the IASB’s firstAnnual Improvements Project, which involved theIASB accumulating what it believes are non-urgentbut necessary improvements to InternationalFinancial Reporting Standards (IFRS’s) andprocessing these amendments collectively.This Amending Standard will impact the disclosureprovided regarding Financial Instruments.1 January 20091 January 20091 January 200930 June 201030 June 201030 June 2010International Financial Reporting Standards (“IFRS”) refer to the overall framework of standardsand pronouncements approved by the International Accounting Standards Board. IFRS forms thebasis of AASBs. This financial report of the Company complies with IFRS. The current IFRSstandard for insurance contracts does not include a comprehensive set of recognition andmeasurement criteria. The International Accounting Standard Board continues to work on a projectto issue a standard that does include such criteria. Until the issuance of that standard, the financialreports of insurers in different countries that comply with IFRS may not be comparable in terms ofthe recognition and measurement of insurance contracts.The following standards, amendments to standards and interpretations have been identified asthose which may impact the entity in the period of initial application that are available for earlyadoption at 30 June 2009, but have not been applied in preparing this financial report:(a)Use of estimates and judgementsThe preparation of financial statements requires management to make judgements,estimates and assumptions that affect the application of accounting policies and the reportedamounts of assets, liabilities, income and expenses. Actual results may differ from theseestimates. Estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which the estimate isrevised and in any future periods affected.In particular, information about significant areas of estimation uncertainty and criticaljudgements in applying accounting policies that have the most significant effect on theamount recognised in the financial statements are described in the following notes:Claims outstanding, see note 1(j)AASB amendmentAASB 3: BusinessCombinations.AASB 127: Consolidated andSeparate Financial Statements.Affectedstandard(s)Nature of changeto accounting policyAdjustment to carrying amounts of assetsand liabilities that arose under businesscombinations.(If AASB 3 is adopted early, AASB 127must be adopted for the same period.)Application dateof standardApplication datefor GMHBA01 July 2009 30 June 2010(b)Liability Adequacy Test, see note 1(k)Connect Reward benefits, see note 1(l)Determination of fair valuesA number of the Group’s accounting policies and disclosures require the determination of fairvalue, for both financial and non-financial assets and liabilities. Fair values have beendetermined for measurement and/or disclosure purposes based on the following methodsand where applicable, further information about the assumptions made in determining fairvalues is disclosed in the notes specific to that asset or liability.30 2931 30
GMHBA Limited ABN 98 004 417 092NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2009 (CONTINUED)1. Summary of significant accounting policies (continued)(b)Determination of fair values (continued)(i)(ii)Term Deposits, Debentures, Bank Bonds and NotesThe fair value of these investments is based on their listed market price, if available. Ifa listed market price is not available, then fair value is estimated by discounting thedifference between the contractual forward price and the current forward price for theresidual maturity of the contract using a market interest rate (based on governmentbonds). These investments are held for a set term and rolled over at maturity.Equity investments and unit trustsFor securities listed in an active market, fair value is determined by reference topublished bid price quotations. For investments in unlisted investment trusts the fairvalue is determined with reference to the quoted redemption price provided by theTrustee.GMHBA Limited ABN 98 004 417 092NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2009 (CONTINUED)1. Summary of significant accounting policies (continued)(g)DepreciationProperty, plant and equipment, other than land, is depreciated using either the diminishingvalue method or the straight line method over the period during which benefits are expectedto be derived from the asset. Profits and losses on disposal of property, plant and equipmentare taken into account in determining the profit for the year. The following rates ofdepreciation are applied:2009%2008%Buildings 1.5 1.5Furniture & Fittings 10.0 10.0Office Equipment 15.0 to 40.0 15.0 to 40.0Motor Vehicles 22.5 22.5(c)(d)(e)(f)(iii) Land and buildingsThe Company engaged Landlink Property Group Pty Ltd, a valuations and advisoryservices company which employs accredited independent valuers, to determine thefair value of its land and buildings. Fair value is determined directly by reference tomarket based evidence, which is the amounts for which the assets could beexchanged between a knowledgeable willing buyer and a knowledgeable willing sellerin an arm’s length transaction as at the valuation date. The effective dates of thevaluations were 30 June 2009 for the Geelong properties.Cash and cash equivalentsFor the purposes of the Cash Flow Statement, cash includes cash on hand and bankdeposits at call within 90 days.Trade and other receivablesThe Premium receivable as at 30 June 2009 consists of:(i) Actual cash premium receipts for periods in advance of the reporting date; plus(ii) Forecast premiums receivable from policyholders at 30 June 2009.Property, plant and equipmentLand and buildings are recorded at valuation (buildings are subsequently subject todepreciation) and plant and equipment are recorded in the financial statements at cost lessaccumulated depreciation. The Company engages an appropriately qualified person toundertake a full valuation of its land and buildings at intervals not greater than three years(see 1 (b)(iii)).Recoverable amount of non-current assetsNon-current assets, except for investments and land and buildings are recorded in thefinancial statements at cost less accumulated depreciation. The carrying values of all noncurrentassets are reviewed by management at regular intervals to ensure that they are notstated at amounts in excess of their recoverable amounts. Except where stated, recoverableamounts are not determined using discounted cash flows. Management has reviewed theassets and are of the opinion that there has been no impairment of the asset’s current valueswithin the asset classes.(h)(i)(j)Employee benefitsSalaries and wages and annual leaveLiabilities for salaries and wages and annual leave are recognised, and are measured as theamount unpaid at the reporting date based on remuneration rates expected to apply whenthe obligation is settled, including on-costs, in respect of employees’ services up to that date.Long service leaveA liability for long service leave is recognised, and is measured as the present value ofexpected future payments to be made in respect of services provided by employees up to thereporting date. Consideration is given to the expected future wage and salary levels,experience of employee departures and periods of services. Expected future payments arediscounted using interest rates on national government guaranteed securities with terms tomaturity that match, as closely as possible, the estimated future cash flows.Health benefits risk equalisation trust fundUnder the provisions of the Private Health Insurance Risk Equalisation Policy Rules 2007,hospital benefits are submitted to the Risk Equalisation trust fund and shared amongst allhealth benefit funds in the following circumstances:Where a fund has directly paid these benefits, which are proportionally less than the averageof other funds in the State, it is required to pay to the Risk Equalisation Trust Fund anamount equivalent to the shortfall. Conversely, where the direct payment is proportionallygreater than the average, the difference is paid to the Company from the Risk EqualisationTrust Fund. Eligible claims are assessed on a quarterly basis.Claims outstandingClaims that have been incurred by Fund members, but not yet presented to the Company forreimbursement, are estimated based on the claims experience in previous accountingperiods. Outstanding claims are not discounted as they are usually settled within six monthsof the reporting date. The provision is calculated in accordance with the principles of thechain ladder method which can be used under the prudential regulations of the PrivateHealth Insurance Industry.32 3133 32
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2009 GMHBA Annual Report - GMHBA Health Insurance

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