INSTRUCTIONS - Realview

NOTES TO THEFINANCIAL STATEMENTSFor the year ended 30 June 2009Note 1 Summary of significant accountingpolicies cont.(z) Contributed equityOrdinary shares are classified as equity.Incremental costs directly attributable to the issue of newshares or options are shown in equity as a deduction, fromthe proceeds. Incremental costs directly attributable to theissue of new shares or options, or for the acquisition of abusiness, are included in the cost of the acquisition as partof the purchase consideration.If the entity reacquires its own equity instruments,e.g. as the result of a share buy-back, those instrumentsare deducted from equity and the associated shares arecancelled. No gain or loss is recognised in the incomestatement and the consideration paid including any directlyattributable incremental costs is recognised directly in equity.(aa) Earnings per share(i) Basic earnings per shareBasic earnings per share is calculated by dividing the profitattributable to equity holders of the Company, excludingany costs of servicing equity other than ordinary shares, bythe weighted average number of ordinary shares outstandingduring the reporting period, adjusted for bonus elementsin ordinary shares issued during the reporting period.(ii) Diluted earnings per shareDiluted earnings per share adjusts the figures used in thedetermination of basic earnings per share to take into accountthe after income tax effect of interest and other financingcosts associated with dilutive potential ordinary shares andthe weighted average number of shares assumed to havebeen issued for no consideration in relation to dilutivepotential ordinary shares.(ab) Restricted cashFunds placed on deposit with financial institutions to securebank guarantees are classified as current receivables.(ac) Rehabilitation and mine closureThe consolidated entity has obligations to dismantle,remove, restore and rehabilitate certain items of property,plant and equipment.Under AASB 116 Property, Plant and Equipment, the costof an asset must include any estimated costs of dismantlingand removing the asset and restoring the site on which itis located. The capitalised rehabilitation and mine closurecosts are depreciated (along with the other costs includedin the asset) over the asset’s useful life.AASB 137 Provisions, Contingent Liabilities and ContingentAssets requires a provision to be made for the estimatedcost of rehabilitation and restoration of areas disturbedduring mining operations up to reporting date but not yetrehabilitated. Provision has been made in full for all thedisturbed areas at the reporting date based on currentestimates of costs to rehabilitate such areas, discountedto their present value based on expected future cash flows.The estimated cost of rehabilitation includes the currentcost of contouring, topsoiling and revegetation to meetlegislative requirements. Changes in estimates are dealtwith on a prospective basis as they arise.There is some uncertainty as to the amount of rehabilitationobligations that will be incurred due to the impact ofchanges in environmental legislation and many otherfactors, including future developments, changes intechnology and price increases.At each reporting date the rehabilitation liability is remeasuredin line with changes in the timing and /or amounts ofthe costs to be incurred and discount rates. The liabilityis adjusted for changes in estimates. Adjustments to theestimated amount and timing of future rehabilitation andrestoration cash flows are a normal occurrence in lightof the significant judgments and estimates involved.As the value of the provision represents the discounted valueof the present obligation to restore, dismantle and rehabilitate,the increase in the provision due to the passage of time isrecognised as a borrowing cost.(ad) Rounding of amountsThe company is of a kind referred to in Class Order 98/0100,issued by the Australian Securities and Investments Commission,relating to the “rounding off” of amounts in the financialreport. Amounts in the financial report have been roundedoff in accordance with that Class Order to the nearestthousand dollars, or in certain cases, the nearest dollar.(ae) New accounting standards and interpretationsCertain new accounting standards and interpretations havebeen published that are not mandatory for the 30 June2009 reporting date. The Group’s and the parent entity’sassessment of the impact of these new standards andinterpretations is set out below:(i) Revised AASB 3 Business Combinations (2008) incorporatesthe following changes that are likely to be relevant to theGroup’s operations:• The definition of a business has been broadened, whichis likely to result in more acquisitions being treated asbusiness combinations.• Contingent consideration will be measured at fair value,with subsequent changes therein recognised in profit or loss• Transaction costs, other than share and debt issue costs,will be expensed as incurred.• Any pre-existing interest in the acquiree will be measuredat fair value with the gain or loss recognised in profit or loss.• Any non-controlling (minority) interest will be measuredat either fair value, or at its proportionate interest in theidentifiable assets and liabilities of the acquiree, on atransaction-by-transaction basis.58