Financial Report 2008 - Leighton Holdings

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Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDRevenue from mining contracts isrecognised on the basis of the valueof work completed. Expected lossesare recognised in full as soon as theybecome apparent.Property development revenueincludes sales of developmentproperties, rental and fee income.Revenue from the sale of propertydevelopments and land sales isrecognised when the significant risksand rewards of ownership have beentransferred. Rental income isrecognised on a straight line basisover the term of the lease. Otherproperty development revenue isrecognised as services are provided.Revenue from other services,including telecommunications,environmental and utilities services,is recognised as services areprovided.Expected losses on all contracts arerecognised in full as soon as theybecome apparent.Interest revenue is recognised on anaccruals basis.Dividend income is recognised whenthe dividend is declared.Non-derivative financialinstrumentsNon-derivative financial instrumentscomprise investments in equity anddebt securities, trade and otherreceivables, cash and cashequivalents, loans and borrowings,and trade and other payables.Non-derivative financial instrumentsare recognised initially at fair value.Subsequent to initial recognition nonderivativefinancial instruments aremeasured as described below.Cash and cash equivalentsCash and cash equivalents includecash on hand, cash at bank and calldeposits. For the purposes of thestatements of cash flows, net cashincludes cash on hand, at bank andshort term deposits at call, net ofbank overdrafts.Trade and other receivablesContract and trade debtors includeall net receivables from constructionand other services, and propertydevelopment. Included in contractdebtors is the progressive valuationof work completed. The valuation ofwork completed is made afterbringing to account a proportion ofthe estimated contract profits andafter recognising all known losses.Where payments received exceedthe revenue recognised, thedifference is recorded as a liability inthe balance sheet.Other amounts receivable generallyarise from transactions other thanthe provision of services and includeamounts in respect of sales of assetsand taxes receivable. Interest maybe charged at market rates based onindividual debtor arrangements.Contract and trade debtors arenormally settled within 60 days ofbilling. Recoverability is assessed atreporting date and provision madefor any doubtful debts.Prepayments represent the futureeconomic benefits receivable inrespect of economic sacrifices madein the current or prior reportingperiod.Available-for-sale financial assetsAvailable-for-sale assets are initiallyrecognised at cost, being the fairvalue of the consideration given andinclude acquisition costs.Subsequently, available-for-saleassets are measured at fair value.Changes in fair value are recognisedas a separate component of equity inthe fair value reserve. When theasset is sold, collected or otherwisedisposed, or if the asset isdetermined to be impaired, thecumulative gain or loss previouslyreported in equity is recognised inthe income statement.Interest bearing liabilitiesAll loans and borrowings are initiallyrecognised at fair value, being theamount received less attributabletransaction costs. After initialrecognition, interest-bearing liabilitiesare stated at amortised cost with anydifference between cost andredemption value being recognisedin the income statement over theperiod of the borrowings on aneffective interest basis.Trade and other payablesLiabilities are recognised for amountsto be paid for goods or servicesreceived. Trade payables arenormally settled within 60 days.Other non-derivative financialinstrumentsOther non-derivative financialinstruments are measured atamortised cost using the effectiveinterest method, less any impairmentlosses.Derivative financial instrumentsDerivative financial instruments arestated at fair value, with changes infair value recognised in the incomestatement. Where derivative financialinstruments qualify for hedgeaccounting, recognition of changes infair value depends on the nature ofthe item being hedged. Hedgeaccounting is discontinued when thehedging relationship is revoked, thehedging instrument expires, is sold,terminated, exercised, or no longerqualifies for hedge accounting.Cash flow hedgeChanges in the fair value ofdesignated and qualifying cash flowhedges are deferred in equity.Where it is expected that all or aportion of a loss recognised directlyin equity will not be recovered infuture periods, that loss isrecognised in the income statement.Amounts deferred are included inthe initial measurement of the costof the asset or liability where theforecast transaction being hedgedresults in the recognition of a nonfinancialasset or a non-financialliability.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 6
Notes to the Financial Statements continuedfor the year ended 30 June 20081. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUEDCash flow hedges relating tooperating activities are recognised inprofit or loss in the same period thehedged item is recognised in profitor loss. When a forecast transactionis no longer expected to occur, thecumulative gain or loss deferred inequity is recognised immediately inprofit or loss.Hedges of net investments in foreignoperationsGains or losses on the hedginginstrument are recognised in theforeign currency translation reserve.Gains and losses deferred in theforeign currency translation reserveare recognised in profit or loss upondisposal of the foreign operation.Fair value hedgeChanges in the fair value ofdesignated and qualifying fair valuehedges are recorded in profit orloss, together with any changes inthe fair value of the hedged item thatis attributable to the hedged risk.When hedge accounting isdiscontinued the adjustment to thecarrying amount of the hedged itemarising from the hedged risk isamortised to profit or loss from thatdate.The gain or loss relating to theineffective portion is recognisedimmediately in profit or loss as partof other expenses or other income.Share capitalOrdinary share capitalIssued and paid up capital isrecognised at the considerationreceived by the Company.DividendsProvision is not made for dividendsunless the dividend has beendeclared by the Directors on orbefore the end of the period and notdistributed at reporting date.Finance CostsFinance costs are recognised asexpenses in the period in which theyare incurred, except where they areincluded in the costs of qualifyingassets.The capitalisation rate used todetermine the amount of financecosts to be capitalised to qualifyingassets is the weighted averageinterest rate applicable to the entity’soutstanding borrowings during theperiod.Finance costs include interest onbank overdrafts and short-term andlong-term borrowings, amortisationof discounts or premiums relating toborrowings, amortisation of ancillarycosts incurred in connection with thearrangement of borrowings, financelease charges and certain exchangedifferences arising from foreigncurrency borrowings.Income TaxIncome tax expense on the profit orloss for the period comprises currentand deferred tax expense. Incometax expense is recognised in theincome statement except to theextent that it relates to itemsrecognised directly in equity, inwhich case it is recognised in equity.Current tax expense is the expectedtax payable on the taxable incomefor the period, using tax ratesenacted at the reporting date, andany adjustment to tax payable inrespect of previous years. TheGroup adopts the balance sheetliability method to provide fortemporary differences between thecarrying amounts of assets andliabilities for financial reportingpurposes and the amounts used fortaxation purposes.Temporary differences are notprovided for the initial recognition ofgoodwill. The amount of deferredtax provided is based on theexpected manner of realisation orsettlement of the carrying amount ofassets and liabilities, using tax ratesenacted at the balance sheet date.Deferred tax assets are recognisedfor deductible temporary differencesand unused tax losses only if it isprobable that future taxableamounts will be available to utilisethose temporary differences andlosses.The Company is the head entity inthe tax-consolidated groupcomprising the Australian whollyownedsubsidiaries. The head entityrecognises all of the current taxassets and liabilities and deferred taxassets in respect of tax losses of thetax-consolidated group (afterelimination of intra-grouptransactions). Deferred tax assetsand liabilities in respect of temporarydifferences are recognised in thesubsidiaries’ financial statements.The tax-consolidated group hasentered into a tax funding agreementthat requires wholly-ownedsubsidiaries to make contributions tothe head entity for current tax assetsand liabilities occurring after theimplementation of tax consolidation.Under the tax funding agreement,the contributions are calculated usingthe “group allocation” approach sothat the contributions are equivalentto the current tax balancesgenerated by transactions enteredinto by wholly-owned subsidiaries.The contributions are payable as setout in the agreement and reflect thetiming of the head entity’s obligationsto make payments for tax liabilities tothe relevant tax authorities. Theassets and liabilities arising underthe tax funding agreement arerecognised as intercompany assetsand liabilities with a consequentialadjustment to current income tax.Leighton Holdings Limited Financial Report 2008 NOTES TO THE FINANCIAL STATEMENTS 7
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Statutory StatementsDirectors’ De
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Financial Report 2008 - Leighton Holdings

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