McConnell Dowell 2018 Annual Review

McConnell Dowell Financial Statements 2018 19 NEW ACCOUNTING STANDARDS NOT YET EFFECTIVE A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or after 1 July 2018, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below and the assessment of the estimated impact that the initial application will have on the consolidated financial statements are set out below. These will be adopted in the period that they become mandatory unless otherwise indicated: Standard/Interpretation Effective date Periods beginning on or after IFRS 15 Revenue from contracts with customers 1 July 2018 IFRS 9 Financial Instruments 1 July 2018 IFRS 16 Leases 1 July 2019 AASB Interpretation 23 Uncertainty over Income Tax Treatment 1 July 2019 AASB 15 Revenue from contracts with customers AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. The application of the standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: over time or at a point in time. The model features a contract-based five- step analysis of transactions to determine whether, how much and when revenue is recognised. Management has performed a high level assessment of the impact of the standard on its consolidated financial statements. Management continues with a detailed assessment to determine the extent of identified impacts. Based on the high level assessment the application of this standard may include a possible change in the accounting for the following matters in particular: • Variable consideration originating from variation claims for example will require a formal assessment in accordance with the recognition criteria of the new standard, including application of the constraint principle • Construction contracts will require a formal assessment of the application of an over-time model versus a point in time revenue in order to confirm the current versus future revenue recognition process. The impact cannot be reliably quantified at this stage. The consolidated financial statement disclosures will be updated in the year of adoption to ensure compliance with IFRS 15 requirements including the implications of adoption of the various transition options. Based on the outcomes of the detailed assessments, referred to above, the Group will determine which transition option to apply. Significant Accounting Estimates and Assumptions Impairment of goodwill and intangibles with indefinite useful lives The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount in cash-generating units, using a value in use discounted cash flow methodology, to which the goodwill and intangibles with indefinite useful lives are allocated. The details of these goodwill and intangibles impairment are disclosed in note 13. Employee provisions The company carries provisions for a number of employee entitlements including for bonus, redundancy and project incentives. These provisions are recognised and measured at the reporting date based on all available information in existence at that time, and while requiring management judgement of future outcomes, represent the best estimate of the amount required to settle the obligations. These obligations are both legal and constructive in nature. Movements in these provisions caused by revision to the estimate of fair value are recognised in the statement of profit and loss. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS New Accounting Standards and Interpretations effective from 1 July 2017 Other than the following, the Group has not adopted any new or amended Accounting Standards or Interpre- tations that have had a material impact on the Group for the year ended 30 June 2018. AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107 The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Group has provided the information for both the current period in Note 22. McConnell Dowell Annu l Review 1 55