McConnell Dowell 2019 Annual Review

61 Annual Review 2019 Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised in the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statement of profit or loss. Joint Arrangements The Group currently conducts significant construction activities through various joint arrangements with other partners. In determining whether these joint arrangements are joint operations or joint venture in accordance with AASB 11 Joint Arrangements, management have applied significant judgements with whether arrangements are structured through a separate vehicle and the extent to which the terms of the contractual arrangements provide the parties to the joint arrangement with rights to the assets, and obligations for the liabilities, relating to the arrangement. 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 flowmethodology, 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 NewAccounting Standards and Interpretations effective from 1 July 2018 Other than the AASB 15 and AASB 9 described above, the Group has not adopted any new or amended Accounting Standards or Interpretations that have had a material impact on the Group for the year ended 30 June 2019. Impact of adopting the new standards on the statement of financial position In summary, the following adjustments were made to the amounts recognised in the statement of financial position at the date of initial application of AASB 15: A$000 As reported 30 June 2018 AASB 15 Transition Adjustment Opening Balance 1 July 2018 Current Trade and other receivables 294,464 (25,615) 268,849 Retained Earnings (86,652) (25,615) (112,267) AASB 9 Financial Instruments In the current year the group applied AASB 9, Financial Instruments. There was no material impact on the Group from applying this standard. 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 2019, 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 AASB 16 Leases 1 July 2019 AASB Interpretation 23 Uncertainty over Income Tax Treatment 1 July 2019