Financial Statements 2022 57 certain not to exercise that option. The lease term includes any rentperiods provided to the lessee by the lessor. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of property, plant and equipment that have a lease term of 12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis of the lease term. Leases and sale and leaseback transactions Material changes in one or more of these judgements and/ or estimates, whilst not anticipated, would significantly affect the profitability of individual contracts and the Group’s overall results. The impact of a change in judgements and/or estimates has and will be influenced by the size and complexity of individual contracts within the portfolio at any point in time. The classification of leases as finance leases or operating leases requires judgement about the fair value of the leased asset, the split of the fair value between land and buildings, the economic life of the asset, whether or not to include renewal options in the lease terms and the appropriate discount rate to calculate the present value of the minimum lease payments. Impact of the COVID-19 on operations At 30 June 2022, the continued impact and duration of the COVID-19 outbreak, and the related measures taken to control it, including the likelihood of a global recession, are not yet known. In preparing these financial statements, the short-term impact on items such as financial instruments, working capital, sales and provisions has been fully considered. The valuations of financial assets and liabilities carried at fair value reflect inputs known at the reporting date. In assessing the carrying value of its other non-current assets, the Group has assumed that, despite a short-term impact, long-term market conditions remain unchanged, as the timing and scale of the economic impact and recovery remain uncertain. 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. Useful lives of property, plant and equipment The Group reviews the estimated useful lives, residual values and depreciation methods of property, plant and equipment at the end of each reporting period. 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. NEWACCOUNTING STANDARDS AND INTERPRETATIONS New Accounting Standards and Interpretations effective from 1 July 2021 and are applicable for the Group: AASB 2020-8 Amendments to AAS’s - Interest rate Benchmark Reform - Effective 1 January 2021 In May 2019, the IASB issued amendments to AASB 9, IAS 39, AASB 7, AASB 4 and AASB 16 to address uncertainties related to the ongoing reform of interbank offered rates (IBOR). The amendments provide targeted relief for financial instruments qualifying for hedge accounting in the lead up to IBOR reform. The Board completed its redeliberation process in August 2019. The Board has now published its first-phase amendments. The second phase of the project dealt with replacement issues (issues that might affect financial reporting when an existing interest rate benchmark is replaced). The Group does not have any hedges affected by IBOR reform. The amendments are not expected to have any impact on the Group’s consolidated financial statements. AASB16 COVID-19-Related Rent Concessions (amendment) – Effective date April 2021 In response to the COVID-19 coronavirus pandemic, the IASB issued amendments to AASB 16 Leases to allow lessees not to account for rent concessions as lease modifications if they are a direct consequence of COVID-19 and meet certain conditions. The practical expedient will only apply if: • the revised consideration is substantially the same or less than the original consideration; • the reduction in lease payments relates to payments due on or before 30 June 2022; and • no other substantive changes have been made to the terms of the lease. • Lessees applying the practical expedient are required to disclose: • that fact, if they have applied the practical expedient to all eligible rent concessions and, if not, the nature of the contracts to which they have applied the practical expedient; and • the amount recognised in profit or loss for the reporting period arising from application of the practical expedient. The Group has adopted these amendments to contracts where lease concessions were provided as a direct consequence of COVID-19. The Group does not treat these concessions as lease modifications and has appropriately disclosed as such. NEWACCOUNTING STANDARDS ISSUED NOT YET EFFECTIVE The Group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Group’s accounting periods beginning on or after 1 July 2022. All other standards and interpretations that are not disclosed have been assessed and are not applicable to the Group.
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