57 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. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS New Accounting Standards and Interpretations effective from 1 July 2022 and are applicable for the Group: AASB 137 Provisions, Contingent Liabilities and Contingent Assets (amendments) - Effective 1 January 2022 While AASB 11 specified which costs were included as a cost of fulfilling a contract, AASB 37 did not, which led to diversity in practice. The International Accounting Standards Board’s amendments address this issue by clarifying those costs that comprise the costs of fulfilling a contract, which includes: • The incremental costs • An allocation of other direct costs The Group has assessed the amendments to AASB 37. The amendments are not expected to have a significant impact on the Groups consolidated financial statements. AASB 16 Property, Plant and Equipment (amendments) - Effective 1 January 2022 Proceeds from selling items before the related item of PPE is available for use should be recognised in profit or loss, together with the costs of producing those items. AASB 2 Inventories should be applied in identifying and measuring these production costs. The amendments to AASB 16 are not expected to have a significant impact on the Groups consolidated financial statements. AASB 3 Definition of a Business (amendments) - Effective 1 January 2022 Provides clarity on the definition of business and reduces the element of judgement when determining what a business is. The amendments to AASB 3 are not expected to have a significant impact on the Groups consolidated financial statements. AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform –Pillar Two Model Rules – Effective immediately AASB 2023-2 amends AASB 112 Income Taxes to introduce: • a mandatory temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (OECD); and • targeted disclosure requirements to help financial statement users better understand an entity’s exposure to income taxes arising from the reform, particularly in periods before legislation implementing the rules is in effect. The Group has applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. The full impact of the Global of the Global Pillar Two model is still being assessed, including considerations relating to the timing of the enactment of regulations in both Australia and its Holding Company jurisdiction, South Africa.
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