Endeavour Energy Annual Performance Report - Parliament of New ...

2 Statement of Significant
Accounting Policies
continued
(u) Leases
Leases where the lessor retains
substantially all the risks and
benefits of ownership of the asset
are classified as operating leases.
Operating lease payments are
recognised as an expense in the
Statement of Comprehensive
Income on a straight line basis
over the lease term, except where
another systematic basis is more
representative of the time pattern in
which the economic benefits from
lease assets are consumed.
(v) Finance costs
Borrowing costs include interest,
amortisation of discounts or
premiums relating to borrowings,
amortisation of ancillary costs
incurred in connection with
arrangement of borrowings and
Government guarantee fee costs.
The amount excludes borrowing
costs relating to qualifying
assets that have been capitalised
in accordance with AASB 123
Borrowing Costs. Borrowing costs
are recognised in profit or loss in the
period in which they are incurred.
(w) Income tax
Income tax expense comprises
current and deferred tax. Current
and deferred tax are recognised
in profit or loss except to the
extent that it relates to a business
combination, or items recognised
directly in equity or in other
comprehensive income.
Current tax is the expected tax
payable or receivable on the taxable
income or loss for the year, using
tax rates enacted or substantively
enacted at the reporting date, and
any adjustment to tax payable in
respect of previous years.
Deferred tax is recognised in respect
of temporary differences between
the carrying amounts of assets and
liabilities for financial reporting
purposes and the amounts used
for taxation purposes. Deferred tax
is not recognised for the following
temporary differences: the initial
recognition of assets or liabilities in
a transaction that is not a business
combination and that affects neither
accounting nor taxable profit or loss.
Deferred tax is measured at the tax
rates that are expected to be applied
to temporary differences when they
reverse, based on the laws that
have been enacted or substantively
enacted by the reporting date.
Deferred tax assets and liabilities
have been offset as there is a legally
enforceable right to offset current
tax liabilities and assets, and they
relate to income taxes levied by
the same tax authority on the same
taxable entity.
A deferred tax asset is recognised
for unused tax losses, tax credits and
deductible temporary differences,
to the extent that it is probable that
future taxable profits will be available
against which they can be utilised.
Deferred tax assets are reviewed at
each reporting date and are reduced
to the extent that it is no longer
probable that the related tax benefit
will be realised.
Endeavour Energy is subject to
the National Taxation Equivalent
Regime (NTER) based on the Income
Tax Assessment Act 1936 and the
Income Tax Assessment Act 1997.
Tax equivalents are payable to the
Office of State Revenue.
(x) Other taxes
FBT, payroll tax and land tax are
recognised in accordance with
relevant legislation. In relation to
GST, revenues, expenses and assets
are recognised net of the amount of
GST except:
• where the GST incurred on a
purchase of goods and services
is not recoverable from the
taxation authority, in which case
the GST is recognised as part of
the cost of acquisition of the asset
or as part of the expense item
as applicable; and
• receivables and payables are
stated with the amount of
GSt included.
Cash flows are included in the
Statement of Cash Flows on a gross
basis and the GST component of
cash flows arising from investing
and financing activities, which is
recoverable from, or payable to, the
taxation authority are classified as
operating cash flows.
Contingencies are disclosed net of
the amount of GST recoverable from,
or payable to, the taxation authority.
A detailed assessment of
greenhouse gas emissions indicates
Endeavour Energy will not be liable
under the proposed carbon tax, as
the Corporation’s direct emissions
do not currently exceed the
defined threshold.
(y) Workers compensation
insurance
Endeavour Energy is a self-insurer
through its insurance provision for
workers compensation and meets
all liabilities under the Workers
Compensation Act 1987.
An external actuary is engaged to
provide an annual investigation
of Endeavour Energy’s estimated
liability for workers compensation
as at the reporting date. The liability
is measured as the present value of
expected future payments at the
reporting date.
(z) Dividend
Ordinary dividend is calculated in
accordance with TPP 09-6 Financial
Distribution Policy for Government
Businesses based on a base payout
ratio of 70% applied to post-tax
profit adjusted for non-cash fair value
movements on financial instruments
classified or designated “at fair
value through profit or loss” under
AASB 139 Financial Instruments:
Recognition and Measurement, and
other adjustments as agreed with
NSW Treasury. Dividend payable
for the 2010/11 financial year is
$156.8m (2010: $142.6m).
Endeavour Energy Annual Performance Report 2010–11
61