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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONTINUED
d) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit attributable to shareholders of the parent entity, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period, adjusted for bonus
elements in ordinary shares issued during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
e) Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables. When acquired, non-derivative financial instruments are recognised at
fair value. At subsequent reporting dates they are measured at amortised cost unless specifically mentioned below.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash at bank and call deposits. For the purposes of the statement of cash flows, net cash
includes cash on hand, at bank and short term deposits at call, net of bank overdrafts where there is an ability to offset and an intention to
settle.
Trade and other receivables
Contract and trade debtors include all net receivables from construction, contract mining and mineral processing, property development,
and other services. Included in contract debtors is the progressive valuation of work completed. The valuation of work completed is made
after bringing to account a proportion of the estimated contract profits and after recognising all forecast losses. Contract and trade debtors
are normally settled within 60 days of billing.
Where payments received exceed the revenue recognised, the difference is recorded as a liability in the statement of financial position.
Other amounts receivable generally arise from transactions other than the revenue generating activities and include amounts in respect of
sales of assets and taxes receivable. Interest may be charged at market rates based on individual debtor arrangements. Amounts receivable
expected to be received after twelve months are discounted. Recoverability is assessed at reporting date and provision made for any
doubtful debts. Prepayments represent amounts paid for the rights to receive future goods or services.
Available-for-sale financial assets
Available-for-sale assets are initially recognised at cost, being the fair value of the consideration given and include acquisition costs.
Subsequently, available-for-sale assets are measured at fair value. Changes in fair value are recognised as a separate component of equity
in the fair value reserve. When the asset is sold, collected or otherwise disposed, or if the asset is determined to be impaired, the cumulative
gain or loss previously reported in equity is recognised in the statement of profit or loss.
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial
recognition. Financial assets designated as at fair value through profit and loss comprise equity securities that otherwise would have been
classified as available-for-sale. These financial assets are measured at fair value at each reporting date and movements in fair value are
taken into the statement of profit and loss.
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, being the amount received less attributable transaction costs. After initial
recognition, interest bearing liabilities are stated at amortised cost with any difference between cost and redemption value being
recognised in the statement of profit or loss over the period of the borrowings on an effective interest basis.
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables are settled on terms aligned with the normal
commercial terms in the Group’s countries of operation.
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