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CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes continued
for the 12 months to 31 December 2016
39. NEW ACCOUNTING STANDARDS
CONTINUED
AASB
16
– Leases
AASB 16
Leases
specifies how to recognise, measure and disclose leases. The standard provides a single lessee accounting model,
requiring lessees to recognise assets and liabilities for almost all leases. AASB 16 applies to annual reporting periods beginning on or
after 1 January 2019.
As at the reporting date, the Group has non-cancellable operating lease commitments of $969.4 million, refer to Note 32:
Commitments
.
The Group manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its
current obligations and to tender for new work. The decision as to whether to lease or purchase an asset is dependent on the finance
available at the time and the residual risk of ownership following the anticipated completion of a project.
Many of the operating leases currently held expire prior to the implementation of the standard and decisions on future leases will
be made as projects are tendered for. As such the Group has not quantified the effect of the new standard, however the following
impacts are expected:
-
the total assets and liabilities on the balance sheet will increase with a decrease in net total assets, due to the reduction of the
capitalised asset being on a straight line basis whilst the liability reduces by the principal amount of repayments. Net current
assets will show a decrease due to an element of the liability being disclosed as a current liability;
-
interest expenses will increase due to the unwinding of the effective interest rate implicit in the lease. Interest expense will be
greater earlier in a leases life due to the higher principal value causing profit variability over the course of a lease life. This
effect may be partially mitigated due to number of leases held in the Group at different stages of their terms; and
-
operating cash flows will be higher as repayment of the principle portion of all lease liabilities will be classified as financing
activities.
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial statements:
AASB 2016-1
Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses
;
AASB 2016-2
Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 107;
AASB 2016-5
Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment
Transactions;
AASB 2014-10
Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its Associate
or Joint Venture; and
AASB 2015-10
Amendments to Australian Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128
40. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date:
The Group determined a 100% franked dividend of 62 cents per share to be paid on 4 July 2016.
On 24 January 2017, CIMIC announced its intention to acquire the remaining shares of Macmahon that it did not already own, at a
price of $0.145 per share, made through an unconditional off
‐
market takeover offer.
On 25 January 2017, CIMIC, through the UGL-CH2M JV-GE Consortium, which includes UGL and its joint venture partner CH2M,
terminated its contract with JKC Australia LNG for the design, construct and commissioning of the Ichthys Combined Cycle Power
Plant. The termination is adequately covered by provisions held at 31 December 2016.
The Directors approved the financial report on 8 February 2017.
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