The fair value at grant date (the date at which the employer and the employee have a shared understanding of the terms and
conditions of the arrangement) is determined for each equity settled share based payment using a valuation model which excludes the
impact of any non-market vesting conditions. This fair value does not change over the life of the instrument. At each reporting date
during the vesting period (the period during which related employment services are provided) and upon the final vesting or expiry of the
equity instruments, the total accumulated expense is revised based on the fair value at grant date and the latest estimate of the
number of equity instruments that are expected to vest based on non-market vesting conditions only and taking into account the
expired portion of the vesting period. Changes in the total accumulated expense from the previous reporting date are recognised in
profit or loss with a corresponding movement in an equity reserve. Upon exercise of the relevant instruments, the balance of the share
based remuneration reserve relating to those instruments is transferred within equity.
The different treatment of market and non-market vesting conditions means that if an equity instrument does not vest because a
participant ceases relevant employment then the accumulated expense charged in relation to that participant is reversed, but if an
equity instrument does not vest only because a market condition is not met, the expense is not reversed.
To satisfy obligations under the various share based remuneration plans, shares are generally bought on-market at or near grant date
of the relevant arrangement and held in trust. Shares held in trust that are controlled for accounting purposes are treated as treasury
shares held in trust (refer to section AG of the summary of significant accounting policies note).
IV. Superannuation
For defined contribution superannuation plans, obligations for contributions are recognised in profit or loss as they become payable.
For defined benefit superannuation plans, the net financial position of the plans is recognised on the balance sheet and the movement
in the net financial position is recognised in profit or loss, except for remeasurements of defined benefit plans (experience adjustments
and changes in actuarial assumptions), which are recognised directly in retained earnings.
AB. INTEREST BEARING LIABILITIES AND FINANCE COSTS
Interest bearing liabilities are initially recognised at fair value less transaction costs that are directly attributable to the transaction.
After initial recognition the liabilities are carried at amortised cost using the effective interest method.
Finance costs include interest, which is accrued at the contracted rate and included in payables, amortisation of transaction costs
which are capitalised, presented together with the borrowings, and amortised over the life of the borrowings or a shorter period if
appropriate, and amortisation of discounts or premiums (the difference between the original proceeds, net of transaction costs, and
the settlement or redemption value of borrowings) over the term of the liabilities. Where interest payments are subject to hedge
accounting, they are recognised as finance costs net of any effect of the hedge.
AC. FOREIGN CURRENCY
I. Functional and presentation currency
Items included in the financial records are measured using the currency of the primary economic environment in which the entity
operates (functional currency). The financial statements are presented in Australian dollars, which is the presentation currency of the
Company.
II. Translation of foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at reporting date are translated to the functional
currency using reporting date exchange rates. Resulting exchange differences are recognised in profit or loss.
III. Translation of the financial results of foreign operations
The financial position and performance of foreign operations with a functional currency other than Australian dollars are translated into
the presentation currency for inclusion in the consolidated financial statements. The assets and liabilities are translated using
reporting date exchange rates while equity items are translated using historical rates. Items from the statement of comprehensive
income are translated using weighted average rates for the reporting year. Exchange rate differences arising from the translations are
recorded directly in equity in the foreign currency translation reserve. Goodwill and fair value adjustments arising on the acquisition of
a foreign operation are treated as assets and liabilities of the foreign operation and translated using reporting date exchange rates.
On the disposal of a foreign operation, the cumulative amount of the exchange differences deferred in the foreign currency translation
reserve relating to that foreign operation is recognised in profit or loss.
IV. Principal exchange rates used
The reporting date exchange rates for balance sheet translation and the annual average daily exchange rates for statement of
comprehensive income and cash flow statement translation to Australian dollars are provided here for selected currencies as an
indication of the rates used for the current year.
BALANCE SHEET
STATEMENT OF COMPREHENSIVE
INCOME AND CASH FLOW STATEMENT
2015
2014
2015
2014
New Zealand dollar
0.87848
0.92866
0.93060
0.90485
British pound
2.03934
1.81505
1.88818
1.77299
Thai baht
0.03833
0.03270
0.03676
0.03398
United States dollar
1.29618
1.06078
1.20200
1.08950
Malaysian ringgit
0.34331
0.33036
0.34745
0.33574
50 IAG ANNUAL REPORT 2015
