AD. PROVISION FOR DIVIDENDS
Provision for dividends is made in respect of ordinary shares where the dividends are declared on or before the reporting date but have
not yet been distributed at that date.
AE. EARNINGS PER SHARE
I. Basic earnings per share
Basic earnings per share is determined by dividing the profit or loss attributable to shareholders of the Parent by the weighted average
number of shares of the Parent on issue during the reporting year, net of treasury shares held in trust.
II. Diluted earnings per share
Diluted earnings per share is determined by dividing the profit or loss attributable to shareholders of the Parent used in the calculation
of basic earnings per share, adjusted for relevant costs associated with dilutive potential ordinary shares, by the weighted average
number of ordinary shares and dilutive potential ordinary shares.
AF. SHARE CAPITAL
Shares are classified as equity when there is no obligation to transfer cash or other assets to the holder. Transaction costs directly
attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax.
AG. TREASURY SHARES HELD IN TRUST
Ordinary shares of IAG that are controlled for accounting purposes by share based remuneration trusts that are subsidiaries of the
Consolidated entity, are presented on the balance sheet as treasury shares held in trust. The shares are measured at cost (total
amount paid to acquire the shares including directly attributable costs) and are presented as a deduction from equity until they are
otherwise dealt with. No gain or loss is recognised in profit or loss on the sale, cancellation or reissue of the shares. The shares are
derecognised as treasury shares held in trust when the shares vest or are released to the participant.
NOTE 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the process of applying the significant accounting policies, certain critical accounting estimates and assumptions are used, and
certain judgements are made.
The estimates and related assumptions are based on experience and other factors that are considered to be reasonable, the results of
which form the basis for judgements about the carrying values of assets and liabilities. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and future periods if relevant.
The areas where the estimates and assumptions involve a high degree of judgement or complexity and are considered significant to
the financial statements, listed together with reference to the notes to the financial statements where more information is provided,
are:
insurance contracts related:
claims, refer to note 10;
reinsurance and other recoveries on outstanding claims, refer to note 11; and
liability adequacy test, refer to note 13.B.
The estimation process of the gross cash flows for the 2011 financial year natural catastrophe events in New Zealand is conducted
in a manner consistent with the preparation of accounts as described in the summary of significant accounting policies note 1.
This estimate is subject to a high degree of uncertainty owing to the unique nature of the events. The uncertainties include
allocation of costs between the various earthquake events (September 2010, February 2011 and June 2011) for policies affected
by multiple events, under the Earthquake Commission (EQC) cap (NZ$100,000) claims which may subsequently exceed the cap,
potential latent claims, outcomes of court cases and litigation, the impact of demand surge inflation, the interaction with the EQC
and uncertainty relating to IAG's share of claim costs.
There are other amounts relating to insurance contracts that are based on allocation methodologies supported by assumptions
(e.g. deferred acquisition costs). The estimates relate to past events, do not incorporate forward looking considerations and the
methodology supporting them generally does not change from year to year.
other:
intangible assets and goodwill impairment testing, refer to notes 16 and 17;
acquired intangible assets' initial measurement and determination of useful life, refer to notes 16 and 23;
income tax and related assets and liabilities, refer to note 6;
provisional accounting of business combinations, refer note 23; and
share based remuneration, refer to note 28.
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