1. Statement of Significant Accounting Policies (continued) 

## (r) Payables 

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in future for goods and services received, whether or not billed to the consolidated entity. 

Payables to related parties are carried at the principal amount. 

## (s) Foreign Currency Transactions 

Foreign currency items are translated to Australian currency on the following bases: 

 Transactions are converted at exchange rates in effect at the date of each transaction; 

 Amounts payable and receivable are translated at the average of the buy and sell rates available on the close of business at balance date; and 

 The financial statements of all foreign operations are translated using the current rate method as they are considered self-sustaining. 

Exchange differences relating to monetary items are included in the Statement of Financial Performance, as exchange gains and losses in the period when exchange rates change, except where the difference relates to hedging part of the net investment in a self- sustaining foreign operation, in which case the differences are transferred to the foreign currency translation reserve on consolidation. 

## (t) Interest-Bearing Liabilities 

Bills payable are recognised when issued at the amount of the net proceeds received, with the discount on issue amortised over the period to maturity. Interest is recognised as an expense on an effective yield basis. 

Interest rate swaps are recognised as a liability, measured by reference to amounts payable. Net receipts and payments are recognised as an adjustment to interest expense. 

All loans are measured at the principal amount. Interest is recognised as an expense as it accrues. 

## (u) Derivative Financial Instruments 

The consolidated entity enters into forward exchange contracts where it agrees to buy specified amounts of foreign currencies in the future at a predetermined exchange rate. The objective is to match the contract with anticipated future cash flows from purchases in foreign currencies, to protect the consolidated entity against the possibility of loss from future exchange rate fluctuations. 

Foreign exchange contracts are recognised at the date that the contract is entered into. Except for specific hedges, all resulting exchange differences on settlement or restatement are recognised as revenues or expenses in the Statement of Financial Performance in the current year. 

## (v) Contributed Equity 

Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders. Issued and paid up capital is recognised at the fair value of the consideration received by the company. 

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction in share proceeds received. 

## (w) Borrowing Costs 

Borrowing costs are expensed as incurred. 

## (x) Earnings Per Share 

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. 

Diluted EPS is calculated as net profit attributable to members adjusted for: 

 costs of servicing equity (other than dividends) and preference share dividends; 

 the after tax effect if dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and 

 other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; 

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 

