Note 03
Significant accounting estimates and judgements
In applying the Group’s accounting policies,
management continually makes judgements,
estimates and assumptions including
expectations concerning the future. Although
reasonable based on the current information
available to management, the actual results
will by definition, seldom equal the accounting
estimates. The judgements, estimates and
assumptions that are considered significant in
preparation of these financial statements are
discussed below.
(i) Defined benefit plans
Various actuarial assumptions are required
when determining the Groups’ defined
benefit obligations.
(ii) Timing of project completion
The Group is undertaking an extensive
investment program in the coming years with
the continued delivery which is reliant on the
availability of requisite material, project resources
and applicable regulatory approvals.
(iii) Impairment
In order to comply with the relevant accounting
standards, ARTC undertook impairment testing of
the Group’s infrastructure assets, which resulted
in ARTC taking up an impairment loss of $290.2m
against the carrying value of those assets as they
could not be supported by the forecast net cash
flows to be derived in relation to those assets.
(iv) Deferred tax recognition
The recognition of the deferred tax asset of
$348.4m is considered appropriate following
an assessment of the overall forecast profit and
taxation position of the Group over the next 5
years, including reversal of existing temporary
differences. The deferred tax liability of $175.0m
comprises the difference between the tax base
and carrying value relating to various assets
and liabilities.
(v) Incident recognition
The provision for incidents of $31.3m recognises
the Group’s estimated liability with respect to
costs associated with damage caused by incidents
such as derailments, including the potential for
third party and/or insurance recoveries.
(vi) Operating lease commitments -
Group as lessor
The Group has entered into commercial property
leases on property assets owned by the Group.
The Group has determined that it retains all the
significant risks and rewards of ownership of
these properties and has thus classified the leases
as operating leases.
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