AUDIT Example Public Company Limited Guide to annual reports – illustrative disclosures 2015-16 November 2015 kpmg.com.au b | Example Public Company Limited – illustrative disclosures Concise, clear and informative financial reporting As evidenced in our publication A new era in corporate reporting, public companies in Australia continue to challenge themselves to prepare more relevant and user friendly financial reports. 2015 has seen a marked increase in companies de-cluttering their financial reports by reducing immaterial or irrelevant disclosures, reordering notes into more logical groupings and rewriting technical wording into plain English. With few new or amended standards or regulatory requirements to apply this year, now is the time to consider whether you too are reporting your financial information in the most meaningful way. This publication provides a large range of illustrative disclosures, for the most part without regard to materiality. We encourage you to be careful not to become buried in compliance to the detriment of relevance. Our Example Public Financial Statements website is designed to support you in this goal, providing access to our guidance and tools to assist you in the preparation of your annual report. As in recent years, due to Australia’s close alignment to IFRS, we have made minimal changes to the source document prepared by our international colleagues and built the Australian-specific disclosures around this guide. In addition, the publication covers both 31 December 2015 and 30 June 2016 annual financial year ends. The navigation bookmarks and links in our digital publication will assist you to identify the changes and disclosures you need in a quick and accessible manner. We trust you will find this publication a useful reference in your annual report preparation. For further information on the contents of this publication or to provide feedback, please contact your KPMG adviser. Duncan McLennan National Managing Partner – Audit © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. | c How to use Example Public Company Limited Example Public Company Limited Guide to annual reports – illustrative disclosures (Example Public Company Limited, or the guide) has been compiled on the same basis as last year. With Australia’s close alignment to International Financial Reporting Standards (IFRS), a substantial portion of Example Public Company Limited has been drawn from the illustrative disclosures publication prepared by our international colleagues based on ‘pure’ IFRS. Additional Australian- Generally accepted accounting principles (GAAP) specific disclosures and alternative presentation methods that are commonly used in Australia have been illustrated in a separate section just before the main financial statements. A clear cross-reference to the Australian section is included on affected international pages. In addition, Example Public Company Limited covers both 31 December 2015 and 30 June 2016 annual financial year ends. The What’s new? page and Appendix I will help to determine which requirements are applicable to a period end based on the annual reporting date. Our Example Public Financial Statements website provides access to our guidance and tools to assist you in the preparation of your annual report. This guidance includes the KPMG Australian Financial Reporting Manual, a companion to KPMG’s Insights into IFRS, which focuses on the Australian regulatory framework for preparation and lodgement of financial report. The purpose of the KPMG Australian Financial Reporting Manual is to: • provide a guide to the Australian financial reporting environment and legal financial reporting framework; • give guidance on distinguishing between reporting and non-reporting entities; • provide specific guidance on the financial reporting requirements of various types of entities; and • outline the requirements for annual, concise, and interim reporting in Australia. © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. d | Example Public Company Limited – illustrative disclosures Contents Concise, clear and informative financial reporting b How to use Example Public Company Limited c What’s new? 2 About this guide – compliance focused 3 References and abbreviations 4 Australian content 5 Corporate governance statement 7 Directors’ report 13 Notes to the consolidated financial statements 44 Directors’ declaration 53 ASX additional information 54 Guide to annual financial statements 57 Consolidated statement of financial position 58 Consolidated statement of profit or loss, and other comprehensive income 60 Consolidated statement of changes in equity 62 Consolidated statement of cash flows 64 Notes to the consolidated financial statements 66 Appendices 177 I New standards or amendments, and forthcoming requirements 177 II Presentation of comprehensive income – two-statement approach 179 III Statement of cash flows – direct method 181 IV Other disclosures not illustrated in the consolidated financial statements 182 Keeping you informed 188 Acknowledgements 190 © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Example Public Company Limited – Illustrative disclosures | 1 Notes to the consolidated financial statements Basis of preparation 66 Accounting policies 159 1. Reporting entity 66 42. Basis of measurement 159 2. Basis of accounting 66 43. Correction of errors 160 3. Functional and presentation currency 66 44. Significant accounting policies 161 4. Use of judgements and estimates 66 45. Standards issued not yet effective 176 Performance for the year 68 Australian content 5. Operating segments 68 1. Reporting entity 44 6. Discontinued operation 75 2. Basis of accounting 44 7. Revenue 76 25. Capital and reserves 45 8. Income and expenses 77 46. Reconciliation of cash flows 9. Net finance costs 79 from operating activities 46 10. Earnings per share 80 47. Auditors’ remuneration 47 48. Deed of cross guarantee 48 Employee benefits 82 49. Parent entity disclosures 51 11. Share-based payment arrangements 82 12. Employee benefits 85 13. Employee benefit expenses 89 Income taxes 90 14. Income taxes 90 Assets 95 15. Biological assets 95 16. Inventories 99 17. Trade and other receivables 100 18. Cash and cash equivalents 101 19. Disposal group held for sale 102 20. Property, plant, and equipment 103 21. Intangible assets and goodwill 106 22. Investment property 111 23. Equity-accounted investees 112 24. Other investments, including derivatives 114 Equity and liabilities 115 25. Capital and reserves 115 26. Capital management 118 27. Loans and borrowings 119 28. Trade and other payables 122 29. Deferred income/revenue 123 30. Provisions 124 Financial instruments 126 31. Financial instruments – fair values and risk management 126 Group composition 143 32. List of subsidiaries 143 33. Acquisition of subsidiary 144 34. NCI 148 35. Acquisition of NCI 150 Other information 151 36. Loan covenant waiver 151 37. Operating leases 152 38. Commitments 153 39. Contingencies 154 40. Related parties 155 41. Subsequent events 158 © 2015 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. 2 | Example Public Company Limited – illustrative disclosures What’s new? This new Example Public Company Limited Guide to annual reports – illustrative disclosures (Example Public Company Limited, or the guide) takes account of the impact of the following new or revised accounting standards and regulatory changes: Effective for the first time for an annual reporting period ending: 31 December 30 June 2015 2016 Already adopted Annual Improvements to IFRS 2010-2012 Cycle 30 June 2015 Already adopted Corporations Legislation (Deregulatory and Other Measures) Act 2015 30 June 2015 ASX Corporate Governance Council Principles and Recommendations Already adopted (Third Edition) 30 June 2015 As demonstrated above, major changes since the previous edition of this guide are highlighted as follows: • for changes effective for the first time for ONLY an annual reporting period ending 31 December 2015, by a green line running down the left margin of the text; • for changes effective for the first time for BOTH annual reporting periods ending 31 December