51
FLEXIGROUP LIMITED FINANCIAL REPORT 2011
1. Summary of signifcant accounting policies
The principal accounting policies adopted in the
preparation of these consolidated fnancial statements
are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
The fnancial statements are for the consolidated entity
consisting of FlexiGroup Limited and its subsidiaries.
a. Basis of preparation
These general purpose fnancial statements have been
prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the
Australian Accounting Standards Board, Urgent Issues
Group (UIG) interpretations and the
Corporations Act 2001
.
Compliance with IFRS
The consolidated fnancial statements of FlexiGroup
Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
Historical cost convention
These fnancial statements have been prepared under the
historical cost convention, as modifed by the revaluation
of available-for-sale fnancial assets, fnancial assets and
liabilities (including derivative instruments) at fair value
through proft or loss, certain classes of property plant
and equipment and investment property.
Critical accounting estimates
The preparation of fnancial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas
involving a higher degree of judgement of complexity,
or areas where assumptions and estimates are signifcant
to the fnancial statements, are disclosed in note 2.
b. Principles of consolidation
i. Subsidiaries
The consolidated fnancial statements incorporate the
assets and liabilities of all subsidiaries of FlexiGroup
Limited (“Company” or “parent entity”) as at 30 June 2011
and the results of all the subsidiaries for the year then
ended. FlexiGroup Limited and its subsidiaries together
are referred to in these fnancial statements as the Group
or the consolidated entity.
Subsidiaries are all those entities (including special purpose
entities) over which the Group has the power to govern the
fnancial and operational policies, generally accompanying
a shareholding of more than one-half of the voting rights.
The existence and efect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The acquisition method of accounting is used to account
for the acquisition of subsidiaries by the Group (refer to
note 1(h)).
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the
policies adopted by the Group.
Investments in subsidiaries are accounted for at cost in
the individual fnancial statements of FlexiGroup Limited.
ii. Employee Share Trust
The consolidated entity utilises a trust to administer the
consolidated entities employee share scheme. The trust
is consolidated into the consolidated entity.
c. Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who
is responsible for allocating resources and assessing
performance of the operating segments, has been
identifed as the executive management committee.
d. Foreign currency translation
i. Functional and presentation currency
Items included in the fnancial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘’the functional currency”). The consolidated fnancial
statements are presented in Australian dollars, which is
FlexiGroup Limited’s functional and presentation currency.
ii. Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement,
except when they are deferred in equity as qualifying
cash fow hedges and qualifying net investment hedges
or are attributable to part of the net investments in
foreign operations.
Foreign exchange gains and losses that relate to
borrowings are presented in the income statement, within
fnance costs. All other foreign exchange gains and losses
are presented in the income statement on a net basis within
other income or other expenses.