Home' Slater and Gordon Annual Report : Slater and Gordon AR 2016 Contents Notes to the Financial Statements
For the Year Ended 30 June 2016
Slater and Gordon Limited
1.4 Significant Accounting Judgements, Estimates and Assumptions (continued)
(iii). Recognising Revenue: Measuring the Stage of Completion
Revenue is recognised when control of a service is transferred to the customer. The Group recognises revenue in
respect of personal injury matters “over time” (as opposed to at a “point in time”) . A stage of completion approach is
used to measure progress towards completion of the performance obligation. The stage of completion is determined
using a milestones based approach using prescribed status codes for client matters as the relevant milestones. The
percentage completion is determined either by calculating the average fee received for matters that resolve at a
particular status code as a percentage of the average fee received for matters that resolve at that status and any later
status, or by use of defined completion allocations based on historical performance.
In addition, when new businesses are acquired, there is a transition period during which time the Group’s practices and
procedures are embedded into the operations of the new business. Therefore the valuation of work in progress acquired
in a business combination may be adjusted during the period of provisional accounting for the acquisition.
(iv). Proposals from the Autumn 2015 Chancellor’s Statement
The proposed reforms announced by the UK Government in November 2015 are expected to affect personal injury cases
below £5,000. As yet there has been no announcement in relation to the commencement of the foreshadowed
consultation process and the Company has made its best effort to factor potential changes into its assessment of the
future cash flows, even though the results are not yet certain.
As both the Slater and Gordon UK (“SGL UK”) and Slater Gordon Solutions (“SGS”) segments of the Group operate in
the UK, management has also given consideration to the possible influence of the outcome of the UK referendum to
withdraw from the European Union (“Brexit”) on the progress of the consultation process.
It is not clear what the impact of Brexit and the process which will now ensue to implement the UK’s exit from the
European Union will be on the UK economy however management assesses that the outcome of the Brexit referendum
itself is not likely to have any material adverse impact on the performance of the Group.
1.5 Foreign Currency Translations and Balances
Functional and Presentation Currency
The consolidated financial statements are presented in Australian dollars which is also the functional currency of the
parent entity and all Australian subsidiaries. The financial statements of each entity within the consolidated entity are
measured using the currency of the primary economic environment in which that entity operates (the functional
Transactions and Balances
Transactions in foreign currencies of entities within the consolidated group are translated into the respective functional
currency of each entity at the rate of exchange ruling at the date of the transaction. The assets, liabilities and results of
foreign operations where their functional currency is different to the presentation currency are translated as disclosed
Foreign currency monetary items that are outstanding at the reporting date are translated using the spot rate at the end
of the financial year.
Except for certain foreign currency hedges, all resulting exchange differences arising on settlement or re-statement of
monetary items are recognised as income and expenses for the financial year.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions and are not remeasured unless they are carried at fair value.
On consolidation, the assets and liabilities of foreign operations are translated into the presentation currency of the
Group at the closing rate on the reporting date. Income and expenses are translated at average exchange rates for the
period, unless the exchange rate fluctuated significantly during the period, in which case the exchange rates at the dates
of the transactions are used. All resulting exchange differences are recognised in Other Comprehensive Income in the
foreign currency translation reserve, a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of
the foreign operation and translated at the closing rate.
Slater and Gordon Limited 57
Annual Report 2016
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