The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for Cricket Australia (the Company).
(a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Cricket Australia is a not-for-profit entity for the purpose of preparing the financial statements.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.
Critical accounting estimates
The preparation of financial statements in conformity with Australian Equivalent of International Financial Reporting Standards (AIFRS) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.
(b) Income Tax
The Company is exempt from Australian income tax pursuant to Section 50-45 of the Income Tax Assessment Act 1997.
(c) Rounding of amounts
The amounts in the financial statements have been rounded off in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 to the nearest thousand dollars.
(d) Foreign currency translation
Functional and presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Australian dollars, which is Cricket Australia’s functional and presentation currency.
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 deferred in equity as qualifying cash flow hedges.
(e) Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Company designates certain derivatives as hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges).
The Company documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative financial instruments used for hedging purposes are disclosed in Note 12. Movements in the hedging reserve in shareholders’ equity are shown in Note 22. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the statement of comprehensive income within other income or other expense.
Amounts accumulated in equity are recycled in the statement of comprehensive income in the periods when the hedged item affects profit or loss (for instance when the forecast media income that is hedged takes place).
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the statement of comprehensive income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
(f) Acquisition of assets
The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets given up or liabilities undertaken at the date of acquisition plus costs incidental to the acquisition.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of the acquisition. The discount rate used is the rate at which a similar borrowing could be obtained under comparable terms and conditions.
(g) Revenue recognition
Revenue is measured for the major business activities as follows:
- International Media income is recognised, after allowance for commission and charges, on
the completion of the relevant matches covered by the underlying contract. Domestic media
income is brought to account on an accruals basis;
- Gate takings are recognised as the relevant percentage of gross takings received for all international matches forwarded by State Associations or venues;
- Investment revenue is recognised on an accruals basis using the effective interest rate method except for managed funds which are discussed in Note 1(u);
- Sponsorships are brought to account on an accruals basis;
- Dividends and distributions are brought to account at the date of entitlement.
(h) Government grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Company has complied with the attached conditions.
(i) Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, less provision for impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of trade receivables is raised where there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the assets carrying value and the present value of the estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the statement of income statement in other expenses.
(j) Other loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other receivables (Notes 7 and 11) in the balance sheet.
All inventories, which consist of uniforms and cricket equipment are finished goods. Inventories are based on purchase price using the ‘first in, first out’ method and are stated at the lower of cost and net realisable value.
(l) Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
(m) Intangible assets
Assets that are identifiable non-monetary without physical substance are recognised as intangible assets. The Company estimates the useful life of the internally generated software to be 5 years based on the expected technical obsolesence of such assets. However, the actual useful life may be shorter or longer than 5 years, depending on future technological innovations.
(n) Investment property
The investment property is a two story semi detached Victorian dwelling adjacent to the current business premises and is held for long term organisational growth. The investment property is carried at historical cost less depreciation. Given the Company’s consideration of converting the building in to office space in the near future, the decision was made to depreciate at a rate of 50% per annum. The building was fully depreciated by 30 June 2011, with the remainder attributed to land at a cost of $1,525,000. Rental revenue is recognised on a straight line basis over the term of the lease agreement.
(o) Depreciation of property, plant and equipment
Depreciation is calculated on a diminishing value basis to write off the net cost or revalued amount of each item of property, plant and equipment (excluding land) over its expected useful life to the Company. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The depreciation rates are as follows:
|Plant & Equipment||20% to 30%|
(p) Leasehold improvements
The cost of improvements to or on leasehold properties is amortised over the remaining period of the lease or the estimated useful life of the improvement, whichever is the shorter. Leasehold improvements being held at balance date are amortised using a diminishing value rate of 20%.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually payable within 30 days of recognition.
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events. It is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
(s) Employee benefits
- Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables.
- Long service leave
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
- Player payments adjustments
A liability is recognised and is measured as the expected future payments to be made to players in relation to entitlements arising for service up to balance date determined in accordance with the Memorandum of Understanding. The player payment adjustment in any relevant contract year will represent any shortfall in the Player Payments Pool (PPP) that has arisen due to actual Australian Cricket Revenue (ACR) exceeding the Australian Cricket Revenue Estimate, less any excess in the PPP that has arisen in any relevant contract year due to the ACR Estimate exceeding actual ACR.
(t) Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes deposits at call which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts.
- Managed funds
Investments in managed funds are designated at “fair value through profit or loss” on initial recognition and are initially recognised at fair value, being the cost of acquiring units in the managed funds. At balance date, the investment is revalued to its fair value, which reflects the redemption price of units held. Movements in the fair value are included in the income statement.
- Bank bills, bonds and deposits
Investments in bank bills, bonds and deposits are classified as “held to maturity” on initial recognition and are initially recognised at fair value, being the cost of acquiring the investment, including transaction costs. At balance date, the investment is carried at amortised cost with interest income recognised using the effective interest rate method.
(v) Retirement schemes
The Company operates a defined benefit scheme (Australian Cricketers’ Retirement Account) and a post-employment plan (Players’ and Umpires’ Retirement Benefits Schemes). Liabilities are recognised based on set rates and the relevant player’s or umpire’s service to the Company and State Associations. The portion of entitlements expected to be paid within 12 months is recognised as a current liability.
- Players’ and Umpires’ Retirement Benefits Schemes
This scheme covers player service up to 2001 and umpires. Payment of the benefit is entirely at the discretion of the Company and occurs after retirement. When payment is made, interest at commercial bank bill rates is applied for the period between retirement and payment. On 1 July 2001 the Players’ and Umpires’ Retirement Benefits Scheme (P&URBS) was replaced by the Australian Cricketers’ Retirement Account (ACRA). All entitlements accrued up until 30 June 2001 under this scheme remain payable. The Company will determine the umpire’s value of credits to be made for specified cricket matches annually and will confirm those matches which will qualify for credits. Umpire’s benefits scheme payouts are based on accrued value credits earned until retirement from umpiring. Payouts may be made on retirement under certain conditions in the absolute and uncontrolled discretion of Cricket Australia, to umpires who have qualified, in accordance with the Rules of the Scheme.
- Australian Cricketers’ Retirement Account
This scheme covers player service since 1 July 2001. Contributions from the PPP are made to the Australian Cricketers’ Retirement Account (ACRA) in order to fund entitlements and the balance of the account is recorded as restricted cash and investments in the balance sheet. Interest earned on the account is recognised as income in the income statement. The liability is measured as the present value of expected future payments to be made in respect of entitlements earned up to the reporting date, giving consideration to expected timing of retirements, with expected future payments discounted using corporate bond yields rather than government bond yields. The increase/decrease in the present value of future entitlements is included in the income statement.
Distributions are made to the members of the Company for state player payments and game development. Distributions are recognised as an expense to the extent that payment is required by virtue of the by-laws. Clause 3 of the Memorandum of Association of the Company permits the distribution from time to time of surplus funds (over and above the obligations under the by-laws) provided it is for the purposes of promoting and developing the game of cricket. Such discretionary distributions are recognised directly as adjustments against accumulated funds.
(x) Leased assets
The Company has entered into various leases which have been treated as operating leases as the lessor effectively retains substantially all risks and benefits of ownership. Operating lease payments are charged to the income statement on a straight line basis over the lease term.
(y) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office (ATO). In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the ATO, are presented as operating cash flow.
(z) New Accounting Standards
The Directors have reviewed the new or revised AASB’s issued by the Australian Accounting Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2015. There are no new standards or revisions that affect any of the amounts recognised in the current period or any prior period, and are not likely to affect future periods.
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2016 reporting periods, and have not been early adopted by the Company, with the assessment of the impact of these new standards and interpretations set out below:
|Title of Standard||Nature of Change||Impact||Date of adoption|
|AASB 9 Financial Instruments||AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.||The new hedging rules align hedge accounting more closely with the Company’s Risk Management practices. As a general rule it will be easier to apply hedge accounting going forward as the standard introduces a more principles based approach. The new standard also introduces expanded disclosure requirements and changes in presentation. The Company does not expect the new standard to have a significant impact on the classification and measurement of its financial assets and liabilities. Expanded disclosures will be required in future periods.||Must be applied for financial years commencing on or after 1 January 2018.|
Revenue from contracts with customers
|The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers revenue arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption.||Management is currently undertaking assessment of the impact of the new rules. At this stage the effect on the financial statements has not yet been determined. The Company will make more detailed assessments of the impact over the 12 months.||Mandatory for financial years commencing on or after 1 January 2018.|
|AASB 16 Leases||Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low- value leases.||The standard will affect primarily the accounting for the group’s operating leases.||Mandatory for financial years commencing on or after 1 January 2019.|
(aa) Cricket World Cup Investment
The Company’s investment in the ICC Cricket World Cup 2015 Ltd (CWC) entity was accounted for in the financial statements using the equity method of accounting, after initially being recognised at cost. The Company’s share of the CWC post-acquisition profits or losses was recognised in the income statement and its share of post-acquisition other comprehensive income was recognised in other comprehensive income. The cumulative post acquisition movements were adjusted against the carrying amount of the investment. The distribution received from the CWC reduced the carrying amount of the investment in the financial statements.
The Company’s interest was reduced to zero on receipt of the the CWC distribution. The CWC was wound up upon finalisation of the events financial statements in FY16 and there are no legal, constructive or outstanding obligations of the Company in relation to the CWC at balance date.