FINANCIAL REPORTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
Note 1. Summary of significant accounting policies
(a) Basis of preparation
In accordance with AASB Interpretation 1002: Post-Date-of-Transition
Stapling Arrangements, the entities within DXS must be consolidated.
The parent entity and deemed acquirer of DIT, DOT and DXO is DDF.
The DDF consolidated column represents the consolidated result of
DDF, which comprises DDF and its controlled entities, DIT and its
controlled entities, DOT and its controlled entities, DXO and its
controlled entities. Equity attributable to other trusts stapled to DDF
is a form of minority interest in accordance with AASB 1002 and, in the
DDF consolidated column, represents the equity of DIT, DOT and DXO.
Other minority interests represent the equity attributable to parties
external to the Trusts.
DEXUS Property Group stapled securities are quoted on the Australian
Stock Exchange under the code “DXS” and comprise one unit in each
of DDF, DIT, DOT and DXO. Each entity forming part of DXS continues
as a separate legal entity in its own right under the Corporations Act
2001 and is therefore required to comply with the reporting and
disclosure requirements under the Corporations Act 2001 and
Australian Accounting Standards.
DEXUS Funds Management Limited (DXFM) as Responsible Entity for
each of the Trusts may only unstaple the Trusts if approval is obtained
by special resolution of the stapled security holders.
This general purpose Financial Report for the year ended 30 June
2009 has been prepared in accordance with the requirements of the
Trusts’ Constitutions, the Corporations Act 2001, Australian Equivalents
to International Financial Reporting Standards (AIFRS) and
Interpretations. Compliance with AIFRS ensures that the consolidated
and parent Financial Statements and Notes comply with International
Financial Reporting Standards (IFRS).
This Financial Report is prepared on the going concern basis and in
accordance with historical cost conventions and has not been adjusted
to take account of either changes in the general purchasing power of
the dollar or changes in the values of specific assets, except for the
valuation of certain non-current assets and financial instruments (refer
notes 1(e), 1(n), 1(p), and 1(v)).
As at 30 June 2009, DXS had a current net asset deficiency of $607.9
million. This Financial Report is prepared on a going concern basis as
DXS has sufficient working capital and cash flow due to the existence
of unutilised facilities of $1,450.4 million as set out in note 21.
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period,
unless otherwise stated.
Critical accounting estimates
The preparation of Financial Statements in conformity with AIFRS
may require the use of certain critical accounting estimates and
management to exercise its judgement in the process of applying the
Trusts’ accounting policies. Other than the estimations described in
notes 1(e), 1(n), 1(p), and 1(v), no key assumptions concerning the
future or other estimation of uncertainty at the reporting date have a
significant risk of causing material adjustments to the Financial
Statements in the next annual reporting period.
Uncertainty around property valuations
The global market for many types of real estate has been severely
affected by the recent volatility in global financial markets. The lower
levels of liquidity and volatility in the banking sector have translated into
a general weakening of market sentiment towards real estate and the
number of real estate transactions has significantly reduced.
Fair value of investment property is the price at which the property
could be exchanged between knowledgeable, willing parties in an arm’s
length transaction. A “willing seller” is not a forced seller prepared to
sell at any price. The best evidence of fair value is given by current
prices in an active market for similar property in a comparable
location and condition.
The current lack of comparable market evidence relating to pricing
assumptions and market drivers means that there is less certainty in
regard to valuations and the assumptions applied to valuation inputs.
The period of time needed to negotiate a sale in this environment may
also be significantly prolonged.
The fair value of investment property has been adjusted to reflect
market conditions at the end of the reporting period. While this
represents the best estimates of fair value as at the balance sheet date,
the current market uncertainty means that if investment property is
sold in future the price achieved may be higher or lower than the most
recent valuation, or higher or lower than the fair value recorded in the
Financial Statements.
(b) Principles of consolidation
(i) Controlled entities
The Financial Statements have been prepared on a consolidated basis
in recognition of the fact that while the securities issued by the Trusts
are stapled into one trading security and cannot be traded separately,
the Financial Statements must be presented on a consolidated basis.
The parent entity and deemed acquirer of the Trusts is DDF. The
accounting policies of the subsidiary trusts are consistent with those
of the parent.
The Financial Statements incorporate an elimination of inter-entity
transactions and balances to present the Financial Statements on a
consolidated basis. Net profit and equity in controlled entities, which
is attributable to the unitholdings of minority interests, are shown
separately in the Income Statements and Balance Sheets respectively.
Where control of an entity is obtained during a financial year, its results
are included in the Income Statements from the date on which control
is gained. The Financial Statements incorporate all the assets, liabilities
and results of the parent and its controlled entities.
(ii) Partnerships and joint ventures
Where assets are held in a partnership or joint venture with another
entity directly, the Trusts’ share of the results and assets of this
partnership or joint venture are consolidated into the Income
Statements and Balance Sheets of the Trusts. Where assets are jointly
controlled via ownership of units in single purpose unlisted unit trusts
or shares in companies, the Trusts apply equity accounting to record
the operations of these investments (refer note 1(s)).
DEXUS PROPERTY GROUP Annual REPORT 2009 33