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Shareholder Review

• About Tower
• Highlights
• What we do
  • Anchor in a storm
  • Courageous Heart
  • Straight Up
  • Greater Good
• From the Chairman
• Board of Directors
• From the Managing Director
• Senior Management
• Tower's people
• Corporate and Social Responsibility
• Information for Shareholders

Annual Report

• From the Chairman
• From the Managing Director
• Directors' Report
• Auditor's Independence Declaration
• Corporate Governance
• Income Statements
• Balance Sheets
• Statements of Changes
  in Equity
• Statements of Cash Flows
• Notes to the Financial Statements
• Directors' Declaration
• Independent Auditors' Report
• Shareholder Information

Notice of Meeting

• Letter from the chairman
• Notice of AGM
• Explanatory Memorandum
• Glossary

 

TOWER Australia Group Limited NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 September 2008 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been applied to all the periods presented, unless otherwise stated. BASIS OF PREPARATION This general purpose financial report has been prepared in accordance with Australian Equivalents to International Financial Reporting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with IFRS Compliance with AIFRS ensures that the financial statements and notes to the financial statements comply with International Financial Reporting Standards (IFRS). The financial statements have been prepared on a fair value basis with any exceptions noted in the accounting policies below. The financial statements are presented in Australian dollars. Rounding The Company is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. PRINCIPLES OF CONSOLIDATION The consolidated financial statements incorporate the assets and liabilities of all controlled entities of TOWER Australia Group Limited ("Company" or "parent entity") as at 30 September 2008 and the results of all controlled entities for the year then ended. TOWER Australia Group Limited and its controlled entities together are referred to in this financial report as "the Group" or "the consolidated entity". Controlled entities are all those entities over which the consolidated entity has control, being the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity controls another entity. The results of any controlled entities acquired during the year are consolidated from the date on which control is transferred to the consolidated entity and the results of any controlled entities disposed of during the year are consolidated up to the date control ceases. The acquisition of controlled entities is accounted for using the purchase method of accounting. Inter-company transactions and balances between Group entities are eliminated on consolidation. Investments in associates Investments in associates are accounted for in the parent entity financial statements using the cost method and in the consolidated financial statements using the equity method, after initially being recognised at cost. An associate is an entity over which the consolidated entity has significant influence, but not control (usually accompanied by shareholdings between 20 and 50%). CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise it's judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. COMPARATIVES The accounting policies adopted are consistent with those of the previous financial year. Comparatives are adjusted from time to time for changes in disclosures to improve comparability of information. In the comparative period: - fees earned from some life investment contracts have been reclassified and disclosed as fee and other revenue on the income statement where previously these were classified and disclosed as movement in policy liabilities; and - assets arising from reinsurance contracts and life insurance contract liabilities have been grossed up for the inclusion of reinsurance amounts which were previously shown net. These reclassifications have no impact on income or net assets for the comparative period. PRINCIPLES UNDERLYING THE CONDUCT OF THE LIFE INSURANCE BUSINESS The life insurance operations of the Group comprise the selling and administration of contracts which are classified as either life insurance contracts or life investment contracts. Contracts that include both investment and insurance elements are separated into these two elements and reported accordingly. Life insurance contracts involve the acceptance of significant insurance risk. Insurance risk is defined as significant if, and only if, an insured event could cause an insurer to pay significant additional benefits in any scenario of commercial substance. Insurance contracts include those where the insured benefit is payable on the occurrence of a specified event such as death, injury or disability caused by accident or illness. The insured benefit is either not linked or only partially linked to the market value of the investments held by the life insurer, and the financial risks are substantially borne by the life insurer. Any products that do not meet the definition of a life insurance contract are classified as life investment contracts. Life investment contracts include investment-linked contracts where the benefit amount is directly linked to the market value of the investments held. While the underlying assets are registered in the name of the life insurer and the investment-linked policy owner has no direct access to the specific assets, the contractual arrangements are such that the investment-linked policy owner bears the risks and rewards of the investment performance. The life insurer derives fee income from the administration of investment-linked policies. Participating policy owner benefits, both vested and unvested, are treated as expenses when incurred and liabilities until paid. The Group operates predominantly in the financial services industry. As such, the assets and liabilities disclosed in the consolidated balance sheet are grouped by nature and listed in an order that reflects their relative liquidity. SPECIFIC ACCOUNTING POLICIES a) Premium revenue Life Insurance contracts Premiums on life insurance contracts are separated into their revenue and deposit components. Where it is not practicable to split out the two components all premiums have been recognised as revenue. Where policies provide for the payment of amounts of premiums on specific due dates, such premiums are recognised as revenue when due. Unpaid premiums are recognised as revenue only during the days of grace or where secured by the surrender values of the policies concerned. Other premiums are recognised as revenue on a cash received basis. Life investment contracts Under life investment contracts the life company receives deposits from policyholders which are then invested on behalf of the policyholders and taken to the balance sheet. No premiums are recognised as revenue. Fees deducted from members accounts are accounted for as fee revenue. Life investment premiums are treated as a movement in life investment contract liabilities.

 

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• ANNUAL REPORT
• SHAREHOLDER REVIEW

TOWER AUSTRALIA ANNUAL REPORT 2008