Notes to the Financial Statements
for the year ended 30 June 2001

1.Statement of Significant Accounting Policies

Basis of accounting
The financial statements have been prepared as a general purpose financial report which complies with the requirements of the Corporations Act 2001, Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Consensus Views. The accounting policies used are consistent with those adopted in the previous year. The directors have elected under Section 334(5) of the Corporations Act (2001) to apply Accounting Standard AASB 1041 – ‘Revaluation of Non-Current Assets (Revised 2001)’ for the financial year ended 30 June 2001. The financial statements have also been prepared in accordance with the historical cost convention and do not take account of changes in either the general purchasing power of the dollar or in the prices of specific assets except for certain assets which, where noted, are at valuation.

Principles of consolidation
The consolidated financial statements include the financial statements of the parent entity, Computershare Limited, and its controlled entities, referred to collectively throughout these financial statements as the ‘Consolidated entity’.

All inter-entity balances and transactions have been eliminated. Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up to the date control ceased.

Financial statements of foreign controlled entities presented in accordance with overseas accounting principles are, for consolidation purposes, adjusted to comply with group policy and generally accepted accounting principles in Australia.

Foreign currency transactions
Foreign currency transactions are converted to Australian dollars at exchange rates approximating those in effect at the date of each transaction. Amounts payable and receivable in foreign currencies at balance date are converted to Australian dollars at the average of the buy and sell rates available on the close of business at balance date. Revaluation gains and losses are brought to account as they occur. The financial statements of all foreign operations are translated using the current rate method as they are considered self-sustaining.

Exchange differences relating to monetary items are included in the Statement of Financial Performance, as exchange gains or losses, in the period when the exchange rates change. Where the exchange difference relates to hedging part of the net investment in a self-sustaining foreign operation the exchange difference is transferred to the foreign currency translation reserve on consolidation.

Income tax
The financial statements apply the principles of tax - effect accounting. The income tax expense in the Statement of

Financial Performance represents tax on the pre-tax accounting profit adjusted for income and expenses never to be assessed or allowed for taxation purposes. The provision for deferred income tax liability and the future income tax benefit include the tax effect of differences between income and expense items recognised in different accounting periods for book and tax purposes, calculated at the tax rates expected to apply when the differences reverse.

The benefit arising from estimated carry forward tax losses is recorded as a future income tax benefit only where realisation of such benefit is considered to be virtually certain. The benefit arising from timing differences is recorded as a future income tax benefit where realisation of such benefit is beyond reasonable doubt.

No provision is made for withholding tax on unremitted earnings of applicable foreign incorporated controlled entities as there is currently no intention to remit these earnings to the parent entity.

Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is assigned on a first-in first-out basis.

Prepaid inventory is recorded at cost and is bought on behalf of the Company’s clients. As the inventory is used, the costs are billed.

Recoverable amount of non-current assets
All non-current assets are reviewed at least annually to determine whether their carrying amounts require write down to recoverable amount. Recoverable amounts for all non-current assets are determined using net cash flows that have not been discounted to present values.

Property, plant & equipment
The amounts at which property, plant and equipment are stated in these financial statements are regularly reviewed. Where revaluations are made they are based on reports by independent valuers.

The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal and is included in the profit and loss of the consolidated entity in the year of disposal. Any related revaluation increment in the asset revaluation reserve at the time of disposal is transferred to retained earnings.

Depreciation
Items of property, plant and equipment, excluding freehold land and leasehold plant and equipment, are depreciated on a straight line basis at rates calculated to allocate their cost or valuation, less estimated residual value, against revenue over their estimated useful life. Additions and disposals are depreciated for the period held in the year of acquisition or disposal. Depreciation expense has been determined based on the following rates of depreciation – Buildings (2.5% per annum), Plant and Equipment (10% to 50% per annum), Fixtures and Fittings (13% to 50% per annum) and Motor Vehicles (15% to 40%per annum).