for the year ended 31 December 2018
Woodside Petroleum Ltd|Financial Statements 105
About these statements
Woodside Petroleum Ltd (Woodside or the Group) is a for-
profit entity limited by shares, incorporated and domiciled in
Australia. Its shares are publicly traded on the Australian Securities
Exchange. The nature of the operations and the principal activities
of the Group are described in the Directors’ Report and in the
segment information in Note A.1.
The financial statements were authorised for issue in accordance
with a resolution of the directors on 14 February 2019.
Statement of compliance
The financial statements are general purpose financial statements,
which have been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards
(AASBs) and other authoritative pronouncements of the
Australian Accounting Standards Board. The financial statements
comply with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board.
The accounting policies are consistent with those disclosed in the
2017 Financial Statements, except for the impact of all new or
amended standards and interpretations. The adoption of these
standards and interpretations did not result in any significant
changes to the Group’s accounting policies, with the exception
of AASB 15 Revenue from Contracts with Customers (AASB 15)
(refer to Note E.10(b)). The Group early adopted AASB 9 Financial
Instruments (AASB 9) on 1 January 2017.
The Group has not elected to early adopt any new or amended
standards or interpretations that are issued but not yet eective.
The functional and presentation currency of Woodside Petroleum
Ltd and all its subsidiaries is US dollars.
Transactions in foreign currencies are initially recorded in the
functional currency of the transacting entity at the exchange rates
ruling at the date of transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are
translated at the rates of exchange ruling at that date. Exchange
dierences in the consolidated financial statements are taken to
the income statement.
Rounding of amounts
The amounts contained in these financial statements have been
rounded to the nearest million dollars under the option available
to the Group under Australian Securities and Investments
Commission (ASIC) Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191 dated 24 March 2016, unless
otherwise stated.
Basis of preparation
The financial statements have been prepared on a historical cost
basis, except for derivative financial instruments and certain other
financial assets and financial liabilities, which have been measured
at fair value or amortised cost adjusted for changes in fair
value attributable to the risks that are being hedged in eective
hedge relationships.
The financial statements comprise the financial results of the
Group and its subsidiaries as at 31 December each year (refer to
Section E).
Subsidiaries are fully consolidated from the date on which control
is obtained by the Group and cease to be consolidated from the
date at which the Group ceases to have control.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. All intercompany balances and transactions,
including unrealised profits and losses arising from intra-group
transactions, have been eliminated in full.
The consolidated financial statements provide comparative
information in respect of the previous period. A reclassification of
items in the financial statements of the previous period has been
made in accordance with the classification of items in the financial
statements of the current period.
Non-controlling interests are allocated their share of the net
profit after tax in the consolidated income statement, their share
of other comprehensive income net of tax in the consolidated
statement of comprehensive income and are presented within
equity in the consolidated statement of financial position,
separately from parent shareholders’ equity.
Financial and capital risk management
The Board of Directors has overall responsibility for the establishment
and oversight of the Group’s risk management framework, including
review and the approval of the Group’s risk management strategy,
policy and key risk parameters. The Board of Directors and the Audit
and Risk Committee have oversight of the Group’s internal control
system and risk management process, including the oversight of the
internal audit function.
The Group’s management of financial and capital risks is aimed
at ensuring that available capital, funding and cash flows are
sucient to:
meet the Group’s financial commitments as and when
they fall due;
maintain the capacity to fund its committed project
pay a reasonable dividend; and
maintain a long-term credit rating of not less than
‘investment grade’.
The Group monitors and tests its forecast financial position against
these criteria and, in general, will undertake hedging activity only
when necessary to ensure that these objectives are achieved.
Other circumstances that may lead to hedging activities include the
management of exposures relating to trading activities, the purchase
of reserves and the underpinning of the economics of a new project.
It is, and has been throughout the period, the Group Treasury
policy that no speculative trading in financial instruments shall be
undertaken. Refer to the risk section of the Operating and Financial
Review on pages 60–62 for more information on the Group’s
objectives, policies and processes for managing financial risk.
The below risks arise in the normal course of the Group’s business.
Risk information can be found in the following sections:
Section A Commodity price risk Page 107
Section A Foreign exchange risk Page 107
Section C Capital risk Page 117
Section C Liquidity risk Page 117
Section C Interest rate risk Page 117
Section D Credit risk Page 121