5 9
Tainui Group Holdings
Annual Report
2012
5 9
Tainui Group Holdings
Annual Report
2012
the present value of the estimated future cash outfows to be made by the Group in respect of services provided by
employees up to reporting date.
The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the
achievements of agreed key performance indicators, including the achievement of fnancial budget targets. The Group
recognises a provision where contractually obliged or where there is a past practice that has created a constructive
obligation.
2.7 Leases
Leases in which a signifcant portion of the risks and rewards of ownership are retained by the lessor are classifed as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to
the statement of comprehensive income on a straight‑line basis over the period of the lease.
Property interests held by a lessee under an operating lease are recognised as part of the carrying amount of the
investment property with a corresponding liability at fair value through proft or loss being recorded.
2.8 Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is
required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the rate associated with
project related borrowings or the weighted average interest rate applicable to the Group’s outstanding borrowings
during the year.
2.9 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short‑term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignifcant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the statement of fnancial position.
2.10 Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for
doubtful debts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are
written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not
be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated future cash fows, discounted at
the effective interest rate. The amount of the provision is recognised in the statement of comprehensive income within
expenses.
When a trade receivable is uncollectible, it is written off. Subsequent recoveries of amounts previously written off are
credited against other expenses in the statement of comprehensive income.
2.11 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of inventory is comprised of section costs
and other direct costs using the weighted average cost basis. Net realisable value is the estimated selling price in the
ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.
2.12 Biological assets
Biological assets are measured at fair value less estimated point of sale costs. The fair value of livestock is determined
based on market prices of livestock of similar age, breed and genetic merit. The fair value of trees is determined
annually by independent valuers by calculating the crop expectation and future value discounted back to the present
value, based on the rotation age of the crop and the current market prices of the logs. The valuation of Redwood trees is
based on the current replacement cost method used for young trees.