Page 34 - NZPM Annual Report 2020

NZPM GROUP LIMITED
Notes to the Consolidated Financial Statements for the year ended 31 March 2020

1. General information

The consolidated financial statements presented are those of NZPM Group (‘the Group’), comprising NZPM Group Limited (‘the
company’ or ‘NZPM’) and its subsidiaries as at 31 March 2020. The Group is primarily involved in the provision of plumbing supplies.

Statutory base

NZPM is a co-operative. It is a profit-orientated company incorporated and domiciled in New Zealand. The address of the registered
office is Metrix Building, 155 The Strand, Parnell, Auckland 1010. NZPM is registered in New Zealand under the Companies Act 1993
and the Co-operative Companies Act 1996 and is a FMC reporting entity under the Financial Markets Conduct Act 2013. The financial
statements have been prepared in accordance with the Financial Markets Conduct Act 2013, the Financial Reporting Act 2013 and the
Companies Act 1993.

These consolidated financial statements are expressed in New Zealand dollars which is the Group’s presentation currency. All financial
information has been rounded to the nearest thousand ($’000) unless otherwise stated.

The consolidated financial statements have been authorised for issue by the Board of Directors on 10 July 2020.

2. Changes to accounting standards

New standards not yet adopted
There are standards, amendments and interpretations on issue but not yet in effect. However these are not expected to have a
material impact on the Group consolidated financial statements.

General impact of application of NZ IFRS 16 Leases
The Group has adopted NZ IFRS 16 Leases (NZ IFRS 16) from 1 April 2019.

The standard deals with the recognition, measurement, presentation and disclosure of leases and replaces the current guidance in
NZ IAS 17 Leases (NZ IAS 17). The new standard introduces a single model for lessees which recognises all leases on the balance sheet
through an asset representing the rights to use the leased item during the lease term and a liability for the obligation to make lease
payments. This removes the distinction between operating and finance leases and aims to provide users of the financial statements
relevant information to assess the effect that leases have on the balance sheet, income statement and cash flows of the reporting
entity.

The Group reviewed leases where the Group is the lessee and these leases primarily relate to leases for properties and motor vehicles.

The Group has applied NZ IFRS 16 using the modified retrospective approach on adoption of NZ IFRS 16, (using the cumulative catch-
up method at the date of adoption based on the Group’s lease contracts on that date), with the right-of-use asset being equal to
the lease liability less any lease incentives at commencement date. The Group has made use of the practical expedient available on
transition to NZ IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance
with NZ IAS 17 and IFRIC 4 will continue to be applied to those leases entered or modified before 1 April 2019. Comparative numbers
have not been restated.

The Group has also used the practical expedient of relying on previous assessments of whether leases are onerous.

The right-of-use (ROU) assets are subsequently depreciated using the straight line method over the shorter of the estimated useful
lives of the ROU assets or the remaining estimated lease term. The estimated useful lives of ROU assets are determined on the same
basis as similar owned assets within property, plant and equipment. An additional depreciation expense has been recognised in
relation to the adoption of NZ IFRS 16. The lease liabilities are initially measured at the present value of the unpaid lease payments at
commencement date.

Under NZ IFRS 16, ROU assets are tested for impairment in accordance with NZ IAS 36 Impairment of Assets.

Incremental borrowing rates
The Group has used the practical expedient of applying discount rates to a portfolio of assets and has further applied the same
incremental borrowing rates dependent to each portfolio of assets. In determining the discount rate to use, the Group reviewed
publicly available rates for Government Bonds, market swap rates and Treasury Risk-free discount rates and then applied an
adjustment to these rates to apply a company specific credit risk.

32
NZPM GROUP LIMITED ANNUAL REPORT 2020