Page 35 - NZPM Annual Report 2020
P. 35

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


               The Group has applied an incremental borrowing rate to each type of asset in its portfolio.  The property assets have been grouped
               into four types (Auckland warehouse, Auckland and Queenstown properties, other large city properties and other regional properties)
               with each type having three lease durations (under 5 years, 6 to 11 years, 12 years and over). The incremental borrowing rate for
               vehicles and other equipment is the rate implied in the individual lease agreement.

               Incremental borrowing rates:             Per annum
                 Auckland warehouse                         4.75%
                 Auckland and Queenstown properties    5.05% – 5.75%
                 Other large New Zealand city properties   5.55% – 6.25%
                 Other regional properties            5.80% – 6.50%
                 Vehicles                             6.00% – 8.25%



               Reconciliation of lease commitments to opening lease liabilities at 1 April 2019
                                                                                                       $’000
               Operating lease commitments at 31 March 2019                                          39,351
               Leases committed but not yet commenced at 1 April 2019                                (12,465)
               Extension options reasonably certain to be exercised                                  26,372
               Effect of discounting using incremental borrowing rates at 1 April 2019               (12,483)
               Lease liabilities recognised at 1 April 2019                                          40,775


               Financial impact of NZ IFRS 16 Leases
               The tables below show the amount of adjustment for each financial statement affected by the application of IFRS 16 for the current
               year.

                                                                              Pre NZ    NZ IFRS 16
               Impact on profit or loss                                      IFRS 16  adjustments  As reported
                                                                               $’000       $’000      $’000
               Gross profit                                                  71,597          0       71,597


               Lease expense - motor vehicles                                 (1,429)     1,398         (31)
               Lease expense - property                                       (7,639)     7,639          0
               Depreciation and amortisation expense                          (2,679)     (7,776)    (10,455)
               Other income and expenses                                     (49,447)        0       (49,447)
               Operating profit before net finance costs, rebate dividends and   10,403   1,261      11,664
               dividends paid, and income tax

               Net interest expense                                            (496)      (2,906)    (3,402)
               Rebate dividends and dividends                                 (5,622)        0       (5,622)
               Income tax expense                                             (2,831)      461       (2,370)


               Net profit for the year                                        1,454      (1,184)       270


















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                                               NZPM GROUP LIMITED ANNUAL REPORT 2020
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