Page 69 - NZPM Annual Report 2020

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

33. Capital management

Capital is defined by the Group to be the total equity as shown in the balance sheet. The Group’s capital management objectives
are to safeguard the Group’s ability to continue as a going concern, to provide an appropriate rate of return to shareholders and to
optimise the Group’s cost of capital. The Group’s policy in respect of capital management and allocation are regularly reviewed by
the board of directors. The Group may make adjustments by means including changes to the rebate dividend and dividend pay-out
percentage, return capital to shareholders, issue new shares, sale of assets to reduce debt or a combination of these. The Group’s
current dividend policy is a long-term target distribution of 80% of net profit after tax and a short-term target distribution range of
65% – 95% and other such financial factors as the board determines.
The introduction of the new NZ IFRS 16 Leases accounting standard , which is effective for the Group from the 2019 financial year has
significantly increased book gearing as operating lease liabilities are recorded on the balance sheet. This new standard is non-cash
in nature and for internal purposes and for testing debt covenant compliance with the Group’s external funding providers, these
new lease liabilities and the associated interest expense are excluded from the company’s internal gearing and debt covenant
calculations.

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NZPM GROUP LIMITED ANNUAL REPORT 2020