71
ANNUAL REPORT 2015
Notes to the Financial Statements (cont’d)
for the financial year ended 30 June 2015
2.
Summary of significant accounting policies (cont’d)
2.18 Inventories
Inventories are stated at lower of cost and net realisable value. Costs incurred in bringing the inventories to
their present location and conditions are accounted for as follows:
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Raw materials: purchase costs on weighted average cost formula.
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Finished goods and work-in-progress: cost of raw materials, direct labour, an appropriate proportion of
fixed and variable factory overheads and all costs attributable to nursery and tree planting expenditure
that can be allocated on a reasonable basis to such activities.
-
Processed inventories: cost of raw materials, direct labour and an appropriate proportion of fixed and
variable production overheads.
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.
2.19 Provisions
Provisions are recognised when the Group and the Company have a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of economic resources will be required to settle the
obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources will be required to settle the obligation, the provision
is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre
tax rate that reflects, where appropriate, the risk specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as a finance cost.
2.20 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and
the definitions of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when,
and only when, the Group and the Company become a party to the contractual provisions of the financial
instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or
other financial liabilities.
(a)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that
do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and
subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net
gains or losses on derivatives include exchange differences.
(b) Other financial liabilities
The Group’s and the Company’s financial liabilities include trade and other payables and loans and
borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective interest method.
