annual report - Harvey Norman Company Reports & Announcements

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STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (iv) Foreign currency translation (continued) The functional currency of overseas subsidiaries is the currency commonly used in their respective countries. As at the reporting date the assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Harvey Norman Holdings Limited at the rate of exchange ruling at the balance date and the income statements are translated at the weighted average exchange rates for the period. The exchange differences arising on the retranslation are taken directly to a separate component of equity called the foreign currency translation reserve (“FCTR”). On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. (v) Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Land and buildings are measured at fair value less accumulated depreciation on buildings and any impairment losses recognised after the date of the revaluation. Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Land – not depreciated Leasehold land – lease term Buildings under construction – not depreciated Buildings – 20 to 40 years Owned plant and equipment – 3 to 20 years Plant and equipment under finance lease – 1 to 10 years The assets‟ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For plant and equipment, impairment losses are recognised in the income statement. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement. Revaluations Following initial recognition at cost, land and buildings are carried at a revalued amount which is the fair value at the date of the revaluation less any subsequent accumulated depreciation on buildings and accumulated impairment losses. Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm‟s length transaction as at the valuation date. Properties in New Zealand, Slovenia and Singapore owned by the consolidated entity, upon any revaluation, are valued at fair value, determined by independent licensed valuers, in accordance with the respective local statutory requirements. 59
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (v) Property, plant and equipment (continued) Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the Statement of Financial Position unless it reverses a revaluation decrease of the same asset previously recognised in the income statement. Any revaluation deficit is recognised in the income statement unless it directly offsets a previous surplus of the same asset in the asset revaluation reserve. In addition, any accumulated depreciation as at revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. Valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the asset‟s fair value at the balance date. Derecognition and Disposal An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised. (vi) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised as an expense when incurred. (vii) Investment properties Completed Investment Property Initially, investment properties, which is property held to earn rentals and / or for capital appreciation are measured at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the period in which they arise. Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the derecognition of an investment property are recognised in the income statement in the period of derecognition. Transfers are made to investment property when, and only when, there is a change in use, evidenced by the ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale. Properties in ACT which are held under a 99 year ground crown land sublease from the Commonwealth Government are not amortised over the remaining life of the lease, as the expectation is that these leases will be renewed at minimal cost once they expire. Properties in ACT have been accounted for as investment properties as they are primarily held to earn rental income. Each investment property is valued at fair value. Each investment property is the subject of a lease or licence in favour of independent third parties, including franchisees. Franchisees occupy properties pursuant to a licence for an initial term of 30 days, thereafter terminable at will. The fair value in respect of each investment property has been calculated using the capitalisation method of valuation, against current market rental value, and having regard to, in respect of each property: the highest and best use quality of construction age and condition of improvements recent market sales data in respect of comparable properties current market rental value, being the amount that could be exchanged between knowledgeable, willing parties in an arm‟s length transaction tenure of Harvey Norman franchisees and external tenants adaptive reuse of buildings the specific circumstances of the property not included in any of the above points non-reliance on turnover rent 60
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2012 ANNUAL REPORT HOLDINGS LIMITED
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2 Contents Company Information 1 Co
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CHAIRMAN‟S REPORT Business Perfor
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CHAIRMAN‟S REPORT (CONTINUED) Our
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Page 11 and 12: CHAIRMAN‟S REPORT (CONTINUED) Sal
Page 13 and 14: CHAIRMAN‟S REPORT (CONTINUED) Slo
Page 15 and 16: DIRECTOR‟S REPORT Your directors
Page 17 and 18: DIRECTOR‟S REPORT (CONTINUED) Com
Page 19 and 20: DIRECTOR‟S REPORT (CONTINUED) Div
Page 21 and 22: DIRECTOR‟S REPORT (CONTINUED) Rem
Page 29 and 30: DIRECTORS‟ REPORT (CONTINUED) Rem
Page 31 and 32: DIRECTORS‟ REPORT (CONTINUED) Rem
Page 33 and 34: DIRECTORS‟ REPORT (CONTINUED) Aud
Page 35 and 36: CORPORATE GOVERNANCE STATEMENT (CON
Page 43 and 44: STATEMENT OF FINANCIAL POSITION AS
Page 45 and 46: STATEMENT OF COMPREHENSIVE INCOME F
Page 47 and 48: STATEMENT OF CHANGES IN EQUITY FOR
Page 49 and 50: STATEMENT OF CASH FLOWS FOR THE YEA
Page 51 and 52: OPERATING SEGMENTS (CONTINUED) Oper
Page 53 and 54: OPERATING SEGMENTS (CONTINUED) OPER
Page 55 and 56: OPERATING SEGMENTS (CONTINUED) Oper
Page 57 and 58: STATEMENT OF SIGNIFICANT ACCOUNTING
Page 59: STATEMENT OF SIGNIFICANT ACCOUNTING
Page 71 and 72: Reference Title Summary Application
Page 77 and 78: NOTES TO THE FINANCIAL STATEMENTS (
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NOTES TO THE FINANCIAL STATEMENTS (
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Independent auditor’s report to t
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SHAREHOLDER INFORMATION Distributio
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DIRECTORY OF HARVEY NORMAN, DOMAYNE
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