New Image Annual Report 2012 concept.indd - NZX

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Notes to and forming part of the financial statements (continued) For the year ended 30 June 2012 16 The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Management has discussed with the Directors the development, selection and disclosure of the Group’s critical accounting policies and estimates and the application of these policies and estimates. Significant Accounting Judgements Impairment of other assets and goodwill Goodwill is assessed for impairment every year. Other assets are assessed for impairment where there are triggers of impairment. In the current year, judgements were made around levels of impairment. Management does not consider that triggers for impairment testing exist for any other assets other than the investment in Living Nature Natural Products Limited. Taxation The Group’s accounting policy for taxation requires management’s judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets are recognised in the Statement of Financial Position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits and repatriation of retained earnings depends on management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the Statement of Financial Position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the Statement of Comprehensive Income. Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Contingent liabilities Management has made judgements concerning the probability of the outcomes when assessing whether to recognise a provision or a contingent liability. These judgements are subject to risk and uncertainty, hence there is a possibility that a change in circumstances will alter expectations, which may impact the amount of provisions recognised on the Statement of Financial Position and the amount of contingent liabilities not yet recognised. Key sources of estimation and uncertainty Note 14 contains information about the assumptions and their risk factors relating to goodwill impairment. In Note 22 detailed analysis is given of the foreign exchange exposure of the Group and risks in relation to foreign exchange movements. F Basis of Consolidation The consolidated financial statements prepared are issued in the name of the legal parent, but represent a continuation of the financial statements of the legal subsidiary following a reverse acquisition in 2004. In reverse acquisition accounting, the cost of the business combination is deemed to have been incurred by the legal subsidiary (the acquirer for accounting purposes) in the form of equity instruments issued to the owners of the legal parent (the acquiree for accounting purposes). As these consolidated financial statements represent a continuation of the financial statements of the legal subsidiary: The assets and liabilities of the legal subsidiary are recognised and measured in the consolidated financial statements at their pre-combination carrying amounts. The retained earnings and other equity balances recognised in the consolidated financial statements are the retained earnings and other equity balances of the legal subsidiary immediately before the business combination. The amount recognised as issued equity instruments is determined by adding the issued equity of the legal subsidiary immediately before the business combination, to the cost of the combination. All acquisitions of subsidiaries subsequent to the reverse acquisition mentioned above are accounted for using the acquisition method. Subsidiaries Subsidiaries are those entities controlled, directly or indirectly, by the Group. Control exists when the Group has the power to govern the financial and operating policy of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company using consistent accounting policies. Intra-group balances, transactions and profits or losses are eliminated in full in the preparation of these Group financial statements. The results of entities acquired during the year are included in the consolidated financial statements from the date that control commenced. Generally assets and liabilities are recognised at their fair value at the date of acquisition. Investments in subsidiaries held by the parent are accounted for at cost in the separate financial statements of the parent less any impairment charges. Dividends received from subsidiaries are recorded as a component of other revenues in the separate Statement of Comprehensive Income of the parent, and do not impact the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess whether any indicators of impairment of the carrying value of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable amount, an impairment loss is recognised. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the 17 NEW IMAGE GROUP ANNUAL REPORT NEW IMAGE GROUP ANNUAL REPORT
Notes to and forming part of the financial statements (continued) For the year ended 30 June 2012 18 acquiree) is goodwill or a discount on acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Non-controlling interests are allocated their share of net profit after tax in the Statement of Comprehensive Income and are presented within equity in the consolidated Statement of Financial Position, separately from the equity of the owners of the parent. Losses are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: Derecognises the assets (including goodwill) and liabilities of the subsidiary Derecognises the carrying amount of any non-controlling interest Derecognises the cumulative foreign currency translation differences, recorded in reserves Recognises the fair value of the consideration received Recognises the fair value of any investment retained Recognises any surplus or deficit in profit or loss Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit and loss, or retained earnings, as appropriate. Business Combinations Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the Group, the liabilities incurred by the Group to former owners of the acquiree and the equity issued by the Group, and the amount of any non-controlling interest in the acquiree. For each business combination, the Group measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred, and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair values of the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the Group will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with NZ IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured until it is finally settled within equity. G Foreign Currency Translation Transactions Foreign currency transactions are translated to the New Zealand dollar at the exchange rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are translated to the functional currency at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary assets and liabilities in foreign currencies are recognised in the Statement of Comprehensive Income as other comprehensive income. Translation of foreign group entities The assets and liabilities of Group entities incorporated overseas are translated at the rates of exchange ruling at reporting date. The revenues and expenses of these entities are translated at rates approximating the exchange rates ruling at the dates of the transactions. Exchange differences arising on translation are recognised directly in the foreign currency translation reserve, a component of other comprehensive income. H Property, Plant and Equipment Owned assets Property, plant and equipment are stated at historical cost less accumulated depreciation (see below) and any accumulated impairment losses (see accounting policy (M)). Disposal of property, plant and equipment Where property, plant and equipment are disposed of, the profit or loss recognised in the Statement of Comprehensive Income is calculated as the difference between the sale price and the carrying value of the asset. Subsequent costs The Group recognises in the carrying amount of the asset the cost of replacing part of such an item when the cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the Statement of Comprehensive Income as an expense as incurred. Depreciation Depreciation is calculated on a straight line basis to allocate the cost of an asset, less any residual value, over its estimated useful life. The following useful lives have been applied: Leasehold Improvements Office Furniture Plant and Equipment Computer Equipment Motor Vehicles Over the term of the lease (5 to 10 years) 5 years 3 to 10 years 2 to 5 years 4 to 10 years 19 NEW IMAGE GROUP ANNUAL REPORT NEW IMAGE GROUP ANNUAL REPORT
Page 2 and 3: To enhance the health and well-bein
Page 4 and 5: Executive Chairman’s Review 2012
Page 6 and 7: NEW IMAGE GROUP LIMITED Annual Repo
Page 8 and 9: Statement of Changes in Equity (con
Page 12 and 13: Notes to and forming part of the fi
Page 44 and 45: Audit Report 84 Independent Auditor
Page 46 and 47: Statutory Information (continued) F
Page 48 and 49: Statutory Information (continued) F
Page 50: Company Directory For the year ende

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