Annual Report - Bega Cheese

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Financial Statements Period Financial Ended Statements 30 June 2010 Notes Period to Ended the Financial 30 June Statements 2010 Notes to the Financial Statements t. Provisions Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events. It is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to anyone item included in the same class of obligations may be small. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. u. Employee Benefits Short-term Obligations Liabilities for wages and salaries, including non monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short term employee benefit obligations are presented as payables. Other Long-term Employee Benefit Obligations The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and period of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Retirement Benefit Obligations All employees of the Group are entitled to benefits from the Group’s superannuation plan on retirement, disability or death. All employees receive fixed contributions from the Group and the Group’s legal or constructive obligation is limited to these contributions. v. Contributed Equity Ordinary shares are classified as equity. w. Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. x. Research and Development Costs Expenditure on research activities is recognised as an expense in the period in which it is incurred. y. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. Bega Cheese Limited 2010 Annual Report 24 Bega Cheese Limited 2010 Annual Report 24
Financial Statements Financial Period Ended Statements 30 June 2010 Period Notes to Ended the Financial 30 June 2010 Statements Notes to the Financial Statements z. New Accounting Standards and Interpretations Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010 reporting periods. The Group's and the parent entity's assessment of the impact of these new standards and interpretations is set out below. i. AASB 9 replaces the multiple classification and measurement models in AASB 139 Financial instruments: Recognition and measurement with a single model that has only two classification categories: amortised cost and fair value. The Group intends to apply the revised standard from 1 July 2013. ii. AASB 2009-5 Further amendments arising from the 2nd improvements project. The improvements project is an annual project that provides a mechanism for making non-urgent changes to IFRSs. The changes include editorial and accounting changes across a great number of standards. iii. Amendments arising from the third annual improvements project. The annual improvements process provides a vehicle for making non-urgent but necessary amendments to IFRSs. Amendments affect six standards and one IFRIC: IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27, IAS 34 and IFRIC 13. The Group intends to monitor the amendments going forward. 2. Financial Risk Management The Group’s activities expose it to a variety of financial risks; market risks including currency risk, interest rate risk and price risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in case of interest rate, foreign exchange and other price risks and aging analysis for credit risk. Risk management is carried out by the treasury function within the finance department under policies approved by the Board of Directors and overseen by the Finance Committee. The officer identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units, by applying principals provided by the Board who have overall responsibility for risk management. The Board also approve policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of financial instruments, and investment of excess liquidity. a. Market Risk The Group’s activities expose it primarily to market risks in relation to foreign currency and interest rate movements. The Group enters into a variety of derivative financial instruments to manage exposures which include; forward foreign currency contracts to hedge exchange rate risks from the sale of exported goods; interest rate swaps to hedge the fair value risk associated with fluctuating interest rates. Foreign Exchange Risk Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The Group exports dairy products and is exposed to foreign exchange risk, primarily the US dollar and Japanese Yen. The risk is measured using sensitivity analysis and cash flow forecasting, forward contracts are used to manage these risks. The Group’s risk management policy is to match highly probable future cash flows in foreign currencies, for cash flow hedge accounting purposes, with forward exchange contracts in the same currency and with closely corresponding settlement dates. 30-80% of its estimated foreign currency exposures in respect of forecast sales over the subsequent 12 months are hedged. Bega Cheese Limited 2010 Annual Report 25 Bega Cheese Limited 2010 Annual Report 25
Page 1 and 2: Bega Cheese Limited Trading as ‘B
Page 3 and 4: Review of Operations and Activities
Page 5 and 6: Directors’ Report (cont.) Period
Page 7 and 8: Auditors Independence Declaration P
Page 9 and 10: Independent Auditor’s Report (con
Page 11 and 12: Index to to Financial Statements In
Page 13 and 14: Financial Statements Period Ended 3
Page 15 and 16: Financial Statements Period Ended 3
Page 17 and 18: Notes Notes Financial Statements Pe
Page 19 and 20: Financial Statements Financial Peri
Page 23: Financial Statements Financial Peri

Annual Report - Bega Cheese

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