Prospectus - Fonterra

48Fonterra Co-operative Group LimitedNotes to the Financial StatementsFor the 14 months ended 31 July 200812 Deferred taxationAs at31 July 2008$ millionAs at31 May 2007Deferred taxation comprises the following:Property, plant and equipment 8 7Intangible assets (9) (8)Financial instruments (11) (16)Employee entitlements 6 5Receivables, payables & provisions 33 14New Zealand tax losses 122 143149 145Movements for the period:Opening balance 145 108Recognised in profit or loss 4 52Change in tax rate recognised in profit or loss - (15)Closing balance 149 145Deferred tax balances are presented in the balance sheet asfollows:Deferred tax assets 149 145149 14513 Capital notesThe capital notes are unsecured subordinated interest bearing obligations. Interest is payable on a quarterlybasis at a rate of 8.74% per annum (31 May 2007: 8.62%). This rate is reset on 10 July each year.The capital notes have no fixed maturity date and continue in existence until redeemed by the Company on anelection date, or otherwise purchased by the Company through the secondary market, or off market afterallotment with agreement from the holder, or are redeemed or purchased by the Company from its shareholdersin accordance with the Company’s constitution. The capital notes have an election date of 10 July in each year.The Company has the option to redeem all or part of the capital notes for cash on each election date.