Limited - EY

Good Group New Zealand Limited

Illustrative consolidated financial statements for the year ended 31 December 2019 (also applicable to 30 June 2020 year-ends)

Based on NZ IFRS for Tier 1 and Tier 2 for-profit entities

Contents

Introduction

Foreword

This publication has been designed to illustrate disclosure requirements for both Tier 1 for-profit entities reporting in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and Tier 2 for-profit entities reporting in accordance with NZ IFRS Reduced Disclosure Regime (NZ IFRS RDR). Disclosures and related commentaries for which NZ IFRS RDR disclosure concessions are available have been highlighted in this document in dark grey with white text. Tier 2 entities are not required to make these disclosures. Certain disclosures are included in this publication merely for illustrative purposes. We, therefore, recommend that entities using this publication tailor the illustrative disclosures to reflect the entity's own facts and circumstances. The NZ IFRS standards applied in these illustrative financial statements are those that are effective for annual periods beginning on or before 1 January 2019. The Standard that introduces substantive changes from the 2018 version of our illustrative financial statements is NZ IFRS 16 Leases. We have disclosed the impact of those changes in Note 2.4. Entities may find useful the following publications about the new leasing standard: Applying IFRS - A closer look at IFRS 16 leases (Dec 2018) Applying IFRS ? Presentation and disclosure requirements of IFRS 16 Leases (Nov 2018) Industry specific materials on impacts of NZ IFRS 16 can be found here. We recommend you contact one of the EY member firms' Assurance partners or a member of the EY Financial Accounting Advisory Services team for more information about the new leasing standard.

Caveat

The names of people and organisations included in these illustrative financial statements are fictitious and have been created for the purpose of illustration only. Any resemblance to any person or organisation is purely coincidental.

These financial statements are illustrative only and do not attempt to show all possible accounting and disclosure requirements. In case of doubt as to the requirements, it is essential to refer to the relevant source and, where necessary, to seek appropriate professional advice. Although the illustrative financial statements attempt to show the most likely disclosure requirements, it should not be regarded as a comprehensive checklist of disclosure requirements.

? 2019 Ernst & Young, New Zealand. All Rights Reserved.

Consolidated financial statements

Notes

Appendices

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Contents

Contents ................................................................................................................................................................ ii Abbreviations and key............................................................................................................................................ iii Introduction ...........................................................................................................................................................4 Consolidated statement of profit or loss .................................................................................................................10 Consolidated statement of comprehensive income..................................................................................................12 Consolidated statement of financial position...........................................................................................................14 Consolidated statement of changes in equity ..........................................................................................................17 Consolidated statement of cash flows ....................................................................................................................20 Index to notes to the consolidated financial statements...........................................................................................22 Appendix 1: Alternative method of adopting NZ IFRS 16 Leases ............................................................................157 Appendix 2: Consolidated statement of profit or loss and other comprehensive income (example of a single statement) ...........................................................................................................................168 Appendix 3: Consolidated statement of profit or loss (example of expenses disclosed by nature) .............................170 Appendix 4: Consolidated statement of cash flows (example of the direct method) .................................................171 Appendix 5: Biological assets (example of disclosures) ..........................................................................................173 Appendix 6: Correction of a prior period error ......................................................................................................186 Appendix 7: Companies Act 1993 disclosures.......................................................................................................187 Key contacts ......................................................................................................................................................193

Introduction

Consolidated financial statements

Notes

Appendices

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Introduction

Abbreviations and key

The following styles of abbreviation are used in this set of illustrative financial statements:

NZ IAS 33.41

New Zealand Equivalent to International Accounting Standard No. 33, paragraph 41

NZ IAS 1.BC13

New Zealand Equivalent to International Accounting Standard No. 1, Basis for Conclusions, paragraph BC13

NZ IFRS 2.44

New Zealand Equivalent to International Financial Reporting Standard No. 2, paragraph 44

FRS-44.8

Financial Reporting Standard No. 44, paragraph 8

NZ SIC 29.6

New Zealand Equivalent to Interpretation No. 29, paragraph 6

NZ IFRIC 4.6

New Zealand Equivalent to IFRS Interpretations Committee (formerly IFRIC) Interpretation No. 4, paragraph 6

NZ IFRS 9.IG.G.2

International Financial Reporting Standard No. 9 -- Guidance on Implementing NZ IFRS 9 Section G: Other, paragraph G.2

CA93 s211(1)(j) Companies Act 1993, section 211, subsection (1)(j)

Commentary

The commentary explains how the requirements of NZ IFRS have been implemented in arriving at the illustrative disclosure

NZ GAAP

New Zealand Generally Accepted Accounting Practice

IASB

International Accounting Standards Board

Interpretations Committee

IFRS Interpretations Committee (formerly International Financial Reporting Interpretations Committee (IFRIC))

SIC

Standing Interpretations Committee

OCI

Other Comprehensive Income

CGU

Cash-Generating Unit

EIR

Effective Interest Rate

DCF

Discounted Cash Flows

CODM

Chief Operating Decision Maker

Consolidated financial statements

Notes

Appendices

Good Group New Zealand Limited

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Contents

Introduction

Consolidated financial statements

Introduction

This publication contains an illustrative set of consolidated financial statements for Good Group New Zealand Limited (the parent) and its subsidiaries (the Group). The Group is a fictitious, for-profit manufacturing company. Good Group New Zealand Limited is incorporated in New Zealand. The presentation currency of the Group is the New Zealand dollar.

Objective

The publication has been designed to illustrate disclosure requirements for both Tier 1 for-profit entities reporting in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and Tier 2 for-profit entities reporting in accordance with New Zealand Equivalents to International Financial Reporting Standards Reduced Disclosure Regime (NZ IFRS RDR).

This set of illustrative financial statements only presents the financial statements for the Group. Entities will need to consider legislative requirements around whether separate (parent) financial statements are required.

The illustrative financial statements intend to reflect transactions, events and circumstances that we consider to be most common for a broad range of companies. Certain disclosures are included in these financial statements merely for illustrative purposes even though they may be regarded as items or transactions that are not material for the Group. The illustrative disclosures are intended to be a useful reference but each entity should consider its own facts and circumstances when preparing its financial statements, including materiality. As a general approach, these illustrative financial statements do not early adopt standards or amendments before their effective date.

How to use this publication

The illustrative financial statements contain IFRS disclosures. Disclosures highlighted in dark grey with white text are disclosures arising from New Zealand accounting standards. Tier 2 entities are not required to make these disclosures.

Additional NZ IFRS RDR disclosures required to be made by Tier 2 for-profit entities, are contained in a dashed box.

Commentaries are provided to explain the basis for the disclosure or to address alternative disclosures not included in the illustrative financial statements. For a more comprehensive list of disclosure requirements, please refer to EY Disclosure Checklist. Please contact one of EY member firm's Assurance partners for the latest version of the Disclosure Checklist. If questions arise as to the NZ IFRS requirements, it is essential to refer to the relevant source material and, where necessary, to seek professional advice. Notations shown on the right-hand margin of each page are references to NZ IFRS paragraphs that describe the specific disclosure requirements.

NZ IFRS 8 and NZ IAS 33 NZ IFRS 8 Operating Segments and NZ IAS 33 Earnings per Share disclosures have also been highlighted in this document in dark grey with white text. The limited scope of NZ IFRS 8 and NZ IAS 33 (as outlined below) means that entities that meet the Tier 2 for-profit entity criteria would not be within the scope of NZ IFRS 8 or NZ IAS 33, meaning that such disclosures are not applicable to Tier 2 for-profit entities.

NZ IFRS 8 and NZ IAS 33 only apply to: ? the separate or individual financial statements of an entity:

? whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-thecounter market, including local and regional markets), or

? that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; and

? the consolidated financial statements of a group with a parent:

? whose debt or equity instruments are traded in a public market (a domestic or foreign stock exchange or an over-thecounter market, including local and regional markets), or

? that files, or is in the process of filing, the consolidated financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market.

Entity-specific disclosures

Users of this publication are encouraged to prepare entity-specific disclosures. Transactions and arrangements other than those addressed by the Group may require additional disclosures. It should be noted that the illustrative financial statements of the Group are not designed to satisfy any share market or regulatory requirements, nor is this publication intended to reflect disclosure requirements that apply mainly to regulated or specialised industries.

Notes

Appendices

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Introduction

Improving disclosure effectiveness

Terms such as 'disclosure overload' and `cutting the clutter', and more precisely `disclosure effectiveness', describe a problem in financial reporting that has become a priority issue for the International Accounting Standards Board (IASB or Board), local standard setters, and regulatory bodies. The growth and complexity of financial statement disclosure is also drawing significant attention from financial statement preparers, and more importantly, the users of financial statements.

Even though there is no formal definition of `disclosure overload', from the different discussions and debates among stakeholders, three common themes have appeared, namely: financial statements' format or structure; tailoring; and materiality.

Format

When deciding on the format for the financial statements, it was common practice to follow the structure suggested in NZ IAS 1. However, as financial statement disclosures have increased in volume as transactions and the requirements of accounting standards become more complex, alternative formats may better communicate the links between different pieces of information and more transparently reflect the financial position, performance and risks of the entity. Some alternative ways to structure and present financial statements disclosures are: ? Improve the navigation of financial statements by, for example, using summary pages or content

listing, headings and cross references. Other approaches include content banners, section signs, callout boxes, or the use of colour and symbols.

? Disclosure of accounting policies together with the relevant note

? Order the notes by reference to importance

? Group disclosures by nature

? Present a specific note that provides a summary of key transactions and events for the period

Tailoring Materiality

Investors, analysts and other users of financial statements often observe that disclosures in the financial statements are boilerplate and generic, and therefore do not provide decision-useful information. Tailoring disclosures to the entity-specific facts and circumstances may not reduce the length of the financial statements, but it should enhance the relevance of the information and, in turn, enhance the usefulness of the financial statements. For example, instead of simply copying disclosures from our illustrative financial statements, entities should customise the disclosures to reflect their own facts and circumstances

Applying the concept of materiality requires judgement, in particular, in relation to matters of presentation and disclosure, and inappropriate application of the concept may be another cause of the perceived disclosure problem. NZ IFRS sets out a set of minimum disclosure requirements, which, in practice, tend to be applied without consideration of the relevance of the information for a specific entity. If a particular transaction or item is immaterial to the reporting entity, then it is not relevant, in which case, NZ IFRS allows for non-disclosure. If immaterial information is included in the financial statements, the amount of information can potentially reduce the transparency and usefulness of the financial statements as the material, and thus relevant information, loses prominence. IFRS Practice Statement 2 Making Materiality Judgements provides practical guidance and examples that companies may find helpful in deciding whether information is material. The Practice Statement is not mandatory. However, entities are encouraged to consider it when making materiality judgements.

Some ways to cut clutter in financial statements are:

? Remove immaterial disclosures

? Remove irrelevant or insignificant accounting policies

? Avoid the use of boilerplate text

? Avoid a `disclosure checklist' mentality

Consolidated financial statements

Notes

Appendices

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Introduction

For-profit Accounting Standards Framework

XRB A1 Accounting Standards Framework introduces two tiers of reporting requirements for preparing general purpose financial statements for for-profit entities: ? Tier 1 For-profit Accounting Requirements NZ IFRS and the authoritative notices listed in Appendix B of XRB A1 ? Tier 2 For-profit Accounting Requirements including NZ IFRS RDR and the authoritative notices listed in Appendix B of XRB

A1

Tier 1 incorporates International Financial Reporting Standards (IFRS) issued by the IASB and includes requirements that are specific to New Zealand entities. Tier 2 comprises the recognition and measurement requirements of Tier 1 but substantially reduced disclosure requirements. Except for the presentation of a third statement of financial position in particular circumstances under Tier 1, the presentation requirements under Tier 1 and Tier 2 are the same. Tier 1 and Tier 2 criteria for for-profit entities Tier 1 for-profit entities Tier 1 for-profit entities are required to comply with NZ IFRS in full. A for-profit entity shall report in accordance with Tier 1 For-profit Accounting Requirements if it: ? has public accountability at any time during the reporting period

or ? is a large for-profit public sector entity (i.e. it has total expenses (including income tax expense) over $30 million). An entity has public accountability if it: ? meets the IASB definition of public accountability

or ? is deemed to have public accountability in New Zealand. Under the IASB definition, an entity has public accountability if: ? its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a

public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets) or ? it holds assets in a fiduciary capacity for a broad group of outsides as one of its primary businesses. This is typically the case for banks, credit unions, insurance providers, securities brokers/dealers, mutual funds and investment banks.

An entity is deemed to have public accountability in New Zealand if it is: ? an FMC reporting entity or a class of FMC reporting entities that is considered to have a "higher level of public

accountability" than other FMC reporting entities, specifically: a) an issuer of equity securities or debt securities under a regulated offer b) a manager of registered schemes, but only in respect of financial statements of a scheme or fund c) a listed issuer d) a registered bank e) a licensed insurer f) a credit union g) a building society or ? an FMC reporting entity or a class of FMC reporting entities that is considered to have a "higher level of public accountability" by a notice issued by the Financial Markets Authority (FMA) under section 461L(1) of the Financial Markets Conduct Act 2013.

Consolidated financial statements

Notes

Appendices

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Introduction

Consolidated financial statements

Tier 2 for-profit entities

The term "Tier 2 for-profit entities" refers to entities that qualify for and elect to report under NZ IFRS RDR.

A for-profit entity qualifies for Tier 2 if it:

? does not have public accountability as defined above

and

? in respect of for-profit entities in the public sector, is not large (i.e. total expenses < $30 million).

Accounting Policy Choices

In some cases, NZ IFRS permits more than one accounting treatment for a transaction or event. Preparers of financial statements should select the treatment that is most relevant to their business and the relevant circumstances as their accounting policy.

NZ IAS 8 requires an entity to select and apply its accounting policies consistently for similar transactions, events and/or conditions, unless an NZ IFRS specifically requires or permits categorisation of items for which different policies may be appropriate. Where an NZ IFRS requires or permits such categorisation, an appropriate accounting policy is selected and applied consistently to each category. Therefore, once a choice of one of the alternative treatments has been made, it becomes an accounting policy and must be applied consistently. Changes in accounting policy should only be made if required by a standard or interpretation, or if the change results in the financial statements providing more relevant and reliable information.

In this publication, when a choice is permitted by NZ IFRS, the Group has adopted one of the treatments as appropriate to the circumstances of the Group. In these cases, the commentary provides details of which policy has been selected, the reasons for this policy selection.

Additional information presented in the annual report

Entities may voluntarily provide a financial review by management outside the financial statements or be required to make additional disclosures in the annual report to meet the requirements of the NZX Listing Rules, Companies Act 1993 or other legislative or regulatory requirements.

NZ IFRS does not require entities present a financial review by management, although paragraph 13 of NZ IAS 1 gives a brief outline of what may be included in an annual report. IFRS Practice Statement 1, Management Commentary provides a nonbinding framework for the presentation of a management commentary that relates to financial statements prepared in accordance with IFRS. If a company decides to follow the guidance in the Practice Statement, management is encouraged to explain the extent to which the Practice Statement has been followed. A statement of compliance with the Practice Statement is only permitted if it is followed in its entirety.

Entities that are subject to the NZX Listing Rules should refer to the NZX Listing Rules for required disclosures. Entities preparing annual reports in accordance with the Companies Act 1993 should refer to the Companies Act 1993 and Appendix 7 of this publication. Entities subject to other legislative or regulatory requirements should refer to those requirements.

No financial review by management has been included in this publication.

Changes in the 2019 edition of Good Group New Zealand Limited annual financial statements

The standards and interpretations listed below have become effective since 1 July 2018 for annual periods beginning on 1 January 2019. While the list of new standards is provided below, not all of these new standards will have an impact on these illustrative financial statements. To the extent these illustrative financial statements have changed since the 2018 edition due to changes in standards and interpretations, we have disclosed the impact of those changes in Note 2.4.

Other changes from the 2018 edition have been made in order to reflect practice developments and to improve the overall quality of the illustrative financial statements.

Changes to NZ IFRS

The following new standards and amendments became effective as at 1 January 2019:

? NZ IFRS 16 Leases

? NZ IFRIC Interpretation 23 Uncertainty over Income Tax Treatments

? Amendments to NZ IFRS 9 Prepayment Features with Negative Compensation

? Amendments to NZ IAS 28 Long-term Interests in Associates and Joint Ventures

? Amendments to NZ IAS 19 Plan Amendment, Curtailment or Settlement

? RDR NZ IFRS 16 and NZ IAS 7

? Amendments to the Scope of FRS-42

Notes

Appendices

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