Notes to the Financial Statements
continued
68
Development properties and land at cost
In 2012, development properties relating to the development of the Novotel Auckland Airport hotel, which was
completed in May 2011, had been transferred to a separate hotel category within property, plant and equipment
(see also note 22 for ASB Bank security agreement over the hotel assets).
The transfer to development properties relates to a property previously classified as investment property. The
property will be developed as the Company’s new offices, therefore owner occupied, and as such the property
has been reclassified to property, plant and equipment.
In 2013, the property developed as the Company’s new offices has been transferred from development to farm
and other properties. The Company’s prior office property has been transferred to investment properties.
Land at cost includes two properties which were to be developed but are now considered investment
properties. The properties are located in Taupo and Ruakiwi Road, Hamilton.
Valuations of farm and other properties
Telfer Young (Waikato) Limited and Curnow Tizard were contracted as independent valuers to value farm and
other properties. Fair value has been assessed as the amount for which an asset could be exchanged or a
liability settled between knowledgeable willing parties in an arms length transaction.
The significant methods and assumptions applied in estimating the fair value were:
‑ the direct comparison approach (based on analysis of sales of vacant property. This analysis includes
determination of land value, other improvements and residual value for principal improvements);
‑ the traditional capitalisation approach (focusing on the net maintainable income and the level of
investment return);
‑ the discounted cash flow approach (based on establishing a cash flow budget for the property having
particular regard to the length of lease term and nature of the leasehold interest and the following factors;
discount rate, land inflation and rental rates); and
‑ comparing market evidence of transaction prices for similar properties.
The total value of farm properties valued by Telfer Young (Waikato) Limited at 31 March 2013 for the Group and
Parent is $19.3m (2012: $20.1m).
The total value of other properties by Curnow Tizard Limited for the Group at 31 March 2013 is $4.6m (2012: $1.7m).
All valuers are independent registered valuers not related to the Company or Group. All valuers hold recognised
and relevant professional qualifications and have recent experience in the locations and categories of farm and
other properties they have valued.
Valuation basis of investment properties
Investment property valuations were completed as follows:
D.J. Saunders from Telfer Young (Waikato) Limited valued properties at fair value of $76m and parent $24m on
31 March 2013 (31 March 2012: $131m and Parent: $24m) using a mixture of market evidence of transaction
prices for similar properties, direct comparison, capitalisation and discounted cash flow approaches.
T. Arnott from CB Richard Ellis Limited valued properties at fair value of $310m and parent $61m on 31 March
2013 (31 March 2012: $282m and Parent: $57m) using a mixture of market evidence of transaction prices for
similar properties, capitalisation and discounted cash flow approaches.
M. J. Snelgrove from Curnow Tizard Limited valued properties at fair value of $109m on 31 March 2013
19 Investment properties
2013
2012
2013
2012
Notes
$’000
$’000
$’000
$’000
Balance at beginning of year
528,412
457,728
81,033
71,778
Development
16,785
48,420
-
-
Net gain from fair value adjustment
8
25,686
23,624
3,590
9,255
Transfer from/(to) property, plant and equipment 18
4,862
(1,360)
-
-
Disposals
(2,624)
-
-
-
Balance at end of year
573,121
528,412
84,623
81,033
Parent
Consolidated
Note 18 continued
