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2.10 Relativity settlement
Relativity is the mechanism under which further settlement is recognised (see note 1 for further details).
The Crown annually prepares statements of all Treaty Settlements made up to 30 June of each respective year. Under the Deed of
Settlement the Trust is entitled to claim for relativity settlement from the Crown every five years until 2044. The first claimed was
made in 2012, the next year of claim entitlement is 2017.
The impact of Relativity Settlement on the Group’s financial statements can be broken down into three distinct components:
Disputed Relativity Settlements in relation to initial claim to 30 June 2012
The Trust is pursuing a claim for further amounts based on interpretations within the Deed. No further amount has been accrued
due to the level of uncertainty and any receivable being contingent on agreement being reached. This meets the definition of a
contingent asset (see note 27). The quantum of the amount is not disclosed as it is not able to be reliably measured.
Relativity receivable for Treaty Settlements made between 1 July 2012 and 30 June 2014
As at the end of each financial year the Trust estimates the relativity receivable based on the relativity mechanism formula and
the most recent Crown statement. The amount is calculated solely on portions of Treaty Settlements made by the Crown (i.e.
paid in cash) that are undisputed and can be reliably measured. Due to the level of uncertainty, judgments involved, and limited
information available, no revenue is recognised in relation to disputed and unmeasureable portions of Treaty Settlements made
(i.e. settled through properties or other assets).
Relativity receivables for Treaty Settlements made post 1 July 2014
No relativity receivables have been recognised in the period 1 July 2014 to 31 March 2015 in relation to Treaty Settlements made
after the most recent Crown statement has been received. There is no Crown statement for that period confirming the amount of
Treaty Settlements made, hence the amount of any relativity receivable cannot be reliably measured.
2.11 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the
statement of financial position.
2.12 Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A
provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the
provision is recognised in the statement of comprehensive income within expenses.
When a trade receivable is uncollectible, it is written off. Subsequent recoveries of amounts previously written off are credited
against other expenses in the statement of comprehensive income.
2.13 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of inventory is comprised of section costs and other direct
costs using the weighted average cost basis. Net realisable value is the estimated selling price in the ordinary course of business
less estimated costs of completion and the estimated costs necessary to make the sale.
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waikato-tainui
annual report 2015