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## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONT 

## 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

## (g) Biological assets 

Biological assets comprise cattle, other livestock, crops not yet harvested, and harvested crops� Biological assets are measured at fair value less costs to sell, with any change recognised in the income statement� Costs to sell include all costs that would be necessary to sell the assets, including freight and direct selling costs� 

The fair value of a biological asset is based on its present location and condition� If an active or other effective market exists for a biological asset or agricultural produce in its present location and condition, the quoted price in that market is the appropriate basis for determining the fair value of that asset� Where we have access to different markets then we use the most relevant one� The relevant one is defined as the market “that access is available to the entity” to be used at the time the fair value is established� 

If an active market does not exist then we use one of the following, when available, in determining fair value: 

 the most recent market transaction price, provided that there has not been a significant change in economic circumstances between the date of that transaction and the end of the reporting period; or 

 market prices, in markets accessible to the entity, for similar assets with adjustments to reflect differences; or 

 sector benchmarks� 

In the event that market determined prices or values are not available for a biological asset in its present condition we may use the present value of the expected net cashflows from the asset discounted at a current market determined rate in determining fair value� 

## (i) Livestock 

Broadly, for the most significant types of cattle we determine net market values as follows: 

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(ii) Crops 

Harvested crops at the reporting date are measured at their fair value less costs to sell with reference to the relevant market spot price� At harvest the fair value is determined on an estimated yield from cotton modules or grain weighed and stored in silos at the commodity’s quoted spot price in the market place� At reporting date if the crop is not harvested then the carrying value is based on costs incurred on the crop to the reporting date subject to those costs being probable of recovery� Crops are only brought to account at fair value when yields can be reliably measured and it’s probable that the future economic benefits will be received by us� 

## (h) Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement 

We use derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge our foreign currency risks, interest rate risks and commodity price risks, respectively� Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value� Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative� 

