Statement of Accounting Policies

FOR THE YEAR ENDED 30 JUNE 2011

Standards and interpretation issued and adopted

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted by the group.

NZ IAS 24 Related Party Disclosures (Revised 2009) replaces NZ IAS 24 Related Party Disclosures (Issued 2004). The revised standard simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition. The Council and the Group has elected not to early adopt the revised standard. Its effect will be to require disclosure of further information about commitments between related parties.

Financial reporting requirements for public benefit entities frozen.

In May 2011 the ASRB and FRSB agreed on a "position statement" that all NZ IFRS's with a mandatory effective date for annual periods beginning on or after 1 January 2012 will be applicable to profit-orientated entities only.

The result is that the financial reporting requirements for public benefit entities are effectively frozen from the 2012 year end onwards. This exemption from new pronouncements is provided in light of pending changes to the Statutory Financial Reporting Framework in New Zealand.

Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted by Far North Holdings Limited as a profit orientated entity.

NZ IFRS 9 Financial Instruments will eventually replace NZ IAS 39 Financial Instruments: Recognition and Measurement.
NZ IAS 39 is being replaced through the following three main phases: Phase 1 Classification and Measurement, Phase 2 Impairment Methodology, and Phase 3 Hedge Accounting. Phase 1 has been completed and has been published in the new financial instrument standard NZ IFRS 9. NZ IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in NZ IAS 39. The approach in
NZ IFRS 9 is based on how an entity manages its financial assets (its business model) and the contractual cash flow characteristics of the financial assets. The financial liability requirements are the same as those of NZ IAS 39, except for when an entity elects to designate a financial liability at fair value through the surplus or deficit. The new standard is required to be adopted for the year ended 30 June 2014. Far North Holdings Limited has not yet assessed the effect of the new standard and expects it will not be early adopted.

FRS-44 New Zealand Additional Disclosures and Amendments to NZ IFRS to harmonise with IFRS and Australian Accounting Standards (Harmonisation Amendments)
These were issued in May 2011 with the purpose of harmonising Australia and New Zealand's accounting standards with source IFRS and to eliminate many of the differences between the accounting standards in each jurisdiction. The amendments must first be adopted for the year ended 30 June 2012. Far North Holdings Limited has not yet assessed the effects of FRS-44 and the Harmonisation Amendments.