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McPHERSON’S LIMITED

ANNUAL REPORT 2015



NOTE 1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these

consolidated financial statements are set out below. These policies

have been consistently applied to all the periods presented, unless

otherwise stated. The financial statements are for the consolidated

entity consisting of McPherson’s Limited and its subsidiaries.

(A) BASIS OF PREPARATION

These general purpose financial statements have been prepared in

accordance with Australian Accounting Standards and Interpretations

issued by the Australian Accounting Standards Board and the

Corporations Act 2001. McPherson’s Limited is a for profit entity for

the purpose of preparing the financial statements.

Compliance with IFRS

The consolidated financial statements also comply with International

Financial Reporting Standards (IFRS) as issued by the International

Accounting Standards Board (IASB).

Historical cost convention

These financial statements have been prepared under the historical

cost convention, except for certain financial assets and liabilities

(including derivative instruments) which are carried at fair value.

New and amended standards

None of the new standards and amendments to standards that were

mandatory for the first time for the financial year beginning 1 July 2014

affected any of the amounts recognised in the current period or any

prior period and are not likely to affect future periods.

Correction of error – Revenue recognition

During the year the Group reviewed its processes surrounding revenue

recognition, in particular with respect to the timing of recognising

promotional discount claims against revenue. As a consequence of this

review some adjustments with respect to the timing of recognising revenue

and the associated claims and discounts were required to be made.
As the underlying error had built up over time, in order to correct the

error, it has been necessary to correct prior year information as well. The

affected financial statement line items for the prior period are as follows:

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

(EXTRACT)

2014

$’000

RESTATEMENT

$’000

2014

RESTATED

$’000

Sales revenue

353,386

(689)

352,697

Loss before income tax

(61,908)

(689)

(62,597)

Income tax expense

(4,649)

207

(4,442)

Loss for the year

(66,557)

(482)

(67,039)

Other comprehensive income

(4,114)

Total comprehensive income

(70,671)

(482)

(71,153)

Basic loss per share (cents)

(71.9)

(0.5)

(72.4)

Diluted loss per share (cents)

(71.9)

(0.5)

(72.4)

(B) PRINCIPLES OF CONSOLIDATION

Subsidiaries

Subsidiaries are all entities over which the Group has control. The

Group controls an entity when the Group is exposed to, or has rights to,

variable returns from its involvement with the entity and has the ability

to affect those returns through its power to direct the activities of the

entity. Subsidiaries are fully consolidated from the date on which

control is transferred to the Group. They are deconsolidated from the

date that control ceases.
The acquisition method of accounting is used to account for business

combinations by the Group (refer to Note 1(H)).
Intercompany transactions, balances and unrealised gains on

transactions between Group entities are eliminated. Unrealised losses

are also eliminated unless the transaction provides evidence of an

impairment of the transferred asset. Accounting policies of subsidiaries

have been changed where necessary to ensure consistency with the

policies adopted by the Group.
Investments in controlled entities are accounted for at cost in the

individual financial statements of the parent entity.

Changes in ownership interests

When the Group ceases to have control any retained interest in the

entity is remeasured to its fair value with the change in carrying

amount recognised in profit or loss. This fair value becomes the initial

carrying amount for the purposes of subsequently accounting for the

retained interest as an associate, joint venture or financial asset. In

addition, any amounts previously recognised in other comprehensive

income in respect of that entity are accounted for as if the Group had

directly disposed of the related assets or liabilities. This may mean that

amounts previously recognised in other comprehensive income are

reclassified to profit or loss.

Joint arrangements

Under AASB 11

Joint Arrangements investments in joint arrangements

are classified as either joint operations or joint ventures. The

classification depends on the contractual rights and obligations of each

investor, rather than the legal structure of the joint arrangement.
The Group’s 49% investment in McPherson’s Housewares is deemed a

joint venture due to the contractual rights of the arrangement.

This investment is accounted for using the equity method (see below)

after initially being recognised at fair value in the consolidated balance

sheet.

Equity method

Under the equity method of accounting, after initial recognition the

investment is adjusted thereafter to recognise the Group’s share of the

post-acquisition profits or losses of the investee in profit or loss, and

the Group’s share of movements in other comprehensive income of the

investee in other comprehensive income. Dividends received or

receivable from the joint venture are recognised as a reduction in the

carrying amount of the investment.

NOTES TO AND FORMING PART OF THE

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

(EXTRACT)

2014

$’000

RESTATEMENT

$’000

2014 RESTATED

$’000

2013

$’000

RESTATEMENT

$’000

2013 RESTATED

$’000

Trade and other receivables

63,272

(2,543)

60,729

56,762

(1,854)

54,908

Current tax assets

112

268

Current tax liabilities

(652)

652

(289)

289

Net assets

94,544

(1,779)

92,765

169,092

(1,297)

167,795

(Accumulated losses) / Retained earnings

(49,874)

(1,779)

(51,653)

28,574

(1,297)

27,277

Total equity

94,544

(1,779)

92,765

169,092

(1,297)

167,795