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McPHERSON’S LIMITED

 ANNUAL REPORT 2015

NOTE 1.  SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES (CONTINUED)

(U) EMPLOYEE BENEFITS (CONTINUED)

Other long-term employee benefit obligations

The liability for long service leave and annual leave which is not expected 

to be settled within 12 months after the end of the period in which the 

employees render the related service is recognised in the provision for 

employee benefits and measured as the present value of expected future 

payments to be made in respect of services provided by employees up 

to the end of the reporting period.  Consideration is given to expected 

future wage and salary levels, experience of employee departures and 

periods of service.  Expected future payments are discounted using 

market yields at the end of the reporting period on national government 

bonds with terms to maturity and currency that match, as closely as 

possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet 

if the entity does not have an unconditional right to defer settlement 

for at least twelve months after the reporting date, regardless of when 

the actual settlement is expected to occur.

Bonus plans

A liability for employee benefits in the form of bonuses is recognised in 

provisions when there is no realistic alternative but to settle the liability 

and at least one of the following conditions is met:

 

•there are formal terms for determining the amount of the benefit;

 

•the amounts to be paid are determined before the time of 

completion of the financial report; and

 

•past practice gives clear evidence of the amount of the obligation.

Superannuation

Contributions to employee superannuation funds are made by 

McPherson’s Limited and controlled entities.  Contributions are 

recognised as an expense as they become payable.

Termination benefits

Liabilities for termination benefits, are recognised when a detailed plan has 

been developed and a valid expectation has been raised in those 

employees affected, that the termination will be carried out.  The liabilities 

for termination benefits are recognised in other creditors unless timing of 

the payment is uncertain, in which case they are recognised as provisions.

Employee benefit on-costs

Employee benefit on-costs are recognised and included in employee 

benefit liabilities when the employee benefits to which they relate are 

recognised as liabilities.

Share-based payments

Share-based compensation benefits are provided to employees via the 

McPherson’s Limited Employee Share/Option Purchase Plan or the 

McPherson’s Limited Performance Rights Plan.
The fair value of options or rights granted to employees is recognised 

as an employee benefit expense with a corresponding increase in 

equity.  The fair value is independently determined at grant date and 

recognised over the period during which the employees become 

unconditionally entitled to the options or rights. 
Non-market vesting conditions are included in assumptions about the 

number of options or rights that are expected to vest. The total expense 

is recognised over the vesting period, which is the period over which all 

of the specified vesting conditions are to be satisfied. At the end of each 

period, the entity revises its estimates of the number of options or rights 

that are expected to vest based on the non-marketing vesting 

conditions. It recognises the impact of the revision to original estimates, if 

any, in profit or loss, with a corresponding adjustment to equity.
Upon the exercise of options or rights, the balance of the share-based payments 

reserve relating to those options or rights is transferred to share capital.

(V) CONTRIBUTED EQUITY AND DIVIDENDS

Contributed equity

Ordinary shares are classified as equity. Incremental costs directly 

attributable to the issue of new shares or options are shown in equity 

as a deduction, net of tax, from the proceeds.

Dividends

Provision is made for any dividend declared by the Directors, being 

appropriately authorised and no longer at the discretion of the entity, on or 

before the end of the financial year but not distributed at balance date.

(W) EARNINGS PER SHARE 

Basic earnings per share

Basic earnings per share is determined by dividing the operating profit 

after income tax attributable to members of McPherson’s Limited by 

the weighted average number of ordinary shares outstanding during 

the financial year (refer to Note 30).

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination 

of basic earnings per share by taking into account all dilutive potential 

ordinary shares arising from the exercise of options outstanding (refer 

to Note 30).

(X) BORROWINGS AND BORROWING COSTS

Borrowings are initially recognised at fair value, net of transaction costs 

incurred.  Borrowings are subsequently measured at amortised cost.  

Borrowings are removed from the balance sheet when the obligation 

specified in the contract is discharged, cancelled or expired.  The 

difference between the carrying amount of a financial liability that has 

been extinguished or transferred to another party and the consideration 

paid, including any non-cash assets transferred or liabilities assumed, is 

recognised in profit or loss as other income or financial costs.
Fees paid on the establishment of loan facilities are recognised as transaction 

costs of the loan and are amortised over the period of the facility to which it 

relates, unless a shorter period is considered more appropriate.
Borrowings are classified as current liabilities unless the Group has an 

unconditional right to defer settlement of the liability for at least twelve 

months after the reporting period.  
Borrowing costs are expensed as incurred.

(Y) GOODS AND SERVICES TAX (GST)

Revenues, expenses and assets are recognised net of the amount of 

associated GST, unless the GST incurred is not recoverable from the 

taxation authority. In this case it is recognised as part of the cost of 

acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST 

receivable or payable. The net amount of GST recoverable from, or 

payable to, the taxation authority is included with other receivables or 

payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of 

cash flows arising from investing or financing activities which are 

recoverable from, or payable to the taxation authority, are presented as 

operating cash flows.

NOTES TO AND FORMING PART OF THE  

CONSOLIDATED FINANCIAL STATEMENTS CONTINUED