McPHERSON’S LIMITED
ANNUAL REPORT 2015
43
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)
-
(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
112
-
268
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