48
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