McPHERSON’S LIMITED

 ANNUAL REPORT 2015  



  

71

(B) CONTINGENT CONSIDERATION

A number of the Group’s recent acquisitions have included a contingent consideration arrangement whereby the Group may be required to pay the 

vendors a variable amount of money depending on the performance of the acquired business or asset over a set period post acquisition.  In 

accordance with Australian Accounting Standards, management is required to estimate how much of the contingent consideration it expects to 

pay in the future and raise a provision for this amount.  The estimated amount is required to be reassessed each balance date.  Refer to Note 31 for 

further information.

(C) CLAIMS, RETURNS AND WARRANTY

Provision is made for the estimated product related claims and returns by customers. 

(D) RESTRUCTURE

At the end of the 2015 financial year the Group commenced a restructuring program to continue to align the Group’s structure with the current 

strategy and environment.  Since the restructuring plan was formally announced to employees prior to the end of the year and a formal plan is in 

place, a provision has been raised at 30 June 2015, for the restructuring activities that are still to be completed.

(E) EMPLOYEE INCENTIVES

Amounts reflect incentive payments to employees on the basis that certain criteria were fulfilled during the financial year.

(F) OTHER

Miscellaneous obligations for which there is a probability of an outflow of resources.

Movement in provisions

Movements in each class of provision during the financial year, other than employee entitlements, are set out below:

CONTINGENT

CONSIDERATION

CLAIMS,

RETURNS AND 

WARRANTY

RESTRUCTURE

EMPLOYEE

INCENTIVES

OTHER

$’000

$’000

$’000

$’000

$’000

Carrying amount at 1 July 2014

12,885

1,920

-

392

257

Additional provisions charged to profit or loss

-

2,662

1,409

968

413

Transfers (Note 16)

(4,140)

-

-

-

-

Unused amounts reversed to profit or loss

(2,036)

-

-

(10)

-

Payments

(72)

(2,540)

-

(1,070)

(322)

Foreign currency exchange differences

-

-

-

11

-

Carrying amount at 30 June 2015

6,637

2,042

1,409

291

348

NOTE 21.   BORROWINGS – NON-CURRENT

2015

$’000

2014

$’000

Secured liabilities

Bank loans - secured

30,000

76,000

Unsecured liabilities

Bonds 

60,000

-

Debt issue Costs

(1,931)

-

88,069

76,000

In April 2015 the Group completed its refinancing and significantly changed the structure and tenure associated with its funding sources.  The 

Group’s new facilities are denominated in Australian dollars and comprise:

 

•$30,000,000 unsecured variable rate corporate bonds.  The bonds mature in March 2019 and pay a coupon rate of 4.30% over the 90 day Bank 

Bill Swap Rate;

 

•$30,000,000 unsecured fixed rate corporate bonds.  The bonds mature in March 2021 and pay a fixed rate of 7.10%;

 

•$63,000,000 core two year revolving secured bank working capital facility.  This facility provides an additional $10,000,000 seasonal uplift 

during the period 1 August to 28 February.  Drawings under this facility are required to be backed by eligible trade debtor and inventory assets.

The fair value of the Group’s non-current borrowings approximate their carrying amount.
Refer to Note 24 for details on the financial covenants associated with the Group’s borrowings.