VALUE ACCOUNTS Reduced Disclosure - PwC · 2015-09-15 · There is no “one size fits all”...

VALUEACCOUNTSReducedDisclosureAnnual financial reporting2015

© 2014 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers (“PwC”) refers to the Australianmember firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please seewww.pwc.com/structure for further details.

This publication presents the sample annual financial report of a fictitious company, VALUE ACCOUNTSReduced Disclosure Pty Ltd. It illustrates the financial reporting requirements that would apply to such acompany under Australian Accounting Standards on issue at 15 January 2015. Supporting commentary is alsoprovided. For the purposes of this publication, VALUE ACCOUNTS Reduced Disclosure Pty Ltd is a largeproprietary company that is the parent entity in a consolidated entity.

Reporting requirements include:

Australian Accounting Standards

Interpretations issued by the Australian Accounting Standards Board (AASB) and the Urgent Issues

Group (UIG)

Corporations Act 2001

Australian Securities & Investments Commission releases

VALUE ACCOUNTS Reduced Disclosure 2015 is for illustrative purposes only and should be used inconjunction with the relevant legislation, standards and other reporting pronouncements.

Disclaimer

This publication has been prepared for general reference only and does not constitute professional advice. It isnot intended to be and is not comprehensive in relation to its subject matter. This publication is not intended tocover all aspects of Australian Accounting Standards, or to be used as a substitute for reading any relevantaccounting standard, professional pronouncement or guidance, the Corporations Act 2001 (Cth) or any otherrelevant material. Specific company structure, facts and circumstances will have a material impact on thepreparation and content of financial reports. No person should undertake or refrain from any action based onthis publication or otherwise rely on this publication. This publication should not be used as a substitute forconsultation with a professional adviser with knowledge of information relevant to your particularcircumstances. No representation or warranty (express or implied) is given as to the accuracy or completenessof the information contained in this publication. To the extent permitted by law PwC, its members, employeesand agents do not accept or assume any liability, responsibility or duty of care for any use of or reliance on thispublication. Any references in this publication to PwC providing, or agreeing to provide, any services to anyentity are illustrative only and are not intended to reflect or summarise the terms of actual arrangements inrespect of the provision of services. Accordingly, users of this publication should not rely on such references asreflecting or summarising actual terms. Legal advice should be obtained as to whether any such arrangementsare required to be disclosed, and as to the form of any disclosure.

PwC 2

Foreword

There is an increasing trend towards focusing financial reporting on the needs of the user. As the world becomes more andmore used to easily consumed, instantly accessible information, users’ tolerance for sifting through information to find whatthey need will continue to decline. This has real implications for the reputation of companies who fail to keep pace. A recentglobal study confirms this trend, with the vast majority of analysts stating that the quality of reporting directly influencedtheir opinion of the quality of management.

Streamlining financial reports

Financial reporting must continue to innovate or it risks becoming irrelevant. This past reporting season has seen someencouraging signs of change: this will need to continue and accelerate. A number of companies have taken initial steps tostreamline their financial report, with more set to do so in 2015.

While the changes vary from company to company, there are a number of common threads which are also illustrated in thispublication:

grouping of content into logical sections, rather than presenting users with a ‘shopping list’ of notes with no clearorganising principle

highlighting important information by making it more prominent.

adopting plain English principles and cutting down on jargon, and

a greater use of colour and headings to help users navigate financial reports and find related information.

However, the structure used in our VALUE ACCOUNTS Reduced Disclosure publication is only intended to provide youwith possible ideas. It is not a template and will not necessarily be suitable for all companies.

The structure of financial reports should reflect the particular circumstances of the company and the likely priorities of itsreport readers. There is no “one size fits all” approach and companies should engage with their investors to determine whatwould be most relevant to them.

As the VALUE ACCOUNTS Reduced Disclosure publication is a reference tool, we have not removed disclosures based onmateriality, but have included illustrative disclosures for as many common scenarios as possible. To see our example of‘materiality-based’ financial statements, please download our Streamlined annual financial report fromwww.pwc.com.au/assurance/ifrs.

Accessing VALUE

VALUE ACCOUNTS Reduced Disclosure will continue to be available as PDF but you can access our VALUE ACCOUNTSHoldings publication in different ways.

PwC Australia’s Value Accounts app is bringing together the sources required to prepare and audit financial statements inone app that’s accessible from your iPad or iPhone. It provides direct access to all relevant third party financial reportingliterature, together with a sophisticated search function and interactive annotation capabilities.

For those who prefer the computer, or who are users of non-iOS devices, VALUE ACCOUNTS Holdings is available as aneasy-to-navigate interactive PDF.

We welcome your feedback on the VALUE ACCOUNTS Reduced Disclosure format and content. Please contact us [email protected] or speak to your usual PwC representative, and let us know your thoughts.

Regina Fikkers

PartnerPwC AustraliaFebruary 2015

PwC 4

VALUE ACCOUNTS Reduced Disclosure

Annual financial reporting 2015

Annual report 7Directors’ report 8

Financial statements 22Income statement 27Statement of comprehensive income 28

Balance sheet 37Statement of changes in equity 40

Statement of cash flows 42

Notes to the financial statements 46Significant changes in the current reporting period 49

How numbers are calculated 50Segment information (not applicable)

Profit and loss 51

Balance sheet 63

Cash flows 131

Risk 134Critical estimates, judgements and errors 135

Financial risk management 141

Capital management 155

Group structure 159Business combinations 160

Discontinued operation 164

Interests in other entities 170

Unrecognised items 179Contingent liabilities and contingent assets 180

Commitments 183

Events occurring after the reporting period 184

Other information 188Related party transactions 189

Share-based payments 195

Remuneration of auditors 199

Earnings per share (not applicable)

Offsetting financial assets and financial liabilities 202

Assets pledged as security 205

Deed of cross guarantee 206

Parent entity information 209

Accounting policies 212

Directors' declaration 242

Independent auditor's report 244

Appendices 245

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Introduction

Similar to the other publications in the VALUE ACCOUNTS series, this publication presents illustrative general purposefinancial statements of a fictitious company, VALUE ACCOUNTS Reduced Disclosure Pty Ltd. The financial report complieswith the Australian Corporations Act 2001 and authoritative pronouncements on issue at 15 January 2015 that areoperative for 30 June 2015 reports.

VALUE ACCOUNTS Reduced Disclosure Pty Limited is a large proprietary company that is the parent entity in aconsolidated group. As a consequence, this publication does not illustrate the disclosure obligations of disclosing entities orlisted companies (eg, segment information and earnings per share disclosures). Please refer to our VALUE ACCOUNTSHoldings publication for examples of these types of disclosures.

The purpose of the illustrative financial report is to highlight disclosure requirements and provide sample disclosures. Thedisclosures are based on those made by VALUE ACCOUNTS Holdings Limited, but we have used shading to indicate thedisclosures that can be removed if an entity decides to adopt the reduced disclosure regime. The disclosures should beadapted to particular situations as required. Alternative disclosures, wording and forms of presentation may be used as longas they include the specific disclosures prescribed in the accounting and reporting pronouncements.

Please note that the amounts disclosed in this publication are purely for illustrative purposes and may not necessarily beconsistent throughout the publication.

The source for each disclosure requirement is provided in the reference column on each page of the sample reports.

The appendices provide further information on Australia’s financial reporting regime, including a list of accounting andreporting pronouncements on issue at 15 January 2015. Abbreviations used in this publication are listed in Appendix J.

Elements updated

The 2015 edition of VALUE ACCOUNTS Reduced Disclosure reflects financial reporting developments that have occurredsince 15 January 2014. The most significant changes this year related to the addition of comparative information for some ofthe new disclosures which were required for the first time in last year’s financial report (relating to fair values and definedbenefit plans) and to new impairment disclosures that were introduced by AASB 2013-3 Amendments to AASB 136 –Recoverable Amount Disclosures for Non-Financial Assets

Other improvements include:

a more detailed breakdown of assets and liabilities measured at fair value for the purpose of the fair value disclosures

more detailed disclosures of key assumptions used in impairment testing

the introduction of a cash-settled share-based payment scheme to illustrate the accounting and related disclosures

the reclassification of all employee benefit obligations to a separate line item in the balance sheet, and

changing our discontinued operation into a foreign subsidiary, to show the treatment of a foreign currency translationreserve on disposal of a foreign operation.

Any financial reporting developments that are relevant to VALUE ACCOUNTS Reduced Disclosure at 30 June 2015 arereflected in the example disclosures or commentary notes to the illustrative financial reports. All significant changes arisingfrom new or revised requirements, and improvements made to existing disclosures, are identified in the reference column inthe illustrative financial report.

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Changes in accounting policies

None of the standards that will apply for the first time in annual June 2015 or half-year 31 December 2015 financialstatements require a retrospective change in accounting policy in the consolidated financial statements of VALUEACCOUNTS Reduced Disclosure Pty Limited. We have therefore removed the illustrative disclosures for a change inaccounting policy from note 29.

However, users should be mindful of the following standards that are mandatory for the first time for financial yearsbeginning 1 July 2014 and that may affect the accounting policies of some entities:

AASB Interpretation 21 Accounting for Levies

AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities

AASB 2014-1 Amendments to Australian Accounting Standards – Part A Annual Improvements 2010-2012 and 2011-2013 Cycles

Appendix G contains a full list of standards that apply for the first time to financial reporting periods commencing on orafter 1 July 2014 (including those that have only a disclosure impact) as well as a summary of their key requirements.Depending on the entity’s existing accounting policies, some of these standards may result in a change in policy that willneed to be explained.

For an illustration of the types of disclosures required in an annual report in relation to changes in accounting policy pleaserefer to our 2014 edition of the VALUE ACCOUNTS Holdings or VALUE ACCOUNTS Reduced Disclosure publications (note29). Both of these can be accessed via our www.pwc.com.au/assurance/ifrs web site under previous editions.

Early adoption of standards

VALUE ACCOUNTS Reduced Disclosure Pty Ltd generally only adopts standards early which clarify existing practice but donot introduce any substantive changes. These include standards issued by the AASB as a result of the InternationalAccounting Standards Board’s improvements program, eg AASB 2014-1 Amendments to Australian Accounting Standards– Part A Annual Improvements 2010-2012 and 2011-2013 Cycles. In addition, VALUE ACCOUNTS Reduced Disclosure PtyLimited has also elected to adopt early the amendments made by the IASB in relation to the Disclosure Initiative and the2012-2014 Improvements Cycle. While the AASB had not made equivalent amendments at the time of writing, they areexpected to do so in the first quarter of 2015. The amendments should therefore be available for early adoption for 30 June2015 financial reports.

As required under Australian Accounting Standards, the impacts of standards and interpretations that have not been earlyadopted and that are expected to have a material effect on the entity are disclosed in accounting policy note 28(a). Asummary of all pronouncements relevant for annual reporting periods ending on or after 30 June 2015 is included inAppendix G. This also also includes various amendments made by the IASB which had not yet been endorsed by the AASBby 15 January 2015. For updates after the cut-off date for our publication please see www.pwc.com.au/assurance/ifrs.

Specialised companies and industry-specific requirements

VALUE ACCOUNTS Reduced Disclosure Pty Ltd does not illustrate the disclosures specifically relevant to specialisedindustries such as construction, insurance, mining, agriculture, investment funds, finance or banking. The reportingobligations of entities operating in investment funds, life insurance and general insurance industries are contained in otherpublications in the VALUE ACCOUNTS series. Illustrative disclosures for construction, mining and agricultural activitiesare included in our global publications Illustrative IFRS consolidated financial statements and Financial reporting in themining industry, both of which are available from your usual PwC contact. The global series also includes illustrativefinancial statements for banks, entities in the investment property industry and private equity companies.

The disclosure requirements included in VALUE ACCOUNTS Reduced Disclosure Pty Ltd are relevant to corporatereporting entities, non-corporate reporting entities in the private sector, and business undertakings in the public sector.Exceptions relating to certain non-corporate reporting entities and not-for-profit entities are highlighted in relevantcommentary sections.

PwC 7

VALUE ACCOUNTS Reduced Disclosure Pty Ltd

ABN XY XYZ XYZ XYZ 1,2

Annual report – 30 June 2015

Directors’ report

Directors 8

Principal activities 8

Dividends 8

Review of operations 9

Significant changes in the state of affairs 9

Events since the end of the financial year 9

Likely developments and expected results of operations 9

Environmental regulation 9

Shares under option 10

Insurance of officers and indemnities 11

Proceedings on behalf of the company 12

Auditor’s independence declaration 12

Rounding of amounts 12

Financial report 22

Independent auditor’s report to the members 244

Annual report

Quotation of Australian Business Number or Australian Company Number

CA153(1),(2) Under the Corporations Act 2001, a company is required to show its name and Australian1.Company Number (ACN) or its Australian Business Number (ABN) on all public documents.It may only show the ABN if the last nine digits of its ABN are identical to the last nine digitsof its ACN.

ASIC-RG13 Guidance on issues relating to the use of ACNs is set out in ASIC Regulatory Guide 13.2.

PwC 8PwC VALUE ACCOUNTS Reduced Disclosure Pty Ltd 8

30 June 2015

Directors’ report 1-4,24

CA299(2)(b) Your directors present their report on the consolidated entity consisting of VALUE ACCOUNTSReduced Disclosure Pty Ltd and the entities it controlled at the end of, or during, the year ended 30June 2015. Throughout the report, the consolidated entity is referred to as the group.

Directors

CA300(1)(c) The following persons were directors of VALUE ACCOUNTS Reduced Disclosure Pty Ltd during thewhole of the financial year and up to the date of this report:

J C Campbell

A L Cunningham

M K Hollingworth

R J Hunter

C A Maxwell

N T Toddington

CA300(1)(c) H G Wells and B C Bristol were appointed as directors on 31 January 2015 and 1 March 2015respectively and continue in office at the date of this report.

CA300(1)(c) R T Brown was a director from the beginning of the financial year until his resignation on31 January 2015.

CA300(1)(c) B A Wilson was a director from the beginning of the financial year until his resignation on 29 July 2015.

Principal activities

CA299(1)(c) During the year the principal continuing activities of the group consisted of:

manufacture and sale of high quality household and commercial office furniture, and(a)

IT consulting including IT management, design, implementation and support.(b)

In addition, the group is also involved in the development and resale of land and the management ofinvestment properties.

CA299(1)(c) The following activities of the group changed significantly during the year:

Through the acquisition of VALUE ACCOUNTS Electronics Pty Ltd the group is now also(a)involved in the manufacture and sale of electronic equipment.

The group entered into the retail market with the opening of a chain of retail furniture stores.(b)

The machinery hire division was sold in August 2014, ending the group’s involvement in this(c)industry.

Dividends – VALUE ACCOUNTS Reduced Disclosure Pty Ltd

CA300(1)(a) Dividends paid to members during the financial year were as follows:5

Comparatives notmandatory

2015

$’0002014

$’000

Final ordinary dividend for the year ended 30 June 2014 of 22 cents(2013 – 10 cents) per fully paid share paid on 10 October 2014 11,586 5,455

Interim ordinary dividend for the year ended 30 June 2015 of 21 cents(2014 – 10 cents) per fully paid share paid on 10 March 2015 11,144 5,467

Preference dividend of 7 cents (2014 – 7 cents) per share paid on20 February 2015 107 107

22,837 11,029

CA300(1)(b) Since the end of the financial year the directors have recommended the payment of a final ordinarydividend of $11,989,000 (22 cents per fully paid share) to be paid on 9 October 2015 out of retainedearnings at 30 June 2015.

CA300(1)(a) Preference dividends for both 2015 and 2014 exclude $660,000 paid on redeemable preferenceshares classified as debt and charged to profit or loss as interest and finance charges.

Directors’ report


30 June 2015

Review of operations 6-7

CA299(1)(a)ASIC98/2395

[Provide details as appropriate.]

Significant changes in the state of affairs

CA299(1)(b) Significant changes in the state of affairs of the group during the financial year were as follows.

Contributed equity increased by $11,637,000 (from $63,426,000 to $75,063,000) as the result of arights issue, the final call on partly paid ordinary shares, the issue of shares under the dividendreinvestment plan and on the exercise of options granted under the VALUE ACCOUNTS EmployeeOption Plan. Details of the changes in contributed equity are disclosed in note 9(a) to the financialstatements.

The company also issued 1,500,000 7% convertible notes for $20 million during the year which areconvertible into ordinary shares at the option of the holder or repayable on 23 January 2019 (seenote 7(g)).

The net cash received from the increase in contributed equity and the issue of the convertible noteswas used principally to repay borrowings that were undertaken to finance the establishment of thefurniture retail division, reconstruct and expand the Maitland manufacturing facilities, and acquireshares in VALUE ACCOUNTS Electronics Pty Ltd (see note 14).

VALUE ACCOUNTS Reduced Disclosure Pty Ltd also decided to buy back all 500,000 7% non-redeemable participating preference shares on-market to simplify the company’s capital structure. Thetotal cost of the buy-back amounted to $1,380,000, including after-tax transaction cost of $30,000 (seenote 9(a)).

The sale of the machinery hire division that was announced in April 2014 was completed on 31 August2014. For details of the sale see note 15. In addition, VALUE ACCOUNTS Manufacturing Limitedclosed its Queensland factory and transferred the manufacturing of all furniture to the Maitland factory.Ongoing economic advantages are expected to flow from this rationalisation. A parcel of land that hasbecome vacant as result of the move is currently in the process of being sold (see note 15).

Events since the end of the financial year

CA299(1)(d) Since 30 June 2015 VALUE ACCOUNTS Reduced Disclosure Pty Ltd has acquired 87.5% of theissued shares in Better Office Furnishings Limited, a manufacturer of office furniture and equipment,for cash consideration of $11,750,000 and contingent consideration of $280,000 (see note 19).

The fair value of the net identifiable assets of the company at the date of acquisition has beenprovisionally determined to be $12,390,000 and the purchased goodwill is estimated at $1,360,000.

No other matter or circumstance has arisen since 30 June 2015 that has significantly affected thegroup’s operations, results or state of affairs, or may do so in future years.

Likely developments and expected results of operations 8

CA299(1)(e) Likely developments in the operations of the group that were not finalised at the date of thisreport included:

the proposed formation of a company to be equally owned by VALUE ACCOUNTS Reduced(a)Disclosure Pty Ltd and Bold Eagle Enterprises Inc. of the USA. This company will becalled Bold VALUE ACCOUNTS Pty Ltd and will utilise the skills of Bold Eagle in networkmanagement to expand the group’s involvement in IT consulting activities

the proposed acquisition of the 65% of the issued share capital of Cuddly Bear Pty Ltd that is(b)not already beneficially owned by the group. If successfully completed, this acquisition shouldgenerate a significant increase in sales and profits of the land development and resaledivision in future years.

More information on these developments is included in the review of operations and activities on pages[x] – [y].

Environmental regulation 2,9-12

CA299(1)(f) The group is subject to significant environmental regulation in respect of its land development andmanufacturing activities.

Land development approvals

Planning approvals are required for the clearing of land for development under the New South WalesEnvironmental Planning and Assessment Act 1979 and the Queensland Urban Land DevelopmentAuthority Act 2007. The relevant authorities are provided with regular updates, and to the best of thedirectors’ knowledge, all activities have been undertaken in compliance with the requirements of theplanning approvals.

Directors’ report


30 June 2015

Environmental regulation

Manufacturing

The group holds environmental licences for its manufacturing sites in New South Wales. The licencesrequire discharges to air and water to be below specified levels of contaminants, and solid wastes to beremoved to an appropriate disposal facility. These requirements arise under the Protection of theEnvironment Operations Act 1997, the Environmentally Hazardous Chemicals Act 1985 and the WasteAvoidance and Resource Recovery Act 2001.

During the year there were inadvertent breaches of the requirements relating to discharges to water atthe Maitland site, resulting in the issue of minor infringement notices. Management has been workingwith the New South Wales Office of Environment & Heritage to alter the processes at the site tominimise discharges and ensure compliance with the regulatory requirements. It is anticipated the issuewill be resolved during the current financial year.

During the year the Queensland manufacturing facility was closed. As part of the closure processenvironmental clean-up responsibilities were examined and tests carried out showed no evidence ofany contamination.

Greenhouse gas and energy data reporting requirements

The group is subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006and the National Greenhouse and Energy Reporting Act 2007.

The Energy Efficiency Opportunities Act 2006 requires the group to assess its energy usage, includingthe identification, investigation and evaluation of energy saving opportunities, and to report publicly onthe assessments undertaken, including what action the group intends to take as a result. The groupcontinues to meet its obligations under this Act.

The National Greenhouse and Energy Reporting Act 2007 requires the group to report its annualgreenhouse gas emissions and energy use. The group has implemented systems and processes forthe collection and calculation of the data required and submitted its 2013/14 report to the Greenhouseand Energy Data Officer on 24 October 2014.

Shares under option 13,28

(a) Unissued ordinary sharesCA300(1)(e),(3),(6)(a),(b)

Unissued ordinary shares of VALUE ACCOUNTS Reduced Disclosure Pty Ltd under option at the dateof this report are as follows:

CA300(1)(d),(e),(3),(6)(b)-(d) Date options granted Expiry date

Issue priceof Shares

Number underoption

1 May 2012 30 April 2017 $5.28 263,600

1 May 2013 30 April 2018 $5.51 569,000

1 May 2014 30 April 2019 $5.78 641,000

1 May 2015 * 30 April 2020 $6.18 728,000

2,201,600

CA300(6)(e) No option holder has any right under the options to participate in any other share issue of the companyor any other entity.

Directors’ report

PwC VALUE ACCOUNTS Reduced Disclosure Pty Ltd 1130 June 2015

Shares under option 13,28

CA300(1)(d) * Included in these options were options granted as remuneration to the following directors and thefive most highly remunerated officers of the company and the group during the year:

14,15

Name of officer Date grantedIssue price

of SharesNumber of

options granted

N T Toddington 1 May 2015 $6.18 250,000

H G Wells 1 May 2015 $6.18 70,000

P M Elliott 1 May 2015 $6.18 80,000

D M Green 1 May 2015 $6.18 70,000

S J McInnes 1 May 2015 $6.18 60,000

W P Shanahan 1 May 2015 $6.18 90,000

P G Lincoln 1 May 2015 $6.18 70,000

C J Cullen 1 May 2015 $6.18 78,000

S M Smith 1 May 2015 $6.18 50,000

CA300(1)(d) No options were granted to the directors or any of the five highest remunerated officers of the companysince the end of the financial year.

(b) Shares issued on the exercise of options 13,28

CA300(1)(f),(3),(7) The following ordinary shares of VALUE ACCOUNTS Reduced Disclosure Pty Ltd were issued duringthe year ended 30 June 2015 on the exercise of options granted under the VALUE ACCOUNTSEmployee Option Plan. No further shares have been issued since that date. No amounts are unpaid onany ofthe shares.

Date options grantedIssue price

of SharesNumber of

shares issued

1 May 2012 $5.28 228,000

228,000

Insurance of officers and indemnities

(a) Insurance of officers 16,27

CA300(1)(g),(8)(b),(9)(a),(f)

During the financial year, VALUE ACCOUNTS Reduced Disclosure Pty Ltd paid a premium of $65,425to insure the directors and secretaries of the company and its Australian-based controlled entities, andthe general managers of each of the divisions of the group.

CA300(9)(c) The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings thatmay be brought against the officers in their capacity as officers of entities in the group, and any otherpayments arising from liabilities incurred by the officers in connection with such proceedings. This doesnot include such liabilities that arise from conduct involving a wilful breach of duty by the officers or theimproper use by the officers of their position or of information to gain advantage for themselves orsomeone else or to cause detriment to the company. It is not possible to apportion the premiumbetween amounts relating to the insurance against legal costs and those relating to other liabilities.

20

(b) Indemnity of auditors 16-18

CA300(1)(g),(8)(b),(9)(a),(f)

VALUE ACCOUNTS Reduced Disclosure Pty Ltd has agreed to indemnify their auditors,PricewaterhouseCoopers, to the extent permitted by law, against any claim by a third party arising fromVALUE ACCOUNTS Reduced Disclosure Pty Ltd’s breach of their agreement. The indemnity stipulatesthat VALUE ACCOUNTS Reduced Disclosure Pty Ltd will meet the full amount of any such liabilitiesincluding a reasonable amount of legal costs.

Directors’ report


Proceedings on behalf of the company 19-21

CA300(14)

Not mandatory ifno proceedings

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bringproceedings on behalf of the company, or to intervene in any proceedings to which the company is aparty, for the purpose of taking responsibility on behalf of the company for all or part of thoseproceedings.

CA300(15) No proceedings have been brought or intervened in on behalf of the company with leave of the Courtunder section 237 of the Corporations Act 2001.

Auditor’s independence declaration 22,23

CA298(1AA)(c)ASIC98/2395

A copy of the auditor’s independence declaration as required under section 307C of the CorporationsAct 2001 is set out on page 13.

Rounding of amounts 25-28

ASIC98/100 The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities andInvestments Commission, relating to the ‘rounding off’ of amounts in the directors’ report. Amounts inthe directors’ report have been rounded off in accordance with that Class Order to the nearest thousanddollars, or in certain cases, to the nearest dollar.

CA298(2)(a) This report is made in accordance with a resolution of directors.29

CA298(2)(c) M K HollingworthDirector

29

CA298(2)(b) Sydney23 August 2015

29

PricewaterhouseCoopers, ABN 52 780 433 757Darling Park Tower 2, 201 SussexStreet, GPO BOX 2650, Sydney NSW 1171T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.13

CA298(1AA)(c)CA307C Auditor’s Independence Declaration 22,23

As lead auditor for the audit of VALUE ACCOUNTS Reduced Disclosure Pty Ltd for the year ended 30 June2015, I declare that, to the best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation(a)to the audit; and

no contraventions of any applicable code of professional conduct in relation to the audit.(b)

This declaration is in respect of VALUE ACCOUNTS Reduced Disclosure Pty Ltd and the entities it controlledduring the period.

A B JonesPartnerPricewaterhouseCoopers

Sydney23 August 2015

Directors’ report


Directors’ report

Contents of directors’ reports

CA299(2) The tables on pages 18 – 20 summarise the contents of directors’ reports by classes of1.entities. The entity to be reported on is:

the company, registered scheme or disclosing entity (if consolidated financial statements(a)are not required), or

the consolidated entity (if consolidated financial statements are required).(b)

Where a directors’ report disclosure requirement is not relevant to an entity (including a2.consolidated entity) for a particular financial year, PwC’s view is that it is not necessary toinclude a reference to the matter. However, it should be noted that in respect of environmentalreporting (see paragraphs 9 – 12 below), ASIC recommends the inclusion of a comment thatno significant environmental regulations apply. Where items are significant (eg a decision not torecommend the payment of a dividend) and no comment is made in the directors’ report, thedirectors must consider them at the directors’ meeting called to approve the directors’ reportand should consider specifically minuting their decisions to show the items were addressed.

Disclosures required where additional information is included to give true and fair view

If the financial report for a financial year includes additional information under CA 295(3)(c)3.(information included to give a true and fair view of financial position and performance), thedirectors’ report for the financial year must:

CA298(1A)(a) set out the directors’ reasons for forming the opinion that the inclusion of that additional(a)information was necessary to give the true and fair view required by CA 297, and

CA298(1A)(b) specify where that additional information can be found in the financial report.(b)

This disclosure is not illustrated in the VALUE ACCOUNTS Reduced Disclosure Pty Ltddirectors’ report, as there is no additional information included under CA 295(3)(c).

Transfer of information from the directors’ report

ASIC-RG68(76)-(77C)

Entities may transfer certain information otherwise required to be included in the directors’4.report to other parts of the annual report. For details see page 21.

Comparative figures

Comparative figures are not mandatory for directors’ reports, but are recommended in the5.interests of more meaningful disclosure.

Review of operations, financial position, business strategies and prospects

CA299(1)(a)

CA299A(1)

CA 299(1)(a) requires all entities to present a review of the operations of the entity reported on6.and the results of those operations. In addition, under CA 299A(1) the directors’ report of alisted company, registered scheme or other disclosing entity must contain information thatmembers of the company would reasonably require to make an informed assessment of:

the operations of the entity reported on(a)

the financial position of the entity(b)

the entity’s business strategies and its prospects for future financial years.(c)

For more detailed comments about format and content of the review of operations, please referto pages 56 to 58 of our VALUE ACCOUNTS Holdings publication.

ASIC98/2395 Where the review of operations and activities is presented as a separate section in the annual7.report, but covers disclosures that would ordinarily be included in the review of operationsrequired in the directors’ report by CA 299(1)(a) and/or 299A, Class Order 98/2395 can beapplied to avoid having to repeat the information in the directors’ report - see paragraph 4above and the table on page 21. For the purposes of this illustrative directors’ report, it hasbeen assumed that the Class Order has been applied and the requirements of CA 299(1)(a)and 299A have been satisfied by referring to a separate review of operations and activitiessection in the annual report.

Directors’ report


Directors’ report

Likely developments and expected results of operations – unreasonable prejudiceexemption

CA299(3) The report may omit material on likely developments and expected results of operations if it is8.likely that its disclosure would result in unreasonable prejudice to the company, theconsolidated entity or any entity that is part of the consolidated entity. ASIC Regulatory Guide247 Effective disclosure in an operating and financial review sets out ASIC’s view on when theexemption can be applied. According to the guide, an entity should

identify the adverse consequences that are likely to occur(a)

consider whether these consequences are reasonable, and(b)

assess whether it is likely (more probable than not) that they will occur.(c)

It will be difficult to demonstrate unreasonable prejudice if the relevant information has alreadybeen disclosed elsewhere, or can be inferred from information that is in the public domain.Where information has been omitted in reliance on the exemption, the entity must disclose thisfact and should also provide a short, high level summary of the type of information that hasbeen omitted and the reasons for the omission. ASIC further recommends that entitiesdocument their assessment in their working papers if they have relied on the exemption.

Environmental regulation

CA299(1)(f) If the entity’s operations are subject to any particular and significant environmental regulation9.under a Commonwealth, State or Territory law, details of the entity’s performance in relation toenvironmental regulation must be disclosed.

ASIC-RG68(74) ASIC has set out general guidelines in relation to the environmental reporting requirements in10.Regulatory Guide 68. The guidelines state that:

the requirements would normally apply where an entity is licensed or otherwise subject to(a)conditions for the purposes of environmental legislation or regulation

as the requirements are not related specifically to financial disclosures (eg contingent(b)liabilities and capital commitments) but relate to performance in relation to environmentalregulation, accounting concepts of materiality in financial statements are not applicable

the information provided cannot be reduced or eliminated because information has been(c)provided to a regulatory authority for the purposes of any environmental legislation, and

the information provided would normally be more general and less technical than(d)information provided in any compliance reports to an environmental regulator.

Examples of environmental regulations that will affect many entities are:11.

National Greenhouse and Energy Reporting Act 2007, and(a)

Energy Efficiency Opportunities Act 2006.(b)

Entities that have obligations under any of these laws should comment on their performance inrelation to them in the directors’ report, as we have done on pages 9 and 10.

As well as complying with the Corporations Act 2001 requirements for the reporting of12.environmental performance, listed entities should consider including comments on themanagement of environmental issues in their review of operations section.

Information on options

CA300(3) The information to be disclosed under CA 300(1)(d), (e) and (f) covers:13.

options over unissued shares and interests of the company, registered scheme or(a)disclosing entity, and

if consolidated financial statements are required - options over unissued shares or(b)interests of any controlled entity that is a company, registered scheme or disclosing entity.

CA300(1)(d) CA 300(1)(d) specifically requires the disclosure of options granted to directors and the five14.most highly remunerated officers of the company (other than directors). The wording of CA300(1)(d) suggests that information on options granted to the directors and the 5 most highlyremunerated officers is only required in relation to directors and officers of the parent entity.However, where the report relates to a consolidated entity, entities should consider whether toprovide the information also be disclosed on a consolidated basis (ie including the 5 mosthighly remunerated officers of the consolidated entity who are not directors of the parententity), to be consistent with the requirements of CA 300A(1)(c).

Directors’ report


Directors’ report

CA(9) Officers are persons who make, or participate in making, decisions that affect the whole, or a15.substantial part of the business of the corporation, or who have the capacity to affectsignificantly the corporation’s financial standing or in accordance with whose instructions orwishes the directors of the corporation are accustomed to act. They specifically includedirectors and secretaries.

Indemnities and insurance premiums for officers and auditors

CA300(8) The directors’ report must disclose information about any16.

indemnity given to a current or former officer or auditor, and(a)

premium paid, or agreed to be paid, for insurance against a current or former officer’s or(b)auditor’s liability for legal cost

to the extent the indemnities or insurance arrangements are not prohibited under CA 199A andCA 199B of the Corporations Act.

We note that many companies are now agreeing to indemnify their auditor to the extent17.permitted under sub-sections 199A(2) and (3) of the Corporations Act 2001. Please note thatthe disclosure on page 11 is purely illustrative and is not intended to reflect or summarise theterms of actual arrangements in respect of the provision of services. Accordingly, users of thispublication should obtain legal advice as to whether their particular arrangement will requiredisclosure, and as to the form of any such disclosure.

See Appendix E for detailed commentary on the requirements for the disclosure of information18.on indemnities and/or insurance premiums for officers and auditors. The commentary includesillustrative wording for indemnities and indemnification agreements.

Proceedings on behalf of the company

CA300(14) The directors’ report for a company must include the following details of any application for19.leave under CA 237 made in respect of the company:

the applicant’s name, and(a)

a statement whether leave was granted.(b)

CA300(15) The directors’ report for a company must include the following details of any proceedings that a20.person has brought or intervened in on behalf of the company with leave under CA 237:

the person’s name(a)

the names of the parties to the proceedings, and(b)

sufficient information to enable members to understand the nature and status of the(c)proceedings (including the cause of action and any orders made by the Court).

If no applications for leave have been made and/or no proceedings have been brought or21.intervened in on behalf of the company with leave, PwC’s view is that it is not necessary toinclude a reference to these matters in the directors’ report. If the directors wish to make acomment, the wording used in the illustrative report may be used as a guide.

Auditor’s independence declaration

CA298(1AA)(c)CA307CASIC98/2395

The directors’ report must include a copy of the auditor’s independence declaration made22.under CA 307C in relation to the audit for the financial year. ASIC Class Order 98/2395 permitsthe declaration to be transferred to a document included with the directors’ report and financialreport – see table on page 21. Where advantage is taken of this relief, the directors’ reportmust contain a clear cross reference to the page or pages containing the transferredinformation (see footnote 1 on page 21).

CA307C Under CA 307C(5), the auditor is required to give the declaration to the directors with the23.auditor’s report. This would mean the auditor’s report would need to be signed before thedirectors’ report. However, auditing standards require the auditor to comment in the auditor’sreport on any material inconsistencies between the directors’ report and the financial report,and to consider the impact of any material misstatements of fact in the directors’ report. Thismakes it difficult for the auditor to sign the audit report before the directors’ report is signed. Asa result, CA 307C(5A) provides that the declaration may be given to the directors before theypass their resolution in relation to the directors’ report and before the audit report is signed,provided that:

Directors’ report


Directors’ report

the declaration is given to the directors before the directors resolve to make the(a)directors’ report

the directors’ report is signed within 7 days after the declaration is given(b)

the auditor’s report is made within 7 days after the directors’ report is signed and includes(c)a statement that:

(i) either the declaration would be in the same terms if it was given to the directors at thetime the auditor’s report is made, or

(ii) circumstances have changed since the declaration was given to the directors andsetting out how the declaration would differ if it was given to the directors at the timethe auditor’s report is made.

Officers who are former auditors

CA300(1)(ca) The directors’ report is required to disclose the name of each person who:24.

is an officer of the entity at any time during the year, and(a)

was a partner in an audit firm, or a director of an audit company, that is an auditor of the(b)entity for the year, and

was such a partner or director at a time when the audit firm or the audit company(c)undertook an audit of the entity.

This disclosure is not illustrated in the VALUE ACCOUNTS Reduced Disclosure Pty Ltddirectors’ report, as it is assumed there are no such officers.

Rounding of amounts

ASIC98/100 See Appendix F for detailed commentary on rounding of amounts in the directors’ report and25.financial report. The commentary covers the requirements of ASIC Class Order 98/100 whichpermits entities to round off as follows, subject to certain conditions and exceptions:

Assets greater than: Round off to nearest:

$10m (but less than $1,000m)

$1,000m (but less than $10,000m)

$10,000m

$1,000

$100,000

$1,000,000

ASIC98/100 Rounding to lower prescribed amounts is also permissible, as explained in paragraphs 3 and 426.of Appendix F.

ASIC98/100 It should be noted that the following directors’ report disclosures must be shown to the nearest27.dollar by entities with assets (or consolidated assets) of less than $1,000 million, and may onlybe rounded to the nearest $1,000 by entities with assets (or consolidated assets) of more than$1,000 million:

Section Details

CA 300(1)(d) Options granted to directors and 5 highest paid officers

CA 300(1)(g),(8),(9) Indemnification/insurance of officers or auditors

CA 300(11),(12) Directors’ interests in securities

CA 300(11B),(11C) Non-audit services

CA 300(13)(a) Fees paid to responsible entity and associates

CA 300A(1)(c),(1)(e) Remuneration of directors and executives

ASIC98/100 The following directors’ report disclosures may only be rounded to the nearest cent:28.

Section Details

CA 300(6)(c) Issue price of unissued shares or interests under option

CA 300(7)(d),(e) Amounts unpaid, paid, or agreed to be considered aspaid, on shares or interests issued as a result of theexercise of an option

Dating and signing of report

CA298(2) The directors’ report must be made in accordance with a resolution of the directors, specify the29.date on which it was made and be signed by a director.

Directors’ report


Summary of content of directors’ report by classes of entities 6

Description 1Proprietarycompanies 3

Non-listedpublic

companies 5Listed

companies

Otherdisclosing

entities

Non-listedregisteredschemes

Listedregisteredschemes

Companieslimited byguarantee

CA298(1AA)(c)CA298(1AB)(b)

Copy of the auditor’sindependencedeclaration

● ● ● ● ● ●

CA298(1A) Disclosures regardingadditional informationto give a true and fairview

● ● ● ● ●

CA299(1)(a) Review of operationsand results

● ● ● ● ●

CA299(1)(b) Any significant changein the state of affairs

● ● ● ● ●

CA299(1)(c) Principal activities andany significant changein their nature

● ● ● ● ●

CA299(1)(d) Events after end offinancial year

● ● ● ● ●

CA299(1)(e) Future developmentsand results

● ● ● ● ●

CA299(1)(f) Performanceregardingenvironmentalregulation

● ● ● ● ●

CA299(3) Exclusion ofprejudicial informationon futuredevelopments andresults

● ● ● ● ●

CA299A(1) Information on theoperations, financialposition and businessstrategies andprospects

● ●

CA299A(3) Exclusion ofprejudicial informationon business strategiesand prospects

● ●

CA300(1)(a) Dividends paid ● ● ● ● ●

CA300(1)(b) Dividendsrecommended but notpaid

● ● ● ● ●

CA300(1)(c)CA300B(3)(a)

Directors’ names andperiods for which theywere directors

● ● ● ● ● ●

CA300(1)(ca) Officers who areformer auditors

● ● ● ● ●

Directors’ report



Description 1Proprietarycompanies3

Non-listedpublic

companies5Listed

companies

Otherdisclosing

entities




CA300(1)(d),(3),(5) Options granted overunissued shares orinterests to directorsand the 5 most highlyremunerated officers

● ● ● ● ● ●

CA300(1)(e),(3),(6) Details of unissuedshares or interestsunder option at thedate of the report

● ● ● ● ● ●

CA300(1)(f),(3),(7) Details of shares orinterests issued as aresult of the exerciseof an option

● ● ● ● ● ●

CA300(1)(g),(8),(9) Indemnification/insurance of officers orauditors

● ● ● ●4 ●4 ●4

CA300(10)(a),CA300B(3)(b)

Directors’qualifications,experience andresponsibilities

2

● ● ●

CA300(10)(b),(c)CA300B(3)(c)

Directors’ meetingattendance 2 ● ● ●

CA300(10)(d) Qualifications andexperience of eachcompany secretary 2

● ●

CA300(11)(a)-(d) Directors’ interests insecurities, includingoptions

●

CA300(12) Directors’ interests inthe scheme, includingoptions

●

CA300(11)(e) Directorships of otherlisted companies heldby directors in the last3 years

●

CA300(11A) Details of any ASICdeclaration under CA342A (modification ofauditor rotationrequirements)

●

CA300(2A),(11B),(11C),(11D)

Details of non-auditservices provided bythe auditor, andrelated statements bythe directors

●

CA300ACR2M.3.03

Remuneration report(for details seeparagraphs 39-97 ofcommentary in theHoldings publication)

●

● (only if they

arecompanies)

CA300(13)(a) Fees paid to theresponsible entity andassociates

●

CA300(13)(b) Number of interests inscheme held by theresponsible entity andassociates

● ●

CA300(13)(c) Interests in thescheme issued duringthe financial year

● ●

Directors’ report



Description 1Proprietarycompanies 3

Non-listedpublic

companies 5Listed

companies

Otherdisclosing

entities




CA300(13)(d) Withdrawals from thescheme during thefinancial year

● ●

CA300(13)(e) Value of schemeassets and basis ofvaluation

● ●

CA300(13)(f) Number of interests inscheme at the end ofthe financial year

● ●

CA300(14),(15) Proceedings on behalfof company

● ● ●

CA300B(1)(a) Description of short-and long-termobjectives

●

CA300B(1)(b) Strategy for achievingthose objectives

●

CA300B(1)(c),(d) Principal activitiesduring the year andhow they assisted inachieving the entity’sobjectives

●

CA300B(1)(e) Explanation of howthe entity measures itsperformance

●

CA300B(3)(d) For each class ofmembership theamount which amember of that classhas to contribute onwinding up

●

CA300B(3)(e) Total amount thatmembers have tocontribute onwinding up

●

ASIC98/100 Rounding of amountsin the directors’ andfinancial reports

● ● ● ● ● ● ●

Some of the information in the table may be provided in the financial report or a document1.included with the directors’ report and financial report. For a summary of the options refer topage 21.

CA300(10) Wholly-owned subsidiaries of Australian companies are exempted from the requirements of CA2.300(10).

CA298(3) A small proprietary company does not have to prepare a directors’ report if:3.

it is preparing financial statements in response to a shareholder direction under CA 293,(a)and

the direction specifies that a directors’ report need not be prepared.(b)

CA300(1)(g) CA300(1)(g) requires disclosure of indemnities given and insurance premiums paid for an4.officer or auditor and includes references to CA 300(8) and (9) which prescribe specific detailsto be provided in directors’ reports for companies. These specific details do not appear to applyto registered schemes or other disclosing entities, although CA 300(1)(g) does apply to theseentities. Disclosure of similar details is recommended where these entities provide indemnitiesor pay insurance premiums for an officer or auditor, to comply with CA 300(1)(g).

Other than companies limited by guarantee.5.

For an explanation of the different types of entities refer to Appendix B.6.

Directors’ report


Transfer of information from the directors’ report

ASIC-RG68(76)-(77C) Entities may transfer certain information otherwise required to be included in the directors’ report toother parts of the annual report. The following table sets out which type of information can be providedwhere.

Can be transferred to: Referenceallowingtransfer

Section ofCA

Nature ofdisclosure

Type of entityaffected

Otherdocument*

Financialreport

298(1)(c) Auditor’sindependencedeclaration

Company, registeredscheme or disclosingentity

Yes No ASIC 98/2395

298(1A) Informationincluded to give atrue and view

All Yes No ASIC 98/2395

299 Generalinformation aboutoperationsactivities

All Yes No ASIC 98/2395

299A Additionalinformation on theoperationsactivities

Listed* companies* registered schemes* disclosing entities

Yes No ASIC 98/2395

300(otherthan300(11B) and(11C))

Various specificinformation

All, exceptCA 300(10) – (15)apply to specificclasses of entities

Yes Yes ASIC 98/2395CA300(2)

300(11B) and(11C)

Non-audit servicesand auditorindependence

Listed companies No Yes CA 300(2),(2A)

* The ‘other document’ must be included with the directors’ report and financial report.

ASIC98/2395 Entities taking advantage of the relief provided by ASIC Class Order 98/2395 must comply with1.the following conditions:

the directors’ report must contain a clear cross reference to the page or pages containing(a)the transferred information

the entity must never distribute or make available the directors’ report and financial report(b)without the transferred information included, and must take reasonable steps to ensurethat no one else distributes or makes those documents available without the transferredinformation included

a document containing the transferred information must be lodged with ASIC as if it were a(c)part of the report required to be lodged under CA 319

a directors’ report which is identical to the directors’ report, except that the page(d)references required by (a) above are updated as necessary, must be included in theconcise report (where prepared), and

any of the transferred information otherwise required by CA 298(1)(c), 298(1A), 299 or(e)299A must be included in any concise report for the purposes of CA 314 and lodged withASIC pursuant to CA 319.

ASIC98/2395(Editorial note)

Any information transferred from the directors’ report to the financial report becomes part of the2.financial report and must be covered by the auditor’s report.

ASIC98/2395(Editorial note)

Comparative information is not required for information transferred from the directors’ report to3.the financial report unless that information is also required by an accounting standard.

Information that must be included in the remuneration report cannot be transferred out of the4.report and disclosed elsewhere (eg the notes to the financial statements).

PwC 22

AASB101(49),(51)(a)

CA153(1) VALUE ACCOUNTS Reduced Disclosure Pty Ltd

ABN XY XYZ XYZ XYZ

Annual financial report – 30 June 2015 1-19, 23-29

AASB101(49) Financial statements 23

Consolidated income statement 27

Consolidated statement of comprehensive income 28

Consolidated balance sheet 37

Consolidated statement of changes in equity 40

Consolidated statement of cash flows 42

Notes to the consolidated financial statements 46

Directors’ declaration 242

AASB101(51)(b),(d) These financial statements are consolidated financial statements for the group consisting of VALUEACCOUNTS Reduced Disclosure Pty Ltd and its subsidiaries. A list of major subsidiaries is includedin note 16.

The financial statements are presented in the Australian currency.25

AASB101(138)(a) VALUE ACCOUNTS Reduced Disclosure Pty Ltd is a company limited by shares, incorporated anddomiciled in Australia. Its registered office and principal place of business is:


350 Harbour Street

Sydney NSW 2000.

AASB110(17) The financial statements were authorised for issue by the directors on 23 August 2015. The directorshave the power to amend and reissue the financial statements.

30

All press releases, financial reports and other information are available at our Shareholders’ Centreon our website: www.valueaccounts.com.au

22


Financial statements

Accounting standard for financial statements presentation and disclosures

AASB101(Aus1.1) AASB 101 Presentation of Financial Statements applies to each entity which is required to1.prepare financial reports in accordance with Part 2M.3 of the Corporations Act 2001, generalpurpose financial statements of each reporting entity, and to financial statements that are, orare held out to be, general purpose financial statements.

AASB101(10) According to AASB 101, a ‘complete set of financial statements’ comprises:2.

a statement of financial position as at the end of the period(a)

a statement of profit or loss and other comprehensive income for the period(b)

a statement of changes in equity for the period(c)

a statement of cash flow for the period(d)

notes, comprising a summary of significant accounting policies and other explanatory(e)notes, and

if the entity has applied an accounting policy retrospectively, made a retrospective(f)restatement of items or has reclassified items in its financial statements: a statement offinancial position as at the beginning of the earliest comparative period.

AASB101(11) The statements must all be presented with equal prominence.

AASB101(10) The titles of the individual statements are not mandatory and an entity can, for example3.continue to refer to the statement of financial position as ‘balance sheet’ and to the statementof profit or loss as ‘income statement’. VALUE ACCOUNTS Reduced Disclosure Pty Ltd haschosen to retain the previous titles (balance sheet and income statement), as they are widelyknown and understood.

Financial statements vs financial report

While the term ‘financial report’ is no longer used in the accounting standards, it is still a4.defined term in the Corporations Act 2001 and covers:

CA295(1) the complete set of financial statements (as per above), and(a)

the directors’ declaration.(b)

General requirements for financial statements

AASB101(49) The financial statements shall be clearly identified and distinguished from other information in5.the same published document.

AASB101(51) Each financial statement and the notes shall be clearly identified. The following information6.shall be displayed prominently, and repeated when necessary for a proper understanding ofthe information presented:

the name of the reporting entity or other means of identification, and any change in that(a)information from the end of the preceding reporting period

whether the financial statements cover the individual entity or a group of entities(b)

the date of the end of the reporting period or the period covered by the set of financial(c)statements or notes

the presentation currency, as defined in AASB 121 The Effects of Changes in Foreign(d)Exchange Rates (refer also to paragraphs 25-28 below), and

the level of rounding used in presenting amounts in the financial statements (refer to(e)note 28(ad) to the financial statements).

Consolidated financial statements of intermediate parents

AASB10(4) A parent entity does not need to present consolidated financial statements if (and only if):7.

the parent is an intermediate parent and the owners do not object to the parent not(a)preparing consolidated financial statements

the parent’s debt or equity instruments are not publicly traded(b)

the parent has not filed, or is not in the process of filing, its financial statements with a(c)regulatory body for the purpose of issuing any class of instruments in a public market, and

the ultimate parent or an intermediate parent produces consolidated financial statements(d)for public use that comply with IFRS.

AASB10(Aus4.2) The ultimate Australian parent must also present consolidated financial statements if either theparent and/or the group are reporting entities.




AASB10(Aus4.1),(AG1)

Not-for-profit entities or entities reporting under the reduced disclosure regime can also apply8.this relief, provided the entity seeking relief is subject to the same reporting requirements asthe parent and is not required to produce full IFRS compliant financial statements. Please referto the table in the Application Guidance to AASB 10 for details.

Comparative information

AASB101(38) Except when an Australian Accounting Standard permits or requires otherwise, comparative9.information shall be disclosed in respect of the preceding period for all amounts reported in thefinancial statements. Comparative information shall be included for narrative and descriptiveinformation when it is relevant to an understanding of the current period’s financial statements.

AASB101(38A) As a minimum, entities shall present two of each of the required financial statements (see10.paragraph 2 above).

AASB101(38B) In some cases, narrative information provided in the financial statements for the previous11.period(s) continues to be relevant in the current period. For example, details of a legal dispute,the outcome of which was uncertain at the end of the immediately preceding reporting periodand that is yet to be resolved, are disclosed in the current period. Users benefit frominformation that the uncertainty existed at the end of the immediately preceding reportingperiod, and about the steps that have been taken during the period to resolve the uncertainty.

Additional comparatives

AASB101(38C),(38D) An entity may present additional comparative information, voluntarily, for example by including12.a third statement of profit or loss and other comprehensive income. This does not mean thatthey have to present a complete set of financial statements for the additional period, byincluding also a third balance sheet or statement of cash flows, for example. However, theentity will need to include additional comparative information in the notes that are related to thestatement of profit or loss and other comprehensive income.

Reclassification

AASB101(41) When the presentation or classification of items in the financial statements is amended,13.comparative amounts shall be reclassified unless the reclassification is impracticable. Whencomparative amounts are reclassified, an entity shall disclose:

the nature of the reclassification(a)

the amount of each item or class of items that is reclassified(b)

the reason for the reclassification.(c)

AASB101(42) When it is impracticable to reclassify comparative amounts, an entity shall disclose:14.

the reason for not reclassifying the amounts(a)

the nature of the adjustments that would have been made if the amounts had been(b)reclassified.

Three balance sheets required in certain circumstances

AASB101(40A),(40B) If an entity has15.

applied an accounting policy retrospectively, restated items retrospectively, or reclassified(a)items in its financial statements, and

the retrospective application, restatement or reclassification has a material effect on the(b)information presented in the balance sheet at the beginning of the preceding period,

it must present a third balance sheet (statement of financial position) as at the beginning of thepreceding period (eg 1 July 2013 for 30 June 2015 reporters).

AASB101(40D) The date of the third balance sheet must be the beginning of the preceding period, regardless16.of whether the entity presents additional comparative information for earlier periods.

AASB101(40C) Where the entity is required to include a third balance sheet, it must also disclose the17.information about changes in accounting policies and other restatements that is required byAASB 108 Accounting Policies, Changes in Accounting Estimates and Errors and theinformation required in paragraph 13 above. However, the entity does not need to include theadditional comparatives in the related notes. This contrasts with the position where an entitychooses to present additional comparative information, see paragraph 12 above.




No financial statements prepared in the previous year

AASB101(38) Comparative information must be provided even if the entity did not prepare financial18.statements under the Corporations Act 2001 in the previous financial year, eg a company thatwas previously a small proprietary company that became large or foreign controlled during thereporting period. Specific relief from providing comparative information in such cases, whichwas provided by ASIC before transition to Australian equivalents to IFRS, is no longer availableunder Australian Accounting Standards.

Materiality

AASB101(7)

See: IAS1R(BC30F)(as amendedDecember 2014)

Accounting standards only need to be complied with if the information resulting from their19.application is material. Materiality is judged by reference to the size and nature of the item. Thedeciding factor is whether the omission or misstatement could, individually or collectively,influence the economic decisions that users make on the basis of the financial statements. Inparticular circumstances either the nature or the amount of an item or an aggregate of itemscould be the determining factor. Preparers generally tend to err on the side of caution anddisclose rather too much than too little. However, the IASB has recently expressed the viewthat too much immaterial information could obscure useful information and hence should beavoided.

Consistency and aggregation

AASB101(45) The presentation and classification of items in the financial statements shall be retained from20.one period to the next unless:

it is apparent, following a significant change in the nature of the entity’s operations or a(a)review of its financial statements, that another presentation or classification would be moreappropriate having regard to the criteria for the selection and application of accountingpolicies in AASB 108 Accounting Policies, Changes in Accounting Estimates andErrors, or

an Australian Accounting Standard requires a change in presentation.(b)

AASB101(29) Each material class of similar items shall be presented separately in the financial statements.21.Items of a dissimilar nature or function shall be presented separately unless they areimmaterial.

Electronic presentation of financial reports

CA314(1AE) Subject to certain conditions, companies, registered schemes and disclosing entities can22.satisfy their statutory reporting obligations to shareholders by distributing annual financialreports electronically. In doing so, management should ensure their systems and controlsaddress the risks associated with presenting information using this medium in order to maintainthe security and integrity of the information in those financial reports.

Disclosures not illustrated: not applicable to VALUE ACCOUNTS Reduced Disclosure PtyLtd

Separate financial statements

AASB127(17) When a parent, venturer with an interest in a joint venture or an investor in an associate23.prepares separate financial statements, those financial statements shall disclose:

AASB127(17)(a) (a) the fact that the statements are separate financial statements

AASB127(17)(a) (b) the reason why they are prepared, if not required by law

AASB127(17)(b) (c) a list of significant investments in subsidiaries, jointly controlled entities and associates,including their country of incorporation or residence, proportion of ownership interest andproportion of voting power held (if different), and

AASB127(17)(c)AASB127(RDR17.1)

(d) a description of the method used to account for the investments in (c) above.

Consolidated financial statements not prepared

AASB127(16)(a) Where a parent entity has elected not to prepare consolidated financial statements in24.accordance with paragraphs 4(a) and Aus 4.1 of AASB 10 (see paragraph 7 above) itsseparate financial statements shall disclose:

(a) the fact that the financial statements are separate financial statements

(b) that the exemption from consolidation has been used

(c) the name and country of incorporation or residence of the entity whose consolidatedfinancial statements that comply with IFRS have been produced for public use, and

(d) the address where those consolidated financial statements can be obtained.




Foreign currenciesAASB121(51),(53) When the presentation currency is different to the functional currency of the parent entity, that25.

fact shall be stated, together with disclosure of the functional currency and the reason for usinga different presentation currency.

AASB121(51),(54) When there is a change in the functional currency of either the reporting entity or a significant26.foreign operation, that fact and the reason for the change in functional currency shall bedisclosed.

AASB121(51),(55) When an entity presents its financial statements in a currency that is different from its functional27.currency, it shall describe the financial statements as complying with Australian AccountingStandards only if they comply with all the requirements of each applicable standard and eachapplicable UIG Interpretation of those standards including the translation method set out inparagraphs 39 and 42 of AASB 121.

AASB121(51),(57) When an entity displays its financial statements or other financial information in a currency that28.is different from either its functional currency or its presentation currency and the requirementsof paragraph 55 of AASB 121 (refer to paragraph 27 above) are not met, it shall:

(a) clearly identify the information as supplementary information to distinguish it from theinformation that complies with Australian Accounting Standards

(b) disclose the currency in which the supplementary information is displayed, and

(c) disclose the entity’s functional currency and the method of translation used to determinethe supplementary information.

Period of financial statements changed to longer or shorter than one year

AASB101(36) An entity shall present a complete set of financial statements at least annually. When an entity29.changes the end of its reporting period and presents financial statements for a period longer orshorter than one year, it shall disclose, in addition to the period covered by the financialstatements:

(a) the reason for using a longer or shorter period, and

(b) the fact that amounts presented in the financial statements are not entirely comparable.

Where entity’s owners or others have power to amend financial statements after issue

AASB110(17) If an entity’s owners or others have the power to amend the financial statements after issue,30.the entity shall disclose that fact.


CA295(1)(a),(2)AASB101(10)(b),(10A)

Consolidated income statement 1-18,20,32-35,46-48

AASB101(51)(c),(e)AASB101(113)

Notes2015$'000

2014Restated *

$'000AASB101(82)(a) Revenue from continuing operations

Sale of goods 3 117,200 80,540

Services 3 80,450 60,900

Other revenue 3 14,890 15,840

212,540 157,280

Other income 5 6,136 1,641

AASB101(97) Expenses39-45

4,5

AASB101(97) Cost of sales of goods (49,156) (42,410)

Cost of providing services (53,286) (36,428)

Other expenses from ordinary activities

Distribution (25,544) (16,585)

Marketing (14,475) (8,510)

Occupancy (3,516) (2,410)

Administration (8,294) (5,634)

Other (4,265) (1,951)

AASB101(82)(b) Finance costs 5 (7,335) (6,194)

AASB101(82)(c) Share of net profit of associates and joint ventures accountedfor using the equity method

19 450 370

Profit before income tax 53,255 39,169

AASB101(82)(d)AASB112(77)

Income tax expense 6 (16,766) (11,446)

Profit from continuing operations 36,489 27,723

AASB5(33)(a)

AASB101(82)(ea)

Profit from discontinued operation21

15 664 399

AASB101(81A)(a) Profit for the period 37,153 28,122

AASB101(81B)(a) Profit is attributable to:7

Owners of VALUE ACCOUNTS Reduced Disclosure PtyLtd 34,148 25,803

Non-controlling interests 3,005 2,319

37,153 28,122

The above consolidated income statement should be read in conjunction with the accompanyingnotes.


CA295(1)(a),(2)AASB101(10)(b),(10A) Consolidated statement of comprehensive income 36-38,46-48

Notes2015

$’000

2014Restated *

$’000

AASB101(81A)(a) Profit for the period 37,153 28,122

Other comprehensive income27-31

AASB101(82A)(b) Items that may be reclassified to profit or loss5

AASB101(82A),(7)(d)AASB139(55)(b)

Changes in the fair value of available-for-salefinancial assets 9(b) 234 (830)

AASB101(82A),(7)(e)AASB139(95)(a)

Changes in the fair value of cash flow hedges 9(b) 83 1,642

AASB5(38) Exchange differences on translation of discontinuedoperation

30 15 170 58

AASB101(82A),(7)(c)AASB121(32)

Exchange differences on translation of foreign operations 9(b) 30 2,159

AASB101(82A),(7)(c)AASB139(100)

Net investment hedge 9(b) (287) -

AASB101(91) Income tax relating to these items 9(b) (95) (244)

AASB101(82A)(a) Items that will not be reclassified to profit or loss5

AASB101(82A),(7)(a) Gain on revaluation of land and buildings 9(b) 7,243 5,840

AASB101(82A) Share of gain on revaluation of land and buildings ofassociates and joint ventures

28 9(b) 300 100

AASB101(82A),(7)(b)AASB119(120)(c)

Remeasurements of retirement benefit obligations 9(b) 160 (531)

AASB101(91) Income tax relating to these items 9(b) (2,310) (1,622)

AASB101(81A)(b) Other comprehensive income for the period, net of tax 5,358 4,598

AASB101(81A)(c) Total comprehensive income for the period 42,511 32,720

AASB101(81B)(b) Total comprehensive income for the period is attributable to:7

Owners of VALUE ACCOUNTS Reduced Disclosure PtyLtd 39,605 30,144

Non-controlling interests 2,906 2,577

42,511 32,720

Total comprehensive income for the period attributable toowners of VALUE ACCOUNTS Reduced Disclosure Pty Ltdarises from:

8

Continuing operations 38,771 29,687

AASB5(33)(d) Discontinued operations 834 457

39,605 30,144

* See note 11(b) for details regarding the restatement as a result of an error.

The above consolidated statement of comprehensive income should be read in conjunction with theaccompanying notes.

Income statement and statement of comprehensive income



Accounting standard for income statement and statement of comprehensive income

AASB101(Aus1.1),(10) Requirements for the income statement and statement of comprehensive income are set out in1.AASB 101 Presentation of Financial Statements. The standard now refers to income statementas ‘statement of profit or loss’. However, since the new title is not mandatory, VALUEACCOUNTS Reduced Disclosure Pty Ltd has elected to retain the better known name of‘income statement’. AASB 101 applies to each entity which is required to prepare financialreports in accordance with Part 2M.3 of the Corporations Act 2001, general purpose financialstatements of each reporting entity, and to financial statements that are, or are held out to be,general purpose financial statements.

One or two statements

AASB101(10A) Entities have a choice to present all items of income and expense recognised in a2.period either:

in a single statement of profit or loss and other comprehensive income, or(a)

in two statements (as done by VALUE ACCOUNTS Reduced Disclosure Pty Ltd):(b)

(i) a separate income statement which displays components of profit or loss, and

(ii) a statement of comprehensive income which begins with profit or loss and displayscomponents of other comprehensive income.

The main difference between these two options is that profit for the period would be shown asa sub-total rather than the ‘bottom line’ and the statement would continue down to totalcomprehensive income for the period under option (a).

AASB101(10A) Where an entity elects to prepare a separate income statement, it must present this income3.statement immediately before the statement of comprehensive income.

Minimum line items

AASB101(82) The income statement (profit or loss section of the single statement of profit or loss and other4.comprehensive income) must include line items that present the following amounts for theperiod, in addition to items required by other accounting standards:

revenue(a)

finance costs(b)

share of the profit or loss of associates and joint ventures accounted for using the equity(c)method

tax expense, and(d)

a single amount for the total of discontinued operations.(e)

AASB101(82A) The statement of comprehensive income (other comprehensive income section of the single5.statement) shall present line items for amounts of other comprehensive income in the period,classified by nature (including the entity’s share of the other comprehensive income of equity-accounted associates and joint ventures). The items must be grouped into items that, inaccordance with other accounting standards:

will not subsequently be reclassified to profit or loss, and(a)

may have to be subsequently reclassified to profit or loss when specific conditions are(b)met.

AASB101(81A) The statement of other comprehensive income must further disclose sub-totals and totals for:6.

profit or loss(a)

total other comprehensive income(b)

comprehensive income for the period (being the total of profit or loss and other(c)comprehensive income)

Allocation of profit or loss and total comprehensive income

AASB101(81B) The following items must be disclosed as allocations for the period:7.

profit or loss attributable to:(a)

(i) non-controlling interests

(ii) owners

This must be presented in the separate income statement (statement of profit or loss) whereapplicable.




AASB101(81B) total comprehensive income for the period attributable to:(b)

(i) non-controlling interests

(ii) owners

AASB5(33)(d) Entities must also disclose the amount of income attributable to owners of the parent from:8.

continuing operations, and(a)

discontinued operations(b)

either in the statement of comprehensive income or in the notes. VALUE ACCOUNTSReduced Disclosure Pty Ltd has elected to provide this information in the statement ofcomprehensive income.

Additional line items

AASB101(85) Additional line items, headings and subtotals shall be presented in the statement of9.comprehensive income and the income statement (where applicable) when such presentationis relevant to an understanding of the entity’s financial performance. For example, a sub-total ofgross profit (revenue from sales less cost of sales) should be included where expenses havebeen classified by function.

Framework(QC4),(QC12)AASB-CF2013-1

However, additional sub-headings should be used with care. The Framework for the10.Preparation and Presentation of Financial Statements states that to be useful, information mustbe relevant and faithfully represent what it purports to represent. That is, it must be complete,neutral and free from error. The apparent flexibility in AASB 101 can, therefore, only be used toenhance users’ understanding of the company’s financial performance. It cannot be used todetract from the amounts that must be disclosed under Australian Accounting Standards(statutory measures).

See: IAS1R(85A)(as amended inDecember 2014)

Amendments made to IAS 1 in December 2014 clarify that additional subtotals must:11.

be comprised of items that are recognised and measured in accordance with IFRS(c)

be presented and labelled such that they are clear and understandable(d)

be consistent from period to period(e)

not be displayed with more prominence than the mandatory subtotals and totals.(f)

The amendments apply to annual reporting periods commencing on or after 1 January 2016.The AASB is expected to make equivalent changes to AASB 101 in the first half of 2015.

ASIC-RG230(28)-(30)

CA295(3)(c)CA298(1A)

Australian entities must also consider the guidance in ASIC Regulatory Guide 230 Disclosing12.non-IFRS financial information which explains when and how entities may use non-IFRSfinancial information in financial reports. Non-IFRS financial information is financial informationthat is presented other than in accordance with all relevant accounting standards. It mayexclude certain transactions or may have been determined by applying different recognitionand measurement rules. Since the Corporations Act 2001 sets out an exhaustive list of whatcan be included in the primary financial statements, entities cannot include non-IFRS financialinformation in their financial statements and can only provide such information in the notes inthe rare circumstances where it is necessary for the financial report to give a true and fair view.In these cases, the directors must explain in the directors’ report why they believe theadditional information was necessary to give a true and fair view and specify where thatadditional information can be found (see commentary paragraph 3 to the directors’ report forfurther information).

In relation to the inclusion of sub-totals and additional line items in the statement of13.comprehensive income, the guide reminds entities of the following principles in AASB 101:

a breakdown of individual items within their relevant category is permitted and even(a)required in certain circumstances, but this doesn’t cover the inclusion of sub-totals that arenon-IFRS measures (eg alternative profit figures).

the statement of comprehensive income must show total revenue and total income tax(b)expense/benefit.

no items of income or expenditure can be presented as ‘extraordinary’, even if they are(c)given a different name.

the statement of comprehensive income can only include revenue or expense items and(d)items of other comprehensive income and the items must be measured in accordance withthe accounting standards. It is therefore not appropriate, for example, to present anamount of revenue that is based on cash collections.




ASIC-RG230(30)(b) Having said that, ASIC does acknowledge that EBIT (earnings before interest and tax) may bean appropriate sub-heading to show on the face of the statement of comprehensive income, asit can be used to assess interest cover. This line item usually distinguishes between the pre-taxprofits arising from operating items and those arising from financing activities.

Operating profit

IAS1(BC56) An entity may also elect to include a sub-total for its result from operating activities. While this14.is permitted, care must be taken that the amount disclosed is representative of activities thatwould normally be considered to be ‘operating’. Items that are clearly of an operating nature,for example inventory write-downs, restructuring or relocation expenses, must not be excludedsimply because they occur infrequently or are unusual in amount. Similarly, expenses cannotbe excluded on the grounds that they do not involve cash flows (eg depreciation oramortisation). As a general rule, operating profit would be the subtotal after ‘other expenses’, ieexcluding finance costs and the share of profits of equity-accounted investments.

Re-ordering of line items

AASB101(86) Entities should re-order the line items and descriptions of those items where this is necessary15.to explain the elements of performance. However, entities are again governed by the overallrequirement for a ‘fair presentation’ and should not make any changes unless there is a goodreason to do so. For example, it may be acceptable to present finance cost as the last itembefore pre-tax profit, thereby separating financing activities from the activities that arebeing financed.

Another example is the share of profit of associates. Normally, this would be shown after16.finance cost. However, there may be exceptions when the line item showing the investor’sshare of the associate’s result is included before finance cost. Where the entity presents asubtotal for operating profit, it could be included in operating profit or presented immediatelybelow operating profit. This might apply where the associate (or joint venture) is an integralvehicle through which the group conducts its operations and its strategy.

Finance income and finance cost

AASB 101 requires an entity to present finance costs on the face of the income statement, but17.it does not require the separate presentation of finance income. Finance income should not benetted against finance costs, but should be included in other revenue/other income or shownseparately in the statement of comprehensive income.

The classification of finance income will depend on an entity’s accounting policy for such items.18.Where earning interest income is one of the entity’s main lines of business, it will presentfinance income as ‘revenue’. However, in other circumstances it will be more appropriate topresent finance income as other revenue or other income. Alternatively, entities may considerit appropriate to include finance income that arises from treasury activity (for example, incomeon surplus funds invested for the short term) outside operating profit. Where finance income isjust an incidental benefit, it is acceptable to present finance income immediately before financecosts and include a sub-total of ‘net finance costs’ in the statement of comprehensive income.As entities have some discretion in the way in which finance income is presented, the policyadopted should be applied consistently and disclosed if material.

Revenue of equity-accounted investments

AASB101(82)(c)Framework(74)

The share of the profit or loss of associates and joint ventures accounted for using the equity19.method should be presented as a separate line item, commonly below other expenses andfinance costs. It should not be included as part of the entity’s revenue. The share of anassociate’s or joint venture’s profit is in the nature of a net gain. It does not represent a grossinflow of economic benefits and hence does not satisfy the definition of revenue in AASB 118Revenue. Combining the entity’s share of the associate’s revenue with its own revenue wouldbe inconsistent with the balance sheet treatment where the entity’s investment is presented asa separate line item. This is different to the accounting for joint operations where the entitycombines its share of the joint operation’s revenue with its own. Where a group conducts asignificant proportion of its business through equity-accounted investments and wishes tohighlight that fact to the reader of the statement of comprehensive income, it may choose togive additional financial information by way of a footnote and cross-reference to the notes.

Extraordinary items not permitted

AASB101(87) An entity shall not present any items of income and expense as extraordinary items, either in20.the statement of comprehensive income or in the notes.




Discontinued operations

AASB5(33)(a),(b)AASB101(82)(ea)

As stated in paragraph 4(e) above, entities shall disclose a single amount in the statement of21.comprehensive income (or separate income statement) comprising the total of (i) the post-taxprofit or loss of discontinued operations and (ii) the post-tax gain or loss recognised on themeasurement to fair value less costs to sell or on the disposal of the assets or disposalgroup(s) constituting the discontinued operation. An analysis of this single amount is alsorequired by paragraph 33 of AASB 5 Non-current Assets Held for Sale and DiscontinuedOperations. This analysis may be presented in the notes or in the statement of comprehensiveincome (separate income statement). In the case of VALUE ACCOUNTS Reduced DisclosurePty Ltd it is presented in note 15. If it is presented in the income statement it must be presentedin a section identified as relating to discontinued operations; that is, separately from continuingoperations. The analysis is not required for disposal groups that are newly acquiredsubsidiaries that meet the criteria to be classified as held for sale on acquisition (refer toparagraph 11 of AASB 5).

Earnings per share

AASB133(66) – 26. Commentary removed as not applicable to VALUE ACCOUNTS Reduced Disclosure Pty22.Ltd. Note that if an entity discloses earnings per share voluntarily, it must calculate anddisclose the earnings per share in accordance with the requirements of AASB 133 Earningsper Share. Please refer to our VALUE ACCOUNTS Holdings publication for an illustration ofAASB 133 compliant disclosures and related commentary.

Components of other comprehensive income

AASB101(7) Components of other comprehensive income (OCI) are items of income and expense27.(including reclassification adjustments, see paragraph 36 below) that are specifically requiredor permitted by other Australian Accounting Standards to be included in other comprehensiveincome and are not recognised in profit or loss. They currently include:

revaluation gains and losses relating to property, plant and equipment or intangible assets(a)

remeasurements of defined benefit obligations(b)

gains and losses arising from translating the financial statements of a foreign operation(c)

gains and losses on remeasuring available-for-sale financial assets(d)

the effective portion of gains and losses on hedging instruments in a cash flow hedge(e)

the investor’s share of the other comprehensive income of equity-accounted(f)investments, and

current and deferred tax credits and charges in respect of items recognised in other(g)comprehensive income.

See: IAS1R(82A)(as amended inDecember 2014)

It is not clear from the wording in AASB 101 as to whether items of OCI arising from equity28.accounted investments should be reported in aggregate as a single line item, or by nature. Theinternational equivalent standard, IAS 1 was amended in December 2014 to clarify that suchitems should be presented in aggregate as a single line item, classified by whether the itemswill or will not be reclassified to profit or loss. On that basis, it would not be necessary todisclose the nature of the items as is done on page 28. The AASB is expected to makeequivalent amendments to AASB 101 in the first half of 2015. These amendments must beapplied from 1 January 2016 but will be available for early adoption.

AASB101(91) Gross or net of tax

Entities may present components of other comprehensive income either net of related tax29.effect or before related tax effects. VALUE ACCOUNTS Reduced Disclosure Pty Ltd haschosen to present the items before tax. In this case:

the income tax relating to the components of other comprehensive income must be shown(a)as aggregate amounts in the statement of comprehensive income, allocated between theitems that may be subsequently reclassified to profit or loss and those that will not bereclassified, and

AASB101(90) the amount of income tax relating to each component of OCI, including reclassification(b)adjustments, must be disclosed in the notes.





AASB 5 is unclear as to whether entities need to separate out items of other comprehensive30.income between continuing and discontinued operations. We believe that it would beconsistent with the principles of AASB 5 to do so, as it would provide a useful base forpredicting the future results of the continuing operations. We also note that entities mustpresent separately any cumulative income or expense recognised in other comprehensiveincome that relates to a non-current asset or disposal group classified as held for sale.

Summary

The requirements surrounding components of OCI can be summarised as follows:31.

Item ReferenceRequirement instandard

Presentation inVALUE

Each component of OCI recognisedduring the period, classified bynature

AASB 101(82A)

Statement ofcomprehensiveincome

Statement ofcomprehensiveincome

Reclassification adjustments duringthe period relating to components ofOCI (see paragraph 36 below)

AASB 101 (92) Statement ofcomprehensiveincome or notes

Note 9

Tax relating to each component ofOCI, including reclassificationadjustments

AASB 101 (90) Statement ofcomprehensiveincome or notes

Note 9

Reconciliation for each componentof equity, showing separately

profit/loss

OCI

transactions with owners

See commentary 2 to 4 on page 41.

AASB 101(106)(d)

Statement of changesin equity and notes,see relatedcommentary

Statement ofchanges in equityand note 9

Information to be presented either in the statement of comprehensive income or in the notes

Material items of income and expense

AASB101(97) When items of income and expense are material, their nature and amount must be disclosed32.separately either in the statement of comprehensive income (income statement) or in thenotes. In the case of VALUE ACCOUNTS Reduced Disclosure Pty Ltd these disclosures aremade in the income statement and in note 4.

AASB101(86),(97) AASB 101 does not provide a specific name for the types of items that should be separately33.disclosed. Where an entity discloses a separate category of ‘exceptional’, ‘significant’ or‘unusual’ items either in their statement of comprehensive income or in the notes, theaccounting policy note should include a definition of the chosen term. The presentation anddefinition of these items must be applied consistently from year to year.

Where an entity classifies its expenses by nature (see paragraph 39 below), it must take care34.to ensure that each class of expenses includes all items related to that class. Materialrestructuring cost may, for example, include redundancy payments (ie employee benefit cost),inventory write-downs (changes in inventory) and impairments in property, plant andequipment. It would not be acceptable to show restructuring costs as a separate line item in ananalysis of expenses by nature where there is an overlap with other line items.

Entities that classify their expenses by function will have to include the material items within the35.function to which they relate. In this case, material items can be disclosed as footnote or in thenotes to the financial statements.

Reclassification adjustments

AASB101(92),(94) An entity shall also disclose separately any reclassification adjustments relating to components36.of other comprehensive income either in the statement of comprehensive income or in thenotes. VALUE ACCOUNTS Reduced Disclosure Pty Ltd provides this information in note 9(b).




AASB101(7),(95) Reclassification adjustments are amounts reclassified to profit or loss in the current period that37.were recognised in other comprehensive income in the current or previous periods. They arise,for example, on disposal of a foreign operation, on derecognition or impairment of an available-for-sale financial asset and when a hedged forecast transaction affects profit or loss.

Dividends: statement of changes in equity or notes only

AASB101(107) The amount of dividends recognised as distributions to owners during the period, and the38.related amount per share must be presented either in the statement of changes in equity or inthe notes. In the case of VALUE ACCOUNTS Reduced Disclosure Pty Ltd these disclosuresare made in note 13(b).

Classification of expenses

By nature or function

AASB101(99),(100) An analysis of expenses shall be presented using a classification based on either the nature of39.expenses or their function within the entity, whichever provides information that is reliable andmore relevant. Entities are encouraged, but not required, to present the analysis of expensesin the statement of comprehensive income (or income statement, where applicable).

AASB101(105) The choice of classification between nature and function will depend on historical and industry40.factors and the nature of the entity. The entity should choose the classification that providesthe most relevant and reliable information about its financial performance.

Within a functional statement of comprehensive income (income statement), costs directly41.associated with generating revenues should be included in cost of sales. Cost of sales shouldinclude direct material and labour costs but also indirect costs that can be directly attributed togenerating revenue; for example, depreciation of assets used in the production. Impairmentcharges should be classified according to how the depreciation or amortisation of the particularasset is classified. Entities should not mix functional and natural classifications of expenses byexcluding certain expenses such as inventory write-downs, employee termination benefits andimpairment charges from the functional classifications to which they relate.

AASB101(104),(105) Entities classifying expenses by function shall disclose additional information about the nature42.of their expenses in the notes to the financial statements. According to AASB 101 this includesdisclosure of depreciation, amortisation and employee benefits expense. Other classes ofexpenses should also be disclosed where they are material, as this information assists users inpredicting future cash flows.

Materiality

AASB101(29) Regardless of whether expenses are classified by nature or by function, materiality applies to43.the classification of expenses. Each material class should be separately disclosed, andunclassified expenses (shown as ‘other expenses’ in VALUE ACCOUNTS Reduced DisclosurePty Ltd) should be immaterial both individually and in aggregate. Accordingly, unclassifiedexpenses should not normally exceed 10% of total expenses classified by nature or function.




Example of classification by nature

AASB101(103) Expenses are classified by function in VALUE ACCOUNTS Reduced Disclosure Pty Ltd’s44.income statement. An example of disclosure by nature is set out below.

2015 2014

$’000 $’000

Revenue from continuing operations 212,540 157,280AASB101(82)(a)

Other income 6,136 1,641

Changes in inventories of finished goods and work inprogress 6,681 5,255

Raw materials and consumables used (65,055) (42,645)

Employee benefits expense (77,649) (59,876)

Depreciation and amortisation expense (10,985) (8,880)

Impairment of goodwill (2,410) -

Write off of assets damaged by fire (1,210) -

Other expenses (7,908) (7,782)AASB101(82)(b)

AASB101(82)(c)

Finance costs (7,335) (6,194)

Share of net profits of associates and joint venturesaccounted for using the equity method 450 370


The classification of expenses may vary with the type of expense. For example, where45.expenses are classified by nature, wages and salaries paid to employees involved in researchand development (R&D) activities may be classified as employee benefits expense, whileamounts paid to external organisations for R&D may be classified as external R&D expense.However, where expenses are classified by function, both the wages and salaries and externalpayments may be classified as R&D expense.

Other presentation issues

Goods and Services Tax (GST)

UIG1031(6),(7) UIG 1031 Accounting for the Goods and Services Tax (GST) provides that revenues and46.expenses must be recognised net of the amount of GST, except that where GST relating toexpense items is not recoverable from the taxation authority it must be recognised as part ofthe item of expense. We recommend that entities that are not able to recover GST relating toparticular expense items should include a policy note indicating which expense items disclosedin the financial statements are inclusive of non-recoverable GST. They could also amend thewording of specific disclosures (eg auditor’s remuneration - refer to commentary onremuneration of auditors - note 22) to make it clear that the amounts disclosed are inclusive ofnon-recoverable GST.




Offsetting

AASB101(32) Assets and liabilities, and income and expenses, must not be offset unless required or47.permitted by an Australian Accounting Standard. Examples of income and expenses that arerequired or permitted to be offset are as follows:

AASB101(34)(a) gains and losses on the disposal of non-current assets, including investments and(a)operating assets, are reported by deducting from the proceeds on disposal the carryingamount of the asset and related selling expenses

AASB101(34)(b) expenditure related to a provision that is recognised in accordance with AASB 137(b)Provisions, Contingent Liabilities and Contingent Assets and reimbursed under acontractual arrangement with a third party (eg a supplier’s warranty agreement) may benetted against the related reimbursement

AASB101(35) gains and losses arising from a group of similar transactions are reported on a net basis,(c)for example, foreign exchange gains and losses or gains and losses arising on financialinstruments held for trading. Such gains and losses are, however, reported separately ifthey are material.

Income which falls under the scope of AASB 118 Revenue cannot be netted off against related48.expenses. This does not preclude an entity from presenting interest income followed by interestexpense and a sub-total such as ‘net interest expense’ on the face of the income statement,see paragraph 18 above.


CA295(1)(a),(2)AASB101(10)(a),(54) Consolidated balance sheet 1

AASB101(51)(c),(e)AASB101(113)

Notes2015

$’000

2014Restated *

$’000

1 July 2013Restated *

9

$’000AASB101(60),(66) ASSETS

Current assets2-7

AASB101(54)(i) Cash and cash equivalents (excluding bankoverdrafts) 7(a) 55,304 24,693 17,593

AASB101(54)(h)AASB7(8)(c)

Trade and other receivables 7(b) 18,935 12,184 8,243

AASB101(54)(g) Inventories 8(a) 22,153 16,672 15,616

AASB101(54)(d)AASB7(8)(a)

Financial assets at fair value through profit orloss 7(c) 11,300 10,915 10,370


Derivative financial instruments 12(a) 1,854 1,417 156

109,546 65,881 51,978

AASB101(54)(j)AASB5(38)

Assets classified as held for sale 8(b),15 250 4,955 -

Total current assets 109,796 70,836 51,978

AASB101(60),(66) Non-current assets2-7

AASB101(54)(h)AASB7(8)(c)

Receivables 7(b) 2,226 1,380 6,011

AASB101(54)(e) Investments accounted for using the equitymethod 16(e) 3,775 3,275 3,025

AASB101(54)(d)AASB7(8)(d)

Available-for-sale financial assets 7(d) 11,110 5,828 5,997

AASB101(54)(d)AASB7(8)(b)

Held-to-maturity investments 7(e) 1,210 - -


Derivative financial instruments 12(a) 308 712 -

AASB101(54)(a) Property, plant and equipment 8(c) 132,095 100,080 88,145

AASB101(54)(b) Investment properties 8(d) 13,300 10,050 8,205

AASB101(54)(o),(56) Deferred tax assets 8(e) 7,260 4,771 3,584

AASB101(54)(c) Intangible assets 8(f) 24,550 20,945 20,910

Total non-current assets 195,834 147,041 135,877

Total assets 305,630 217,877 187,855

LIABILITIES

AASB101(60),(69) Current liabilities2-7

AASB101(54)(k) Trade and other payables 7(f) 16,700 12,477 12,930

AASB101(54)(m),AASB7(8)(f)

Borrowings 7(g) 8,980 8,555 7,869

AASB101(54)(m)AASB7(8)(e)

Derivative financial instruments 12(a) 1,376 1,398 445

AASB101(54)(n) Current tax liabilities 1,657 1,095 989

AASB101(54)(l) Provisions 8(g) 2,472 1,240 730

(Improvement) Employee benefit obligations11

8(h) 690 470 440

Deferred revenue 3 2,395 2,370 2,290

34,270 27,605 25,693

AASB101(54)(p)AASB5(38)

Liabilities directly associated with assetsclassified as held for sale 15 - 500 -

Total current liabilities 34,270 28,105 25,693

* See note 11(b) for details regarding the restatement as a result of an error.9-10

Consolidated balance sheet


Notes2015

$’000

2014Restated *

$’000

1 July 2013Restated *

9

$’000AASB101(60),(69) Non-current liabilities

2-7

AASB101(54)(m)AASB7(8)(f)

Borrowings 7(g) 91,464 61,525 58,250

AASB101(54)(o),(56) Deferred tax liabilities8

8(e) 12,593 6,660 4,356

AASB101(54)(l) Provisions 8(g) 1,223 - -

(Improvement) Employee benefit obligations 8(h) 5,728 3,965 3,411

Total non-current liabilities 111,008 72,150 66,017

Total liabilities 145,278 100,255 91,710

Net assets 160,352 117,622 96,145

EQUITY2-3

AASB101(54)(r) Contributed equity 9(a) 84,878 63,426 62,368

AASB101(54)(r) Other reserves 9(b) 18,144 12,429 7,395

Retained earnings 9(c) 47,868 36,078 21,442

AASB101(54)(r) Capital and reserves attributable to ownersof VALUE ACCOUNTS Reduced DisclosurePty Ltd 150,890 111,933 91,205

AASB101(54)(q) Non-controlling interests 16(b) 9,462 5,689 4,940

Total equity 160,352 117,622 96,145

* See note 11(b) for details regarding the restatement as a result of an error. 9-10

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

Balance sheet

Accounting standard for the balance sheet (statement of financial position)

AASB101(Aus1.1),(10) Requirements for the balance sheet are set out in AASB 101 Presentation of Financial1.Statements. The standard now refers to the balance sheet as ‘statement of financial position’.However, since this title is not mandatory, VALUE ACCOUNTS Reduced Disclosure Pty Ltdhas elected to retain the better known name of ‘balance sheet’. AASB 101 applies to eachentity which is required to prepare financial reports in accordance with Part 2M.3 of theCorporations Act 2001, general purpose financial statements of each reporting entity, and tofinancial statements that are, or are held out to be, general purpose financial statements.

Information to be presented

In the balance sheet

AASB101(54),(55) Paragraph 54 of AASB 101 sets out the line items that shall, as a minimum, be presented in2.the balance sheet. Additional line items, headings and subtotals shall be presented in thebalance sheet when such presentation is relevant to an understanding of the entity’sfinancial position.

Consolidated balance sheet


Balance sheet

Either in the balance sheet or in the notes

AASB101(77),(78) An entity shall disclose, either in the balance sheet or in the notes, further sub-classifications of3.the line items presented, classified in a manner appropriate to the entity’s operations. The detailprovided in sub-classifications depends on the requirements of Australian AccountingStandards and on the size, nature and function of the amounts involved.

AASB101(60) An entity shall present current and non-current assets, and current and non-current liabilities,4.as separate classifications in its balance sheet except when a presentation based on liquidityprovides information that is reliable and is more relevant. When that exception applies, allassets and liabilities shall be presented broadly in order of liquidity.

AASB101(61) Whichever method of presentation is adopted, for each asset and liability line item that5.combines amounts expected to be recovered or settled (a) no more than twelve months afterthe reporting period, and (b) more than twelve months after the reporting period, an entity shalldisclose the amount expected to be recovered or settled after more than twelve months. Seenotes 8(e) and 8(g) for an illustration of this disclosure.

AASB101(70) Current assets include assets (such as inventories and trade receivables) that are sold,6.consumed or realised as part of the normal operating cycle even when they are not expected tobe realised within twelve months after the reporting period. Similarly, some current liabilities,such as trade payables and some accruals for employee and other operating costs, are part ofthe working capital used in the entity’s normal operating cycle. Such operating items areclassified as current liabilities even if they are due to be settled more than twelve months afterthe reporting period.

Operating cycle

AASB101(68) The operating cycle of an entity is the time between the acquisition of assets for processing and7.their realisation in cash or cash equivalents. When the entity’s normal operating cycle is notclearly identifiable, its duration is assumed to be twelve months.

Current and deferred tax assets and liabilities

AASB101(54),(56) Current and deferred tax assets and liabilities shall be presented separately from each other8.and from other assets and liabilities. When a distinction is made between current and non-current assets and liabilities in the balance sheet, deferred tax assets and liabilities shall beclassified as non-current.

Three balance sheets required in certain circumstances

AASB101(40A),(40B) If an entity has applied an accounting policy retrospectively, restated items retrospectively or9.reclassified items in its financial statements, it must provide a third balance sheet (statement offinancial position) as at the beginning of the earliest comparative period presented. Refer to thecommentary regarding comparatives on page 24 for further information.

In this publication, we have illustrated these requirements using a retrospective restatement for10.the correction of an error as an example. The adjustments are explained in note 11(b) on page136. The impact on the balance sheet is illustrated on pages 37 and 38.

Separate line item for employee benefit obligations

AASB 101 does not prescribe where employee benefit obligations should be presented in the11.balance sheet. In previous years, VALUE ACCOUNTS Reduced Disclosure Pty Ltd includedthe liabilities for annual leave and long service leave obligations within provisions and had aseparate line item in the balance sheet for its obligations under the defined benefit plan.However, we have now decided to reclassify the leave obligations and present all employeebenefit obligations together as separate current and non-current line items, as this providesmore relevant information to users. The reclassification is explained in note 28(y).


CA295(1)(a),(2)(b)AASB101(10)(c),(106) Consolidated statement of changes in equity 1,3,5

Attributable to owners of VALUE ACCOUNTSReduced Disclosure Pty Ltd

Notes

Contri-butedequity$’000

Otherreserves

$’000

Retainedearnings

$’000Total$’000

Non-con-trolling

interests$’000

Totalequity$’000

AASB101(106)(d) Balance at 1 July 2013 62,368 7,395 21,362 91,125 4,940 96,065

AASB101(106)(b) Correction of error (net of tax)2

11(b) - - 80 80 - 80

Restated total equity at the beginningof the financial year 62,368 7,395 21,442 91,205 4,940 96,145

Profit for the period - - 25,803 25,803 2,319 28,122

Other comprehensive income - 4,479 (138) 4,341 257 4,598

Total comprehensive income for theperiod 2,4 - 4,479 25,665 30,144 2,576 32,720

AASB101(106)(d)(iii) Transactions with owners in theircapacity as owners: 2

AASB132(22),(35) Contributions of equity net of transactioncosts 9(a) 1,357 - - 1,357 - 1,357

AASB132(33) Acquisition of treasury shares 9(a) (299) - - (299) - (299)

Dividends provided for or paid 13(b) - - (11,029) (11,029) (1,827) (12,856)

AASB2(50) Employee share schemes –value of employee services 9(b) - 555 - 555 - 555

1,058 555 (11,029) (9,416) (1,827) (11,243)

AASB101(106)(d) Balance at 30 June 2014 63,426 12,429 36,078 111,933 5,689 117,622

Profit for the period - - 34,148 34,148 3,005 37,153

Other comprehensive income - 5,121 336 5,457 (99) 5,358

AASB101(106)(a) Total comprehensive income for theperiod 2,4

- 5,121 34,484 39,605 2,906 42,511

AASB101(106)(d)(iii) Transactions with owners in theircapacity as owners: 2

AASB132(22),(35) Contributions of equity, net of transactioncosts and tax 9(a) 10,871 - - 10,871 - 10,871

Issue of ordinary shares as considerationfor a business combination, net oftransaction costs and tax 14 9,780 - - 9,780 - 9,780

AASB132(33) Acquisition of treasury shares 9(a) (1,217) - - (1,217) - (1,217)

AASB132(35) Buy-back of preference shares, net of tax 9(a) (1,523) - 143 (1,380) - (1,380)

Value of conversion rights on convertiblenotes 9(a) 2,450 - - 2,450 - 2,450

Non-controlling interests on acquisitionof subsidiary 14 - - - - 5,051 5,051

AASB10(23) Transactions with non-controlling interests 16(c) - (333) - (333) (1,167) (1,500)

Dividends provided for or paid 13(b) - - (22,837) (22,837) (3,017) (25,854)

Employee share schemes –value of employee services 9(b) - 2,018 - 2,018 - 2,018

AASB2(50) Issue of treasury sharesto employees 9(a)

1,091 (1,091) - - - -

21,452 594 (22,694) (648) 867 219

AASB101(106)(d) Balance at 30 June 2015 84,878 18,144 47,868 150,890 9,462 160,352

The above consolidated statement of changes in equity should be read in conjunction with theaccompanying notes.

Consolidated statement of changes in equity


Statement of changes in equity

Accounting standard for the statement of changes in equity

AASB101(Aus1.1) Requirements for the statement of changes in equity are set out in AASB 101 Presentation of1.Financial Statements. The standard applies to each entity which is required to prepare financialreports in accordance with Part 2M.3 of the Corporations Act 2001, general purpose financialstatements of each reporting entity, and to financial statements that are, or are held out to be,general purpose financial statements.

AASB101(106) The statement of changes in equity shall include:2.

total comprehensive income for the period, showing separately the total amounts(a)attributable to owners of the parent and to non-controlling interests

for each component of equity, the effects of retrospective application or retrospective(b)restatement recognised in accordance with AASB 108

AASB101(106)(d) for each component of equity, a reconciliation between the carrying amount at the(c)beginning and the end of the period, separately disclosing changes resulting from:

(i) profit or loss

(ii) other comprehensive income, and

(iii) transactions with owners in their capacity as owners, showing separately contributionsby and distributions to owners and changes in ownership interests in subsidiaries thatdo not result in loss of control.

AASB101(108) Components of equity include each class of contributed equity, the accumulated balance of3.each class of other comprehensive income and retained earnings. We believe that individualreserves can be disclosed as a single column ‘other reserves’ if they are similar in nature andcan be regarded as a component of equity. The reserves grouped together in VALUEACCOUNTS Reduced Disclosure Pty Ltd’s statement of changes in equity are all accountingreserves which have arisen as a result of specific requirements in the accounting standards.This distinguishes them from other reserves that are the result of discretionary transfers withinequity, for example capital realisation reserves. Disclosing the individual reserves in the notesrather than on the face of the statement of changes in equity reduces clutter and makes thestatement more readable.

AASB101(106A) The reconciliation of changes in each component of equity shall also show separately each4.item of comprehensive income. However, this information may be presented either in the notesor in the statement of changes in equity. VALUE ACCOUNTS Reduced Disclosure Pty Ltd haselected to provide the detailed information in note 9(b) and (c).

Presentation of dividends

AASB101(107) The amount of dividends recognised as distributions to owners during the period and the5.related amount per share must be disclosed either in the statement of changes in equity or inthe notes. VALUE ACCOUNTS Reduced Disclosure Pty Ltd is presenting this information innote 13(b).


CA295(1)(a),(2)AASB101(10)(d)AASB107(1),(10)

Consolidated statement of cash flows 1-4,21-24

AASB101(113)

Notes2015$'000

2014Restated

$'000AASB107(10),(18)(a) Cash flows from operating activities

5,6,9

AASB107(14)(a) Receipts from customers (inclusive of goods and services tax)11-13 198,202 164,693

AASB107(14)(c),(d) Payments to suppliers and employees (inclusive of goods andservices tax)

11-13 (145,559) (124,572)

52,643 40,121AASB107(14)(g) Payments for financial assets at fair value through profit or loss (135) (1,235)AASB107(14)(g) Proceeds from disposal of financial assets at fair value through

profit or loss 600 -AASB107(14)(b) Insurance recovery relating to fire 4(b) 300 -AASB107(16) Transaction costs relating to acquisition of subsidiary

714 (750) -

AASB107(14)(b) Other revenue 7,490 7,484AASB107(31)-(33) Interest paid

14,15 (6,617) (4,044)AASB107(14)(f),(35),(36) Income taxes paid

17-19 (16,444) (12,260)

Net cash inflow from operating activities 10(a) 37,087 30,066

AASB107(10),(21) Cash flows from investing activities8

AASB107(39) Payment for acquisition of subsidiary, net of cash acquired 14 (12,815) -AASB107(16)(a) Payments for property, plant and equipment 8(c) (25,387) (17,602)

Payments for investment property 8(d) (1,900) -AASB107(16)(c) Payments for available-for-sale financial assets (4,447) (2,029)AASB107(16)(c) Payments for held-to-maturity investments (1,210) -AASB107(16)(a) Payment of software development costs (880) (720)AASB107(16)(e) Loans to related parties (1,180) (730)AASB107(39) Proceeds from sale of machinery hire division

2115 3,110 -

AASB107(16)(b) Proceeds from sale of property, plant and equipment 4,585 639AASB107(16)(d) Proceeds from sale of available-for-sale financial assets 1,375 820AASB107(16)(f) Repayment of loans by related parties 469 626AASB107(38) Distributions received from joint ventures and associates 16(e) 110 120AASB107(31),(33) Dividends received

14,153,350 4,400

AASB107(31),(33) Interest received14,15

4,350 4,300

Net cash (outflow) from investing activities (20,705) (10,176)

AASB107(10),(21) Cash flows from financing activities8

AASB107(17)(a)Proceeds from issues of shares and other equity securities 9(a) 12,413 -

Proceeds from calls on shares and calls in arrears 9(a) 1,500 -AASB107(17)(c)

Proceeds from borrowings 10(c) 45,903 25,796AASB107(17)(b)

Payments for shares bought back 9(a) (1,350) -AASB107(17)(b)

Payments for shares acquired by the VALUE ACCOUNTSEmployee Share Trust (1,217) (299)

Share issue and buy-back transaction costs 9(a) (245) -AASB107(17)(d)

Repayment of borrowings 10(c) (15,334) (24,835)AASB107(17)(e)

Finance lease payments 10(c) (805) -

Transactions with non-controlling interests10 16(c) (1,500) -

AASB107(31),(34)Dividends paid to company’s shareholders

16 13(b) (22,271) (10,470)AASB107(31),(34)

Dividends paid to non-controlling interests in subsidiaries17 (3,017) (1,828)

Net cash inflow (outflow) from financing activities 14,077 (11,636)

Net increase (decrease) in cash and cash equivalents 30,459 8,254

Cash and cash equivalents at the beginning of the financial year 22,443 13,973AASB107(28) Effects of exchange rate changes on cash and cash equivalents

20 (248) 216

Cash and cash equivalents at end of year 7(a) 52,654 22,443

AASB107(43)Non-cash financing and investing activities

23

Cash flows of discontinued operation21

10(b)15

The above consolidated statement of cash flows should be read in conjunction with the accompanyingnotes.

Consolidated statement of cash flows


Statement of cash flows

Accounting standard for the statement of cash flows

AASB107(Aus1.1) Requirements for statements of cash flows are set out in AASB 107 Statement of Cash Flows.1.The standard applies to each entity which is required to prepare financial reports in accordancewith Part 2M.3 of the Corporations Act 2001, general purpose financial statements of eachreporting entity, and to financial statements that are, or are held out to be, general purposefinancial statements.

Definition of cash and cash equivalents

AASB107(6),(7) Cash is cash on hand and demand deposits. Cash equivalents are short-term, highly liquid2.investments that are readily convertible to known amounts of cash and which are subject toinsignificant risk of changes in value. Investments normally only qualify as cash equivalent ifthey have a short maturity of three months or less from the date of acquisition. Equityinstruments can only be included if they are in substance cash equivalents, eg preferred shareswith fixed redemption dates that are acquired within a short period of their maturity.

Reporting cash flows

On a net basis

AASB107(22),(23) Cash flows arising from the following operating, investing or financing activities may be3.reported on a net basis:

cash receipts and payments on behalf of customers when the cash flows reflect the(a)activities of the customer rather than those of the entity (eg rents collected on behalf of,and paid over to, the owners of properties), and

cash receipts and payments for items in which the turnover is quick, the amounts are(b)large, and the maturities are short (eg advances made for, and repayment of, principalamounts relating to credit card customers).

AASB107(24) Cash flows arising from each of the following activities of a financial institution may be reported4.on a net basis:

cash receipts and payments for the acceptance and repayment of deposits with a fixed(a)maturity date

the placement of deposits with, and withdrawal of deposits from, other financial institutions,(b)and

cash advances and loans made to customers and the repayment of those advances(c)and loans.

From operating activities

AASB107(18)(a) An entity shall report cash flows from operating activities using either:5.

the direct method, whereby major classes of gross cash receipts and gross cash payments(a)are disclosed, or

the indirect method, whereby profit or loss is adjusted for the effects of transactions of a(b)non-cash nature, any deferrals or accruals of past or future operating cash receipts orpayments, and items of income or expense associated with investing or financingcash flows.

AASB107(19) However, AASB 107 encourages entities to use the direct method, as it provides information6.which may be useful in estimating future cash flows and which is not available under theindirect method. VALUE ACCOUNTS Reduced Disclosure Pty Ltd therefore uses the directmethod. For an illustration of a statement of cash flows presented using the indirect methodplease refer to our Illustrative IFRS consolidated financial statements which are available onwww.pwc.com/ifrs.

Expenditure on unrecognised assets to be classified as operating cash flows

AASB107(16) Cash flows can only be classified as arising from investing activities if they result in the7.recognition of an asset in the balance sheet. Examples of expenditure that should be classifiedas operating cash flows on this basis are:

expenditures on exploration or evaluation activities, unless the entity has a policy of(a)capitalising these expenditures as permitted under AASB 6 Exploration for and Evaluationof Mineral Resources

expenditures on advertising or promotional activities, staff training and research and(b)development, and

transaction costs related to a business combination.(c)




From investing and financing activities

AASB107(21) An entity shall report separately major classes of gross cash receipts and gross cash payments8.arising from investing and financing activities, except to the extent that cash flows described inparagraphs 22 and 24 of AASB 107 are reported on a net basis (refer to paragraphs 3 and 4above).

Sale of property, plant and equipment held for rental to others

AASB107(14) Cash flows from the sale of property, plant and equipment are normally presented as cash9.flows from investing activities. However, cash payments to manufacture or acquire assetswhich will be held for rental to others and subsequently for sale are cash flows from operatingactivities. Consequently, the cash receipts from rents and subsequent sales of such assets arealso cash flows from operating activities.

Changes in ownership interest in a subsidiary without loss of control

AASB107(42A),(42B)

Cash flows arising from changes in ownership interest in a subsidiary that do not result in a10.loss of control shall be classified as cash flows from financing activities.


UIG1031(10) Cash flows shall be included in the statement of cash flows on a gross basis, subject to11.paragraph 12 below and to AASB 107.

UIG1031(11) The GST component of cash flows arising from investing and financing activities which is12.recoverable from, or payable to, the taxation authority shall be classified as operating cashflows and will be included in receipts from customers or payments to suppliers, as appropriate.Although GST amounts are not required to be disclosed in statements of cash flows, entitiescan choose to make specific GST disclosures in the statement itself or in notes to thestatement.

Some entities have experienced difficulty in adjusting net of GST revenue and expense13.amounts to GST inclusive amounts for their statements of cash flows. This was discussed at aUIG meeting in 2001. However, UIG members agreed that it would be inappropriate to allowalternative approaches to the preparation of statements of cash flows.

Interest and dividends

AASB107(31) Cash flows from interest and dividends received and paid shall each be disclosed separately.14.Each shall be classified in a consistent manner from period to period as either operating,investing or financing activities.

AASB107(33) Interest paid and interest and dividends received are usually classified as operating cash flows15.for a financial institution. However, there is no consensus on the classification of these cashflows for other entities. Interest paid and interest and dividends received may be classified asoperating cash flows because they enter into the determination of net profit or loss.Alternatively, interest paid and interest and dividends received may be classified as financingcash flows and investing cash flows respectively, because they are costs of obtaining financialresources or returns on investments.

AASB107(34) Dividends paid may be classified as a financing cash flow because they are a cost of obtaining16.financial resources. Alternatively, they may be classified as operating cash flows to assist usersto determine the ability of an entity to pay dividends out of operating cash flows.

Income taxes

AASB107(35) Cash flows arising from income taxes shall be separately disclosed and shall be classified as17.cash flows from operating activities unless they can be specifically identified with financing andinvesting activities.

AASB107(36) Taxes on income arise on transactions that give rise to cash flows that are classified as18.operating, investing or financing activities in a statement of cash flows. While tax expense maybe readily identifiable with investing or financing activities, the related tax cash flows are oftenimpracticable to identify and may arise in a different period from the cash flows of theunderlying transaction. Therefore, taxes paid are usually classified as cash flows fromoperating activities. However, when it is practicable to identify the tax cash flow with anindividual transaction that gives rise to cash flows that are classified as investing or financingactivities the tax cash flow is classified as an investing or financing activity as appropriate.When tax cash flows are allocated over more than one class of activity, the total amount oftaxes paid is disclosed.




Tax consolidation

AASB107(35) Income taxes paid by head entities in a tax consolidated group include amounts paid on behalf19.of the tax consolidated entities. Amounts received by the head entity under a tax fundingagreement should be separately disclosed. However, in the statement of cash flows of a taxconsolidated entity, these amounts paid to the head entity represent cash flows arising fromtaxes on income and should be presented as such, despite the fact that they are paid to thehead entity, not the taxation authorities.

Effects of exchange rate changes

AASB107(28) Unrealised gains and losses arising from changes in foreign currency exchange rates are not20.cash flows. However, the effect of exchange rate changes on cash and cash equivalents heldor due in a foreign currency is reported in the statement of cash flows in order to reconcile cashand cash equivalents at the beginning and the end of the period. This amount is presentedseparately from cash flows from operating, investing and financing activities and includes thedifferences, if any, had those cash flows been reported at end of period exchange rates.


AASB5(33)(c) Entities must disclose separately the net cash flows attributable to each of operating, investing21.and financing activities of discontinued operations. There are different ways of presenting thisinformation, but the underlying principle is that the cash flow statement must give the cashflows for the total entity including both continuing and discontinued operations. The additionalinformation in relation to the discontinued operations can be disclosed either on the face of thecash flow statement or in the notes. VALUE ACCOUNTS Reduced Disclosure Pty Ltd isproviding the information in note 15.

Additional recommended disclosures

AASB107(50) Additional information may be relevant to users in understanding the financial position and22.liquidity of an entity. Disclosure of this information, together with a commentary bymanagement, is encouraged and may include:

AASB107(50)(a) the amount of undrawn borrowing facilities that may be available for future operating(a)activities and to settle capital commitments, indicating any restrictions on the use of thesefacilities

AASB107(50)(c) the aggregate amount of cash flows that represent increases in operating capacity(b)separately from those cash flows that are required to maintain operating capacity

AASB107(50)(d) the amount of the cash flows arising from the operating, investing and financing activities(c)of each reportable segment (refer to AASB 8 Operating Segments).

Where no cash flows

A statement of cash flows must be included in the financial report even if there are no cash23.flows (and no cash or cash equivalent balances). Preferably, the statement should include theminimum line items that are required to be presented under AASB 107 Statement of CashFlows, with zero amounts for the current and comparative period. However, it may also beacceptable to replace the individual line items with an explanation that there were no cashflows during the current and previous financial years, provided this explanation is given underthe heading of ‘statement of cash flows’ and is presented as part of the financial statements,before the notes to the financial statements.

You will also need to take care to comply with the disclosure requirements of AASB 10724.relating to any non-cash financing or investing activities (refer to note 10(b)).

PwC 46

Contents of the notes to the consolidatedfinancial statements 1-9

1 Significant changes in the current reporting period 49

How numbers are calculated 50

2 Segment information (not included – not applicable)

3 Revenue 51

4 Individually significant items 54

5 Other income and expense items 56

6 Income tax expense 58

7 Financial assets and financial liabilities 63

8 Non-financial assets and liabilities 86

9 Equity 123

10 Cash flow information 131

Risk 134

11 Critical estimates, judgements and errors 135

12 Financial risk management 141

13 Capital management 155

Group structure 159

14 Business combinations 160

15 Discontinued operation 164

16 Interests in other entities 170

Unrecognised items 179

17 Contingent liabilities and contingent assets 180

18 Commitments 183

19 Events occurring after the reporting period 184

Other information 188

20 Related party transactions 189

21 Share-based payments 195

22 Remuneration of auditors 199

23 Earnings per share (not included – not applicable)

24 Offsetting financial assets and financial liabilities 202

25 Assets pledged as security 205

26 Deed of cross guarantee 206

27 Parent entity information 209

28 Summary of significant accounting policies 212

29 Changes in accounting policies 240


Contents of the notes to the financial statements

Content

AASB101(112) The notes to the financial statements of an entity shall:1.

present information about the basis of preparation of the financial statements and the(a)specific accounting policies used in accordance with paragraphs 117 to 124 of AASB 101Presentation of Financial Statements

disclose the information required by Australian Accounting Standards that is not presented(b)elsewhere in the financial statements, and

provide additional information that is not presented elsewhere in the financial statements,(c)but is relevant to an understanding of any of them.

Structure of the notes

AASB101(113) Notes shall, as far as practicable, be presented in a systematic manner. Each item in the2.balance sheet, statement of comprehensive income, statement of changes in equity andstatement of cash flows shall be cross referenced to any related information in the notes.

AASB101(114) According to AASB 101, notes are normally presented in the following order:3.

a statement of compliance with Australian Accounting Standards (refer to paragraph 16 of(a)AASB 101)

a summary of significant accounting policies applied (refer to paragraph 117 of AASB 101)(b)

supporting information for items presented in the balance sheet, statement of(c)comprehensive income, statement of changes in equity and statement of cash flows, in theorder in which each statement and each line item is presented, and

other disclosures, including:(d)

(i) contingent liabilities (refer to AASB 137) and unrecognised contractual commitments,and

(ii) non-financial disclosures; for example, the entity’s financial risk managementobjectives and policies (refer to AASB 7).

AASB101(115)

Traditionally, disclosures are organised standard-by-standard (eg all accounting policies are in4.one note and AASB 7 disclosures in another). Disclosures required by new standards are oftensimply added to the end of the notes. As a result, information can be difficult for users to find,and related information is scattered throughout the notes.

Our VALUE ACCOUNTS publication demonstrates how financial reports could be improved if5.the existing information was presented in a more user-friendly order. This is permitted by thestandard, which acknowledges that it may sometimes be necessary or desirable to vary theordering of the notes. In this publication, information about specific aspects of the entity’sfinancial position and performance is presented together. For example, the entity’s exposureand management of financial risks is dealt with in notes 11 to 13 while information about thegroup structure and interests in other entities is presented in notes 14 to 16. Colour codinghelps to find relevant information quickly.

In addition, the notes relating to individual line items in the financial statements disclose the6.relevant accounting policies as well as information about significant estimates or judgements.Accounting policies that merely summarise mandatory requirements are disclosed at the end ofthe financial report, as they are not relevant for the majority of users. This structure makes theinformation in the financial report more accessible for users and provides a basis forconsidering the most useful structure for your entity’s report. We have adopted the samestructure for this Reduced Disclosure publication.




See: IAS1R((as amended inDecember 2014)

Our approach is supported by the IASB’s Disclosure Initiative which explores how disclosures7.in IFRS financial reporting can be improved. As part of this project, the IASB made narrow-scope amendments to IAS 1 Presentation of Financial Statements in December 2014. Theseprovide preparers with more flexibility in presenting the information in their financial reports.Amongst others, the IASB has amended paragraph 114 of IAS 1, to clarify that the order shownin that paragraph is not a requirement but only one that is commonly used. Instead, entitiesshould consider the effect on both understandability and comparability when determining theorder of the notes to the financial statements. The AASB is expected to make equivalentamendments to AASB 101 in the first half of 2015. For the purpose of this publication, we haveassumed that VALUE ACCOUNTS Reduced Disclosure Pty Ltd has early adopted theseamendments, see note 28(a).

It is important to note that the structure used in this publication is not mandatory and is only one8.possible example of improved readability. In fact, our experience has shown that there is notone structure that is suitable for all entities. Rather, the appropriate structure depends on theentity’s business and each entity should consider what would be most useful and relevant fortheir stakeholders based on their individual circumstances.

See: IAS1R((as amended inDecember 2014)

When drafting the disclosures in the notes to the financial statements, also remember that too9.much immaterial information could obscure the information that is actually useful to readers.Some of the disclosures in this publication would likely be immaterial if VALUE ACCOUNTSReduced Disclosure Pty Ltd was a ‘real life’ company. The purpose of this publication is toprovide a broad selection of illustrative disclosures which cover most common scenariosencountered in practice. The underlying story of the company only provides the framework forthese disclosures and the amounts disclosed are not always realistic. Disclosures should notbe included where they are not relevant or not material in specific circumstances. For anillustration of how this might be applied to the fictional VALUE ACCOUNTS Holdings Limited,refer to our Streamlined Annual Financial Report athttp://www.pwc.com.au/assurance/ifrs/financial-reporting/index.htm.


CA295(1)(b),(3)AASB101(10)(e) Notes to the financial statements

1 Significant changes in the current reporting periodNot mandatory The financial position and performance of the group was particularly affected by the following events

and transactions during the reporting period:

The opening of a chain of furniture retail stores by VALUE ACCOUNTS Retail Limited in July 2014(see note 2). This resulted in increased inventory levels as at June 2015 (note 8(a)), therecognition of leasehold improvements for the fittings in the stores (see property, plant andequipment, note 8(c)) and associated make-good provisions (note 8(g)).

The acquisition of VALUE ACCOUNTS Electronics Pty Ltd in October 2014 (see note 14) whichresulted in an increase in property, plant and equipment (note 8c)) and the recognition of goodwilland other intangible assets (note 8(f)).

The sale of the machinery hire division in August 2014 (see note 15).

A fire in Maitland in September 2014 which resulted in the impairment of a number of assets (seenote 4).

A review of the furniture manufacturing operations which led to redundancies and a goodwillimpairment charge (see notes 8(g) and 8(f)).

For a detailed discussion about the group’s performance and financial position please refer to ouroperating and financial review on pages [x] to [y].

Some of the amounts reported for the previous period have been restated to correct an error. Detailedinformation about these adjustments can be found in note 11(b).

Significant changes in the current reporting period

There is no requirement to disclose a summary of significant events and transactions that have1.affected the company’s financial position and performance during the period under review.However, we believe that it helps readers understand the entity’s performance and anychanges to the entity’s financial position during the year.

PwC 50

How the numbers are calculated

Not mandatory This section provides additional information about those individual line items in the financialstatements that the directors consider most relevant in the context of the operations of theentity, including:

(a) accounting policies that are relevant for an understanding of the items recognised in thefinancial statements. These cover situations where the accounting standards eitherallow a choice or do not deal with a particular type of transaction

(b) analysis and sub-totals, including segment information

(c) information about estimates and judgements made in relation to particular items.

2 Segment information (not included – not applicable)

3 Revenue 51

4 Individually significant items 54

5 Other income and expense items 56

6 Income tax expense 58

7 Financial assets and financial liabilities 63

8 Non-financial assets and liabilities 86

9 Equity 123

10 Cash flow information 131


2 Segment informationAASB8(4) Removed as not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Ltd. Note that if an entity

discloses information about segments voluntarily, it can only describe the disclosure as ‘segmentinformation’ if it complies with the requirements of AASB 8 Operating Segments. Please refer to ourVALUE ACCOUNTS Holdings publication for an illustration of AASB 8 compliant disclosures.

3 Revenue 1-7,9

The group derives the following types of revenue:

2015$’000

2014Restated

$’000

From continuing operations

Sales revenueAASB118(35)(b)(i) Sale of goods 117,200 80,540AASB118(35)(b)(ii) Services 80,450 60,900

197,650 141,440

Other revenue

AASB118(35)(b)(iii) Rental and sub-lease rental income 7,240 7,240AASB7(20)(b) Interest from financial assets not at fair value through profit or loss

8 4,350 4,300AASB118(35)(b)(v) Dividends 3,300 4,300

14,890 15,840

212,540 157,280

AASB118(35)(b)(ii) From discontinued operation (note 15)

Services 4,200 26,460

(a) Recognising revenue from major business activities 3

AASB101(117),(119) Revenue is recognised for the major business activities using the methods outlined below.

AASB101(119)(i) Sale of goods – wholesale

AASB118(35)(a) Timing of recognition: the group manufactures and sells a range of furniture in the wholesale market.Sales are recognised when products are delivered to the wholesaler, the wholesaler has full discretionover the channel and price to sell the products, and there is no unfulfilled obligation that could affect thewholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to thespecified location, the risks of obsolescence and loss have been transferred to the wholesaler, andeither the wholesaler has accepted the products in accordance with the sales contract, the acceptanceprovisions have lapsed, or the group has objective evidence that all criteria for acceptance have beensatisfied.

Measurement of revenue: The furniture is often sold with volume discounts and customers have aright to return faulty products in the wholesale market. Revenue from sales is based on the pricespecified in the sales contracts, net of the estimated volume discounts and returns at the time of sale.Accumulated experience is used to estimate and provide for the discounts and returns. The volumediscounts are assessed based on anticipated annual purchases. No element of financing is deemedpresent as the sales are made with a credit term of 30 days, which is consistent with market practice.

AASB101(119)(ii) Sale of goods – retail

AASB118(35)(a) Timing of recognition: The group operates a chain of retail stores selling householdfurniture. Revenue from the sale of goods is recognised when a group entity sells a product tothe customer.

Measurement of revenue: It is the group’s policy to sell its products to the end customer with a right ofreturn within 28 days. Accumulated experience is used to estimate and provide for such returns at thetime of sale.

Revenue


(a) Recognising revenue from major business activities 3

(iii) Sale of goods – customer loyalty programme (deferred revenue)AASB-I13(5)-(7) Timing of recognition: The group operates a loyalty programme where customers accumulate points

for purchases made which entitle them to discounts on future purchases. Revenue from the awardpoints is recognised when the points are redeemed.

Measurement of revenue: The amount of revenue is based on the number of points redeemed relativeto the total number expected to be redeemed. Award points expire 12 months after theinitial sale.

AASB101(119)(iv) Sale of goods – Land development and resale

AASB118(35)(a) Timing of recognition: Revenue is recognised when the risks and rewards have been transferred andthe entity does not retain either continuing managerial involvement to the degree usually associatedwith ownership, or effective control over the units sold. Due to the nature of the agreements enteredinto by the group, this occurs on settlement.

Measurement of revenue: The revenue is measured at the amount receivable under the contract. It isdiscounted to present value if deferred payments have been agreed and the impact of discounting ismaterial.

AASB101(119)(v) Revenue from services – Consulting

AASB118(35)(a) Timing of recognition: Revenue from consulting services is recognised in the accounting period inwhich the services are rendered. For fixed-price contracts, revenue is recognised based on the actualservice provided to the end of the reporting period as a proportion of the total services to be provided(percentage of completion method).

Measurement of revenue: Estimates of revenues, costs or extent of progress toward completion arerevised if circumstances change. Any resulting increases or decreases in estimated revenues or costsare reflected in profit or loss in the period in which the circumstances that give rise to the revisionbecome known by management.

(vi) Other revenue

See note 28(e) for the recognition and measurement of other revenue.

AASB101(122)(b) Critical judgements in calculating amounts 3,4

The group has recognised revenue amounting to $2,950,000 for the sale of furniture to a wholesalecustomer during 2015. The buyer has the right to return the goods within 90 days if their customersare dissatisfied. The group believes that, based on past experience with similar sales, thedissatisfaction rate will not exceed 3%. The group has, therefore, recognised revenue on thistransaction with a corresponding provision against revenue for estimated returns. If the estimatechanges by 1%, revenue will be reduced/increased by $78,000 and post-tax profit reduced/increasedby $53,000. The right of return expires on 3 September 2015.

Revenue


Revenue

General requirement

AASB118(35)(b) Disclosure is required of the amount of each significant category of revenue recognised during1.the period, including revenue arising from:

AASB118(35)(b)(i) the sale of goods(a)

AASB118(35)(b)(ii) the rendering of services(b)

AASB118(35)(b)(iii) interest(c)

AASB118(35)(b)(iv) royalties (not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Ltd), and(d)

AASB118(35)(b)(v) dividends.(e)

Where earning interest is only an incidental benefit and not part of the entity’s main business2.objectives, it may be appropriate to present interest income as other income or as financeincome in the income statement, see commentary paragraph 18 to the income statement forfurther discussion.

Accounting policies and significant judgements

As explained on page 47, it is helpful for readers of the financial report if the notes for specific3.line items in the financial statements also set out:

information about accounting policies that are specific to the entity, and that explain how(a)the line items are determined, and

information about significant judgements and estimates applied in relation to line items.(b)

However, this format is not mandatory.

A full list of all accounting policies is provided in note 28 together with relevant commentary.4.Detailed commentary regarding the disclosure of significant judgements and estimates isprovided in note 11.


Exchange of goods and services

AASB118(35)€ Disclosure is required of the amount of revenue arising from exchanges of goods or services5.included in each significant category of revenue.

Revenue from the construction of real estate

AASB-I15(20) If the entity has applied AASB Interpretation 15 Agreements for the Construction of Real Estate6.and recognises revenue using the percentage of completion method for agreements that areagreements for the sale of goods, it shall disclose:

(a) how it determines which agreements meet the criteria for the sale of goods continuously asconstruction progresses

(b) the amount of revenue arising from such agreements in the period

(c) the methods used to determine the stage of completion of agreements in progress.

AASB-I15(21) For agreements referred to in the previous paragraph that are in progress at the end of the7.reporting period, the entity shall also disclose:

(a) the aggregate amount of costs incurred and recognised profits (less recognised losses) todate, and

(b) the amount of advances received.

Interest income on impaired financial assets

AASB7(20)(d) Entities that have accrued interest income on impaired financial assets in accordance with8.AG93 of AASB 139 Financial Instruments: Recognition and Measurement must disclose thisinterest income separately.

Fee income

AASB7(20)(c) Separate disclosure is also required for fee income (other than amounts included in9.determining the effective interest rate) arising from financial assets that are not at fair valuethrough profit or loss, and trust and other fiduciary activities that result in the holding orinvesting of assets on behalf of individuals, trusts, retirement benefit plans and otherinstitutions.


4 Individually significant items 1-8

The following items are significant to the financial performance of the group, and so are listedseparately here.

Notes2015

$’0002014$’000

AASB101(97),(98)(c) Net gain on sale of freehold land (a) 1,270 -

AASB101(97) Gain on sale of discontinued operation 15 481

AASB101(97),(98)(b) Restructuring costs 8(g) (1,377) -

AASB101(97) Impairment of goodwill 8(f) (2,410) -

AASB136(126)(a) Impairment of other assets (b)

AASB136(130)(b) Office and warehouse building (465) -

Plant and equipment (210) -

Inventories (535) -

AASB101(97) Total impairment losses – other assets (1,210) -

Insurance recovery 300 -

AASB101(97),(98)(c) Net loss on disposal of plant and equipment (c) - (230)

AASB101(97),(98)(f) Litigation settlement relating to claim against the landdevelopment division

(d) - (370)

(a) Sale of freehold land

Following the rezoning of land held by VALUE ACCOUNTS Consulting Limited, the entity sold a largeparcel of freehold land at a significant profit and realised a gain of $1,270,000.

(b) Impairment of other assets

AASB136(129)(a),(130)(a),(c)

A fire in Maitland in September 2014 damaged a major office and warehouse building owned by asubsidiary that is part of the furniture manufacturing segment. The fire also destroyed equipment andinventories stored in the warehouse.

AASB136(130)(e)(Revised requirement)

The office and warehouse was written down to its recoverable amount of $1,220,000, which wasdetermined by reference to the building’s fair value less costs of disposal. The main valuation inputsused were a market value of $105 per square meter (determined by an independent valuer) and costsof repair, estimated by management to be approximately $430,000. Since the estimated costs of repairare a significant unobservable input, the fair value of the office and warehouse is classified as a level 3fair value.

As the inventory and plant and equipment were destroyed beyond repair, their fair value less cost ofdisposal was nil.

AASB136(126)(a) The impairment loss is included in other expenses in the income statement.

AASB116(74)(d) An insurance recovery of $300,000 has been received and recognised as other income.

(c) Disposal of plant and equipment

VALUE ACCOUNTS Manufacturing upgraded its plant and equipment by installing a large newproduction line in its Maitland factory in the previous financial year. There were several items of oldequipment that had to be removed to make place for the new plant. Since the items were usingsuperseded technology, the entity was not able to sell them at their carrying amounts but incurred aloss of $230,000 on disposal.

(d) Litigation settlement

In January 2014, VALUE ACCOUNTS Development Limited paid $370,000 as settlement for a claimlodged against the company following the termination of the Melaleuca development in Northern NSW.

Individually significant items

Material items

AASB101(97),(98) When items of income and expense are material, their nature and amount shall be disclosed1.separately either in the statement of comprehensive income, the income statement whereapplicable, or in the notes. Circumstances that would give rise to the separate disclosure ofitems of income and expense include:




write-downs of inventories to net realisable value or of property, plant and equipment to(a)recoverable amount, as well as reversals of such write-downs

restructurings of the activities of an entity and reversals of any provisions for the costs of(b)restructuring

disposals of items of property, plant and equipment(c)

disposals of investments(d)

discontinued operations (refer to note 15)(e)

litigation settlements(f)

other reversals of provisions, and(g)

gains or losses recognised in relation to a business combination.(h)

Individually significant items do not need to be presented in a separate note. However, in our2.view it will be easier for users to assess the impact of such items on the entity’s performance, ifthis information is presented together.


Disposal or loss of control of a subsidiary

AASB12(19) A material gain or loss arising as a result of the loss of control (including disposal) of a3.subsidiary must be disclosed separately under paragraph 19 of AASB 12 Disclosure ofInterests in Other Entities. In addition, entities must also disclose the following:

(a) the portion of that gain or loss attributable to recognising any investment retained in theformer subsidiary at its fair value at the date when control is lost, and

(b) the line item(s) in the statement of comprehensive income in which the gain or loss isrecognised (if not presented separately in the statement of comprehensive income).

AASB10(B97)-(B99) AASB 10 paragraphs B97 to B99 provide specific guidance on the accounting for the loss of4.control of a subsidiary. The guidance requires derecognition of the net assets and any non-controlling interest and recognition at fair value of any retained investment along with theconsideration received.

AASB10(B98)(c),(B99) In addition, paragraph B98(c) requires any components of other comprehensive income that5.are attributable to the subsidiary to be reclassified from equity to profit or loss similar to therequirement if the parent had directly disposed of the related assets and liabilities. Thebalances of certain reserves must be reclassified to profit or loss and therefore be included inthe gain or loss on disposal, but others are transferred directly to retained earnings. Thetreatment of the most common reserves is as follows:

AASB10(B99) (a) reclassification to profit or loss and inclusion in gain or loss on disposal:

AASB139(26),(55)

AASB139(97),(102)

AASB121(48)

- available-for-sale financial assets

- cash flow hedges

- foreign-currency translation

AASB10(B99)

AASB116(41),(71)

(b) transfer directly to retained earnings:

- property, plant and equipment revaluation surplus

However, this does not extend to equity adjustments that were previously recognised in relation6.to transactions with the non-controlling interest. These adjustments resulted from transactionsamong shareholders and are not directly attributable to the non-controlling interest. Further, theequity adjustments are not components of other comprehensive income and therefore do notfall under the requirements of paragraph B99.

AASB101(106)(d) All amounts transferred from equity reserves on the loss of control of a subsidiary will need to7.be reflected in the reconciliation of reserves as reclassification adjustments (refer to note 9(b)).As AASB 101 requires separate disclosure of each change in reserves, the disclosure shoulddistinguish between amounts included in profit or loss and amounts transferred to retainedearnings on the loss of control of a subsidiary.

AASB101(97) Where the amounts reclassified to profit or loss and included in the gain or loss of control are8.material and the reserve movement disclosures do not adequately highlight this impact,consideration should be given to disclosing details of the components of the gain or loss. Suchdetails may be necessary to explain the nature of the gain or loss, as required under paragraph97 of AASB 101.


5 Other income and expense items 1-2

This note provides a breakdown of the items included in ‘other income’ and an analysis of expenses bynature. Information about specific profit and loss items (such as gains and losses in relation to financialinstruments) is disclosed in the related balance sheet notes.

(a) Other income

Notes2015

$’000

2014Restated

$’000

Net gain on disposal of property, plant and equipment(excluding property, plant and equipment sold as part ofthe machinery hire division) 8(c) 1,620 -

AASB7(20)(a)(i) Fair value gains on financial assets at fair value throughprofit or loss 7(c) 835 -

AASB7(20)(a)(i) Net foreign exchange gains 12(b) 464 -AASB7(20)(a)(ii) Net gain on sale of available-for-sale financial assets 7(d) 646 -

AASB140(76)(d) Fair value adjustment to investment property 8(d) 1,350 1,397Not mandatory Other items (i) 1,221 244

6,136 1,641

(i) Government grants 3

AASB120(39)(b),(c) Export market development grants of $250,000 (2014 – $244,000) are included in the ‘other items’ lineitem. There are no unfulfilled conditions or other contingencies attaching to these grants. The group didnot benefit directly from any other forms of government assistance.

AASB101(117)Deferral and presentation of government grants

AASB120(12) Government grants relating to costs are deferred and recognised in the profit or loss over the periodnecessary to match them with the costs that they are intended to compensate.

AASB120(24),(26) Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over theexpected lives of the related assets. See note 28(f) for further details.

(b) Breakdown of expenses by nature 4

Notes2015

$’000

2014Restated

$’000Not mandatory Changes in inventories of finished goods and work in

progress 8(a) (6,681) (5,255)Not mandatory Raw materials and consumables used 8(a) 65,055 42,645

AASB101(104),(105) Employee benefits expenses5 77,649 59,876

AASB101(104),(105) Depreciation 8(c) 8,950 8,150

AASB101(104),(105) Amortisation 8(f) 2,035 730

AASB101(97) Impairment of goodwill 8(f) 2,410 -AASB101(97) Write off of assets damaged by fire 4(b) 1,210 -Not mandatory Other expenses 7,908 7,782

Not mandatory Total cost of sales and providing services and otherexpenses from ordinary activities 158,536 113,928

Finance costs6-8

AASB7(20)(b) Interest and finance charges paid/payable for financialliabilities not at fair value through profit or loss 5,778 4,904

AASB137(60) Provisions: unwinding of discount 215 -

Fair value gain on interest rate swaps designated ascash flow hedges – transfer from OCI (155) (195)

Net exchange losses on foreign currency borrowings7 12(b) 2,022 1,810

7,860 6,519AASB123(26)(a) Amount capitalised (i) (525) (325)

Finance costs expensed 7,335 6,194

Other income and expense items


(b) Breakdown of expenses by nature 4

(i) Capitalised borrowing costs

AASB123(26)(b) The capitalisation rate used to determine the amount of borrowing costs to be capitalised is theweighted average interest rate applicable to the entity’s general borrowings during the year, in this case7.02% (2014 – 7.45%).

Other income and expense items

This note provides a breakdown of other income and an analysis of expenses by nature, but it1.does not show all of the profit and loss amounts that must be disclosed under variousaccounting standards. Instead, individual profit and loss items are now disclosed together withthe relevant information to which they belong.

For example, gains or losses related to various financial instruments held by the group are now2.disclosed together with the balance sheet amounts. We believe that this presentation is moreuseful for users of the financial statements.

Government grants and other assistance

The following disclosures are required by AASB 120 Accounting for Government Grants and3.Disclosure of Government Assistance:

AASB120(39)(b) the nature and extent of government grants recognised in the financial statements and an(a)indication of other forms of government assistance from which the entity has directlybenefited

AASB120(39)(c) unfulfilled conditions and other contingencies attaching to government assistance that has(b)been recognised.

Disclosure of expenses by nature where otherwise classified by function

AASB101(104) Disclosure of depreciation and amortisation expense, employee benefits expenses and other4.material classes of expenses (classified by nature) is mandatory where an entity has otherwiseclassified its expenses by function.

Employee benefits expenses

AASB119(25),(158),(171) Although AASB 119 Employee Benefits does not require specific disclosures about employee5.benefits other than post-employment benefits, other standards may require disclosures, forexample, where the expense resulting from such benefits is material and so would requiredisclosure under paragraph 97 of AASB 101 Presentation of Financial Statements. Similarly,termination benefits may result in an expense needing disclosure in order to comply withparagraph 97 of AASB 101.

Finance costs

Finance costs include:6.

AASB123(5),(6) costs that are borrowing costs for the purposes of AASB 123 Borrowing Costs:(a)

(i) interest expense calculated using the effective interest rate method as described inAASB 139 Financial Instruments: Recognition and Measurement

(ii) finance charges in respect of finance leases (refer to note 28(h)), and

(iii) exchange differences arising from foreign currency borrowings to the extent that theyare regarded as an adjustment to interest costs

AASB137(60) the unwinding of the effect of discounting provisions(b)

AASB132(35),(40) dividends on preference shares that are classified as debt.(c)

AASB121(52)(a) Amounts disclosed under paragraph 6(a)(iii) above shall also be included in the net foreign7.exchange gain or loss disclosed under AASB 121 The Effects of Changes in Foreign ExchangeRates paragraph (52)(a). VALUE ACCOUNTS Reduced Disclosure Pty Ltd discloses thisamount in note 12(b).

Costs which may also be classified as finance cost include other costs associated with the8.entity’s management of cash, cash equivalents and debt; for example, fair value changes oninterest rate hedges, the ineffective portion of cash flow interest rate hedges or a loss on theextinguishment of a liability.


6 Income tax expense 1,7-20

This note provides an analysis of the group’s income tax expense, shows what amounts are recogniseddirectly in equity and how the tax expense is affected by non-assessable and non-deductible items. Italso explains significant estimates made in relation to the group’s tax position.

2015$’000

2014Restated

$’000AASB112(79),(81)(g)(ii)

(a) Income tax expense 1

Current taxAASB112(80)(a) Current tax on profits for the year 17,388 12,231

AASB112(80)(b) Adjustments for current tax of prior periods (369) 135

Total current tax expense 17,019 12,366

AASB112(80)(c) Deferred income tax

Decrease (increase) in deferred tax assets (note 8(e)) (198) (1,406)

(Decrease) increase in deferred tax liabilities (note 8(e)) 302 657

Total deferred tax expense/(benefit) 104 (749)

Income tax expense 17,123 11,617

Income tax expense is attributable to:

Profit from continuing operations 16,766 11,446

Profit from discontinued operation 357 171

Aggregate income tax expense 17,123 11,617

(b) Significant estimates

AASB101(125)

AASB101(38)

In calculating the tax expense for the current period, the group has treated certain expenditures asbeing deductible for tax purposes. However, the tax legislation in relation to these expenditures is notclear and the group has applied for a private ruling to confirm their interpretation. If the ruling shouldnot be favourable, this would increase the group’s current tax payable and current tax expense by$580,000 respectively. The impact in the prior year would have been an increase of $345,000.

AASB112(81)(c)(i),(84),(85) (c) Numerical reconciliation of income tax expense to prima

facie tax payable

2015$’000

2014Restated

$’000

Profit from continuing operations before income tax expense 53,255 39,169

Profit from discontinuing operation before income tax expense 1,021 570

54,276 39,739AASB112(81)(d) Tax at the Australian tax rate of 30% (2014 – 30%) 16,283 11,922

Tax effect of amounts which are not deductible (taxable) in calculatingtaxable income:

Goodwill impairment 723 -

Amortisation of intangibles2 92 158

Research and development expenditure 365 303

Entertainment 82 79

Employee option plan3 277 99

Tax offset for franked dividends (9) (21)

Dividends paid to preference shareholders 378 378

Recycling of foreign currency translation reserve on sale of subsidiary,see note 15 (51) -

Sundry items 131 40

Subtotal 18,271 12,958

Income tax expenses


AASB112(81)(c)(i),(84),(85) (c) Numerical reconciliation of income tax expense to prima

facie tax payable

2015$’000

2014$’000

Subtotal 18,271 12,958

Difference in overseas tax rates (248) (127)AASB112(80)(b) Adjustments for current tax of prior periods (369) 135

Research and development tax credit (486) (404)AASB112(80)(f) Previously unrecognised tax losses used to reduce deferred tax expense - (945)AASB112(80)(e) Previously unrecognised tax losses now recouped to reduce current tax

expense(45) -

Income tax expense 17,123 11,617

Notes2015

$’0002014$’000

(d) Amounts recognised outside profit or loss 4,5

AASB112(81)(a),(62A) Aggregate current and deferred tax arising in the reportingperiod and directly debited or credited to equity:

Current : share buy-back transaction costs 9(a) (15) -

Deferred tax: Convertible note, share issue costs and errorcorrection

8(e),11(b) 990 12

975 12

AASB112(RDR81.1) Aggregate deferred tax arising in the reporting period anddirectly debited to other comprehensive income 2,274 1,487

(e) Tax losses

AASB112(81)(e) Unused tax losses for which no deferred tax asset has beenrecognised 1,740 2,796

Potential tax benefit @ 30% 522 839

The unused tax losses were incurred by an Australian subsidiary that is not part of the tax consolidatedgroup. The losses are currently not considered to be recoverable as the entity is dormant and not likelyto generate taxable income in the foreseeable future. See note 8(e) for information about recognisedtax losses and significant judgements made in relation to them.

(f) Unrecognised temporary differences

AASB112(81)(f) Temporary difference relating to investments in subsidiaries forwhich deferred tax liabilities have not been recognised:

Foreign currency translation 2,190 1,980

Undistributed earnings 1,350

3,540 1,980

AASB112(87)

Not mandatory

Unrecognised deferred tax liabilities relating to the abovetemporary differences

1,062 594

Temporary differences of $2,190,000 (2014 – $1,980,000) have arisen as a result of the translation ofthe financial statements of the group’s subsidiary in Indonesia. However, a deferred tax liability has notbeen recognised as the liability will only eventuate in the event of disposal of the subsidiary, and nosuch disposal is expected in the foreseeable future.

6

VALUE ACCOUNTS Retail Pty Ltd has undistributed earnings of $1,350,000 (2014 – nil) which, if paidout as dividends, would be unfranked and therefore subject to tax in the hands of the recipient. Anassessable temporary difference exists, but no deferred tax liability has been recognised as the parententity is able to control the timing of distributions from this subsidiary and is not expected to distributethese profits in the foreseeable future.

Income tax expenses


Income tax expense

AASB112(80) General requirement

AASB 112 Income Taxes requires separate disclosure of the major components of tax1.expense (income). These may include:

current tax expense (income)(a)

any adjustments recognised in the period for current tax of prior periods(b)

the amount of deferred tax expense (income) relating to the origination and reversal of(c)temporary differences

the amount of deferred tax expense (income) relating to changes in tax rates or the(d)imposition of new taxes

the amount of the benefit arising from a previously unrecognised tax loss, tax credit or(e)temporary difference of a prior period that is used to reduce current tax expense

the amount of the benefit from a previously unrecognised tax loss, tax credit or temporary(f)difference of a prior period that is used to reduce deferred tax expense

deferred tax expense arising from the write-down, or reversal of a previous write-down, of(g)a deferred tax asset in accordance with AASB 112(56), and

the amount of tax expense (income) relating to those changes in accounting policies and(h)errors that are included in profit or loss accounted for retrospectively.

Initial recognition exemption – subsequent amortisation

The amount shown in the reconciliation of income tax expense to prima facie income tax2.payable as ‘amortisation of intangibles’ represents the amortisation of a temporary differencethat arose on the initial recognition of the asset and for which no deferred tax liability has beenrecognised in accordance with paragraph 15(b) of AASB 112. The initial recognition exemptiononly applies to transactions that are not a business combination and do not affect eitheraccounting profit or taxable profit.

Taxation of share-based payments

AASB112(68A)-(68C)

For the purpose of these illustrative financial statements, we have assumed that deductions3.are available for the payments made by VALUE ACCOUNTS Reduced Disclosure Pty Ltd intothe employee share trust for the acquisition of the deferred shares (see note 21). In ourexample, the payments are made and shares acquired upfront which gives rise to deferred taxliabilities. However, this will not apply in all circumstances to all entities. For example, we havealso assumed that no tax deductions can be claimed in relation to the employee option plan.The taxation of share-based payments and the accounting thereof is a complex area andspecific advice should be obtained for each individual circumstance. AASB 112 providesfurther guidance on the extent to which deferred tax is recognised in profit or loss and in equity.

Income tax recognised outside profit or loss

AASB101(90)AASB112(81)(a),(ab)AASB112(62A)

AASB112(RDR81.1)

Under certain circumstances, current and deferred tax is recognised outside profit or loss either4.in other comprehensive income or directly in equity, depending on the item the tax relates to.Entities must disclose separately:

the amount of income tax relating to each component of other comprehensive income,(a)including reclassification adjustments (either in the statement of comprehensive income orin the notes), and

the aggregate current and deferred tax relating to items that are charged directly to equity(b)(without being recognised in other comprehensive income).

Entities reporting under the reduced disclosure regime must disclose the aggregate amount ofcurrent and deferred income tax relating to items recognised in other comprehensive income.

AASB112(62A) Examples of items that are charged directly to equity are:5.

the equity component on compound financial instruments(a)

share issue costs(b)

adjustments to retained earnings, eg as a result of a change in accounting policy.(c)

Unrecognised temporary differences

The disclosure of unrecognised temporary differences in relation to the overseas subsidiary6.has been made for illustrative purposes only. The taxation of overseas subsidiaries will varyfrom case to case and tax advice should be obtained to assess whether there are any potentialtax consequences and temporary differences that should be disclosed.

Income tax expenses


Income tax expense

Tax consolidation legislation

UIG1052(16) Where the tax consolidation legislation has been implemented or will be implemented in the7.current reporting period, the following disclosures are required by the head entity and wholly-owned entities in the tax consolidated group:

the relevance of the tax consolidation system to the entity, including the part of the(a)reporting period for which it applies to the entity where it is not applicable for the whole ofthe reporting period, and the name of the head entity

the method adopted for measuring the current and deferred tax amounts (see note 28(g))(b)

information about the nature of any tax funding arrangement and any tax sharing(c)agreement, including significant terms and conditions that may affect the amount, timingand uncertainty of future cash flows, and

the net amount recognised for the period as tax-consolidation contributions by (or(d)distributions to) equity participants, its major components and the accounts affected.

As tax consolidation is only relevant to the separate financial statements of the parent entity8.and the wholly-owned subsidiaries that are part of the tax consolidated group, VALUEACCOUNTS Reduced Disclosure Pty Ltd has moved the tax consolidation disclosures to note28(ae).

Tax funding arrangements

The terms and conditions of tax funding agreements may vary widely between entities. For9.example, the funding amounts may be determined on a completely different basis to thatassumed for VALUE ACCOUNTS Reduced Disclosure Pty Ltd. The illustrative wordingprovided in this publication must be adapted to the individual circumstances. Some groups mayalso permit payment to occur via debit or credit to a general intercompany account. In thiscase, the tax note should state this fact and refer to the relevant note for the terms andconditions of these accounts.

If there is no tax funding agreement, the entity may disclose a note along the following lines:10.

As the tax consolidated group has not entered into a tax funding agreement, nocompensation has been received or paid for any current tax payable or deferred taxassets relating to tax losses assumed by the parent entity since implementation of the taxconsolidation regime.

UIG1052(16)(d) In this case, the entity must disclose the net amount recognised for the period as taxconsolidation contributions by (or distributions to) equity participants, its major components andthe accounts affected.

Equity contributions and distributions

Tax consolidated groups that do not have any tax funding agreements, or where the amounts11.payable or receivable under the tax funding agreement are not the same as the amountsassumed by the head entity in relation to the entity’s current tax payable and tax losses and/ortax credits, will have to recognise equity transactions for any differences between the taxamounts assumed by the head entity and amounts receivable or payable under the fundingagreement.

UIG1052(16)(d) Head entities will recognise equity contributions to, or distributions from, the tax consolidated12.entities by debiting the relevant investment account or recognising investment income receivedfrom controlled entities, as appropriate. They must disclose the net amount recognised for theperiod as tax consolidation contributions to (or distributions from) tax consolidated entities, itsmajor components and the accounts affected.

AASB101(106)UIG1052(16)(d)

Tax consolidated entities may recognise the equity transactions as other contributed equity, in13.reserves or retained earnings, depending on the circumstances. Any amounts recognised inequity as a result of applying UIG 1052 (including amounts recognised in reserves or retainedearnings) must be separately identified in the statement of changes in equity or a related note.The components of the net amount recognised for the period as tax consolidation contributionor distribution must also be disclosed.

Where the tax consolidated entities are indirect subsidiaries of the head entity, the equity14.contributions or distributions are recognised via the interposed parent entities. A similarprinciple applies in the case of multiple entry consolidated (MEC) groups. See UIG 1052paragraphs 46-48 for further information.

Income tax expenses


Income tax expense

Intragroup transfer of assets

Equity contributions or distributions may arise even where a tax funding agreement is in place15.which covers only current tax payable and deferred tax assets for tax losses/tax creditsassumed by the head entity. For example, where a group has decided to use the stand-alonetaxpayer method to allocate the individual tax amounts recognised by each entity in the taxconsolidated group, equity contributions or distributions may arise as a result of the intragroupsale of assets. This is because the subsidiary transferring the asset will recognise a taxpayable in relation to the prima facie taxable gain realised on the sale of the asset (assumingthe asset is sold at an amount in excess of the carrying amount). However, no such payable isrecognised by the head entity, as the profit is eliminated in determining the taxable income inthe group. The controlled entity or the parent will recognise an equity contribution ordistribution, depending on the terms and conditions of the tax funding agreement (if any).


General

The following disclosures are not illustrated because they are not applicable to VALUE16.ACCOUNTS Reduced Disclosure Pty Ltd:

AASB112(81)(d) (a) an explanation of changes in the applicable tax rate(s) compared to the previous reportingperiod

AASB112(81)(e) (b) the amount (and expiry date, if any) of deductible temporary differences, unused taxlosses, and unused tax credits for which no deferred tax asset is recognised in the balancesheet (illustrated for tax losses only)

AASB112(81)(i) (c) the amount of income tax consequences of dividends to shareholders of the entity thatwere proposed or declared before the financial statements were authorised for issue, butare not recognised as a liability in the financial statements

AASB112(82) (d) where utilisation of a deferred tax asset is dependent on future taxable profits in excess ofprofits arising from the reversal of existing taxable temporary differences and the entityhas suffered a loss in either the current or preceding period in the tax jurisdiction to whichthe deferred tax asset relates, it must disclose the amount of the deferred tax asset andthe nature of evidence supporting its recognition

AASB112(82A),(87A)-(87C)

(e) where the amount of income tax payable varies depending on the amount of profit orretained earnings that is paid as dividends to shareholders of the entity, an entity mustdisclose the nature of the potential income tax consequences that would result from thepayment of dividends to its shareholders. In addition, the entity must disclose the amountsof the potential income tax consequences practicably determinable and whether there arepotential income tax consequences not practicably determinable.

Alternative reconciliation of tax expense

AASB112(81)(c)(ii) Entities can also provide a reconciliation between the average effective tax rate and the17.applicable tax rate. This would replace the reconciliation of income tax expense to prima facietax payable in note 6(b).

Contingent liabilities and contingent assets

AASB112(88) Contingent liabilities and contingent assets may arise, for example, from unresolved disputes18.with the taxation authorities. An entity discloses any such tax-related contingent liabilities andassets in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets.Similarly, where changes in tax rates or tax laws are enacted or announced after the reportingperiod, an entity discloses any significant effect of those changes on its current and deferredtax assets and liabilities in accordance with AASB 110 Events after the Reporting Period.

Changes to the entity’s own deferred tax assets as a result of a business combination

AASB112(81)(j) If a business combination, in which the entity is the acquirer, causes a change in the amount19.recognised for its pre-acquisition deferred tax asset as per paragraph 67 of AASB 112, theamount of that change must be disclosed.

Deferred tax assets acquired in a business combination but not initially recognised

AASB112(81)(k) If the deferred tax benefits acquired in a business combination are not recognised at the20.acquisition date but are recognised after the acquisition date under paragraph 68 of AASB 112,the entity must disclose a description of the event or change in circumstances that caused thedeferred tax benefits to be recognised.


7 Financial assets and financial liabilities 1,67

Not mandatory This note provides information about the group’s financial instruments, including:

an overview of all financial instruments held by the group

specific information about each type of financial instrument

accounting policies

information about determining the fair value of the instruments, including judgements andestimation uncertainty involved.

Not mandatory The group holds the following financial instruments:

Financial assets Notes

Assets atFVOCI

$’000

Assets atFVPL

$’000

Derivativesused forhedging

$’000

Financialassets at

amortisedcost

$’000

Total

$’000

2015

Cash and cash equivalents 7(a) - - - 55,254 55,254

Trade and other receivables * 7(b) - - - 20,661 20,661

Financial assets at fair valuethrough profit or loss 7(c) - 11,300 - - 11,300

Derivative financialinstruments 12(a) - 1,854 308 - 2,162

Available-for-sale financialassets 7(d) 11,110 - - - 11,110

Held-to-maturity investments 7(e) - - - 1,210 1,210

11,110 13,154 308 77,375 101,697

2014

Cash and cash equivalents 7(a) - - - 24,693 24,693

Trade and other receivables * 7(b) - - - 13,089 13,089

Financial assets at fair valuethrough profit or loss 7(c) - 10,915 - - 10,915

Derivative financialinstruments 12(a) - 1,417 712 - 2,129

Available-for-sale financialassets 7(d) 5,828 - - - 5,828

5,828 12,332 712 37,782 56,654

* excluding prepayments

Financial liabilities Notes

Derivativesat FVPL

$’000

Derivativesused forhedging

$’000

Liabilities atamortised

cost

$’000

Total

$’000

2015

Trade and other payables ** 7(f) - - 15,130 15,130

Borrowings 7(g) - - 100,444 100,444

Derivative financial instruments 12(a) 610 766 - 1,376

610 766 115,574 116,950

2014

Trade and other payables ** 7(f) - - 11,270 11,270

Borrowings 7(g) - - 70,080 70,080

Derivative financial instruments 12(a) 621 777 - 1,398

621 777 81,350 82,748

** excluding non-financial liabilities

AASB7(36)(a),AASB7(31),(34)(c)

The group’s exposure to various risks associated with the financial instruments is discussed in note 12.The maximum exposure to credit risk at the end of the reporting period is the carrying amount of eachclass of financial assets mentioned above.

Financial assets and financial liabilities


(a) Cash and cash equivalents 42

2015$’000

2014Restated

$’000

Current assets

AASB107(45) Cash at bank and in hand 750 600

AASB107(45) Deposits at call 54,554 24,093

55,304 24,693

(i) Reconciliation to cash flow statementAASB107(45) The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of

the financial year as follows:2015$’000

2014$’000

Balances as above 55,304 24,693

AASB107(8) Bank overdrafts (see note 7(g) below) (2,650) (2,250)

Balances per statement of cash flows 52,654 22,443

(ii) Classification as cash equivalents 2,3

AASB107(46) Term deposits are presented as cash equivalents if they have a maturity of three months or less fromthe date of acquisition and are repayable with 24 hours’ notice with no loss of interest. See note 28(k)for the group’s other accounting policies on cash and cash equivalents.

(b) Trade and other receivables 44,51-53,69

2015 2014 (Restated)

AASB101(77),(78)(b)AASB7(6)

Current$’000

Non-current

$’000Total$’000

Current$’000

Non-current

$’000Total$’000

Trade receivables 17,855 - 17,855 11,167 - 11,167

Provision for impairment(see note 12 (c)) (525) - (525) (300) - (300)

17,330 - 17,330 10,867 - 10,867

Loans to related parties - 1,300 1,300 - 700 700

Loans to key managementpersonnel

166 551 717 126 480 606

Other receivables (iii) 939 375 1,314 716 200 916

Prepayments6,7 500 - 500 475 - 475

18,935 2,226 21,161 12,184 1,380 13,564

AASB124(17) Further information relating to loans to related parties and key management personnel is set out innote 20.

AASB101(117)(i) Classification as trade and other receivables 2,3,43

AASB7(21)AASB139(9),(46)(a)

Trade receivables are amounts due from customers for goods sold or services performed in theordinary course of business. Loans and other receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in an active market. If collection of the amounts isexpected in one year or less they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are generally due for settlement within 30 days and therefore are allclassified as current. The group’s impairment and other accounting policies for trade and otherreceivables are outlined in notes 12(c) and 28(l) respectively.



(b) Trade and other receivables

(ii) Transferred receivables 8,9,45-49

AASB7(42D)(a)-(c),(e) The carrying amounts of the trade receivables include receivables which are subject to a factoringarrangement. Under this arrangement, VALUE ACCOUNTS Manufacturing Limited has transferred therelevant receivables to the factor in exchange for cash and is prevented from selling or pledging thereceivables. However, VALUE ACCOUNTS Manufacturing Limited has retained late payment andcredit risk. The group therefore continues to recognise the transferred assets in their entirety in itsbalance sheet. The amount repayable under the factoring agreement is presented as securedborrowing.

The relevant carrying amounts are as follows:

2015$’000

2014$’000

Transferred receivables 3,250 -

Associated secured borrowing (bank loans – see note 7(g)below) 3,100 -

(iii) Other receivablesAASB7(7) These amounts generally arise from transactions outside the usual operating activities of the group.

Interest may be charged at commercial rates where the terms of repayment exceed six months.Collateral is not normally obtained. The non-current other receivables are due and payable withinthree years from the end of the reporting period.

(iv) Fair values of trade and other receivables 10-11

AASB7(25),(29)(a)AASB13(97),(93)(b),(d)

Due to the short-term nature of the current receivables, their carrying amount is assumed to be thesame as their fair value. For the majority of the non-current receivables, the fair values are also notsignificantly different to their carrying amounts. An exception are the loans to key managementpersonnel, which have a fair value of $481,000 as at 30 June 2015, compared to a carrying amount of$551,000 (2014: fair value of $424,000 and carrying amount of $480,000).

The fair values were calculated based on cash flows discounted using a current lending rate. They areclassified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputsincluding counterparty credit risk (see note 7(h) below).

34,40

(v) Impairment and risk exposureAASB7(31),(34)(c) Information about the impairment of trade and other receivables, their credit quality and the group’s

exposure to credit risk, foreign currency risk and interest rate risk can be found in note 12(b) and (c).

(c) Financial assets at fair value through profit or loss 12,54-56,60-63,77

AASB101(77)AASB7(31),(34)(c)

Financial assets at fair value through profit or loss are all held for trading and include the following:

2015$’000

2014$’000

Current assets

US listed equity securities 5,190 4,035

Australian listed equity securities 6,110 6,880

11,300 10,915

AASB101(117)(i) Classification of financial assets at fair value through profit or loss 2,3

AASB7(21),(8)(a)AASB101(66),(68)AASB139(9),(45)

The group classifies financial assets at fair value through profit or loss if they are acquired principally forthe purpose of selling in the short term, ie are held for trading. They are presented as current assets ifthey are expected to be sold within 12 months after the end of the reporting period; otherwise they arepresented as non-current assets. The group has not not elected to designate any financial assets at fairvalue through profit or loss. See note 28(o) for the group’s other accounting policies for financial assets.

(ii) Amounts recognised in profit or loss 68

AASB7(20)(a)(i) Changes in fair values of financial assets at fair value through profit or loss are recorded as otherincome or other expense in profit or loss (2015 – gain of $835,000; 2014 – loss of $690,000).

(iii) Risk exposure and fair value measurementsAASB7(31)AASB13(93)

Information about the group’s exposure to price risk is provided in note 12. For information about themethods and assumptions used in determining fair value please refer to note 7(h) below.



(d) Available-for-sale financial assets 64-66,77

AASB7(25),(31),(34)(c)AASB101(77)

Available-for-sale financial assets include the following classes of financial assets:

2015$’000

2014$’000

Non-current assets

Listed securities

Equity securities 4,168 2,350

Debentures 2,230 1,528

Preference shares 990 590

7,388 3,468

Unlisted securities (iv)

Equity securities (i),(v) 1,332 1,280

Debentures 575 560

Preference shares 525 520

2,432 2,360

Contingent consideration from disposal of discontinuedoperation (note 15)

1,290 -

11,110 5,828

(i) Investments in related partiesAASB124(17) Available-for-sale financial assets includes $300,000 (2014 – $280,000) of equity securities held in

entities that are controlled by the ultimate parent entity, Lion Plc.

AASB101(117)(ii) Classification of financial assets as available-for-sale 2,3

AASB7(21),(B5)(b)AASB101(66),(68)AASB139(9),(45)

Investments are designated as available-for-sale financial assets if they do not have fixed maturitiesand fixed or determinable payments, and management intends to hold them for the medium to long-term. Financial assets that are not classified into any of the other categories (at FVPL, loans andreceivables or held-to-maturity investments) are also included in the available-for-sale category.

The financial assets are presented as non-current assets unless they mature, or management intendsto dispose of them within 12 months of the end of the reporting period.

(iii) Impairment indicators for available-for-sale financial assetsAASB101(117) A security is considered to be impaired if there has been a significant or prolonged decline in the fair

value below its cost. See note 28(o) for further details about the group’s impairment policies forfinancial assets.

(iv) Significant estimates 2,3

AASB13(91)(a)AASB101(125)

The fair value of financial instruments that are not traded in an active market is determined usingvaluation techniques. The group uses its judgement to select a variety of methods and makeassumptions that are mainly based on market conditions existing at the end of each reporting period.For details of the key assumptions used and the impact of changes to these assumptions see note7(h) below.

(v) Significant judgements 2,3

AASB12(7),(9)(a)AASB101(122)

The directors have determined that they do not control a company called VALUE ACCOUNTSTrustee Pty Ltd even though VALUE ACCOUNTS Reduced Disclosure Pty Ltd owns 100% of theissued capital of this entity. VALUE ACCOUNTS Trustee Limited is the trustee of the VALUEACCOUNTS Employees’ Superannuation Fund. It is not a controlled entity of VALUE ACCOUNTSReduced Disclosure Pty Ltd because VALUE ACCOUNTS Reduced Disclosure Pty Ltd is notexposed, and has no right, to variable returns from this entity and is not able to use its power over theentity to affect those returns. The investment has a fair value of $2 (2014 – $2) and is included inunlisted securities.

15



(d) Available-for-sale financial assets

AASB101(38) In the 2014 financial statements, the group made a significant judgement about the impairment of anumber of its available-for-sale financial assets.

To determine if an available-for-sale financial asset is impaired, the group evaluates the duration andextent to which the fair value of the asset is less than its cost, and the financial health of and short-term business outlook for the investee (including factors such as industry and sector performance,changes in technology and operational and financing cash flows). While the fair value of a number ofthe group’s available-for-sale financial assets had fallen below cost as at 30 June 2014, the groupdetermined that none of these declines in fair value were expected to be significant or prolonged andhence no impairment needed to be recognised.

If all of the declines in fair value below cost had been significant or prolonged, the group would havesuffered an additional loss of $250,000 in its 2014 financial statements, being the reclassification ofthe accumulated fair value adjustments recognised in equity on the impaired available-for-salefinancial assets to profit or loss. In the 2015 financial year, the fair value of the relevant assets hasincreased and is now above cost.

(vi) Amounts recognised in profit or loss and other comprehensive income

During the year, the following gains/(losses) were recognised in profit or loss and other comprehensiveincome.

2015$’000

2014$’000

AASB7(20)(a)(ii) Gains/(losses) recognised in other comprehensive income (see note 9(b)) 880 (1,378)

AASB7(20)(a)(ii) Gains/(losses) reclassified to profit or loss as other income (other expense)from other comprehensive income on sale (note 5) 646 (548)

(vii) Non-current assets pledged as securityAASB7(14) Refer to note 25 for information on non-current assets pledged as security by the group.

(viii) Fair value, impairment and risk exposureAASB13(93)AASB7(36)(c)

Information about the methods and assumptions used in determining fair value is provided in note 7(h)below. None of the available-for-sale financial assets are either past due or impaired.

AASB7(34) All available-for-sale financial assets are denominated in Australian dollars. For an analysis of thesensitivity of available-for-sale financial assets to price and interest rate risk refer to note 12(b).

(e) Held-to-maturity investments 16,17,63,65,69

2015$’000

2014$’000

Non-current assetsAASB101(77) Debentures 750 -

AASB101(77) Zero coupon bonds 460 -

1,210 -

(i) DebenturesAASB7(25)AASB13(97),(93)(b))

The fair value of the debentures is $795,000 (2014 – nil). Fair value was determined by reference topublished price quotations in an active market (classified as level 1 in the fair value hierarchy – seenote 7(h) below for further information).

10-11,34,41

(ii) Zero coupon bondsAASB7(25),AASB13(97),(93)(b)

The fair value of the zero coupon bonds is $482,000 (2014 – nil). Fair value was determined byreference to published price quotations in an active market (classified as level 1 in the fair valuehierarchy – see note 7(h) below for further information).

10-12,34,41



(e) Held-to-maturity investments

AASB101(117)(iii) Classification of financial assets as held-to-maturity 2,3

AASB7(21),(B5)(b)AASB101(66),(68)AASB139(9)

The group classifies investments as held-to-maturity if:

they are non-derivative financial assets

they are quoted in an active market

they have fixed or determinable payments and fixed maturities

the group intends to, and is able to, hold them to maturity.

Held-to-maturity financial assets are included in non-current assets, except for those with maturitiesless than 12 months from the end of the reporting period, which would be classified as current assets.See note 28(o) for the group’s other accounting policies for financial assets.

(iv) Impairment and risk exposureAASB7(36)(c) None of the held-to-maturity investments are either past due or impaired.

AASB7(34) All held-to-maturity investments are denominated in Australian dollars. As a result, there is noexposure to foreign currency risk. There is also no exposure to price risk as the investments will beheld to maturity.

(f) Trade and other payables

2015$’000

2014Restated

$’000

Current liabilitiesAASB101(77) Trade payables 11,590 9,220

Payroll tax and other statutory liabilities 1,570 1,207

AASB101(77) Other payables 3,540 2,050

16,700 12,477

Trade payables are unsecured and are usually paid within 30 days of recognition.

AASB7(29)(a)AASB13(97),(93)(b),(d)

The carrying amounts of trade and other payables are assumed to be the same as their fair values,due to their short-term nature.

10-11

(g) Borrowings 18-26,57-59,70-75

2015 2014

Current$’000

Non-current

$’000Total$’000

CurrentRestated

$’000

Non-current

Restated

$’000

TotalRestated

$’000

AASB101(77) Secured

Bank overdrafts 2,650 - 2,650 2,250 - 2,250

Bank loans (i) 4,250 37,070 41,320 2,865 27,035 29,900

Debentures (vi) - - - 2,000 2,000 4,000

Lease liabilities (v) 580 2,814 3,394 560 3,390 3,950

Other loans 450 8,580 9,030 150 14,100 14,250

Total secured borrowings (i) 7,930 48,464 56,394 7,825 46,525 54,350

AASB101(77) Unsecured

Bills payable 1,050 - 1,050 730 - 730

Convertible notes (iii) - 16,815 16,815 - - -

Redeemable preferenceshares (iv)

- 11,000 11,000 - 11,000 11,000

Loans from related parties * - 15,185 15,185 - 4,000 4,000

Total unsecured borrowings 1,050 43,000 44,050 730 15,000 15,730

Total borrowings 8,980 91,464 100,444 8,555 61,525 70,080

* Further information relating to loans from related parties is set out in note 20.



(g) Borrowings

(i) Secured liabilities and assets pledged as securityAASB7(7),(14)(b) Of the bank loans, $3,100,000 relate to transferred receivables (see note 7(b)(ii) above). The

remaining bank loans and overdraft are secured by first mortgages over the group’s freehold land andbuildings, including those classified as investment properties.

The debentures were secured by a floating charge over the assets of the parent entity.

Lease liabilities are effectively secured as the rights to the leased assets recognised in the financialstatements revert to the lessor in the event of default.

The other loans are secured by a negative pledge that imposes certain covenants on the subsidiarythat has received those loans. The negative pledge states that (subject to certain exceptions) thesubsidiary will not provide any other security over its assets, and will ensure that the following financialratios are met:

(i) debt will not, at any time, exceed 50% of total tangible assets, and

(ii) borrowing costs will not exceed 50% of earnings before borrowing costs and taxation for each half-year period.

The carrying amounts of financial and non-financial assets pledged as security for current and non-current borrowings are disclosed in note 25.

(ii) Compliance with loan covenants 27

AASB101(135)(d) VALUE ACCOUNTS Reduced Disclosure Pty Ltd has complied with the financial covenants of itsborrowing facilities during the 2015 and 2014 reporting period, see note 13 for details.

(iii) Convertible notes 28

AASB7(17)AASB101(79)(a)(vii)

The parent entity issued 1,500,000 7% convertible notes for $20 million on 23 January 2015. Thenotes are convertible into ordinary shares of the parent entity, at the option of the holder, orrepayable on 23 January 2019. The conversion rate is 2 shares for each note held, which is basedon the market price per share at the date of the issue of the notes ($6.10), but subject to adjustmentsfor reconstructions of equity. The convertible notes are presented in the balance sheet as follows:

2015$’000

2014$’000

Face value of notes issued 20,000 -

Other equity securities – value of conversion rights (note 9(a)) (3,500) -

16,500 -

Interest expense * 842 -

Interest paid (527) -

Non-current liability 16,815 -

* Interest expense is calculated by applying the effective interest rate of 9.6% to the liability component.

AASB132(18),(28),AG31(a) The initial fair value of the liability portion of the bond was determined using a market interest rate foran equivalent non-convertible bond at the issue date. The liability is subsequently recognised on anamortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of theproceeds is allocated to the conversion option and recognised in shareholders’ equity, net of incometax, and not subsequently remeasured.

(iv) Redeemable preference shares 28

AASB7(7)AASB101(79)(a)(v)

The redeemable preference shares represent 5,000,000 fully paid 6% cumulative redeemablepreference shares. The shares are redeemable at $2.20 per share on 31 December 2022 or by theparent entity at any time before that date. The shares are entitled to dividends at the rate of 6% perannum. If insufficient profits are available in a particular financial year, the dividends accumulate andare payable when sufficient profits are available. The shares participate in a winding up of the companyonly to the extent of $2.20 per share.

AASB132(18) Since the shares are mandatorily redeemable on a specified date, they are recognised as liabilities.



(g) Borrowings

(v) Finance leases 50-53

AASB117(31)(a),(e) The group leases various plant and equipment with a carrying amount of $2,360,000 (2014 –$3,200,000) under finance leases expiring within three to seven years. Under the terms of the leases,the group has the option to acquire the leased assets for 50% of their agreed fair value on expiry of theleases. This option lapses in the event the group fails to maintain its credit rating at the level prevailingat inception of the lease.

AASB117(31)(c),(e)(i) Some leases provide for the payment of incremental contingent rentals based on changes in currentmarket rentals for comparable properties. Contingent rentals paid during the year were $610,000 (2014– nil).

2015$’000

2014Restated

$’000AASB117(31)(b) Commitments in relation to finance leases are payable as follows:AASB117(31)(b)(i) Within one year 655 655

AASB117(31)(b)(ii) Later than one year but not later than five years 2,620 2,620

AASB117(31)(b)(iii) Later than five years - 655

Minimum lease payments 3,275 3,930

Future finance charges (681) (930)

Recognised as a liability 2,594 3,000

Lease incentives on non-cancellable operating leases included inlease liabilities (see note 18(b)) 800 950

Total lease liabilities 3,394 3,950

AASB117(31)(b) The present value of finance lease liabilities is as follows:

AASB117(31)(b)(i) Within one year 604 605

AASB117(31)(b)(ii) Later than one year but not later than five years 1,990 1,990

AASB117(31)(b)(iii) Later than five years - 405


(vi) Debt defeasance 28

AASB7(7) At the end of the reporting period, debentures issued by the parent entity were the subject of an in-substance defeasance, whereby the parent entity’s obligations for principal and interest repaymentswere assumed by a State Government Statutory Authority. The parent entity was legally released fromthe primary responsibility for the liability but has guaranteed repayment of the principal and interest inthe event of failure by the Authority to meet repayments. Given the virtual risk free status of theAuthority, the likelihood of the parent entity ever being called upon to meet these obligations isextremely remote and, consequently, the debt has been treated as having been extinguished. Thedebentures are repayable in varying instalments due 31 March each year to 2020. Interest is payablequarterly in arrears at a fixed rate of 9.75% per annum.

AASB139(41)AASB7(20)(a)(v)

The aggregate carrying amount of debt extinguished by the in-substance defeasance was $2,000,000,satisfied by a payment to the liability assuming entity of $1,645,000. After allowing for costs of thedefeasance ($40,000), a net gain of $395,000 was recognised in profit or loss.

AASB13(97),(93)(b),(d) As at 30 June 2015, the fair value of these debentures was estimated to be $1,915,000. This wasdetermined based on cash flows discounted using a borrowing rate of 8.6% (level 2 fair value).Counterparty credit risk was considered immaterial.

(vii) Set-off of assets and liabilities

See note 24 below for information about the group’s offsetting arrangements.



(g) Borrowings

(viii) Fair value 10-11,41,76-79

AASB7(25),(29)(a) For the majority of the borrowings, the fair values are not materially different to their carrying amounts,since the interest payable on those borrowings is either close to current market rates or the borrowingsare of a short-term nature. Material differences are identified only for the following borrowings:

2015 2014Carrying amount

$’000Fair value

$’000Carrying amount

$’000Fair value

$’000

Bank loans 41,320 40,456 29,900 29,950

Convertible notes 16,815 17,175 - -

Redeemable preference shares 11,000 9,475 11,000 10,860

AASB13(97),(93)(b),(d) The fair values of non-current borrowings are based on discounted cash flows using a currentborrowing rate. They are classified as level 3 fair values in the fair value hierarchy (see note 7(h)) dueto the use of unobservable inputs, including own credit risk.

34

(ix) Risk exposuresAASB7(31) Details of the group’s exposure to risks arising from current and non-current borrowings are set out in

note 12.

(h) Recognised fair value measurements 29-33,38,39

(i) Fair value hierarchy 34

AASB7(44G)

This section explains the judgements and estimates made in determining the fair values of the financialinstruments that are recognised and measured at fair value in the financial statements. To provide anindication about the reliability of the inputs used in determining fair value, the group has classified itsfinancial instruments into the three levels prescribed under the accounting standards. An explanation ofeach level follows underneath the table.

AASB13(93)(b) Recurring fair value measurementsAt 30 June 2015 Notes

Level 1$’000

Level 2$’000

Level 3$’000

Total$’000

Financial assets38,39

Financial assets at FVPL(Improvement) US listed equity securities 12(a) 5,190 - - 5,190

Australian listed equity securities 7(c) 6,110 - - 6,110

Derivatives used for hedging

Foreign exchange contracts 12(a) - 1,519 335 1,854

Interest rate swaps 12(a) - 308 - 308

Available-for-sale financial assets

Equity securities – property sector 7(d) 1,400 - - 1,400

Equity securities – retail sector 7(d) 2,768 - - 2,768

Equity securities – biotech sector 7(d) - - 1,332 1,332

Debentures – property sector 7(d) 1,130 - 1,130

Debentures – retail sector 7(d) 1,100 575 - 1,675

Preference shares – property sector 7(d) 990 525 - 1,515

Other (contingent consideration) 7(d) - - 1,290 1,290

Total financial assets 18,688 2,927 2,957 24,572

Financial liabilities38,39

Derivatives used for hedging – foreignexchange contracts 12(a) - 766 - 766

Trading derivatives 12(a) - 610 - 610

Total financial liabilities - 1,376 - 1,376



(h) Recognised fair value measurements

AASB101(38) Recurring fair value measurementsAt 30 June 2014 Notes

Level 1$’000

Level 2$’000

Level 3$’000

Total$’000

Financial assets

Financial assets at FVPL(Improvement) US listed equity securities 12(a) 4,035 - - 4,035

Australian listed equity securities 7(c) 6,880 - - 6,880

Derivatives used for hedging

Foreign exchange contracts 12(a) - 1,417 - 1,417

Interest rate swaps 12(a) - 712 - 712


Equity securities – property sector 7(d) 800 - - 800

Equity securities – retail sector 7(d) 550 - - 550

Equity securities – biotech sector 7(d) - - 1,280 1,280

Debentures – property sector 7(d) 1,000 - - 1,000

Debentures – retail sector 7(d) 528 560 - 1,088

Preference shares – property sector 7(d) 590 520 - 1,110

Total financial assets 14,383 3,209 1,280 18,872

Financial liabilities

Derivatives used for hedging – foreignexchange contracts - 777 - 777

Trading derivatives 12(a) - 621 - 621

Total financial liabilities - 1,398 - 1,398

AASB13(93)(c) There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.For transfers in and out of level 3 measurements see (iii) below.

AASB13(95) The group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at theend of the reporting period.

AASB13(76)AASB13(91)(a),(93)(d)

Level 1: The fair value of financial instruments traded in active markets (such as publicly tradedderivatives, and trading and available-for-sale securities) is based on quoted market prices at the endof the reporting period. The quoted market price used for financial assets held by the group is thecurrent bid price. These instruments are included in level 1.

AASB13(81)AASB13(91)(a),(93)(d)

Level 2: The fair value of financial instruments that are not traded in an active market (for example,over-the-counter derivatives) is determined using valuation techniques which maximise the use ofobservable market data and rely as little as possible on entity-specific estimates. If all significant inputsrequired to fair value an instrument are observable, the instrument is included in level 2.

AASB13(86) Level 3: If one or more of the significant inputs is not based on observable market data, the instrumentis included in level 3. This is the case for unlisted equity securities.

(ii) Valuation techniques used to determine fair values 35,36

AASB13(91)(a),(93)(d)

AASB13(93)(b)

Specific valuation techniques used to value financial instruments include:

the use of quoted market prices or dealer quotes for similar instruments

the fair value of interest rate swaps is calculated as the present value of the estimated future cashflows based on observable yield curves

the fair value of forward foreign exchange contracts is determined using forward exchange rates atthe balance sheet date

the fair value of the remaining financial instruments is determined using discounted cash flowanalysis.

All of the resulting fair value estimates are included in level 2 except for unlisted equity securities, acontingent consideration receivable and certain derivative contracts, where the fair values have beendetermined based on present values and the discount rates used were adjusted for counterparty or owncredit risk.




(iii) Fair value measurements using significant unobservable inputs (level 3)AASB13(93)(e) The following table presents the changes in level 3 items for the periods ended 30 June 2015 and 30

June 2014:

Unlistedequity

securities$’000

Contingentconside-

ration$’000

Tradingderivatives

$’000Total$’000

Opening balance 1 July 2013 1,322 - - 1,322

Disposals (19) - - (19)

Losses recognised in other comprehensiveincome (23) - - (23)

Closing balance 30 June 2014 1,280 - - 1,280

Transfer from level 2 - - (365) (365)

Acquisitions - 1,200 - 1,200

Gains/(losses) recognised in othercomprehensive income 52 (40) - 12

Gains/(losses) recognised in other income * - 130 30 160

Closing balance 30 June 2015 1,332 1,290 (335) 2,287

AASB13(93)(f) * unrealised gains or (losses) recognised inprofit or loss attributable to assets held atthe end of the reporting period (included ingains/(losses) recognised in other incomeabove)

40

2015 - (15) 130 115

2014 (9) - - (9)

(iv) Transfers between levels 2 and 3AASB13(93)(d) In 2015 the group transferred a hedging forward foreign exchange contract from level 2 into level 3 as

the counterparty for the derivative encountered significant financial difficulties. This resulted in asignificant increase to the discount rate which is not based on observable inputs, as it reflects creditrisk specific to the counterparty.

(v) Valuation inputs and relationships to fair valueAASB13(93)(d),(99) The following table summarises the quantitative information about the significant unobservable inputs

used in level 3 fair value measurements. See (ii) above for the valuation techniques adopted.36,37

Description

Fair value at

Un-observable

inputs *

Range of inputs(probability-weighted

average)

Relationship of unobservable inputs to fairvalue

AASB13(91)(a),(93)(d),(h)(i),(ii)(Revised requirement)

30June2015$’000

30June2014$’000 2015 2014

Unlistedequitysecurities

332 280 Earningsgrowth factor

2.5% - 3.5%(3%)

2.0% - 3%

(2.7%)

Increased earnings growth factor (+50 basispoints (bps)) and lower discount rate (-100 bps)

would increase FV by $70,000; lower growthfactor (-50 bps) and higher discount rate (+100

bps) would decrease FV by $80,000.

2014: increasing/decreasing the growth factorand the discount rate by +/- 50bps and 100 bps

respectively would change the FVby +$55,000/-$65,000

Risk-adjusteddiscount rate

9% - 11%(10%)

9.5% - 11%

(10.2%)

Tradingderivatives

335 365 Credit defaultrate

25% 30% A shift of the credit default rate by +/- 5% resultsin a change in FV of $30,000 (2014: change indefault rate by +/- 6% changed FV by $33,000)

Contingentconsideration

1,290 n/a Risk-adjusteddiscount rate

14% n/a A change in the discount rate by 100 bps wouldincrease/ decrease the FV by $40,000

Expectedcash inflows

$2,150,000 -$2,570,000

($2,360,000)

n/a If expected cash flows were 10% higher orlower, the FV would increase/ decrease

by $35,000

AASB13(93)(h)(i) * There were no significant inter-relationships between unobservable inputs that materially affect fair values.




AASB13(93)(g)(vi) Valuation processes

The finance department of the group includes a team that performs the valuations of non-propertyitems required for financial reporting purposes, including level 3 fair values. This team reports directlyto the chief financial officer (CFO) and the audit committee (AC). Discussions of valuation processesand results are held between the CFO, AC and the valuation team at least once every six months, inline with the group’s half-yearly reporting periods.

AASB13(91)(b) The main level 3 inputs used by the group are derived and evaluated as follows:

Discount rates for financial assets and financial liabilities are determined using a capital assetpricing model to calculate a pre-tax rate that reflects current market assessments of the time valueof money and the risk specific to the asset.

Risk adjustments specific to the counterparties (including assumptions about credit default rates)are derived from credit risk gradings determined by VALUE ACCOUNTS Reduced Disclosure PtyLtd’s internal credit risk management group.

Earnings growth factor for unlisted equity securities are estimated based on market information forsimilar types of companies.

Contingent consideration – expected cash inflows are estimated based on the terms of the salecontract (see note 15) and the entity’s knowledge of the business and how the current economicenvironment is likely to impact it.

Changes in level 2 and 3 fair values are analysed at the end of each reporting period during the half-yearly valuation discussion between the CFO, AC and the valuation team. As part of this discussionthe team presents a report that explains the reason for the fair value movements.


Disclosing financial assets and financial liabilities in one note

Users of financial reports have indicated that they would like to be able to quickly access all of1.the information about the entity’s financial assets and liabilities in one location in the financialreport. We have therefore structured our notes such that financial items and non-financial itemsare discussed separately. However, this is not a mandatory requirement in the accountingstandards.

Accounting policies, estimates and judgements

As explained on page 47, in our view it is helpful for readers of the financial report if information2.about accounting policies that are specific to the entity and about significant estimates andjudgements is disclosed with the relevant line items, rather than in separate notes. However,this format is also not mandatory.

For general commentary regarding the disclosures of accounting policies please refer to note3.28. Commentary about the disclosure of significant estimates and judgements is provided innote 11.

Accounting standard for presentation and disclosure of financial instruments

AASB7(3) AASB 7 Financial Instruments: Disclosures applies to all reporting entities and to all types of4.financial instruments except:

those interests in subsidiaries, associates, and joint ventures that are accounted for under(a)AASB 10 Consolidated Financial Statements; AASB 127 Separate Financial Statementsand AASB 128 Investments in Associates and Joint Ventures. However, entities shallapply AASB 7 to an interest in a subsidiary, associate, or joint venture that according toAASB 10, AASB 127 or AASB 128 is accounted for under AASB 139 FinancialInstruments: Recognition and Measurement. In these cases, entities shall apply thedisclosure requirements in AASB 12 and AASB 127 in addition to those in AASB 7.Entities shall also apply AASB 7 to all derivatives on interests in subsidiaries, associates orjoint ventures

employers’ rights and obligations under employee benefit plans, to which AASB 119(b)Employee Benefits applies




insurance contracts as defined in AASB 4 Insurance Contracts. However, AASB 7 applies(c)to derivatives that are embedded in insurance contracts if AASB 139 requires the entity toaccount for them separately. It also applies to financial guarantee contracts if the issuerapplies AASB 139 in recognising and measuring the contracts, but not if the issuer electsto apply AASB 1023 General Insurance Contracts (must provide disclosures under AASB1023 instead)

financial instruments, contracts and obligations under share-based payment transactions(d)to which AASB 2 Share-based Payment applies, except for contracts within the scope ofparagraphs 5-7 of AASB 139 which must be disclosed under AASB 7

AASB7(3)(f) puttable financial instruments that are required to be classified as equity instruments in(e)accordance with paragraphs 16A and 16B or 16C and 16D of AASB 132.

AASB7(4),(5) AASB 7 applies to both recognised and unrecognised financial instruments, even if the5.financial instruments are not recognised under AASB 139. For example, some loancommitments are outside AASB 139’s scope but within the scope of AASB 7 because theyexpose an entity to financial risks such as credit and liquidity risk.

However, AASB 7 does not apply to the following items as they are not financial instruments as6.defined in paragraph 11 of AASB 132:

prepayments made/advances received (right to receive future good or service, not cash or(a)a financial asset)

tax receivables and payables and similar items (statutory rights or obligations, not(b)contractual), or

deferred revenue and warranty obligations (obligation to deliver good or service, not cash(c)or financial asset)

While prepayments are not financial assets, we have included them with trade receivables in7.accordance with paragraph 78(b) of AASB 101 Presentation of Financial Statements.

Transfers of financial assets

AASB7(42A) If the entity has transferred all or part of a financial asset and it:8.

is not able to derecognise the financial asset under AASB 139 Financial Instruments:(a)Recognition and Measurement, or

has any continuing involvement in the asset (see paragraph 42C of AASB 7),(b)

AASB7(42B) the entity must provide information in a single note that enables users of its financialstatements to

understand the relationship between the transferred financial assets that are not(c)derecognised in their entirety and the associated liabilities, and

evaluate the nature of, and risk associated with, the entity’s continuing involvement in(d)derecognised financial assets.

AASB7(42A) For the purpose of these disclosure requirements, an entity has transferred all or part of a9.financial asset if, and only if, it either

transferred the contractual rights to receive the cash flows of that financial asset, or(a)

retained the contractual rights to receive the cash flows, but assumed a contractual(b)obligation to pay the cash flows to one or more recipients in an arrangement.

Fair value disclosures: Financial instruments carried at other than fair value

AASB7(25),(29) An entity shall disclose the fair value for each class of financial assets and financial liabilities in10.a way that permits it to be compared with its carrying amount. Fair values do not need to bedisclosed for the following:

where the carrying amount is a reasonable approximation of fair value (eg for cash, short-(a)term trade receivables and payables)

investments in equity instruments (and derivatives linked to such equity instruments) that(b)do not have a quoted market price and that are measured at cost in accordance withAASB 139 because their fair value cannot be measured reliably

a contract containing a discretionary participation feature (as described in AASB 4(c)Insurance Contracts) where the fair value of that feature cannot be measured reliably.

Guidance on what are appropriate classes of financial assets and liabilities is given inparagraph 6 of AASB 7, see commentary paragraphs 38 and 39 below and commentaryparagraph 1 to note 12).




Carrying amounts are a reasonable approximation of fair value

A statement that the carrying amount of financial assets or financial liabilities is a reasonable11.approximation of their fair value should only be made if it can be substantiated. That is, entitiesmust have made a formal assessment of the carrying amounts of their financial assets andliabilities in comparison to their fair values and documented this assessment. If the fair valuesare not a reasonable approximation of the carrying amounts, the fair values must be disclosed.

Financial assets at fair value through profit or loss

AASB139(9) A financial asset or financial liability at fair value through profit or loss is a financial asset or12.financial liability that meets either of the following conditions:

it is classified as held for trading. A financial asset or financial liability is classified as held(a)for trading if it is:

(i) acquired or incurred principally for the purpose of selling or repurchasing it in the nearterm

(ii) part of a portfolio of identified financial instruments that are managed together and forwhich there is evidence of a recent actual pattern of short-term profit-taking

(iii) a derivative (except for a derivative that is a designated and effective hedginginstrument), or

upon initial recognition it is designated by the entity as at fair value through profit or loss.(b)Financial assets or financial liabilities can only be designated at fair value through profit orloss if the conditions in AASB 139 paragraphs 9 or 11A are satisfied, see paragraph 45 ofthe commentary to note 28 for further information.


AASB139(9) Available-for-sale financial assets are those non-derivative financial assets that are13.

designated as available-for-sale, or(a)

not classified as(b)

(i) loans and receivables

(ii) held-to-maturity investments or

(iii) financial assets at fair value through profit or loss.

Corporate trustees

Consistent with the requirements of the Superannuation Industry (Supervision) Act 1993 many14.companies are 100% shareholders of the corporate trustees of their superannuation funds. Ifthe activities of these corporate trustees do not extend beyond the normal responsibilities of atrustee, it is commonly accepted that they will not normally be controlled entities.

AASB12(7),(9)(a) AASB 12 Disclosure of Interests in Other Entities requires disclosure of the reasons why the15.ownership, directly or indirectly through subsidiaries, of more than half of the voting or potentialvoting power of an investee does not constitute control. We have used a corporate trustee toillustrate this disclosure. However, we do note that these types of entities will in many casesnot be significant to the group’s financial position and performance. Where this is the case,disclosure would not be necessary because of materiality.

Reduced disclosure regime

AASB101(122) In contrast, an entity reporting under the reduced disclosure regime may still need to disclosethe fact that an investment is not consolidated because it is not considered to be controlled,where the investment is material to the group. This is because the disclosure of significantjudgements is also required under AASB 101 paragraph 122.

Held-to-maturity investments

AASB139(9) Held-to-maturity investments are non-derivative financial assets with fixed or determinable16.payments and fixed maturity that an entity has the positive intention and ability to hold tomaturity (refer to Appendix A, paragraphs AG16-AG25 of AASB139) other than:

those that the entity upon initial recognition designates as at fair value through profit or(a)loss

those that the entity designates as available-for-sale, and(b)

those that meet the definition of loans and receivables.(c)




Restriction on classification

AASB139(9) An entity shall not classify any financial assets as held-to-maturity if the entity has, during the17.current annual reporting period or during the two preceding annual reporting periods, sold orreclassified more than an insignificant amount of held-to-maturity investments before maturity(more than insignificant in relation to the total amount of held-to-maturity investments) otherthan sales or reclassifications that:

are so close to maturity or the financial asset’s call date (eg less than three months before(a)maturity) that changes in the market rate of interest would not have a significant effect onthe financial asset’s fair value

occur after the entity has collected substantially all of the financial asset’s original principal(b)through scheduled payments or prepayments, or

are attributable to an isolated event that is beyond the entity’s control, is non-recurring and(c)could not have been reasonably anticipated by the entity.


AASB132(4) Scope issue: employee benefit and dividends payable provisions

The IFRS Interpretations Committee and the AASB have confirmed that the exclusion of18.employee benefit plans from the scope of AASB 132 Financial Instruments: Presentationapplies to all benefits covered by AASB 119 Employee Benefits, including liabilities for longservice leave (see AASB Rejected Issue - Classification of Long-Service Leave Liabilities,issued in December 2005). As the scope of AASB 7 is the same as that of AASB 132, thismeans that the disclosures required under AASB 7 do not have to be made in relation toemployee benefits liabilities.

However, it is unclear whether dividends payable (where recognised) should be treated as a19.financial liability arising under financial instruments. Although dividends payable on equityinstruments seem to literally meet the definition of a financial instrument, none of the text orsupporting guidance in AASB 7 suggests that they are intended to come within the scope of thestandard. VALUE ACCOUNTS Reduced Disclosure Pty Ltd has not recognised any dividendspayable in the balance sheet. Where an entity has recognised and treated dividends payableon equity instruments as a financial liability, it should consider providing the relevant AASB 7disclosures.

Classification: Compound financial instruments

AASB132(28) The issuer of a non-derivative financial instrument shall evaluate the terms of the financial20.instrument to determine whether it contains both a liability and an equity component. Suchcomponents shall be classified separately as financial liabilities or equity instruments.

AASB132(30) Classification of the liability and equity components of a convertible instrument is not revised as21.a result of a change in the likelihood that a conversion option will be exercised, even when theexercise of the option may appear to have become economically advantageous to someholders.

Long-term borrowings

AASB101(72) An entity classifies its financial liabilities as current when they are due to be settled within 1222.months after the reporting period, even if:

the original term was for a period longer than twelve months, and(a)

an agreement to refinance, or to reschedule payments, on a long-term basis is completed(b)after the reporting period and before the financial statements are authorised for issue.

AASB101(73) If an entity expects, and has the discretion, to refinance or roll over an obligation for at least 1223.months after the reporting period under an existing loan facility, it classifies the obligation asnon-current, even if it would otherwise be due within a shorter period. However, whenrefinancing or rolling over the obligation is not at the discretion of the entity (eg there is noagreement to refinance), the potential to refinance is not considered and the obligation isclassified as current. A loan that may be callable by the lender at any time without cause willalso have to be classified as current as the entity does not have an unconditional right to defersettlement for at least another 12 months after the reporting period.




Breached covenants

AASB101(74) When an entity breaches a provision of a long-term loan agreement on or before the end of the24.reporting period with the effect that the liability becomes payable on demand, the liability isclassified as current, even if the lender has agreed, after the reporting period and before theauthorisation of the financial statements for issue, not to demand payment as a consequenceof the breach. The liability is classified as current because, at the end of the reporting period,the entity does not have an unconditional right to defer its settlement for at least twelve monthsafter that date.

AASB101(75) However, if the lender has agreed before the end of the reporting period to provide a period of25.grace ending at least twelve months after the reporting period within which the entity can rectifythe breach and during which the lender cannot demand repayment, the liability is classified asnon-current.

AASB101(76) For liabilities classified as current, the following events must be disclosed as non-adjusting26.events if they occur between the end of the reporting period and the date the financialstatements are authorised for issue:

refinancing on a long-term basis(a)

rectification of a breach of a long-term loan arrangement, and(b)

the granting by the lender of a period of grace to rectify a breach of a long-term loan(c)arrangement ending at least twelve months after the reporting period.

Compliance with debt covenants

AASB101(135)(d) Entities that consider their major borrowings to be part of their capital will need to provide27.additional disclosures about the compliance with the debt covenants (see note 13 and theassociated commentary for details).

Terms and conditions of financial instruments

AASB7(7),(31) Entities shall disclose sufficient information that enables users of its financial statements to28.evaluate the significance of financial instruments for its financial position and performance andthe nature and extent of risks arising from these financial instruments. However, the intention ofAASB 7 was to decrease the potentially voluminous disclosures that were required by AASB132 and replace them with shorter but more meaningful information. Under normalcircumstances entities will therefore not need to disclose the significant terms and conditionsfor each of their major borrowings. Having said that, if an entity has a borrowing (or otherfinancial instrument) with unusual terms and conditions, it should provide sufficient informationto enable users to assess the nature and extent of risks associated with these instruments.

Fair value measurements

AASB 13 Fair Value Measurement explains how to measure fair value and aims to enhance29.fair value disclosures. The standard defines fair value as the price that would be received tosell an asset or paid to transfer a liability in an orderly transaction between market participantsat the measurement date (exit price).

Disclosure objectives

AASB13(91) AASB 13 requires disclosure of information that helps users of its financial statements assess:30.

for assets and liabilities that are measured at fair value on a recurring or non-recurring(a)basis after initial recognition, the valuation techniques and inputs used to develop thosemeasurements

for recurring fair value measurements using significant unobservable inputs (level 3), the(b)effect of the measurements on profit or loss or other comprehensive income for the period.

AASB13(93)(a) AASB 13 distinguishes between recurring and non-recurring fair value measurements.31.Recurring fair value measurements of assets or liabilities are those that other accountingstandards require or permit at the end of each reporting period. Non-recurring fair valuemeasurements are those that other standards require or permit in certain circumstances (egwhen an entity measures an asset held for sale at fair value less costs to sell in accordancewith AASB 5 Non-current Assets Held for Sale and Discontinued Operations).




AASB13(92) Entities shall consider what level of detail is necessary to satisfy the above disclosure32.objectives, how much emphasis needs to be placed on each of the requirements, to whatextent information should be aggregated or disaggregated and whether any additionalinformation is necessary to meet those objectives.

AASB13(99) The information should be presented in tabular format unless another format is more33.appropriate.

Fair value hierarchy

AASB13(72)-(90) Entities shall classify all fair value measurements, including those that are only disclosed but34.not recognised, using a fair value hierarchy based on types of inputs used in making themeasurements. The fair value hierarchy has the following levels:

level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities(a)

level 2: inputs other than quoted prices that are observable for the asset or liability, either(b)directly (eg as prices) or indirectly (eg derived from prices), and

level 3: inputs for the asset or liability that are not based on observable market data(c)(unobservable inputs).

The appropriate level is determined on the basis of the lowest level input that is significant tothe fair value measurement.

Information about valuation techniques

AASB13(93)(d) Entities must describe the valuation technique(s) and inputs used in the fair value35.measurement for all recurring and non-recurring fair value measurements that are categorisedwithin level 2 and level 3 of the fair value hierarchy.

AASB13(93)(d) For fair value measurements categorised within level 3 of the hierarchy, the entity must also36.provide quantitative information about the significant unobservable inputs used, unlessquantitative inputs are not developed by the entity when measuring fair value (eg if the entityuses prices from prior transactions or third-party pricing information without adjustment).


AASB13(91)(a) Entities that are reporting under the reduced disclosure regime do not need to provide thedetailed information about level 2 and level 3 valuations. However, they must still disclose thevaluation techniques and inputs used to determine fair value measurements.

Sensitivity

AASB13(93)(h) For all recurring fair value measurements that are classified as ‘level 3’ entities must provide37.information about the sensitivity of the fair value measurement to changes in unobservableinputs:

For all such measurements: a narrative description of the sensitivity if a change in(a)unobservable inputs could result in significantly higher or lower fair values and adescription of any interrelationships between those inputs and other unobservable inputsand how these interrelationships could magnify or mitigate the effect of changes in theinputs.

For financial assets and financial liabilities, if changing one or more unobservable inputs(b)would change fair value significantly, entities shall disclose the effect of reasonablypossible changes in assumptions and how the effect was calculated.

Classes of assets and liabilities

AASB13(94) The disclosures in AASB 13 must be made separately for each class of assets and liabilities.38.Entities shall determine appropriate classes of assets and liabilities by considering:

the nature, characteristics and risks of the asset or liability, and(a)

the level of the fair value hierarchy within which the fair value measurement is categorised.(b)

While entities reporting under tier 2 of the reduced disclosure regime do not need to providethe fair value disclosures by level of the fair value hierarchy, they must still disclose the fairvalue measurements by classes of assets and liabilities.

AASB13(94) A class of assets and liabilities will often require greater disaggregation than the line items39.presented in the balance sheet. The number of classes may also need to be greater for fairvalue measurements categorised within level 3 of the hierarchy, as those measurements havea greater degree of uncertainty and subjectivity. Entities shall disclose sufficient information toallow a reconciliation back to the line items disclosed in the balance sheet.




Unrealised gains and losses relating to recurring level 3 measures

AASB13(93)(f) AASB 13 does not provide guidance on how to calculate the unrealised gains and losses for40.recurring level 3 measures. A similar requirement previously existed under US GAAP wherethree methods were acceptable. In our view, all of these methods would be acceptable underIFRS provided they are consistently applied. The methods are:

Balance sheet view: determine unrealised gains and losses as the fair value of the security(c)less its amortised cost base. Under this view, gains and losses are realised at maturity orsale date. Therefore the entire gain or loss is considered unrealised until maturity.

Income statement view: determine unrealised gains and losses as the total gains and(d)losses during the period less the cash received or paid for those items. Under this vieweach cash receipt or settlement represents a realised gain or loss in its entirety.

Cash flow view: first determine any realised gains or losses as the difference between the(e)expected cash flows at the beginning of the period and the actual cash flows at the end ofthe period. Then, determine unrealised gains or losses for items still held at the reportingdate as the remaining expected cash flows for future periods at the end of the period lessthe remaining expected cash flows for future periods at the beginning of the period.

Fair value disclosed, but not recognised

AASB13(97),(93)(a) Entities must also provide information about the fair value hierarchy of fair value measurements41.that are disclosed in the notes to the financial statements, but where the assets and liabilitiesare not measured at fair value in the balance sheet. This is illustrated in notes 7(b),(d) and (g).For fair value measurements that are classified as ‘level 2’ or ‘level 3’, entities must furtherdisclose:

AASB13(97),(93)(d) a description of the valuation technique(s) and the inputs used in the fair value(a)measurement

AASB13(97),(93)(i) if the highest and best use of a non-financial asset differs from its current use, that fact and(b)why the asset is being used in a manner that differs from its highest and best use.


Cash not available for use

AASB107(48) An entity shall disclose, together with a commentary by management, the amount of significant42.cash and cash equivalent balances held by the entity that are not available for use by the group(‘restricted cash’).

Renegotiated financial assets that would otherwise be past due or impaired

AASB7(B5)(g)AASB7(36)

If the entity has any financial assets that would otherwise be past due or impaired but that have43.been renegotiated, it should consider disclosing its accounting policy for financial assets thatare the subject of renegotiated terms.

Inactive market: fair value determined using valuation techniques - difference on initial recognition

AASB7(28)(b) If there is a difference between the fair value at initial recognition (being the transaction price)44.and the amount that would be determined at that date using a valuation technique, an entityshall disclose (by class of financial instrument) the aggregate difference yet to be recognised inprofit or loss at the beginning or the end of the period and a reconciliation of changes in thebalance of this difference.

Transferred financial assets that are not derecognised in their entirety

AASB7(42D) In addition to the disclosures illustrated in note 7(b) for transferred assets that are not45.derecognised in their entirety, an entity may also need to disclose the following for each classof such financial assets:

(a) if the counterparty to the associated liabilities has recourse only to the transferred assets,a schedule that sets out the fair value of the assets and the associated liabilities and thenet position (difference) between the two, and

(b) when the entity continues to recognise the assets to the extent of its continuinginvolvement, the total amount of the original assets, the carrying amount of the assets thatthe entity continues to recognise and the carrying amount of the associated liabilities.




Transferred assets that are derecognised in their entirety – continuing involvement

AASB7(42E) When an entity derecognises transferred financial assets but has continuing involvement in46.them, the entity shall disclose for each type of continuing involvement:

(a) the carrying amount of the assets and liabilities that represent the entity’s continuinginvolvement and the line items in which they are recognised

(b) the fair value of the assets and liabilities that represent the entity’s continuing involvement

(c) the amount that best represents the entity’s maximum exposure to loss from its continuinginvolvement, and information on how the maximum exposure is determined

(d) the undiscounted cash outflows that would or may be required to repurchase derecognisedfinancial assets, or other amounts payable to the transferee in respect of the transferredassets (for variable cash outflows determine the disclosed amount based on the conditionsthat exist at the reporting date)

(e) a maturity analysis of the undiscounted cash outflows from (d) above, showing theremaining contractual maturities of the entity’s continuing involvement

(f) qualitative information that explains and supports the quantitative disclosures in (a) –(e) above.

AASB7(42F) If the entity has more than one type of continuing involvement in a derecognised asset, it can47.aggregate the information in paragraph 46 above in respect of the particular asset.

AASB7(42G) In addition to the information provided under paragraph 46 above, the entity shall also disclose48.the following for each type of continuing involvement:

(a) the gain or loss recognised at the date of transfer of the assets

(b) income and expenses recognised, both in the reporting period and cumulatively, from theentity’s continuing involvement in the derecognised financial assets

(c) if the total amount of proceeds from transfer activity in a reporting period is not evenlydistributed throughout the reporting period:

(i) when the greatest transfer activity took place within that reporting period

(ii) the amounts recognised from transfer activity (eg related gains/losses), and

(iii) the total amount of proceeds from transfer activity in that part of the period.

AASB7(42H) Entities must disclose additional information, where this is necessary to satisfy the overall49.objective set out paragraph 8(c) and (d) above.

Finance leases in the financial statements of lessees: sublease payments

AASB117(31)(d) Where applicable, disclosure is required of the total of future minimum sublease payments50.expected to be received under non-cancellable subleases at the end of the reporting period.

Finance leases - disclosure requirements for lessors

AASB117(47) In addition to meeting the requirements in AASB 7 Financial Instruments: Disclosures, lessors51.shall disclose the following for finance leases:

AASB117(47)(a) (a) a reconciliation between the gross investment in the lease at the end of the reportingperiod, and the present value of minimum lease payments receivable at the end of thereporting period. In addition, disclosure shall be made of the gross investment in the leaseand the present value of minimum lease payments receivable at the end of the reportingperiod, for each of the following periods:

(i) not later than one year

(ii) later than one year and not later than five years

(iii) later than five years

AASB117(47)(b) (b) unearned finance income

AASB117(47)(c) (c) the unguaranteed residual values accruing to the benefit of the lessor

AASB117(47)(d) (d) the accumulated allowance for uncollectible minimum lease payments receivable

AASB117(47)(e) (e) contingent rents recognised as income in the period

AASB117(47)(f) (f) a general description of the lessor’s material leasing arrangements.

AASB117(48) As an indicator of growth it is often useful also to disclose the gross investment less unearned52.income in new business added during the period, after deducting the relevant amounts forcancelled leases.




Refer to note 8(d) for an illustration of the disclosure requirements for lessors of operating53.leases under AASB 117 Leases.

Financial assets designated as at FVPL

AASB7(8)(a) Entities that have both financial assets that are held for trading and those that were, upon initial54.recognition, designated by the entity as financial assets at fair value through profit or loss shalldisclose separately the carrying amounts of both classes of financial assets.

AASB7(9) If an entity has designated a loan or receivable (or group of loans or receivables) as at fair55.value through profit or loss, it must provide information about:

(a) the maximum exposure to credit risk of the loan or receivable (or group thereof) at the ofthe reporting period

(b) the amount by which any related credit derivatives or similar instruments mitigate thatexposure

(c) the amount of change, during the period and cumulatively, in the fair value of the loan orreceivable (or group thereof) that is attributable to changes in the credit risk

(d) the amount of the change in the fair value of any related credit derivatives or similarinstruments that has occurred during the period and cumulatively since the loan orreceivable was designated.

AASB7(11) The entity shall further disclose the methods used to determine the amount disclosed in56.paragraph 55(c) above. If the entity believes that the disclosure it has provided does notfaithfully represent the change in the fair value of the financial asset or financial liabilityattributable to changes in its credit risk, it shall disclose the reasons for reaching thisconclusion and the factors it believes are relevant.

Financial liabilities designated as at FVPL

If an entity has designated a financial liability as at fair value through profit or loss on initial57.recognition, it shall disclose:

AASB7(8)(e) (a) the carrying amount separately from other financial liabilities at fair value through profit orloss (held for trading or derivatives)

AASB7(10)(a) (b) the amount of change in its fair value during the period and cumulatively, that isattributable to changes in the credit risk, and

AASB7(10)(b) (c) the difference between its carrying amount and the amount the entity would becontractually required to pay at maturity to the holder of the obligation.

AASB7(11) The entity shall further disclose the methods used to determine the amount disclosed in 16(b)58.above. If the entity believes that the disclosure it has provided does not faithfully represent thechange in the fair value of the financial liability attributable to changes in its credit risk, it shallfurther disclose the reasons for reaching this conclusion and the factors it believes are relevant.

For further comments on financial liabilities designated at fair value through profit or loss, refer59.to paragraphs 44 to 47 of the commentary to note 28.

Reclassifications out of FVPL

AASB139(50) Financial assets that are classified as held for trading (but not derivatives or financial assets60.that are designated at fair value through profit or loss under the fair value option) may bereclassified out of the fair value through profit or loss category if the asset:

(a) is no longer held for the purpose of selling or repurchasing in the near term, and

AASB139(50D) (b) would have met the definition of a loan or receivable at initial recognition and the entitynow has the intent and ability to hold it for the foreseeable future or to maturity.

AASB139(50B) If the financial asset would not have met the definition of a loan or receivable it may be61.reclassified only in rare circumstances. According to a press release issued by the IASB inOctober 2008, the deterioration of the world’s financial markets in the third quarter of 2008 wasan example of such a circumstance.

AASB139(103H) Reclassifications can normally only be made prospectively. That is, they take effect on the day62.of the reclassification.




AASB7(12A) If an entity has reclassified a financial asset out of the fair value through profit or loss category63.in accordance with AASB 139 paragraph 50B or 50D, or the available-for-sale category as perAASB 139 paragraph 50E, it shall disclose:

(a) the amount reclassified into and out of each category

(b) for each reporting period until derecognition, the carrying amounts and fair values of allfinancial assets that have been reclassified in the current and previous reporting periods

(c) if a financial asset was reclassified in accordance with paragraph 50B of AASB 139(paragraph 61 above), the rare situation and the facts and circumstances indicating thatthe situation was rare

(d) for the reporting period when the financial asset was reclassified, the fair value gain or losson the financial asset recognised in profit or loss or other comprehensive income in thatreporting period and in the previous reporting period

(e) for each reporting period following the reclassification (including the reporting period inwhich the financial asset was reclassified) until derecognition of the asset, the fair valuegain or loss that would have been recognised in profit or loss or other comprehensiveincome if the asset had not been reclassified, and the gain, loss, income and expenserecognised in profit or loss, and

(f) the effective interest rate and estimated amounts of cash flows the entity expects torecover, as at the date of reclassification of the financial asset.

Other reclassifications

AASB139(50) Reclassifications of financial assets out of the available-for-sale category are only permitted in64.limited circumstances:

AASB139(54) (a) into the held-to-maturity category if it becomes appropriate to carry the financial asset atcost or amortised cost as a result of a change in intention or ability, or when a tainted held-to-maturity portfolio has been ‘cleansed’ (at the end of the second financial year after thetainting)

AASB139(50E) (b) into the loans and receivable category if:

(i) the asset is no longer held for the purpose of selling or repurchasing it in the nearfuture

(ii) the asset would have met the definition of loans and receivables on initial recognition,and

(iii) the entity has the intention and ability to hold the asset for the foreseeable future oruntil maturity.

AASB139(51),(52) Financial assets may need to be reclassified from the held-to-maturity into the available-for-65.sale category if, as a result of a change in intention or ability, it is no longer appropriate toclassify an investment as held-to-maturity and/or the remaining held-to-maturity investmentshave become ‘tainted’.

AASB7(12) If an entity has reclassified a financial asset during the current or a previous year, it must make66.additional disclosures:

AASB7(12) (a) If the asset was reclassified either into or out of the held-to-maturity category in the currentyear (paragraphs 64(a) and 65 above), the entity must disclose the amount and the reasonfor that reclassification.

AASB7(12) (b) If the asset was reclassified into the loans and receivable category (paragraph 64(b)above), the entity will need to make a number of additional disclosures both in the year ofthe reclassification and in subsequent years, see paragraph 63 above.

Listed investment entities

ASX(4.10.20) Commentary removed as not applicable to proprietary companies.67.




Profit and loss information: financial assets or financial liabilities designated as at FVPL

AASB7(20)(a)(i) Entities that have designated financial assets or financial liabilities as at fair value through profit68.or loss on initial recognition must disclose separately all net gains or net losses on these assetsand liabilities.

Profit and loss information: net gains and losses on other financial instruments

Where applicable, entities must also disclose separately net gains or losses on:69.

AASB7(20)(a)(iii) (a) held-to-maturity investments

AASB7(20)(a)(iv) (b) loans and receivables, and

AASB7(20)(a)(v) (c) financial liabilities measured at amortised cost.

Financial liabilities: fee expense

AASB7(20)(c) Fee expense (other than amounts included in determining the effective interest rate) arising70.from financial liabilities that are not at fair value through profit or loss must be separatelydisclosed.

Financial liabilities: compound financial instruments with multiple embedded derivatives

AASB7(17) If an entity has issued an instrument that contains both a liability and an equity component71.(refer to paragraph 28 of AASB 132) and the instrument has multiple embedded derivativefeatures whose values are interdependent such as a callable convertible debt instrument, itshall disclose the existence of those features.

Financial liabilities: defaults and breaches – reduced disclosure regime

AASB7(RDR18.1) For loans payable recognised at the end of the reporting period, for which there is a breach of72.terms or a default of principal, interest, sinking fund, or redemption terms that has not beenremedied by the end of the reporting period, entities that have applied the reduced disclosureregime must disclose:

(a) details the breach or default

(b) the carrying amount of the loans payable at the end of the reporting period

(c) whether the default has been remedied, or the terms of the loans payable wererenegotiated, before the date the financial statements were authorised for issue.

An example of such a disclosure is:73.

In the third quarter, the group was overdue paying interest on bank borrowings with acarrying amount of $2,000,000. The group experienced a temporary shortage of cashbecause cash outflows in the second and third quarter were higher than anticipated due tobusiness expansions. As a result, interest of $75,000 was not paid on the due date of 31March 2015.

The company has since paid all outstanding amounts (including additional interest andpenalties for late payment) during the fourth quarter.

Management expects that the company will be able to meet all contractual obligationsfrom borrowings on a timely basis going forward.

AASB7(19) The same information must be disclosed if there were breaches of loan agreement terms other74.than those described in paragraph 72 and those breaches permitted the lender to demandaccelerated repayment (unless the breaches were remedied, or the terms of the loan wererenegotiated, on or before the end of the reporting period).

AASB101(74),(75) If a breach occurred during the period, and the breach has not been remedied or the terms of75.the loan payable have not been renegotiated by the end of the reporting period, the effect ofthe breach on the classification of the liability as current or non-current is determined underAASB 101 Presentation of Financial Statements (refer to paragraph 24 above).




Fair value of liabilities with third-party credit enhancements

AASB13(98) For liabilities measured at fair value and issued with an inseparable third-party credit76.enhancement, an issuer shall disclose the existence of that credit enhancement and whether itis reflected in the fair value measurement of the liability.

Fair value of financial assets and financial liabilities with offsetting positions

AASB13(96) If an entity has applied the exception in AASB 13 paragraph 48 and measured the fair value of77.a group of financial assets or financial liabilities on the basis of the price that it would receive tosell a net long position (asset) or pay to transfer a net short position (liability) for a particularrisk exposure, it shall disclose that fact.

AASB7(30) Financial instruments measured at cost where fair value cannot be determined reliably

If the fair value of investments in unquoted equity instruments, derivatives linked to such equity78.instruments or a contract containing a discretionary participation feature (as described inAASB 4 Insurance Contracts) cannot be measured reliably the entity must disclose:

(a) the fact that fair value information has not been disclosed because it cannot bemeasured reliably

(b) a description of the financial instruments, their carrying amount and an explanation of whyfair value cannot be measured reliably

(c) information about the market for the instruments

(d) information about whether and how the entity intends to dispose of the financialinstruments

(e) if the instruments are subsequently derecognised, that fact, their carrying amounts at thetime of derecognition and the amount of gain or loss recognised.

Financial liabilities – fair value of contracts with discretionary participation feature

AASB7(30) If the fair value of a contract containing a discretionary participation feature (as described in79.AASB 4 Insurance Contracts) cannot be measured reliably, the following should be disclosed:

(a) the fact that fair value information has not been disclosed because it cannot be measuredreliably

(b) a description of the financial instruments, their carrying amount and an explanation of whyfair value cannot be measured reliably

(c) information about the market for the instruments

(d) information about whether and how the entity intends to dispose of the financialinstruments

(e) if the instruments are subsequently derecognised, that fact, their carrying amount at thetime of derecognition and the amount of gain or loss recognised.


I 8 Non-financial assets and liabilities 1

Not mandatory This note provides information about the group's non-financial assets and liabilities, including:

specific information about each type of non-financial asset and non-financial liability

inventories (note 8(a))

assets classified as held for sale (note 8(b))

property, plant and equipment (note 8(c))

investment properties (note 8(d))

deferred tax balances (note 8(e))

intangible assets (note 8(f))

provisions (note 8(g))

retirement benefit obligations (note 8(h))

accounting policies

information about determining the fair value of the assets and liabilities, including judgements andestimation uncertainty involved.

(a) Inventories 54,55

2015$’000

2014Restated

$’000

Current assets

AASB101(77)AASB102(36)(b)

Raw materials and stores 6,200 4,800

AASB102(36)(b) Work in progress 5,600 5,400

AASB102(36)(b) Finished goods 7,953 6,472

AASB102(36)(b) Land held for development and resale 2,400 -

22,153 16,672

AASB101(117)(i) Assigning costs to inventories 2,3

AASB102(23),(25),(36)(a)

The costs of individual items of inventory are determined using weighted average costs. The exceptionis land held for development and resale where costs are assigned by specific identification and includethe cost of acquisition, development and borrowing costs incurred during the development. See note28(m) for the group’s other accounting policies for inventories.

(ii) Amounts recognised in profit or lossAASB102(36)(d) Inventories recognised as an expense during the year ended 30 June 2015 amounted to $58,374,000

(2014 – $37,390,000). These were included in cost of sales and cost of providing services (except for$535,000 of inventories damaged by a fire which are recognised in other expense – refer to note 4).

AASB102(36)(e)AASB136(126)(a)

Write-downs of inventories to net realisable value amounted to $950,000 (2014 – $750,000). Thesewere recognised as an expense during the year ended 30 June 2015 and included in ‘cost of sales’ inprofit or loss.

(b) Assets classified as held for sale 4,5

2015$’000

2014$’000

Non-current assets held for sale

Land 250 -

250 -

AASB5(41)(a),(b),(d) In May 2015, the directors of VALUE ACCOUNTS Manufacturing Limited decided to sell a parcel ofvacant land which was originally acquired for an expansion of the Queensland factory. There areseveral interested parties and the sale is expected to be completed before the end of December 2015.The asset is presented within total assets of the Australian Furniture – manufacturing segment innote 2.

Non-financial assets and liabilities


(b) Assets classified as held for sale 4,5

(i) Non-recurring fair value measurementsAASB13(91)(a),(93)(d)AASB5(41)(c)

Land classified as held for sale during the reporting period was measured at the lower of its carryingamount and fair value less costs to sell at the time of the reclassification, resulting in the recognition of awritedown of $22,000 as other expenses in the income statement. The fair value of the land wasdetermined using the sales comparison approach as described in note 8(i) below. This is a level 2measurement as per the fair value hierarchy set out in note 7(h) above.

(c) Property, plant and equipment 56-58

Non-current

Freeholdland

$’000

Freeholdbuildings

$’000

Furniture,fittings andequipment

$’000

Machineryand vehicles

$’000

Assets underconstruction

$’000Total$’000

At 1 July 2013 (Restated) 8-10

AASB116(73)(d) Cost or fair value 11,350 28,050 22,480 70,860 - 132,740

AASB116(73)(d) Accumulated depreciation - - (7,570) (37,025) - (44,595)

Net book amount 11,350 28,050 14,910 33,835 - 88,145

Year ended 30 June 2014

AASB116(73)(e) Opening net book amount 11,350 28,050 14,910 33,835 - 88,145

AASB116(73)(e)(viii) Exchange differences - - (43) (150) - (193)

AASB116(73)(e)(iv) Revaluation surplus 2,700 3,140 - - - 5,840

AASB116(73)(e)(i),(74)(b) Additions 2,874 1,490 2,940 7,198 3,100 17,602

AASB116(73)(e)(ii) Assets included in a disposal groupclassified as held for sale and otherdisposals (424) - (525) (2,215) - (3,164)

AASB116(73)(e)(vii) Depreciation charge 6 - (1,540) (2,030) (4,580) - (8,150)

AASB116(73)(e)AASB116(74)(b)

Closing net book amount 16,500 31,140 15,292 34,088 3,100 100,080

At 30 June 2014 (Restated)

AASB116(73)(d) Cost or fair value 16,500 31,140 24,852 75,693 3,100 151,285

AASB116(73)(d) Accumulated depreciation - - (9,600) (41,605) - (51,205)

AASB101(77) Net book amount 16,500 31,140 15,252 34,088 3,100 100,080

Year ended 30 June 2015

AASB116(73)(e) Opening net book amount 16,500 31,140 15,252 34,088 3,100 100,080

AASB116(73)(e)(viii) Exchange differences - - (230) (570) (800)

AASB116(73)(e)(iv) Revaluation surplus 3,320 3,923 - - 7,243

AASB116(73)(e)(iii) Acquisition of subsidiary 800 3,400 1,890 5,720 11,810

AASB116(73)(e)(i),(74)(b) Additions 2,500 2,682 5,998 11,972 3,450 26,602

AASB116(73)(e)(ii) Assets classified as held for saleand other disposals (550) - (985) (1,680) (3,215)

AASB116(73)(e)(ix) Transfers - - 950 2,150 (3,100) -

AASB116(73)(e)(vii) Depreciation charge - (1,750) (2,340) (4,860) (8,950)

AASB116(73)(e)(v)AASB136(126)(a),(b)

Impairment loss (iv) - (465) (30) (180) (675)

AASB116(73)(e) Closing net book amount 22,570 38,930 20,505 46,640 3,450 132,095

At 30 June 2015

AASB116(73)(d) Cost or fair value 22,570 38.930 32,475 93,285 3,450 190,710

AASB116(73)(d) Accumulated depreciation andimpairment

- - (11,970) (46,645) - (58,615)

AASB101(77)AASB116(74)(b)

Net book amount 22,570 38,930 20,505 46,640 3,450 132,095



(c) Property, plant and equipment

(ii) Leased assetsAASB117(31)(a) Furniture, fittings and equipment includes the following amounts where the group is a lessee under a

finance lease (refer to note 7(g) for further details):

2015$’000

2014Restated

$’000

Leasehold equipment

Cost 3,000 3,000

Accumulated depreciation (250) -

Net book amount 2,750 3,000

(iii) Non-current assets pledged as security

Refer to note 25 for information on non-current assets pledged as security by the group.

(iv) Impairment loss and compensation 11,24

AASB136(130)(a) The impairment loss relates to assets that were damaged by a fire – refer to note 4(b) for details. Thewhole amount was recognised as other expense in profit or loss, as there was no amount included in theasset revaluation surplus relating to the relevant assets.

AASB116(74)(d) An amount of $300,000 (2014 – nil) was received by the group from an insurance company ascompensation for damage to a building caused by the fire and recognised as other income.

AASB101(117)(v) Revaluation, depreciation methods and useful lives 2,3

AASB116(73)(a)

AASB116(50),(73)(b)

Land and buildings are recognised at fair value based on periodic, but at least triennial, valuations byexternal independent valuers, less subsequent depreciation for buildings. A revaluation surplus is creditedto other reserves in shareholders’ equity (note 9(b)). All other property, plant and equipment is recognisedat historical cost less depreciation.

Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net oftheir residual values, over their estimated useful lives or, in the case of leasehold improvements andcertain leased plant and equipment, the shorter lease term as follows:

AASB116(73)(c) Buildings

Machinery

Vehicles

Furniture, fittings and equipment

Leased plant and equipment

25-40 years

10-15 years

3-5 years

3-8 years

10-15 years

See note 28(r) for the other accounting policies relevant to property, plant and equipment.

(vi) Significant estimates – valuations of land and buildings 2,3

Information about the valuation of land and buildings is provided in note 8(i) below.

AASB116(74)(a)(vii) Carrying amounts that would have been recognised if land and buildings were stated at cost

AASB116(77)(e) If freehold land and buildings were stated on the historical cost basis, the amounts would be as follows:

2015$’000

2014$’000

Freehold land

Cost 15,800 13,350

Accumulated depreciation - -


Buildings

Cost 36,362 29,830

Accumulated depreciation (6,775) (4,540)




(d) Investment properties 12,13,59-66

2015 2014

$'000 $'000

Non-current assets - at fair value14

AASB140(76) Opening balance at 1 July 10,050 8,205AASB140(76)(a) Acquisitions 1,900 -AASB140(76)(a) Capitalised subsequent expenditure - 810AASB140(76)(c) Classified as held for sale or disposals - (112)AASB140(76)(d) Net gain/(loss) from fair value adjustment 1,350 1,397AASB140(76)(f) Transfer (to)/from inventories and owner-occupied property - (250)

AASB140(76) Closing balance at 30 June 13,300 10,050

AASB140(75)(f)(i) Amounts recognised in profit or loss for investment properties

2015 2014

$'000 $'000

AASB140(75)(f)(i) Rental income 6,180 5,165AASB140(75)(f)(ii) Direct operating expenses from property that generated rental

income (807) (606)AASB140(75)(f)(iii) Direct operating expenses from property that did not generate

rental income (903) (503)

Fair value gain recognised in other income 1,350 1,397

AASB101(117)(ii) Measuring investment property at fair value

AASB140(75)(a),(75)(d)

Investment properties, principally freehold office buildings, are held for long-term rental yields and are notoccupied by the group. They are carried at fair value. Changes in fair values are presented in profit or lossas part of other income.

(iii) Significant estimate – fair value of investment property

Information about the valuation of investment properties is provided note 8(i) below.

AASB140(75)(g)(iv) Non-current assets pledged as security

Refer to note 25 for information on non-current assets pledged as security by the group.

AASB140(75)(h)(v) Contractual obligations

Refer to note 18 for disclosure of contractual obligations to purchase, construct or develop investmentproperty or for repairs, maintenance or enhancements.

AASB117(56)(c)(vi) Leasing arrangements 15

Some of the investment properties are leased to tenants under long-term operating leases withrentals payable monthly. Minimum lease payments receivable on leases of investment properties are asfollows:

2015 2014$'000 $'000

AASB117(56)(a) Minimum lease payments under non-cancellable operatingleases of investment properties not recognised in the financialstatements are receivable as follows:

Within one year 4,265 4,245

Later than one year but not later than 5 years 9,120 9,050

Later than 5 years 2,370 2,550

15,755 15,845



(e) Deferred tax balances 67

(i) Deferred tax assets

20152014

Restated

Notes $'000 $'000

AASB112(81)(g)(i) The balance comprises temporary differences attributable to:

Tax losses 3,170 2,245

Retirement benefit obligations 8(h) 1.011 509

Employee benefits 914 822

Deferred revenue 719 711

5,814 4,287

Other

Make good provision 8(g) 367 -

Provision for warranties and legal costs 8(g) 328 372

Provision for restructuring 8(g) 270 -

Cash flow hedges 12(a) 230 233

Derivatives held for trading 183 186

Doubtful debts 12(c) 227 137

Contingent liability 8(g) 143 -

Write-down of building 4 140 -

Share issue expenses 9(a) 48 -

Other 53 34

Sub-total other 1,989 962

Total deferred tax assets 7,803 5,249

AASB112(74) Set-off of deferred tax liabilities pursuant to set-off provisions16,17 (ii) (543) (478)

Net deferred tax assets 7,260 4,771

AASB101(61) Deferred tax assets expected to be recovered within 12 months 2,477 1,848AASB101(61) Deferred tax assets expected to be recovered after more than 12

months18 5,326 3,401

7,803 5,249

Significant estimates 2,3

AASB101(125)AASB112(82)

The deferred tax assets include an amount of $1,378,000 which relates to carried forward tax losses ofVALUE ACCOUNTS Manufacturing Limited. The subsidiary, which is not part of the tax consolidatedgroup, has incurred the losses over the last two financial years following the acquisition of themanufacturing operations in Maitland. They relate to the once-off costs of integrating the operations andwill not recur in future. The group has concluded that the deferred assets will be recoverable using theestimated future taxable income based on the approved business plans and budgets for the subsidiary.The subsidiary is expected to generate taxable income from 2017 onwards. The losses can be carriedforward indefinitely and have no expiry date.

AASB112(81)(g)(ii)

Movements19,20

Taxlosses

$’000

Retirementbenefit

obligation$’000

Employeebenefits

$’000

Deferredrevenue

$’000Other$’000 Total $’000

At 1 July 2013 (Restated) 1,300 365 791 687 441 3,584

(Charged)/credited

AASB112(81)(g)(ii) - to profit or loss 945 (15) 31 24 421 1,406

AASB112(81)(ab) - to othercomprehensiveincome - 159 - - 100 259

At 30 June 2014 (Restated) 2,245 509 822 711 962 5,249



(e) Deferred tax balances

AASB112(81)(g)(ii)

Movements19,20

Taxlosses

$’000

Retirementbenefit

obligation$’000

Employeebenefits

$’000

Deferredrevenue

$’000Other$’000 Total $’000

At 30 June 2014 (Restated) 2,245 509 822 711 962 5,249

(Charged)/credited

AASB112(81)(g)(ii) - to profit or loss (600) (24) (33) 8 847 135

AASB112(81)(ab) - to othercomprehensiveincome - (48) - - (15) (63)

AASB112(81)(a) - directly to equity - - - - 60 60

Acquisition of subsidiary 1,525 574 125 - 135 2,359

At 30 June 2015 3,170 1,011 914 719 1,989 7,803

(ii) Deferred tax liabilities

Notes2015

$’000

2014Restated

$’000AASB112(81)(g)(i) The balance comprises temporary differences

attributable to:

Property, plant and equipment 8(c) 6,464 4,140

Intangible assets 8(f) 2,375 770

Convertible note 7(g) 955 -

Investment property 8(d) 1,124 719

10,918 5,629

Other

Financial assets at fair value through profit or loss 7(c) 720 420

Derivatives held for trading 12(a) 556 425

Available-for-sale financial assets 7(d) 281 172

Investments in associates 16(e) 158 113

Prepayments 7(b) 150 143

Inventories 8(a) 120 -

Share-based payments (deferred shares) 21(b) 51 22

Other 182 214

Sub-total other 2,218 1,509

Total deferred tax liabilities 13,136 7,138

AASB112(74) Set-off of deferred tax liabilities pursuant to set-offprovisions

16,17(i) (543) (478)

Net deferred tax liabilities 12,593 6,660

AASB101(61) Deferred tax liabilities expected to be settled within 12 months 1,408 968AASB101(61) Deferred tax liabilities expected to be settled after more than 12

months18 11,185 5,692

12,593 6,660



(e) Deferred tax balances

AASB112(81)(g)(ii)

Movements19,20

Property,plant and

equipment$’000

Intangibleassets

$’000

Investmentproperty

$’000

Conver-tible note

$’000Other$’000 Total $’000

At 1 July 2013 (Restated) 2,150 615 300 - 1,291 4,356

Charged/(credited)

AASB112(81)(g)(ii) - to profit or loss 238 155 419 - (155) 657AASB112(81)(ab) - to other

comprehensiveincome 1,752 - - - 373 2,125

At 30 June 2014 (Restated) 4,140 770 719 - 1,509 7,138

Charged/(credited)

AASB112(81)(g)(ii) - to profit or loss (173) (255) 405 (95) 420 302

AASB112(81)(ab) - to othercomprehensiveincome 2,173 - - - 169 2,342

AASB112(81)(a) - directly to equity - - - 1,050 - 1,050

Acquisition of subsidiary 324 1,860 - - 120 2,304

At 30 June 2015 6,464 2,375 1,124 955 2,218 13,136

(f) Intangible assets 21,23,69-80

Non-current assetsGoodwill

22

$’000

Patents,trademarks

and otherrights$’000

Internallygeneratedsoftware *

$’000

Customercontracts

$’000Total$$’000

AASB3(B67)(d)(i) At 1 July 2013

AASB138(118)(c) Cost 9,700 9,410 2,255 - 21,365

Accumulated amortisationand impairment

- (250) (205) - (455)

Net book amount 9,700 9,160 2,050 - 20,910

AASB138(118)(e) Year ended 30 June2014

Opening net book amount 9,700 9,160 2,050 - 20,910AASB138(118)(e)(i)AASB3(B67)(d)(ii)

Additions – acquisition - - 720 - 720

AASB3(B67)(d)(vi) Exchange differences 45 - - 45AASB138(118)(e)(vi) Amortisation charge ** - (525) (205) - (730)

Closing net book amount 9,745 8,635 2,565 - 20,945

AASB3(B67)(d)(viii)AASB138(118)(c)

At 30 June 2014

Cost 9,745 9,410 2,975 - 22,030

Accumulated amortisationand impairment - (775) (410) - (1,185)

AASB101(77) Net book amount 9,745 8,635 2,565 - 20,945



(f) Intangible assets

Non-current assetsGoodwill

$’000

Patents,trademarks

and otherrights$’000

Internallygeneratedsoftware *

$’000

Customercontracts

$’000Total$$’000

AASB3(B67)(d)(i)AASB138(118)(e)

Year ended 30 June2015

Opening net book amount 9,745 8,635 2,565 - 20,945AASB138(118)(e)(i) Additions – internal

development - - 880 - 880AASB3(B67)(d)(ii)AASB138(118)(e)(i) Acquisition of business 1,115 3,020 - 3,180 7,315AASB3(B67)(d)(vi) Exchange differences (145) - - - (145)AASB3(B67)(d)(v)AASB136(130)(b)AASB138(118)(e)(iv) Impairment charge *** (2,410) - - - (2,410)AASB138(118)(e)(vi) Amortisation charge ** - (525) (300) (1,210) (2,035)

Closing net book amount 8,305 11,130 3,145 1,970 24,550

AASB3(B67)(d)(viii)AASB138(118)(c)

At 30 June 2015

Cost 10,715 12,430 3,855 3,180 30,180

Accumulated amortisationand impairment (2,410) (1,300) (710) (1,210) (5,630)

AASB101(77) Net book amount 8,305 11,130 3,145 1,970 24,550

AASB138(118)(e)(i) * Software consists of capitalised development costs being an internally generated intangible asset.

AASB138(118)(d) ** Amortisation expenses are included in cost of sales of goods ($1,050,000; 2014 – $450,000), cost of providing services ($475,000; 2014 -$125,000), marketing expense ($310,000; 2014 - $45,000) and administration expenses ($200,000; 2014 – $110,000).

AASB136(126)(a),(130)(c)(i),(d)(i)

*** The carrying amount of the furniture manufacturing CGU in South East Asia has been reduced to its recoverable amount through recognition ofan impairment loss against goodwill. This loss has been disclosed as a separate line item in profit or loss.

AASB138(126)(Improvement)

VALUE ACCOUNTS Electronics Pty Ltd is researching new devices that could replace the current suiteof smartphones and tablets. It has incurred research and development expenses of $1,215,000 in thecurrent year (2014 – nil) which are included in administration cost in the income statement.

AASB101(117)(i) Amortisation methods and useful lives 2,3

AASB138(118)(a),(b) The group amortises intangible assets with a limited useful life using the straight-line method over thefollowing periods:

Patents, trademark and licences

IT development and software

Customer contracts

Capitalised development costs

3-5 years

3-5 years

1-3 years

3-5 years

See note 28(t) for the other accounting policies relevant to intangible assets, and note 28(j) for the group’spolicy regarding impairments.

(ii) Customer contractsAASB101(119) The customer contracts were acquired as part of a business combination (see note 14 for details). They

are recognised at their fair value at the date of acquisition and are subsequently amortised on a straight-line based on the timing of projected cash flows of the contracts over their estimated useful lives.

AASB101(125)(iii) Significant estimate: useful life of IT division’s intangible assets 2,3

The group has recently completed the development of software that is used to analyse businessprocesses by the IT consulting division. As at 30 June 2015, the carrying amount of this software was$722,000 (2014 – nil). The group estimates the useful life of the software to be at least 5 years based onthe expected technical obsolescence of such assets. However, the actual useful life may be shorter orlonger than 5 years, depending on technical innovations and competitor actions. If it were only 3 years,the carrying amount would be $702,000 as at 30 June 2015. If the useful life were estimated to be 8years, the carrying amount would be $732,000.




(iv) Impairment tests for goodwill 25,27,73-76,80

AASB136(134) Goodwill is monitored by management at the level of the six operating segments (see note 2 for details).

AASB136(134)(a) A segment-level summary of the goodwill allocation is presented below.

2015Australia

$’000Indonesia

$’000

South EastAsia

$’000Total$’000

IT consulting 4,200 - 2,870 7,070

Furniture – manufacturing 120 - - 120

Electronic equipment 1,115 - - 1,115

5,435 - 2,870 8,305

2014Australia

$’000Indonesia

$’000

South EastAsia

$’000Total$’000

IT consulting 4,200 - 3,015 7,215

Furniture – manufacturing 120 2,410 - 2,530

4,320 2,410 3,015 9,745

(v) Significant estimate: key assumptions used for value-in-use calculations 77-79

AASB136(134)(c),(d)(i),(iii),(iv)AASB101(125)

The group tests whether goodwill has suffered any impairment on an annual basis. The recoverableamount of a cash generating unit (CGU) is determined based on value-in-use calculations which requirethe use of assumptions. The calculations use cash flow projections based on financial budgets approvedby management covering a five-year period.

Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below.These growth rates are consistent with forecasts included in industry reports specific to the industry inwhich each CGU operates.

AASB136(134)(d)(i)(Improvement)

The following table sets out the key assumptions for those CGUs that have significant goodwill allocatedto them:

25

Furniture –manufacturing

Indonesia

IT consulting ElectronicequipmentAustralia

AASB136(130)(g),(134)(d)(i),(iv),(v) 2015 Australia

South-EastAsia

Sales volume (% annual growth rate) 2.7 3.2 4.1 2.9

Sales price (% annual growth rate) 1.4 1.7 1.8 1.8

Budgeted gross margin (%) 47.0 60.0 55.5 40.0

Other operating costs ($’000) 9,500 8,400 5,600 1,650

Annual capital expenditure ($’000) 1,900 500 230 150

Long term growth rate (%) * 3.5 2.2 2.0 3.1

Pre-tax discount rate (%) ** 14.7 14.0 14.8 16.0

2014

Sales volume (% annual growth rate) 2.5 3.0 3.9 -

Sales price (% annual growth rate) 1.3 1.6 1.8 -

Budgeted gross margin (%) 44.0 60.0 54.0 -

Other operating costs ($’000) 9,300 8,300 4,350 -

Annual capital expenditure ($’000) 1,850 580 225 -

Long term growth rate (%) * 3.2 2.2 1.8 -

Pre-tax discount rate (%) ** 14.3 14.4 15.1 -




AASB136(134)(d)(ii),(iv)(Improvement)

Management has determined the values assigned to each of the above key assumptions as follows:

Assumption Approach used to determining values

Sales volume Average annual growth rate over the five-year forecast period; based on pastperformance and management’s expectations of market development.

Sales price Average annual growth rate over the five-year forecast period; based on currentindustry trends and including long term inflation forecasts for each territory.

Budgeted grossmargin

Based on past performance and management’s expectations for the future.

Other operatingcosts

Fixed costs of the CGUs, which do not vary significantly with sales volumes orprices. Management forecasts these costs based on the current structure of thebusiness, adjusting for inflationary increases but not reflecting any futurerestructurings or cost saving measures. The amounts disclosed above are theaverage operating costs for the five-year forecast period.

Annual capitalexpenditure

Expected cash costs in the CGUs. This is based on the historical experience ofmanagement, and the planned refurbishment expenditure. No incrementalrevenue or cost savings are assumed in the value-in-use model as a result of thisexpenditure.

Long-term growthrate

This is the weighted average growth rate used to extrapolate cash flows beyondthe budget period. The rates are consistent with forecasts included in industryreports.

AASB136(55) Pre-tax discountrates

Reflect specific risks relating to the relevant segments and the countries in whichthey operate.

In performing the value-in-use calculations for each CGU, the group has appliedpost-tax discount rates to discount the forecast future attributable post-tax cashflows. The equivalent pre-tax discount rates are disclosed in the table above. Themovements in the pre-tax discount rates between 2014 and 2015 reflect changesin the anticipated timing of future cash flows.

Customer concentration/dependency – IT Consulting CGU – South East AsiaAASB136(134)(a) The IT Consulting CGU in South East Asia generates 20% of its total revenues for each financial year

from a key customer in China. The customer contract is for a five-year term, and the customer has beentrading with the CGU since 2000. Management has included the renewal of this key customer contract inthe value-in-use calculations to determine the recoverable amount of the CGU.

AASB136(134)(f)(vi) Significant estimate – impairment charge 2,3,24

AASB136(129)(a),(130)(a),(b),(d),(e)

AASB136(130)(e)

The impairment charge of $2,410,000 arose in a furniture manufacturing CGU in Indonesia (included inthe South East Asian segment summary) following a decision to reduce the manufacturing outputallocated to these operations. This was a result of a redefinition of the group’s allocation ofmanufacturing volumes across all CGUs in order to benefit from advantageous market conditions.Following this decision, the group reassessed the depreciation policies of its property, plant andequipment in this country and estimated that their useful lives will not be affected following this decision.No class of asset other than goodwill was impaired.

As at 31 December 2014, the recoverable amount of the entire CGU was $33,789,000.24




(vii) Significant estimate: Impact of possible changes in key assumptions 26

AASB136(134)(f)Furniture manufacturing CGU – Indonesia

AASB101(129)(b)AASB136(134)(f)(i)-(iii)(Improvement)

If the budgeted gross margin used in the value-in-use calculation for the furniture manufacturing CGU inIndonesia had been 10% lower than management’s estimates at 30 June 2015 (37% instead of 47%),the group would have had to recognise an impairment against the carrying amount of property, plantand equipment of $1,300,000. The reasonably possible change of 5% reduction in budgeted grossmargin represents a reasonably possible reduction in sales price of 0.2% (i.e. annual growth rate of1.2% instead of 1.4%).

If the pre-tax discount rate applied to the cash flow projections of this CGU had been 1% higher thanmanagement’s estimates (15.7% instead of 14.7%), the group would have had to recognise animpairment against property, plant and equipment of $600,000. In the prior year there were noreasonably possible changes in any of the key assumptions that would have resulted in an impairmentwrite-down in the Indonesian furniture manufacturing CGU.

IT Consulting CGU – South East AsiaAASB136(134)(f)(i)AASB101(38)

The recoverable amount of the IT Consulting CGU in South East Asia is estimated to be $3,580,000(2014 – $3,640,000). This exceeds the carrying amount of the CGU at 30 June 2015 by $388,000(2014 – $463,000).

AASB136(134)(f)(ii),(iii)AASB101(38)

The recoverable amount of this CGU would equal its carrying amount if the key assumptions were tochange as follows:

(Improvement) 2015 2014From To From To

Sales volume (% annual growth rate) 4.1 3.5 3.9 2.5

Budgeted gross margin (%) 55.5 49 54.0 46

Long-term growth rate (%) 2.0 1.5 1.8 1.3

Pre-tax discount rate (%) 14.8 15.5 15.1 15.9

The Directors and management have considered and assessed reasonably possible changes for otherkey assumptions and have not identified any instances that could cause the carrying amount of theSouth-East Asian IT Consulting CGU to exceed its recoverable amount.

(g) Provisions 28-32,81-83

2015 2014AASB101(77) Current

$’000

Non-current

$’000Total$’000

Current$’000

Non-current

$’000Total$’000

Service warranties (i) 635 - 635 920 - 920

Legal claim (i) 460 - 460 320 - 320

Restructuring costs (i) 900 - 900 - - -

Contingent liability (note 14)36 477 - 477 - - -

Make good provision (i) - 1,223 1,223 - - -

2,472 1,223 3,695 1,240 - 1,240

Service warranties31

AASB137(85)(a),(b) Provision is made for estimated warranty claims in respect of products sold which are still under warrantyat the end of the reporting period. These claims are expected to be settled in the next financial year.Management estimates the provision based on historical warranty claim information and any recenttrends that may suggest future claims could differ from historical amounts.

AASB101(125) The group generally offers 12 months warranties for its personal computer products. Managementestimates the related provision for future warranty claims based on historical warranty claim information,as well as recent trends that might suggest that past cost information may differ from future claims. Theassumptions made in relation to the current period are consistent with those in the prior year. Factorsthat could impact the estimated claim information include the success of the group’s productivity andquality initiatives, as well as parts and labour costs. As at 30 June 2015, this particular provision had acarrying amount of $330,000 (2014 - $450,000). Were claims costs to differ by 10% from management’sestimates, the warranty provisions would be an estimated $33,000 higher or lower (2014 – $45,000higher/lower).



(g) Provisions

(i) Information about individual provisions and significant estimates

Legal claim31

AASB137(85)(a),(b) In April 2015, an unfavourable judgement was handed down against the group in respect of a legal claimmade by a customer of the IT consulting segment. The judgement requires a payment of $460,000 to theclaimant. A provision has been recognised for this amount. However, after taking appropriate legaladvice, the directors have decided to appeal against the decision. No payment has been made to theclaimant pending outcome of the appeal. The court of appeal is expected to consider this matter inFebruary 2016.

Restructuring31,33-35

AASB137(85)(a),(b) The reduction in output in the furniture manufacturing division (see note 8(f) above) resulted in the loss of155 jobs at two factories. An agreement was reached with the local union representatives in April 2015,which specifies the number of staff involved and the voluntary redundancy compensation packageoffered by the group, as well as amounts payable to those made redundant. The total estimated staffrestructuring costs to be incurred are $1,050,000. Other direct costs attributable to the restructuring,including lease termination, are $327,000. These costs were fully provided for in the current reportingperiod. The remaining provision of $900,000 is expected to be fully utilised over the next 12 months.

Make good provision31

AASB137(85)(a),(b) VALUE ACCOUNTS Retail Pty Ltd is required to restore the leased premises of its retail stores to theiroriginal condition at the end of the respective lease terms. A provision has been recognised for thepresent value of the estimated expenditure required to remove any leasehold improvements. These costshave been capitalised as part of the cost of leasehold improvements and are amortised over the shorterof the term of the lease or the useful life of the assets.

See note 28(x) for the group’s other accounting policies relevant to provisions.

(ii) Movements in provisions 31-32

AASB137(84) Movements in each class of provision during the financial year, other than employee benefits, are setout below:

2015

Restruc-turing

obligations

$’000

Contin-gent

liability13,36

$’000

Servicewarran-

ties$’000

Legalclaim$’000

Makegood

provision

$’000Total$’000

AASB137(84)(a) Carrying amount at startof year - - 920 320 - 1,240

Acquired through businesscombination - 450 - - - 450

AASB137(84)(b) Additional provisioncharged to plant andequipment - - - - 1,035 1,035

Charged/(credited) toprofit or loss

AASB137(84)(b) - additional provisionsrecognised 1,377 268 140 1,785

AASB137(84)(d) - unused amountsreversed - - (330) - (330)

AASB137(84)(e) - unwinding ofdiscount 27 - - 188 215

AASB137(84)(c) Amounts used duringthe year (477) - (223) - (700)

AASB137(84)(a) Carrying amount at endof year 900 477 635 460 1,223 3,695



(Improvement)(h) Employee benefit obligations 37,84-93

2015 2014AASB101(77)

Current$’000

Non-current

$’000Total$’000

Current$’000

Non-current

$’000Total$’000

Leave obligations (i) 690 2,220 2,910 470 2,270 2,740

Share-appreciation rights (Note 21) - 138 138 - - -

Retirement benefit obligations (ii)-(vii) - 3,370 3,370 - 1,695 1,695

Total employee benefit obligations 690 5,728 6,418 470 3,965 4,435

(i) Leave obligations 37,38

The leave obligations cover the group’s liability for long service leave and annual leave.

AASB101(61) The current portion of this liability includes all of the accrued annual leave, the unconditionalentitlements to long service leave where employees have completed the required period of serviceand also those where employees are entitled to pro-rata payments in certain circumstances. Theentire amount of the provision of $690,000 (2014 - $470,000) is presented as current, since the groupdoes not have an unconditional right to defer settlement for any of these obligations. However, basedon past experience, the group does not expect all employees to take the full amount of accrued leaveor require payment within the next 12 months. The following amounts reflect leave that is not to beexpected to be taken or paid within the next 12 months.

2015$’000

2014$’000

Current leave obligations expected to be settled after 12 months 344 272

(ii) Superannuation plan 39-41

AASB119(139)(a)AASB101(112)(c)

All Australian employees of the group are entitled to benefits from the group’s superannuation plan onretirement, disability or death. The group has one plan with a defined benefit section and a definedcontribution section. The defined benefit section provides lump sum benefits based on years of serviceand final average salary. The plan rules provide benefits which are at least as great as the minimumrequired under Australia’s superannuation guarantee legislation.

Plan assets are held in trusts which are subject to supervision by the prudential regulator. Fundinglevels are reviewed regularly. Where assets are less than vested benefits, being those payable uponexit, a management plan must be formed to restore the coverage to at least 100%.

Responsibility for governance of the plan, including investment decisions and plan rules, rests solelywith the board of trustees of the plan. Contributions levels are also the responsibility of the trustee,although these are usually set in consultation with the employer. The board of trustees must becomposed of an equal number of representatives of the company and plan participants.

41

AASB119(53) The defined contribution section receives fixed contributions from group companies and the group’slegal or constructive obligation is limited to these contributions. The expense recognised in the currentperiod in relation to these contributions was $2,425,000 (2014 – $2,075,000).

(iii) Retirement benefit obligation - balance sheet amounts 42,43,46,84-88

AASB119(140)(a)(i),(ii),(141)

The amounts recognised in the balance sheet and the movements in the net defined benefit obligationover the year are as follows:

Presentvalue of

obligations

$’000

Fair value ofplan assets

$’000

Netamount

$’000

Balance sheet as at 1 July 2013 3,479 (2,264) 1,215

AASB119(141)(a) Current service cost 335 - 335AASB119(141)(d) Past service cost 179 - 179AASB119(141)(b) Interest expense/(income) 184 (115) 69

Total amount recognised in profit or loss 698 (115) 583



(h) Employee benefit obligations

Presentvalue of

obligations

$’000

Fair value ofplan assets

$’000

Netamount

$’000

AASB119(141)(c) Remeasurements

Return on plan assets, excluding amounts included ininterest expense/(income) - 28 28

(Gain)/loss from change in demographic assumptions 30 - 30

(Gain)/loss from change in financial assumptions 90 - 90

Experience (gains)/losses 383 - 383

Total amount recognised in other comprehensiveincome 503 28 531

AASB119(141)(f) Contributions:

Employers - (634) (634)

Plan participants 30 (30) -AASB119(141)(g) Benefit payments (218) 218 -

Balance sheet as at 30 June 2014 (Restated) 4,492 (2,797) 1,695

AASB119(141)(a) Current service cost 619 - 619AASB119(141)(d) Gains and (losses) on curtailment and settlement 150 - 150AASB119(141)(b) Interest expense/(income) 331 (180) 151

Total amount recognised in profit or loss 1,100 (180) 920

AASB119(141)(c) Remeasurements

Return on plan assets, excluding amounts included ininterest expense/(income) - (618) (618)

(Gain)/loss from change in demographic assumptions 20 - 20

(Gain)/loss from change in financial assumptions 38 - 38

Experience (gains)/losses 400 - 400

Total amount recognised in other comprehensiveincome 458 (618) (160)

AASB119(141)(f) Contributions: 55 (1,054) (999)

Employers - (999) (999)

Plan participants 55 (55) -

Payments from plan: (435) 435 -

AASB119(141)(g) Benefit payments (235) 235 -

AASB119(141)(g) Settlements (200) 200 -

AASB119(141)(h) Acquired in business combination (see note 14) 3,691 (1,777) 1,914

Balance sheet as at 30 June 2015 9,361 (5,991) 3,370

AASB119(139)(c) In connection with the closure of a factory, a curtailment loss was incurred and a settlementarrangement agreed with the plan trustees, effective 30 June 2015, which settled all retirement benefitplan obligations relating to the employees of that factory. In the prior year, the group made minoramendments to the terms of the plan, resulting in past service cost of $179,000.

AASB101(112)(c) The group has no legal obligation to settle the defined benefit liability with an immediate contribution oradditional one off contributions. The group intends to continue to contribute to the defined benefitsection of the plan at a rate of 12% of salaries in line with the actuary’s latest recommendations.




(iv) Categories of plan assetsAASB119(142) The major categories of plan assets are as follows:

44

30 June 2015 30 June 2014

QuotedUn-

quoted Total in % QuotedUn-

quoted Total in %

$’000 $’000 $’000 $’000 $’000 $’000

Equity instruments 1,824 30% 994 36%

Information technology 502 - 502 772 - 772

Energy 557 - 557 - - -

Manufacturing 746 - 746 194 - 194

Other - 19 19 - 28 28

Debt instruments 1,761 29% 571 20%

Government 716 - 716 321 - 321

Corporate bonds (investment grade) 700 - 700 99 - 99

Corporate bonds (non-investmentgrade) 68 277 345 41 110 151

Property 1,392 794

In Australia - 1,392 1,392 23% - 794 794 28%

Qualifying Insurance policies - 415 415 7% - 190 190 7%

Cash and cash equivalents 177 - 177 3% 94 - 94 3%

Investment funds 211 - 211 4% 77 - 77 3%

Property trusts 111 - 111 2% 77 - 77 3%

Hedge funds 100 - 100 2% - - -

Total 3,888 2,103 5,991 100% 1,675 1,122 2,797 100%

AASB119(143) The assets set out in the above table include ordinary shares issued by VALUE ACCOUNTS ReducedDisclosure Pty Ltd with a fair value of $530,000 (2014 – $410,000) and land and buildings occupied bythe group with a fair value of $550,000 (2014 – $580,000).

45

(v) Significant estimates: actuarial assumptions and sensitivity 47-49,89

AASB119(144) The significant actuarial assumptions were as follows:

2015 2014

Discount rate – Australia 5.1% 4.5%

Salary growth rate – Australia 4.0% 4.5%

AASB119(145)(a) The sensitivity of the defined benefit obligation to changes in the significant assumptions is:49

Impact on defined benefit obligation

Change inassumption Increase in assumption Decrease in assumption

(Revised requirement) 2015 2014 2015 2014 2015 2014

Discount rate 0.50% 0.3% Decrease by 8.2% 6.6% Increase by 9% 7.2%

Salary growth rate 0.50% 0.7% Increase by 1.8% 2.3% Decrease by 1.7% 2.1%

AASB119(145)(b) The above sensitivity analyses are based on a change in an assumption while holding all otherassumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptionsmay be correlated. When calculating the sensitivity of the defined benefit obligation to significantactuarial assumptions the same method (present value of the defined benefit obligation calculatedwith the projected unit credit method at the end of the reporting period) has been applied as whencalculating the defined benefit liability recognised in the balance sheet.

AASB119(145)(c) The methods and types of assumptions used in preparing the sensitivity analysis did not changecompared to the prior period.




(vi) Risk exposure 49

AASB119(139)(b) Through its defined benefit plan, the group is exposed to a number of risks, the most significant ofwhich are detailed below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to governmentbond yields; if plan assets underperform this yield, this will create a deficit. The planholds a significant proportion of equities, which are expected to outperform governmentbonds in the long-term while providing volatility and risk in the short-term. As the planmatures, the group intends to reduce the level of investment risk by investing more inassets that better match the liabilities. The first stage of this process was completed inFY12 with the sale of a number of equity holdings and purchase of a mixture ofgovernment and corporate bonds. The government bonds represent investments inAustralian government securities only. The corporate bonds are global securities withan emphasis on Australian bonds. However, the group believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level ofcontinuing equity investment is an appropriate element of the group’s long term strategyto manage the plans efficiently. See below for more details on the group’s asset-liabilitymatching strategy.

Changes inbond yields

A decrease in government bond yields will increase plan liabilities, although this will bepartially offset by an increase in the value of the plans’ bond holdings.

Inflation risks The majority of the plans’ benefit obligations are linked to salary inflation, and higherinflation will lead to higher liabilities (although, in most cases, caps on the level ofinflationary increases are in place to protect the plan against extreme inflation). Themajority of the plan’s assets are either unaffected by (fixed interest bonds) or looselycorrelated with (equities) inflation, meaning that an increase in inflation will alsoincrease the deficit.

AASB119(146) The group ensures that the investment positions are managed within an asset-liability matching (ALM)framework that has been developed to achieve long-term investments that are in line with theobligations under the benefit plan. Within this framework, the group’s ALM objective is to match assetsto the obligations by investing in long-term fixed interest securities with maturities that match thebenefit payments as they fall due and in the appropriate currency. The company actively monitors howthe duration and the expected yield of the investments are matching the expected cash outflows arisingfrom the retirement benefit obligations. The group has not changed the processes used to manage itsrisks from previous periods. The group does not use derivatives to manage its risk. Investments arewell diversified, such that the failure of any single investment would not have a material impact on theoverall level of assets. The largest proportion of assets is invested in equities, although the group alsoinvests in property, bonds, cash and investment (hedge) funds. The group believes that equities offerthe best returns over the long term with an acceptable level of risk. The majority of equities are in aglobally diversified portfolio of international blue chip entities, with a target of 60% of equities held inAustralia, 30% in the US and the remainder in emerging markets.

(vii) Defined benefit liability and employer contributions 49

AASB119(147)(a) The group has agreed that it will aim to eliminate the defined benefit deficit over the next nine years.Funding levels, as measured using the principles of AAS 25 Financial Reporting by SuperannuationPlans, are monitored on an annual basis and the current agreed contribution rate is 14% of salaries.The coverage of vested benefits by assets is measured at least annually and the next triennialvaluation is due to be completed as at 30 June 2015. The group considers that the contribution ratesset at the last valuation date are sufficient to eliminate the deficit over the agreed period and thatregular contributions will not increase significantly.

AASB119(147)(b) Expected contributions to post-employment benefit plans for the year ending 30 June 2015 are$1,150,000.




AASB119(147)(c) The weighted average duration of the defined benefit obligation is 15.2 years (2014 – 15.8 years). Theexpected maturity analysis of undiscounted defined benefit obligations is as follows:

AASB119(147)(c)) Less thana year$’000

Between1 - 2 years

$’000

Between2 - 5 years

$’000

Over 5years$’000

Total$’000

Defined benefit obligation – 30June 2015 500 900 5,500 4,600 11,500

Defined benefit obligation – 30 June2014 300 600 3,200 2,600 6,700

(i) Recognised fair value measurements 50-51,94

(i) Fair value hierarchy 52

This note explains the judgements and estimates made in determining the fair values of the non-financial assets that are recognised and measured at fair value in the financial statements. To providean indication about the reliability of the inputs used in determining fair value, the group has classified itsfinancial assets and liabilities into the three levels prescribed under the accounting standards. Anexplanation of each level is provided in note 7(h).

AASB13(93)(a),(b)

At 30 June 2015 NotesLevel 1

$’000Level 2

$’000Level 3

$’000Total$’000

Investment properties(Improvement) Office buildings – West Sydney

528(d) - - 13,300 13,300

Land and buildings52

Manufacturing sites – Australia 8(c) - - 47,200 47,200

Manufacturing sites – Indonesia 17,750 17,750

Land held for sale 8(b) - 250 - 250

Total non-financial assets - 250 78,250 78,500

AASB101(38)(Revised requirement) At 30 June 2014 Notes

Level 1$’000

Level 2$’000

Level 3$’000

Total$’000

Investment properties

Office buildings – West Sydney 8(d) - 5,135 4,915 10,050

Land and buildings

Manufacturing sites – Australia 8(c) - - 32,487 32,487

Manufacturing sites – Indonesia 15,153 15,153

Total non-financial assets - 5,135 52,555 57,690

AASB13(95) The group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at theend of the reporting period.

AASB13(93)(c) There were no transfers between levels 1 and 2 for recurring fair value measurements during the year.For transfers in and out of level 3 measurements see (iv) below.



(i) Recognised fair value measurements

(ii) Valuation techniques used to determine level 2 and level 3 fair valuesAASB13(91)(a),(93)(d)AASB116(77)(a)

The group obtains independent valuations for its investment properties at least annually and for itsfreehold land and buildings related to manufacturing sites (classified as property, plant and equipment)at least every three years.

At the end of each reporting period, the directors update their assessment of the fair value of eachproperty, taking into account the most recent independent valuations. The directors determine aproperty’s value within a range of reasonable fair value estimates.

The best evidence of fair value is current prices in an active market for similar properties. Where suchinformation is not available the directors consider information from a variety of sources including:

current prices in an active market for properties of different nature or recent prices of similarproperties in less active markets, adjusted to reflect those differences

discounted cash flow projections based on reliable estimates of future cash flows

capitalised income projections based upon a property’s estimated net market income, and acapitalisation rate derived from an analysis of market evidence.

All resulting fair value estimates for properties are included in level 3 except for land held for resale.The level 2 fair value of land held for resale has been derived using the sales comparison approach.The key inputs under this approach are the price per square metre from current year sales ofcomparable lots of land in the area (location and size).

52

(iii) Fair value measurements using significant unobservable inputs (level 3)AASB13(93)(e) The following table presents the changes in level 3 items for the period ended 30 June 2014 and 30

June 2015 for recurring fair value measurements:

Office buildings$’000

Manufacturingsites

Total$’000

Australia$’000

Indonesia$’000

AASB101(38)(Revised requirement)

Opening balance 1 July 20133,470 27,043 12,357 42,870

Acquisitions 810 2,584 1,780 5,174

Disposals (112) (424) (536)

Reclassification to inventory (250) - - (250)

Amounts recognised in profit or loss

Depreciation and impairment - (1,100) (440) (1,540)

Gains recognised in other income * 997 - - 997

Gains recognised in other comprehensiveincome - 4,384 1,456 5,840

Closing balance 30 June 2014 4,915 32,487 15,153 52,555

Transfer from level 2 5,135 - 5,135

Acquisitions 1,900 10,585 2,247 14,732

Disposals - (550) - (550)


Depreciation and impairment - (1,360) (855) (2,215)

Gains recognised in other income * 1,350 - - 1,350

Gains recognised in other comprehensiveincome - 6,038 1,205 7,243

Closing balance 30 June 2015 13,300 47,200 17,750 78,250

AASB13(93)(f) * unrealised gains or (losses) recognised in profit or lossattributable to assets held at the end of the reporting period(included in gains/(losses) recognised in other income above)

2015 1,350 - - 1,350

(Revised requirement) 2014 997 - - 997




(iv) Transfers between levels 2 and 3 and changes in valuation techniquesAASB13(93)(d) The group commenced redevelopment of an office building in Australia during the year. The

redevelopment will greatly expand the net lettable area of the property and is expected to be completedin early 2016. Prior to redevelopment, this property was valued using the sales comparison approachbased on recent sales of comparable properties in the area. This resulted in a level 2 fair value. Uponredevelopment, the group had to revise its valuation technique for the property under construction. Therevised valuation technique uses significant unobservable inputs. Accordingly, the fair valuemeasurement was reclassified to level 3.

52

AASB13(93)(d) The revised valuation technique for the property under construction estimates the fair value of thecompleted office building and deducts:

estimated construction and other costs to completion that would be incurred by a marketparticipant, and

estimated profit margin that a market participant would require to hold and develop the property tocompletion, based on the state of the property as at 30 June 2015.

Other than described above, there were no changes in valuation techniques during the year.

(v) Valuation inputs and relationships to fair valueAASB13(93)(d),(99) The following table summarises the quantitative information about the significant unobservable inputs

used in recurring level 3 fair value measurements. See (ii) above for the valuation techniques adopted.

AASB13(91)(a),(93)(d),(h)(i),(ii)(Revised requirement)

Description

Fair value at

Unobservableinputs *


average) Relationship ofunobservable inputsto fair value

11

30June2015

$’000

30June2014$’000 2015 2014

Leased officebuildings

7,765 4,915 Discount rate 4% - 5%(4.8%)

3% - 4%(3.6%)

The higher thediscount rate andterminal yield, thelower the fair value

Terminal yield 6% - 7%(6.6%)

5.5% - 6%(5.8%)

Capitalisationrate

4% - 4.5%(4.4%)

4% - 4.5%(4.2%)

The higher thecapitalisation rate andexpected vacancyrate, the lower the fairvalue

Expectedvacancy rate

9% - 10%(9.2%)

8% - 10%(8.7%)

Rental growthrate

3% - 3.6%(3.2%)

2% - 2.5%(2.2%)

The higher the rentalgrowth rate, thehigher the fair value

Officebuildingunder re-development

5,535 n/a -Level2 fairvalue

Estimated costto completion

$3,230,000 -$3,510,000

($3,395,000)

n/a The higher theestimated costs thelower the fair value

Estimated profitmargin requiredto hold anddevelopproperty tocompletion

12.5% ofproperty value

n/a The higher the profitmargin required, thelower the fair value

Manufac-turingsites -Australia

47,200 32,487 Discount rate 6% - 7%(6.7%)

8% - 9%(7.7%)



9.5% -10%

(9.7%)




AASB13(91)(a),(93)(d),(h)(i),(ii)

Description

Fair value at

Unobservableinputs *


average) Relationship ofunobservable inputsto fair value

11

30June2015

$’000

30June2014$’000 2015 2014

Manufac-turingsites -Indonesia

17,750 15,153 Discount rate 10% - 12%(11%)

9% - 10%(9.4%)



13% -14%

(13.2%)

AASB13(93)(h)(i) * There were no significant inter-relationships between unobservable inputs that materially affect fair values.

AASB13(93)(g)AASB116(77)(a),(b) (vi) Valuation processes

The group engages external, independent and qualified valuers to determine the fair value of thegroup’s investment properties at the end of every financial year and for other land and buildings at leastevery three years. As at 30 June 2015, the fair values of the investment properties have beendetermined by ABC Property Surveyors Limited. A directors’ valuation has been performed for the landand buildings classified as property, plant and equipment as at 30 June 2015. The last independentvaluation of these land and buildings was performed as at 30 June 2014.

AASB13(91)(b) The main level 3 inputs used by the group are derived and evaluated as follows:

Property assets – discount rates, terminal yields, expected vacancy rates and rental growth ratesare estimated by ABC Property Surveyors Limited or management based on comparabletransactions and industry data.

Office building under redevelopment – costs to completion and profit margin are estimated by ABCProperty Surveyors Limited based on market conditions as at 30 June 2015. The estimates areconsistent with the budgets developed internally by the group based on management’s experienceand knowledge of market conditions.

Changes in level 2 and 3 fair values are analysed at each reporting date during the half-yearly valuationdiscussion between the CFO, AC and the valuation team. As part of this discussion the team presentsa report that explains the reason for the fair value movements.


Disclosing non-financial assets and non-financial liabilities in one note

Users of financial reports have indicated that they would like to be able to quickly access all of1.the information about the entity’s financial assets and liabilities without having to trawl throughvarious notes in the financial report. We have therefore structured our notes such that financialitems and non-financial items are discussed separately. But you should be aware that this isnot a mandatory requirement in any of the accounting standards.

Accounting policies, estimates and judgements

As explained on page 47, in our view it is helpful for readers of the financial report if information2.about accounting policies that are specific to the entity and about significant estimates andjudgements is disclosed with the relevant line items, rather than in separate notes. However,this format is also not mandatory.

For general commentary regarding the disclosures of accounting policies please refer to note3.28. Commentary about the disclosure of significant estimates and judgements is provided innote 11.

Assets held for sale

There is no requirement in either AASB 5 Non-current Assets Held for Sale and Discontinued4.Operations or AASB 101 Presentation of Financial Statements to present assets of a disposalgroup separately from individual assets held for sale. VALUE ACCOUNTS Reduced DisclosurePty Ltd has therefore combined the assets of a disposal group with individual assets held forsale as a single line item in the balance sheet, but provided the associated disclosures inseparate notes.

AASB5(6),(7) An entity shall classify a non-current asset (or disposal group) as held for sale if its carrying5.amount will be recovered principally through a sale transaction rather than through continuinguse. For this to be the case the asset (or disposal group) must be available for sale in itspresent condition subject only to terms that are usual and customary for sales of such assets(or disposal groups) and its sale must be highly probable.




Property, plant and equipment

Revaluation – depreciation treatments

AASB116(35) Where an entity revalues depreciable assets, any accumulated depreciation at the date of the6.revaluation is treated in one of the following ways:

restated proportionately with the change in the gross carrying amount of the asset so that(a)the carrying amount of the asset after revaluation equals its revalued amount. This methodis often used when an asset is revalued by means of applying an index to its depreciatedreplacement cost, or

eliminated against the gross carrying amount of the asset and the net amount restated to(b)the revalued amount of the asset. This method is often used for buildings.

Expenditures recognised in assets under construction

AASB116(74)(b) Disclosure is required of the amount of expenditures recognised in the carrying amount of an7.item of property, plant and equipment in the course of its construction. This can be done asseparate disclosure (as in note 8(c) above) or by adding another class of assets called‘Construction in progress’ (or similar) to the reconciliation.

Reconciliation

AASB116(73)(e)

AASB116(RDR73.1)

The financial statements shall disclose, for each class of property, plant and equipment a8.reconciliation of the carrying amount at the beginning and end of the period showing:

additions(a)

assets classified as held for sale or included in a disposal group classified as held for sale(b)in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operationsand other disposals

acquisitions through business combinations(c)

increases or decreases resulting from revaluations under paragraphs 31, 39, Aus39.1, 40,(d)Aus40.1 and Aus40.2 of AASB 116 Property, Plant and Equipment and from impairmentlosses recognised or reversed in other comprehensive income in accordance with AASB136 Impairment of Assets

impairment losses recognised in profit or loss in accordance with AASB 136(e)

impairment losses reversed in profit or loss in accordance with AASB 136(f)

depreciation(g)

the net exchange differences arising on the translation of the financial statements from the(h)functional currency into a different presentation currency, including the translation of aforeign operation into the presentation currency of the reporting entity, and

other changes.(i)

Entities reporting under the reduced disclosure regime do not need to disclose thisreconciliation for the prior period.

Classes of property, plant and equipment

AASB116(37) A class of property, plant and equipment is a grouping of assets of a similar nature and use in9.the entity’s operation. Paragraph 37 of AASB 116 provides the following examples:

land(a)

land and buildings(b)

machinery(c)

ships(d)

aircraft(e)

motor vehicles(f)

furniture and fixtures(g)

office equipment(h)

Each entity will have different classes, depending on their individual operations. The number of10.classes that are separately disclosed also depends on materiality. However, the ‘plant andequipment’ of an entity will normally include assets of quite different nature and use. It willtherefore not be sufficient to provide the information required in AASB 116 only for two classes,being ‘land and buildings’ and ‘plant and equipment’. Rather, entities should provide a furtherbreakdown or, alternatively, use a more specific narrative to illustrate that the entity has onlyone major class of plant and equipment.




Compensation for impairment

AASB116(65),(66) Compensation from third parties for items of property, plant and equipment that were impaired,11.lost or given up shall be included in profit or loss when the compensation becomes receivable.Impairments or losses of items of property, plant and equipment and any related claims forcompensation from third parties are separate economic events that must be accounted forseparately.

Investment property

AASB140(5) An investment property is property (land or a building – or part of a building – or both) held (by12.the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation orboth, rather than for:

use in the production or supply of goods or services or for administrative purposes, or(a)

sale in the ordinary course of business.(b)

AASB140(6) A property interest that is held by a lessee under an operating lease may be classified and13.accounted for as investment property if, and only if, the property would otherwise meet thedefinition of an investment property above and the lessee uses the fair value model.

Reconciliation

AASB140(76)

AASB140(RDR76.1)

An entity that applies the fair value model in AASB 140 Investment Property shall disclose a14.reconciliation between the carrying amounts of investment property at the beginning and end ofthe period, showing the following:

additions, disclosing separately those additions resulting from acquisitions and those(a)resulting from subsequent expenditure recognised in the carrying amount of an asset

additions resulting from acquisitions through business combinations(b)

assets classified as held for sale or included in a disposal group in accordance with AASB(c)5 Non-current Assets Held for Sale and Discontinued Operations and other disposals

net gains or losses from fair value adjustments(d)

the net exchange differences arising on the translation of the financial statements into a(e)different presentation currency, and on translation of a foreign operation into thepresentation currency of the reporting entity

transfers to and from inventories and owner-occupied property, and(f)

other changes.(g)


Operating lease disclosure for lessors

AASB117(49) Lessors shall present assets subject to operating leases in their balance sheets according to15.the nature of the asset.

Deferred tax assets and liabilities

Offsetting

AASB112(74) Deferred tax assets and liabilities shall be set off if, and only if:16.

there is a legally recognised right to set off current tax assets and liabilities, and(a)

the deferred tax assets and liabilities relate to income taxes levied by the same taxation(b)authority on either:

(i) the same taxable entity, or

(ii) different taxable entities which intend to settle current tax liabilities and assets on a netbasis, or to realise the assets and settle the liabilities simultaneously, in each futureperiod in which significant amounts of deferred tax liabilities or assets are expected tobe settled or recovered.

AASB112(76) The circumstances giving rise to a set off between entities in a consolidated entity are likely to17.be rare unless the entities are part of a tax consolidated group.




Deferred tax liabilities recovered within and after 12 months

AASB101(61) Where an asset or a liability combines amounts that are expected to be recovered or settled18.within the next 12 months after the reporting period and more than 12 months after that date,paragraph 61 of AASB 101 Presentation of Financial Statements requires disclosure of theamount expected to be recovered or settled after more than 12 months. VALUE ACCOUNTSReduced Disclosure Pty Ltd has determined this amount as the aggregate deferred taxliabilities relating to temporary differences associated with non-current assets or liabilities.Conversely, deferred tax liabilities relating to current assets and liabilities are assumed to besettled within the next 12 months.

Disclosure of reconciliation by type of temporary difference

AASB112(81)(g) AASB 112 requires the following disclosures for each type of temporary difference and in19.respect of each type of unused tax loss and tax credit:

the deferred tax balances recognised for each period presented(a)

the amounts of deferred tax income or expense recognised in profit or loss, if this is not(b)apparent from the changes in the amounts recognised in the balance sheet

This information can be presented in various ways. VALUE ACCOUNTS Reduced Disclosure20.Pty Ltd has chosen to provide the information in the form of a reconciliation by type oftemporary difference. However, other formats are equally acceptable as long as all of therequired disclosures are made.

Intangible assets

AASB138(2)(a),(3)(f) Accounting for intangible assets is set out in AASB 138 Intangible Assets. However, AASB 13821.does not apply to intangible assets that are within the scope of another standard, includinggoodwill acquired in a business combination which is covered by AASB 3 BusinessCombinations.

Goodwill

AASB3(61),(B67)(d) Information shall be disclosed to enable users of the financial statements to evaluate changes22.in the carrying amount of goodwill during the period. To give effect to this principle, an entityshall disclose a reconciliation of the carrying amount of goodwill at the beginning and end of theperiod, showing separately:

AASB3(B67)(d)(i)

AASB3(B67)(d)(ii)

AASB3(B67)(d)(iii)

AASB3(B67)(d)(iv)

AASB3(B67)(d)(v)

AASB3(B67)(d)(vi)

the gross amount and accumulated impairment losses at the beginning of the period(a)

additional goodwill recognised during the period except goodwill included in a disposal(b)group that, on acquisition, meets the criteria to be classified as held for sale in accordancewith AASB 5

adjustments resulting from the subsequent recognition of deferred tax assets during the(c)period in accordance with paragraph 67 of AASB 3

goodwill included in a disposal group classified as held for sale in accordance with AASB 5(d)and goodwill derecognised during the period without having previously been included in adisposal group classified as held for sale

impairment losses recognised during the period in accordance with AASB 136(e)

net exchange differences arising during the period in accordance with AASB 121 The(f)Effects of Changes in Foreign Exchange Rates

AASB3(B67)(d)(vii) any other changes in the carrying amount during the period(g)

AASB3(B67)(d)(viii) the gross amount and accumulated impairment losses at the end of the period.(h)

AASB3(RDRB67.1) Entities reporting under the reduced disclosure regime do not need to disclose thisreconciliation for the prior period.

AASB3(63) If the information required to be disclosed by AASB 3 does not satisfy the objective set out in23.paragraph 61 of the standard (refer to paragraph 21 above), such additional information as isnecessary to meet that objective shall be disclosed.

Impairment

Recognised impairment losses: for individual assets or CGUs

The following shall be disclosed for each material impairment loss recognised or reversed24.during the period for an individual asset, including goodwill, or a cash-generating unit(applicable disclosures are included in these financial statements in relation to goodwill, but notin relation to cash-generating units as there are no such losses or reversals in VALUEACCOUNTS Reduced Disclosure Pty Ltd):




AASB136(130)(a) the events and circumstances that led to the recognition or reversal of the impairment loss(a)

the amount of the impairment loss recognised or reversed, and(b)

for an individual asset:(c)

(i) the nature of the asset

(ii) if the entity reports segment information in accordance with AASB 8 OperatingSegments, the reportable segment to which the asset belongs

AASB136(130)(b)

AASB136(130)(c)

AASB136(130)(d) for each cash-generating unit:(d)

(i) a description of the cash-generating unit (such as whether it is a product line, a plant,a business operation, a geographical area, or a reportable segment as defined inAASB 8)

(ii) the amount of the impairment loss recognised or reversed by class of assets and, ifthe entity reports segment information in accordance with AASB 8, by reportablesegment, and

(iii) if the aggregation of assets for identifying the cash-generating unit has changed sincethe previous estimate of the cash-generating unit’s recoverable amount (if any), adescription of the current and former way of aggregating assets and the reasons forchanging the way the cash-generating unit is identified, and

AASB136(130)(e) the recoverable amount of the asset or CGU, and whether the recoverable amount of the(e)asset (cash-generating unit) is its fair value less costs of disposal or its value in use

AASB136(130)(f) if recoverable amount is fair value less costs of disposal(f)

AASB136(130)(f)(i) (i) which level of the fair value hierarchy (as per AASB 13) the fair value of the asset orCGU belongs to (without taking into account whether the costs of disposal areobservable)

AASB136(130)(f)(ii) (ii) for level 2 and level 3 fair value measurements, a description of the valuationtechnique(s) used to measure fair value less costs of disposal, including any changesand reasons for the change

AASB136(130)(f)(iii) (iii) for level 2 and level 3 fair value measurements, each key assumption used indetermining fair value less costs of disposals, including the discount rate(s) used,where applicable.

AASB136(130)(g) if recoverable amount is value in use, the discount rate(s) used in the current estimate and(g)previous estimate (if any) of value in use.

Impairment testing – disclosure of assumptions

AASB136(132)AASB136(134)

An entity is encouraged to disclose the assumptions used to determine the recoverable amount25.of all significant assets and cash-generating units during the period, which is what VALUEACCOUNTS Reduced Disclosure Pty Ltd has done. However, as a minimum, paragraph 134 ofAASB 136 requires an entity to disclose information about the estimates used to measure therecoverable amount of a cash-generating unit when goodwill or an intangible asset with anindefinite useful life is included in the carrying amount of that unit.

Reduced disclosure regime: Impairment testing – sources of estimation uncertainty

AASB101(125) While entities reporting under the reduced disclosure regime do not have to provide theinformation required under paragraph 134 of AASB 136, they still have to explain majorsources of estimation uncertainty under AASB 101 paragraph 125. The shading applied to thedisclosures in note 7(f) illustrates what type of information could be provided in relation tomaterial goodwill impairments.

Impairment testing of goodwill and indefinite life intangible assets: changes in key assumptions

AASB136(134)(f) If a reasonably possible change in a key assumption on which management has based its26.determination of the unit’s (group of units’) recoverable amount would cause the unit’s (group ofunits’) carrying amount to exceed its recoverable amount, disclosure is required of:

the amount by which the unit’s (group of units’) recoverable amount exceeds its carrying(a)amount

the value assigned to the key assumption, and(a)

the amount by which the value assigned to the key assumption must change, after(b)incorporating any consequential effects of that change on the other variables used tomeasure recoverable amount, in order for the unit’s (group of units’) recoverable amount tobe equal to its carrying amount.




Prior year recoverable amount calculation

AASB136(136) The most recent detailed calculation made in a preceding period of the recoverable amount of27.a cash-generating unit (group of units) may, in accordance with paragraphs 24 or 99 of AASB136, be carried forward and used in the impairment test for that unit (group of units) in thecurrent period provided specified criteria are met. When this is the case, the information for thatunit (group of units) that is incorporated into the disclosures required by paragraphs 134 and135 of AASB 136 relate to the carried forward calculation of recoverable amount.

Provisions, contingent liabilities and contingent assets

AASB137(1)‑(5) AASB 137 Provisions, Contingent Liabilities and Contingent Assets applies to all provisions,28.contingent liabilities and contingent assets except:

those resulting from executory contracts, except where the contract is onerous(a)

those covered by another Australian Accounting Standard. For example:(b)

(i) financial instruments (including guarantees) that are within the scope of AASB 139Financial Instruments: Recognition and Measurement

(ii) certain types of provisions addressed in standards on

- construction contracts (refer to AASB 111 Construction Contracts)

- income taxes (refer to AASB 112 Income Taxes)

- leases (refer to AASB 117 Leases). However, as AASB 117 contains no specificrequirements to deal with operating leases that have become onerous, AASB 137applies to such leases

- employee benefits (refer to AASB 119 Employee Benefits)

- insurance contracts (refer to AASB 4 Insurance Contracts, AASB 1023 GeneralInsurance Contracts, and AASB 1038 Life Insurance Contracts). However AASB137 applies to provisions, contingent liabilities and contingent assets of aninsurer, other than those arising from its contractual obligations and rights underinsurance contracts within the scopes of AASB 4, AASB 1023 or AASB 1038.

Definition

AASB137(10),(11) A provision is a liability of uncertain timing or amount. Provisions can be distinguished from29.other liabilities such as trade payables and accruals because there is uncertainty about thetiming or amount of the future expenditure required in settlement. Although it is sometimesnecessary to estimate the amount or timing of accruals, the uncertainty is generally much lessthan for provisions.

AASB137(13) AASB 137 distinguishes between:30.

provisions – which are recognised as liabilities (assuming that a reliable estimate can be(a)made) because they are present obligations and it is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligations, and

contingent liabilities (refer to note 17) - which are not recognised as liabilities because they(b)are either:

(i) possible obligations, as it has yet to be confirmed whether the entity has a presentobligation that could lead to an outflow of resources embodying economic benefits, or

(ii) present obligations that do not meet the recognition criteria in this standard (becauseeither it is not probable that an outflow of resources embodying economic benefits willbe required to settle the obligation, or a sufficiently reliable estimate of the amount ofthe obligation cannot be made).

Required disclosures for each class

AASB137(84),(85) The following disclosures are required for each class of provision, subject to the disclosure31.relief referred to in paragraph 83 below:

movements in each class of provision during the period, showing separately:(a)

AASB137(84)(a) (i) the carrying amount at the beginning and end of the period

AASB137(84)(b) (ii) additional provisions made, including increases to existing provisions

AASB137(84)(c (iii) amounts used (ie incurred and charged against the provision) during the period

AASB137(84)(d) (iv) unused amounts reversed during the period

AASB137(84)(e) (v) the increase during the period in the discounted amount arising from the passage oftime and the effect of any change in the discount rate




AASB137(85)(a) a brief description of the nature of the obligation and the expected timing of any resulting(b)outflows of economic benefits

AASB137(85)(b) an indication of the uncertainties about the amount or timing of those outflows. Where(c)necessary to provide adequate information, an entity must disclose the major assumptionsmade concerning future events, as addressed in paragraph 48 of AASB 137

AASB137(85)(c) the amount of any expected reimbursement, stating the amount of any asset recognised(d)for that expected reimbursement.

Comparatives not required

AASB137(84) Comparative information is not required for the disclosures referred to in paragraph 31(a)32.above.

AASB101(69) Restructuring provisions

AASB137(72) AASB 137 sets out how the general recognition criteria for provisions are satisfied for33.restructuring provisions. A constructive obligation to restructure only arises when an entity:

has a detailed formal plan for the restructuring identifying at least:(a)

(i) the business or part of a business concerned

(ii) the principal locations affected

(iii) the location, function and approximate number of employees who will be compensatedfor terminating their services

(iv) the expenditures that will be undertaken, and

(v) when the plan will be implemented, and

has raised a valid expectation in those affected that it will carry out the restructuring by(b)starting to implement that plan or announcing its main features to those affected by it.

AASB119(159),(165) Additional rules apply to provisions for termination benefits. To qualify as a ‘termination benefit’34.there must be no connection to the provision of future service. If the employees have to remainemployed until closure of the operations, for example, the expense will generally be recognisedover the future service period rather than at the time the redundancies are announced. Inaddition, termination benefits for voluntary redundancies can only be recognised when theemployee accepts the offer, or if the entity is not able to withdraw the offer.

AASB137(80) A restructuring provision shall include only the direct expenditures arising from the35.restructuring, which are those that are both:

necessarily entailed by the restructuring, and(a)

not associated with the ongoing activities of the entity.(b)

Contingent liabilities recognised in a business combination

AASB3(B67)(c) If the entity has recognised any contingent liabilities in a business combination, it shall disclose36.the information required by paragraphs 84 and 85 of AASB 137 (see paragraph 31 above) alsofor each class of contingent liability.

Employee benefit obligations

AASB137(1)(c),(5)(d) As noted in paragraph 28 above, AASB 137 does not generally apply to employee benefits as37.these are dealt with by AASB 119 Employee Benefits. However, they may be classified asprovisions in the balance sheet where either the amounts or the timing of the future paymentsin respect of these obligations is uncertain. Alternatively, they could either be classified as otherpayables (where the amount and timing is certain) or, as we have done in this publication,presented as a separate line item in the balance sheet. If the amounts recognised in relation toemployee benefit obligations are material, entities should consider providing the informationrequired by AASB 137 (see paragraph 31 above) regardless of how the amounts arepresented.

Classification of employee benefits obligations as non-current

AASB101(69) Irrespective of how the amount is measured, an employee benefits provision can only be38.classified in the balance sheet as a non-current liability if there is no possibility the entity couldhave to pay out the provision within the next 12 months. This means, for example, that whereemployees are entitled to take their long service leave or accrued annual leave during the next12 months, the provision relating to them must be recorded as a current liability even thoughthe employees may not be expected to take the leave for an extended period.




Retirement benefit obligations

AASB119(135) There is an overriding objective in AASB 119 Employee Benefits that the disclosures for39.defined benefit plans must:

explain the characteristics of the plans and the associated risks(a)

identify and explain the amounts in the financial statements arising from the plans(b)

describe how the plans may affect the amount, timing and uncertainty of the entity’s future(c)cash flows.

AASB119(136)-(138) Entities will need to consider on a case-by-case basis how detailed the disclosures will have to40.be to satisfy these objectives. Additional information or further disaggregation may benecessary in some circumstances. However, preparers should also keep in mind thatmateriality applies to all of the disclosures required under AASB 119.

Characteristics and risks of defined benefit plans

AASB119(139) To describe the characteristics of defined benefit plans and the associated risks, entities will41.have to include descriptions of:

the nature of the benefits provided by the plan(a)

regulatory framework in which the plan operates(b)

any other entity’s responsibilities for the governance of the plan (eg trustees), and(c)

the risks to which the plan exposes the entity, focusing on any unusual, entity-specific or(d)plan-specific risks and significant concentrations of risk.

AASB119(140) Explanation of amounts in the financial statements

Entities must disclose separate reconciliations for the following items:42.

Plan assets(a)

Present value of defined benefit obligation(b)

Effect of the asset ceiling(c)

Reimbursement rights(d)

AASB119(141) Each of the reconciliations in paragraph 42 above must show, if applicable:43.

current service cost(a)

interest income or expense(b)

remeasurements, showing separately the return on plan assets (excluding interest),(c)actuarial gains and losses from changes in demographic assumptions and from changes infinancial assumptions, and changes in the effect of limiting the net defined benefit asset tothe asset ceiling.

past service cost and gains/losses arising from settlements(d)

the effect of changes in foreign exchange rates(e)

contributions to the plan, showing separately those by the employer and by plan(f)participants

payments from the plan, showing separately the amount paid in respect of any settlements(g)

the effects of business combinations and disposals.(h)

AASB119(RDR140.1) Entities reporting under the reduced disclosure regime do not need to disclose thisreconciliation for the prior period.

AASB119(142) The fair value of the plan assets must be disaggregated into classes that distinguish the nature44.and risk of those assets, and subdividing each class of plan assets into those that have aquoted market price and those that do not. The standard lists the following examples of classesof assets:

cash and cash equivalents(a)

equity instruments (segregated by industry type, company size, geography etc)(b)

debt instruments (segregated by type of issuer, credit quality, geography etc)(c)

real estate (segregated by geography)(d)

derivatives (segregated by underlying risk in the contract)(e)

investment funds (segregated by type of fund)(f)




asset-backed securities(g)

structured debt.(h)

AASB119(143) Entities must further disclose the fair value of the entity’s own transferable financial instruments45.that are held as plan assets, and the fair value of plan assets that are property occupied by, orother assets used by, the entity.

Current/non-current distinction

AASB119(133) AASB 119 does not specify whether an entity shall distinguish current and non-current portions46.of assets and liabilities arising from post-employment benefits, as such a distinction maysometimes be arbitrary. When the split into current and non-current is not available, the entirepension asset or liability should be presented as a non-current item.

Actuarial assumptions

AASB119(144) Entities must disclose the significant actuarial assumptions used to determine the present value47.of the defined benefit obligation. The disclosure must be made in absolute terms (ie asabsolute %) and not as margin between different percentages or other variables. Where thedisclosures are made in total for a grouping of plans, the information should be provided asweighted averages or relatively narrow ranges.

Where the amount of the defined benefit obligation is significantly affected by assumptions48.regarding plan members’ mortality (eg for pension plans) the entity should explain how theseassumptions have been determined and how they translate into average life expectancies forpensioners (see Appendix V in our global Illustrative IFRS consolidated financial statements for2014 year ends for an illustration). In this case, the mortality assumptions should also beincluded in the sensitivity analysis.

Impact on timing and uncertainty of future cash flows

AASB119(142) To explain the amount, timing and uncertainty of future cash flows, entities must provide the49.following information:

AASB119(145) a sensitivity analysis for each significant actuarial assumption as of the end of the reporting(a)period, the methods and assumptions used in preparing this analysis, changes from theprevious period in the methods and assumptions and reasons for such changes

AASB119(146) a description of any asset-liability matching strategies used by the plan or the entity,(b)including the use of annuities or longevity swaps to manage risk.

AASB119(147)(a) a description of any funding arrangements and funding policy that affect future(c)contributions

AASB119(147)(b) the expected contributions to the plan for the next annual reporting period(d)

AASB119(147)(c) information about the maturity profile of the defined benefit obligation.(e)


AASB13(1),(5),(9),(24) AASB 13 Fair Value Measurement explains how to measure fair value and aims to enhance fair50.value disclosures. The standard defines fair value as the price that would be received to sell anasset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date (exit price).

As a typical diversified manufacturing company, VALUE ACCOUNTS Reduced Disclosure Pty51.Ltd only has a limited number of assets and liabilities that are measured at fair value. Foralternative disclosures, including disclosures covering biological assets, please refer to ourGlobal publication Illustrative IFRS consolidated financial statements for 2014 year-ends(available from www.pwc.com/ifrs). There is also a practical guide Fair value measurement –unifying the concept of fair value which provides additional guidance on the application of thenew rules.




Classifying the fair value property assets

AASB13(B35)(g)

Property assets are often unique and not traded on a regular basis. As a consequence, there is52.a lack of observable input data for identical assets. Fair value measurements of property assetswill therefore be categorised as ‘level 2’ or ‘level 3’ valuations. Whether it is appropriate toclassify the fair value as a 'level 2' measurement will depend on the individual facts andcircumstances. Examples of ‘level 2’ inputs include sales price per square metre for similarproperties in a similar location in an active market, or property yields derived from the latesttransactions in active markets for similar properties. Where significant adjustments to marketbased data are made, or where other significant inputs are unobservable, the valuation wouldbe categorised as ‘level 3’. If the assets are located in a less developed market, this would alsobe an indication for a ‘level 3’ classification. Assets classified as level 2 measurements basedon recent sales may need to be reclassified in subsequent periods if there have been no moresales of comparable properties in the area.

For more detailed commentary about the requirements of AASB 13 please refer to the53.commentary to note 7 (paragraphs 29 to 41).


Inventories

The following disclosure requirements of AASB 102 Inventories are not applicable to VALUE54.ACCOUNTS Reduced Disclosure Pty Ltd:

AASB102(36)(c) (a) the carrying amount of inventories carried at fair value less costs to sell, as permittedunder paragraph 3 of AASB 102

AASB102(36)(f) (b) the amount of any reversal of any write-down that is recognised as a reduction in theamount of inventories recognised as expense in the period in accordance with paragraph34 of AASB 102

AASB102(36)(g) (c) the circumstances or events that led to the reversal of a write-down of inventories inaccordance with paragraph 34 of AASB 102

AASB102(36)(h) (d) the carrying amount of inventories pledged as security for liabilities.

Inventories: not-for-profit entities

In respect of not-for-profit entities, disclosure is required of the following:55.

AASB102(Aus36.1)(a) (a) the accounting policies adopted in measuring inventories held for distribution, including thecost formula used

AASB102(Aus36.1)(b) (b) the total carrying amount of inventories held for distribution and the carrying amount inclassifications appropriate to the entity

AASB102(Aus36.1)(c) (c) the amount of inventories held for distribution recognised as an expense during the periodin accordance with paragraph Aus34.1 of AASB 102

AASB102(Aus36.1)(d) (d) the amount of any write-down of inventories held for distribution recognised as an expensein the period in accordance with paragraph Aus34.1 of AASB 102

AASB102(Aus36.1)(e) (e) the amount of any reversal of any write-down that is recognised as a reduction in theamount of inventories held for distribution recognised as expense in the period inaccordance with paragraph Aus34.1 of AASB 102

AASB102(Aus36.1)(f) (f) the circumstances or events that led to the reversal of a write-down of inventories held fordistribution in accordance with paragraph Aus34.1 of AASB 102

AASB102(Aus36.1)(g) (g) the carrying amount of inventories held for distribution pledged as security for liabilities

AASB102(Aus36.1)(h) (h) the basis on which any loss of service potential of inventories held for distribution isassessed, or the bases when more than one basis is used

Property, plant and equipment: encouraged disclosures

AASB116(79) Users of the financial statements may also find the following information relevant to their needs:56.

(a) the carrying amount of temporarily idle property, plant and equipment

(b) the gross carrying amount of any fully depreciated property, plant and equipment that isstill in use

(c) the carrying amount of property, plant and equipment retired from active use and notclassified as held for sale in accordance with AASB 5, and

(d) when the cost model is used, the fair value of property, plant and equipment when this ismaterially different from the carrying amount.




Idle assets

IFRIC-RejectionStatement May 2010

In May 2010, the IFRS Interpretations Committee discussed the disclosures required in relation57.to idle assets and assets under construction where additional construction has beenpostponed. While the IFRS Interpretations Committee noted that the disclosures in paragraph79 are merely ‘recommended’ but not mandatory, it reminded entities of the generalrequirement in IAS 1 paragraph 112(c) to disclose information that is relevant to anunderstanding of the financial statements. Disclosures regarding idle assets may be particularlyrelevant in the current economic environment and the IFRS Interpretations Committee wouldtherefore expect entities to provide such information in their financial statements if the amountsinvolved are material.

Property, plant and equipment: not-for-profit entities

AASB116(Aus77.1) Notwithstanding paragraph 77(e) of AASB 116, in respect of not-for-profit entities, for each58.revalued class of property, plant and equipment, the requirement to disclose the carryingamount that would have been recognised had the assets been carried under the cost modeldoes not apply.

Investment property: where classification is difficult

AASB140(75)(c) When it is difficult to determine whether a property qualifies for classification as an investment59.property, disclosure is required of the criteria used to distinguish investment property fromowner-occupied property and property held for sale in the ordinary course of business.

Investment property: where valuation adjusted for financial statements

AASB140(77) When a valuation obtained for investment property is adjusted significantly for the purposes of60.the financial statements, for example to avoid double-counting of assets or liabilities that arerecognised as separate assets and liabilities as described in paragraph 50 of AASB 140, theentity shall disclose a reconciliation between the valuation obtained and the adjusted valuationincluded in the financial statements, showing separately the aggregate amount of anyrecognised lease obligations that have been added back, and any other significantadjustments.

Sale of investment property between pools of assets measured using different models

AASB140(75)(f)(iv) An entity shall disclose the amounts recognised in profit or loss for the cumulative change in61.fair value recognised in profit or loss on a sale of an investment property from a pool of assetsin which the cost model is used into a pool in which the fair value model is used (refer toparagraph 32C of AASB 140).

Investment property: Contingent rents received by lessor

AASB117(56)(b) An entity shall disclose total contingent rents recognised as income in the period.62.

Operating leases classified as investment property

AASB140(75)(b) An entity shall disclose if it applies the fair value model, whether, and in what circumstances,63.property interests held under operating leases are classified and accounted for as investmentproperty.

Investment property: Where fair value not reliably determinable on a continuing basis

ASB140(78) In exceptional cases, referred to in paragraph 53 of AASB 140, there may be clear evidence64.that the fair value of the investment property is not reliably determinable on a continuing basis.The entity then measures investment property using the cost model in AASB 116 Property,Plant and Equipment. In these cases, the reconciliation required by paragraph 76 of AASB 140shall disclose amounts relating to that investment property separately from amounts relating toother investment property. In addition, an entity shall disclose:

(a) a description of the investment property

(b) an explanation of why fair value cannot be determined reliably

(c) if possible, the range of estimates within which fair value is highly likely to lie, and

(d) on disposal of investment property not carried at fair value:

(i) the fact that the entity has disposed of investment property not carried at fair value

(ii) the carrying amount of that investment property at the time of sale, and

(iii) the amount of gain or loss recognised.




Investment property: Use of cost model

AASB140(79)(a)‑(e) An entity that applies the cost model in paragraph 56 of AASB 140 shall not apply the65.disclosure requirements of paragraphs 76 to 78 of AASB 140. Instead it shall disclose:

(a) the depreciation methods used

(b) the useful lives or the depreciation rates used

(c) the gross carrying amount and the accumulated depreciation (aggregated withaccumulated impairment losses) at the beginning and end of the period

(d) a reconciliation of the carrying amount of investment property at the beginning and end ofthe period, showing the following:

(i) additions, disclosing separately those additions resulting from acquisitions and thoseresulting from subsequent expenditure recognised as an asset

(ii) additions resulting from acquisitions through business combinations

(iii) assets classified as held for sale or included in a disposal group in accordance withAASB 5 and other disposals

(iv) depreciation

(v) the amount of impairment losses recognised, and the amount of impairment lossesreversed, during the period in accordance with AASB 136 Impairment of Assets

(vi) the net exchange differences arising on the translation of the financial statements intoa different presentation currency, and on translation of a foreign operation into thepresentation currency of the reporting entity

(vii) transfers to and from inventories and owner-occupied property, and

(viii) other changes, and

(e) the fair value of the investment property (refer to paragraph 66 below for the requirementsin circumstances where this cannot be determined reliably).

AASB140(79)(e) In the exceptional cases described in paragraph 53 of AASB 140, where an entity cannot66.determine the fair value of the investment property reliably, it shall disclose:

(a) a description of the investment property

(b) an explanation of why fair value cannot be determined reliably, and

(c) if possible, the range of estimates within which fair value is highly likely to lie.

Deferred tax balances

AASB112(82) The following disclosure is not illustrated because it is not applicable to VALUE ACCOUNTS67.Reduced Disclosure Pty Ltd:

(a) the amount of a deferred tax asset and the nature of the evidence supporting itsrecognition if it has been recognised and:

(i) its utilisation depends upon future taxable amounts in excess of profits arising from thereversal of existing taxable temporary differences, and

(ii) the entity has suffered a loss in the current or preceding reporting period in the taxjurisdiction to which the deferred tax asset relates.

Intangible assets

AASB138(118) Paragraph 118 of AASB 138 requires specific disclosures for each class of intangible assets,68.distinguishing between internally generated intangible assets and other intangible assets. Mostof these disclosures are illustrated in the intangible assets note, but the disclosures describedin the following paragraphs are not applicable to VALUE ACCOUNTS Reduced Disclosure PtyLtd.

Intangible assets: additional disclosures for reconciliation

Where applicable, the reconciliation of the carrying amount at the beginning and end of the69.period shall show:

AASB138(118)(e)(ii) (a) assets classified as held for sale or included in a disposal group classified as held for salein accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operationand other disposals

AASB138(118)(e)(iii) (b) increases or decreases during the period resulting from revaluations under paragraphs 75,85 and 86 of AASB 138 and from impairment losses recognised or reversed in othercomprehensive income in accordance with AASB 136 Impairment of Assets (if any)




AASB138(118)(e)(v) (c) impairment losses reversed in profit or loss during the period in accordance with AASB136 (if any)

AASB138(118)(e)(vii) (d) net exchange differences arising on the translation of the financial statements into thepresentation currency, and on the translation of a foreign operation into the presentationcurrency of the entity

AASB138(118)(e)(viii)

AASB138(RDR118.1)

(e) other changes in the carrying amount during the period.


Intangible assets: Other disclosures

AASB138(122) The financial statements shall also disclose:70.

(a) for an intangible asset assessed as having an indefinite useful life, the carrying amount ofthat asset and the reasons supporting the assessment of an indefinite useful life, includingthe factor(s) that played a significant role in determining that the asset has an indefiniteuseful life

(b) a description, the carrying amount and remaining amortisation period of any individualintangible asset that is material to the entity’s financial statements

(c) for intangible assets acquired by way of a government grant and initially recognised at fairvalue:

(i) the fair value initially recognised for these assets

(ii) their carrying amount, and

(iii) whether they are measured after recognition under the cost model or the revaluationmodel

(d) the existence and carrying amounts of intangible assets whose title is restricted and thecarrying amounts of intangible assets pledged as security for liabilities, and

(e) the amount of contractual commitments for the acquisition of intangible assets.

Encouraged disclosures

AASB138(128) An entity is encouraged, but not required, to disclose the following information:71.

(a) a description of any fully amortised intangible asset that is still in use

(b) a brief description of significant intangible assets controlled by the entity but notrecognised as assets because they did not meet the recognition criteria in AASB 138.

Intangible assets: Use of revaluation model

AASB138(124) If intangible assets are accounted for at revalued amounts, an entity shall disclose the72.following:

(a) by class of intangible assets:

(i) the effective date of the revaluation

(ii) the carrying amount of revalued intangible assets

AASB138(Aus124.1) (iii) the carrying amount that would have been recognised had the revalued class ofintangible assets been measured after recognition using the cost model in paragraph74 of AASB 138 - this requirement does not apply to not-for-profit entities.

(b) the amount of the revaluation surplus that relates to intangible assets at the beginning andend of the period, indicating the changes during the period and any restrictions on thedistribution of the balance to shareholders.

Impairment losses recognised in OCI and reversals by class of asset

If an entity has recognised an impairment loss on a revalued asset in other comprehensive73.income, or reversed an impairment loss recognised in a prior period, it must disclose for eachclass of assets:

AASB136(126)(b) (a) the amount of reversals of impairment losses recognised in profit or loss during the periodand the line item(s) of the statement of comprehensive income in which those impairmentlosses are reversed

AASB136(126)(c) (b) the amount of impairment losses on revalued assets recognised in other comprehensiveincome during the period

AASB136(126)(d) (c) the amount of reversals of impairment losses on revalued assets recognised in othercomprehensive income during the period




AASB136(129) (d) if the entity reports segment information in accordance with AASB 8, the amount ofreversals of impairment losses recognised in profit or loss and other comprehensiveincome for each reportable segment.

Impairment losses – aggregate amounts

An entity shall disclose the following information for the aggregate impairment losses and the74.aggregate reversals of impairment losses recognised during the period for which no informationis disclosed in accordance with paragraph 24 above:

AASB136(131)(a) (a) the main classes of assets affected by impairment losses and the main classes of assetsaffected by reversals of impairment losses

AASB136(131)(b) (b) the main events and circumstances that led to the recognition of these impairment lossesand reversals of impairment losses.

Unallocated goodwill

AASB136(133) If, in accordance with paragraph 84 of AASB 136, any portion of the goodwill acquired in a75.business combination during the period has not been allocated to a cash-generating unit (groupof units) at the end of the reporting period, the amount of the unallocated goodwill shall bedisclosed together with the reasons why that amount remains unallocated. An example of suchdisclosure is as follows:

Shortly before the end of the reporting period, the company acquired XYZ Limited. Therewas $XX of goodwill recognised on acquisition which is yet to be allocated to one or moreCGUs. XYZ’s business will be integrated into the South America and North AmericaCGUs, but management has not yet finalised the allocation of the goodwill between therelevant CGUs.

Goodwill and intangible assets with indefinite useful lives

AASB136(134)AASB136(134)(b)

Paragraph 134 of AASB 136 requires detailed disclosures for each cash-generating unit (group76.of units) for which the carrying amount of goodwill or intangible assets with indefinite usefullives allocated to that unit (group of units) is significant in comparison with the entity’s totalcarrying amount of goodwill or intangible assets with indefinite useful lives. The disclosures inthe VALUE ACCOUNTS Reduced Disclosure Pty Ltd financial statements relate to goodwill,but where applicable, the carrying amount of intangible assets with indefinite useful livesallocated to the unit (group of units) shall also be disclosed.

Goodwill and indefinite life intangible assets: Recoverable amount based on fair value less costs ofdisposal

AASB136(134)(d)AASB136(134)(e)

In the case of VALUE ACCOUNTS Reduced Disclosure Pty Ltd, the recoverable amount of77.cash-generating units is based on value in use. Accordingly, the disclosures required byparagraph 134(d) of AASB 136 are illustrated in the intangible assets note. If the unit’s (groupof units’) recoverable amount is based on fair value less costs of disposal, the valuationtechnique(s) used to determine fair value less costs of disposal shall be disclosed. If fair valueless costs of disposal is not measured using an observable market price for an identical unit(group of units), the following information shall also be disclosed:

AASB136(134)(e)(i) (a) each key assumption on which management has based its determination of fair value lesscosts of disposal. Key assumptions are those to which the unit’s (group of units’)recoverable amount is most sensitive

AASB136(134)(e)(ii) (b) a description of management’s approach to determining the value(s) assigned to each keyassumption, whether those value(s) reflect past experience or, if appropriate, areconsistent with external sources of information, and, if not, how and why they differ frompast experience or external sources of information

AASB136(134)(e)(iiA) (c) which level of the fair value hierarchy (as per AASB 13) the fair of the asset or CGUbelongs to (without taking into account whether the costs of disposal are observable)

AASB136(134)(e)(iiB) (d) any change in valuation technique and the reason for the change.

AASB136(134)(e)(iii)-(v)

If fair value less costs of disposal is measured using discounted cash flow projections, the78.entity shall also disclose:

(a) the period over which management has projected cash flows

(b) the growth rate used to extrapolate cash flow projections, and

(c) the discount rate applied to the cash flow projections.




Provided below is an illustrative disclosure where the recoverable amount is determined using79.fair value less cost of disposal (FVLCOD).

AASB136(134)(c) Management has determined the recoverable amount of the XYZ CGU by assessing thefair value less cost of disposal (FVLCOD) of the underlying assets. The valuation isconsidered to be Level 3 in the fair value hierarchy due to unobservable inputs used in thevaluation.

Management’s approach and the key assumptions used to determine the CGU’s FVLCODwere as follows:

AASB136(134)(e)(i),(ii) Value assigned tokey assumption

CGUUnobservableinputs 2015 2014

Approach to determining keyassumption

XYZ Cost of disposal($’000)

$250 $320 Estimated based on thecompany's experience withdisposal of assets and onindustry benchmarks.

Sales volume(%)

2.7 3.3 Average annual growth rate overthe five-year forecast period,based on past performance andmanagement’s expectations ofmarket development.

Sales price (%) 1.4 1.9 Average annual growth rate overthe five-year forecast period,based on current industry trendsand includes long term inflationforecasts for each territory.

Cost reductionsfromrestructuringinitiatives ($’000)

$2,900 $2,500 Estimated cost reductions arebased on management'sjudgement and past experiencewith similar restructuringinitiatives.

Cash flowforecast period

5 years 5 years Board approved/ reviewed 5year forecasts which areprepared by management

Post-tax discountrate (%)

11.7 11.4 Reflects specific risks relating tothe segments and the countriesin which it operates.

Long termgrowth rate (%)

2.7 2.6 This is the weighted averagegrowth rate used to extrapolatecash flows beyond the budgetperiod. The rate is consistentwith forecasts included inindustry reports.




Goodwill and indefinite life intangible assets: allocated to multiple CGUs

AASB136(135) If some or all of the carrying amount of goodwill or intangible assets with indefinite useful lives80.is allocated across multiple cash-generating units (groups of units), and the amount soallocated to each unit (group of units) is not significant in comparison with the entity’s totalcarrying amount of goodwill or intangible assets with indefinite useful lives, that fact shall bedisclosed, together with the aggregate carrying amount of goodwill or intangible assets withindefinite useful lives allocated to those units (groups of units). In addition, if the recoverableamounts of any of those units (groups of units) are based on the same key assumption(s) andthe aggregate carrying amount of goodwill or intangible assets with indefinite useful livesallocated to them is significant in comparison with the entity’s total carrying amount of goodwillor intangible assets with indefinite useful lives, an entity shall disclose that fact, together with:

AASB136(135)(a) (a) the aggregate carrying amount of goodwill allocated to those units (groups of units)

AASB136(135)(b) (b) the aggregate carrying amount of intangible assets with indefinite useful lives allocated tothose units (groups of units)

AASB136(135)(c) (c) a description of the key assumption(s)

AASB136(135)(d) (d) a description of management’s approach to determining the value(s) assigned to the keyassumption(s), whether those value(s) reflect past experience or, if appropriate, areconsistent with external sources of information, and, if not, how and why they differ frompast experience or external sources of information

AASB136(135)(e) (e) if a reasonably possible change in the key assumption(s) would cause the aggregate of theunits’ (groups of units’) carrying amounts to exceed the aggregate of their recoverableamounts:

(i) the amount by which the aggregate of the units’ (groups of units’) recoverableamounts exceeds the aggregate of their carrying amounts

(ii) the value(s) assigned to the key assumption(s), and

(iii) the amount by which the value(s) assigned to the key assumption(s) must change,after incorporating any consequential effects of the change on the other variables usedto measure recoverable amount, in order for the aggregate of the units’ (groups ofunits’) recoverable amounts to be equal to the aggregate of their carrying amounts.

Provisions: onerous contract

AASB137(5)(c) An example of an onerous contract is an operating lease that has become onerous. That could81.happen, for example, where the entity is no longer occupying any of the leased space and hasentered into a sub-lease at a lower rate of rent than that payable under the lease agreementbecause the cost of exiting the lease is greater than the loss on the sub-lease arrangement.

AASB137(36) The amount of the liability shall be recognised as the best estimate of the expenditure required82.to settle the present obligation at the end of the reporting period. Therefore any provision that isrecognised should reflect the least net cost alternative of exiting the lease. It should be basedon the excess of the cash flows for the unavoidable costs in meeting the obligations under thelease over the unrecognised estimated future economic benefits from the lease.

Exemption where prejudicial

AASB137(92) Some or all of the information required under the disclosures summarised in paragraph 3183.above may be omitted in the extremely rare cases where the entity is involved in a dispute withother parties on the matter to which a provision or recoverable receivable relates anddisclosure of the information would be expected to seriously prejudice the entity’s position. Thisdisclosure exemption does not affect the requirement to recognise provisions that satisfy therecognition criteria set out in paragraph 14 of AASB 137, regardless of how sensitive certaininformation about provisions may be. It should also be noted that if a class of provisions existsit is unlikely that disclosure of information relating to the class of provisions as a whole willseriously prejudice the position of an entity in respect of disputed legal claims. However, in therare circumstances that the disclosure exemption can be applied, the general nature of thedispute and the fact that, and reason why, the information has not been disclosed must bestated. An example of such disclosure is contained in Appendix D of AASB 137.




Defined benefit plans: additional information and disaggregation

AASB119(136)-(138) If the disclosures provided are not sufficient to satisfy the objectives of the standard (see84.paragraph 39 above) the entity may need to analyse the present value of the defined benefitobligation further eg by showing separately amounts owing to active members, deferredmembers and pensioners or distinguishing between vested and accrued benefits or conditionaland other benefits. Depending on the circumstances, entities may also need to disaggregatesome or all of the disclosures by geographical location, different plan characteristics, regulatoryenvironments, funding arrangements or segments.

Defined benefit plans: reconciliation of defined benefit obligation and plan assets

AASB119(140)(e) If applicable, the reconciliation must also show separately the effect of changes in foreign85.exchange rates.

Defined benefit plans: Asset ceiling

AASB119(8),(64) The term ‘asset ceiling’ refers to the present value of any economic benefits available in the86.form of refunds from the plan or reductions in future contributions to the plan. Entities are notpermitted to recognise a net defined asset in excess of the asset ceiling.

AASB119(140)(a)(iii) If the entity has a surplus in a plan which is not recognised because of the asset ceiling, the87.reconciliation of the balance sheet amounts must include a separate reconciliation for the effectof the asset ceiling. This reconciliation must show separately changes in the unrecognisedamount, excluding amounts included in interest income or expense (see our global IllustrativeIFRS consolidated financial statements for 2014 year ends for an illustration).

Defined benefit plans: Reimbursement rights

AASB119(140)(b) Reimbursement rights must also be shown as a separate column in the reconciliation of the88.balance sheet amounts. In addition, the entity must describe the relationship between thereimbursement right and the related obligations.

Defined benefit plans: mortality assumptions

AASB119(144) Where the amount of the defined benefit obligation is significantly affected by assumptions89.regarding plan members’ mortality (eg for pension plans) the entity should explain how theseassumptions have been determined and how they translate into average life expectancies forpensioners (see our global Illustrative IFRS consolidated financial statements for 2014 yearends for an illustration). In this case, the mortality assumptions should also be included in thesensitivity analysis.

Defined benefit plans: Multi-employer plans

AASB119(33) Where a multi-employer plan is a defined benefit plan, an entity must:90.

AASB119(33)(a) (a) account for its proportionate share of the defined benefit obligation, plan assets and costassociated with the plan in the same way as for any other defined benefit plan, and

AASB119(33)(b) (b) disclose the information required by paragraph 120A of AASB 119.

AASB119(148) Entities that participate in a multi-employer defined benefit plan must disclose:91.

(a) a description of the funding arrangements, including the method used to determine theentity’s rate of contributions and any minimum funding requirements

(b) a description of the extent to which the entity can be liable to the plan for other entities’obligations under the terms and conditions of the plan

(c) a description of any agreed allocation of a deficit or surplus on wind-up or the entity’swithdrawal from the plan

(d) if the entity accounts for the plan as if it were a defined contribution plan, also:

(i) the fact that the plan is a defined benefit plan

(ii) the reason why sufficient information is not available for the plan to be accounted foras a defined benefit plan

(iii) the expected contributions to the plan for the next annual reporting period

(iv) information about any deficit or surplus in the plan that may affect the amount of futurecontributions, including the basis used to determine that deficit or surplus

(v) an indication of the level of participation of the entity in the plan compared with otherparticipating entities (eg proportion of total contributions or total members).




Defined benefit plans: Group plans

AASB119(40) Defined benefit plans that share risks between various entities under common control are not92.multi-employer plans. An entity participating in such a plan shall obtain information about theplan as a whole. The accounting for the plan depends on whether there is a contractualagreement or stated policy for charging the net defined benefit cost for the plan as a whole,measured in accordance with AASB 119, to individual group entities:

(a) If there is such policy or agreement, the entity shall in its separate financial statementsrecognise the net defined benefit cost so charged.

(b) If there is no such policy or agreement, the net defined benefit cost shall be recognised inthe separate financial statements of the group entity that is legally the sponsoringemployer for the plan. The other group entities shall, in their separate financial statements,recognise a cost equal to their contribution payable for the period.

AASB119(149) Entities that participate in a defined benefit plan that shares risks between entities under93.common control must provide the following information:

(a) the contractual agreement or stated policy for charging the net defined benefit cost or thefact that there is no such policy

(b) the policy for determining the contribution to be paid by the entity

(c) if the entity accounts for an allocation of the net defined benefit cost in accordance withparagraph 92(a) above, all the information about the plan as a whole required by AASB119 paragraphs 135 – 147

(d) if the entity accounts for the contribution payable for the period as per paragraph 92(b)above, the information about the plan as a whole required by AASB 119 paragraphs 135-137, 139, 142-144 and 147(a) and (b).

Highest and best use differs from current use – non-financial assets

AASB13(93)(i) If the highest and best use of a non-financial asset differs from its current use, the entity shall94.disclose that fact and why the non-financial asset is being used in a manner that differs from itshighest and best use. This applies to recurring and non-recurring fair value measurements.


9 EquityAASB101(106)(d)

(a) Contributed equity 1,2,7-8,15-21

Notes2015

Shares2014

Shares2015

$’0002014$’000

(i) Share capital

Ordinary shares (iii),(v)AASB101(79)(a)(ii) Fully paid 55,659,439 51,104,358 83,104 58,953AASB101(79)(a)(ii) Called to $2.88 (v) - 1,250,000 - 3,600

Calls in arrears (v) - - - (100)

55,659,439 52,354,358 83,104 62,453AASB101(79)(a)(ii) 7% non-redeemable

participating preferenceshares fully paid (iv) - 500,000 - 1,523

55,659,439 52,854,358 83,104 63,976

(ii) Other equity securitiesAASB132(28) Value of conversion rights –

convertible notes (vi) 3,500 -AASB112(81)(a) Deferred tax liability

component (1,050) -AASB101(79)(a)(vi)AASB132(34)

Treasury shares (vii) (120,641) (99,280) (676) (550)

1,774 -

Total contributed equity 55,538,798 52,755,078 84,878 63,426

AASB101(106)(d)(iii) Movements in ordinary share capital:

Notes Number of shares $’000

Details

AASB101(79)(a)(iv) Opening balance 1 July 2013 52,111,430 61,096

Employee share scheme issues (ix) 142,857 798

Dividend reinvestment plan issues (viii) 100,071 559

AASB101(79)(a)(iv) Balance 30 June 2014 52,354,358 62,453

Dividend reinvestment plan issues (viii) 93,904 565

Final call of $1.12 per share on 1,250,000 partlypaid shares (v) - 1,400

Calls in arrears paid (v) - 100

Exercise of options - proceeds received (x) 228,000 1,203

Acquisition of subsidiary 14 1,698,261 9,815

Rights issue (xi) 1,284,916 7,708

83,244AASB132(35),(39) Less: Transaction costs arising on share issues

4(200)

AASB112(81)(a) Deferred tax credit recognised directly in equity 60

AASB101(79)(a)(iv) Balance 30 June 2015 55,659,439 83,104

Not mandatory The purpose of the rights issue and the call on partly paid shares was to repay borrowings which hadbeen drawn to finance the establishment of the furniture retail division, expand the Maitlandmanufacturing facilities, and acquire shares in VALUE ACCOUNTS Electronics Pty Ltd. Funds raisedfrom the other share issues were used for general working capital purposes.

3

Equity


AASB101(106)(d)(a) Contributed equity

AASB101(106)(d)(iv) Movements in 7% non-redeemable participating preference share capital:

Notes Number of shares $’000

DetailsAASB101(79)(a)(iv) Opening balance 1 July 2013/ 1 June 2014 500,000 1,523AASB101(79)(a)(iv) Shares bought back on-market and cancelled (xii) (500,000) (1,350)

Buy-back transaction costs (xii) - (45)AASB112(81)(a) Current tax credit recognised directly in equity (xii) - 15

Transfer to retained earnings (xii) - (143)

AASB101(79)(a)(iv) Balance 30 June 2015 - -

(v) Ordinary sharesAASB101(79)(a)(v) Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up

the company in proportion to the number of and amounts paid on the shares held. These rights aresubject to the prior entitlements of the 6% redeemable preference shares, which are classified asliabilities (refer to note 7(g)).

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, isentitled to one vote, and upon a poll each share is entitled to one vote.

AASB101(79)(a)(i),(iii) Ordinary shares have no par value and the company does not have a limited amount of authorisedcapital.

AASB101(79)(a)(ii) At 30 June 2014 there were 1,250,000 ordinary shares called to $2.88, on which a further $1.12 wasoutstanding. The outstanding amount, together with calls in arrears of $100,000, was received on3 May 2015.

(vi) Other equity securitiesAASB101(79)(a)(v) The amount shown for other equity securities is the value of the conversion rights relating to the 7%

convertible notes, details of which are shown in note 7(g).

(vii) Treasury sharesAASB101(79)(a)(vi) Treasury shares are shares in VALUE ACCOUNTS Reduced Disclosure Pty Ltd that are held by the

VALUE ACCOUNTS Employee Share Trust for the purpose of issuing shares under the VALUEACCOUNTS Employee share scheme and the executive short-term incentive (STI) scheme (see note21 for further information). Shares issued to employees are recognised on a first-in-first-out basis.

Details Number of shares $’000

AASB101(79)(a)(iv) Opening balance 1 July 2013 (46,916) (251)

Acquisition of shares by the Trust (52,364) (299)

Balance 30 June 2014 (99,280) (550)

Acquisition of shares by the Trust (207,636) (1,217)

Issue of deferred shares under the executive STI scheme 40,373 216

Employee share scheme issue 145,902 875

AASB101(79)(a)(iv) Balance 30 June 2015 (120,641) (676)

(viii) Dividend reinvestment planAASB101(79)(a)(vii) The company has established a dividend reinvestment plan under which holders of ordinary shares

may elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary sharesrather than by being paid in cash. Shares are issued under the plan at a 2.5% discount to the marketprice.

(ix) Employee share schemeAASB101(79)(a)(vii) Information relating to the employee share scheme, including details of shares issued under the

scheme, is set out in note 21.

(x) OptionsAASB101(79)(a)(vii) Information relating to the VALUE ACCOUNTS Employee Option Plan, including details of options

issued, exercised and lapsed during the financial year and options outstanding at the end of thereporting period, is set out in note 21.

Equity


AASB101(106)(d)(a) Contributed equity

(xi) Rights issueAASB101(106)(d)(iii),(112)(c)

On 10 April 2015 the company invited its shareholders to subscribe to a rights issue of 1,284,916ordinary shares at an issue price of $6.00 per share on the basis of 1 share for every 10 fully or partlypaid ordinary shares held, with such shares to be issued on, and rank for dividends after, 4 June 2015.The issue was fully subscribed.

(xii) Share buy-back 5-6

AASB101(106)(d)(iii) During April/May 2015 the company purchased and cancelled all 500,000 7% non-redeemableparticipating preference shares on-market in order to simplify the company’s capital structure. The buy-back and cancellation were approved by shareholders at last year’s annual general meeting. Theshares were acquired at an average price of $2.70 per share, with prices ranging from $2.65 to $2.73.The total cost of $1,380,000, including $30,000 of after tax transaction costs, was deducted frompreference shareholder equity. As all the shares of that class were bought back and cancelled, theremaining balance of $143,000 was transferred to retained earnings. The total reduction in paid upcapital was $1,523,000.

AASB7(7)AASB101(79)(a)(v)

The 7% non-redeemable participating preference shares were entitled to dividends at the rate of 7% perannum when sufficient profits were available, but were non-cumulative. They would have participatedequally with ordinary shares on winding up of the company.

Equity


AASB101(106)(d)(b) Other reserves

AASB101(106A) The following table shows a breakdown of the balance sheet line item ‘other reserves’ and themovements in these reserves during the year. A description of the nature and purpose of each reserveis provided below the table.

AASB116(77)(f)AASB121(52)(b))

Notes

Reva-luation

surplus$’000

AfSfinancial

assets$’000

Cash flowhedges

$’000

Share-based

payments$’000

Trans-actions

with NCI$’000

Foreigncurrency

translation$’000

Totalother

reserves$’000

At 1 July 2013 9 3,220 1,173 (203) 1,289 - 1,916 7,395

AASB116(77)(f)AASB7(20)(a)(ii),(23)(e)

Revaluation – gross8(c),7(d)

12(a) 5,840 (1,378) 1,785 - - - 6,247

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) (1,752) 413 (535) - - - (1,874)

AASB116(77)(f) NCI share in revaluation– gross (178) - - - - - (178)

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) 54 - - - - - 54

AASB116(41) Depreciation transfer –gross 9(c) (334) - - - - - (334)

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) 100 - - - - - 100

AASB116(77)(f) Revaluation associate 16(e) 100 - - - - - 100

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) (30) - - - - - (30)

AASB101(92),(95)AASB7(23)(d)

Reclassification to profitor loss –gross 10,11

12(a)7(d) - 548 (195) - - - 353

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) - (164) 59 - - - (105)

AASB7(23)(e)

Transfer to inventory –gross 12(a) - - 52 - - - 52

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) - - (16) - - - (16)

AASB121(52)(b) Currency translationdifferences - currentperiod - - - - - 243 243

NCI share in translationdifferences - - - - - (133) (133)

Other comprehensiveincome 3,800 (581) 1,150 - - 110 4,479

Transactions withowners in their capacityas owners

Share-basedpayment expenses 21 - - - 555 - - 555

At 30 June 2014 7,020 592 947 1,844 - 2,026 12,429

Equity



AASB116(77)(f)AASB121(52)(b)

Notes

Reva-luation

surplus$’000

AfSfinancial

assets$’000

Cash flowhedges

$’000

Share-based

payments$’000

Trans-actions

with NCI$’000

Foreigncurrency

trans-lation$’000

Totalother

reserves$’000

At 30 June 2014 7,020 592 947 1,844 - 2,026 12,429

AASB116(77)(f)AASB7(20)(a)(ii),(23)(e)

Revaluation – gross8(c),7(d)

12(a) 7,243 880 77 - - - 6,200

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) (2,173) (264) (23) - - - (2,460)

AASB116(77)(f) NCI share in revaluation– gross (211) - - - - - (211)

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) 63 - - - - - 63

AASB116(41) Depreciation transfer –gross 9(c) (320) - - - - - (320)

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) 96 - - - - - 96

AASB116(77)(f)Revaluation joint venture 16(e) 300 - - - - - 300

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) (90) - - - - - (90)

AASB101(92),(95)AASB7(23)(d)

Reclassification to profitor loss – gross

12(a)7(d) - (646) (155) - - - (801)

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) - 194 47 - - - 241

AASB7(23)(e) Transfer to inventory –gross 12(a) - - 161 - - - 161

AASB112(81)(ab),AASB101(90)

Deferred tax 8(e) - - (48) - - - (48)

AASB121(52)(b)

Currency translationdifferences - currentperiod - - - - - (617) (617)

AASB101(92),(95)AASB121(52)(b)

Reclassification to profitor loss on disposal ofdiscontinued operation 15 170 170

AASB121(52)(b)Net investment hedge - - - - - 190 190

NCI share in translationdifferences - - - - - 247 247

Other comprehensiveincome 4,908 164 59 - - (10) 5,121

Transactions withowners in their capacityas owners

Share-basedpayment expenses 21 2,018 2,018

Issue of treasuryshares to employees 9(a) - - - (1,091) - - (1,091)

AASB10(23) Transactions withNCI 16(d) - - - - (333) - (333)

At 30 June 2015 11,928 756 1,006 2,771 (333) 2,016 18,144

(i) Nature and purpose of other reserves 12,13

Revaluation surplus – property, plant and equipmentAASB116(77)(f) The property, plant and equipment revaluation surplus is used to record increments and decrements on

the revaluation of non-current assets. In the event of a sale of an asset, any balance in the reserve inrelation to the asset is transferred to retained earnings, see accounting policy note 28(r) for details.


Changes in the fair value and exchange differences arising on translation of investments that areclassified as available-for-sale financial assets (eg equities), are recognised in other comprehensiveincome and accumulated in a separate reserve within equity. Amounts are reclassified to profit or losswhen the associated assets are sold or impaired, see accounting policy note 28(o) for details.

Equity



Cash flow hedges

The hedging reserve is used to record gains or losses on derivatives that are designated and qualify ascash flow hedges and that are recognised in other comprehensive income, as described in note 28(p).Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.

Share-based payments

The share-based payments reserve is used to recognise:

the grant date fair value of options issued to employees but not exercised

the grant date fair value of shares issued to employees

the grant date fair value of deferred shares granted to employees but not yet vested

the issue of shares held by the VALUE ACCOUNTS Employee Share Trust to employees.

Transactions with non-controlling interests

This reserve is used to record the differences described in note 28(b)(v) which may arise as a result oftransactions with non-controlling interests that do not result in a loss of control.

Foreign currency translation

Exchange differences arising on translation of the foreign controlled entity are recognised in othercomprehensive income as described in note 28(d) and accumulated in a separate reserve within equity.The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

AASB101(106)(d)(c) Retained earnings

AASB101(106)(d) Movements in retained earnings were as follows:

Notes2015

$’000

2014Restated *

$’000

Balance 1 July 36,078 21,442

Net profit for the period 34,148 25,803AASB101(106)(d)(ii) Items of other comprehensive income recognised

directly in retained earnings

Remeasurements of retirement benefitobligation, net of tax 8(h) 112 (371)

Dividends 13(b) (22,837) (11,029)

Transfer from share capital on buy-back ofpreference shares 9(a) 143 -

Depreciation transfer, net of tax 9(b) 224 234

Balance 30 June 47,868 36,078

* The amounts disclosed are after the restatement for the changes in accounting policy disclosed in note 29 and the correction of the error disclosedin note 11(b).

Equity

Contributed equity

Share capital disclosures

AASB101(79)(a) The following shall be disclosed either in the balance sheet, in the statement of changes in1.equity or in the notes for each class of share capital:

the number of shares authorised (where relevant)(a)

the number of shares issued and fully paid, and issued but not fully paid(b)

par value per share, or that the shares have no par value(c)

a reconciliation of the number of shares outstanding at the beginning and at the end of(d)the period

the rights, preferences and restrictions attaching to that class including restrictions on the(e)distribution of dividends and the repayment of capital

Equity


Equity

shares in the entity held by the entity or by its subsidiaries or associates, and(f)

shares reserved for issue under options and contracts for the sale of shares, including the(g)terms and amounts.

Where no share capital

AASB101(80) An entity without share capital, such as a partnership or trust, shall disclose information2.equivalent to that required by paragraph 79(a) of AASB 101 Presentation of FinancialStatements, showing changes during the period in each category of equity interest, and therights, preferences and restrictions attaching to each category of equity interest.

Purposes of share issues

Disclosure of the purposes of share issues is optional.3.

Transaction costs

AASB132(39)AASB101(106)(d)

The amount of transaction costs accounted for as a deduction from equity in the period is4.disclosed separately under AASB 101.

Share buy-backs

AASB101(106)(d)(iii) An entity shall present, either in the statement of changes in equity or in the notes the amount5.of transactions with owners acting in their capacity as owners, showing separately contributionsby and distributions to owners.

ASX(4.10.18) Listed entities are required to state in their annual report whether there is a current on-market6.buy back (not disclosed as not applicable to proprietary companies).

Equity instruments issued as purchase consideration

Refer to paragraph 10 of the commentary on the business combination (note 14) for comments7.on the requirements of AASB 3 where the purchase consideration for an acquisition includesequity instruments.

Classification of financial instruments as liabilities or equity

Refer to paragraphs 20-21 of the commentary on borrowings (note 7) for comments on the8.requirements of AASB 132 Financial Instruments: Presentation relating to the classification offinancial instruments as liabilities or equity and related matters.

Other reserves

Movements

AASB101(106)(d) An entity shall present, either in the statement of changes in equity or in the notes, for each9.accumulated balance of each class of other comprehensive income a reconciliation betweenthe carrying amount at the beginning and the end of the period, separately disclosing each itemof other comprehensive income and transactions with owners. See also commentaryparagraphs 2 and 3 to the statement of changes in equity.

AASB101(92),(94) Reclassification adjustments relating to components of other comprehensive income must also10.be disclosed, either in the statement of comprehensive income or in the notes. VALUEACCOUNTS Reduced Disclosure Pty Ltd has elected to make both disclosures in the notes.

AASB101(7),(95) Reclassification adjustments are amounts reclassified to profit or loss in the current period that11.were recognised in other comprehensive income in the current or previous periods. They arise,for example, on disposal of a foreign operation, on derecognition or impairment of an available-for-sale financial asset and when a hedged forecast transaction affects profit or loss.

Nature and purpose

AASB101(79)(b) A description of the nature and purpose of each reserve within equity must be provided either12.in the balance sheet or in the notes. This applies to each reserve, including general reserves,capital profits reserves and any others in existence.

In providing a description of the nature and purpose of the reserves it would be appropriate to13.refer to any restrictions on their distribution or any other important characteristics. In thecase of:

AASB116(77)(f) the property, plant and equipment revaluation surplus: there is a specific requirement to(a)disclose any restrictions on the distribution of the balance to shareholders

AASB138(124)(b) the amount of the revaluation surplus that relates to intangible assets; there is a specific(b)requirement to disclose the balance at the beginning and end of the period, indicating thechanges during the period and any restrictions on the distribution of the balance toshareholders.

Equity


Equity

Transfer from share-based payments reserve to share capital on exercise of options

The accounting standards do not distinguish between different components of equity. Although14.AASB 2 Share-based Payment permits to transfer an amount from one component of equity toanother upon the exercise of options, there is no requirement to do so. VALUE ACCOUNTSReduced Disclosure Pty Ltd has elected to retain any amounts originally recognised in theshare-based payments reserve, regardless of whether the associated options are exercised orlapse unexercised. Under Australian income tax law, certain transfers to share capital accounts(as broadly defined for tax purposes) can result in the ‘tainting’ of the company’s share capitalaccount which will result in negative tax consequences for the company and its shareholders.This is an area of tax which is complex and continues to evolve. Entities should always obtaintax advice in relation to the accounting for share-based payments in light of their owncircumstances before making any decision.


Puttable financial instruments

AASB101(136A) If an entity has puttable financial instruments that are classified as equity it shall disclose:15.

(a) summary quantitative data about the amount classified as equity

(b) its objectives, policies and processes for managing its obligation to repurchase or redeemthe instruments when required to do so by the instrument holders, including any changesfrom the previous period

(c) the expected cash outflow on redemption or repurchase of that class of financialinstruments, and

(d) information about how the expected cash outflows on redemption or repurchase wasdetermined.

AASB101(80A) If an entity has reclassified:16.

(a) a puttable financial instrument classified as an equity instrument, or

(b) an instrument that imposes on the entity an obligation to deliver to another party a pro-ratashare of the net assets of the entity only on liquidation and is classified as anequity instrument

between financial liabilities and equity, it shall disclose the amount reclassified into and out ofeach category (financial liabilities or equity) and the timing and reason for that reclassification.

AASB101(138)(d) If the entity is a limited life entity, it shall disclose information regarding the length of its life in17.the notes to the financial statements, if not disclosed elsewhere in information published withthe financial statements.

Extinguishing financial liabilities with equity instruments

AASB-I19(11) If the entity has issued equity instruments to extinguish all or part of a financial liability and has18.recognised a gain or loss in the process, it must disclose that gain or loss as a separate lineitem in profit or loss or in the notes.

Share premium accounts and capital redemption reserves

CA1408 On the abolition of par values of shares on 1 July 1998, share premium accounts and capital19.redemption reserves became part of share capital. Transitional provisions in the oldCorporations Law (sections 1446 and 1447) which continue to have application by virtue of CA1408 enable pre-existing share premium accounts to be used:

(a) to provide for premiums payable on the redemption of debentures or redeemablepreference shares issued before 1 July 1998, or

(b) to write off preliminary expenses or share issue costs incurred on or before 1 July 1998.

ASIC-RG68(94) Where opportunity exists to use the share premium account existing immediately prior to 1 July20.1998 in the future in accordance with the above transitional provisions it will be necessary forcompanies to notionally keep track of that account. In Regulatory Guide 68, ASIC encouragesdisclosure of the balance of the former share premium account in the notes to the financialstatements if the information is material. For example, a note could be included along thefollowing lines where applicable:

Contributed equity includes a former share premium account of $941,000 (2014 -$941,000) that may be used to provide for the premium of $900,000 payable on theredemption of (... specify details of relevant redeemable preference shares or debenturesissued prior to 1 July 1998...).

Equity


Equity

ASIC-RG68(95) Any share premium payable on redemption of redeemable preference shares classified as21.liabilities in accordance with AASB 132 should be classified in the financial statements as aliability rather than equity.

10 Cash flow informationAASB1054(16)

(a) Reconciliation of profit after income tax to net cash inflow from operatingactivities 1,2

2015$’000

2014Restated

$’000

Profit for the period 37,153 28,122

Depreciation and amortisation 10,985 8,880

Impairment of goodwill 2,410 -

Write off of assets destroyed by fire 1,210 -

Non-cash employee benefits expense-share based payments 2,156 1,353

Non-cash retirement benefits expense (79) (51)

Accrued interest on convertible note rights 842 -

Dividend and interest income (7,650) (8,600)

Net (gain) loss on sale of non-current assets (1,620) 530

Gain on disposal of machinery hire division (930) -

Fair value adjustment to investment property (1,350) (1,397)

Fair value adjustment to derivatives (11) 621

Net (gain)/loss on sale of available for sale financial assets (626) 548

Fair value (gains)/losses on financial assets at fair value throughprofit or loss

(835) 690

Share of profits of associates and joint ventures (450) (370)

Gain on derecognition of contingent consideration (135) -

Net gain on debt defeasance (355) -

Net exchange differences 1,558 1,810

Change in operating assets and liabilities, net of effects frompurchase of controlled entity and sale of machinery hire division:

(Increase) in trade debtors and bills of exchange (5,383) (5,382)

(Increase) in inventories (3,720) (1,369)

Decrease/(Increase) in financial assets at fair value through profitor loss

465 (1,235)

(Increase) in deferred tax assets (2,355) (1,187)

(Increase)/decrease in other operating assets (150) 5,450

Increase in trade creditors 2,208 385

(Decrease) in other operating liabilities (3,065) (1,712)

Increase in provision for income taxes payable 57 102

Increase in deferred tax liabilities 3,629 2,304

Increase in other provisions 2,438 574

Net cash inflow (outflow) from operating activities 37,087 30,066

Cash flow information


(b) Non-cash investing and financing activities 3,4

2015$’000

2014$’000

AASB107(43) Acquisition of plant and equipment by means of finance leases(note 7(g)) - 3,000

Acquisition of retail store furniture and fittings from lessor as leaseincentive (note 18) - 950

Deferred settlement of part proceeds of the sale of the machinery hire division is disclosed in note 15,dividends satisfied by the issue of shares under the dividend reinvestment plan are shown in note 13(b)and options and shares issued to employees under the VALUE ACCOUNTS Employee Option Planand employee share scheme for no cash consideration are shown in note 21.

Not mandatory(c) Net debt reconciliation 5,6

This section sets out an analysis of net debt and the movements in net debt for each of the periodspresented.

Net debt 2015$’000

2014$’000

Cash and cash equivalents 55,304 24,693

Liquid investments (i) 11,300 10,915

Borrowings – repayable within one year (including overdraft) (8,980) (8,555)

Borrowings – repayable after one year (91,464) (61,525)

Net debt (33,840) (34,472)

Cash and liquid investments 66,604 35,608

Gross debt – fixed interest rates (43,689) (22,150)

Gross debt – variable interest rates (56,755) (47,930)

Net debt (33,840) (34,472)

AASB107(50)

Cash/bank

overdraft$’000

Liquidinvest-

ments (i)$’000

Financeleases

duewithin1 year$’000

Financeleases

due after1 year$’000

Borrow.due

within1 year$’000

Borrow.due after

1 year$’000

Total$’000

Net debt as at1 July 2013 13,973 10,370 - - (4,249) (58,250) (38,156)

Cash flows 8,254 1,235 - - (1,496) 535 8,528

Acquisitions – financeleases and leaseincentives - - (560) (3,390) - - (3,950)

Foreign exchangeadjustments 216 - - - - (420) (204)

Other non-cashmovements - (690) - - - - (690)

Net debt as at30 June 2014 22,443 10,915 (560) (3,390) (5,745) (58,135) (34,472)

Cash flows 30,459 (465) 805 - (5) (30,564) 230

Foreign exchangeadjustments (248) 15 - - - (31) (264)

Other non-cashmovements - 835 (825) 576 - 80 666

Net debt as at30 June 2015 52,654 11,300 (580) (2,814) (5,750) (88,650) (33,840)

(i) Liquid investments comprise current investments that are traded in an active market, being thegroup’s financial assets held at fair value through profit or loss.




Reconciliation to operation cash flow – not-for-profit entities

AASB107(Aus20.2) Not-for-profit entities that highlight the net cost of services in their statement of comprehensive1.income must disclose a reconciliation of cash flows arising from operating activities to net costof services as reported in the statement of comprehensive income.

Indirect method of presenting cash flows from operating activities

AASB1054(16) Entities that present their operating cash flows using the indirect method will not need to2.disclose a reconciliation such as the one in note 10(a), since most of the information providedin this note will in that case be provided in the statement of cash flows.

Non-cash investing and financing activities – information to be disclosed

AASB107(43) Investing and financing transactions that do not require the use of cash or cash equivalents3.shall be disclosed in a way that provides all the relevant information about the investing andfinancing activities.

AASB107(44) Other examples of transactions or events that would require disclosure under paragraph 43 of4.AASB 107 include the following:

acquisitions of assets by assuming directly related liabilities, such as purchase of a(a)building by incurring a mortgage to the seller

acquisitions of entities by means of an equity issue(b)

conversion of debt to equity.(c)

Net debt reconciliation

AASB107(50) Many investors find net debt reconciliations useful to understand the financial position and5.liquidity of an entity. As a consequence, we have decided to illustrate such a disclosure forthose entities that would like to include it voluntarily. We have based our disclosures in note10(c) on the requirements in the UK standard FRS 1 paragraph 33.

ED/2014/6(44A),(BC8)

In December 2014, the IASB proposed amendments to IAS 7 which would require entities to6.provide a similar reconciliation. However, unlike the UK rules, the reconciliation would onlycover those items for which cash flows have been, or would be, classified as financing activitiesin the cash flow statement, excluding equity items (ie primarily borrowings and lease liabilities).While the IASB acknowledged that the inclusion of cash and cash equivalent balances may beuseful where an entity manages debt on a net basis, the board did not want to delay the projectby discussing how net debt should be defined and what should, or should not be included. As aconsequence, the proposed mandatory requirement will only cover balance sheet items forwhich cash flows are classified as financing activities, but entities would be permitted to includeother items where they manage debt on a net basis.

PwC 134

Risk

Not mandatory This section of the notes discusses the group’s exposure to various risks and shows how these couldaffect the group’s financial position and performance.

11 Critical estimates, judgements and errors 135

12 Financial risk management 141

13 Capital management 155


11 Critical estimates, judgements and errorsAASB101(122),(125) The preparation of financial statements requires the use of accounting estimates which, by definition,

will seldom equal the actual results. Management also needs to exercise judgement in applying thegroup’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity,and of items which are more likely to be materially adjusted due to estimates and assumptions turningout to be wrong. Detailed information about each of these estimates and judgements is included innotes 1 to 10 together with information about the basis of calculation for each affected line item in thefinancial statements. In addition, this note also explains where there have been actual adjustments thisyear as a result of an error and of changes to previous estimates.

(a) Significant estimates and judgements 1-16

The areas involving significant estimates or judgements are:

Estimation of current tax payable and current tax expense – note 6(b)

Estimated fair value of certain available-for-sale financial assets – note 7(d)

Estimation of fair values of land and buildings and investment property – notes 8(c) and 8(d)

Estimated goodwill impairment – note 8(f)

Estimated useful life of intangible asset – note 8(f)

Estimation of provision for warranty claims – note 8(g)

Estimation of retirement benefit obligation – note 8(h)

Estimation of fair values of contingent liabilities and contingent purchase consideration in abusiness combination – note 14

Recognition of revenue – note 3

Recognition of deferred tax asset for carried forward tax losses – note 8(e)

Impairment of available-for-sale financial assets – note 7(d)

Consolidation decisions and classification of joint arrangements – note 16

Estimates and judgements are continually evaluated. They are based on historical experience andother factors, including expectations of future events that may have a financial impact on the entityand that are believed to be reasonable under the circumstances.

(b) Correction of error in accounting for leasing contract 17-22

AASB108(49)(a) In March 2015, a subsidiary undertook a detailed review of its leasing contracts and discovered that theterms and conditions of a contract for the lease of equipment had been misinterpreted. As aconsequence, the equipment had been incorrectly accounted for as a finance lease rather than as anoperating lease.

AASB108(49)(b)(i),(c) The error has been corrected by restating each of the affected financial statement line items for theprior periods as follows:

30 June2014

$’000

Increase/(Decrease)

$’000

30 June2014

(Restated)$’000

30 June2012

$’000

Increase/(Decrease)

$’000

1 July2013

(Restated)$’000

Balance sheet(extract)

Property, plant andequipment 101,380 (1,300) 100,080 89,245 (1,350) 87,895

Deferred tax asset 4,879 (108) 4,771 3,669 (85) 3,584

Current borrowings (8,793) 238 (8,555) (8,104) 235 (7,869)

Non-currentborrowings (62,814) 1,289 (61,525) (59,580) 1,330 (58,250)

Net assets 117,503 119 117,622 96,065 80 96,145

Retained earnings (35,959) (119) (36,078) (21,362) (80) (21,442)

Total equity (117,503) (119) (117,622) (96,065) (80) (96,145)

Critical estimates, judgements and errors


(b) Correction of error in accounting for leasing contract

2014$’000

ProfitIncrease/

(Decrease)$’000

2014(Restated)

$’000

Income statement (extract)

Cost of sales of goods (41,031) (25) (41,056)

Finance costs (6,270) 76 (6,194)

Profit before income tax 39,118 51 39,169

Income tax expense (11,434) (12) (11,446)

Profit from discontinued operation 399 - 399

Profit for the period 28,083 39 28,122

Profit is attributable to:

Owners of VALUE ACCOUNTS ReducedDisclosure Pty Ltd 25,764 39 25,803

Non-controlling interests 2,319 - 2,319

28,083 39 28,122

Statement of comprehensive income(extract)

Profit for the period 28,083 39 28,122

Other comprehensive income for the period 4,598 - 4,598

Total comprehensive income for the period 32,681 39 32,720

Total comprehensive income is attributable to:

Owners of VALUE ACCOUNTS ReducedDisclosure Pty Ltd 30,105 39 30,144

Non-controlling interests 2,577 - 2,577

32,681 39 32,720

The correction further affected some of the amounts disclosed in note 5(b) and note 18. Depreciationexpense for the prior year was reduced by $250,000 and rental expense relating to operating leasesincreased by $275,000.

(c) Revision of useful lives of plant and equipment 23-28

AASB108(39)

AASB116(76)

During the year the estimated total useful lives to a subsidiary of certain items of plant and equipmentused in the manufacture of furniture were revised. The net effect of the changes in the current financialyear was an increase in depreciation expense of $980,000.

Assuming the assets are held until the end of their estimated useful lives, depreciation in future yearsin relation to these assets will be increased by the following amounts:

Year ending 30 June $’000

2015 740

2016 610

2017 460

2018 430




Sources of estimation uncertainty

AASB101(125) An entity shall disclose in the notes information about the assumptions concerning the future,1.and other sources of estimation uncertainty at the end of the reporting period, that have asignificant risk of causing a material adjustment to the carrying amounts of assets andliabilities within the next annual reporting period. In respect of those assets and liabilities, thenotes shall include details of:

their nature, and(a)

their carrying amount as at the end of the reporting period.(b)

AASB101(126) Determining the carrying amounts of some assets and liabilities requires estimation of the2.effects of uncertain future events on those assets and liabilities at the end of the reportingperiod. For example, in the absence of recently observed market prices used to measure thefollowing assets and liabilities, future-oriented estimates are necessary to measure therecoverable amount of classes of property, plant and equipment, the effect of technologicalobsolescence on inventories, provisions subject to the future outcome of litigation in progress,and long-term employee benefit liabilities such as pension obligations. These estimatesinvolve assumptions about such items as the risk adjustment to cash flows or discount ratesused, future changes in salaries and future changes in prices affecting other costs.

AASB101(127) The assumptions and other sources of estimation uncertainty disclosed in accordance with3.paragraph 1 relate to the estimates that require management’s most difficult, subjective orcomplex judgements. As the number of variables and assumptions affecting the possiblefuture resolution of the uncertainties increases, those judgements become more subjectiveand complex, and the potential for a consequential material adjustment to the carryingamounts of assets and liabilities normally increases accordingly.

AASB101(128) The disclosures in paragraph 1 are not required for assets and liabilities with a significant risk4.that their carrying amounts might change materially within the next annual reporting period if,at the end of the reporting period, they are measured at fair value based on recently observedmarket prices (their fair values might change materially within the next annual reporting periodbut these changes would not arise from assumptions or other sources of estimationuncertainty at the end of the reporting period).

AASB101(129) The disclosures in paragraph 1 are presented in a manner that helps users of financial5.statements to understand the judgements management makes about the future and aboutother sources of estimation uncertainty. The nature and extent of the information providedvaries according to the nature of the assumption and other circumstances. Examples of thetypes of disclosures made are:

the nature of the assumption or other estimation uncertainty(a)

the sensitivity of carrying amounts to the methods, assumptions and estimates underlying(b)their calculation, including the reasons for the sensitivity

the expected resolution of an uncertainty and the range of reasonably possible outcomes(c)within the next annual reporting period in respect of the carrying amounts of the assetsand liabilities affected, and

an explanation of changes made to past assumptions concerning those assets and(d)liabilities, if the uncertainty remains unresolved.

AASB101(130) It is not necessary to disclose budget information or forecasts in making the disclosures in6.paragraph 1.

AASB101(131) When it is impracticable to disclose the extent of the possible effects of an assumption or7.another source of estimation uncertainty at the end of the reporting period, the entity disclosesthat it is reasonably possible, based on existing knowledge, that outcomes within the nextannual reporting period that are different from assumptions could require a materialadjustment to the carrying amount of the asset or liability affected. In all cases, the entitydiscloses the nature and carrying amount of the specific asset or liability (or class of assets orliabilities) affected by the assumption.




AASB101(132) The disclosures in paragraph 12 of particular judgements management made in the process of8.applying the entity’s accounting policies do not relate to the disclosures of sources ofestimation uncertainty in paragraph 1.

AASB101(133) The disclosure of some of the assumptions that would otherwise be required in accordance9.with paragraph 1 is required by other Australian Accounting Standards. For example, AASB137 Provisions, Contingent Liabilities and Contingent Assets requires disclosure, in specifiedcircumstances, of major assumptions concerning future events affecting classes of provisions.AASB 7 Financial Instruments: Disclosures requires disclosure of significant assumptionsapplied in estimating fair values of financial assets and financial liabilities that are carried at fairvalue. AASB 116 Property, Plant and Equipment requires disclosure of significant assumptionsapplied in estimating fair values of revalued items of property, plant and equipment.

Example disclosures of critical accounting estimates that may have a significant risk of causing10.material adjustments to the carrying amounts of assets and liabilities, but that are not relevantto VALUE ACCOUNTS Reduced Disclosure Pty Ltd, or are not expected to have a significantimpact in this instance, are:

Pension benefits

This applies where the group’s accounting policy is to recognise any actuarial gains orlosses immediately either in profit or loss or in other comprehensive income.

The present value of the pension obligations depends on a number of factors that aredetermined on an actuarial basis using a number of assumptions. The assumptions usedin determining the net cost (income) for pensions include the discount rate. Any changesin these assumptions will impact the carrying amount of pension obligations.

The group determines the appropriate discount rate at the end of each year. This is theinterest rate that should be used to determine the present value of estimated future cashoutflows expected to be required to settle the pension obligations. In determining theappropriate discount rate, the group considers the interest rates of high quality corporatebonds that are denominated in the currency in which the benefits will be paid, and thathave terms to maturity approximating the terms of the related pension liability. Marketyields on government bonds are used in countries where there is no deep market incorporate bonds.

Other key assumptions for pension obligations are based in part on current marketconditions. Additional information is disclosed in note 8(h).

If the discount rate used was 100 basis points higher or lower than management’sestimates, the carrying amount of pension obligations would be an estimated $425,000lower or $450,000 higher.

Revenue recognition

The group uses the percentage-of-completion method in accounting for its fixed-pricecontracts to deliver design services. Use of the percentage-of-completion methodrequires the group to estimate the services performed to date as a proportion of the totalservices to be performed. Were the proportion of services performed to total services tobe performed to differ by 10% from management’s estimates, the amount of revenuerecognised in the year would be increased by $175,000 if the proportion performed wasincreased, or would be decreased by $160,000 if the proportion performed wasdecreased.

AASB-I14(10) The recognition of a net defined benefit asset may also warrant additional disclosures. For11.example, the entity should explain any restrictions on the current realisability of the surplus andthe basis used to determine the amount of the economic benefits available.

Significant judgements

AASB101(122) An entity shall disclose, in the summary of significant accounting policies or other notes, the12.judgements, apart from those involving estimations (refer to paragraph 1 above), thatmanagement has made in the process of applying the entity’s accounting policies and thathave the most significant effect on the amounts recognised in the financial statements.




In the process of applying the entity’s accounting policies, management makes various13.judgements, apart from those involving estimations, that can significantly affect the amountsrecognised in the financial statements. For example, management makes judgementsin determining:

whether financial assets are held-to-maturity investments(a)

when substantially all the significant risks and rewards of ownership of financial assets(b)and lease assets are transferred to other entities

whether, in substance, particular sales of goods are financing arrangements and therefore(c)do not give rise to revenue

whether an asset should be classified as held-for-sale or an operation meets the definition(d)of a discontinued operation

whether multiple assets should be grouped to form a single cash-generating unit (where(e)this would affect whether an impairment is recognised)

whether there are material uncertainties about the entity’s ability to continue as a going(f)concern.

AASB101(123) Another example disclosure of a judgement that may significantly affect the amounts14.recognised in the financial statements, but that is not disclosed by VALUE ACCOUNTSReduced Disclosure Pty Ltd due to materiality, is:


The group follows the AASB 139 guidance on classifying non-derivative financial assetswith fixed or determinable payments and fixed maturity as held-to-maturity. Thisclassification requires significant judgement. In making this judgement, the groupevaluates its intention and ability to hold such investments to maturity.

If the group fails to keep these investments to maturity other than for specificcircumstances explained in AASB 139, it will be required to reclassify the whole class asavailable-for-sale. The investments would therefore be measured at fair value notamortised cost.

If the class of held-to-maturity investments is tainted, the fair value would increase by$2,300,000 with a corresponding entry in the fair value reserve in shareholders’ equity.Furthermore, the entity would not be able to classify any financial assets as held-to-maturity for the following two annual reporting periods.

AASB101(124) Some of the disclosures made in accordance with paragraph 12 are required by other15.Australian Accounting Standards. For example:

AASB 12 Consolidated Financial Statements requires an entity to disclose the significant(a)judgements and assumptions made in determining that it:

AASB12(9)(a) (i) does not control another entity even though it holds more than half of the voting rights,and

AASB12(9)(b) (ii) controls another entity even though it holds less than half of the voting rights.

(iii) is an agent or a principal

(iv) does not have significant influence even though it holds 20 per cent or more of thevoting rights of another entity, or

(v) has significant influence even though it holds less than 20 per cent of the voting rightsof another entity.

AASB140(75)(c) AASB 140 Investment Property requires disclosure of the criteria developed by the entity(b)to distinguish investment property from owner-occupied property and from property heldfor sale in the ordinary course of business, when classification of the property is difficult.


AASB101(122),(125) Entities adopting the reduced disclosure regime need to be aware that some disclosures are16.required by more than one standard. The fact that a specific disclosure requirement no longerapplies under the reduced disclosure regime does not necessarily mean that the relateddisclosure can be completely omitted. For example, if the entity elects to remove the detaileddisclosures about impairment testing, it may still need to provide explanations about theuncertainties associated with determining the recoverable amount of goodwill under AASB 101paragraph 125. Likewise, judgements about non-consolidation of another entity may also needto be disclosed under AASB 101 where the entity in question is significant to the group.




Prior period errors

Correction

AASB108(42) Subject to paragraph 43 of AASB 108 Accounting Policies, Changes in Accounting Estimates17.and Errors (refer to paragraph 18 below), an entity shall correct material prior period errorsretrospectively in the first financial statements authorised for issue after their discovery by:

restating the comparative amounts for the prior period(s) presented in which the error(a)occurred, or

if the error occurred before the earliest prior period presented, restating the opening(b)balances of assets, liabilities and equity for the earliest prior period presented.

AASB108(43) A prior period error shall be corrected by retrospective restatement except to the extent that it18.is impracticable to determine either the period-specific effects or the cumulative effect of theerror. Retrospective restatement is correcting the recognition, measurement and disclosure ofamounts of elements of financial statements as if a prior period error had never occurred.

AASB108(44) When it is impracticable to determine the period-specific effects of an error on comparative19.information for one or more prior periods presented, the entity shall restate the openingbalances of assets, liabilities and equity for the earliest period for which retrospectiverestatement is practicable (which may be the current period).

AASB108(45) When it is impracticable to determine the cumulative effect, at the beginning of the current20.period, of an error on all prior periods, the entity shall restate the comparative information tocorrect the error prospectively from the earliest date practicable.

Disclosure

AASB108(49) In applying paragraph 17 above, an entity shall disclose the following:21.

the nature of the prior period error(a)

for each prior period presented, to the extent practicable, the amount of the correction:(b)

(i) for each financial statement line item affected, and

(ii) if AASB 133 Earnings per Share applies to the entity, for basic and diluted earningsper share

the amount of the correction at the beginning of the earliest prior period presented, and(c)

if retrospective restatement is impracticable for a particular prior period, the circumstances(d)that led to the existence of that condition and a description of how and from when the errorhas been corrected.

Financial statements of subsequent periods need not repeat these disclosures.

Third balance sheet required

AASB101(40A)AASB2012-5(11)

Where the restatement affects line items in the balance sheet as at the beginning of the22.comparative period (1 July 2013 for VALUE ACCOUNTS Reduced Disclosure Pty Ltd), theentity will need to present a third balance sheet as of that date. However, followingamendments made by the 2009-2011 improvements cycle, the related notes no longer have toinclude the additional comparative information. Instead, it is sufficient if the corrections madeare explained in a separate note, as we have done in note 11(b).

AASB108(49) Changes in accounting estimates

Recognition

AASB108(36) The effect of a change in an accounting estimate, other than a change to which paragraph 3723.of AASB 108 applies (refer to paragraph 24 below), shall be recognised prospectively byincluding it in profit or loss in:

the period of the change, if the change affects that period only, or(a)

the period of the change and future periods, if the change affects both.(b)

AASB108(37) To the extent that a change in an accounting estimate gives rise to changes in assets and24.liabilities, or relates to an item of equity, it shall be recognised by adjusting the carrying amountof the related asset, liability or equity item in the period of the change.




Disclosure

AASB108(39) Disclosure is required of the nature and amount of a change in an accounting estimate that has25.an effect in the current period or is expected to have an effect in future periods, except for thedisclosure of the effect on future periods when it is impracticable to estimate that effect.

AASB108(40) If the amount of the effect in future periods is not disclosed because estimating it is26.impracticable, that fact shall be disclosed.

AASB116(76) For property, plant and equipment, disclosure of a change in an accounting estimate may arise27.from changes in estimates with respect to:

residual values(a)

the estimated costs of dismantling, removing or restoring items of property, plant and(b)equipment

useful lives, and(c)

depreciation methods.(d)

Change of estimate in final interim period

AASB134(26) If an estimate of an amount reported in an interim period is changed significantly during the28.final interim period of the annual reporting period but separate financial statements are notpublished for that final interim period, the nature and amount of that change in estimate shallbe disclosed in a note to the annual financial statements for that annual reporting period.

12 Financial risk management 1,2,33-36

This note explains the group’s exposure to financial risks and how these risks could affect the group’sfuture financial performance. Current year profit and loss information has been included where relevantto add further context.

AASB7(31),(32),(33) Risk Exposure arising from Measurement Management

Market risk –foreignexchange

Future commercial transactions

Recognised financial assets andliabilities not denominated in AUD

Cash flowforecasting

Sensitivityanalysis

Forward foreign exchangecontracts

Market risk –interest rate

Long-term borrowings at variablerates

Sensitivityanalysis

Interest rate swaps

Market risk –security prices

Investments in equity securities Sensitivityanalysis

Portfolio diversion

Credit risk Cash and cash equivalents, tradereceivables, derivative financialinstruments, available-for-sale debtinstruments and held-to-maturityinvestments

Aging analysis

Credit ratings

Diversification of bankdeposits, credit limits,retention of title overgoods sold, letters ofcredit

Investment guidelines foravailable-for-sale andheld-to-maturityinvestments

Liquidity risk Borrowings and other liabilities Rolling cash flowforecasts

Availability of committedcredit lines and borrowingfacilities

The group’s risk management is carried out by a central treasury department (group treasury) underpolicies approved by the board of directors. Group treasury identifies, evaluates and hedges financialrisks in close co-operation with the group’s operating units. The board provides written principles foroverall risk management, as well as policies covering specific areas, such as foreign exchange risk,interest rate risk, credit risk, use of derivative financial instruments and non-derivative financialinstruments, and investment of excess liquidity.

Financial risk management


(a) Derivatives 3-6,33,34

Derivatives are only used for economic hedging purposes and not as trading or speculativeinvestments. The group has the following derivative financial instruments:

2015$’000

2014$’000

Current assets

AASB101(77)AASB7(22)(a),(b)

Forward foreign exchange contracts – cash flow hedges (b)(i)) 1,854 1,417

Total current derivative financial instrument assets 1,854 1,417

Non-current assets

AASB101(77)AASB7(22)(a),(b)

Interest rate swap contracts – cash flow hedges ((b)(ii)) 308 712

Total non-current derivative financial instrument assets 308 712

Current liabilities

Forward foreign exchange contracts – held for trading ((b)(i)) 610 621

AASB101(77)AASB7(22)(a),(b)

Forward foreign exchange contracts – cash flow hedges ((b)(i)) 766 777

Total current derivative financial instrument liabilities 1,376 1,398

AASB101(117)(i) Classification of derivatives

AASB101(66),(68)AASB139(9),(45)

Derivatives are classified as held for trading and accounted for at fair value through profit or loss unlessthey are designated as hedges. They are presented as current assets or liabilities if they are expectedto be settled within 12 months after the end of the reporting period.

AASB139(98)(b) The group’s accounting policy for its cash flow hedges is set out in note 28(p). For hedged forecasttransactions that result in the recognition of a non-financial asset, the group has elected to includerelated hedging gains and losses in the initial measurement of the cost of the asset.

AASB108(28)(ii) Change in accounting policy

The group has applied the new standard on fair value measurement from 1 July 2014. As explained innote 29, the adoption of the standard has affected the measurement of the fair value of certainderivative liabilities. The group has recognised the adjustment as a fair value movement in profit or lossin the current period ($30,000 gain, included in the net loss for the ineffective portion of thesederivatives).

(iii) Fair value measurement

For information about the methods and assumptions used in determining the fair value of derivativesplease refer to note 7(h).

AASB7(33)(b) Market risk 7-11,12-17

(i) Foreign exchange risk 15,16

AASB7(33)(b),(22)(c) Group companies are required to hedge their foreign exchange risk exposure using forward contractstransacted with group treasury.

AASB7(22)(c) The group treasury’s risk management policy is to hedge between 75% and 100% of anticipated cashflows (mainly export sales and purchase of inventory) in US dollars for the subsequent 12 months.Approximately 90% (2013 – 95%) of projected purchases qualify as ‘highly probable’ forecasttransactions for hedge accounting purposes.

The US dollar denominated bank loans are expected to be repaid with receipts from US dollardenominated sales. The foreign currency exposure of these loans has therefore not been hedged.

Instruments used by the groupAASB7(22),(23)(a) The South East Asian operations use materials purchased from the United States. In order to protect

against exchange rate movements, the group has entered into forward exchange contracts to purchaseUS dollars. These contracts are hedging highly probable forecasted purchases for the ensuing financialyear. The contracts are timed to mature when payments for major shipments of component parts arescheduled to be made.



(b) Market risk

AASB7(7) The group also entered into forward exchange contracts in relation to projected sales for the next 12months that do not qualify as ‘highly probable’ forecast transactions and hence do not satisfy therequirements for hedge accounting (economic hedges). These contracts are subject to the same riskmanagement policies as all other derivative contracts. However, they are accounted for as held fortrading with gains (losses) recognised in profit or loss.

Hedge of net investment in foreign entityAASB7(22),(24)(c) In 2015, the parent entity has entered into a bank loan amounting to $1,222,000 which is denominated

in Indonesian rupiah (IDR). This loan, which was taken out to provide additional equity to theIndonesian subsidiary, has been designated as a hedge of the net investment in this subsidiary. Thefair value and carrying amount of the borrowing at 30 June 2015 was $1,509,000 (30 June 2014 – nil).The foreign exchange loss of $287,000 (2014 – nil) on translation of the borrowing to Australian dollarsat the end of the reporting period is recognised in other comprehensive income and accumulated in theforeign currency translation reserve, in shareholders’ equity (note 9(b)). There was no ineffectivenessto be recorded from net investments in foreign entity hedges.

ExposureAASB7(31),(34)(c) The group’s exposure to foreign currency risk at the end of the reporting period, expressed in

Australian dollar, was as follows:

30 June 2015 30 June 2014USD

$’000SGD

$’000IDR

$’000USD

$’000SGD

$’000IDR

$’000

Trade receivables 5,150 2,025 - 4,130 945

Bank loans (18,765) - (1,509) (8,250) - -

Trade payables (4,250) - - (5,130) - -

Forward exchangecontracts

buy foreign currency(cash flow hedges) 21,519 - - 18,613 - -

sell foreign currency(held for trading) 12,073 - - 11,422 - -

Amounts recognised in profit or loss and other comprehensive income

During the year, the following foreign-exchange related amounts were recognised in profit or loss andother comprehensive income:

2015$’000

2014$’000

Amounts recognised in profit or lossAASB121(52)(a) Net foreign exchange gain/(loss) included in other income/other expenses 464 (590)

AASB123(6)(e) Exchange losses on foreign currency borrowing included in finance costs (2,022) (1,810)

AASB121(52)(a) Total net foreign exchange (losses) recognised in profit before income taxfor the period (1,588) (2,400)

AASB7(20)(a)(i) Net gain/(loss)on foreign currency derivatives not qualifying as hedges (note5(a)) included in other income/other expense 11 (621)

AASB7(24)(b) Net (loss) for ineffective portion of derivatives designated as cash flowhedges (40) -

AASB121(52)(b) Net gains (losses) recognised in other comprehensive income (note 9(b))

Cash flow hedges 327 877

Translation of foreign operations and net investment hedges (427) 2,159

AASB7(23)(d),(e) Loss/(gain) reclassified from other comprehensive income

- included in acquisition cost of components (note 9(b)) 161 52

- included in gain on disposal of discontinued operation (note 15) 170 -



(b) Market risk

SensitivityAASB7(40)(a),(b),(c) As shown in the table above, the group is primarily exposed to changes in US/AUD exchange rates.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from US-dollardenominated financial instruments and the impact on other components of equity arises from foreignforward exchange contracts designated as cash flow hedges.

Impact on posttax profit

Impact on othercomponents of equity

2015$’000

2014$’000

2015$’000

2014$’000

US/AUD exchange rate – increase 10% (10%) (2,194) (894) 1,506 1,311

US/AUD exchange rate – decrease 10% (10%) 1,795 747 (1,232) (1,045)

* Holding all other variables constant

Profit is more sensitive to movements in the Australian dollar/US dollar exchange rates in 2015 than2014 because of the increased amount of US dollar denominated borrowings. Equity is more sensitiveto movements in the Australian dollar/US dollar exchange rates in 2015 than 2014 because of theincreased amount of forward foreign exchange contracts. The group’s exposure to other foreignexchange movements is not material.

(ii) Cash flow and fair value interest rate risk 17

AASB7(33)(a),(b) The group’s main interest rate risk arises from long-term borrowings with variable rates, which exposethe group to cash flow interest rate risk. Group policy is to maintain at least 60% of its borrowings atfixed rate using interest rate swaps to achieve this when necessary. During 2015 and 2014, the group’sborrowings at variable rate were mainly denominated in Australian Dollars and US Dollars.

AASB7(Appendix-A) The group’s fixed rate borrowings and receivables are carried at amortised cost. They are therefore notsubject to interest rate risk as defined in AASB 7, since neither the carrying amount nor the future cashflows will fluctuate because of a change in market interest rates.

AASB7(22) The group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Underthese swaps, the group agrees with other parties to exchange, at specified intervals (mainly quarterly),the difference between fixed contract rates and floating rate interest amounts calculated by referenceto the agreed notional principal amounts. Generally, the group raises long-term borrowings at floatingrates and swaps them into fixed rates that are lower than those available if the group borrowed at fixedrates directly.

AASB7(34)(a)(Improvement)

The exposure of the group’s borrowing to interest rate changes and the contractual re-pricing dates ofthe fixed interest rate borrowings at the end of the reporting period are as follows:

2015$’000

2014$’000

Variable rate borrowings 43,689 22,150

Fixed interest rate – repricing dates:

6 months or less 4,500 3,050

6 – 12 months 12,640 14,100

1 – 5 years 28,615 19,780

Over 5 years 11,000 11,000

100,444 70,080

Instruments used by the groupAASB7(22) Swaps currently in place cover approximately 30% (2014 – 10%) of the variable loan principal

outstanding. The fixed interest rates range between 7.8% and 8.3% (2014 – 9.0% and 9.6%) and thevariable rates are between 0.5% and 1.0% above the 90 day bank bill rate which at the end of thereporting period was 8.2% (2014 – 9.4%).

AASB7(23)(a) The contracts require settlement of net interest receivable or payable every 90 days. The settlementdates coincide with the dates on which interest is payable on the underlying debt and settlement occurson a net basis.



(b) Market risk

As at the end of the reporting period, the group had the following variable rate borrowings and interestrate swap contracts outstanding:

30 June 2015 30 June 2014Weighted

averageinterest rate Balance

% oftotal

loans

Weightedaverage

interest rate Balance

% oftotal

loans

% $’000 % $’000

Bank overdrafts andbank loans 8.9% 43,689 44% 10.4% 22,150 33%

Interest rate swaps (notionalprincipal amount) 8.1% (5,010) 9.3% (3,440)

Net exposure to cash flowinterest rate risk 38,679 39% 18,710 28%

An analysis by maturities is provided in note 12(d) below. The percentage of total loans shows theproportion of loans that are currently at variable rates in relation to the total amount of borrowings.


During the year, the following gains/(losses) were recognised in profit or loss and other comprehensiveincome in relation to interest rate swaps.

AASB7(23)(d)),(24)(b)

2015$’000

2014$’000

AASB7(20)(a)(ii) (Loss)/gain recognised in other comprehensive income (see note 9(b)) (250) 908

AASB7(23)(d),(e) Gains reclassified from other comprehensive income

- to profit or loss (finance costs; see notes 5(b) and 9(b)) (155) (195)

SensitivityAASB7(40)(a) Profit or loss is sensitive to higher/lower interest income from cash and cash equivalents as a result of

changes in interest rates. Other components of equity change as a result of an increase/decrease inthe fair value of the cash flow hedges of borrowings.


Impact on othercomponents of

equity

2015$’000

2014$’000

2015$’000

2014$’000

Interest rates – increase by 70 basis points ( 60 bps) 82 59 (187) (143)

Interest rates – decrease by 100 basis points (80 bps) (14) 28 267 269* Holding all other variables constant

(iii) Price risk

ExposureAASB7(33)(a) The group’s exposure to equity securities price risk arises from investments held by the group and

classified in the balance sheet either as available-for-sale (note 7(d)) or at fair value through profit orloss (note 7(c)).

AASB7(33)(b) To manage its price risk arising from investments in equity securities, the group diversifies its portfolio.Diversification of the portfolio is done in accordance with the limits set by the group.

AASB7(40)(a),(b) The majority of the group’s equity investments are publicly traded and are included either in the ASX200 Index or the NYSE International 100 Index.



(b) Market risk

Sensitivity

The table below summarises the impact of increases/decreases of these two indexes on the group’sequity and post-tax profit for the period. The analysis is based on the assumption that the equityindexes had increased by 9% and 7% respectively or decreased by 6% and 5% with all other variablesheld constant, and that all the group’s equity instruments moved in line with the indexes.


Impact on othercomponents of

equity

2015$’000

2014$’000

2015$’000

2014$’000

ASX 200 – increase 9% (2014 – 7.5%) 385 361 336 280

NYSE International 100 – increase 7% (2014 – 6.5%) 254 184 - -

ASX 200 – decrease 6% (2014 – 4%) (257) (193) (224) (180)

NYSE International 100 – decrease 5% (2014 – 3.5%) (182) (99) - -

Post-tax profit for the period would increase/decrease as a result of gains/losses on equity securitiesclassified as at fair value through profit or loss. Other components of equity would increase/decreaseas a result of gains/losses on equity securities classified as available-for-sale. As the fair value of theavailable-for-sale financial assets would still be above cost, no impairment loss would be recognised inprofit or loss as a result of the decrease in the index.


The amounts recognised in profit or loss and other comprehensive income in relation to the variousinvestments held by the group are disclosed in note 7.

(c) Credit risk 7-11,18-19

AASB7(33)(a),(b)

AASB7(34)(c)

Credit risk arises from cash and cash equivalents, held-to-maturity investments, favourable derivativefinancial instruments and deposits with banks and financial institutions, as well as credit exposures towholesale and retail customers, including outstanding receivables.

(i) Risk management

Credit risk is managed on a group basis. For banks and financial institutions, only independently ratedparties with a minimum rating of ‘A’ are accepted.

If wholesale customers are independently rated, these ratings are used. Otherwise, if there is noindependent rating, risk control assesses the credit quality of the customer, taking into account itsfinancial position, past experience and other factors. Individual risk limits are set based on internal orexternal ratings in accordance with limits set by the board. The compliance with credit limits bywholesale customers is regularly monitored by line management.

Sales to retail customers are required to be settled in cash or using major credit cards, mitigating creditrisk. There are no significant concentrations of credit risk, whether through exposure to individualcustomers, specific industry sectors and/or regions.

For derivative financial instruments, management has established limits so that, at any time, less than10% of the fair value of favourable contracts outstanding are with any individual counterparty.

Held-to-maturity investments consist of debentures and zero coupon bonds, which are considered tobe low risk investments. The credit ratings of the investments are monitored for credit deterioration.

AASB7(15)(b),(36)(a),AASB7(36)(b)

(ii) Security

For wholesale customers without credit rating, the group generally retains title over the goods sold untilfull payment is received, thus limiting the loss from a possible default to the profit margin made on thesale. For some trade receivables the group may also obtain security in the form of guarantees, deedsof undertaking or letters of credit which can be called upon if the counterparty is in default under theterms of the agreement.

AASB7(15)(a),(b) As at 30 June 2015 the fair value of collateral held by the group in relation to trade receivables was$580,000 (2014 – $280,000). This relates to receivables from wholesale customers with a carryingamount of $600,000 (2014 – $315,000). The group had not sold or re-pledged any collateral.

(iii) Guarantees

Credit risk also arises in relation to financial guarantees given to certain parties (see notes 26 and 27for details). Such guarantees are only provided in exceptional circumstances and are subject to specificboard approval.



(c) Credit risk 7-11,18-19

(iv) Credit quality

The credit quality of financial assets that are neither past due nor impaired can be assessed byreference to external credit ratings (if available) or to historical information about counterparty defaultrates.

4

AASB7(36)(c) 2015$’000

2014$’000

Trade receivables

Counterparties with external credit rating (Moody’s)

A 5,700 4,031

BBB 3,100 2,100

BB 1,970 600

10,770 6,731

Counterparties without external credit rating *

Group 1 750 555

Group 2 2,102 2,081

Group 3 2,300 256

5,152 2,892

Total trade receivables 15,922 9,623

Other receivables

Related parties and key management personnel ** 2,017 1,306

Receivables from once-off transactions with third parties

Counterparty with an external credit rating of A (Moody’s) 750 -

Other third parties *** 814 916

3,581 2,222

Cash at bank and short-term bank deposits

AAA 38,835 14,690

AA 16,469 10,003

55,304 24,693

Available-for-sale debt securities

AAA 2,600 1,300

AA 900 700

BB 820 380

4,320 2,380


AAA 750 -

AA 460 -

1,210 -

Derivative financial assets

AA 1,327 2,129

B 835 -

2,162 2,129

* Group 1 – new customers (less than 6 months)Group 2 – existing customers (more than 6 months) with no defaults in the pastGroup 3 – existing customers (more than 6 months) with some defaults in the past. All defaults were fully recovered.

** None of the amounts receivable from related parties are past due or impaired and repayments have been received regularly and on timehistorically. Management has established a related entity risk management framework including pre-determined limits for extending credit to keymanagement personnel. Loans to key management personnel are generally secured through mortgage (see note 20(g) for further information).

*** The group has procedures in place to assess whether to enter into once-off transactions with third parties, including mandatory credit checks.



(c) Credit risk

(v) Impaired trade receivables 20,38

AASB7(21)AASB7(B5)(d)AASB139(59)AASB101(117)

Individual receivables which are known to be uncollectible are written off by reducing the carryingamount directly. The other receivables are assessed collectively to determine whether there isobjective evidence that an impairment has been incurred but not yet been identified. For thesereceivables the estimated impairment losses are recognised in a separate provision for impairment.The group considers that there is evidence of impairment if any of the following indicators are present:

significant financial difficulties of the debtor

probability that the debtor will enter bankruptcy or financial reorganisation, and

default or delinquency in payments (more than 30 days overdue).

Receivables for which an impairment provision was recognised are written off against the provisionwhen there is no expectation of recovering additional cash.

Impairment losses are recognised in profit or loss within other expenses. Subsequent recoveries ofamounts previously written off are credited against other expenses. See note 28(o) for informationabout how impairment losses are calculated.

AASB7(37)(b) Individually impaired trade receivables relate to four furniture wholesalers that are experiencingunexpected economic difficulties (2014 – two customers of the consulting business). The groupexpects that a portion of the receivables will be recovered and has recognised impairment losses of$200,000 (2014 - $130,000). The ageing of these receivables is as follows.

Carrying amounts

Non-current assets 2015$’000

2014$’000

1 to 3 months 20 10

3 to 6 months 60 20

Over 6 months 151 128

231 158

AASB7(16) Movements in the provision for impairment of trade receivables that are assessed for impairmentcollectively are as follows:

2015$’000

2014$’000

At 1 July 300 100

Provision for impairment recognised during the year 580 540

Receivables written off during the year as uncollectible (330) (285)

Unused amount reversed (25) (55)

At 30 June 525 300


During the year, the following gains/(losses) were recognised in profit or loss in relation to impairedreceivables.

2015$’000

2014$’000

AASB7(20)(e) Impairment losses

- individually impaired receivables (200) (130)

- movement in provision for impairment (580) (540)

AASB7(20)(e) Reversal of previous impairment losses 35 125

(vi) Past due but not impaired 21

AASB7(37)(a),(36)(c) As at 30 June 2015, trade receivables of $1,277,000 (2014 – $1,207,000) were past due but notimpaired. These relate to a number of independent customers for whom there is no recent history ofdefault. The ageing analysis of these trade receivables is as follows:

2015$’000

2014$’000

Up to 3 months 1,177 1,108

3 to 6 months 100 99

1,277 1,207

AASB7(37)(a),(b) The other classes within trade and other receivables do not contain impaired assets and are not pastdue. Based on the credit history of these other classes, it is expected that these amounts will bereceived when due. The group does not hold any collateral in relation to these receivables, other than aretention of title over goods sold to wholesale customers until cash is received (see (ii) above).

22,23



(d) Liquidity risk 7-11,24,25

AASB7(33)(a),(b),(39)(c),(B11E)

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and theavailability of funding through an adequate amount of committed credit facilities to meet obligationswhen due and to close out market positions. At the end of the reporting period the group held depositsat call of $44,657,000 (2014 – $24,093,000) that are expected to readily generate cash inflows formanaging liquidity risk. Due to the dynamic nature of the underlying businesses, group treasurymaintains flexibility in funding by maintaining availability under committed credit lines.

25

AASB7(34)(a) Management monitors rolling forecasts of the group’s liquidity reserve (comprising the undrawnborrowing facilities below) and cash and cash equivalents (note 7(a)) on the basis of expected cashflows. This is generally carried out at local level in the operating companies of the group in accordancewith practice and limits set by the group. These limits vary by location to take into account the liquidityof the market in which the entity operates. In addition, the group’s liquidity management policy involvesprojecting cash flows in major currencies and considering the level of liquid assets necessary to meetthese, monitoring balance sheet liquidity ratios against internal and external regulatory requirementsand maintaining debt financing plans.

(i) Financing arrangements 31

AASB7(7),(39)(c)AASB107(50)(a)

The group had access to the following undrawn borrowing facilities at the end of the reporting period:

2015$’000

2014$’000

Floating rate

- Expiring within one year (bank overdraft and bill facility) 12,400 10,620

- Expiring beyond one year (bank loans) 9,470 8,100

21,870 18,720

AASB7(7),(39)(c)AASB107(50)(a)

The bank overdraft facilities may be drawn at any time and may be terminated by the bank withoutnotice. The unsecured bill acceptance facility may be drawn at any time and is subject to annual review.Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at anytime in either Australian or United States dollars and have an average maturity of 6.5 years (2014 – 6.9years).

32

(ii) Maturities of financial liabilities 26-30,37

AASB7(39)(a),(b),(B11B)

The tables below analyse the group’s financial liabilities into relevant maturity groupings based on theircontractual maturities for:

all non-derivative financial liabilities, and(a)

net and gross settled derivative financial instruments for which the contractual maturities are(b)essential for an understanding of the timing of the cash flows.

AASB7(B11D) The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within12 months equal their carrying balances as the impact of discounting is not significant. For interest rateswaps the cash flows have been estimated using forward interest rates applicable at the end of thereporting period.

27

AASB7(39(a),(B11B)(Improvement)

The group’s trading portfolio of derivative instruments with a negative fair value has been included attheir fair value of $610,000 (2014 – $621,000) within the less than 6 month time bucket. This isbecause the contractual maturities are not essential for an understanding of the timing of the cashflows. These contracts are managed on a net fair value basis rather than by maturity date.



(d) Liquidity risk

AASB7(39)(b),(c),(B11)

Contractualmaturities offinancial liabilities

At 30 June 2015

Lessthan 6

months$’000

6 – 12months

$’000

Between1 and 2

years$’000

Between2 and 5

years$’000

Over5 years

$’000

Totalcontrac-

tual cashflows$’000

Carryingamount

(assets)/liabilities

$’000

Non-derivatives

Trade payables 15,130 - - - - 15,130 15,130

Borrowings (excludingfinance leases) 4,439 4,639 9,310 46,195 40,121 104,704 96,769

Finance leaseliabilities 333 332 920 2,506 365 4,456 3,675

Total non-derivatives 19,902 4,971 10,230 48,701 40,486 124,290 115,574

Derivatives

Trading derivatives 610 - - - - 610 610

Gross settled (forwardforeign exchangecontracts – cash flowhedges)

- (inflow) (17,182) (13,994) - - - (31,176) -

- outflow 17,521 14,298 - - - 31,819 610

949 304 - - - 1,453 1,376

At 30 June 2014

Non-derivatives

Trade payables 11,270 - - - - 11,270 11,270

Borrowings (excludingfinance leases) 4,513 4,118 8,820 34,476 21,303 73,230 66,130

Finance leaseliabilities 237 238 930 3,105 370 4,880 3,950

Total non-derivatives 16,020 4,356 9,750 37,581 21,673 89,380 81,350

Derivatives

Trading derivatives 621 - - - - 621 621

Gross settled (forwardforeign exchangecontracts – cash flowhedges)

- (inflow) (11,724) (6,560) - - - (18,284) -

- outflow 11,885 7,028 - - - 18,913 621

782 468 - - - 1,450 1,398

AASB7(B10A)(a) Of the $47,195,000 disclosed in the 2015 borrowings time band ‘between 2 and 5 years’, the group isconsidering early repayment of $5,000,000 in the first quarter of the 2016 financial year (2014 – nil).

30


Classes of financial instruments

AASB7(6),(B1)-(B3) Where AASB 7 requires disclosures by class of financial instrument, the entity shall group its1.financial instruments into classes that are appropriate to the nature of the information disclosedand that take into account the characteristics of those financial instruments. The entity shallprovide sufficient information to permit reconciliation to the line items presented in the balancesheet. Guidance on classes of financial instruments and the level of required disclosures isprovided in Appendix B of AASB 7.




Level of detail and selection of assumptions – information through the eyes of management

AASB7(34)(a) The disclosures in relation to the financial risk management of an entity should reflect the2.information provided internally to key management personnel. As such, the disclosures that willbe provided by an entity, their level of detail and the underlying assumptions used will varygreatly from entity to entity. The disclosures in these illustrative financial statements are onlyone example of the kind of information that may be disclosed and you should consider carefullywhat may be appropriate in your individual circumstances.

Derivative financial instruments

Definition

A derivative is a financial instrument or other contract within the scope of AASB139 Financial3.Instruments: Recognition and Measurement (see paragraphs 2-7 of AASB 139) with all three ofthe following characteristics:

its value changes in response to the change in a specified interest rate, financial(a)instrument price, commodity price, foreign exchange rate, index of prices or rates, creditrating or credit index, or other variable, provided in the case of a non-financial variable thatthe variable is not specific to a party to the contract (sometimes called the ‘underlying’)

it requires no initial net investment or an initial net investment that is smaller than would be(b)required for other types of contracts that would be expected to have a similar response tochanges in market factors, and

it is settled at a future date.(c)

Classification as current or non-current

IAS1(BC38B),(38C)AASB101(66),(69)

The classification of financial instruments as held for trading under AASB 139 (see note 74.commentary paragraph 12) does not mean that they must necessarily be presented as currentin the balance sheet. If a financial liability is primarily held for trading purposes it should bepresented as current. If it is not held for trading purposes, it should be presented as current ornon-current on the basis of its settlement date. Financial assets should only be presented ascurrent assets if the entity expects to realise them within 12 months.

The treatment of hedging derivatives will be similar. Where a portion of a financial asset is5.expected to be realised within 12 months of the end of the reporting period, that portion shouldbe presented as a current asset; the remainder of the financial asset should be shown as anon-current asset. This suggests that hedging derivatives should be split into current and non-current portions. However, as an alternative, the full fair value of hedging derivatives could beclassified as current if the hedge relationships are for less than 12 months and as non-current ifthose relationships are for more than 12 months.

Hedge ineffectiveness

AASB7(24)(b),(c) If hedges are partially or fully ineffective, the entity shall disclose the ineffectiveness recognised6.in profit or loss that arises from:

cash flow hedges(a)

hedges of net investments in foreign operations.(b)

Nature and extent of risks arising from financial instruments

AASB7(31),(32) The financial statements shall include qualitative and quantitative disclosures that enable users7.to evaluate the nature and extent of risks arising from financial instruments to which the entityis exposed at the end of the reporting period. These risks typically include, but are not limitedto, credit risk, liquidity risk and market risk.

Qualitative disclosures

AASB7(33) The qualitative disclosures shall discuss for each type of risk:8.

the exposures to the risk and how they arise(a)

the entity’s objectives, policies and processes for managing the risk and the methods used(b)to measure the risk

any changes in (a) or (b) from the previous period.(c)

AASB7(32A) They shall also enable users to form an overall picture of the nature and extent of risks arising9.from financial instruments by providing a link to related quantitative disclosures.




Quantitative disclosures

AASB7(34)(a),(c) An entity shall provide for each type of risk, summary quantitative data on risk exposure at the10.end of the reporting period, based on information provided internally to key managementpersonnel and any concentrations of risk. This information can be presented in narrative formas is done on pages 142 to 146 of this publication. Alternatively, entities could provide the datain a table which sets out the impact of each major risk on each type of financial instruments.

AASB7(34)(b) If not already provided as part of the summary quantitative data, the entity shall also provide11.the information in paragraphs 12-30 below.

Market risk

AASB7(40)(a),(b) Entities shall disclose a sensitivity analysis for each type of market risk (currency, interest rate12.and other price risk) to which an entity is exposed at the end of the reporting period, showinghow profit or loss and equity would have been affected by ‘reasonably possible’ changes in therelevant risk variable, as well as the methods and assumptions used in preparing such ananalysis.

AASB7(B27) The sensitivity of profit or loss (eg from instruments classified as at fair value through profit or13.loss and the impairment of available-for-sale financial assets) is disclosed separately from thesensitivity of equity (eg from instruments classified as available-for-sale). That is, the disclosureshould distinguish between those changes that affect profit or loss and those changes that arerecognised directly in equity without going through profit or loss.

AASB7(40)(c) If there have been any changes in methods and assumptions from the previous period, this14.must be disclosed together with the reasons for such a change.

Foreign currency risk

AASB7(B23) Foreign currency risk can only arise on financial instruments that are denominated in a15.currency other than the functional currency in which they are measured. Translation relatedrisks are therefore not included in the assessment of the entity’s exposure to currency risks.Translation exposures arise from financial and non-financial items held by an entity (forexample, a subsidiary) with a functional currency different from the group’s presentationcurrency. However, foreign currency denominated inter-company receivables and payableswhich do not form part of a net investment in a foreign operation would be included in thesensitivity analysis for foreign currency risks, because even though the balances eliminate inthe consolidated balance sheet, the effect on profit or loss of their revaluation under AASB 121is not fully eliminated.

AASB7(B23) For the purpose of AASB 7, currency risk does also not arise from financial instruments that16.are non-monetary items. VALUE ACCOUNTS Reduced Disclosure Pty Ltd has thereforeexcluded its US dollar denominated equity securities from the analysis of foreign exchangerisk. The foreign currency exposure arising from investing in non-monetary financialinstruments is reflected in the other price risk disclosures as part of the fair value gains andlosses.

Interest rate risk – fixed rate borrowings

Sensitivity to changes in interest rates is normally only relevant to financial assets or financial17.liabilities bearing floating interest rates. However, sensitivity will also be relevant to fixed ratefinancial assets and financial liabilities which are remeasured to fair value.

Credit risk

AASB7(36),(37) For each class of financial instrument, the entity shall disclose:18.

the maximum exposure to credit risk (not required for instruments whose carrying amount(a)best represents the maximum exposure to credit risk)

a description of collateral held as security and of other credit enhancements, and their(b)financial effect, in respect of the amount that best represents the maximum exposure tocredit risk (eg a quantification of the extent to which collateral and other creditenhancements mitigate credit risk)

information about the credit quality of financial assets that are neither past due nor(c)impaired

an analysis of the age of financial assets that are past due but not impaired(d)

an analysis of financial assets that are individually determined to be impaired.(e)




AASB7(34)(c),(B8)IFRS7(IG18)

Entities should also explain any concentrations of credit risk if they are not apparent from the19.other information provided. Concentrations of credit risk could arise from exposure to particularindustry sectors or geographical regions, from specific credit ratings or other measure of creditquality and from a limited number of individual counterparties or groups of closely relatedcounterparties.

Impaired trade receivables

AASB7(37)(b) Entities must provide an analysis of financial assets that are individually determined to be20.impaired. However, there is no specific requirement to disclose the ageing of those financialassets. Other forms of analyses will be equally acceptable.

Past due but not impaired

AASB7(Appendix-A)AASB7(37)(a)

A financial asset is past due when a counterparty has failed to make a payment when21.contractually due. AASB 7 requires disclosure of an analysis of the age of financial assets thatare past due but for which there is no evidence at the end of the reporting period that theassets are impaired.

Collateral accepted

AASB7(15) Where an entity holds collateral (of financial or non-financial assets) that it is permitted to sell22.or repledge in the absence of default by the owner of the collateral, it shall disclose:

the fair value of the collateral held(a)

the fair value of any such collateral sold or repledged and whether the entity has an(b)obligation to return it, and

any terms and conditions associated with its use of this collateral.(c)

AASB7(38) When an entity has obtained financial or non-financial assets during the period by taking23.possession of collateral held or by calling on other credit enhancements (eg guarantees) it shalldisclose the nature and carrying amount of the assets and, if the assets are not readilyconvertible into cash, its policies for disposing of such assets or for using them in itsoperations.

Liquidity risk

AASB7(34),(a),(39) Information about liquidity risk shall be provided by way of:24.

a maturity analysis for non-derivative financial liabilities (including issued financial(a)guarantee contracts) that shows the remaining contractual maturities

a maturity analysis for derivative financial liabilities (see paragraph 26 below for details),(b)and

a description of how the entity manages the liquidity risk inherent in (a) and (b).(c)

AASB7(B11F) In describing how liquidity risk is being managed, an entity should consider discussing25.whether it:

has committed borrowing facilities or other lines of credit that it can access to meet(a)liquidity needs

holds deposits at central banks to meet liquidity needs(b)

has very diverse funding sources(c)

has significant concentrations of liquidity risk in either its assets or its funding sources(d)

has internal control processes and contingency plans for managing liquidity risk(e)

has instruments that include accelerated repayment terms (eg on the downgrade of the(f)entity’s credit rating)

has instruments that could require the posting of collateral (eg margin calls for derivatives)(g)

has instruments that allow the entity to choose whether it settles its financial liabilities by(h)delivering cash (or another financial asset) or by delivering its own shares, or

has instruments that are subject to master netting agreements.(i)




Maturity analysis

AASB7(B11B) All financial liabilities must be included in the maturity analysis. The analysis should generally26.be based on contractual maturities. However, for derivative financial liabilities the standardprovides entities with a choice to base the maturity grouping on expected rather thancontractual maturities, provided the contractual maturities are not essential for anunderstanding of the timing of the cash flows. This could be the case for derivative contractsthat are held for trading. For contracts such as interest rate swaps in a cash flow hedge of avariable rate financial asset or liability and for all loan commitments, the remaining contractualmaturities will be essential for an understanding of the timing of the cash flows. Thesecontracts must therefore be grouped based on their contractual maturities.

AASB7(3),(B11D) The amounts disclosed should be the amounts expected to be paid in future periods,27.determined by reference to the conditions existing at the end of the reporting period. However,AASB 7 does not specify whether current or forward rates should be used. PwC recommendsthe use of forward rates as they are a better approximation of future cash flows.

AASB7(B11C)(c) The specific time buckets presented are not mandated by the standard but are based on what28.is reported internally to the key management personnel. For financial guarantee contracts, themaximum amount of the guarantee must be allocated to the earliest period in which theguarantee could be called.

As the amounts included in the maturity tables are the contractual undiscounted cash flows,29.including principal and interest payments, these amounts will not reconcile to the amountsdisclosed in the balance sheet. This is in particular as far as borrowings or derivative financialinstruments are concerned. Entities can choose to add a column with the carrying amountswhich ties into the balance sheet and a reconciling column if they so wish, but this is notmandatory.

AASB7(B10A) If an outflow of cash could occur either significantly earlier than indicated or be for significantly30.different amounts from those indicated in the entity’s disclosures about its exposure to liquidityrisk, the entity shall state that fact and provide quantitative information that enables users of itsfinancial statements to evaluate the extent of this risk. This disclosure is not necessary if thatinformation is included in the contractual maturity analysis.

Financing arrangements

AASB107(50)(a)AASB7(39)(b)

Committed borrowing facilities are a major element of liquidity management. Entities should31.therefore consider providing information about their undrawn facilities. AASB 107 Statement ofCash Flows also recommends disclosure of undrawn borrowing facilities that may be availablefor future operating activities and to settle capital commitments, indicating any restrictions onthe use of these facilities.

Terms and conditions of financial instruments

AASB7(7),(31) Entities shall disclose sufficient information that enables users of its financial statements to32.evaluate the significance of financial instruments for its financial position and performance andthe nature and extent of risks arising from these financial instruments. However, the intention ofAASB 7 was to decrease the potentially voluminous disclosures that were required by AASB132 and replace them with shorter but more meaningful information. Under normalcircumstances entities will therefore no longer need to disclose the significant terms andconditions for each of their major borrowings. Nevertheless, if an entity has a borrowing orother financial instrument with unusual terms and conditions, then some information should beprovided to enable users to assess the nature and extent of risks associated with theseinstruments.

Disclosure not illustrated: not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Ltd

Hedge accounting - transaction no longer expected to occur

AASB7(23)(b) For designated cash flow hedges an entity shall include a description of any forecast33.transaction for which hedge accounting had previously been used but which is no longerexpected to occur.

Fair value hedges

AASB7(24)(a) For fair value hedges, an entity shall disclose separately gains or losses on the:34.

(a) hedging instrument

(b) hedged item attributable to the hedged risk.




Parent entity disclosures

AASB7(Aus2.1) If an entity presents separate financial statements for the parent entity in addition to the35.consolidated financial statements, all of the disclosures required under AASB 7 must be madefor both the parent and the group.

AASB7(35),(42) Additional information where quantitative data about risk exposure is unrepresentative

If the quantitative data disclosed under paragraphs 10,11 and 12,13 above is unrepresentative36.of the entity’s exposure to risk during the period, the entity shall provide further information thatis representative. If the sensitivity analyses are unrepresentative of a risk inherent in a financialinstrument (eg where the year-end exposure does not reflect the exposure during the year), theentity shall disclose that fact and the reason why the sensitivity analyses are unrepresentative.

Financial guarantee contracts

AASB7(39)(a),(B11C)(c)AASB139(9)

Where an entity has entered into a financial guarantee contract with a third party, the issuer of37.the guarantee must include the contract in the maturity table. For this purpose, the maximumamount of the financial guarantee is included in the earliest time bucket in which it can becalled. A financial guarantee contract is a contract that requires the issuer to make specifiedpayments to reimburse the holder for a loss it incurs because a specified debtor fails to makepayment when due in accordance with the original or modified terms of a debt instrument.

Impairment of financial assets

An entity shall disclose:38.

AASB7(20)(e) (a) the amount of any impairment loss recognised in profit or loss separately for eachsignificant class of financial asset

AASB7(20)(d) (b) the amount of interest income accrued on impaired financial assets, in accordance withparagraph AG93 of AASB 139

AASB7(37)(b) (c) an analysis of financial assets that are individually determined to be impaired.

13 Capital management

(a) Risk management 1,2

AASB101(134),(135),(136)

The group’s objectives when managing capital are to

safeguard their ability to continue as a going concern, so that they can continue to provide returnsfor shareholders and benefits for other stakeholders, and

maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paidto shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the group monitors capital on the basis of the followinggearing ratio:

Net debt as per note 10(c)

divided by

Total ‘equity’ (as shown in the balance sheet, including non-controlling interests).

AASB101(134),(135),(136)

During 2015, the group’s strategy, which was unchanged from 2014, was to maintain a gearing ratiowithin 20% to 30% and a B credit rating. The credit rating was unchanged and the gearing ratios at 30June 2015 and 30 June 2014 were as follows:

2015$’000

2014Restated

$’000

Net debt 33,840 34,472

Total equity 160,352 117,622

Net debt to equity ratio 21% 29%

Capital management


(a) Risk management 1,2

(i) Loan covenants 2

AASB101(135)(d) Under the terms of the major borrowing facilities, the group is required to comply with the followingfinancial covenants:

the gearing ratio must be not more than 50%, and(c)

the ratio of net finance cost to EBITDA must be not more than 10%.(d)

The group has complied with these covenants throughout the reporting period. As at 30 June 2015, theratio of net finance cost to EBITDA was 4% (3% as at 30 June 2014).

(b) Dividends 3,7,8

2015$’000

2014$’000

(i) Ordinary shares, 3,4

AASB101(107) Final dividend for the year ended 30 June 2014 of 22cents (2013 – 10 cents) per fully paid share 11,586 5,455

AASB101(107) Interim dividend for the year ended 30 June 2015 of 21cents (2014 – 10 cents) per fully paid share 11,144 5,467

(ii) 7% non-redeemable participating preference shares3,4

AASB101(107) Annual dividend of 7 cents (2014 – 7 cents) per share 107 107

AASB101(107) Total dividends provided for or paid 22,837 11,029

Dividends paid in cash or satisfied by the issue of sharesunder the dividend reinvestment plan during the yearsended 30 June 2015 and 2014 were as follows:

Paid in cash 22,271 10,470AASB107(43) Satisfied by issue of shares 566 559

22,837 11,029

(iii) Dividends not recognised at the end of thereporting period 4,6

AASB101(137)(a)AASB110(12)

In addition to the above dividends, since year end thedirectors have recommended the payment of a finaldividend of 22 cents per fully paid ordinary share (2014 –22 cents), fully franked based on tax paid at 30%. Theaggregate amount of the proposed dividend expected tobe paid on 9 October 2015 out of retained earnings at 30June 2015, but not recognised as a liability at year end, is 11,989 11,586

(iv) Franked dividends 5,9-15

The franked portions of the final dividends recommended after 30 June 2015 will be franked out ofexisting franking credits, or out of franking credits arising from the payment of income tax in the yearending 30 June 2016.

AASB1054(13) Consolidated Parent entity

2015$’000

2014$’000

2015$’000

2014$’000

Franking credits available for subsequentreporting periods based on a tax rate of30% (2014 - 30%) 20,531 15,480 12,510 9,465

AASB1054(14) The above amounts are calculated from the balance of the franking account as at the end of thereporting period, adjusted for franking credits and debits that will arise from the settlement of liabilitiesor receivables for income tax and dividends after the end of the year.

The consolidated amounts include franking credits that would be available to the parent entity ifdistributable profits of subsidiaries were paid as dividends.

Capital management


Capital management

AASB101(Aus1.7),(134),(135)

Capital risk management

Reporting entities must disclose information that enables users of the financial statements to1.evaluate the entity’s objectives, policies and processes for managing capital, including:

qualitative information: a description of what the entity manages as capital, information(a)about any externally imposed capital requirements and how the entity is meeting itsobjectives for managing capital

summary quantitative data about what the entity manages as capital(b)

changes in (a) or (b) from the previous period(c)

whether the entity complied with externally imposed capital requirements and, if not, the(d)consequences of the non-compliance.

Capital is not defined in any of the Australian Accounting Standards. As noted above, entities2.must describe what they manage as capital based on the type of information that is providedinternally to the key management personnel. It therefore depends on the individual entity as towhether capital includes interest-bearing debt or not. If such debt is included, however, and theloan agreements include capital requirements such as financial covenants that must besatisfied, then these need to be disclosed under paragraph 135(d) of AASB 101 Presentationof Financial Statements.

Dividends

Parent vs consolidated information

The dividends disclosed in this note are only those paid by the parent entity and do not include3.dividends paid by subsidiaries to non-controlling interests. AASB 101 requires disclosure of thedividends recognised as distribution to owners during the period (paragraph 107). The term‘owners’ is generally used in AASB 101 in the context of owners of the parent entity (egparagraphs 83 and 106). The focus of the financial statements is still on the parent entityshareholders and on that basis a disclosure of dividends per share is only relevant for theowners of the parent entity. This disclosure also correlates to the disclosure of the number ofshares issued as required under paragraph 79 of AASB 101. Holders of non-controllinginterests will receive their dividend information from the separate financial statements of therelevant subsidiaries.

Dates of payment

AASB1039(30)(b)(i) Disclosure of the actual or expected dates of payment of dividends is not mandatory in the full4.financial statements. These disclosures are required in a concise financial report, however,where such a report is prepared.

Franking credits

AASB1054(14) AASB 1054 Australian Additional Disclosures does not specify whether the disclosure of5.franking credits available for use in subsequent reporting periods should be made on aconsolidated basis or for the parent entity only. The consolidated amounts show the totalamount of franking credits available if distributable profits of subsidiaries were paid asdividends. However, we believe that information about the parent entity only amount is alsorelevant, as it is the parent entity that will be declaring the dividends in the first place.

Disclosure not illustrated: not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Ltd

Cumulative preference dividends not recognised

AASB101(137)(b) The amount of any cumulative preference dividends not recognised shall be disclosed.6.

Dividends in the form of non-cash assets

If the entity has distributed assets other than cash as dividends to its owners, it shall:7.

AASB-I17(15) (d) present the difference between the carrying amount of the assets distributed and thecarrying amount of the dividend payable as a separate line item in profit or loss

AASB-I17(16) (e) the following information, if applicable:

(i) the carrying amount of the dividend payable at the beginning and end of theperiod, and

(ii) the increase or decrease in the carrying amount recognised in the period as a resultof a change in the fair value of the assets to be distributed.

Capital management


Capital management

AASB-I17(17) If the entity has declared a dividend to distribute a non-cash asset after the end of the8.reporting period but before the financial statements are authorised for issue, it shall disclose:

(a) the nature of the asset to be distributed

(b) the carrying amount of the asset(s) to be distributed as of the end of the reportingperiod, and

(c) the estimated fair value of the asset to be distributed as of the end of the reportingperiod, if it is different from its carrying amount, and the information about the methodused to determine that fair value required by AASB 7 paragraph 27(a) and (b).

Franking credits available for subsequent reporting periods

Where franking credits could be significantly affected by a possible future payment or refund of9.tax following a retrospective change in legislation, entities should consider explaining this fact.

AASB1054(12) AASB 1054 refers to ‘imputation credits’ but explains that this also includes franking credits.10.The disclosures required by paragraphs 13 and 15 of the standard must be made separately inrespect of any New Zealand imputation credits and any Australian imputation credits.

AASB1054(15) If there are different classes of investors with different entitlements to imputation credits, the11.entity should explain the nature of those entitlements for each class where this is relevant toan understanding of them.

Franking account legislation for certain companies

Australian resident shareholders of companies which are effectively wholly-owned by non-12.residents or tax exempt bodies (‘exempting companies’) may not obtain rebates and frankingcredits, except in limited circumstances.

Furthermore, an exempting company which ceases to be effectively wholly-owned by non-13.residents or tax exempt bodies (referred to as a ‘former exempting company’) is required tomaintain an ‘exempting account’ in addition to a franking account. In effect, the exemptingaccount will be the franking account balance at the date of ownership change adjusted forsubsequent tax payments and refunds attributable to the period before change in ownership.The franking account balance will only reflect franking credits and debits arising from taxpayments, refunds and dividends attributable to the period after change in ownership.

Resident shareholders of such companies are not eligible for rebates or franking credits on14.exempting account dividends, except in limited circumstances. Non-resident shareholders willcontinue to receive the benefit of ‘franked’ or ‘exempted’ dividends by way of an exemptionfrom withholding tax.

It is suggested that companies affected by the above should include the following additional15.disclosures on the availability of franking credits:

Exempting company

Income tax legislation denies Australian resident shareholders of companies which areeffectively wholly-owned by non-residents and/or tax exempt bodies from obtainingrebates or franking credit benefits, except in limited circumstances. Non-residentshareholders will continue to receive the benefit of franked dividends by way of anexemption from withholding tax. The legislation applies to the company.

Former exempting company

Where at a particular time, the company ceases to be effectively wholly-owned by non-residents and/or tax exempt bodies, special rules will apply to establish an ‘exemptingaccount’ in addition to a new franking account. In effect, the ‘exempting account is thefranking account balance at the date of ownership change adjusted for subsequent taxpayments and refunds attributable to the period before the change in ownership. Thefranking account balance will only reflect franking credits and debits arising from taxpayments, refunds and dividends attributable to the period after the change in ownership.

Resident shareholders of such companies are not eligible for rebates or franking creditson ‘exempting account’ dividends, except in limited circumstances. Non-residentshareholders will continue to receive the benefit of ‘franked’ dividends by way of anexemption from withholding tax. Certain non-resident shareholders may receive thebenefit of exempted dividends by way of exemption from withholding tax.

The legislation applies to the company and the amount of franking credits and exemptingcredits available for the subsequent financial year are as follows:

Franking credits available for the subsequent financial year $_____ $_____

Exempting credits available for the subsequent financial year $_____ $_____

PwC 159

Group structure

Not mandatory This section provides information which will help users understand how the group structure affects thefinancial position and performance of the group as a whole. In particular, there is information about:

changes to the structure that occurred during the year as a result of business combinations and thedisposal of a discontinued operation

transactions with non-controlling interests, and interests in joint operations.

A list of significant subsidiaries is provided in note 16. This note also discloses details about the group’sequity accounted investments.

14 Business combination 160

15 Discontinued operation 164

16 Interests in other entities 170


14 Business combination 1,2,13-19

(a) Summary of acquisition

AASB3(B64)(a)-(d) On 1 October 2014 the parent entity acquired 70% of the issued share capital of VALUE ACCOUNTSElectronics Pty Ltd, a manufacturer of electronic equipment. The acquisition has significantly increasedthe group’s market share in this industry and complements the group’s existing IT consultancy division.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

$’000AASB3(B64)(f) Purchase consideration (refer to (b) below):

Cash paid 3,000

Ordinary shares issued 9,765

Contingent consideration 135

AASB107(40)(a) Total purchase consideration 12,900

AASB3(B64)(f)(iv),(m)(Improvement)

The fair value of the 1,698,000 shares issued as part of the consideration paid for VALUE ACCOUNTSElectronics Pty Ltd ($9,815,000) was based on the published share price on 1 October 2014 of $5.78per share. Issue costs of $50,000 which were directly attributable to the issue of the shares have beennetted against the deemed proceeds.

10

AASB3(B64)(i)AASB107(40)(d)

The assets and liabilities recognised as a result of the acquisition are as follows:

Fair value$’000

Cash 1,550

Trade receivables 780

Inventories 840

Land and buildings 4,200

Plant and equipment 7,610

Deferred tax asset 2,224

Intangible assets: trademarks 3,020

Intangible assets: customer contracts 3,180

Trade payables (335)

Bank overdraft (1,150)

Contingent liability (450)

Deferred tax liability (2,304)

Retirement benefit obligations (1,914)

Other employee benefit obligations (415)

Net identifiable assets acquired 16,836AASB3(B64)(o)(i) Less: non-controlling interests (5,051)

Add: goodwill 1,115

Net assets acquired 12,900

AASB3(B64)(e),(k) The goodwill is attributable to the workforce and the high profitability of the acquired business. It will notbe deductible for tax purposes.

AASB101(38) There were no acquisitions in the year ending 30 June 2014.12

(i) Significant estimate: contingent consideration 11

AASB3(B64)(g) In the event that certain pre-determined sales volumes are achieved by the subsidiary for the yearended 30 June 2015, additional consideration of up to $1,000,000 may be payable in cash on1 March 2016.

AASB3(B67)(b)(iii) The potential undiscounted amount payable under the agreement is between $0 for sales below$10,000,000 and $1,000,000 for sales above $18,000,000. The fair value of the contingentconsideration of $135,000 was estimated by calculating the present value of the future expected cashflows. The estimates are based on a discount rate of 6% and assumed probability-adjusted sales ofVALUE ACCOUNTS Electronics Pty Ltd of between $12,000,000 and $12,500,000.

AASB3(B67)(b) As at 30 June 2015, the contingent consideration has been derecognised, as the actual sales revenueachieved by VALUE ACCOUNTS Electronics Pty Ltd was below $10,000,000. A gain of $135,000 wasincluded in other income.

Business combination


(a) Summary of acquisition

(ii) Significant judgement: contingent liability 3-6,11

AASB3(B64)(j)AASB137(85)

AASB3(B67)(c)

A contingent liability of $450,000 was recognised on the acquisition of VALUE ACCOUNTSElectronics Pty Ltd for a pending lawsuit in which the entity is a defendant. The claim has arisen froma customer alleging defects on products supplied to them. It is expected that the courts will havereached a decision on this case by the end of 2015. The potential undiscounted amount of all futurepayments that the group could be required to make if there was an adverse decision related to thelawsuit is estimated to be between $250,000 and $700,000. As at 30 June 2015, there has been nochange in the amount recognised (except for the unwinding of the discount of $27,000) for the liabilityin October 2014, as there has been no change in the probability of the outcome of the lawsuit.

AASB3(B64)(h)(iii) Acquired receivables

The fair value of acquired trade receivables is $780,000. The gross contractual amount for tradereceivables due is $807,000, of which $27,000 is expected to be uncollectible.

(iv) Accounting policy choice for non-controlling interestsAASB3(B64)(o)(i) The group recognises non-controlling interests in an acquired entity either at fair value or at the non-

controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision ismade on an acquisition-by-acquisition basis. For the non-controlling interests in VALUE ACCOUNTSElectronics Pty Ltd, the group elected to recognise the non-controlling interests in at its proportionateshare of the acquired net identifiable assets. See note 28(i) for the group’s accounting policies forbusiness combinations.

(v) Revenue and profit contribution 8,9

AASB3(B64)(q) The acquired business contributed revenues of $3,850,000 and net profit of $1,405,000 to the group forthe period from 1 October 2014 to 30 June 2015.

If the acquisition had occurred on 1 July 2014, consolidated pro-forma revenue and profit for the yearended 30 June 2015 would have been $212,030,000 and $38,070,000 respectively. These amountshave been calculated using the subsidiary’s results and adjusting them for:

differences in the accounting policies between the group and the subsidiary, and

the additional depreciation and amortisation that would have been charged assuming the fair valueadjustments to property, plant and equipment and intangible assets had applied from 1 July 2014,together with the consequential tax effects.

(b) Purchase consideration – cash outflow

2015$’000

2014$’000

Outflow of cash to acquire subsidiary, net of cash acquiredAASB107(40)(b) Cash consideration 12,765 -

AASB107(40)(c) Less: Balances acquired

Cash 1,100 -

Bank overdraft (1,150) -

(50) -

Net outflow of cash – investing activities 12,815 -

Acquisition-related costs7

AASB3(B64)(m) Acquisition-related costs of $750,000 that were not directly attributable to the issue of shares areincluded in other expenses in profit or loss and in operating cash flows in the statement of cash flows.




General requirement

AASB3(59) An acquirer is required to disclose information that enables users of its financial statements to1.evaluate the nature and financial effect of business combinations that occurred either duringthe reporting period or after the end of the reporting period but before the financial statementsare authorised for issue. Refer to note 19 for illustrative disclosures relating to an acquisitionthat occurred after the reporting period.

Specific disclosures

AASB3(60),(B64)-(B65)AASB3(RDRB65.1)

Specific disclosures are required by paragraph B64 of AASB 3 Business Combinations for each2.material business combination that occurred during the reporting period. The informationrequired by that paragraph shall be disclosed in aggregate for business combinations effectedduring the reporting period that are individually immaterial.

Contingent liabilities acquired

AASB3(23) Contingent liabilities must be recognised if there is a present obligation that arises from past3.events and its fair value can be measured reliably, regardless of whether it is probable that anoutflow will be required. The required disclosures depend on whether the liability is recognisedon acquisition.

AASB3(B64)(j)AASB137(85)

If the contingent liability was recognised on acquisition, the entity must provide the disclosures4.required under AASB 137 Provisions, Contingent Liabilities and Contingent Assets forprovisions, being:

a brief description of the nature of the obligation and expected timing of any resulting(a)outflows

an indication of the uncertainties about the amount or timing of these outflows, including(b)major assumptions made concerning future events, if applicable, and

the amount of any expected reimbursement, including the amount of any asset recognised(c)for that reimbursement.

AASB3(B67)(c) Subsequent to the acquisition, the entity shall disclose:5.

AASB137(84) a reconciliation of the carrying amount of the liability as at the beginning and at the end of(a)the reporting period (illustrated in note 8(g)), and

AASB137(85) the information required by AASB 137 paragraph 85 (see paragraph 4 above).(b)

AASB3(B64)(j) If the liability was not recognised because it could not be reliably measured, the entity must6.disclose the following information:

the reasons why the liability could not be measured reliably, and(a)

AASB137(86) the disclosures required under AASB 137 for contingent liabilities, being a brief description(b)of the nature of the contingent liability, an estimate of its financial effect, an indication ofthe uncertainties relating to the amount or timing of any outflow and the possibility of anyreimbursement.

Acquisition-related costs

AASB3(B64)(m) The disclosures shall also include:7.

the amount of acquisition-related costs and, separately, the amount of those costs(a)recognised as an expense and the line item or items in the statement of comprehensiveincome in which those expenses are recognised, and

the amount of any issue costs not recognised as an expense and how they were(b)recognised.

Revenue and profit or loss since acquisition date

AASB3(B64)(q)(i) Disclosure shall be made of the amount of the acquired entity’s revenue and profit or loss since8.the acquisition date included in the acquirer’s consolidated statement of comprehensive incomefor the period, unless disclosure would be impracticable. If such disclosure would beimpracticable, that fact shall be disclosed, together with an explanation of why this is the case.

Revenue and profit or loss as if occurred at the beginning of the period

AASB3(B64)(q)(ii) Unless impracticable, the acquirer shall disclose the revenue and the profit or loss of the9.combined entity for the period as though the acquisition date for all business combinations thatoccurred during the period had been the beginning of the period. If disclosure of thisinformation would be impracticable, that fact shall be disclosed, together with an explanation ofwhy this is the case.




Equity interests issued as purchase consideration

AASB3(B64)(f)(iv) When equity interests are issued or issuable as part of the cost of acquisition, the entity shall10.disclose the number of instruments or interests issued and the method of determining the fairvalue of those instruments or interests.

Adjustments subsequent to the acquisition

AASB3(61),(B67) An acquirer shall also disclose information that enables users of its financial statements to11.evaluate the financial effects of adjustments recognised in the current reporting period thatrelate to business combinations that occurred in the period or in previous reporting periods.The relevant disclosures include details about any contingent consideration, a reconciliation ofthe carrying amount of goodwill (see note 8(f)) and information about incomplete acquisitionaccounting, recognised contingent liabilities and any gains and losses recognised during thereporting period (see paragraphs 3 – 5 above and 17 – 18 below).

Comparatives

AASB101(38) Under AASB 101, comparative information must be given for all numerical information reported12.in the financial statements, including narratives. However, AASB 3 does not separately requirecomparative information in respect of business combinations. In our view, the AASB 3disclosures are required only for business combinations occurring during the period. Thismeans that in the period following the combination, the disclosures required in paragraph B64of AASB 3 do not need to be repeated. However, the disclosures that are required in relation toa prior business combination (paragraph 11 above and paragraphs 17-18 below) must bemade.


Transactions recognised separately from the business combinations

AASB3(B64)(l) If the entity has entered into any transactions that are recognised separately from the13.acquisition of assets and assumptions of liabilities in the business combination as perparagraph 51 of AASB 3, it shall disclose:

(a) a description of each transaction

(b) how the acquirer accounted for each transaction

(c) the amounts recognised for each transaction and the line item in the financial statementsin which each amount is recognised, and

(d) if the transaction is the effective settlement of a pre-existing relationship, the method usedto determine the settlement amount.

AASB3(52) Examples of separate transactions are transactions that in effect settle a pre-existing14.relationship, remunerate employees or former owners for future services or reimburse theacquired entity or its former owners for paying the acquirer’s acquisition-related costs.

Bargain purchase

AASB3(B64)(n) If the entity has made a bargain purchase as in paragraphs 34-36 in AASB 3, it must disclose:15.

(a) the amount of any gain recognised in accordance with paragraph 34 of AASB 3 and theline item in the statement of comprehensive income in which the gain is recognised, and

(b) a description of the reasons why the transaction resulted in a gain.

Business combination achieved in stages

AASB3(B64)(p) Where the business combination was achieved in stages, the entity shall disclose:16.

(a) the acquisition-date fair value of the equity interest in the acquired entity held by theacquirer immediately before the acquisition date, and

(b) the amount of any gain or loss recognised as a result of remeasuring to fair value theequity interest in the acquired entity held by the acquirer before the business combinationand the line item in the statement of comprehensive income in which that gain or loss isrecognised.




Initial accounting incomplete

AASB3(B67)(a) If the initial accounting for a business combination is incomplete and the amounts recognised in17.relation to the business combination have thus been determined only provisionally, the entitymust disclose:

(a) the reasons why the initial accounting is incomplete

(b) the assets, liabilities, equity interests or items of consideration for which the initialaccounting is incomplete, and

(c) the nature and amount of any measurement period adjustments recognised during thereporting period in accordance with paragraph 49 of AASB 3.

Gain or loss recognised in the current reporting period

AASB3(B67)(e) If the entity has recognised any gain or loss in the current reporting period that both:18.

(a) relates to the identifiable assets acquired or liabilities assumed in a business combinationthat occurred in the current or previous reporting period, and

(b) is of such a size, nature or incidence that disclosure is relevant to understanding thecombined entity’s financial statements

it must disclose the amount and explanation of the gain or loss.

Additional disclosures

AASB3(63) If the specific disclosures required by AASB 3 and other Australian Accounting Standards do19.not satisfy the objectives set out in paragraphs 59 and 61 of the standard (paragraphs 1 and 11above), the entity shall disclose whatever additional information is necessary to meet thoseobjectives.

15 Discontinued operation 1-7,14-21

(a) Description

AASB5(41)(a),(b),(d) On 30 April 2014 the group announced its intention to exit the machinery hire business and initiated anactive program to locate a buyer for its New Zealand subsidiary, VALUE ACCOUNTS Machinery HireLimited. The associated assets and liabilities were consequently presented as held for sale in the 2014financial statements.

AASB5(30) The subsidiary was sold on 31 August 2014 with effect from 1 September 2014 and is reported in thecurrent period as a discontinued operation. Financial information relating to the discontinued operationfor the period to the date of disposal is set out below.

(b) Financial performance and cash flow information 8-13

The financial performance and cash flow information presented are for the two months ended 31August 2014 (2015 column) and the year ended 30 June 2014.

2015$’000

2014$’000

AASB5(33)(b)(i) Revenue (note 3) 4,200 26,460AASB5(33)(b)(i) Expenses (3,939) (25,890)

AASB5(33)(b)(i) Profit before income tax 261 570AASB5(33)(b)(ii)AASB112(81)(h)(ii) Income tax expense

24 (78) (171)

Profit after income tax of discontinued operation 183 399AASB5(33)(b)(iii) Gain on sale of the subsidiary after income tax (see (c) below) 481 -

Profit from discontinued operation 664 399

Discontinued operation


(b) Financial performance and cash flow information

2015$’000

2014$’000

AASB5(33)(c) Net cash inflow from operating activities 1,166 710AASB5(33)(c) Net cash inflow (outflow) from investing activities (2015 includes an inflow of

$3,110,000 from the sale of the division) 3,110 (190)AASB5(33)(c) Net cash (outflow) from financing activities - (280)

Net increase in cash generated by the division 4,276 240

(c) Details of the sale of the division 23,24

2015$’000

2014$’000

Consideration received or receivable:AASB107(40)(b) Cash 3,110 -

Fair value of contingent consideration 1,200 -

AASB107(40)(a) Total disposal consideration 4,310 -

Carrying amount of net assets sold (3,380) -

Gain on sale before income tax and reclassification of foreign currencytranslation reserve 930 -

Reclassification of foreign currency translation reserve (170) -AASB112(81)(h)(i) Income tax expense on gain

24 (279) -

Gain on sale after income tax 481 -

AASB132(11)AASB139(9)

In the event the operations of the subsidiary achieve certain performance criteria during the period 1September 2014 to 31 August 2016 as specified in an ’earn out’ clause in the sale agreement,additional cash consideration of up to $2,400,000 will be receivable. At the time of the sale the fairvalue of the consideration was determined to be $1,200,000. It has been recognised as an available-for-sale financial asset (see note 7(d)).

AASB139(AG8),AASB139(55)(b)

At year end, the fair value was re-estimated to be $1,290,000. Of this change in fair value, $130,000related to the remeasurement of the expected cash flows and was taken to profit or loss, net of relatedincome tax. The gain is presented in other income (note 5(a)). A fair value loss of $40,000 relating tochanges in market interest rate was recognised in other comprehensive income and included in theavailable-for-sale financial assets reserve in equity, also net of related income tax.

AASB107(40)(d) The carrying amounts of assets and liabilities as at the date of sale (31 August 2014) were:22,23

31 August 2014$’000

Property, plant and equipment 1,660

Trade receivables 1,200

Inventories 950

Total assets 3,810

Trade creditors (390)

Employee benefit obligations (40)

Total liabilities (430)

Net assets 3,380



(d) Assets and liabilities of disposal group classified as held for sale

The following assets and liabilities were reclassified as held for sale in relation to the discontinuedoperation as at 30 June 2014:

2015$’000

2014$’000

AASB101(77) Assets classified as held for sale

Property, plant and equipment - 1,995

Trade receivables - 1,570

Inventories - 1,390

Total assets of disposal group held for sale - 4,955

AASB101(77) Liabilities directly associated with assets classified as held for sale

Trade creditors - (450)

Employee benefit obligations - (50)

Total liabilities of disposal group held for sale - (500)


Accounting standards for discontinued operations and disposal groups

Accounting standards for discontinued operations and disposal groups are contained in1.AASB 5 Non-current Assets Held for Sale and Discontinued Operations. The exampledisclosures are for a discontinued operation of a controlled entity which is material to theeconomic entity and where the operation was made available for immediate sale in theprevious reporting period and was sold during the current reporting period. The disclosures willneed to be amended to cover the specific disclosure requirements of AASB 5 relevant to thecircumstances of each discontinued operation.

Classification as held for sale

AASB5(6),(7) An entity shall classify a non-current asset or disposal group as held for sale if its carrying2.amount will be recovered principally through a sale transaction rather than through continuinguse. For this to be the case the asset or disposal group must be available for sale in its presentcondition subject only to terms that are usual and customary for sales of such assets ordisposal groups and its sale must be highly probable.

Definitions


AASB5(32),(Appendix-A)

A discontinued operation is a component of an entity that either has been disposed of or is3.classified as held for sale and:

represents a separate major line of business or geographical area of operations(a)

is part of a single co-ordinated plan to dispose of a separate major line of business or(b)geographical area of operations, or

is a subsidiary acquired exclusively with a view to resale.(c)

AASB5(Appendix-A) A component of an entity comprises operations and cash flows that can be clearly4.distinguished, operationally and for financial reporting purposes, from the rest of the entity. Inother words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use.

Disposal group

AASB5(32),(Appendix-A)

A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a5.group in a single transaction, and liabilities directly associated with those assets that will betransferred in the transaction. The group includes goodwill acquired in a business combinationif the group is a cash-generating unit to which goodwill has been allocated in accordance withAASB 136 Impairment of Assets or if it is an operation within such a cash-generating unit.




General requirement

AASB5(30) An entity shall present and disclose information that enables users of the financial statements6.to evaluate the financial effects of discontinued operations and disposals of non-current assets(or disposal groups).

In the statement of comprehensive income

AASB5(33)(a) An entity shall disclose a single amount comprising the total of:7.

the post-tax profit or loss of discontinued operations, and(a)

the post-tax gain or loss recognised on the measurement to fair value less costs to sell or(b)on the disposal of the assets or disposal group(s) constituting the discontinued operation.

In the statement of comprehensive income or in the notes

Analysis

AASB5(33)(b) An analysis of the single amount described in paragraph 7(a) must be made into:8.

the revenue, expenses and pre-tax profit of loss of discontinued operations(a)

the related income tax expense as required by paragraph 81(h)(ii) of AASB 112(b)Income Taxes

the gain or loss recognised on the measurement to fair value less costs to sell or on the(c)disposal of the assets or disposal group(s) constituting the discontinued operation, and

the related income tax expense as required by paragraph 81(h)(i) of AASB 112.(d)

This analysis may be presented in the notes or in the statement of comprehensive income. If itis presented in the statement of comprehensive income it must be presented in a sectionidentified as relating to discontinued operations; that is, separately from continuing operations.The analysis is not required for disposal groups that are newly acquired subsidiaries that meetthe criteria to be classified as held for sale on acquisition (refer to paragraph 11 of AASB 5).

AASB5(33A) If an entity presents the components of profit or loss in a separate income statement, as is9.done by VALUE ACCOUNTS Reduced Disclosure Pty Ltd, the separate section referred to inparagraph 8 above is presented in that separate statement.

Net cash flows

AASB5(33)(c) Disclosure is required of the net cash flows attributable to the operating, investing and financing10.activities of discontinued operations. These disclosures may be presented either in the notes orin the financial statements. These disclosures are not required for disposal groups that arenewly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition(refer to paragraph 11 of AASB 5).

Prior periods

AASB5(34) An entity must re-present the disclosures in paragraphs 7-10 above for prior periods presented11.in the financial statements so that the disclosures relate to all operations that have beendiscontinued by the end of the reporting period for the latest period presented. Thediscontinued operations presented in the statement of comprehensive income and statement ofcash flows in the comparative period should therefore include all operations that have beendiscontinued by the end of the most recent reporting period. This means that the statements ofcomprehensive income and cash flows for the comparative period should show as discontinuedoperations both those reported as discontinued in the previous period together with thoseclassified as discontinued in the current period. As a consequence, the restated prior yearstatements of comprehensive income and cash flows figures will not be entirely comparable tothe current year’s figures.

AASB5(40) In contrast, the balance sheet information for the prior year is neither restated nor remeasured.12.

Adjustments to amounts presented for operations discontinued in a prior period

AASB5(35) Adjustments in the current period to amounts previously presented in discontinued operations13.that are directly related to the disposal of a discontinued operation in a prior period must beclassified separately in discontinued operations. The nature and amount of such adjustmentsmust be disclosed. Examples of circumstances in which these adjustments may arise includethe following:

the resolution of uncertainties that arise from the terms of the disposal transaction, such as(a)the resolution of purchase price adjustments and indemnification issues with the purchaser




the resolution of uncertainties that arise from and are directly related to the operations of(b)the component before its disposal, such as environmental and product warrantyobligations retained by the seller, and

the settlement of employee benefit plan obligations, provided that the settlement is directly(c)related to the disposal transaction.

Classification

Separate

AASB5(38) An entity shall present a non-current asset classified as held for sale and the assets of a14.disposal group classified as held for sale separately from other assets in the balance sheet.The liabilities of a disposal group classified as held for sale shall be presented separately fromother liabilities in the balance sheet. Those assets and liabilities shall not be offset andpresented as a single amount. The major classes of assets and liabilities classified as held forsale shall be separately disclosed either in the balance sheet or in the notes, except aspermitted by paragraph 39 of AASB 5 (refer to paragraph 15 below). An entity shall presentseparately any cumulative income or expense recognised in other comprehensive incomerelating to a non-current asset (or disposal group) classified as held for sale.

AASB5(39) If the disposal group is a newly acquired subsidiary that meets the criteria to be classified as15.held for sale on acquisition (refer to paragraph 11 of AASB 5), disclosure of the major classesof assets and liabilities is not required.

Plan to sell controlling interest in a subsidiary

AASB5(8A),(36A)

If an entity is committed to a sale plan which involves the loss of control of a subsidiary, it shall16.classify all the assets and liabilities of that subsidiary as held for sale when the criteria in AASB5 are met, regardless of whether the entity will retain a non-controlling interest in its formersubsidiary after the sale. If the subsidiary is a disposal group that meets the definition of adiscontinued operation, the relevant disclosures must be made. This was confirmed in anamendment made to AASB 5 as a result of the IASB’s first annual improvements project.

Criteria for classifying met after end of the reporting period

AASB110(21),(22)(c)AASB5(12)

If the criteria for classifying a non-current asset or disposal group as held for sale are met after17.the reporting period, an entity shall not classify the non-current asset or disposal group as heldfor sale in the financial statements when issued. However, when those criteria are met after thereporting period but before the authorisation of the financial statements for issue, the entityshould provide the information specified in paragraphs 41(a), (b) and (d) of AASB 5 in thenotes.

Cease to classify

AASB5(12) If an entity ceases to classify a component of an entity as held for sale, the results of18.operations of the component previously presented in discontinued operations in accordancewith paragraphs 33-35 of AASB 5 shall be reclassified and included in income from continuingoperations for all periods presented. The amounts for prior periods shall be described ashaving been re-presented.

Disclosures required under other accounting standards

AASB5(5B) Disclosures in other standards do not generally apply in respect of non-current assets (or19.disposal groups) classified as held for sale or discontinued operations, unless thosestandards require:

specific disclosures in respect of non-current assets (or disposal groups) classified as held(a)for sale or discontinued operations, or

disclosures about measurement of assets and liabilities within a disposal group that are(b)not within the scope of the measurement requirement of AASB 5 and such disclosures arenot already provided in the other notes to the financial statements.

Entities are further reminded that additional disclosures may be necessary to comply with thegeneral requirements of AASB 101 Presentation of Financial Statements, in particularparagraphs 15 (fair presentation), 122 (judgements) and 125 (estimation uncertainty) of thatstandard. For example, it may be necessary to explain the judgements made about whether adisposal is highly probable (thus triggering classification as held-for-sale) and/or whether anoperation meets the definition of a discontinued operation. Disclosures may also be required tohighlight uncertainty, assumptions and judgements in relation to the fair value less costs ofdisposal measure used for a disposal group or non-current asset.





Required disclosures that are not applicable to VALUE ACCOUNTS Reduced Disclosure Pty20.Ltd are as follows:

AASB5(35) (a) If the entity has recognised adjustments in the current period to amounts previouslypresented in discontinued operations that are a result of the disposal of a discontinuedoperation, the nature and amount of the adjustments must be separately disclosed.

AASB5(36) (b) If the entity has ceased to classify a component of an entity as held for sale, the resultsthat were previously presented as discontinued operations must be reclassified andincluded in income from continuing for all periods presented, with appropriateexplanations.

AASB5(41)(c) (c) In the period in which a non-current asset (or disposal group) has been either classified asheld for sale or sold, an entity must disclose in the notes the gain or loss recognised inaccordance with paragraphs 20-22 of AASB 5 (ie impairment losses and reversals ofimpairment losses) and, if not separately presented in the statement of comprehensiveincome, the caption in the statement of comprehensive income that includes that gainor loss.

AASB5(42) (d) If either paragraph 26 or paragraph 29 of AASB 5 applies (part or whole group of assetsno longer held for sale), an entity must disclose, in the period of the decision to change theplan to sell the non-current asset (or disposal group), a description of the facts andcircumstances leading to the decision and the effect of the decision on the results ofoperations for the period and any prior periods presented.

AASB5(38) (e) The cumulative income or expense recognised in other comprehensive income relating toa non-current asset (or disposal group) classified as held-for-sale.

AASB-I17 Refer to the commentary to note 13 for disclosures that must be made if the entity has declared21.a dividend in form of non-cash assets to be distributed to owners.


AASB107(40) The information referenced to AASB 107 Statement of Cash Flows is included to comply with22.the requirements of that standard relating to disposals of subsidiaries or other business units.Refer to paragraphs 39-42 of AASB 107 for detailed guidance on required disclosures withrespect to disposals of subsidiaries or other business units, in an entity’s statement ofcash flows.

AASB107(40)(c) The amount of cash and cash equivalents in the subsidiary or business unit acquired or23.disposed of must also be disclosed. Refer to commentary paragraph 2 to the statement of cashflows for the definitions of cash and cash equivalents.

Reduced disclosure regime – tax expense relating to discontinued operations

AASB112(81)(h)(i),(ii) Entities reporting under the reduced disclosure regime still need to disclose tax expense24.relating to:

the gain or loss on discontinuance, and(a)

the profit or loss from the ordinary activities of the discontinued operation for the period,(b)together with the corresponding amounts for each prior period presented.


16 Interests in other entities 1-2,6-21

(a) Material subsidiaries 5

AASB12(10)(a) The group’s principal subsidiaries at 30 June 2015 are set out below. Unless otherwise stated, theyhave share capital consisting solely of ordinary shares that are held directly by the group, and theproportion of ownership interests held equals the voting rights held by the group. The country ofincorporation or registration is also their principal place of business.

AASB12(10)(a)(i),(ii)AASB124(13)AASB12(12)(a)-(d)

Name of entity

Place ofbusiness/country of

incorporation

Ownershipinterest held by

the group

Ownershipinterest held bynon-controlling

interestsPrincipalactivities

2015 2014 2015 2014

% % % %

VALUEACCOUNTS RetailLimited

Australia 100 100 - - Furniture retailstores

VALUEACCOUNTSManufacturingLimited (note 16(c))

Australia 90 85 10 15 Furnituremanufacture

VALUEACCOUNTSElectronics Pty Ltd

Australia 70 - 30 - Electronicequipmentmanufacture

VALUEACCOUNTSOverseasLimited (i),(ii)

Indonesia 45 45 55 55 Furnituremanufacture

VALUEACCOUNTSConsulting Limited*

Australia 100 100 - - IT consulting

VALUEACCOUNTSDevelopmentLimited*

Australia 100 100 - - Developmentof residentialland

VALUEACCOUNTSMachinery HireLimited

New Zealand - 100 - - Machinery hirebusiness; see note15

ASIC98/1418 * These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by theAustralian Securities and Investments Commission. For further information refer to note 26.

AASB101(122)(i) Significant judgement: consolidation of entities with less than 50% ownership

AASB12(7)(a),(9)(b) The directors have concluded that the group controls VALUE ACCOUNTS Overseas Limited, eventhough it holds less than half of the voting rights of this subsidiary. This is because the group is thelargest shareholder with a 45% equity interest while the remaining shares are held by eight investors.An agreement signed between the shareholders and VALUE ACCOUNTS Overseas Limited grantsVALUE ACCOUNTS Reduced Disclosure Pty Ltd the right to appoint, remove and set theremuneration of management responsible for directing the relevant activities. A 67% majority vote isrequired to change this agreement, which cannot be achieved without the group’s consent as thegroup holds 45% of the voting rights.

(ii) Significant restrictionsAASB12(10)(b)(i),(13) Cash and short-term deposits held in Asian countries (including Indonesia) are subject to local

exchange control regulations. These regulations provide for restrictions on exporting capital from thosecountries, other than through normal dividends.

AASB12(13)(c) The carrying amount of the assets included within the consolidated financial statements to which theserestrictions apply is $650,000 (2014 – $410,000).

Interests in other entities


(b) Non-controlling interests (NCI)

AASB12(12)(g)

AASB12(B11)

Set out below is summarised financial information for each subsidiary that has non-controlling intereststhat are material to the group. The amounts disclosed for each subsidiary are before inter-companyeliminations.

Summarised balancesheet

VALUE ACCOUNTSManufacturing

LimitedVALUE ACCOUNTSOverseas Limited

VALUE ACCOUNTSElectronics Limited

AASB12(B10)(b) 30 June2015

30 June2014

30 June2015

30 June2014

30 June2015

30 June2014

$’000 $’000 $’000 $’000 $’000 $’000

Current assets 13,870 13,250 11,500 9,800 7,875-

Current liabilities 12,570 7,595 10,570 8,300 1,200 -

Current net assets 1,300 5,655 930 1,500 6,675

Non-current assets 28,010 22,910 15,570 12,730 18,900-

Non-current liabilities 5,800 3,400 12,735 10,748 10,100 -

Non-current net assets 22,210 19,510 2,835 1,982 8,800-

Net assets 23,510 25,165 3,765 3,482 15,475 -

AASB12(12)(f) Accumulated NCI 2,751 3,775 2,071 1,914 4,641 -

Summarised statementof comprehensiveincome




AASB12(B10)(b) 2015

$’0002014

$’000

2015

$’0002014

$’000

2015

$’0002014

$’000

Revenue 30,200 27,800 14,100 14,450 3,850 -

Profit for the period 10,745 7,900 2,412 2,062 1,405 -

Other comprehensiveincome 1,265 830 (447) 243 - -

Total comprehensiveincome 12,010 8,730 1,965 2,305 1,405 -

AASB12(12)(e) Profit/(loss) allocated toNCI 1,257 1,185 1,327 1,134 422 -

AASB12(B10)(a) Dividends paid to NCI 1,262 935 925 893 830 -

Summarised cashflows




AASB12(B10)(b) 2015 2014 2015 2014 2015 2014$’000 $’000 $’000 $’000 $’000 $’000

Cash flows fromoperating activities 2,989 2,780 1,203 1,160 980 -

Cash flows frominvesting activities (1,760) (1,563) (584) (859) (870) -

Cash flows fromfinancing activities 390 (950) 256 330 (235) -

Net increase/(decrease) in cash andcash equivalents 1,619 267 875 631 (125) -



(c) Transactions with non-controlling interests

AASB12(10)(b)(iii),(18) On 21 April 2015, the group acquired an additional 5% of the issued shares of VALUE ACCOUNTSManufacturing Limited for $1,500,000. Immediately prior to the purchase, the carrying amount of theexisting 15% non-controlling interest in VALUE ACCOUNTS Manufacturing Limited was $3,501,000.The group recognised a decrease in non-controlling interests of $1,167,000 and a decrease in equityattributable to owners of the parent of $333,000. The effect on the equity attributable to the owners ofVALUE ACCOUNTS Reduced Disclosure Pty Ltd during the year is summarised as follows:

2015$'000

2014$'000

Carrying amount of non-controlling interests acquired 1,167 -

Consideration paid to non-controlling interests (1,500) -

Excess of consideration paid recognised in the transactions withnon-controlling interests reserve within equity (333) -

There were no transactions with non-controlling interests in 2014.

(d) Joint operations 3

AASB12(7)(b),(21)(a) A subsidiary has a 50% interest in a joint arrangement called the Fernwood Venture which was set upas a partnership together with House of Cards Constructions Limited to develop properties forresidential housing in regional New South Wales.

AASB12(21)(a)(iii) The principal place of business of the joint operation is in Australia.

(i) Significant judgement: classification of joint arrangements 1

AASB12(7)(c) The joint venture agreements in relation to the Fernwood joint venture require unanimous consentfrom all parties for all relevant activities. The two partners own the assets of the partnership astenants in common and are jointly and severally liable for the liabilities incurred by the partnership.This entity is therefore classified as a joint operation and the group recognises its direct right to thejointly held assets, liabilities, revenues and expenses as described in note 28(b)(iii).

(e) Interests in associates and joint ventures

Set out below are the associates and joint ventures of the group as at 30 June 2015 which, in theopinion of the directors, are material to the group. The entities listed below have share capitalconsisting solely of ordinary shares, which are held directly by the group. The country of incorporationor registration is also their principal place of business, and the proportion of ownership interest is thesame as the proportion of voting rights held.

AASB12(21)(a),(b)(i),(iii)

Name of entity

Place ofbusiness/country of

incorporation

% of ownershipinterest

Nature ofrelationship

Measurementmethod

Quoted fairvalue Carrying amount

2015 2014 2015 2014 20152014

Restated

% % $’000 $’000 $’000 $’000

Big Hide Pet Ltd Australia 25 25 Associate (1) Equity method 615 560 600 540

Cuddly Bear Ltd Australia 35 35 Associate (2) Equity method 570 505 550 490

Wombat Pty Ltd Australia 40 40 Joint Venture (3) Equity method - * - * 2,250 1,900

Immaterial associates (iii) below 375 345

Total equity accounted investments 3,775 3,275

AASB12(21)(a)(ii) (1) Big Hide Pet Ltd develops residential land. It is a strategic investment which utilises the group’s knowledge and expertise in the development ofresidential land but at the same time limits the group’s risk exposure through a reduced equity holding.

(2) Cuddly Bear Ltd is a manufacturer of specialised furniture for the hospitality industry, including cafés and restaurants. Its product rangecomplements the group’s commercial furniture range and provides access to markets not previously serviced by the group.

(3) Wombat Pty Ltd distributes computer software to wholesale customers in the Australian market. It is a strategic investment for the group whichcomplements the services provided by the IT consulting segment.

* Private entity – no quoted price available.




(i) Commitments and contingent liabilities in respect of associates and joint ventures

2015$'000

2014$'000

AASB12(23)(a),(B18) Commitments – joint ventures

AASB12(B19)(a) Commitment to provide funding for joint venture’s capitalcommitments, if called 250 200

AASB12(23)(b) Contingent liabilities – associates

Share of contingent liabilities incurred jointly with other investorsof the associate 150 120

Contingent liabilities relating to liabilities of the associate forwhich the company is severally liable - 80

Contingent liabilities – joint ventures

Share of joint venture’s contingent liabilities in respect of a legalclaim lodged against the entity 200 180

350 380

(ii) Summarised financial information for associates and joint ventures 4

AASB12(21)(b)(ii),(B14) The tables below provide summarised financial information for those joint ventures and associates thatare material to the group. The information disclosed reflects the amounts presented in the financialstatements of the relevant associates and joint ventures and not VALUE ACCOUNTS ReducedDisclosure Pty Ltd’s share of those amounts. They have been amended to reflect adjustments made bythe entity when using the equity method, including fair value adjustments and modifications fordifferences in accounting policy.

4

AASB12(B12),(B13) Big Hide Pet Ltd Cuddly Bear Ltd Wombat Pty Ltd

Summarised balance sheet30 June

201530 June

201430 June

201530 June

201430 June

201530 June

2014

$’000 $’000 $’000 $’000 $’000 $’000

AASB12(B12)(b)(i) Current assets

AASB12(B13)(a) Cash and cash equivalents * * * * 300 275

Other current assets * * * * 1,700 1,475

Total current assets 800 650 243 371 2,000 1,750

AASB12(B12)(b)(ii) Non-current assets 3,580 3,050 2,000 1,800 7,125 6,500

AASB12(B12)(b)(iii) Current liabilities

AASB12(B13)(b) Financial liabilities (excluding tradepayables) * * * * 150 250

Other current liabilities * * * * 1,100 625

Total current liabilities 350 240 271 171 1,250 875

AASB12(B12)(b)(iv) Non-current liabilities

AASB12(B13)(c) Financial liabilities (excluding tradepayables) * * * * 1,900 2,250

Other non-current liabilities * * * * 350 375

Total non-current liabilities 1,630 1,300 400 600 2,250 2,625

Net assets 2,400 2,160 1,572 1,400 5,625 4,750

AASB12(B14)(b) Reconciliation to carrying amounts:

Opening net assets 1 July 2,160 1,780 1,400 1,286 4,750 4,500

Profit/(loss) for the period 400 300 200 171 625 550

Other comprehensive income - 400 - - 525 -

Dividends paid (160) (320) (28) (57) (275) (300)

Closing net assets 2,400 2,160 1,572 1,400 5,625 4,750

Group’s share in % 25% 25% 35% 35% 40% 40%

Group’s share in $ 600 540 550 490 2,250 1,900

Goodwill - - - - - -

Carrying amount 600 540 550 490 2,250 1,900




AASB12(B12),(B13)Summarised statement of comprehensiveincome

Big Hide Pet Ltd Cuddly Bear Ltd Wombat Pty Ltd

2015 2014 2015 2014 2015 2014

$’000 $’000 $’000 $’000 $’000 $’000

AASB12(B12)(b)(v) Revenue 5,240 5,040 2,657 2,457 10,038 9,800

AASB12(B13)(e) Interest income * * * * - -

AASB12(B13)(d) Depreciation and amortisation * * * * (2,800) (1,890)

AASB12(B13)(f) Interest expense * * * * (340) (280)

AASB12(B13)(g) Income tax expense * * * * - -

AASB12(B12)(b)(vi) Profit from continuing operations 400 300 200 171 625 550

AASB12(B12)(b)(vii) Profit from discontinued operations - - - - - -

Profit for the period 400 300 200 171 625 550

AASB12(B12)(b)(viii) Other comprehensive income - 400 - - 525 -

AASB12(B12)(b)(ix) Total comprehensive income 400 700 200 171 1,150 550

AASB12(B12)(a) Dividends received from associates and jointventure entities 40 80 10 20 110 120

* Shading indicates disclosures that are not required for investments in associates. 8

(iii) Individually immaterial associates 10

AASB12(21)(c),(B16) In addition to the interests in associates disclosed above, the group also has interests in a number ofindividually immaterial associates that are accounted for using the equity method.

2015$'000

2014$'000

Aggregate carrying amount of individually immaterial associates 375 345

Aggregate amounts of the group’s share of:

Profit/(loss) from continuing operations 30 15

Post-tax profit or loss from discontinued operations - -

Other comprehensive income - -

Total comprehensive income 30 15




The disclosures in AASB 12 Consolidated Financial Statements fall in the following broad1.categories:

AASB12(7) Significant judgement and assumptions made in determining whether the entity has(a)control, joint control or significant influence over another entity and the type of the jointarrangement.

AASB12(10) Information about interests in subsidiaries, including:(b)

AASB12(10)(a)(i) (i) the composition of the group

AASB12(10)(a)(ii),(12) (ii) the interest that non-controlling interests (NCIs) have in the group’s activities and cashflows

AASB12(10)(b)(i),(13) (iii) the nature and extent of significant restrictions on the entity’s ability to access or useassets and settle liabilities of the group

AASB12(10)(b)(ii),(14)-(17)

(iv) the nature of the risks associated with an entity’s interests in consolidated structuredentities

AASB12(10)(b)(iii),(18) (v) consequences of changes in a parent’s ownership interest in a subsidiary that do notresult in a loss of control, and

AASB12(10)(b)(iv),(19) (vi) consequences of losing control of a subsidiary during the reporting period.

Interests in joint arrangements and associates:(c)

(i) the nature, extent and financial effects of an entity’s interests in joint arrangementsand associates, and

(ii) risks associated with an entity’s interests in joint ventures and associates, and

AASB12(24) The nature and extent of interests in unconsolidated structured entities and risks(d)associated with those interests.

AASB12(Appendix-A),(B21)-(B24)

A structured entity is an entity that has been designed so that voting or similar rights are not2.the dominant factor in deciding who controls the entity. This could be the case where votingrights relate to administrative tasks only and the relevant activities are directed by means ofcontractual arrangements. Paragraphs B22 and B23 of AASB 12 provide examples ofstructured entities and their features.

AASB12(7)(c) Joint operations – summary of assets and employed/liabilities incurred

AASB101(112)(c) If an entity has significant interests in joint operations, it should consider disclosing the group’s3.interests in the assets employed and liabilities incurred in relation to these joint operations.This information will assist users in assessing the extent and financial impact of the jointoperations and may – in extreme circumstances – be required on the basis that it is relevant toan understanding of the financial statements (AASB 101 paragraph 112(c)).

Summarised financial information of associates and joint ventures

The disclosure requirements in relation to summarised financial information of joint ventures4.are more onerous than those for interests in associates. Where certain information is notrequired for interests in associates, the relevant parts of the table have been shaded. We havechosen this form of presentation primarily to illustrate the similarities and differences in thedisclosures for associates and joint ventures. This form of presentation may not be suitable forall entities.

Listing of significant subsidiaries

AASB12(10)(a)AASB12(4)

AASB 12 requires entities to disclose information about the composition of the group. This5.information can be provided in different ways; eg by identifying major subsidiaries as we havedone in this note. However, preparers of financial statements should consider what level ofdetail is necessary to satisfy the overall disclosure objective of the standard and how muchemphasis to place on each of the requirements. Useful information should not be obscured byincluding a large amount of insignificant detail (eg a complete listing of all subsidiaries withinthe group).





In addition to the disclosures illustrated in this Appendix, entities must also disclose the6.following information where applicable.

Consolidated structured entities

AASB12(10)(b)(ii) If the entity holds interests in consolidated structured entities, it must disclose information that7.enables users of its financial statements to evaluate the nature of, and changes in, the risksassociated with its interests in consolidated structured entities. This includes:

AASB12(14) (a) the terms of any contractual arrangements that could require any entity within the group toprovide financial support to a consolidated structured entity

AASB12(15) (b) the type and amount of financial or other support provided to a consolidated structuredentity during the reporting period without a contractual obligation to do so (includingassistance to the structured entity in obtaining financial support) and the reasons forproviding such support

AASB12(16) (c) if an entity within the group has provided financial or other support to a previouslyunconsolidated structured entity without a contractual obligation to do so, which resulted inthe entity controlling the structured entity, an explanation of the relevant factors inreaching this decision

AASB12(17) (d) disclosure of any current intentions to provide financial or other support to a consolidatedstructured entity (including intentions to assist the structured entity in obtaining financialsupport).

Entities such as employee share trusts will often qualify as structured entities. To the extentthey are relevant, the above disclosures should therefore be considered in this context. Note21 illustrates the disclosures that would apply to the VALUE ACCOUNTS Employee ShareTrust.

Loss of control of a subsidiary

AASB12(10)(b)(iv),(19) If the entity has lost control of a subsidiary during the reporting period, it must disclose8.

(a) the gain or loss, calculated in accordance with paragraph 25 of AASB 10

(b) the portion of that gain or loss that is attributable to measuring any investment retained inthe former subsidiary at its fair value at the date when control is lost, and

(c) the line item(s) in profit or loss in which the gain or loss is recognised (if not presentedseparately).

Different reporting dates – subsidiaries, associates and joint ventures

AASB12(11),(22)(b) If the financial statements of a subsidiary used in the preparation of the consolidated financial9.statements, or the financial statements of a joint venture or associate used in applying theequity method, are as of a date or for a period that is different from that of the consolidatedfinancial statements, the entity must disclose the reporting date or period of the subsidiary,associate or joint venture and the reason for using a different date or period.

Individually immaterial joint ventures

AASB12(21)(c),(B16) If the entity has interests in joint ventures that are individually immaterial, it must disclose the10.same information as is illustrated for associates. The information must be disclosed separatelyfor associates and joint ventures.

Significant restrictions – associates and joint ventures

AASB12(22)(a) If there are any significant restrictions (eg resulting from borrowing arrangements, regulatory11.requirements or contractual arrangements) on the ability of joint ventures or associates totransfer funds to the entity in the form of cash dividends, or to repay loans or advances madeby the entity, the entity must disclose the nature and extent of these restrictions.

Unrecognised share of losses

AASB12(22)(c) If the entity has stopped recognising its share of the losses of a joint venture or associate when12.applying the equity method it must disclose the unrecognised share of the losses both for thereporting period and cumulatively.




Interests in associates and joint ventures measured at fair value

AASB12(B15) If the entity measures its interests in joint ventures or associates at fair value, it can present the13.summarised financial information that is required to be disclosed under paragraphs B12 andB13 of AASB 12 on the basis of the joint venture’s or associate’s financial statements if thejoint venture or associate does not prepare financial statements in accordance with AustralianAccounting Standards and preparation on that basis would be impracticable or cause unduecost.

Interest in subsidiary, associate or joint venture classified as held for sale

AASB12(B17) If an entity’s interest in a subsidiary, joint venture or associate is classified as held for sale in14.accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations, theentity does not need to disclose summarised financial information for that subsidiary, associateor joint venture.

Unrecognised commitments

AASB12(B19)(b) Unrecognised commitments that may require disclosure under paragraph B18 include15.commitments to acquire another party’s ownership interest (or a portion thereof) in a jointventure if a particular event occurs or does not occur in the future.

Unconsolidated structured entities

AASB12(24) If the entity has any interests in unconsolidated structured entities, it must disclose information16.that enables users of its financial statements:

AASB12(24)(a) (a) to understand the nature and extent of its interests in unconsolidated structured entities

AASB12(24)(b),(25) (b) to evaluate the nature of, and changes in, the risks associated with its interests inunconsolidated structured entities (including an entity’s exposure to risk from involvementswith unconsolidated structured entities in previous periods, even if the contractualinvolvement had ceased at the reporting date).

To satisfy the objectives in paragraph 16, the entity shall provide the following information:17.

AASB12(26) (a) qualitative and quantitative information about the entity’s interest in unconsolidatedstructured entities (nature, purpose, size and activities of the entity and how the entity isfinanced)

AASB12(29)(a),(b) (b) the carrying amounts of assets and liabilities recognised in the entity’s financial statementsrelating to its interests in unconsolidated structured entities and the line items in thestatement of financial position in which those assets and liabilities are recognised

AASB12(29)(c) (c) the amount that best represents the entity’s maximum exposure to loss from its interests inunconsolidated structured entities, including how the maximum amount is determined

AASB12(29)(d) (d) a comparison of the amounts in (b) and (c)

AASB12(30) (e) if the entity has provided financial or other support to an unconsolidated structured entity,an explanation of the type of and amount of support provided and the reasons forproviding the support

AASB12(31) (f) any current intentions to provide financial or other support to an unconsolidated structuredentity, including intentions to assist the entity in obtaining financial support, and

AASB12(27)

AASB12(28)

(g) information about sponsored unconsolidated structured entities which are not included inthe disclosures under (b)-(d) above (eg because the entity does not have an interest in theunconsolidated structured entity at the reporting date), including income from thoseentities and the carrying amount of assets transferred to those entities during the reportingperiod.

The information in paragraph 17(g) should be presented in tabular format unless anotherformat is more appropriate.




Investment entities

AASB2013-5(4) In August 2013, the AASB made amendments to AASB 10, AASB 12 and AASB 127 which18.exempt ‘Investment entities” from consolidating controlled investees. The amendments apply tofinancial years commencing on or after 1 January 2014.

AASB10(27) Investment entities are entities that19.

(a) obtain funds from one or more investors for the purpose of providing those investors withinvestment management services

(b) commit to their investor(s) that their business purpose is to invest funds solely for returnsfrom capital appreciation, investment income or both, and

(c) measure and evaluate the performance of substantially all of their investments on a fairvalue basis.

Investment entities that have applied the exemption will have to make a number of additional20.disclosures in relation to unconsolidated subsidiaries, including

AASB12(19A) (a) that the entity is an investment entity and is accounting for its investments in subsidiariesat fair value through profit or loss

AASB12(9A) (b) significant judgements and assumptions made in determining that they are an investmententity

AASB12(19B) (c) information about the unconsolidated entities (names, principal place of business,ownership interest held etc)

AASB12(19D)(a) (d) the nature and extent of any significant restrictions on the ability of an unconsolidatedsubsidiary to transfer funds to the investment entity, and

AASB12(19D)(b),(19E),(19F)

(e) information about the provision of financial support provided to the subsidiary during thereporting period and current commitments, intentions and contractual arrangements thatcould require the entity to provide such support (including support to other unconsolidatedstructured entities).

An investment entity that makes the disclosures required by AASB 12 paragraphs 19A-19G willnot need to provide the other disclosures for unconsolidated entities that are required underAASB 12 paragraph 24 (see paragraphs 16 and 17 above).

AASB12(9B) If the entity has changed its status as investment entity it must disclose the total fair value of21.the subsidiaries that cease to be consolidated, the total gain or loss recognised ondeconsolidation and the line item(s) of the profit and loss statement in which the gain or loss ispresented.

PwC 179

Unrecognised items

Not mandatory This section of the notes provides information about items that are not recognised in the financialstatements as they do not (yet) satisfy the recognition criteria.

In addition to the items and transactions disclosed below, there are also:

(a) Unrecognised tax amounts – see note 6

(b) Non-cash investing and financing transactions – see note 10(b).

17 Contingent liabilities and contingent assets 180

18 Commitments 183

19 Events occurring after the reporting period 184

Unrecognised items

There is no requirement to highlight separately any unrecognised items. However, we believe1.that this information is useful for users in assessing the financial performance and position ofthe group.


17 Contingent liabilities and contingent assets 1,10-17

(a) Contingent liabilities 2,4-7

The group had contingent liabilities at 30 June 2015 in respect of:

(i) ClaimsAASB137(86),(91)

AASB137(86)

A claim for unspecified damages was lodged against VALUE ACCOUNTS Retail Pty Ltd in June 2014in relation to alleged non-performance under a sales contract. The company has disclaimed liability andis defending the action. It is not practical to estimate the potential effect of this claim but legal adviceindicates that it is not probable that a significant liability will arise.

In March 2015, a claim was lodged against VALUE ACCOUNTS Manufacturing Limited asserting thatthe entity had breached certain registered patents of a competitor. The matter is currently beingconsidered by the courts and the group expects judgement before the end of December 2015. Thegroup considers it to be probable that the judgement will be in its favour and has therefore notrecognised a provision in relation to this claim. The potential undiscounted amount of the total paymentsthat the group could be required to make if there was an adverse decision related to the lawsuit isestimated to be approximately $250,000.

(ii) Guarantees

For information about guarantees given by entities within the group, including the parent entity, pleaserefer to notes 26 and 27.

(iii) Associates and Joint venturesAASB12(23)(b) For contingent liabilities relating to associates and joint ventures refer to note 16(e).

(b) Contingent assets 3-5,8-9

AASB137(89),(91) A subsidiary has lodged a claim against a supplier for damages caused by the supply of faulty products.The matter has been referred to arbitration and, having received legal advice, the directors believe thata favourable outcome is probable. However, the contingent asset has not been recognised as areceivable at 30 June 2015 as receipt of the amount is dependent on the outcome of the arbitrationprocess.


Accounting standard for provisions, contingent liabilities and contingent assets

AASB137(1)‑(5) AASB 137 Provisions, Contingent Liabilities and Contingent Assets applies to all provisions,1.contingent liabilities and contingent assets except:

those resulting from executory contracts, except where the contract is onerous(a)

those covered by another Australian Accounting Standard. For example:(b)

(i) financial instruments (including guarantees) that are within the scope of AASB 139Financial Instruments: Recognition and Measurement

(ii) contingent liabilities assumed in a business combination - AASB 3 BusinessCombinations addresses the treatment by an acquirer of contingent liabilities assumedin a business combination

(iii) certain types of provisions are also addressed in Standards on:

- construction contracts (refer to AASB 111 Construction Contracts)

- income taxes (refer to AASB 112 Income Taxes)

- leases (refer to AASB 117 Leases). However, as AASB 117 contains no specificrequirements to deal with operating leases that have become onerous, AASB 137applies to such leases

- employee benefits (refer to AASB 119 Employee Benefits)

- insurance contracts (refer to AASB 4 Insurance Contracts, AASB 1023 GeneralInsurance Contracts, and AASB 1038 Life Insurance Contracts). However, AASB137 applies to provisions, contingent liabilities and contingent assets of an insurer,other than those arising from its contractual obligations and rights under insurancecontracts within the scopes of AASB 4, AASB 1023 or AASB 1038.




Definitions

Contingent liabilities

AASB137(10) A contingent liability is:2.

a possible obligation that arises from past events and whose existence will be confirmed(a)only by the occurrence or non-occurrence of one or more uncertain future events notwholly within the control of the entity, or

a present obligation that arises from past events but is not recognised because:(b)

(i) it is not probable that an outflow of resources embodying economic benefits will berequired to settle the obligation, or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

Contingent assets

AASB137(10) A contingent asset is a possible asset that arises from past events and whose existence will be3.confirmed only by the occurrence or non-occurrence of one or more uncertain future events notwholly within the control of the entity.

Application of definitions

Careful consideration will need to be given to each potential contingent liability or asset. For4.example, in the case of an entity that has:

incurred liabilities in acting as trustee for a trust: if the liabilities of the trust are insignificant(a)compared to the assets in the trust and the chances of the trustee being called to meetthose liabilities is remote, no contingent liability and asset disclosures will need to bemade. It is likely that it will be possible to demonstrate remoteness where the entity isacting as trustee for an equity trust that has no borrowings and holds investments that canbe readily sold to meet any liabilities that do arise. Remoteness is unlikely to bedemonstrated where an entity acts as trustee for a trust that is carrying on a business andthe trustee is incurring liabilities and undertaking the risks relating to the business

provided a guarantee or indemnity to another party: it will be more difficult to demonstrate(b)the probability of having to meet the potential liabilities as being remote because there arelikely to be commercial risks which gave rise to the need for the guarantee or indemnity.

Not to be recognised in the financial statements

AASB137(27),(31)AASB3(22),(23)

An entity shall not recognise a contingent liability or a contingent asset in the financial5.statements, except for contingent liabilities that were acquired in a business combination.Where an entity has recognised a contingent liability as a result of a business combination, itmust make the same disclosures for the contingent liability as are required for provisions, seecommentary to note 8(g).

Disclosure

Contingent liabilities

AASB137(86) Unless the possibility of any outflow in settlement is remote, an entity shall disclose for each6.class of contingent liability at the end of the reporting period a brief description of the nature ofthe contingent liability and, where practicable:

an estimate of its financial effect, measured under paragraphs 36-52 of AASB 137(a)

an indication of the uncertainties relating to the amount or timing of any outflow, and(b)

the possibility of any reimbursement.(c)

AASB137(87) In determining which contingent liabilities may be aggregated to form a class, it is necessary to7.consider whether the nature of the items is sufficiently similar for a single statement about themto fulfil the requirements of paragraphs 85(a) and (b) and 86(a) and (b) of AASB 137.

Contingent assets

AASB137(89) Where an inflow of economic benefits is probable, an entity shall disclose a brief description of8.the nature of the contingent assets at the end of the reporting period, and, where practicable,an estimate of their financial effect, measured using the principles set out for provisions inparagraphs 36-52 of AASB 137.

AASB137(90) It is important that disclosures for contingent assets avoid giving misleading indications of the9.likelihood of income arising.





Provision and contingent liability arise from the same set of circumstances

Some sets of circumstances may result in the recognition of a provision as well as the10.disclosure of a contingent liability. Examples include where an entity:

(a) has sold faulty products and has an obligation to rectify the products under the saleswarranty. The customers have claimed damages but the entity is defending the claims onthe basis of expert legal advice that it is not liable for the damages. A liability shall berecognised for the obligation to rectify the products under warranty and the damages claimis a contingent liability resulting from the sale of faulty products, or

(b) is involved in litigation in relation to a matter with a number of parties making claims forspecified amounts. If the entity has admitted liability to a number of the parties but isdisclaiming liability and, based on expert legal advice, expects to successfully defend theclaims made by the other parties, the entity shall recognise a liability for the claims it hasadmitted liability for and has a contingent liability in respect of the claims it is defending.

AASB137(88) Where a provision and a contingent liability arise from the same set of circumstances, an entity11.makes the disclosures required by paragraphs 84-86 of AASB 137 in a way that shows the linkbetween the provision and the contingent liability.

Not practicable to make required disclosures

AASB137(91) Where any of the information required to be disclosed by paragraphs 86 and 89 of AASB 137 is12.not disclosed because it is not practicable to do so, that fact shall be stated.

Disclosure that might seriously prejudice the position of the entity

AASB137(92) In extremely rare cases, disclosure of some or all of the information required to be disclosed by13.paragraphs 84-89 of AASB 137 can be expected to prejudice seriously the position of the entityin a dispute with other parties on the subject matter of the provision, contingent liability orcontingent asset. In such cases, an entity need not disclose the information, but shall disclosethe general nature of the dispute, together with the fact that, and reason why, the informationhas not been disclosed. An example of such disclosure is contained in Appendix D ofAASB 137.

Liabilities for subsidiary’s debts

CA588V Holding companies can be liable for debts incurred by a subsidiary company where the holding14.company, or any of its directors, are, or ought to be, aware that there are reasonable groundsfor suspecting the subsidiary is insolvent. Where a subsidiary is, or may be, insolvent and thefinancial statements of the holding company do not include a provision for the subsidiary’sdebts, the contingent liability note should specifically refer to the fact that the company may beliable under the Corporations Act 2001 for the subsidiary’s debts.


Under the tax consolidation legislation, tax consolidated entities are jointly and severally liable15.for the income tax liability of the tax consolidated group. However, the joint and several liabilitycan be avoided if a valid tax sharing agreement has been entered into. Such an agreement hasthe effect of limiting the liability of each member of the group in the case of a default to theamount determined under the agreement. Wholly-owned entities in a tax consolidated groupwill need to disclose contingent liabilities if the probability of default by the head entity or of thewholly-owned entity leaving the tax-consolidated group is more than remote and:

(a) no tax sharing agreement has been entered into, or

(b) a tax sharing agreement has been entered into and the liability arising in the event of adefault exceeds the amount recognised as a liability in the financial statements, if any.

No contingent liabilities should arise in relation to the head entity or the consolidated entity.

Arrangements involving the legal form of a lease

UIG127(7) Obligations of an arrangement in the legal form of a lease, including any guarantees provided16.and obligations incurred upon early termination, shall be accounted for in accordance withAASB 137, AASB 139 Financial Instruments: Recognition and Measurement or AASB 1023General Insurance Contracts, depending on the terms.

Possible contingent liabilities relating to post-employment benefits

AASB119(152) Where applicable, an entity may need to disclose information about contingent liabilities arising17.from post-employment benefit obligations.


18 Commitments 1,5

(a) Capital commitments 1-3

Significant capital expenditure contracted for at the end of the reporting period but not recognised asliabilities is as follows:

2015$’000

2014$’000

AASB116(74)(c) Property, plant and equipment 4,200 800

AASB140(75)(h) Investment property 520 1,250

AASB138(122)(e) Intangible assets 450 -

Fernwood ventureAASB12(23)(a) The above commitments include capital expenditure commitments of $500,000 (2014 – nil) relating to

the Fernwood Venture (refer to note xx).

(b) Non-cancellable operating leases 4

AASB117(35)(d) The group leases various offices, warehouses and retail stores under non-cancellable operating leasesexpiring within two to eight years. The leases have varying terms, escalation clauses and renewalrights. On renewal, the terms of the leases are renegotiated. Excess warehouse space is sub-let to thirdparties also under non-cancellable operating leases.

2015$’000

2014$’000

AASB117(35)(a) Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

AASB117(35)(a)(i) Within one year 850 750AASB117(35)(a)(ii) Later than one year but not later than five years 2,300 2,300AASB117(35)(a)(iii) Later than five years 3,940 3,770

7,090 6,820

Sub-lease paymentsAASB117(35)(b) Future minimum lease payments expected to be received in relation

to non-cancellable sub-leases of operating leases 850 920

AASB117(35)(d)(i) Not included in the above commitments are contingent rental payments which may arise in the eventthat units produced by certain leased assets exceed a pre-determined production capacity. Thecontingent rental payable is 1% of sales revenue from the excess production.

UIG115(5) A number of lease agreements for the retail stores include free fit-outs provided by the lessor as a leaseincentive. The assets obtained by the group have been recognised as furniture and equipment at fairvalue and are depreciated over the shorter of their useful life or the lease term. The lease incentive ispresented as part of the lease liabilities and is reversed on a straight line basis over the lease term.

AASB117(35)(c)Rental expense relating to operating leases

2015$’000

2014$’000


Contingent rentals 430 -

Sub-leases 290 270

Total rental expense relating to operating leases 1,950 1,800

(b) Repairs and maintenance: investment property 2

2015$’000

2014$’000

AASB140(75)(h) Contractual obligation for future repairs and maintenance – notrecognised as a liability 540 389

Commitments


Commitments

Disclosures of commitments

The previous disclosure requirement for commitments in AASB 101 Presentation of Financial1.Statements was removed as a result of the trans-Tasman convergence project. There is nosimilar requirement in AASB 1054 Australian Additional Disclosures.

As a consequence, entities now only need provide information about commitments as required2.under specific standards. This includes contractual commitments:

AASB116(74)(c) for the acquisition of property, plant and equipment(a)

AASB138(122)(e) for the acquisition of intangible assets(b)

AASB140(75)(h) to purchase, construct or develop investment property or for repairs, maintenance or(c)enhancements

AASB117(31)(b),(35)(a)

in relation to finance leases and non-cancellable operating leases.(d)

An analysis of the commitments into time bands is only required for lease commitments.3.

Leasing arrangements

AASB117(31)(e),(35)(d)

For both finance and operating leases, disclosure is required of a general description of the4.lessee’s significant leasing arrangements including, but not limited to, the following:

the basis on which contingent rent payable is determined(a)

the existence and terms of renewal or purchase options and escalation clauses(b)

restrictions imposed by lease arrangements, such as those concerning dividends,(c)additional debt, and further leasing.


Arrangements containing a lease - payments cannot be separated

UIG4(15)(b) Where an arrangement contains an operating lease but the lessee cannot reliably separate the5.payments, all payments under the arrangement must be treated as lease payments for thepurpose of complying with the disclosure requirements in AASB 117. In addition, the lesseemust:

(a) disclose those payments separately from other lease payments that do not include non-lease elements

(b) state that the payments include payments for non-lease elements.

19 Events occurring after the reporting period 1-10

(a) Acquisition of Better Office Furnishings Limited 3

AASB110(21)(a),(b)AASB3(59)(b)AASB3(B64),(B66)

On 15 August 2015 VALUE ACCOUNTS Reduced Disclosure Pty Ltd acquired 87.5% of the issuedshares in Better Office Furnishings Limited, a manufacturer of office furniture and equipment, forconsideration of $12,030,000. The acquisition is expected to increase the group’s market share andreduce cost through economies of scale.

The financial effects of this transaction have not been recognised at 30 June 2015. The operatingresults and assets and liabilities of the acquired company will be consolidated from15 August 2015.

1,2,9,10

(i) Purchase considerationAASB3(B64)(f) Details of the consideration transferred are:

$’000

Purchase consideration

Cash paid 11,750

Contingent consideration 280

Total purchase consideration 12,030

Events occurring after the reporting period


(a) Acquisition of Better Office Furnishings Limited

AASB3(B64)(i) The provisionally determined fair values of the assets and liabilities of Better Office Furnishings Limitedas at the date of acquisition are as follows:

Fair value$’000

Cash and cash equivalents 575

Property, plant and equipment 12,095

Intangible assets: customer list 2,285

Intangible assets: customer contracts 1,180

Inventories 1,010

Receivables 685

Payables (2,380)

Employee benefit obligations, including superannuation (230)

Borrowings (3,250)

Net deferred tax assets 420

Net identifiable assets acquired 12,390

Less: non-controlling interests (1,720)

Add: goodwill 1,360

Net assets acquired 12,030

AASB3(B64)(e),(k) The goodwill is attributable to Better Office Furnishings Limited’s strong position and profitability intrading in the office furniture and equipment market and synergies expected to arise after thecompany’s acquisition of the new subsidiary. None of the goodwill is expected to be deductible for taxpurposes.

(ii) Contingent considerationAASB3(B64)(g) The contingent consideration arrangement requires the group to pay the former owners of Better Office

Furnishings Limited 5% of the profit of Better Office Furnishings Limited, in excess of $4,000,000 for theyear ending 30 June 2016, up to a maximum undiscounted amount of $800,000.

The potential undiscounted amount of all future payments that the group could be required to makeunder this arrangement is between $0 and $800,000. The fair value of the contingent considerationarrangement of $280,000 has been estimated by calculating the present value of the future expectedcash flows. The estimates are based on a discount rate of 8% and assumed probability-adjusted profitin Better Office Furnishings Limited of $4,400,000 to $4,800,000.

(iii) Acquisition-related costsAASB3(B64)(m) Acquisition-related costs of $750,000 will be included in other expenses in profit or loss in the reporting

period ending 30 June 2016.

(iv) Non-controlling interestAASB3(B64)(o) The group has chosen to recognise the non-controlling interest at its fair value for this acquisition.

The fair value of the non-controlling interest in Better Office Furnishings Limited, an unlisted company,was estimated by applying a market approach and an income approach. The fair value estimates arebased on:

(a) an assumed discount rate of 8%

(b) an assumed terminal value based on a range of terminal EBITDA multiples between three and fivetimes

(c) long-term sustainable growth rate of 2%

(d) assumed financial multiples of companies deemed to be similar to Better Office FurnishingsLimited, and

(e) assumed adjustments because of the lack of control or lack of marketability that marketparticipants would consider when estimating the fair value of non-controlling interest in BetterOffice Furnishing Limited.

(v) Information not disclosed as not yet available 3,4

AASB3(B66) At the time the financial statements were authorised for issue, the group had not yet completed theaccounting for the acquisition of Better Office Furnishings Limited. In particular, the fair values of theassets and liabilities disclosed above have only been determined provisionally as the independentvaluations have not been finalised. It is also not yet possible to provide detailed information about eachclass of acquired receivables and any contingent liabilities of the acquired entity.



(b) Refinancing of borrowing

AASB110(21) At the beginning of August, the group renegotiated its existing loan facility to finance the construction ofthe new production plant for the electronic equipment division. The total available amount under thefacility was increased by $20,000,000, which is expected to be drawn down over the next 12 months.The facility is now repayable in three annual instalments, commencing 1 December 2020.

(c) Other events

AASB110(21) Please refer to note 13(b) for the final dividend recommended by the directors, to be paid on 9 October2015.


Non-adjusting events after the reporting period

AASB110(21)(b) The above disclosure relates to an event that is indicative of conditions that arose after the1.reporting period (ie a non-adjusting event). If the financial effect of the event cannot beestimated, a statement to that effect shall be made.

Updating disclosure about conditions at the end of the reporting period

AASB110(19),(20) If an entity receives information after the reporting period about conditions that existed at the2.end of the reporting period, it shall update disclosures that relate to these conditions, in the lightof the new information. An example is where evidence becomes available after the reportingperiod about a contingent liability that existed at the end of the reporting period. In addition toconsidering whether it should recognise or change a provision under AASB 137 Provisions,Contingent Liabilities and Contingent Assets, an entity updates its disclosures about thecontingent liability in the light of that evidence.

Business combinations after the reporting period

AASB3(59)(b)AASB3(B64)-(B66)

AASB 3 Business Combinations requires disclosures relating to business combinations that3.occurred after the reporting period but before the financial statements are authorised for issue.The acquirer shall disclose the information required by paragraph B64 of AASB 3 for eachbusiness combination, unless the initial accounting for the business combination is incompleteat the time the financial statements are authorised for issue. In that situation, the acquirer shalldescribe which disclosures could not be made and the reasons why they cannot be made.


Certain business combination disclosures

VALUE ACCOUNTS Reduced Disclosure Pty Ltd has not disclosed the details about the4.following items because the accounting for the business combination was incomplete at thetime the financial statements were authorised for issue:

AASB3(B64)(h) (a) acquired receivables, including fair values, gross contractual amounts and an estimate ofcontractual cash flows not expected to be collected, and

AASB3(B64)(j) (b) recognised or unrecognised contingent liabilities.

Other disclosures required by paragraph B64 of AASB 3 but that are not applicable to VALUE5.ACCOUNTS Reduced Disclosure Pty Ltd are:

AASB3(B64)(f)(iv) (a) the number of equity instruments or interests issued or issuable and the method ofdetermining the fair value of those instruments or interests

AASB3(B64)(l) (b) a description of transactions that are recognised separately from the businesscombination, how the acquirer has accounted for these transactions, amounts recognisedand, if the transaction is the effective settlement of a pre-existing relationship, the methodused to determine the settlement amount

AASB3(B64)(n) (c) for a bargain purchase, the amount of any gain recognised in accordance with paragraph34 of AASB 3, the line item in the statement of comprehensive income in which the gain isrecognised and a description of the reasons why the transaction resulted in a gain, and

AASB3(B64)(p) (d) for a business combination achieved in stages, the acquisition-date fair value of the equityinterest held by the acquirer immediately before the acquisition date and the amount of anygain or loss recognised as a result of remeasuring the equity interest to fair value.




Criteria for classifying non-current asset or disposal group as held for sale met after end of thereporting period

AASB5(12) Refer to paragraph 17 of the commentary on discontinued operation (note 15) for disclosure6.requirements where the criteria for classifying non-current assets or disposal groups as held forsale are met after the reporting period.

Current loan events

AASB101(76) In respect of loans classified as current liabilities, if the following events occur between the end7.of the reporting period and the date the financial statements are authorised for issue, thoseevents qualify for disclosure as non-adjusting events in accordance with AASB 110 Events afterthe Reporting Period:

(a) refinancing on a long-term basis

(b) rectification of a breach of a long-term loan agreement, and

(c) the receipt from the lender of a period of grace to rectify a breach of a long-term loanagreement ending at least twelve months after the reporting period.

Using pro forma balance sheets to disclose post-reporting period acquisitions and disposals

ASIC05/644 To illustrate the financial effect of material acquisitions and disposals of entities or operations8.after the reporting period, an entity may wish to present a pro forma balance sheet in the notesto the financial statements. While the Corporations Act 2001 does not generally permit proforma financial statements to be included in a financial report, ASIC has given relief in theseparticular circumstances, provided certain conditions set out in Class Order 05/644are satisfied.

Reduced disclosure regime – business combinations after the reporting period

AASB110(21)(a) If there has been a material non-adjusting event after the end of the reporting period, the entity9.shall disclose the nature of the event and an estimate of its financial effect, or a statement thatsuch an estimate cannot be made. The disclosure should give sufficient numerical informationto enable the reader to understand the event and its impact on the reporting entity.

While many of the requirements in AASB 3 do not apply to entities reporting under the reduced10.disclosure regime, there may be circumstances where it is necessary to provide moreinformation than just the purchase consideration paid. For example, if there is a significantamount of contingent purchase consideration, then this fact should also be disclosed. Abreakdown of the assets and liabilities acquired may assist users in assessing the impact of theacquisition on the financial position of the entity and may need to be provided where theacquired entity is material in comparison to the group.

PwC 188

Other information

Not mandatory This section of the notes includes other information that must be disclosed to comply with theaccounting standards and other pronouncements, but that is not immediately related to individual lineitems in the financial statements.

20 Related party transactions 189

21 Share-based payments 195

22 Remuneration of auditors 199

23 Earnings per share

24 Offsetting financial assets and financial liabilities 202


26 Deed of cross guarantee 206

27 Parent entity financial information 209

28 Summary of significant accounting policies 212

29 Changes in accounting policies 240


20 Related party transactions 25-31

(a) Parent entities 4-6

AASB101(138)(c) The group is controlled by the following entities:

Name TypePlace ofincorporation

Ownership interest

2015 201422

AASB124(13),(Aus13.1)(a),(b)AASB101(138)(c)

Lion (Australia) Limited Immediate and ultimateAustralian parent entity

Australia 60% 63.7%

AASB124(13)AASB101(138)(c)

Lion plc Ultimate parent entity andcontrolling party

United Kingdom 60% * 63.7% *

* Lion plc holds 100% of the issued ordinary shares of Lion (Australia) Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 16(a).

AASB124(17)(c) Key management personnel compensation 7-9,22

2015$

202014

$21

AASB124(17)(a) Short-term employee benefits 2,232,619 2,053,464AASB124(17)(b) Post-employment benefits 179,953 161,541AASB124(17)(c) Long-term benefits 39,530 32,719AASB124(17)(d) Termination benefits 115,500 -AASB124(17)(e) Share-based payments 704,942 547,753

3,272,544 2,795,477

AASB124(18)(b) In addition to the above, the group is committed to pay the CEO and the CFO up to $250,000 in theevent of a change in control of the group.

11,23

AASB124(18)(d) Transactions with other related parties 10-14,16,19

AASB124(18)(a) The following transactions occurred with related parties:

2015$

202014

$21

Sales and purchases of goods and servicesAASB124(19)(d) Sale of goods to associates 125,222 -AASB124(19)(a) Purchase of management services from parent 450,000 370,000AASB124(19)(g) Purchases of electronic equipment from other related parties 182,232 78,300AASB124(19)(f) Purchases of various goods and services from entities controlled

by key management personnel (i)23,24 764,265 576,020

Dividend revenueAASB124(19)(g) Other related parties 150,000 300,000

Superannuation contributions17,18

AASB124(19)(g) Contributions to superannuation funds on behalf of employees 3,719,333 3,287,543* see note 8(h) for information about VALUE ACCOUNTS Reduced Disclosure Pty Limited shares held bythe group’s defined benefit plan and property owned by the plan that is occupied by the group.

Other transactionsAASB124(19)(a) Dividends paid to ultimate Australian parent entity (Lion

(Australia) Limited) 13,313,400 6,553,200AASB124(19)(a) Final call on partly paid ordinary shares paid by ultimate Australian

parent entity (note 9(a)) 840,321 -AASB124(19)(a) Subscriptions for new ordinary shares by ultimate Australian parent

entity (note 9(a)) 4,626,422 -

Related party transactions


AASB124(17)(d) Transactions with other related parties

2015$

202014

$21

AASB124(19)(f) Subscription for new ordinary shares by key management personnelas a result of the rights issue (note 9a))

23 118,096 -

(i) Purchases from entities controlled by key management personnel 23

AASB124(18) The group acquired the following goods and services from entities that are controlled by members ofthe group’s key management personnel:

construction of a warehouse building

rental of an office building, and

legal services.

(e) Outstanding balances arising from sales/purchases of goods and services 8-14

AASB124(18)(b) The following balances are outstanding at the end of the reporting period in relation to transactions withrelated parties:

2015$

202014

$21

Current payables (purchases of goods and services)AASB124(19)(a) Australian parent entity 58,200 73,000AASB124(19)(f) Entities controlled by key management personnel 196,375 91,294AASB124(19)(g) Other related parties 265,327 94,300

(f) Loans to/from related parties 10-14,16

2015$

202014

$21

AASB124(19)(f) Loans to key management personnel23

AASB124(18)(b) Beginning of the year 606,300 502,700AASB124(18)(a) Loans advanced 220,000 150,000AASB124(18)(a) Loan repayments received (108,850) (46,400)AASB124(18)(a) Interest charged 56,929 41,275AASB124(18)(a) Interest received (56,929) (41,275)

AASB124(18)(b) End of year 717,450 606,300

AASB124(19)(g) Loans to other related partiesAASB124(18)(b) Beginning of the year 700,000 600,000AASB124(18)(a) Loans advanced 1,000,400 600,400AASB124(18)(a) Loan repayments received (400,300) (500,400)AASB124(18)(a) Interest charged 81,450 62,130AASB124(18)(a) Interest received (81,450) (62,130)

AASB124(18)(b) End of year 1,300,100 700,000

AASB124(19)(a) Loans from Lion (Australia) Limited (ultimate Australian parent entity)AASB124(18)(b) Beginning of the year 4,000,000 -AASB124(18)(a) Loans advanced 7,150,000 4,100,000AASB124(18)(a) Loan repayments made (2,050,000) (100,000)AASB124(18)(a) Interest charged 185,400 104,900AASB124(18)(a) Interest paid (185,400) (104,900)

AASB124(18)(b) End of year 9,100,000 4,000,000



(f) Loans to/from related parties

2015$

202014

$21

AASB124(19)(d) Loans from associatesAASB124(18)(b) Beginning of the year - -AASB124(18)(a) Loans advanced 6,285,230 800,220AASB124(18)(a) Loan repayments made (200,000) (800,220)AASB124(18)(a) Interest charged 245,450 84,830AASB124(18)(a) Interest paid (245,450) (84,830)

AASB124(18)(b) End of year 6,085,230 -

AASB124(18)(c),(d) There is no allowance account for impaired receivables in relation to any outstanding balances, and noexpense has been recognised in respect of impaired receivables due from related parties.

(g) Terms and conditions 15

AASB124(18)(b)(i) Transactions relating to dividends, calls on partly paid ordinary shares and subscriptions for newordinary shares were on the same terms and conditions that applied to other shareholders.

The loans to key management personnel are generally for periods of 10 years repayable in quarterlyinstalments at interest rates of 5% per annum. They are secured by first mortgages over the individuals’residences. One unsecured loan of $60,000 was made to a director of VALUE ACCOUNTS ReducedDisclosure Pty Ltd for a period of two years with an interest rate of 8% per annum. This loan isrepayable in full on 30 September 2015.

23

Goods were sold to associates during the year based on the price lists in force and terms that would beavailable to third parties. Management services were bought from the immediate parent entity on acost-plus basis, allowing a margin ranging from 15% to 30% (2014 – 10% to 24%). All othertransactions were made on normal commercial terms and conditions and at market rates, except thatthere are no fixed terms for the repayment of loans between the parties. The average interest rate onthe other loans during the year was 9.5% (2014 – 9.75%).

AASB124(18)(b)(i) Outstanding balances other than loans to key management personnel are unsecured and arerepayable in cash.


Accounting standards for related party disclosures

AASB124(Aus1.2)AASB124(Aus1.3)

Accounting standards for related party disclosures are set out in AASB 124 Related Party1.Disclosures. At present, AASB 124 applies to all entities, except not-for-profit public sectorentities. However, the AASB is expected to make amendments to AASB 124 in early 2015which will extend the application to not-for-profit public sector entities.

Presentation

All of the related party information required by AASB 124 that is relevant to VALUE2.ACCOUNTS Reduced Disclosure Pty Ltd has been presented, or referred to, in one note. Thisis considered to be a convenient and desirable method of presentation, but there is norequirement to present the information in this manner. Compliance with the standard could alsobe achieved by disclosing the information in relevant notes throughout the financial statements.

Materiality

AASB101(7) The disclosures required by AASB 124 apply to the financial statements when the information3.is material. According to AASB 101 Presentation of Financial Statements, materiality dependson the size and nature of an item. It may be necessary to treat an item or a group of items asmaterial because of their nature, even if they would not be judged material on the basis of theamounts involved. This may apply when transactions occur between an entity and parties whohave a fiduciary responsibility in relation to that entity, such as those transactions between theentity and its key management personnel.




Relationships between parents and subsidiaries

AASB124(13),(16) Relationships between parents and subsidiaries shall be disclosed irrespective of whether4.there have been transactions between those related parties. An entity shall disclose the nameof the entity’s parent and, if different, the ultimate controlling party. If neither the entity’s parentnor the ultimate controlling party produces financial statements available for public use, thename of the next most senior parent that does so shall also be disclosed.

The ultimate controlling party may be an individual or a group of individuals (eg a family).5.

AASB124(Aus13.1) If any of the parent entities or the ultimate controlling parties disclosed as per paragraph 46.above are incorporated or otherwise constituted outside Australia, the disclosure must identifywhich of the entities is incorporated overseas and where and disclose the name of the ultimatecontrolling entity that is incorporated within Australia.

Key management personnel

AASB124(9) For the purposes of AASB 124, key management personnel (KMP) are persons having7.authority and responsibility for planning, directing and controlling the activities of the entity,directly or indirectly, including any director (whether executive or otherwise) of that entity.

AASB124(Aus9.1) A director is a person who is a director under the Corporations Act 2001 or, in the case of8.entities governed by bodies not called a board of directors, a person who, regardless of thename that is given to the position, is appointed to the position of member of the governingbody, council, commission or authority. Individuals who are directors of subsidiaries within aneconomic entity but not directors of the parent entity are not directors of the group.

Key management personnel compensation

AASB124(17) All reporting entities must disclose KMP compensation in total and for each of the following9.categories:

AASB124(17)(a) short-term employee benefits(a)

AASB124(17)(b) post-employment benefits(b)

AASB124(17)(c) other long-term benefits(c)

AASB124(17)(d) termination benefits(d)

AASB124(17)(e) share-based payments.(e)

While the disclosures under AASB 124 paragraph 17 are subject to materiality, this must bedetermined based on both quantitative and qualitative factors. In our view, it will not beappropriate to omit the aggregate compensation disclosures based on materiality.

Transactions with related parties

AASB124(18) If there have been transactions between the reporting entity and a related party, the reporting10.entity must disclose:

the nature of the related party transactions, and(a)

information about the transactions and outstanding balances necessary for an(b)understanding of the potential effect of the relationship on the financial statements:

AASB124(18)(a) (i) the amount of the transactions

AASB124(18)(b) (ii) the amount of outstanding balances (including commitments) and their terms andconditions, whether they are secured, the nature of the consideration to be provided insettlement and details of any guarantees given

AASB124(18)(c) (iii) provisions for doubtful debts related to the amount of outstanding balances, and

AASB124(18)(d) (iv) the expense recognised during the period in respect of bad or doubtful debts due fromrelated parties.

AASB124(9),(21)AASB137(3)

Related party transactions are transfers of resources, services or obligations between the11.reporting entity and a related party, regardless of whether a price is charged. They includecommitments to do something if a particular event occurs (or does not occur) in the future andexecutory contracts (recognised or unrecognised). As per AASB 137, executory contracts arecontracts under which neither party has performed any of its obligations, or both parties havepartially performed their obligations to an equal extent.




Related party definition

AASB124(9)AASB124(IE4)-(IE26)

The definition of a related party includes the following persons and entities:12.

A person (or a close member of that person’s family) is related to the reporting entity if(a)the person:

(i) has control or joint control over the reporting entity

(ii) has significant influence over the reporting entity

(iii) is a member of the key management personnel of the reporting entity, or of a parentof the reporting entity

The reporting entity (A) is related to another entity (B) if:(b)

(i) A and B are members of the same group (that is all entities within a group are relatedto each other)

(ii) A is an associate or joint venture of B. In this case A is related to all members of thegroup that B belongs to

(iii) A and B are joint ventures of the same third party, C

(iv) A is a joint venture of C and B is an associate of C (or vice versa)

(v) B is a post-employment benefit plan for the benefit of employees of A or an entityrelated to A. If A is itself a post-employment benefit plan, any sponsoring employersare also related to A

(vi) B is controlled or jointly controlled by a person identified in (a) above

(vii) a person who has control or joint control over A has significant influence over B or is amember of the key management personnel of B, or

(viii) B (or any member of the group of which B is a part) provides key managementpersonnel services to A or A’s parent.

AASB124(12) In the above definition, an associate includes subsidiaries of the associate and a joint venture13.includes subsidiaries of the joint venture.

AASB124(9) Close family members are defined as those family members who may be expected to14.influence, or be influenced by, the key management person. They include a person’s childrenand spouse or domestic partner, children of that spouse or domestic partner and dependantsof that person, spouse or domestic partner.

Terms and conditions

AASB124(18)(b)(i),(23)

The terms and conditions of outstanding balances shall be disclosed, including whether they15.are secured, and the nature of the consideration to be provided in settlement. Disclosures thatrelated party transactions were made on terms equivalent to those that prevail in arm’s lengthtransactions are made only if such terms can be substantiated.

Categories

AASB124(19) The disclosures of related party transactions required by paragraph 18 of AASB 124 shall be16.made separately for each of the following categories:

the parent(a)

entities with joint control or significant influence over the entity(b)

subsidiaries(c)

associates(d)

joint ventures in which the entity is a venturer(e)

key management personnel of the entity or its parent, and(f)

other related parties.(g)

Superannuation plans

AASB124(9)(b)(v)

AASB119(151)

Post-employment benefit plans for the benefit of employees of the entity, or of any entity that is17.a related party of the entity, are related parties as per the definition in AASB 124 paragraph 9.This means that contributions made to such plans by the entity or any other entity in theconsolidated group must be disclosed as a related party transaction, regardless of whether theplans are defined contribution or defined benefit plans.

Defined benefit group plans

AASB124(22)AASB119(34B)

Participation by a parent or subsidiary in a defined benefit plan that shares risks between18.group entities is a transaction between related parties and must be disclosed as such.




Aggregate or separate disclosure

AASB124(24) Items of a similar nature may be disclosed in aggregate except when separate disclosure is19.necessary for an understanding of the effects of related party transactions on the financialstatements of the entity.

Rounding

ASIC98/100 Under ASIC Class Order 98/100 amounts disclosed in relation to transactions between related20.parties can only be rounded to the nearest dollar for entities with total assets of less than$1,000m and to the nearest $1,000 for entities with total assets of more than $1,000m.

Comparatives

AASB101(38) AASB 124 is silent on comparatives. The rules in AASB 101 Presentation of Financial21.Statements are that comparative information must be given for all amounts reported in thefinancial statements, except when a standard provides otherwise, which is not the case withAASB 124. Comparative information should also be provided for narrative and descriptiveinformation when it is relevant to an understanding of the current period’s financial statements.In the case of related party disclosures, comparative information is likely to be relevant for allnarrative and descriptive information. The comparative information should disclosetransactions with parties that were related at the time the transaction took place, but need notinclude information about transactions with parties that were unrelated at that time.

AASB2014-1,PartA(25)See:AASB124R(9)(b)(viii),(17A),(18A)

Managed investment schemes

In June 2014, the AASB made amendments to AASB 124 Related Party Disclosures which22.clarify that if an entity hires key management personnel services from another entity (eg aresponsible entity or management entity), the entity does not need to disclose anycompensation paid by the management entity to its employees or directors. However, themanagement entity is specifically identified as a related party and amounts payable to themanagement entity for the provision of key management personnel services must beseparately disclosed. The amendments become applicable for financial years commencing onor after 1 July 2014.

Aggregated KMP disclosures in related party note

The notes to the financial statements must now also provide aggregate information about23.transactions with KMPs and loans made to KMPs. While this is not a new requirement in AASB124, it was previously satisfied via the detailed disclosures in the KMP note. However, thesedetailed disclosures have been moved to the remuneration report for financial yearscommencing 1 July 2013. Since entities are not permitted to satisfy disclosures requirementsof accounting standards by reference to documents outside the financial report, they willtherefore need to include aggregate information about KMP transactions in their related partynote going forward.

CR2M.3.03(3B) The Corporations Regulations 2001 provide an exception for transactions with KMPs that are24.either trivial or domestic or were undertaken on an arm’s length basis. However, this exceptiononly applies to the remuneration report and does not apply to the disclosures in the notes tothe financial statements. Instead, the disclosures required under paragraph 17 are subject tomateriality, which should be assessed from both the entity’s and the individual’s perspective.The amount of detail that will need to be disclosed in the notes will depend on the type ofbusiness and the volume of the relevant transactions.


Parent entity disclosure

If the entity presents separate parent entity financial statements in addition to consolidated25.financial statements, the disclosures required by AASB 124 must be made in relation to boththe parent entity and the consolidated financial statements.

Investment entities

Consolidated financial reports do not need to disclose transactions that are eliminated on26.consolidation (eg transactions between subsidiaries or between the parent entity andsubsidiaries). However, where an investment entity is exempt from consolidating certainsubsidiaries and instead measures them at fair value through profit or loss, it will have todisclose the transactions and outstanding balances with those entities since they are noteliminated.




Tax consolidation

UIG1052(59) Where applicable (eg in individual financial statements of the parent entity), transactions with27.related parties as the result of the tax consolidation regime will also need to be disclosed.This includes:

(a) tax amounts assumed by a head entity

(b) amounts payable/receivable under a tax funding or tax sharing agreement

(c) equity contributions or distributions

For further information about accounting for the tax consolidation regime and relateddisclosures see the commentary to note 6.

A tax consolidated group may include entities that are not controlled by the parent entity but28.are controlled by the same foreign entity (referred to as a multiple entry consolidated group orMEC group). Where the parent entity is the head entity in such an MEC group, transactionswith entities that are subject to common control must be separately disclosed.

Exemption for government related entities

AASB124(25) Entities do not need to make any of the disclosures required under paragraph 10 above in29.relation to related party transactions, outstanding balances and commitments with:

(a) a government that has control, joint control or significant influence over the reportingentity, and

(b) another entity that is a related party because the same government has control, jointcontrol or significant influence over both the reporting entity and the other entity.

AASB124(26) Where an entity has applied the exemption in paragraph 29 above, it must disclose the30.following in relation to the transactions and outstanding balances:

(a) the name of the government and the nature of its relationship with the reporting entity(control, joint control or significant influence)

(b) the following information in sufficient detail to enable users of the entity’s financialstatement to understand the effect of related party transactions on its financial statements:

(i) the nature and amount of each individually significant transaction, and

(ii) for other transactions that are collectively, but not individually significant, a qualitativeor quantitative indication of their extent.

AASB124(27) In deciding the level of detail to be disclosed, entities shall consider the closeness of the31.related party relationship and other factors such as whether the transaction is significant interms of size, carried out on non-market terms, outside normal day-to-day business operations,disclosed to regulatory or supervisory authorities, reported to senior management or subject toshareholder approval.

21 Share-based payments

(a) Employee Option Plan 1,2

AASB2(44),(45)(a) The establishment of the VALUE ACCOUNTS Employee Option Plan was approved by shareholders atthe 2010 annual general meeting. The Employee Option Plan is designed to provide long-termincentives for senior managers and above (including executive directors) to deliver long-termshareholder returns. Under the plan, participants are granted options which only vest if certainperformance standards are met. Participation in the plan is at the board’s discretion and no individualhas a contractual right to participate in the plan or to receive any guaranteed benefits.

The amount of options that will vest depends on VALUE ACCOUNTS Reduced Disclosure Pty Ltd’stotal return to shareholders (TSR), including share price growth, dividends and capital returns, rankingwithin a peer group of 20 selected companies that are listed on the ASX over a three year period. Oncevested, the options remain exercisable for a period of two years.

Options granted under the plan for no consideration and carry no dividend or voting rights.

When exercisable, each option is convertible into one ordinary share fourteen days after the release ofthe half-yearly and annual financial results of the group to the market.

The exercise price of options is based on the weighted average price at which the company’s sharesare traded on the Australian Securities Exchange (ASX) during the week up to and including the dateof the grant.



(a) Employee option plan

Set out below are summaries of options granted under the plan:3

2015 2014AASB2(45)(b)(i),(ii),(iii),(iv),(vii),(d)

Averageexerciseprice per

share optionNumber of

options

Averageexercise price

per shareoption

Number ofoptions

As at 1 July $5.55 2,056,000 $5.33 1,688,000

Granted during the year $6.18 818,000 $5.78 814,000

Exercised during the year * $5.28 (228,000) - -

Forfeited during the year $5.71 (445,000) $5.12 (446,000)

As at 30 June $5.78 2,201,000 $5.55 2,056,000

Vested and exercisable at 30 June $5.28 263,000 - -

AASB2(45)(c) * The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2015 was $6.35 (2014 – notapplicable).

AASB2(45)(b)(v) No options expired during the periods covered by the above tables.

Share options outstanding at the end of the year have the following expiry date and exercise prices:3

AASB2(45)(a),(b)(vi),(d)

Grant Date Expiry dateExercise

price

Shareoptions

30 June 2015Share options30 June 2014

1 May 2012 30 April 2017 $5.28 263,000 546,000

1 May 2013 30 April 2018 $5.51 569,000 709,000

1 May 2014 30 April 2019 $5.78 641,000 801,000

1 May 2015 30 April 2020 $6.18728,000 -

Total 2,201,000 2,056,000

Weighted average remaining contractual life of optionsoutstanding at end of period 3.67 years 3.96 years

(i) Fair value of options granted2

AASB2(46),(47)(a)(i)AASB2(RDR46.1)

The assessed fair value at grant date of options granted during the year ended 30 June 2015 was$1.80 per option (2014 – $1.75). The fair value at grant date is independently determined using anadjusted form of the Black Scholes Model which includes a Monte Carlo simulation model that takesinto account the exercise price, the term of the option, the impact of dilution (where material), the shareprice at grant date and expected price volatility of the underlying share, the expected dividend yield andthe risk free interest rate for the term of the option and the correlations and volatilities of the peer groupcompanies.

AASB2(47)(a)(i) The model inputs for options granted during the year ended 30 June 2015 included:

options are granted for no consideration and vest based on VALUE ACCOUNTS Reduced(a)Disclosure Pty Ltd’s TSR ranking within a peer group of 20 selected companies over a threeyear period. Vested options are exercisable for a period of two years after vesting

exercise price: $6.18 (2014 – $5.78)(b)

grant date: 1 May 2015 (2014 – 1 May 2014)(c)

expiry date: 30 April 2020 (2014 – 30 April 2019)(d)

share price at grant date: $6.18 (2014 – $5.78)(e)

expected price volatility of the company’s shares: 35% (2014 – 30%)(f)

expected dividend yield: 3.8% (2014 – 3.2%)(g)

risk-free interest rate: 6% (2014 – 5.5%)(h)

AASB2(47)(a)(ii) The expected price volatility is based on the historic volatility (based on the remaining life of theoptions), adjusted for any expected changes to future volatility due to publicly available information.



(b) Deferred shares – executive short-term incentive scheme

AASB2(45)(a)AASB2(RDR46.1)

Under the group’s short-term incentive (STI) scheme, executives receive 50% of the annual STIachieved in cash and 50% in the form of rights to deferred shares of VALUE ACCOUNTS ReducedDisclosure Pty Ltd. The rights are granted on the 31 August of the following year and vest after twoyears from the grant date. They automatically convert into one ordinary share each on vesting at anexercise price of nil. The executives do not receive any dividends and are not entitled to vote in relationto the deferred shares during the vesting period. If an executive ceases to be employed by the groupwithin this period, the rights will be forfeited, except in limited circumstances that are approved by theboard on a case-by-case basis.

AASB12(14),(17)

The deferred shares are administered by the VALUE ACCOUNTS Employee Share Trust. This trust isconsolidated in accordance with note 28(b)(i). The shares are acquired on market at the grant date andare held as treasury shares until such time as they are vested. Forfeited shares are reallocated insubsequent grants. Under the terms of the trust deed, VALUE ACCOUNTS Reduced Disclosure PtyLtd is required to provide the trust with the necessary funding for the acquisition of the shares at thetime of the grant.

AASB2(47)(b) The number of rights to be granted is determined based on the dollar value of the achieved STI dividedby the weighted average price at which the company’s shares are traded on the ASX during the weekup to and include the date of the grant ($5.94 for the rights granted in August 2014 and $6.08 for therights granted in 2013).

2015 2014

Number of rights to deferred shares granted on 31 August 2014(31 August 2013) 57,636 52,364

Fair value of rights at grant date $5.50 $5.71

AASB2(47)(b)AASB2(RDR46.1)

The fair value of the rights at grant date was estimated by taking the market price of the company’sshares on that date less the present value of expected dividends that will not be received by theexecutives on their rights during the two year vesting period.

(c) Employee share scheme 1,2

AASB2(44),(45)(a) A scheme under which shares may be issued by the company to employees for no cash considerationwas approved by shareholders at the 2011 annual general meeting. All Australian resident permanentemployees (excluding executive directors, other key management personnel of the group and thegroup company secretary) who have been continuously employed by the group for a period of at leastone year are eligible to participate in the scheme. Employees may elect not to participate inthe scheme.

Since the current reporting period, the employee share scheme is also administered by the VALUEACCOUNTS Employee Share Trust. This Trust is consolidated in accordance with note 28(b)(i).

Shares issued by the trust to the employees are acquired on-market prior to the issue. Shares held bythe trust and not yet issued to employees at the end of the reporting period are shown as treasuryshares in the financial statements (see note 9(a)).

AASB2(47)(b)

AASB2(46)AASB2(RDR46.1)

Under the scheme, eligible employees may be granted up to $1,000 worth of fully paid ordinary sharesin VALUE ACCOUNTS Reduced Disclosure Pty Ltd annually for no cash consideration. The number ofshares issued to participants in the scheme is the offer amount divided by the weighted average priceat which the company’s shares are traded on the ASX during the week up to and including the date ofgrant. The shares are recognised at the closing share price on the grant date (grant date fair value) asan issue of treasury shares by the trust (in 2014 as share capital) and as part of employee benefit costsin the period the shares are granted.

Offers under the scheme are at the discretion of the company, and no offer may be made unlessannual profit growth in the financial year prior to the date of the offer was at least 3% greater than theincrease in the consumer price index.

Shares issued under the scheme may not be sold until the earlier of three years after issue orcessation of employment by the group. In all other respects the shares rank equally with other fully-paid ordinary shares on issue (refer to note 9(a)).

2015 2014AASB2(47)(b) Number of shares issued under the plan to participating employees on

1 December 2014 (2014 – 2 December 2013) 145,902 142,857

AASB2(47)(b) Each participant was issued with shares worth $1,000 based on the weighted average market price of$6.18 (2014 – $5.59). The shares had a grant date fair value of $6.18 (2014 – $5.59).



(Improvement)(d) Share appreciation rights 1

AASB2(44),(45)(a) In March 2015, the remuneration committee decided to reward divisional managers for theircontribution to the performance of the group by granting them 200,000 share appreciation rights(SARs). The rights entitle the employees to a cash payment after three years of service. The amountpayable will be determined based on the increase of VALUE ACCOUNTS Reduced Disclosure PtyLtd’s share price between the grant date (25 March 2015) and the vesting date (25 March 2018). Therights must be exercised on vesting date and will expire if not exercised on that date.

AASB2(46) The fair value of the SARs was determined using the Black-Scholes model using the following inputs atthe grant date and as at 30 June 2015:

30 June 2015Grant date

25 March 2015

Share price at measurement date $6.19 $5.43

Expected volatility 32% 35%

Dividend yield 3.8% 3.8%

Risk-free interest rate 6% 6%AASB2(RDR50.1)(b) Carrying amount of liability – included in employee benefit

obligations (note 8(h)) $138,000 $114,000

AASB2(51)(b)(ii) There were no SARs granted in prior years and none of the SARs had vested as at 30 June 2015.

(d) Expenses arising from share-based payment transactions 2

AASB2(RDR50.1) Total expenses arising from share-based payment transactions recognised during the period as partof employee benefit expense were as follows:

2015$’000

2014$’000

Options issued under employee option plan 896 330

Deferred shares issued under the short-term incentive scheme 220 225

Shares issued under employee share scheme 902 798

Share appreciation rights 138 -

2,156 1,353


AASB2(44) General requirement

An entity shall disclose information that enables users of the financial statements to1.understand the nature and extent of share-based payment arrangements that existed duringthe period.


AASB2(45)(a) An entity shall disclose information that enables users of the financial statements to2.understand the nature and extent of share-based payment arrangements that existed duringthe period.

AASB2(45)(a) a description of each type of share-based payment arrangement(a)AASB2(45)(b) the number and weighted average exercise prices of share options for each group of(b)

options (outstanding at the beginning and end of the period, granted, forfeited, exercised,expired during the period and exercisable at the end of the period)

AASB2(RDR46.1) for equity-settled share-based payment arrangements – information about how the entity(c)measured the fair value of goods or services received or the fair value of the equityinstruments granted. If a valuation methodology was used, the entity shall disclose themethod and its reason for choosing it

AASB2(47)(c)(i)) if the entity has measured the fair value of goods or services received as consideration for(d)equity instruments of the entity indirectly, by reference to the fair value of the equityinstruments granted and the share-based payment arrangement was modified during theperiod, an explanation of those modifications




AASB2(RDR46.2) for cash-settled share-based payment arrangements, information about how the liability(e)was measured, and

AASB2(RDR50.1) information about the effect of share-based payment transactions on the entity’s profit or(f)loss for the period and on its financial position:

(i) the total expense recognised in profit or loss for the period, and

(ii) the total carrying amount at the end of the period of liabilities arising from share-basedpayment transactions.

Change in presentation – reconciliation of share options

VALUE ACCOUNTS Reduced Disclosure Pty Ltd previously disclosed each option grant3.separately in the reconciliation of share options. However, this is not required under AASB 2and we have therefore changed our presentation this year to show the reconciliation inaggregate for all options.

22 Remuneration of auditors 1-4,8-11,13

AASB1054(10) During the year the following fees were paid or payable for services provided by the auditor of theparent entity, its related practices and non-related audit firms:

2015 2014

(a) PricewaterhouseCoopers Australia $12

$12

(i) Audit and other assurance servicesAASB1054(10)(a) Audit and review of financial statements 197,900 186,300AASB1054(10)(b),(11) Other assurance services

Audit of regulatory returns 24,900 24,500

Due diligence services - 10,300

Total remuneration for audit and other assurance services 222,800 221,100

AASB1054(10)(b),(11)(ii) Taxation services

Tax compliance services 25,000 23,700

International tax consulting and tax advice on mergers and acquisitions 20,200 17,500

Total remuneration for taxation services 45,200 41,200

AASB1054(10)(b),(11)(iii) Other services

Remuneration advice (including remuneration recommendation) 40,500 29,200

Benchmarking services 12,300 -

Total remuneration for other services 52,800 29,200

Total remuneration of PricewaterhouseCoopers Australia 320,800 291,500

(b) Network firms of PricewaterhouseCoopers Australia 5-7

(i) Audit and other assurance servicesAASB1054(10)(a) Audit and review of financial statements 121,000 119,000AASB1054(10)(b),(11) Other assurance services

Audit of regulatory returns 6,300 5,500

Total remuneration for audit and other assurance services 127,300 124,500

AASB1054(10)(b),(11)(ii) Other services

Benchmarking services 5,500 7,200

Total remuneration of network firms of PricewaterhouseCoopersAustralia

132,800 131,700

Remuneration of auditors


2015 2014

(c) Non PricewaterhouseCoopers audit firms $12

$12

AASB1054(10)(a)(i) Audit and other assurance services

Audit and review of financial statements 45,000 -

AASB1054(10)(b),(11)(ii) Other services

Legal services 7,500 10,900

Total remuneration of non-PricewaterhouseCoopers audit firms 52,500 10,900

Total auditors’ remuneration 506,100 434,100

It is the group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutoryaudit duties where PricewaterhouseCoopers’s expertise and experience with the group are important.These assignments are principally tax advice and due diligence on acquisitions, or wherePricewaterhouseCoopers is awarded assignments on a competitive basis. It is the group’s policy toseek competitive tenders for all major consulting projects.


Audit remuneration disclosure requirements

AASB1054(10) Under AASB 1054 Australian Additional Disclosures entities must disclose fees to each auditor1.or reviewer, including any network firm, separately for:

the audit or review of the financial statements, and(a)

all other services performed during the period.(b)

Example disclosures exceed the requirements of AASB 1054

AASB1054(11) Unlike the previous rules in AASB 101 Presentation of Financial Statements, it is no longer2.necessary to disclose separately the nature and amount of fees paid for each non-auditservice. Instead, it is sufficient if an entity provides an aggregate amount for non-audit fees byauditor, together with a narrative explanation about the nature of the non-audit servicesprovided.

However, PwC supports enhanced disclosure and transparency of remuneration paid or3.payable to auditors for both audit and non-audit services in the financial statements of publiclylisted entities. The sample disclosures in note 22 therefore exceed the requirements in AASB1054 in the following respects:

we have retained the breakdown of the fees paid for non-audit services by type of service,(a)and

the paragraph at the foot of the note concerning the group’s policy for the employment of(b)the auditors for non-audit services is not required by AASB 1054.

It is further not clear whether a separate disclosure of fees paid to network firms is strictly4.required under AASB 1054. However, we believe that this information is relevant for users andtherefore continue to provide a breakdown of fees paid directly to PwC Australia and fees paidto our network firms.

Network firm

AASB1054(BC7) The notion of a network firm is taken from APES 110 Code of Ethics for Professional5.Accountants issued by Accounting and Professional Ethical Standards Board (APESB). TheAASB decided not to define network firm or provide explanatory material for the purposes ofAASB 1054 on the basis that the notion is generally understood.

APES110(2) A network firm is defined in APES 110 as a firm or entity that belongs to a network. A network6.is a larger structure:

that is aimed at co-operation, and(a)

that is clearly aimed at profit or cost sharing, or shares common ownership, control or(b)management, common quality control policies and procedures, common businessstrategy, the use of a common brand name or a significant part of professional resources.

Further guidance on networks and network firms can be found in paragraphs 290.13 to 290.247.of APES 110.




Joint venture operation

The shares of auditor’s remuneration relating to joint venture operations should be included.8.

Amounts paid or payable by another entity

Where an amount is paid or payable by another entity (eg the parent entity) the recommended9.approach is to disclose the amount in the individual entity’s financial statements, regardless ofwho paid it. In cases where it is not possible to make an allocation, the individual entity’sfinancial statements should include a suitable explanation.


UIG1031(6),(7) Amounts disclosed for auditor’s remuneration should be net of goods and services tax (GST)10.except where the GST included in fees is not recoverable from the tax authority. GST that isnot recoverable should be included as part of the remuneration. This disclosure is consistentwith UIG 1031 Accounting for the Goods and Services Tax (GST) which requires revenues,expenses and assets to be recognised net of the amount of GST, except that where the GST isnot recoverable it shall be recognised as part of the cost of acquisition of the asset or as part ofthe item of expense to which it relates.

We recommend that entities that are not able to recover GST on fees for audit and other11.services and other expenses should include a policy note indicating which expense itemsdisclosed in the financial statements are inclusive of non-recoverable GST. They could alsoamend the wording of specific disclosures such as auditor’s remuneration to make it clear thatthe amounts disclosed are inclusive of non-recoverable GST, eg by adding the words‘’including non-recoverable GST’’ to the relevant captions.

Rounding

ASIC98/100 Audit remuneration must be disclosed to the nearest dollar by entities with assets (or12.consolidated assets) of less than $1,000 million, and such remuneration may only be roundedto the nearest $1,000 by entities with assets (or consolidated assets) of more than $1,000million. See Appendix F for further information. While ASIC Class Order 98/100 has not beenupdated following the release of AASB 1054 and therefore still refers to the supersededparagraphs (Aus138.1) and (Aus138.2) in AASB 101, we believe that the Class Order shouldbe equally applied to paragraphs 10 and 11 of AASB 1054.


Network firm of subsidiary auditors

AASB1054(10) Where applicable, entities must also disclose the fees paid for audit and non-audit services13.provided by a network firm of the auditors of any of the subsidiaries.

23 Earnings per shareAASB133(3) Removed as not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Limited. Note that if an

entity discloses earnings per share voluntarily, it must calculate and disclose the earnings per share inaccordance with the requirements of AASB 133 Earnings per Share. Please refer to our VALUEACCOUNTS Holdings publication for an illustration of AASB 133 compliant disclosures.


24 Offsetting financial assets and financial liabilities 1-11

AASB132(42)AASB7(13A),(13B)

Financial assets and liabilities are offset and the net amount reported in the balance sheet whereVALUE ACCOUNTS Reduced Disclosure Pty Ltd currently has a legally enforceable right to offset therecognised amounts, and there is an intention to settle on a net basis or realise the asset and settle theliability simultaneously. VALUE ACCOUNTS Reduced Disclosure Pty Ltd has also entered intoarrangements that do not meet the criteria for offsetting but still allow for the related amounts to be setoff in certain circumstances, such as bankruptcy or the termination of a contract.

The following table presents the recognised financial instruments that are offset, or subject toenforceable master netting arrangements and other similar agreements but not offset, as at 30 June2015 and 30 June 2014. The column ‘net amount ‘shows the impact on the group’s balance sheet if allset-off rights were exercised.

AASB7(13C) Effects of offsetting on the balance sheet Related amounts not offset

2015

Grossamounts

Grossamounts

set off in thebalance

sheet

Net amountspresented inthe balance

sheet

Amountssubject to

masternetting

arrange-ments

9

Financialinstrument

collateralNet

amount

Financial assets $’000 $’000 $’000 $’000 $’000 $’000

Cash and cash equivalents (c) 55,304 - 55,304 - (24,678) 30,626

Trade and other receivables(a)(i),(c) 18,329 (999) 17,330 - (12,410) 4,920

Financial assets at FVPL (c) 11,300 - 11,300 - (11,300) -

Other financial assets (a)(ii) 1,000 (1,000) - - - -

Derivative financial instruments(b),(c) 2,162 - 2,162 (308) (1,088) 766

Total 88,095 (1,999) 86,096 (308) (49,476) 36,312


Trade payables (a)(i) 12,589 (999) 11,590 - 11,590

Borrowings (a)(ii),(c) 101,444 (1,000) 100,444 - (52,726) 47,716

Derivative financial instruments (b) 1,376 - 1,376 (308) - 1,068

Total 115,409 (1,999) 113,410 (308) (52,726) 60,376

Effects of offsetting on the balance sheet Related amounts not offset

2014

Grossamounts

Grossamounts

set off in thebalance

sheet

Net amountspresented inthe balance

sheet

Amountssubject to

masternetting

arrange-ments 9

Financialinstrument

collateralNet

amount

Financial assets $’000 $’000 $’000 $’000 $’000 $’000

Cash and cash equivalents (c) 24,693 - 24,693 - (11,154) 13,539

Trade and other receivables(a)(i),(c) 11,317 (450) 10,867 - (9,542) 1,325

Financial assets at FVPL (c) 10,915 - 10,915 - (10,915) -

Other financial assets (a)(ii) 1,000 (1,000) - - - -

Derivative financial instruments(b),(c) 2,129 - 2,129 (621) (640) 868

Total 50,054 (1,450) 48,604 (621) (32,251) 15,732


Trade payables (a)(i) 9,670 (450) 9,220 - 9,220

Borrowings (a)(ii),(c) 71,080 (1,000) 70,080 - (32,251) 37,829

Derivative financial instruments (b) 1,398 - 1,398 (621) - 777

Total 82,148 (1,450) 80,698 (621) (32,251) 47,826

(a) Offsetting arrangements

(i) Trade receivables and payablesAASB7(13B) VALUE ACCOUNTS Manufacturing Limited gives volume-based rebates to selected wholesalers.

Under the terms of the supply agreements, the amounts payable by VALUE ACCOUNTSManufacturing Limited are offset against receivables from the wholesalers and only the net amountsare settled. The relevant amounts have therefore been presented net in the balance sheet.

Offsetting financial assets and financial liabilities


(a) Offsetting arrangements

(ii) BorrowingsAASB7(13B) VALUE ACCOUNTS Reduced Disclosure Pty Ltd is required to maintain cash on deposit of $1,000,000

in respect of certain borrowings. The cash cannot be withdrawn or used by the company for liquiditypurposes whilst the borrowing is outstanding. Upon maturity of the borrowing, the company and thelender intend to net settle. As a result, VALUE ACCOUNTS Reduced Disclosure Pty Ltd’s borrowingshave been presented net of the cash on deposit, as the requirements under Australian AccountingStandards to offset have been met.

(b) Master netting arrangements – not currently enforceable 9

AASB7(13E),(B50) Agreements with derivative counterparties are based on an ISDA Master Agreement. Under the termsof these arrangements, only where certain credit events occur (such as default), the net position owing/receivable to a single counterparty in the same currency will be taken as owing and all the relevantarrangements terminated. As Value Account Holdings does not presently have a legally enforceableright of set-off, these amounts have not been offset in the balance sheet, but have been presentedseparately in the table above.

(c) Collateral against borrowings 10

AASB7(13C) VALUE ACCOUNTS Reduced Disclosure Pty Ltd has pledged financial instruments as collateralagainst a number of its borrowings. Refer to note 25 for further information on financial and non-financial collateral pledged as security against borrowings.


AASB7(13B) Amendments to AASB 7 Financial Instruments: Disclosures by AASB 2012-2 Amendments to1.Australian Accounting Standards – Disclosures – Offsetting financial assets and financialliabilities require additional disclosures to enable users of financial statements to evaluate theeffect or the potential effects of netting arrangements, including rights of set-off associated withan entity’s recognised financial assets and recognised financial liabilities, on the entity’sfinancial position.

AASB7(13A),(B40) The new disclosures are required for all recognised financial instruments that are set off in2.accordance with paragraph 42 of AASB 132. They also apply to recognised financialinstruments that are subject to an enforceable master netting arrangement or similaragreements, irrespective of whether they are set off in accordance with paragraph 42 ofAASB 132.

AASB132(50) The amendments do not provide a definition of ‘‘master netting arrangement’’. However, as per3.paragraph 50 of AASB 132, a master netting arrangement will commonly:

provide for a single net settlement of all financial instruments covered by the agreement in(a)the event of default on, or termination of, any one contract

be used by financial institutions to provide protection against loss in the event of(b)bankruptcy or other circumstances that result in a counterparty being unable to meet itsobligations, and

create a right of set-off that becomes enforceable and affects the realisation or settlement(c)of individual financial assets and financial liabilities only following a specified event ofdefault or in other circumstances not expected to arise in the normal course of business.

AASB7(B41) The amendments do not impact arrangements, such as:4.

financial instruments with only non-financial collateral agreements(a)

financial instruments with financial collateral agreements but no other rights of set-off, and(b)

loans and customer deposits with the same financial institution, unless they are set off in(c)the balance sheet

Because of the broad scope of the new offsetting requirements, these disclosures are relevant5.not only to financial institutions but also corporate entities. The disclosures were introducedprimarily to allow users of the financial statements to assess the impact of the differentoffsetting requirements under IFRS and US GAAP. They will therefore be particularly relevantfor entities with US-based stakeholders, but less relevant for entities that operate exclusively incountries with IFRS or IFRS compliant standards.




AASB2012-2(5),(7)see:AASB7(13B),(13C)(a),(c),(d),(e),(13E),(B40)-(B53)

Entities will need to disclose separately for recognised financial assets and recognised6.financial liabilities:

the gross amounts of the recognised financial assets and financial liabilities, the amounts(a)that are set off and the net amounts presented in the balance sheet

the amounts subject to an enforceable master netting arrangement or similar agreement,(b)including amounts related to recognised financial instruments that do not meet some or allof the offsetting criteria and amounts related to financial collateral

the net amount after deducting the amounts disclosed under (b) from the net amounts(c)presented in the balance sheet (after set-off) in (a)

a description of the rights of set-off associated with financial assets and liabilities that are(d)subject to enforceable master netting arrangements and similar agreements, and

a description of measurement differences between the set-off amounts (eg amortised cost(e)vs fair value).

AASB7(13C), (B51), (B52) The quantitative information above may be grouped by type of financial instrument or7.transaction, or in some instances also by counterparty. It should be provided in tabular formatunless another format is more appropriate.

AASB7(13F) Where the disclosures are provided in more than one note to the financial statements, cross8.references between the notes shall be included. Entities with significant offsettingarrangements should consider including this information more prominently, for exampletogether with the information about financial risk management or as part of their financialassets/financial liabilities disclosures.

Master netting

AASB7(36)(a) An entity may have entered into one or more master netting arrangements that serve to9.mitigate its exposure to credit loss but do not meet the criteria for offsetting. When a masternetting arrangement significantly reduces the credit risk associated with financial assets notoffset against financial liabilities with the same counterparty, the entity must provide additionalinformation concerning the effect of the arrangement.

Collateral arrangements

AASB7(13C)(d),(B41) Where an entity has pledged financial instruments (including cash) as collateral, this is only10.required to be disclosed as part of the table where there are other set off arrangementscurrently in place. VALUE ACCOUNTS Reduced Disclosure Pty Ltd illustrates an examplewhere cash has been set off against borrowings held by the entity. As a result, it is required todisclose other financial instrument collateral held.

New offsetting guidance applicable from 1 January 2014

AASB2012-3 At the same time as the new offsetting disclosures were released (June 2012), the AASB also11.made amendments to AASB 132 which clarify that the right of set-off must be available today(ie not contingent on a future event) and must be legally enforceable in the normal course ofbusiness as well as in the event of default, insolvency or bankruptcy. These amendments areapplicable for financial years commencing on or after 1 January 2014 but can be adoptedearly.



The carrying amounts of assets pledged as security for current and non-current borrowings are:

Notes2015

$’0002014$’000

Current

Transferred receivables 3,250 -

Floating chargeAASB7(14)(a) Cash and cash equivalents 7(a) 24,678 11,154AASB7(14)(a) Receivables 7(b) 12,410 9,542AASB7(14)(a) Financial assets at fair value through profit or

loss 7(c) 11,300 10,915AASB7(14)(a) Derivative financial instruments 12(a)

1,088 640

Total current assets pledged as security 52,726 32,251

Non-current

First mortgageAASB116(74)(a) Freehold land and buildings 8(c) 24,950 23,640AASB140(75)(g) Investment properties 8(d)

13,300 10,050

38,250 33,690

Finance leaseAASB116(74)(a) Plant and equipment 8(c)

2,750 2,950

Floating chargeAASB7(14)(a) Receivables – non-current 7(b) 1,300 700AASB7(14)(a) Available-for-sale financial assets 7(d) 11,110 5,828AASB7(14)(a) Held-to-maturity investments 7(e) 1,210 -AASB7(14)(a) Derivative financial instruments 12(a) 308 712AASB116(74)(a) Plant and equipment 8(c)

6,150 4,100

20,078 11,340

Total non-current assets pledged as security 61,078 47,980

Total assets pledged as security 113,804 80,231

Assets pledged as security

The requirement to identify assets that have been pledged as security is included in various1.standards, including AASB 7, AASB 116 Property Plant and Equipment, AASB 138 IntangibleAssets and AASB 140 Investment Property.


26 Deed of cross guarantee 1-2,5-10

ASIC98/1418 VALUE ACCOUNTS Reduced Disclosure Pty Ltd, VALUE ACCOUNTS Consulting Limited and VALUEACCOUNTS Development Limited are parties to a deed of cross guarantee under which eachcompany guarantees the debts of the others. By entering into the deed, the wholly-owned entities havebeen relieved from the requirement to prepare a financial report and directors’ report under ClassOrder 98/1418 (as amended) issued by the Australian Securities and Investments Commission.

(a) Consolidated income statement, statement of comprehensive income andsummary of movements in consolidated retained earnings 3,4

ASIC98/1418 The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there areno other parties to the deed of cross guarantee that are controlled by VALUE ACCOUNTS ReducedDisclosure Pty Ltd, they also represent the ‘extended closed group’.

ASIC98/1418 Set out below is a consolidated income statement, a consolidated statement of comprehensive incomeand a summary of movements in consolidated retained earnings for the year ended 30 June 2015 ofthe closed group consisting of VALUE ACCOUNTS Reduced Disclosure Pty Ltd, VALUE ACCOUNTSConsulting Limited and VALUE ACCOUNTS Development Limited.

2015$’000

2014$’000

Consolidated income statement4

Revenue from continuing operations 121,706 98,471

Other income 4,385 1,190

Cost of sales of goods (22,132) (28,337)

Cost of providing services (30,494) (20,823)

Other expenses from ordinary activities (32,029) (19,722)

Finance costs (4,200) (3,548)

Share of net profits of associates and joint ventures accounted forusing the equity method 450 370


Income tax expense (9,778) (6,808)


2015$’000

2014$’000

Consolidated statement of comprehensive income4


Other comprehensive income

Items that may be reclassified to profit or loss

Available for sale financial assets 234 (830)

Income tax relating to these items (70) 249

Items that will not be reclassified to profit or loss

Gain on revaluation of land and buildings 3,532 3,662

Actuarial (losses)/gains on retirement benefit obligation 30 (576)

Share of revaluation of land and buildings of associates andjoint ventures 300 100

Income tax relating to these items (1,159) (956)

Other comprehensive income for the period, net of tax 2,867 1,649

Total comprehensive income for the period 30,775 22,443

Deed of cross guarantee


(a) Consolidated income statement, statement of comprehensive income andsummary of movements in consolidated retained earnings

2015$’000

2014$’000

Summary of movements in consolidated retained earnings

Retained earnings at the beginning of the financial year 16,663 7,068


Transfer from share capital on buy-back of preference shares 143 -

Actuarial (losses)/gains on retirement benefit obligation, net of tax 21 (403)

Depreciation transfer, net of tax 224 234

Dividends provided for or paid (22,837) (11,029)

Retained earnings at the end of the financial year 22,122 16,663

(b) Consolidated balance sheet

ASIC98/1418 Set out below is a consolidated balance sheet as at 30 June 2015 of the closed group consisting ofVALUE ACCOUNTS Reduced Disclosure Pty Ltd, VALUE ACCOUNTS Consulting Limited and VALUEACCOUNTS Development Limited.

2015$’000

2014$’000

Current assets

Cash and cash equivalents 46,175 18,552

Trade and other receivables 8,521 5,483

Inventories 9,968 7,502

Financial assets at fair value through profit or loss 5,085 4,912

Derivative financial instruments 490 288

Total current assets 70,239 36,737

Non-current assets

Receivables 1,114 621

Investments accounted for using the equity method 3,775 3,275

Available-for-sale financial assets 11,110 5,828

Held-to-maturity investments 1,210 -

Other financial assets 12,890 11,340

Property, plant and equipment 69,443 65,036

Investment properties 13,300 10,050


Deferred tax assets 3,198 2,104

Intangible assets 11,048 9,425

Total-non-current assets 127,227 107,999

Total assets 197,466 144,736

Current liabilities

Trade and other payables 9,910 7,985

Borrowings 4,041 3,850


Current tax liabilities 782 503

Provisions 1,423 770

Total current liabilities 16,431 13,386



(b) Consolidated balance sheet

2015$’000

2014$’000

Non-current liabilities

Borrowings 65,728 40,525

Deferred tax liabilities 5,731 2,987

Provisions 1,549 1,022

Retirement benefit obligations 3,225 1,532

Total non-current liabilities 76,233 46,066

Total liabilities 92,664 59,452

Net assets 104,802 85,284

Equity

Contributed equity 75,063 63,426

Reserves 7,617 5,195

Retained earnings 22,122 16,663

Total equity 104,802 85,284



ASIC98/1418 ASIC Class Order 98/1418 relieves a company of a specified class that is wholly-owned by an1.Australian company, a disclosing entity which is an Australian body corporate, or a registeredforeign holding company, of the necessity to prepare a financial report and directors’ reportwhere the requirements of the Class Order have been met. One of these requirements is thatthe holding entity and the subsidiaries have become parties to a deed of cross guaranteeunder which each of the entities guarantees the debts of the others.

ASIC has prepared an editorial note on the operation of the Class Order, together with various2.pro forma documents, including a pro forma deed of cross guarantee.

Consolidated financial statements

ASIC98/1418 The Class Order requires the consolidated financial statements to include adequate provision3.in relation to the liabilities of any parties to the deed of cross guarantee which are notconsolidated where it is probable that those liabilities will not be fully met by those parties.

ASIC98/1418 Where an entity has elected to present separately an income statement and a statement of4.comprehensive income, it must do the same for the purpose of the disclosures required underthe Class Order.

Comparatives

ASIC98/1418 Comparative information only needs to be provided if the holding entity was a holding entity in5.a deed of cross guarantee at any time during the immediately preceding reporting period.

Extended closed group

ASIC98/1418 The extended closed group is defined in the Class Order as “the closed group and any other6.entities which are parties to the deed of cross guarantee and which are controlled by theHolding Entity”. For the purposes of these illustrative financial statements, the holding entity isVALUE ACCOUNTS Reduced Disclosure Pty Ltd. The Class Order requires disclosure of themembers of the closed group and, where applicable, the other members of the extendedclosed group.

Additional disclosure requirements for extended closed group and other parties to the deed

ASIC98/1418 If the consolidated financial statements cover entities which are not parties to the deed of cross7.guarantee and the members of the extended closed group are not the same as the closedgroup, Class Order 98/1418 requires note disclosure of consolidated information for:

the closed group (as illustrated in note 26), and(a)

the holding entity and those entities which are parties to the deed of cross guarantee and(b)controlled by the holding entity (ie VALUE ACCOUNTS Reduced Disclosure Pty Ltd).




In the case of VALUE ACCOUNTS Reduced Disclosure Pty Ltd, the parties to the deed are allmembers of the closed group. The information to be disclosed includes a statement ofcomprehensive income and separate income statement (where applicable), setting out theinformation specified by paragraphs 82-87 of AASB 101 Presentation of Financial Statements,opening and closing balances of retained earnings, dividends provided for or paid, transfers toand from reserves and a balance sheet complying with paragraphs 54 to 59 of AASB 101.

ASIC98/1418 If there are any parties to the deed of cross guarantee which are not controlled by the holding8.entity, the note disclosures shall include an income statement and balance sheet (and retainedearnings and dividend information) in respect of those parties (either individually or inaggregate). In the case of VALUE ACCOUNTS Reduced Disclosure Pty Ltd, all the parties tothe deed of cross guarantee are controlled by the holding entity (ie VALUE ACCOUNTSReduced Disclosure Pty Ltd).

Disclosure of changes in parties to the deed of cross guarantee or eligible for the relief

ASIC98/1418 Additional disclosures specified in Class Order 98/1418 and not illustrated in note 26 because9.they are not relevant to the parties to the VALUE ACCOUNTS Reduced Disclosure Pty Ltddeed of cross guarantee which shall also be made, where relevant are:

details (including dates) of parties which, during or since the financial year, have been:(a)

(i) added by an assumption deed contemplated by the deed of cross guarantee

(ii) removed by a revocation deed contemplated by the deed of cross guarantee, or

(iii) the subject of a notice of disposal contemplated by the deed of cross guarantee, and

details (including dates and reasons) of any entities which obtained relief at the end of the(b)preceding financial year, but which were ineligible for relief in respect of the current year.

Recognition of financial liability

AASB139(9),(43) Parent entities and subsidiaries that are party to a deed of cross guarantee should be aware10.that these guarantees are financial liabilities under AASB 139 and will have to be recognised attheir fair value, if material.

27 Parent entity financial information 1-3,8,9

(a) Summary financial information

CR2M.3.01 The individual financial statements for the parent entity show the following aggregate amounts:

2015$’000

2014$’000

Balance sheetCR2M.3.01(1)(a),(k) Current assets 11,726 5,651CR2M.3.01(1)(b),(k) Total assets 32,359 21,547CR2M.3.01(1)(c),(k) Current liabilities 3,389 2,842CR2M.3.01(1)(d),(k) Total liabilities 9,124 6,006

CR2M.3.01(1)(e),(k) Shareholders’ equity

Issued capital 19,212 13,870

Reserves

Revaluation surplus – property, plant and equipment 503 256

Available-for-sale financial assets 203 151

Cash flow hedges (119) (124)

Share-based payments7

158 62

Retained earnings 3,278 1,326

23,235 15,541

CR2M.3.01(1)(f),(k) Profit or loss for the period 3,099 1,663

CR2M.3.01(1)(g)(k) Total comprehensive income 3,417 1,828

Parent entity financial information


CR2M.3.01(1)(h),(k)(b) Guarantees entered into by the parent entity 4-6

2015$’000

2014$’000

Carrying amount included in current liabilities 23 28

23 28

The parent entity has provided financial guarantees in respect of bank overdrafts and loans ofsubsidiaries amounting to $365,000 (2014 – $360,000), secured by registered mortgages over thefreehold properties of the subsidiaries.

The parent entity has also given unsecured guarantees in respect of:

(i) finance leases of subsidiaries amounting to $2,500,000 (2014 – $2,600,000)

(ii) the bank overdraft of a subsidiary amounting to $790,000 (2014 – $845,000)

(iii) a bank loan of the subsidiary participating in the Fernwood Joint Venture (see note 16(d))amounting to $2,750,000 (2014 – $5,800,000).

A liability has been recognised in relation to these financial guarantees in accordance with the policyset out in notes 28(q) and 28(ae).

In addition, there are cross guarantees given by VALUE ACCOUNTS Reduced Disclosure Pty Ltd,VALUE ACCOUNTS Consulting Limited and VALUE ACCOUNTS Development Limited as describedin note 26. No deficiencies of assets exist in any of these companies.

The parent entity has also provided a guarantee in respect of obligations assumed by a StateGovernment Statutory Authority, as described in note 7(g).

No liability was recognised by the parent entity or the group in relation to these last two guarantees, asthe fair value of the guarantees is immaterial.

CR2M.3.01(1)(i),(k)(c) Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2015 or 30 June 2014. Forinformation about guarantees given by the parent entity, please see above.

CR2M.3.01(1)(j),(k)(d) Contractual commitments for the acquisition of property, plant or equipment

As at 30 June 2015, the parent entity had contractual commitments for the acquisition of property, plantor equipment totalling $850,000 (30 June 2014 – $770,000). These commitments are not recognisedas liabilities as the relevant assets have not yet been received.


CR2M.3.01(1) Financial reports of entities that are the parent entity in a group no longer need to include a1.complete set of financial statements for the parent entity. Instead, the notes to the consolidatedfinancial statements must include the following disclosures:

current assets of the parent entity(a)

total assets of the parent entity(b)

current liabilities of the parent entity(c)

total liabilities of the parent entity(d)

shareholders’ equity in the parent entity separately showing issued capital and each(e)reserve

profit or loss of the parent entity(f)

total comprehensive income(g)

details of any guarantees entered into by the parent entity in relation to the debts of its(h)subsidiaries

details of any contingent liabilities of the parent entity(i)

details of any contractual commitments by the parent entity for the acquisition of property,(j)plant and equipment

comparative information for the previous period for each of paragraphs (a) to (i).(k)




CR2M.3.01(2) The disclosures must be determined in accordance with applicable accounting standards.2.

CR2M.3.01(3) For the purposes of the Corporations Regulations, a parent entity is a company, registered3.scheme or disclosing entity that is required by the accounting standards to prepare financialstatements in relation to a consolidated entity (group).

Financial guarantees

AASB139(9) A financial guarantee contract is a contract that requires the issuer to make specified payments4.to reimburse the holder for a loss it incurs because a specified debtor fails to make paymentwhen due in accordance with the original or modified terms of a debt instrument.

AASB139(2)(e)AASB108(19)(b)

Financial guarantees must be accounted for in accordance with the provisions in AASB 1395.Financial Instruments: Recognition and Measurement, unless the issuer has previouslyasserted explicitly that it regards such contracts as insurance contracts and has accounted forthem as such.

Recognition and measurement

AASB139(43),(47)(c) Where financial guarantee contracts are recognised under AASB 139, they must be initially6.recognised at their fair value. Subsequently, the guarantees are measured at the higher of:

the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities(a)and Contingent Assets, and

the amount initially recognised less, when appropriate, cumulative amortisation recognised(b)in accordance with AASB 118 Revenue.

Share-based payment funding reserve – accounting in the parent entity

It is assumed that under the VALUE ACCOUNTS Employee Share Trust, the employees own7.the beneficial interest in the residual assets of the shares and there is no formal loanarrangement in place between the parent entity and the Trust. As a result, the provision of cashto the Trust to buy shares in the parent entity on market is recognised as an equity transactionin the share-based payment reserve of the parent entity. If the entity (rather than theemployees) has a beneficial interest in the Trust’s residual assets, the entity should recognisean investment in the Trust instead.

Additional information to give a true and fair view

CA297CA295(3)(c)

While CR2M.3.03 provides an exhaustive list of the information that must be disclosed for the8.parent entity, additional explanations may be necessary if the information required under theCorporations Regulations alone does not give a true and fair view of the parent entity’sfinancial position and performance. This could be the case where significant transactions orevents have affected the financial position and/or performance of the entity (eg a largeimpairment loss recognised during the reporting period).

Preparation of separate financial statements

Guidance on the preparation of full separate financial statements for parent entities, including9.the recognition and measurement of investments in subsidiaries, joint ventures and associates,is included in AASB 127 Separate Financial Statements.


AASB101(117) 28 Summary of significant accounting policies 8-10,67-72

AASB101(112)(a),(b)(51)(b)

This note provides a list of all significant accounting policies adopted in the preparation of theseconsolidated financial statements. These policies have been consistently applied to all the yearspresented, unless otherwise stated. The financial statements are for the group consisting of VALUEACCOUNTS Reduced Disclosure Pty Ltd and its subsidiaries.

AASB101(112)(a),(117)(a) Basis of preparation 1-2,22-23,67-69

AASB1054(7)-(9) These general purpose financial statements have been prepared in accordance with AustralianAccounting Standards and Interpretations issued by the Australian Accounting Standards Board andthe Corporations Act 2001. VALUE ACCOUNTS Reduced Disclosure Pty Ltd is a for-profit entity for thepurpose of preparing the financial statements.

1

(i) Compliance with Australian Accounting Standards – Reduced Disclosure Requirements-7

AASB1054(RDR7.1) The consolidated financial statements of the VALUE ACCOUNTS Reduced Disclosure Pty Ltd groupcomply with Australian Accounting Standards – Reduced Disclosure Requirements as issued by theAustralian Accounting Standards Board (AASB).

(ii) Historical cost conventionAASB101(117)(a) The financial statements have been prepared on a historical cost basis, except for the following:

available-for-sale financial assets, financial assets and liabilities (including derivative instruments)certain classes of property, plant and equipment and investment property – measured at fair value

assets held for sale – measured at fair value less cost of disposal, and

retirement benefit obligations – plan assets measured at fair value.

(Revised requirement)(iii) New and amended standards adopted by the group 11-14

AASB108(28) The group has applied the following standards and amendments for the first time for their annualreporting period commencing 1 July 2014:

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-FinancialAssets

AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives andContinuation of Hedge Accounting

Interpretation 21 Accounting for Levies

AASB 2014-1 Amendments to Australian Accounting Standards

The adoption of AASB 2013-3 had a small impact on the impairment disclosures. Other than that, theadoption of these standards did not have any impact on the current period or any prior period and is notlikely to affect future periods.

The group also elected to adopt the following standard early:13,14

Amendments made to Australian Accounting Standards by AASB 2015-xx (Improvements 2012-2014 cycle), and

Amendments made to AASB 101 by AASB 2015-xx (Disclosure initiative).15

As these amendments merely clarify the existing requirements, they do not affect the group’saccounting policies or any of the disclosures.

Summary of significant accounting policies



(Revised requirement)(iv) New standards and interpretations not yet adopted 16-21

AASB108(30) Certain new accounting standards and interpretations have been published that are not mandatory for30 June 2015 reporting periods and have not been early adopted by the group. The group’sassessment of the impact of these new standards and interpretations is set out below.

Title ofstandard Nature of change Impact

Mandatoryapplication date/Date of adoption bygroup

AASB 9FinancialInstruments

AASB 9 addresses theclassification,measurement andderecognition offinancial assets andfinancial liabilities andintroduces new rulesfor hedge accounting.

In December 2014, theAASB made furtherchanges to theclassification andmeasurement rulesand also introduced anew impairmentmodel. These latestamendments nowcomplete the newfinancial instrumentsstandard.

Following the changes approved bythe AASB in December 2014, thegroup no longer expects any impactfrom the new classification,measurement and derecognitionrules on the group’s financial assetsand financial liabilities.

While the group has yet to undertakea detailed assessment of the debtinstruments currently classified asavailable-for-sale financial assets, itwould appear that they would satisfythe conditions for classification as atfair value through othercomprehensive income (FVOCI) andhence there will be no change to theaccounting for these assets.

There will also be no impact on thegroup’s accounting for financialliabilities, as the new requirementsonly affect the accounting forfinancial liabilities that are designatedat fair value through profit or loss andthe group does not have any suchliabilities.

The new hedging rules align hedgeaccounting more closely with thegroup’s risk management practices.As a general rule it will be easier toapply hedge accounting goingforward as the standard introduces amore principles-based approach. Thenew standard also introducesexpanded disclosure requirementsand changes in presentation.

The new impairment model is anexpected credit loss (ECL) modelwhich may result in the earlierrecognition of credit losses.

The group has not yet assessed howits own hedging arrangements andimpairment provisions would beaffected by the new rules.

Must be applied forfinancial yearscommencing on orafter 1 January 2018.

Based on thetransitional provisionsin the completed IFRS9, early adoption inphases was onlypermitted for annualreporting periodsbeginning before 1February 2015. Afterthat date, the newrules must be adoptedin their entirety.




AASB 15RevenuefromContractswithCustomers

The AASB has issueda new standard for therecognition of revenue.This will replace AASB118 which coverscontracts for goodsand services andAASB 111 whichcovers constructioncontracts.

The new standard isbased on the principlethat revenue isrecognised whencontrol of a good orservice transfers to acustomer – so thenotion of controlreplaces the existingnotion of risks andrewards.

The standard permits amodified retrospectiveapproach for theadoption. Under thisapproach entities willrecognise transitionaladjustments inretained earnings onthe date of initialapplication (eg 1 July2017), ie withoutrestating thecomparative period.They will only need toapply the new rules tocontracts that are notcompleted as of thedate of initialapplication.

Management is currently assessingthe impact of the new rules and hasidentified the following areas that arelikely to be affected:

extended warranties, which willneed to be accounted for asseparate performanceobligations, which will delay therecognition of a portion of therevenue

consignment sales whererecognition of revenue willdepend on the passing of controlrather than the passing of risksand rewards

IT consulting services where thenew guidance may result in theidentification of separateperformance obligations whichcould again affect the timing ofthe recognition of revenue, and

the balance sheet presentationof rights of return, which willhave to be grossed up in future(separate recognition of the rightto recover the goods from thecustomer and the refundobligation)

At this stage, the group is not able toestimate the impact of the new ruleson the group’s financial statements.The group will make more detailedassessments of the impact over thenext twelve months.

Mandatory forfinancial yearscommencing on orafter 1 January 2017.

Expected date ofadoption by the group:1 July 2017.

There are no other standards that are not yet effective and that would be expected to have a materialimpact on the entity in the current or future reporting periods and on foreseeable future transactions.



AASB101(119)(b) Principles of consolidation 24

(i) SubsidiariesAASB10(5)-(7),(20),(25) Subsidiaries are all entities (including structured 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 involvementwith the entity and has the ability to affect those returns through its power to direct the activities of theentity. Subsidiaries are fully consolidated from the date on which control is transferred to the group.They are deconsolidated from the date that control ceases.

AASB3(4) The acquisition method of accounting is used to account for business combinations by the group (referto note 28(i)).

AASB10(19),(B86)(c) Intercompany transactions, balances and unrealised gains on transactions between group companiesare eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of animpairment of the transferred asset. Accounting policies of subsidiaries have been changed wherenecessary to ensure consistency with the policies adopted by the group.

AASB10(22) Non-controlling interests in the results and equity of subsidiaries are shown separately in theconsolidated income statement, statement of comprehensive income, statement of changes in equityand balance sheet respectively.

AASB101(119)(ii) Associates

AASB128(5),(16) Associates are all entities over which the group has significant influence but not control or joint control.This is generally the case where the group holds between 20% and 50% of the voting rights.Investments in associates are accounted for using the equity method of accounting (see (iv) below),after initially being recognised at cost.

(iii) Joint arrangementsAASB11(14) 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 ofeach investor, rather than the legal structure of the joint arrangement. VALUE ACCOUNTS ReducedDisclosure Pty Ltd has both joint operations and joint ventures.

Joint operations

AASB11(20) VALUE ACCOUNTS Reduced Disclosure Pty Ltd recognises its direct right to the assets, liabilities,revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities,revenues and expenses. These have been incorporated in the financial statements under theappropriate headings. Details of the joint operation are set out in note 16(d).

Joint ventures

AASB11(24)AASB128(10)

Interests in joint ventures are accounted for using the equity method (see (iv) below), after initially beingrecognised at cost in the consolidated balance sheet.

(iv) Equity methodAASB128(10) Under the equity method of accounting, the investments are initially recognised at cost and adjusted

thereafter to recognise the group’s share of the post-acquisition profits or losses of the investee in profitor loss, and the group’s share of movements in other comprehensive income of the investee in othercomprehensive income. Dividends received or receivable from associates and joint ventures arerecognised as a reduction in the carrying amount of the investment.

AASB128(38),(39) When the group’s share of losses in an equity-accounted investment equals or exceeds its interest inthe entity, including any other unsecured long-term receivables, the group does not recognise furtherlosses, unless it has incurred obligations or made payments on behalf of the other entity.

AASB128(28),(30) Unrealised gains on transactions between the group and its associates and joint ventures areeliminated to the extent of the group’s interest in these entities. Unrealised losses are also eliminatedunless the transaction provides evidence of an impairment of the asset transferred. Accounting policiesof equity accounted investees have been changed where necessary to ensure consistency with thepolicies adopted by the group.

AASB128(42) The carrying amount of equity-accounted investments is tested for impairment in accordance with thepolicy described in note 28(j).



AASB101(119)(b) Principles of consolidation 24

(v) Changes in ownership interestsAASB10(23)(B96) The group treats transactions with non-controlling interests that do not result in a loss of control as

transactions with equity owners of the group. A change in ownership interest results in an adjustmentbetween the carrying amounts of the controlling and non-controlling interests to reflect their relativeinterests in the subsidiary. Any difference between the amount of the adjustment to non-controllinginterests and any consideration paid or received is recognised in a separate reserve within equityattributable to owners of VALUE ACCOUNTS Reduced Disclosure Pty Ltd.

AASB10(25),(B97)-(B99)AASB128(22)

When the group ceases to consolidate or equity account for an investment because of a loss of control,joint control or significant influence, any retained interest in the entity is remeasured to its fair value withthe change in carrying amount recognised in profit or loss. This fair value becomes the initial carryingamount for the purposes of subsequently accounting for the retained interest as an associate, jointventure or financial asset. In addition, any amounts previously recognised in other comprehensiveincome in respect of that entity are accounted for as if the group had directly disposed of the relatedassets or liabilities. This may mean that amounts previously recognised in other comprehensive incomeare reclassified to profit or loss.

AASB128(25) If the ownership interest in a joint venture or an associate is reduced but joint control or significantinfluence is retained, only a proportionate share of the amounts previously recognised in othercomprehensive income are reclassified to profit or loss where appropriate.

AASB101(119)(c) Segment reporting

AASB8(5),(7) Removed as not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Ltd.

AASB101(119),(120)(d) Foreign currency translation

AASB101(119)(i) Functional and presentation currency 26

AASB121(9),(17),(18)AASB101(51)(d)

Items included in the financial statements of each of the group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (‘the functional currency’).The consolidated financial statements are presented in Australian dollars, which is VALUE ACCOUNTSReduced Disclosure Pty Ltd’s functional and presentation currency.

AASB101(119)(ii) Transactions and balances

AASB121(21),(28),(32)AASB139(95)(a),(102)(a)

Foreign currency transactions are translated into the functional currency using the exchange rates atthe dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation of monetary assets and liabilities denominated in foreigncurrencies at year end exchange rates are generally recognised in profit or loss. They are deferred inequity if they relate to qualifying cash flow hedges and qualifying net investment hedges or areattributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the income statement,within finance costs. All other foreign exchange gains and losses are presented in the incomestatement on a net basis within other income or other expenses.

AASB121(23)(c)AASB121(30)

Non-monetary items that are measured at fair value in a foreign currency are translated using theexchange rates at the date when the fair value was determined. Translation differences on assets andliabilities carried at fair value are reported as part of the fair value gain or loss. For example, translationdifferences on non-monetary assets and liabilities such as equities held at fair value through profit orloss are recognised in profit or loss as part of the fair value gain or loss and translation differences onnon-monetary assets such as equities classified as available-for-sale financial assets are recognised inother comprehensive income.

AASB101(119)(iii) Group companies

AASB121(39) The results and financial position of foreign operations (none of which has the currency of ahyperinflationary economy) that have a functional currency different from the presentation currency aretranslated into the presentation currency as follows:

AASB121(39) assets and liabilities for each balance sheet presented are translated at the closing rate at the dateof that balance sheet

income and expenses for each income statement and statement of comprehensive income aretranslated at average exchange rates (unless this is not a reasonable approximation of thecumulative effect of the rates prevailing on the transaction dates, in which case income andexpenses are translated at the dates of the transactions), and

all resulting exchange differences are recognised in other comprehensive income.



AASB101(119),(120)(d) Foreign currency translation

AASB139(102) On consolidation, exchange differences arising from the translation of any net investment in foreignentities, and of borrowings and other financial instruments designated as hedges of such investments,are recognised in other comprehensive income. When a foreign operation is sold or any borrowingsforming part of the net investment are repaid, the associated exchange differences are reclassified toprofit or loss, as part of the gain or loss on sale.

AASB121(47) Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated asassets and liabilities of the foreign operation and translated at the closing rate.

AASB101(119)(e) Revenue recognition 27

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosedas revenue are net of returns, trade allowances, rebates and amounts collected on behalf ofthird parties.

The group recognises revenue when the amount of revenue can be reliably measured, it is probablethat future economic benefits will flow to the entity and specific criteria have been met for each of thegroup’s activities as described below. The group bases its estimates on historical results, taking intoconsideration the type of customer, the type of transaction and the specifics of each arrangement.

The specific accounting policies for the group’s main types of revenue are explained in note 3.Revenue for other business activities is recognised on the following basis:

AASB101(119)(i) Interest income

AASB118(35)a) Interest income is recognised using the effective interest method. When a receivable is impaired, thegroup reduces the carrying amount to its recoverable amount, being the estimated future cash flowdiscounted at the original effective interest rate of the instrument, and continues unwinding the discountas interest income. Interest income on impaired loans is recognised using the original effective interestrate.

AASB101(119)(ii) Dividends

AASB118(35)(a)AASB127(12)

Dividends are recognised as revenue when the right to receive payment is established. This applieseven if they are paid out of pre-acquisition profits. However, the investment may need to be tested forimpairment as a consequence, refer note 28(o).

AASB101(119)(f) Government grants

AASB120(7),(39)(a) Grants from the government are recognised at their fair value where there is a reasonable assurancethat the grant will be received and the group will comply with all attached conditions. Note 5 providesfurther information on how the group accounts for government grants.

AASB101(119),(120)(g) Income tax

AASB112(46) The income tax expense or revenue for the period is the tax payable on the current period’s taxableincome based on the applicable income tax rate for each jurisdiction adjusted by changes in deferredtax assets and liabilities attributable to temporary differences and to unused tax losses.

AASB112(12),(46) The current income tax charge is calculated on the basis of the tax laws enacted or substantivelyenacted at the end of the reporting period in the countries where the company’s subsidiaries andassociates operate and generate taxable income. Management periodically evaluates positions takenin tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Itestablishes provisions where appropriate on the basis of amounts expected to be paid to the taxauthorities.

AASB112(15),(24),(47)

Deferred income tax is provided in full, using the liability method, on temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in the consolidated financialstatements. However, deferred tax liabilities are not recognised if they arise from the initial recognitionof goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an assetor liability in a transaction other than a business combination that at the time of the transaction affectsneither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (andlaws) that have been enacted or substantially enacted by the end of the reporting period and areexpected to apply when the related deferred income tax asset is realised or the deferred income taxliability is settled.

AASB112(51B) The deferred tax liabilities in relation to investment property that is measured at fair value is determinedassuming the property will be recovered entirely through sale.

AASB112(24),(34) Deferred tax assets are recognised only if it is probable that future taxable amounts will be available toutilise those temporary differences and losses.



AASB101(119),(120)(g) Income tax

AASB112(39),(44) Deferred tax liabilities and assets are not recognised for temporary differences between the carryingamount and tax bases of investments in foreign operations where the company is able to control thetiming of the reversal of the temporary differences and it is probable that the differences will not reversein the foreseeable future.

AASB112(71),(74) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset currenttax assets and liabilities and when the deferred tax balances relate to the same taxation authority.Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offsetand intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

UIG1052(16)(a) VALUE ACCOUNTS Reduced Disclosure Pty Ltd and its wholly-owned Australian controlled entitieshave implemented the tax consolidation legislation. As a consequence, these entities are taxed as asingle entity and the deferred tax assets and liabilities of these entities are set off in the consolidatedfinancial statements.

28-30

AASB112(61A) Current and deferred tax is recognised in profit or loss, except to the extent that it relates to itemsrecognised in other comprehensive income or directly in equity. In this case, the tax is also recognisedin other comprehensive income or directly in equity, respectively.

(i) Investment allowances and similar tax incentives

Companies within the group may be entitled to claim special tax deductions for investments inqualifying assets or in relation to qualifying expenditure (eg the Research and Development TaxIncentive regime in Australia or other investment allowances). The group accounts for such allowancesas tax credits, which means that the allowance reduces income tax payable and current tax expense. Adeferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred taxassets.

AASB101(119)(h) Leases 31-37

AASB117(20),(25) Leases of property, plant and equipment where the group, as lessee, has substantially all the risks andrewards of ownership are classified as finance leases (note 8(c)). Finance leases are capitalised at thelease’s inception at the fair value of the leased property or, if lower, the present value of the minimumlease payments. The corresponding rental obligations, net of finance charges, are included in othershort-term and long-term payables. Each lease payment is allocated between the liability and financecost. The finance cost is charged to the profit or loss over the lease period so as to produce a constantperiodic rate of interest on the remaining balance of the liability for each period. The property, plant andequipment acquired under finance leases is depreciated over the asset’s useful life or over the shorterof the asset’s useful life and the lease term if there is no reasonable certainty that the group will obtainownership at the end of the lease term.

AASB117(33)UIG115(5)

Leases in which a significant portion of the risks and rewards of ownership are not transferred to thegroup as lessee are classified as operating leases (note 18). Payments made under operating leases(net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis overthe period of the lease.

AASB117(49),(50) Lease income from operating leases where the group is a lessor is recognised in income on a straight-line basis over the lease term (note 8(d)). The respective leased assets are included in the balancesheet based on their nature.

AASB101(119),(120)(i) Business combinations 38-40

AASB3(5),(37),(39),(53),(18),(19)

The acquisition method of accounting is used to account for all business combinations, regardless ofwhether equity instruments or other assets are acquired. The consideration transferred for theacquisition of a subsidiary comprises the

fair values of the assets transferred

liabilities incurred to the former owners of the acquired business

equity interests issued by the group

fair value of any asset or liability resulting from a contingent consideration arrangement, and

fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combinationare, with limited exceptions, measured initially at their fair values at the acquisition date. The grouprecognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basiseither at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s netidentifiable assets.

Acquisition-related costs are expensed as incurred.



AASB101(119),(120)(i) Business combinations

AASB3(32),(34) The excess of the

consideration transferred,

amount of any non-controlling interest in the acquired entity, and

acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts areless than the fair value of the net identifiable assets of the subsidiary acquired, the difference isrecognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future arediscounted to their present value as at the date of exchange. The discount rate used is the entity’sincremental borrowing rate, being the rate at which a similar borrowing could be obtained from anindependent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as afinancial liability are subsequently remeasured to fair value with changes in fair value recognised inprofit or loss.

AASB3(42) If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’spreviously held equity interest in the acquire is remeasured to fair value at the acquisition date. Anygains or losses arising from such remeasurement are recognised in profit or loss.

AASB101(119)(j) Impairment of assets

AASB136(9),(10) Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and aretested annually for impairment, or more frequently if events or changes in circumstances indicate thatthey might be impaired. Other assets are tested for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss isrecognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. Forthe purposes of assessing impairment, assets are grouped at the lowest levels for which there areseparately identifiable cash inflows which are largely independent of the cash inflows from other assetsor groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered animpairment are reviewed for possible reversal of the impairment at the end of each reporting period.

AASB101(119)(k) Cash and cash equivalents

AASB107(6),(8),(46) For the purpose of presentation in the statement of cash flows, cash and cash equivalents includescash on hand, deposits held at call with financial institutions, other short-term, highly liquid investmentswith original maturities of three months or less that are readily convertible to known amounts of cashand which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdraftsare shown within borrowings in current liabilities in the balance sheet.

AASB101(119)(l) Trade receivables 41,42

AASB7(21)AASB139(46)(a)

Trade receivables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method, less provision for impairment. See note 7(b) for further informationabout the group’s accounting for trade receivables and note 12(c) for a description of the group’simpairment policies.

AASB101(119)(m) Inventories

AASB101(119)(i) Raw materials and stores, work in progress and finished goods

AASB102(9),(10),(25),(36)(a)

Raw materials and stores, work in progress and finished goods are stated at the lower of cost and netrealisable value. Cost comprises direct materials, direct labour and an appropriate proportion ofvariable and fixed overhead expenditure, the latter being allocated on the basis of normal operatingcapacity. Cost includes the reclassification from equity of any gains or losses on qualifying cash flowhedges relating to purchases of raw material but excludes borrowing costs. Costs are assigned toindividual items of inventory on the basis of weighted average costs. Costs of purchased inventory aredetermined after deducting rebates and discounts. Net realisable value is the estimated selling price inthe ordinary course of business less the estimated costs of completion and the estimated costsnecessary to make the sale.

AASB101(119)(ii) Land held for resale/capitalisation of borrowing costs

AASB102(9),(10),(23),(36)(a)AASB123(8),(22)

Land held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specificidentification and includes the cost of acquisition, and development and borrowing costs duringdevelopment. When development is completed borrowing costs and other holding charges areexpensed as incurred.



AASB101(119)(m) Inventories

AASB123(8),(10),(20)

Borrowing costs included in the cost of land held for resale are those costs that would have beenavoided if the expenditure on the acquisition and development of the land had not been made.Borrowing costs incurred while active development is interrupted for extended periods are recognisedas expenses.

AASB101(119)(n) Non-current assets (or disposal groups) held for sale and discontinued operations

AASB5(6),(15) Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will berecovered principally through a sale transaction rather than through continuing use and a sale isconsidered highly probable. They are measured at the lower of their carrying amount and fair value lesscosts to sell, except for assets such as deferred tax assets, assets arising from employee benefits,financial assets and investment property that are carried at fair value and contractual rights underinsurance contracts, which are specifically exempt from this requirement.

AASB5(20)-(22) An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposalgroup) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair valueless costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment losspreviously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

AASB5(25) Non-current assets (including those that are part of a disposal group) are not depreciated or amortisedwhile they are classified as held for sale. Interest and other expenses attributable to the liabilities of adisposal group classified as held for sale continue to be recognised.

AASB5(38) Non-current assets classified as held for sale and the assets of a disposal group classified as held forsale are presented separately from the other assets in the balance sheet. The liabilities of a disposalgroup classified as held for sale are presented separately from other liabilities in the balance sheet.

AASB5(31),(32),(33)(a)

A discontinued operation is a component of the entity that has been disposed of or is classified as heldfor sale and that represents a separate major line of business or geographical area of operations, ispart of a single co-ordinated plan to dispose of such a line of business or area of operations, or is asubsidiary acquired exclusively with a view to resale. The results of discontinued operations arepresented separately in the income statement.

AASB101(119)AASB7(21) (o) Investments and other financial assets 41-48

(i) ClassificationAASB139(45),(60) The group classifies its financial assets in the following categories:

financial assets at fair value through profit or loss,

loans and receivables,

held-to-maturity investments, and

available-for-sale financial assets.

The classification depends on the purpose for which the investments were acquired. Managementdetermines the classification of its investments at initial recognition and, in the case of assets classifiedas held-to-maturity, re-evaluates this designation at the end of each reporting period. See note 7 fordetails about each type of financial asset.

(ii) ReclassificationAASB139(50)‑(50E) The group may choose to reclassify a non-derivative trading financial asset out of the held for trading

category if the financial asset is no longer held for the purpose of selling it in the near term. Financialassets other than loans and receivables are permitted to be reclassified out of the held for tradingcategory only in rare circumstances arising from a single event that is unusual and highly unlikely torecur in the near term. In addition, the group may choose to reclassify financial assets that would meetthe definition of loans and receivables out of the held for trading or available-for-sale categories if thegroup has the intention and ability to hold these financial assets for the foreseeable future or untilmaturity at the date of reclassification

AASB139(50F) Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new costor amortised cost as applicable, and no reversals of fair value gains or losses recorded beforereclassification date are subsequently made. Effective interest rates for financial assets reclassified toloans and receivables and held-to-maturity categories are determined at the reclassification date.Further increases in estimates of cash flows adjust effective interest rates prospectively.



AASB101(119)AASB7(21) (o) Investments and other financial assets

AASB139(38)AASB7(21),(B5)(c)

(iii) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on whichthe group commits to purchase or sell the asset. Financial assets are derecognised when the rights toreceive cash flows from the financial assets have expired or have been transferred and the group hastransferred substantially all the risks and rewards of ownership.

When securities classified as available-for-sale are sold, the accumulated fair value adjustmentsrecognised in other comprehensive income are reclassified to profit or loss as gains and losses frominvestment securities.

48

(iv) MeasurementAASB7(21)AASB139(43)

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financialasset not at fair value through profit or loss, transaction costs that are directly attributable to theacquisition of the financial asset. Transaction costs of financial assets carried at fair value through profitor loss are expensed in profit or loss.

AASB139(46)(a) Loans and receivables and held-to-maturity investments are subsequently carried at amortised costusing the effective interest method.

AASB139(46),(55)(a),(b)AASB7(21),(B5)(e)(Improvement)

Available-for-sale financial assets and financial assets at fair value through profit or loss aresubsequently carried at fair value. Gains or losses arising from changes in the fair value are recognisedas follows:

for ‘financial assets at fair value through profit or loss’ – in profit or loss within other income orother expenses

for available for sale financial assets that are monetary securities denominated in a foreigncurrency – translation differences related to changes in the amortised cost of the security arerecognised in profit or loss and other changes in the carrying amount are recognised in othercomprehensive income

for other monetary and non-monetary securities classified as available for sale – in othercomprehensive income.

48

Dividends on financial assets at fair value through profit or loss and available-for-sale equityinstruments are recognised in profit or loss as part of revenue from continuing operations when thegroup’s right to receive payments is established.

48

Interest income from financial assets at fair value through profit or loss is included in the netgains/(losses). Interest on available-for-sale securities calculated using the effective interest method isrecognised in the income statement as part of revenue from continuing operations.

48

AASB13(91) Details on how the fair value of financial instruments is determined are disclosed in note 7(h).

(v) ImpairmentAASB139(58),(59) The group assesses at the end of each reporting period whether there is objective evidence that a

financial asset or group of financial assets is impaired. A financial asset or a group of financial assets isimpaired and impairment losses are incurred only if there is objective evidence of impairment as aresult of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) andthat loss event (or events) has an impact on the estimated future cash flows of the financial asset orgroup of financial assets that can be reliably estimated. In the case of equity investments classified asavailable-for-sale, a significant or prolonged decline in the fair value of the security below its cost isconsidered an indicator that the assets are impaired.

Assets carried at amortised costAASB139(63) For loans and receivables, the amount of the loss is measured as the difference between the asset’s

carrying amount and the present value of estimated future cash flows (excluding future credit lossesthat have not been incurred) discounted at the financial asset’s original effective interest rate. Thecarrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If aloan or held-to-maturity investment has a variable interest rate, the discount rate for measuring anyimpairment loss is the current effective interest rate determined under the contract. As a practicalexpedient, the group may measure impairment on the basis of an instrument’s fair value using anobservable market price.

AASB139(65) If, in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised (such as an improvementin the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised inprofit or loss.

Impairment testing of trade receivables is described in note 12(c).



AASB101(119)AASB7(21) (o) Investments and other financial assets

AASB139(67)-(70)Assets classified as available-for-sale

If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss –measured as the difference between the acquisition cost and the current fair value, less any impairmentloss on that financial asset previously recognised in profit or loss – is removed from equity andrecognised in profit or loss.

Impairment losses on equity instruments that were recognised in profit or loss are not reversed throughprofit or loss in a subsequent period.

If the fair value of a debt instrument classified as available-for-sale increases in a subsequent periodand the increase can be objectively related to an event occurring after the impairment loss wasrecognised in profit or loss, the impairment loss is reversed through profit or loss.

AASB101(119)AASB7(21) (p) Derivatives and hedging activities 41,48,70

AASB139(88) Derivatives are initially recognised at fair value on the date a derivative contract is entered into and aresubsequently remeasured to their fair value at the end of each reporting period. The accounting forsubsequent changes in fair value depends on whether the derivative is designated as a hedginginstrument, and if so, the nature of the item being hedged. The group designates certain derivatives aseither:

hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges)

hedges of a particular risk associated with the cash flows of recognised assets and liabilities andhighly probable forecast transactions (cash flow hedges), or

hedges of a net investment in a foreign operation (net investment hedges).

AASB139(88) The group documents at the inception of the hedging transaction the relationship between hedginginstruments and hedged items, as well as its risk management objective and strategy for undertakingvarious hedge transactions. The group also documents its assessment, both at hedge inception and onan ongoing basis, of whether the derivatives that are used in hedging transactions have been and willcontinue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative financial instruments used for hedging purposes are disclosed innote 7(h). Movements in the hedging reserve in shareholders’ equity are shown in note 9(b). The fullfair value of a hedging derivative is classified as a non-current asset or liability when the remainingmaturity of the hedged item is more than 12 months; it is classified as a current asset or liability whenthe remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified asa current asset or liability.

AASB101(119)(i) Cash flow hedge

AASB139(95),(97),(98)

The effective portion of changes in the fair value of derivatives that are designated and qualify as cashflow hedges is recognised in other comprehensive income and accumulated in reserves in equity. Thegain or loss relating to the ineffective portion is recognised immediately in profit or loss within otherincome or other expense.

48

AASB139(100)

AASB139(98)(b)

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged itemaffects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or lossrelating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised inprofit or loss within ‘finance costs’. The gain or loss relating to the effective portion of forward foreignexchange contracts hedging export sales is recognised in profit or loss within ‘sales’. However, whenthe forecast transaction that is hedged results in the recognition of a non-financial asset (for example,inventory or fixed assets) the gains and losses previously deferred in equity are reclassified from equityand included in the initial measurement of the cost of the asset. The deferred amounts are ultimatelyrecognised in profit or loss as cost of goods sold in the case of inventory, or as depreciation orimpairment in the case of fixed assets.

AASB139(101) When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets thecriteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains inequity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When aforecast transaction is no longer expected to occur, the cumulative gain or loss that was reported inequity is immediately reclassified to profit or loss.



AASB101(119)AASB7(21) (p) Derivatives and hedging activities

AASB101(119)(ii) Net investment hedges

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.

AASB139(102) Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised inother comprehensive income and accumulated in reserves in equity. The gain or loss relating to theineffective portion is recognised immediately in profit or loss within other income or other expenses.

48

Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation ispartially disposed of or sold.

AASB101(119)(iii) Derivatives that do not qualify for hedge accounting

AASB139(55)(a) Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of anyderivative instrument that does not qualify for hedge accounting are recognised immediately in profit orloss and are included in other income or other expenses.

48

AASB101(119)AASB7(21) (q) Financial guarantee contracts

AASB139(47)(c) Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued.The liability is initially measured at fair value and subsequently at the higher of the amount determinedin accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amountinitially recognised less cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cashflows between the contractual payments under the debt instrument and the payments that would berequired without the guarantee, or the estimated amount that would be payable to a third party forassuming the obligations.

Where guarantees in relation to loans or other payables of associates are provided for nocompensation, the fair values are accounted for as contributions and recognised as part of the cost ofthe investment.

AASB101(119)(r) Property, plant and equipment 49-50

AASB116(73)(a)AASB116(35)(b)AASB116(17)AASB139(98)(b)

The group’s accounting policy for land and buildings is explained in note 8(c). All other property, plantand equipment is stated at historical cost less depreciation. Historical cost includes expenditure that isdirectly attributable to the acquisition of the items. Cost may also include transfers from equity of anygains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant andequipment.

AASB116(12) Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the item will flow tothe group and the cost of the item can be measured reliably. The carrying amount of any componentaccounted for as a separate asset is derecognised when replaced. All other repairs and maintenanceare charged to profit or loss during the reporting period in which they are incurred.

AASB116(39) Increases in the carrying amounts arising on revaluation of land and buildings are recognised, net oftax, in other comprehensive income and accumulated in reserves in shareholders’ equity. To the extentthat the increase reverses a decrease previously recognised in profit or loss, the increase is firstrecognised in profit or loss. Decreases that reverse previous increases of the same asset are firstrecognised in other comprehensive income to the extent of the remaining surplus attributable to theasset; all other decreases are charged to profit or loss. Each year, the difference between depreciationbased on the revalued carrying amount of the asset charged to profit or loss and depreciation based onthe asset’s original cost, net of tax, is reclassified from the property, plant and equipment revaluationsurplus to retained earnings.

AASB116(50),(73)(b) The depreciation methods and periods used by the group are disclosed in note 8(c).

AASB116(51) The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end ofeach reporting period.

AASB136(59) An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carryingamount is greater than its estimated recoverable amount (note 28(j)).

AASB116(68),(71)AASB116(41)

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These areincluded in profit or loss. When revalued assets are sold, it is group policy to transfer any amountsincluded in other reserves in respect of those assets to retained earnings.



AASB101(119)(s) Investment properties

AASB140(75)(a) The group’s accounting policy for investment properties is disclosed in note 8(d).

AASB101(119)(t) Intangible assets 51

AASB101(119)(i) Goodwill

AASB3(32)AASB136(10)

Goodwill is measured as described in note 28(i). Goodwill on acquisitions of subsidiaries is included inintangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently ifevents or changes in circumstances indicate that it might be impaired, and is carried at cost lessaccumulated impairment losses. Gains and losses on the disposal of an entity include the carryingamount of goodwill relating to the entity sold.

AASB136(80) Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation ismade to those cash-generating units or groups of cash-generating units that are expected to benefitfrom the business combination in which the goodwill arose. The units or groups of units are identified atthe lowest level at which goodwill is monitored for internal management purposes, being the operatingsegments (note 2).

AASB101(119)(ii) Trademarks, licences and customer contracts

AASB138(74),(97),(118)(a),(b)(Improvement)

Separately acquired trademarks and licences are shown at historical cost. Trademarks, licenses andcustomer contracts acquired in a business combination are recognised at fair value at the acquisitiondate. They have a finite useful life and are subsequently carried at cost less accumulated amortisationand impairment losses.

AASB101(119)

AASB138(57),(66),(74),(97),(118)(a),(b)

(Improvement)

(iii) Software

Costs associated with maintaining software programmes are recognised as an expense as incurred.Development costs that are directly attributable to the design and testing of identifiable and uniquesoftware products controlled by the group are recognised as intangible assets when the followingcriteria are met:

it is technically feasible to complete the software so that it will be available for use

management intends to complete the software and use or sell it

there is an ability to use or sell the software

it can be demonstrated how the software will generate probable future economic benefits

adequate technical, financial and other resources to complete the development and to use or sellthe software are available, and

the expenditure attributable to the software during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software include employee costs and anappropriate portion of relevant overheads.

Capitalised development costs are recorded as intangible assets and amortised from the point at whichthe asset is ready for use.

AASB101(119)(iv) Research and development

AASB138(8),(54),(57),(66),(71),(74),(97),(118)(a),(b)

Research expenditure and development expenditure that do not meet the criteria in (iii) above arerecognised as an expense as incurred. Development costs previously recognised as an expense arenot recognised as an asset in a subsequent period.

AASB101(119)(v) Amortisation methods and periods

Refer to note 8(f) for details about amortisation methods and periods used by the group for intangibleassets.

AASB101(119)(u) Trade and other payables


These amounts represent liabilities for goods and services provided to the group prior to the end offinancial year which are unpaid. The amounts are unsecured and are usually paid within 30 days ofrecognition. Trade and other payables are presented as current liabilities unless payment is not duewithin 12 months after the reporting period. They are recognised initially at their fair value andsubsequently measured at amortised cost using the effective interest method.

AASB101(119)(v) Borrowings

AASB7(21)AASB139(43),(47)

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings aresubsequently measured at amortised cost. Any difference between the proceeds (net of transactioncosts) and the redemption amount is recognised in profit or loss over the period of the borrowings usingthe effective interest method. Fees paid on the establishment of loan facilities are recognised astransaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn



down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidencethat it is probable that some or all of the facility will be drawn down, the fee is capitalised as aprepayment for liquidity services and amortised over the period of the facility to which it relates.

AASB132(18) Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities.The dividends on these preference shares are recognised in profit or loss as finance costs.

AASB101(119)(v) Borrowings

AASB132(18),(28),(AG31)(a)

The fair value of the liability portion of a convertible bond is determined using a market interest rate foran equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basisuntil extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated tothe conversion option. This is recognised and included in shareholders’ equity, net of income taxeffects.

AASB139(39),(41) Borrowings are removed from the balance sheet when the obligation specified in the contract isdischarged, cancelled or expired. The difference between the carrying amount of a financial liability thathas 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 financecosts.

AASB-I19(9) Where the terms of a financial liability are renegotiated and the entity issues equity instruments to acreditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised inprofit or loss, which is measured as the difference between the carrying amount of the financial liabilityand the fair value of the equity instruments issued.

AASB101(69) Borrowings are classified as current liabilities unless the group has an unconditional right to defersettlement of the liability for at least 12 months after the reporting period.

AASB101(119)AASB123(8) (w) Borrowing costs

(Improvement) General and specific borrowing costs that are directly attributable to the acquisition, construction orproduction of a qualifying asset are capitalised during the period of time that is required to completeand prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take asubstantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

AASB101(119)(x) Provisions 52-54

AASB137(14),(24),(63)

Provisions for legal claims, service warranties and make good obligations are recognised when thegroup has a present legal or constructive obligation as a result of past events, it is probable that anoutflow of resources will be required to settle the obligation and the amount can be reliably estimated.Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole. A provision is recognisedeven if the likelihood of an outflow with respect to any one item included in the same class ofobligations may be small.

AASB137(36),(45),(47),(60)

Provisions are measured at the present value of management’s best estimate of the expenditurerequired to settle the present obligation at the end of the reporting period. The discount rate used todetermine the present value is a pre-tax rate that reflects current market assessments of the time valueof money and the risks specific to the liability. The increase in the provision due to the passage of timeis recognised as interest expense.

AASB101(119)(y) Employee benefits

(i) Short-term obligationsAASB119(11),(13) Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave that are

expected to be settled wholly within 12 months after the end of the period in which the employeesrender the related service are recognised in respect of employees’ services up to the end of thereporting period and are measured at the amounts expected to be paid when the liabilities are settled.The liabilities are presented as current employee benefit obligations in the balance sheet.




AASB119(8),(155),(156)(ii) Other long-term employee benefit obligations 58-60

The liabilities for long service leave and annual leave are not expected to be settled wholly within 12months after the end of the period in which the employees render the related service. They aretherefore measured as the present value of expected future payments to be made in respect ofservices provided by employees up to the end of the reporting period using the projected unit creditmethod. Consideration is given to expected future wage and salary levels, experience of employeedepartures and periods of service. Expected future payments are discounted using market yields at theend of the reporting period of government bonds with terms and currencies that match, as closely aspossible, the estimated future cash outflows. Remeasurements as a result of experience adjustmentsand changes in actuarial assumptions are recognised in profit or loss.

AASB101(69)(d) The obligations are presented as current liabilities in the balance sheet if the entity does not have anunconditional right to defer settlement for at least twelve months after the reporting period, regardlessof when the actual settlement is expected to occur.

(iii) Retirement benefit obligations 59,60

AASB119(135)(a) All employees of the group are entitled to benefits from the group’s superannuation plan on retirement,disability or death or can direct the group to make contributions to a defined contribution plan of theirchoice. The group’s superannuation plan has a defined benefit section and a defined contributionsection. The defined benefit section provides defined lump sum benefits based on years of service andfinal average salary. The defined contribution section receives fixed contributions from groupcompanies and the group’s legal or constructive obligation is limited to these contributions.

AASB119(57),(67) The liability or asset recognised in the balance sheet in respect of defined benefit superannuation plansis the present value of the defined benefit obligation at the end of the reporting period less the fair valueof plan assets. The defined benefit obligation is calculated annually by independent actuaries using theprojected unit credit method.

AASB119(83),(86) The present value of the defined benefit obligation is determined by discounting the estimated futurecash outflows using market yields of government bonds that are denominated in the currency in whichthe benefits will be paid, and that have terms approximating to the terms of the related obligation. Incountries where there is a deep market in high-quality corporate bonds, the market rates on thosebonds are used rather than government bonds.

AASB119(57)(d) Remeasurement gains and losses arising from experience adjustments and changes in actuarialassumptions are recognised in the period in which they occur, directly in other comprehensive income.They are included in retained earnings in the statement of changes in equity and in the balance sheet.

AASB119(103) Changes in the present value of the defined benefit obligation resulting from plan amendments orcurtailments are recognised immediately in profit or loss as past service costs.

AASB119(51) Contributions to the defined contribution section of the group’s superannuation fund and otherindependent defined contribution superannuation funds are recognised as an expense as they becomepayable. Prepaid contributions are recognised as an asset to the extent that a cash refund or areduction in the future payments is available.

AASB101(119)(iv) Share-based payments 61

Share-based compensation benefits are provided to employees via the VALUE ACCOUNTS EmployeeOption Plan and an employee share scheme. Information relating to these schemes is set out innote 21.

AASB2(15)(b),(19) The fair value of options granted under the VALUE ACCOUNTS Employee Option Plan is recognisedas an employee benefits expense with a corresponding increase in equity. The total amount to beexpensed is determined by reference to the fair value of the options granted, which includes anymarket performance conditions and the impact of any non-vesting conditions but excludes the impact ofany service and non-market performance vesting conditions.

Non-market vesting conditions are included in assumptions about the number of options that areexpected to vest. The total expense is recognised over the vesting period, which is the period overwhich all of the specified vesting conditions are to be satisfied. At the end of each period, the entityrevises its estimates of the number of options that are expected to vest based on the non-marketvesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss,with a corresponding adjustment to equity.

The Employee Option Plan is administered by the VALUE ACCOUNTS Employee Share Trust, which isconsolidated in accordance with the principles in note 28(b)(i).

25When the options are exercised, the

trust transfers the appropriate amount of shares to the employee. The proceeds received net of anydirectly attributable transaction costs are credited directly to equity.




(Improvement)

Under the employee share scheme, shares issued by the VALUE ACCOUNTS Employee Share Trustto employees for no cash consideration vest immediately on grant date. On this date, the market valueof the shares issued is recognised as an employee benefits expense with a corresponding increase inequity.

The fair value of deferred shares granted to employees for nil consideration under the short-termincentive scheme is recognised as an expense over the relevant service period, being the year to whichthe bonus relates and the vesting period of the shares. The fair value is measured at the grant date ofthe shares and is recognised in equity in the share-based payment reserve. The number of sharesexpected to vest is estimated based on the non-market vesting conditions. The estimates are revised atthe end of each reporting period and adjustments are recognised in profit or loss and the share-basedpayment reserve.

61

The deferred shares are acquired by the VALUE ACCOUNTS Employee Share Trust on market at thegrant date and are held as treasury shares until such time as they are vested (see note 28(z) below).

Liabilities for the group’s share appreciation rights are recognised as employee benefit expense overthe relevant service period. The liabilities are remeasured to fair value at each reporting date and arepresented as employee benefit obligations in the balance sheet.

AASB101(119)(v) Profit-sharing and bonus plans

AASB119(19) The group recognises a liability and an expense for bonuses and profit-sharing based on a formula thattakes into consideration the profit attributable to the company’s shareholders after certain adjustments.The group recognises a provision where contractually obliged or where there is a past practice that hascreated a constructive obligation.

AASB101(119)(vi) Termination benefits

AASB119(165),(166) Termination benefits are payable when employment is terminated by the group before the normalretirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.The group recognises termination benefits at the earlier of the following dates: (a) when the group canno longer withdraw the offer of those benefits; and (b) when the entity recognises costs for arestructuring that is within the scope of AASB 137 and involves the payment of terminations benefits. Inthe case of an offer made to encourage voluntary redundancy, the termination benefits are measuredbased on the number of employees expected to accept the offer. Benefits falling due more than 12months after the end of the reporting period are discounted to present value.

(Improvement)(vii) Reclassification of employee benefit obligations 66

AASB101(41) The group’s liabilities for accumulating sick leave and other long-term employee benefit obligationswere previously presented as provisions in the balance sheet. However, management considers it to bemore relevant if all employee benefit obligations are presented in one separate line item in the balancesheet. Prior year comparatives as at 30 June 2014 have been restated by reclassifying $470,000 fromcurrent provisions to current employee benefit obligations and $2,270,000 from non-current provisionsto non-current employee benefit obligations ($440,000 and $2,196,000 respectively as at 1 July 2013).

AASB101(119)(z) Contributed equity

AASB132(18)(a) Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified asliabilities (note 7(g)).

AASB132(35),(37) Incremental costs directly attributable to the issue of new shares or options are shown in equity as adeduction, net of tax, from the proceeds.

AASB132(33) Where any group company purchases the company’s equity instruments, for example as the result of ashare buy-back or a share-based payment plan, the consideration paid, including any directlyattributable incremental costs (net of income taxes) is deducted from equity attributable to the ownersof VALUE ACCOUNTS Reduced Disclosure Pty Ltd as treasury shares until the shares are cancelledor reissued. Where such ordinary shares are subsequently reissued, any consideration received, net ofany directly attributable incremental transaction costs and the related income tax effects, is included inequity attributable to the owners of VALUE ACCOUNTS Reduced Disclosure Pty Ltd.

62

AASB132(33) Shares held by the VALUE ACCOUNTS Employee Share Trust are disclosed as treasury shares anddeducted from contributed equity.

AASB101(119)(aa) Dividends 55-57

AASB110(12),(13) Provision is made for the amount of any dividend declared, being appropriately authorised and nolonger at the discretion of the entity, on or before the end of the reporting period but not distributed atthe end of the reporting period.



AASB101(119)(ab) Earnings per share

AASB133 Removed as not applicable to VALUE ACCOUNTS Reduced Disclosure Pty Ltd.

AASB101(119)(ac) Goods and Services Tax (GST)

UIG1031(6),(7) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GSTincurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost ofacquisition of the asset or as part of the expense.

UIG1031(8),(9) Receivables and payables are stated inclusive of the amount of GST receivable or payable. The netamount of GST recoverable from, or payable to, the taxation authority is included with other receivablesor payables in the balance sheet.

UIG1031(10),(11) Cash flows are presented on a gross basis. The GST components of cash flows arising from investingor financing activities which are recoverable from, or payable to the taxation authority, are presented asoperating cash flows.

AASB101(119)(ad) Rounding of amounts 63,64

AASB101(51)(e) The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities andInvestments Commission, relating to the ‘rounding off’ of amounts in the financial statements. Amountsin the financial statements have been rounded off in accordance with that Class Order to the nearestthousand dollars, or in certain cases, the nearest dollar.

AASB101(119)(ae) Parent entity financial information 65

The financial information for the parent entity, VALUE ACCOUNTS Reduced Disclosure Pty Ltd,disclosed in note 27 has been prepared on the same basis as the consolidated financial statements,except as set out below.

(i) Investments in subsidiaries, associates and joint venture entitiesAASB127(16)(c)AASB127(12)

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in thefinancial statements of VALUE ACCOUNTS Reduced Disclosure Pty Ltd. Dividends received fromassociates are recognised in the parent entity’s profit or loss when its right to receive the dividend isestablished.

AASB101(119),(112)(c)(ii) Tax consolidation legislation 28-30

UIG1052(16)(a) VALUE ACCOUNTS Reduced Disclosure Pty Ltd and its wholly-owned Australian controlled entitieshave implemented the tax consolidation legislation.

UIG1052(7),(9)(a),(16)(a),(b)

The head entity, VALUE ACCOUNTS Reduced Disclosure Pty Ltd, and the controlled entities in the taxconsolidated group account for their own current and deferred tax amounts. These tax amounts aremeasured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in itsown right.

UIG1052(12)(a) In addition to its own current and deferred tax amounts, VALUE ACCOUNTS Reduced Disclosure PtyLtd also recognises the current tax liabilities (or assets) and the deferred tax assets arising fromunused tax losses and unused tax credits assumed from controlled entities in the tax consolidatedgroup.

UIG1052(16)(c) The entities have also entered into a tax funding agreement under which the wholly-owned entities fullycompensate VALUE ACCOUNTS Reduced Disclosure Pty Ltd for any current tax payable assumedand are compensated by VALUE ACCOUNTS Reduced Disclosure Pty Ltd for any current taxreceivable and deferred tax assets relating to unused tax losses or unused tax credits that aretransferred to VALUE ACCOUNTS Reduced Disclosure Pty Ltd under the tax consolidation legislation.The funding amounts are determined by reference to the amounts recognised in the wholly-ownedentities’ financial statements.

UIG1052(16)(c) The amounts receivable/payable under the tax funding agreement are due upon receipt of the fundingadvice from the head entity, which is issued as soon as practicable after the end of each financial year.The head entity may also require payment of interim funding amounts to assist with its obligations topay tax instalments.

UIG1052(12)(b) Assets or liabilities arising under tax funding agreements with the tax consolidated entities arerecognised as current amounts receivable from or payable to other entities in the group.

UIG1052(12)(c) Any difference between the amounts assumed and amounts receivable or payable under the taxfunding agreement are recognised as a contribution to (or distribution from) wholly-owned taxconsolidated entities.



AASB101(119)(ae) Parent entity financial information 68

AASB101(119)(iii) Financial guarantees

Where the parent entity has provided financial guarantees in relation to loans and payables ofsubsidiaries for no compensation, the fair values of these guarantees are accounted for ascontributions and recognised as part of the cost of the investment.

(iv) Share-based payments

The grant by the company of options over its equity instruments to the employees of subsidiaryundertakings in the group is treated as a capital contribution to that subsidiary undertaking. The fairvalue of employee services received, measured by reference to the grant date fair value, is recognizedover the vesting period as an increase to investment in subsidiary undertakings, with a correspondingcredit to equity.


General basis of preparation

The notes to the financial statements must disclose the following:1.

AASB1054(7),(RDR7.1)

where applicable – a statement of compliance with Australian Accounting Standards or(a)Australian Accounting Standards – Reduced Disclosure Requirements

AASB1054(8)(a) the statutory basis or other reporting framework, if any, under which the financial(b)statements are prepared

AASB1054(8)(b) whether the entity is a for-profit or a not-for-profit entity for the purposes of preparing the(c)financial statements,

AASB1054(9) whether the financial statements are general purpose financial statements or special(d)purpose financial statements, and

AASB101(16) where applicable, a statement of compliance with IFRS (refer to paragraph 16 of AASB(e)101 and commentary 3 to 6 below).

AASB101(114)(a) While AASB 101 does not prescribe where in the notes these statements should be disclosed,2.it does recommend that the statement of compliance with Australian Accounting Standards isincluded before the summary of accounting policies. See the commentary about the content ofthe notes on page 47 for explanations about the structure of notes used in this VALUEACCOUNTS Reduced Disclosure publication.

Statement of compliance with IFRS

The statement

AASB101(16) An entity whose financial statements and notes comply with IFRS shall make an explicit and3.unreserved statement of such compliance in the notes. The financial statements and notesshall not be described as complying with IFRS unless they comply with all the requirementsof IFRS.

Where compliance with Australian Accounting Standards doesn’t lead to compliance with IFRS

AASB101(Aus16.2) In some circumstances compliance with Australian Accounting Standards will not lead to4.compliance with IFRS. These circumstances include, for example, when the entity is a for-profitpublic sector entity to which AASB 1004 Contributions applies and the entity has applied arequirement in that standard that overrides the requirements in an Australian equivalentto IFRS.

AASB1053(9) Other examples are special purpose financial statements of non-reporting entities and financial5.statements prepared under tier 2 of the reduced disclosure regime, as neither of these willinclude all of the disclosures required by full IFRS.

AASB101(Aus16.3) Where the financial statements do not comply with IFRS, the statement of compliance must be6.omitted. Not-for-profit entities are not required to make a statement of explicit and unreservedcompliance with IFRS.

Statement of compliance with Australian Accounting Standards - Reduced DisclosureRequirements

AASB1054(RDR7.1) Entities whose financial statements comply with Australian Accounting Standards – Reduced7.Disclosures Requirements shall make an explicit an unreserved statement of such compliancein the notes. As explained above, these entities cannot state compliance with IFRS because ofthe omission of disclosures that are required under IFRS. The disclosures relevant for entitiesreporting under the reduced disclosure regime are illustrated in our publication VALUEACCOUNTS Reduced Disclosure Pty Ltd.




Summary of accounting policies

Contents

A summary of significant accounting policies must include:8.

AASB101(117)(a) the measurement basis (or bases) used in preparing the financial statements, and(a)

AASB101(117)(b) the other accounting policies used that are relevant to an understanding of the financial(b)statements.

Separate components of financial statements

AASB101(116) The summary may be presented as a separate component of the financial statements.9.

Whether to disclose an accounting policy

AASB101(119) In deciding whether a particular accounting policy should be disclosed, management considers10.whether disclosure would assist users in understanding how transactions, other events andconditions are reflected in the reported financial performance and financial position. Disclosureof particular accounting policies is especially useful to users when those policies are selectedfrom alternatives allowed in Australian Accounting Standards. Some Australian AccountingStandards specifically require disclosure of particular accounting policies, including choicesmade by management between different policies they allow. For example, AASB 116 Property,Plant and Equipment requires disclosure of the measurement bases used for classes ofproperty, plant and equipment and AASB 3 Business Combinations requires disclosure of themeasurement basis used for non-controlling interest acquired during the period.

Change in accounting policy

AASB108(28) Where an entity has changed any of its accounting policies either as a result of a new or11.revised accounting standard or voluntarily it must explain the change in its notes. Additionaldisclosures are required where a policy is changed retrospectively. These disclosures areillustrated in note 29.

AASB108(28) New or revised accounting standards and interpretations only need to be disclosed if they12.resulted in a change in accounting policy which had an impact in the current year or couldimpact on future periods. There is no need to disclose pronouncements that did not have anyimpact on the entity’s accounting policies and amounts recognised in the financial statements.

A complete list of standards and interpretations that apply for the first time to financial reportingperiods commencing on or after 1 July 2014 is set out in Appendix G.

Early adoption of accounting standards – VALUE ACCOUNTS Reduced Disclosure Pty Ltd

CA334(5) Entities wishing to adopt an accounting standard before its operative date must make a formal,13.written election to do so in accordance with CA 334(5) and disclose that fact in the notes. For alist of standards that were available for early adoption as at 15 January 2015, refer toAppendix G.

VALUE ACCOUNTS Reduced Disclosure Pty Ltd does not generally adopt any standards14.early. An exception is improvements to accounting standards, where these are only clarifyingexisting practice but do not introduce any major changes (eg AASB 2014-1 Amendments toAustralian Accounting Standards: Part A – Annual Improvements 2010-2012 and 2011-2013Cycles). The impact of standards and interpretations that have not been early adopted isdisclosed in note 28(a)(iii).

Instead, we have listed pending amendments to AASB 101 Presentation of Financial15.Statements in relation to the IASB’s disclosure initiative as changes that might be earlyadopted by entities as at 30 June 2015. The changes will clarify that there is no prescribedorder for the presentation of the notes to the financial statements and that immaterialinformation does not need to be disclosed. Equivalent amendments to IAS 1 had been madeby the IASB in December 2014. They are expected to be approved by the AASB in the firstquarter of 2015 and will be available for early adoption once issued.

Australian Accounting Standards issued but not yet effective

AASB108(30) When an entity has not applied a new Australian Accounting Standard that has been issued16.but is not yet effective, the entity shall disclose:

this fact, and(a)

known or reasonably estimable information relevant to assessing the possible impact that(b)application of the new Australian Accounting Standard will have on the entity’s financialstatements in the period of initial application.



Accrual basis of accounting

AASB101(27) An entity shall prepare its financial statements, except for cash flow information, using the23.accrual basis of accounting.


AASB127(24),(25)AASB128(26)

Consistent accounting policies must be employed in the preparation and presentation of24.consolidated financial statements. Adjustments to achieve consistency must be made wherethe accounting policies adopted by entities within the group are dissimilar and are not requiredby another accounting standard.

Consolidation of employee share trust

AASB10(4),(6),(7) AASB 10 Consolidated Financial Statements applies to all entities, including share-scheme25.trusts. If an employee benefit trust comes under the definition of control in AASB 10, it must beconsolidated into the group. In particular, if the entity has power over the relevant activities ofthe trust, has exposure to variable returns from its involvement with the trust, and has theability to use its power over the trust to affect the amount of the returns, it would consolidate it.To the extent that the trust owns shares in the parent entity, these must be classified astreasury shares in the consolidated accounts.

Change in functional currency by a foreign operation

AASB121(54) Where there is a change in the functional currency of either the reporting entity or a significant26.foreign operation, that fact and the reason for the change in functional currency shall bedisclosed.


AASB108(31) In complying with paragraph 16 above, an entity considers disclosing:17.

the title of the new Australian Accounting Standard(a)

the nature of the impending change or changes in accounting policy(b)

the date by which application of the standard is required(c)

the date as at which it plans to apply the standard initially, and(d)

either:(e)

(i) a discussion of the impact that initial application of the standard is expected to haveon the entity’s financial statements, or

(ii) if that impact is not known or reasonably estimable, a statement to that effect.

The disclosures in paragraph 17 above must be made for all pronouncements that are18.expected to have a material effect on the entity in the current period and on foreseeable futuretransactions (eg the financial instruments standard, AASB 9). Where a pronouncementintroduces a new accounting option that was not previously available, the entity should explainwhether and/or how it expects to use the option in the future.

In our view, where the expected impact is material, entities should make these disclosures19.even if the new accounting pronouncement is issued after the balance sheet date but beforethe date of authorisation of the financial statements.

The illustrative accounting policy note on pages 212 to 229 only discusses pronouncements20.that are relevant for VALUE ACCOUNTS Reduced Disclosure Pty Ltd and that have not beenearly adopted. It also makes certain assumptions that may not apply to all entities alike and willneed to be adapted to the individual circumstances of an entity. For a complete listing ofstandards and interpretations that were on issue as at 15 January 2015 but not yet mandatoryplease refer to Appendix G.

International accounting standards issued but not yet endorsed by the AASB

Entities wishing to state compliance with IFRS in their basis of preparation will also need to21.consider whether there are any international standards and interpretations (or amendmentsthereof) that have not yet been endorsed by the AASB at the time of the completion of theirfinancial statements. If there are any such standards or interpretations and they are relevant tothe entity, their impact on the entity’s financial statements should also be discussed in thisnote.

Inappropriate accounting policies not rectified by disclosure

AASB101(18) Inappropriate accounting policies are not rectified either by disclosure of the accounting22.policies used or by notes or explanatory material.



Revenue recognition - multiple element arrangements

Entities may enter into transactions with their customers which include different elements such27.as the sale of a good and the provision of services. Where this is the case, the accountingpolicy note should discuss the accounting for these types of transactions. This could be alongthe following lines:

The group offers certain arrangements whereby a customer can purchase a personalcomputer together with a two-year servicing arrangement. When such multiple elementarrangements exist, the amount recognised as revenue upon the sale of the personalcomputer is the fair value of the computer in relation to the fair value of the arrangementtaken as a whole. The revenue relating to the service element, which represents the fairvalue of the servicing arrangement in relation to the fair value of the arrangement as awhole, is recognised over the service period. The fair values of each element aredetermined based on the current market price of each of the elements when soldseparately.

To the extent that there is a discount on the arrangement, such discount is allocatedbetween the elements of the contract in such a manner as to reflect the fair value of theelements.


Accounting for the tax consolidation legislation is only relevant for the individual financial28.statements of the parent entity (head entity) in the tax consolidated group, but not for theconsolidated financial statements. Explanations of how the parent entity accounts for the taxconsolidation legislation are therefore now included in note 28(ae).

UIG1052(7),(8) Each entity in the tax consolidated group must account for the current and future tax29.consequences of its own assets and liabilities, transactions and other events as required byAASB 112. However, UIG 1052 does not prescribe how to allocate the consolidated currentand deferred tax amounts among the individual entities, except to say that the method adoptedshall be systematic, rational and consistent with the broad principles established in AASB 112.VALUE ACCOUNTS Reduced Disclosure Pty Ltd has adopted the ‘stand-alone taxpayerapproach’ as per UIG 1052 paragraph 9(a). Other acceptable methods are:

separate-taxpayer within group (UIG 1052 paragraph 9(b)), and(a)

group allocation (UIG 1052 paragraph 9(c)).(b)

Further guidance on each of the three methods is in UIG 1052 paragraphs 34-40. Examples of30.unacceptable methods can be found in UIG 1052 paragraphs 10 and 39. For further commentson the tax consolidation system and UIG 1052 refer to paragraphs 7-15 of the commentary onincome tax (note 6).

Arrangements involving the legal form of a lease

UIG127(4),(10) The accounting for an arrangement in the legal form of a lease must reflect the substance of31.the arrangement. All aspects and implications of the arrangement must be evaluated todetermine its substance, with weight given to those aspects and implications that have aneconomic effect. All aspects of an arrangement that does not, in substance, involve a leaseunder AASB 117 Leases must be considered in determining the appropriate disclosures thatare necessary to understand the arrangement and the accounting treatment adopted.

UIG127(10) The following must be disclosed in each period that an arrangement exists:32.

a description of the arrangement including:(a)

(i) the underlying asset and any restrictions on its use

(ii) the life and other significant terms of the arrangement

(iii) the transactions that are linked together, including any options

the accounting treatment applied to any fee received, the amount recognised as revenue(b)in the period, and the line item of the statement of comprehensive income (incomestatement) in which it is included.

UIG127(11) The disclosures required in accordance with paragraph 32 above must be provided individually33.for each arrangement or in aggregate for each class of arrangement. A class is a grouping ofarrangements with underlying assets of a similar nature (eg power plants).





Lease incentives

UIG115(3) All incentives for the agreement of a new or renewed operating lease shall be recognised as an34.integral part of the net consideration agreed for the use of the leased asset, irrespective of theincentive’s nature or form or the timing of payments.

UIG115(4) The lessor shall recognise the aggregate cost of incentives as a reduction in rental income35.over the lease term, on a straight-line basis unless another systematic basis is representativeof the time pattern over which the benefit of the leased asset is diminished.

UIG115(5) The lessee shall recognise the aggregate benefit of incentives as a reduction of rental expense36.over the lease term, on a straight-line basis unless another systematic basis is representativeof the time pattern of the lessee’s benefit from the use of the leased asset.

UIG115(6) Costs incurred by the lessee, including those in connection with a pre-existing lease (eg costs37.for termination, relocation or leasehold improvements), shall be accounted for by the lessee inaccordance with Australian Accounting Standards applicable to those costs, including costswhich are effectively reimbursed through an incentive arrangement.

Business combinations involving entities under common control

AASB 3 Business Combinations scopes out business combinations involving entities or a38.business under common control. Under the principles established in AASB 108 AccountingPolicies, Changes in Accounting Estimates and Errors, if there is no specific AustralianAccounting Standard, management should develop an accounting policy relevant to thedecision making needs of users to deal with the accounting transaction and that is reliable. Asa result entities may select an accounting policy based on:

- the principles within AASB 3, or

- the principles of predecessor accounting.

An accounting policy using predecessor accounting would be in line with the accounting used39.in the United Kingdom, where FRS 6 Acquisitions and Mergers has permitted mergeraccounting to be used for group reconstructions (provided certain conditions are met). Underthis approach assets and liabilities are not restated to their fair values.

The accounting policy note 28(i) in this publication does not specify how VALUE ACCOUNTS40.Reduced Disclosure Pty Ltd accounts for business combinations involving entities undercommon control, as it has not entered into any such transactions. An appropriate policy willneed to be included in the summary of accounting policies where relevant. The followingexample policies may be used where appropriate:

Purchase method

The acquisition method of accounting is used to account for all business combinations,including business combinations involving entities or businesses under common control.

Predecessor method

In the case of acquisitions of businesses or entities under common control the acquiredassets and liabilities are initially recognised in the consolidated financial statements attheir predecessor carrying amounts, which are the carrying amounts from theconsolidated financial statements at the highest level of common control as at the date ofacquisition. The difference between the cost of acquisition and the share of the carryingamounts of the acquired net assets is recognised directly in equity.

The chosen policy must be consistently applied to all business combinations involving entitiesor businesses under common control. An entity can only change its policy if permitted underAASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.




Financial instruments

AASB7(21),(B5) Disclosure of the measurement bases of financial instruments may include:41.

the criteria for designating financial assets as available-for-sale(a)

whether regular way purchases and sales of financial assets are accounted for at trade(b)date or at settlement date

how net gains or net losses on each category of financial instruments are determined (eg(c)whether the net gains or losses on items at fair value through profit or loss include interestor dividend income)

the criteria the entity uses to determine that there is objective evidence that an impairment(d)loss has occurred

when the terms of financial assets that would otherwise be past due or impaired have(e)been renegotiated, the accounting policy for financial assets that are subject torenegotiated terms.

Allowance account

AASB139(63)AASB7(B5)(d)

Financial assets that are carried at amortised cost, such as loans and receivables, must be42.written down for impairment if there is objective evidence that an impairment loss has beenincurred. The standard provides a choice to recognise the loss as a direct reduction from thecarrying amount or through use of an allowance account. Where an allowance account is used,additional explanations must be included in the accounting policy note, being:

the criteria for determining when the carrying amount of impaired financial assets is(a)reduced directly and when the allowance account is used, and

the criteria for writing off amounts charged to the allowance account against the carrying(b)amount of impaired financial assets.

Fair value determined using valuation technique - difference on initial recognition

AASB7(28) If the market for a financial instrument is not active its fair value must be determined using a43.valuation technique. In these circumstances, there may be a difference between the fair valueat initial recognition (established based on the transaction price) and the amount that would bedetermined at that date using the valuation technique. If there is such a difference an entityshall disclose (by class of financial instrument) the accounting policy for recognising thatdifference in profit or loss (see AASB 139 paragraph AG76A).

Financial assets and liabilities at fair value through profit or loss

AASB139(9) A financial asset or financial liability is classified as at fair value through profit or loss if it is44.either:

classified as held for trading (acquired or incurred principally for the purpose of selling or(a)repurchasing it in the near future, part of a portfolio of identified financial instruments thatare managed together and for which there is evidence of recent actual pattern of short-term profit-taking, or a derivative that is not a designated hedging instrument), or

upon initial recognition designated as at fair value through profit or loss.(b)

AASB139(9),(11A) Financial instruments can only be designated at fair value through profit or loss if permitted45.under paragraph 11A of AASB 139 (relating to contracts that contain embedded derivatives), orwhen doing so results in more relevant information because either:

it eliminates or significantly reduces a measurement or recognition inconsistency(a)(sometimes referred to as ‘an accounting mismatch’) that would otherwise arise frommeasuring assets or liabilities or recognising the gains and losses on them on differentbases, or

a group of financial assets, financial liabilities or both is managed and its performance is(b)evaluated on a fair value basis, in accordance with a documented risk management orinvestment strategy, and information about the group is provided internally on that basis tothe entity’s key management personnel (as defined in AASB 124 Related PartyDisclosures); for example, the entity’s board of directors and chief executive officer.




AASB101(117)

AASB7(B5)(a)

VALUE ACCOUNTS Reduced Disclosure Pty Ltd does not have any financial assets or46.liabilities designated as fair value through profit or loss. However, an entity which does havesuch instruments will need to provide disclosure of the related accounting policy in accordancewith AASB 101. AASB 7 Financial Instruments: Disclosures states that this policy disclosuremay include:

the nature of the financial assets or financial liabilities the entity has designated as at fair(a)value through profit or loss

the criteria for so designating such financial assets or financial liabilities on initial(b)recognition

how the entity has satisfied the conditions for such designation, and(c)

a narrative description of:(d)

(i) the circumstances underlying the measurement and recognition inconsistency thatwould otherwise arise, or

(ii) how designation as at fair value through profit or loss is consistent with the entity’sdocumented risk management or investment strategies.

An illustrative accounting policy meeting the above requirements could be as follows:47.

The policy of management is to designate a financial asset or financial liability as at fairvalue through profit or loss if designation significantly reduces a measurementinconsistency which may arise where a financial asset and a financial liability aremeasured using different methods. The group from time to time will finance fixed rateassets (not being loans or receivables and not classified as held-to-maturity) with fixedrate debentures. Measurement inconsistency will arise from measuring the assets asavailable-for-sale (fair value with changes reported in equity) and the debentures atamortised cost (no recognition of fair value changes). When this occurs, management willdesignate both the financial assets and financial liabilities as at fair value through profit orloss as this designation will result in more relevant information through the consistentrecognition of opposing movements in fair value.

Presentation of fair value gains and losses on financial assets and derivatives

VALUE ACCOUNTS Reduced Disclosure Pty Ltd’s accounting policies for financial assets and48.derivatives (notes 28(o) and (p)) specify where in the statement of comprehensive income (orincome statement, as applicable) the relevant fair value gains or losses are presented.However, AASB 139 does not prescribe the presentation in the statement of comprehensiveincome. Other ways of presenting the fair value gains and losses may be equally appropriate.For example, fair value changes on interest rate hedges or the ineffective portion of an interestrate hedge may be presented within other expenses.

Property, plant and equipment

AASB116(3) AASB 116 Property, Plant and Equipment prescribes the accounting treatment for property,49.plant and equipment. AASB 116 does not apply to:

property, plant and equipment classified as held for sale in accordance with AASB 5 Non-(a)current Assets Held for Sale and Discontinued Operations

biological assets related to agricultural activity (refer to AASB 141 Agriculture)(b)

the recognition and measurement of exploration and evaluation assets (refer to AASB 6(c)Exploration for and Evaluation of Mineral Resources), or

mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative(d)resources.

However, the standard applies to property, plant and equipment used to develop ormaintain the assets described in (b)-(d).




Revaluations

Where an entity elected to revert to a cost basis for measuring a class of non-current assets on50.first applying AASB 116 and chose to deem the existing carrying amounts to be their cost, theentity may want to continue to make it clear that cost includes deemed cost for the relevantnon-current assets at the date of the change in accounting policy. Refer to the commentary onnon-current assets - property, plant and equipment (note 8) for further comments onrevaluations of non-current assets.

Intangible assets with indefinite lives

AASB138(122)(a) The intangible assets (other than goodwill) in VALUE ACCOUNTS Reduced Disclosure Pty Ltd51.have finite lives. Entities that have intangible assets with indefinite useful lives must disclosethe reasons for supporting their assessment that the assets have an indefinite life, including adescription of the factors that played a significant role in this assessment. An exampleaccounting policy note for an intangible asset with an indefinite life is set out below.

The trademark used to identify and distinguish (product name) has a remaining legal life of fiveyears but is renewable every ten years at little cost and is well established. The group intendsto renew the trademark continuously and evidence supports its ability to do so. An analysis ofproduct life cycle studies and market and competitive trends provides evidence that theproduct will generate net cash inflows for the group for an indefinite period. Therefore, thetrademark is carried at cost without amortisation, but is tested for impairment in accordancewith note 28(j).

Provisions

AASB137(47) When a provision is measured by estimating the cash flows required to settle the obligation,52.the carrying amount of the provision must be the present value of those cash flows at the endof the reporting period. The pre-tax discount rate (or rates) shall reflect current marketassessments of the time value of money and the risks specific to the liability. The discountrate(s) shall not reflect risks for which future cash flow estimates have been adjusted.

Onerous contracts

Refer to the commentary on current liabilities - provisions (note 8) for comments on the53.requirements of AASB 137 relating to onerous contracts.

Restructuring costs

Refer to the commentary on current liabilities - provisions (note 8) for comments on the54.requirements of AASB 137 relating to restructuring costs and restructuring provisions.

Dividends

AASB110(12) If an entity declares dividends to holders of equity instruments (as defined in AASB 13255.Financial Instruments: Presentation) after the reporting period, the entity shall not recognisethose dividends as a liability at the end of the reporting period.

AASB110(13)CA254V

If dividends are declared (ie the dividends are appropriately authorised and no longer at the56.discretion of the entity) after the reporting period but before the financial statements areauthorised for issue, the dividends are not recognised as a liability at the end of the reportingperiod because no obligation exists at that time. Such dividends are disclosed in the notes tothe financial statements in accordance with AASB 101 Presentation of Financial Statements.

Non-cash dividends

AASB-I17(11),(14),(15) Where an entity distributes non-cash assets to its owners, it should consider including the57.following accounting policy:

VALUE ACCOUNTS Reduced Disclosure Pty Ltd, from time to time, may makedistributions to owners in the form of assets other than cash. Such distributions aremeasured at the fair value of the assets to be distributed. The difference between the fairvalue of the assets and their carrying amounts is recognised in profit or loss as otherincome or other expense when the distribution is made.




Presentation of annual leave obligations

VALUE ACCOUNTS Reduced Disclosure Pty Ltd has presented its obligation for accrued58.annual leave within current employee benefit obligations. However, it may be equallyappropriate to present these amounts either as provisions (if the timing and/or amount of thefuture payments is uncertain such that they satisfy the definition of ‘provision’ in AASB 137) oras other payables.

Employee benefits

Discount rate to be used for employee entitlements

AASB119(83),(Aus83.1)

AASB 119 Employee Benefits requires post-employment and other long-term employee benefit59.obligations (including long service leave obligations) to be discounted using a rate determinedby reference to the market yields on high quality corporate bonds, unless the entity operates ina country where there is no deep market for such bonds.

The general view is that there is still not enough evidence to say that there is a deep market in60.corporate bonds in Australia. VALUE ACCOUNTS Reduced Disclosure Pty Ltd is thereforecontinuing to use government bond rates. However, entities should confirm closer to the end oftheir reporting period whether this assessment is still appropriate.

Share-based payments – expense recognition and grant date

AASB2(IG4) Share-based payment expenses should be recognised over the period during which the61.employees provide the relevant services. This period may commence prior to the grant date. Inthis situation, the entity estimates the grant date fair value of the equity instruments for thepurposes of recognising the services received during the period between servicecommencement date and grant date. Once the grant date has been established, the entityrevises the earlier estimate so that the amounts recognised for services received is ultimatelybased on the grant date fair value of the equity instruments. The deferred shares awarded byVALUE ACCOUNTS Reduced Disclosure Pty Ltd are an example where this is the case. Theyare expensed over three years and two months, being the period to which the bonus relatesand the two subsequent years until the deferred shares vest.

Treasury shares

CA259A-CA259DAASB132(34)AASB101(79)(a)(vi)

Entities that comply with the Corporations Act 2001 are restricted in their ability to reacquire62.their own equity instruments and generally have to cancel any shares that were re-acquired, egas the result of a buy-back. However, where shares were acquired by an employee share trustthat is consolidated, the shares are not cancelled, but must be separately presented either inthe balance sheet or in the notes as a deduction from equity.

Rounding of amounts

ASIC98/100 See Appendix F for detailed commentary on rounding of amounts in financial statements. The63.commentary covers the requirements of ASIC Class Order 98/100 which permits entities toround off as follows, subject to certain conditions and exceptions:

Assets greater than: Round off to nearest:$10m (but less than $1,000m) $1,000$1,000m (but less than $10,000m) $100,000$10,000m $1,000,000

ASIC98/100 Rounding to lower prescribed amounts is also permissible, as explained in paragraphs 3 and 464.of Appendix F.

Parent entity note

Following changes made to the Corporations Act 2001 in June 2010, parent entities no longer65.need to include separate parent entity financial statements in their annual financial reportunless they are required to do so under other statutory rules (eg AFS licensing requirements orAPRA rules). However, they still need to provide key financial information for the parent entityin the notes (see note 27). Accounting policy note 28(ae) describes how this information hasbeen determined. This is necessary where the policies applied in preparing the parent entityinformation are different to those applied in preparing the consolidated financial statements.

Change in presentation

AASB101(41) Where an entity has reclassified comparative amounts because of a change in presentation, it66.shall disclose the nature and reason for the reclassification in the notes.





Where compliance with an Australian Accounting Standard is misleading

AASB101(23) In the extremely rare circumstances in which management concludes that compliance with a67.requirement in an Australian Accounting Standard would be so misleading that it would conflictwith the objective of financial statements set out in the Framework, the entity shall, to themaximum extent possible, reduce the perceived misleading aspects of compliance bydisclosing:

(a) the title of the Australian Accounting Standard in question, the nature of the requirement,and the reason why management has concluded that complying with that requirement isso misleading in the circumstances that it conflicts with the objective of financialstatements set out in the Framework, and

(b) for each period presented, the adjustments to each item in the financial statements thatmanagement has concluded would be necessary to achieve a fair presentation.

Going concern

AASB101(25) When preparing financial statements, management shall make an assessment of an entity’s68.ability to continue as a going concern. Financial statements shall be prepared on a goingconcern basis unless management either intends to liquidate the entity or to cease trading, orhas no realistic alternative but to do so. When management is aware, in making itsassessment, of material uncertainties related to events or conditions that may cast significantdoubt upon the entity’s ability to continue as a going concern, those uncertainties shall bedisclosed. When the financial statements are not prepared on a going concern basis, that factshall be disclosed, together with the basis on which the financial statements are prepared andthe reason why the entity is not regarded as a going concern.

A disclosure of material uncertainties about the entity’s ability to continue as a going concern69.should:

ASA570(18)(a) (a) adequately describe the principal events and conditions that give rise to the significantdoubt on the entity’s ability to continue as a going concern

ASA570(18)(a) (b) explain management’s plans to deal with these events or conditions, and

ASA570(18)(b) (c) state clearly that:

(i) there is a material uncertainty related to events or conditions which may castsignificant doubt on the entity’s ability to continue as a going concern, and

(ii) the entity may therefore be unable to realise its assets and discharge its liabilities inthe normal course of business.

Fair value hedges

VALUE ACCOUNTS Holdings Limited has not entered into any fair value hedges. An70.illustrative accounting policy could read as follows:

Changes in the fair value of derivatives that are designated and qualify as fair valuehedges are recorded in profit or loss, together with any changes in the fair value of thehedged asset or liability that are attributable to the hedged risk. The gain or loss relatingto the effective portion of interest rate swaps hedging fixed rate borrowings is recognisedin profit or loss within finance costs, together with changes in the fair value of the hedgedfixed rate borrowings attributable to interest rate risk. The gain or loss relating to theineffective portion is recognised in profit or loss within other income or other expenses.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to thecarrying amount of a hedged item for which the effective interest method is used isamortised to profit or loss over the period to maturity using a recalculated effectiveinterest rate.




Financial reporting in hyperinflationary economies

AASB129 AASB 129 Financial Reporting in Hyperinflationary Economies establishes specific standards71.for entities reporting in the currency of a hyperinflationary economy. The following disclosuresshall be made:

(a) the fact that the financial statements and the corresponding figures for previous periodshave been restated for the changes in the general purchasing power of the functionalcurrency and, as a result, are stated in terms of the measuring unit current at the end ofthe reporting period

(b) whether the financial statements are based on a historical cost approach or a current costapproach, and

(c) the identity and level of the price index at the end of the reporting period and themovement in the index during the current and the previous reporting period.

Industry-specific disclosures

Examples of industry-specific accounting policies and other relevant disclosures can be found72.in the following PwC publications:

AASB1023AASB4

(a) VALUE ACCOUNTS General Insurance Australia for an illustration and explanation of thedisclosure requirements of AASB 1023 General Insurance Contracts.

AASB1038AASB4

(b) VALUE ACCOUNTS Life Insurance Australia for an illustration and explanation of thedisclosure requirements of AASB 1038 Life Insurance Contracts.

AASB7 (c) International Financial Reporting Standards: Illustrative Consolidated Financial Statements- Banks for an illustration and explanation of how the disclosure requirements of AASB 7Financial Instruments: Disclosures may be satisfied by a financial institution.

AASB6AASB111

(d) Illustrative IFRS consolidated financial statements for 2014 year-ends for an illustrationand explanation of the disclosure requirements of AASB 6 Exploration for and Evaluationof Mineral Resources, AASB 111 Construction Contracts and AASB 141 Agriculture.



29 Changes in accounting policies 1-9

Disclosures removed as not relevant for the current reporting period.



As there are no new or amended accounting standards that required VALUE ACCOUNTS1.Reduced Disclosure Pty Ltd to change its accounting policies for the June 2015 financial year,we have not illustrated the relevant disclosures in this year’s publication. For a comprehensiveillustration of retrospective changes in accounting policies please refer to the 2014 edition ofthis publication.

AASB108(28) When initial application of an Australian Accounting Standard has an effect on the current2.period or any prior period, would have such an effect except that it is impracticable todetermine the amount of the adjustment, or might have an effect on future periods, an entityshall disclose:

the title of the Australian Accounting Standard(a)

when applicable, that the change in accounting policy is made in accordance with its(b)transitional provisions

the nature of the change in accounting policy(c)

when applicable, a description of the transitional provisions(d)

when applicable, the transitional provisions that might have an effect on future periods(e)

for the current period and each prior period presented, to the extent practicable, the(f)amount of the adjustment:


(ii) if AASB 133 Earnings per Share applies to the entity, for basic and diluted earningsper share

the amount of the adjustment relating to periods before those presented, to the extent(g)practicable, and

if retrospective application required by paragraph 19(a) or (b) of AASB 108 Accounting(h)Policies, Changes in Accounting Estimates and Errors is impracticable for a particular priorperiod, or for periods before those presented, the circumstances that led to the existenceof that condition and a description of how and from when the change in accounting policyhas been applied.


AASB108(RDR28.1) If the entity reports under the reduced disclosure regime and has decided that it is notpracticable to determine the amounts in (f)(i) and (g) above, then it must explain why this is thecase.

AASB108(28) Financial statements of subsequent periods need not repeat these disclosures.

AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors does not3.prescribe any format for these disclosures. VALUE ACCOUNTS Reduced Disclosure Pty Ltdhas chosen a tabular format, but other ways of presenting this information could be equallysuitable, depending on the circumstances.

Impact of change on the current period

AASB108(28)(f) AASB 108 specifically requires disclosure of the effect of a change in accounting policy not4.only on prior periods but also on the current period, unless it is impracticable to determine theamount of the adjustment. To make this disclosure, entities will need to apply both the oldaccounting policy and the new policies parallel in the year of adoption. The standard includes adefinition of impracticable and a set of criteria that must be satisfied for the exemption to beapplied, setting quite a high hurdle for using this exemption.

The IASB did consider requiring this disclosure only for voluntary changes of accounting5.policies and not where the change is a result of changes in the accounting standards.However, they did not proceed with the amendment but decided instead to give relief on acase-by-case basis. For example, relief was provided for the adoption of the new consolidationand joint arrangement standards, AASB 10 and AASB 11. Relief will also be available onadoption of the new revenue standard, IFRS 15 Revenue from contracts with customers.




Additional comparative information – third balance sheet

AASB101(40A) If an entity has applied an accounting policy retrospectively, restated items retrospectively or6.reclassified items in its financial statements and this had a material effect on the information inthe balance sheet (statement of financial position) at the beginning of the preceding period, theentity must present a third balance sheet as at that date (1 July 2013 for entities with a 30 June2015 year-end). However, it is not necessary to include the additional comparative informationin the affected notes, provided the entity has disclosed all of the quantitative information that isrequired by AASB 108, see paragraph 2 above.

AASB101(40D) The third balance sheet must be presented as at the beginning of the preceding period even if7.the entity presents comparative information for earlier periods.

Impact of change on prior interim financial reports

AASB101(112)(c) There is no longer an explicit requirement to disclose the financial effect of a change in8.accounting policy that was made during the final interim period on prior interim financial reportsof the current annual reporting period. However, where the impact on prior interim reportingperiods is significant, an entity should consider explaining this fact and the financial effect aspart of the disclosures made under paragraphs 28 and 29 of AASB 108.

Voluntary change in accounting policy

AASB108(29) When a voluntary change in accounting policy has an effect on the current period or any prior9.period, would have an effect on that period except that it is impracticable to determine theamount of the adjustment, or might have an effect on future periods, an entity shall disclose:

(a) the nature of the change in accounting policy

(b) the reasons why applying the new accounting policy provides reliable and more relevantinformation

(c) for the current period and each prior period presented, to the extent practicable, theamount of the adjustment:


(ii) if AASB 133 applies to the entity, for basic and diluted earnings per share

(d) the amount of the adjustment relating to periods before those presented, to the extentpracticable, and

(e) if retrospective application is impracticable for a particular prior period, or for periodsbefore those presented, the circumstances that led to the existence of that condition and adescription of how and from when the change in accounting policy has been applied.

Financial statements of subsequent periods need not repeat these disclosures.


CA295(1)(c) Directors’ declaration

In the directors’ opinion:

CA295(4)(d) the financial statements and notes set out on pages 22 to 241 are in accordance with the(a)Corporations Act 2001, including:

(i) complying with Accounting Standards – Reduced Disclosure Requirements, the CorporationsRegulations 2001 and other mandatory professional reporting requirements

2, and

(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015and of its performance for the financial year ended on that date, and

CA295(4)(c) there are reasonable grounds to believe that the company will be able to pay its debts as and(b)when they become due and payable

3, and

ASIC98/1418 at the date of this declaration, there are reasonable grounds to believe that the members of(c)the extended closed group identified in note 26 will be able to meet any obligations orliabilities to which they are, or may become, subject by virtue of the deed of cross guaranteedescribed in note 26.

4,5

CA295(5)(a) This declaration is made in accordance with a resolution of the directors.9

CA295(5)(c) M K Hollingworth9

Director

Sydney

CA295(5)(b) 23 August 20159,10

Directors’ declaration

Format of directors’ declaration

The directors’ declaration illustrated above is included by way of example. Other formats can1.be used as long as they comply with all relevant requirements

Reference to other mandatory professional reporting requirements

Reference to other mandatory professional reporting requirements is not required, but2.is recommended.

Solvency declaration

ASIC-RG22 In Regulatory Guide 22 ASIC provides guidance to directors and auditors of companies in3.relation to the solvency declaration previously required by CA 301(5), but now required by CA295(4)(c). As there is no substantive change to the requirements for the solvency declaration,the guidance in Regulatory Guide 22 is still relevant. The Guide discusses the obligations ondirectors in making the declaration, and the implications for auditors, under the followingheadings:

debts to be taken into account by directors in making the solvency statement(a)

matters to be considered by directors(b)

qualified statements by directors, and(c)

implications for auditors.(d)





ASIC98/1418 ASIC Class Order 98/1418 relieves a company of a specified class that is wholly-owned by an4.Australian company, a disclosing entity which is an Australian body corporate, or a registeredforeign holding company, of the necessity to prepare financial statements where therequirements of the Class Order have been met. One of these requirements is that the holdingentity and the subsidiaries have become parties to a deed of cross guarantee under whicheach of the entities guarantees the debts of the other entities.

ASIC98/1418 Another requirement of the Class Order is that the directors’ declaration made in relation to the5.consolidated financial statements must include comments along the lines shown. There arefurther disclosure requirements for the notes to the financial statements which are illustrated innote 26.

IFRS compliance statement

CA295(4)(ca) Entities reporting under the reduced disclosure regime are not able to state compliance with6.IFRS. The above directors’ declaration therefore does not refer to IFRS compliance. Where anentity is reporting under tier 1 of the new differential reporting framework and has statedcompliance with IFRS in note 1, a comment along the following lines should be inserted in thedirectors’ declaration:

Note 28(a) confirms that the financial statements also comply with International FinancialReporting Standards as issued by the International Accounting Standards Board.

Declarations by CEO and CFO - listed entities only

CA295(4)(c) The directors’ declaration of a listed entity must state that the directors have been given the7.declarations by the chief executive officer (CEO) and chief financial officer (CFO) required byCA 295A in relation to the entity’s financial statements

CA295A(1),(2) The declarations must state whether, in the CEO and CFO’s opinion:8.

the financial records of the entity for the financial year have been properly maintained in(a)accordance with CA 286

the financial statements and notes for the financial year comply with accounting standards(b)

the financial statements and notes for the financial year give a true and fair view(c)

any other matters that are prescribed by regulations in relation to the financial statements(d)and notes for the financial year are satisfied.

Dating and signing of declaration

CA295(5)(a)-(c) The directors’ declaration shall be made in accordance with a resolution of the directors,9.specify the date on which it was made and be signed by a director.

The deadlines for various kinds of entities for signing the directors’ declaration are set out in10.Appendix C.


Independent auditor’s report to the members ofVALUE ACCOUNTS Reduced Disclosure Pty Ltd 1-7

The audit report will be provided by the entity’s auditor upon completion of the audit of the financialreport. As the wording of the report may differ in certain aspects from firm to firm, we have not includedan illustrative report in this publication

Independent auditor’s report

Form and content of audit report

CA307AAPES210

Standards and guidance on the preparation of audit reports on general purpose financial1.statements are given in Auditing Standard ASA 700 Forming an Opinion and Reporting on aFinancial Report. Compliance with ASA 700 is mandatory for all audits carried out under theCorporations Act 2001 and for all other audits carried out by members of the AccountingBodies.

Other matters on which the auditor may be required to report

CA308(2) If the auditor is of the opinion that the financial report does not comply with an accounting2.standard, the audit report must, to the extent it is practicable to do so, quantify the effect of thenon-compliance. If it is not practicable to quantify the effect fully, the report must say why.

CA308(3) The audit report must describe (on an exception basis):3.

any defect or irregularity in the financial report(a)

any deficiency, failure or shortcoming in respect of the following matters:(b)

(i) whether the auditor has been given all information, explanation and assistancenecessary for the conduct of the audit

(ii) whether the entity has kept financial records sufficient to enable a financial report tobe prepared and audited

(iii) whether the entity has kept other records and registers as required by theCorporations Act 2001.

CA308(3A) The audit report must include any statements or disclosures required by auditing standards.4.

CA308(3B) If the financial report includes additional information under CA 295(3)(c) (information included5.to give a true and fair view of financial position and performance), the audit report must includea statement of the auditor’s opinion on whether the inclusion of that additional information wasnecessary to give the true and fair view required by CA 297.

Disclosing entities that are companies – remuneration report

CA300A(1),(1A)CA308(3C)

Disclosing entities that are companies must include a remuneration report in their directors’6.report in a separate and clearly identified section. Where such a report has been included, theauditor must also report on whether the remuneration complies with section 300A of theCorporations Act 2001.

GS008 The Auditing and Assurance Standards Board has provided guidance on the audit reporting7.implications of this requirement, including the appropriate changes to the wording of the auditreport, in Auditing Guidance Statement GS008 The Auditor’s Report on a Remuneration ReportPursuant to Section 300A of the Corporations Act 2001.

PwC 245


Annual and interim financial reporting 2015Appendices

Appendix A

Preparation of annual financial reports in Australia 246

Appendix B

Preparation and audit of annual statutory financial reports (flowchart) 258

Appendix C

Annual reporting deadlines 260

Appendix D

Accounting and reporting pronouncements 264

Appendix E

Indemnification and insurance of officers and auditors 272

Appendix F

Rounding of amounts 274

Appendix G

New standards and amendments 276

Appendix H

Application of the differential reporting framework 280

Appendix I

‘Tier 2’ general purpose financial statements vs special purpose financial statements 283

Appendix J

Abbreviations 286

PwC VALUE ACCOUNTS Reduced Disclosure Pty Ltd 246

Appendix A: Preparation of annual financial reports in Australia

Preparation and lodgement of annual financial reports under the Corporations Act 2001

CA297 1. The Corporations Act 2001 (the Act) requirements for the preparation and audit of annual financialreports by various kinds of entities are summarised in the flowchart in Appendix B. Financialreports required under the Act must comply with the accounting standards and give a true and fairview of the entity’s financial position and performance. The annual reporting deadlines fordisclosing entities, other public and proprietary companies and registered schemes aresummarised in Appendix C.

CA295(1) 2. A financial report consists of:

financial statements for the year that are required by accounting standards, being a:(a)

AASB101(10) (i) statement of financial position (balance sheet)

(ii) statement of profit or loss and other comprehensive income (or separate statement ofprofit or loss (income statement) and statement of comprehensive income)

(iii) statement of changes in equity, and

(iv) statement of cash flows

notes to the financial statements, and(b)

directors’ declaration.(c)

CA295(2) 3. Following changes made to the Act in June 2010 companies have to prepare either of the following– but no longer both together:

financial statements in relation to a single entity (if there are no subsidiaries), or(a)

if required under the accounting standards, consolidated financial statements.(b)

Instead of a complete set of financial statements for the parent entity, the consolidated financialstatements now have to include key financial information for the parent entity, as illustrated in note27 of the VALUE ACCOUNTS Reduced Disclosure Pty Ltd annual report.

ASIC10/654 4. As a result of these changes, the side-by-side inclusion of consolidated and parent entity financialstatements is legally no longer required or permitted. However, if a parent entity wishes to continuepresenting its separate financial statements together with the consolidated financial statements, itcan do so under class order 10/654 provided by the Australian Securities and InvestmentsCommission (ASIC). The class order is particularly needed by entities with an Australian FinancialServices Licence (AFSL) and entities regulated by the Australian Prudential Regulation Authority,as they must continue presenting separate financial statements for the parent entity in addition tothe consolidated financial statements. The class order is open ended and does not have anyspecial conditions (eg there is no need to mention the application of the class order in the notes).

ASIC06/441 5. Similarly, ASIC has also permitted related registered schemes to include their financial statementsin adjacent columns in a single financial report provided they have a common responsible entity orresponsible entities that are wholly beneficially owned by the same entity. Please refer to the classorder for further conditions that must be satisfied.

6. Where the financial reports must comply with Australian accounting standards, entities may haveup to three different options:

prepare general purpose financial statements (GPFS) with full disclosures(a)

prepare GPFS with reduced disclosures – only available if the entity does not have public(b)accountability (see paragraphs 15 – 18 below), or

prepare special purpose financial statements (SPFS) – only available if the entity is not a(c)reporting entity (see paragraphs 28 – 33 below).

This is further explained in the graph on the next page and in the subsequent discussion.



7. The following graph summarises the reporting framework for the preparation of statutoryfinancial reports.

2

1. If the financial statements, as prepared in accordance with the Corporations Act 2001, the Corporations Regulations 2001 and accounting standards,would not otherwise give a true and fair view of the financial position and performance of the entity, additional information must be provided toensure that a true and fair view is given.

2. If an entity prepares non-statutory GPFSs, all relevant standards and interpretations should be applied, but the entity may choose to apply thereduced disclosure regime as outlined in paragraphs 13 to 21 below.

3. AASB 101, AASB 107, AASB 108, AASB 1048 and AASB 1054 apply to entities that are required to prepare financial reports under Chapter 2M ofthe Act. Refer to paragraphs 67 – 81 of this Appendix for comments on the reporting requirements for non-reporting entities preparing specialpurpose financial statements, including references to the ASIC guide Reporting requirements for non-reporting entities. If small proprietarycompanies are requested to prepare financial reports by ASIC or members with at least 5% of voting rights, they do not have to be prepared inaccordance with relevant accounting standards, including those mentioned above, where this is specified in the request (ie special purpose financialstatements can be prepared if the request specifies the extent to which relevant accounting standards are to be applied, subject to comments inparagraphs 67 – 81 on non-reporting entities).

4. Entities that prepare general purpose financial statements and that are not publicly accountable can elect to apply the new reduced disclosureregime early, see paragraph 13 to 21 below.

5. Small companies limited by guarantee no longer need to prepare or lodge any financial reports unless they are directed to do so by members orASIC, see paragraph 39 below.

6. For an explanation of the different types of entities refer to Appendix B.

Accounting standards

CA296 8. All entities reporting under the Act must prepare their financial statements in accordance with theaccounting standards issued by the Australian Accounting Standards Board (AASB). If the financialreport, as prepared in accordance with the Act, the Corporations Regulations 2001 (theRegulations) and accounting standards, would not otherwise give a true and fair view of thefinancial position and performance of the entity, additional information must be provided to ensurethat a true and fair view is given. However, most accounting standards only apply to reportingentities and financial statements that are, or are held out to be, general purpose financialstatements (GPFSs). This is referred to as the ‘reporting entity concept’ and is explained further inparagraphs 22 and 28 to 33 below.

9. Subject to the reduced disclosure regime described in paragraph 13 below, the accountingstandards for for-profit entities are consistent with International Financial Reporting Standards(IFRS). However, there are some additional disclosure requirements in AASB 1054 AustralianAdditional Disclosures and a couple of standards and interpretations on issues that are not dealtwith under IFRS, being, for example, general and life insurance contracts and Petroleum ResourceRent Tax. These will be withdrawn if a particular issue is subsequently addressed by the IASB orthe IFRS Interpretations Committee. Australian accounting standards also have specific provisionsadded for not-for-profit and public sector entities which may not always be compliant with IFRS.The standards on issue as at 15 January 2015 are listed in Appendix D.

CA334(5) 10. Individual accounting standards specify their application date. However, an entity may elect toapply a standard earlier than its application date unless the standard says otherwise. An entityrequired to prepare financial reports under Part 2M.3 of the Act can only adopt an AASB standardearly where the directors make a written election in accordance with CA 334(5).

AASB 101, 107, 108, 1048 and1054 apply. Apply other standardsand interpretations as agreed bymembers or users. 1,3

Yes

Yes

No

No

No

Yes

• Listed entities 6

• Registered schemes 6

• Other disclosing entities 6

• Other public companies 5,6

• Large proprietary companies 6

• Small proprietary companies reporting as large proprietarycompany (eg a foreign controlled small proprietary company) 3,6

Is the entity a reporting entity?

Is the entity publiclyaccountable?

Choice of alternatives Are GPFSs being prepared?

Apply all relevant standards andinterpretations and provide fulldisclosures 1

Apply all relevant standards andinterpretations with reduceddisclosures 1,4



ASIC-Act225,227 11. The AASB is responsible for accounting standard setting for all entities, including companies,public sector entities and not-for-profit entities. The Financial Reporting Council oversees theaccounting standard setting process for both the private and public sectors. Some of the Council’smain functions in this area are:

to provide broad oversight of the processes for setting accounting standards in Australia(a)

appointing the members of the AASB (other than the Chair)(b)

approving and monitoring the AASB’s priorities, business plan, budgets and staffing(c)arrangements

determining the AASB’s broad strategic direction and giving it directions, advice and feedback(d)

monitoring the development of international accounting standards and furthering the(e)development of a single set of accounting standards for world wide use.

12. No reference is made in this publication to any of the AAS accounting standards. The onlyremaining AAS standard is AAS 25 Financial Reporting by Superannuation Plans which will besuperseded by AASB 1056 Superannuation Entities for annual reporting periods commencing onor after 1 July 2016.

Differential reporting framework for general purpose financial statements

AASB1053(7),(9) 13. In June 2010, the AASB introduced a new two-tier differential reporting regime which applies to allentities that prepare GPFSs:

AASB1053(11) Tier 1 is IFRS as adopted in Australia, including standards specific to Australian entities. For-(a)profit entities that are publicly accountable (see paragraphs 15 to 18 below) will continue toapply the current versions of the Australian Accounting Standards without changes.

Tier 2 is the new reduced disclosure regime which retains the recognition and measurement(b)requirements of IFRS, but with reduced disclosure requirements for many entities. For-profitentities that do not have public accountability can elect to apply this tier.

14. At this stage, the reporting entity concept (see paragraphs 22 and 28 to 33 below) has not beenaffected by the reduced disclosure regime. The AASB tentatively decided in April 2013 to changethe application focus of the accounting standards such that all entities that are required to preparefinancial statements in accordance with the accounting standards would have to prepare GPFS.However, no final decision on this has been made. A research report on the application of thereporting entity concept and lodgement of special purpose financial statements was issued in June2014 and the AASB currently intends to issue a consultative document on the application ofaccounting standards in the first half of 2015.

Public accountabilityAASB1053(Appendix-A) 15. Public accountability means accountability to those existing and potential resource providers and

others external to the entity who make economic decisions but are not in a position to demandreports tailored to meet their particular information needs.

AASB1053(Appendix-A) 16. A for-profit private sector entity has public accountability if:

its debt or equity instruments are traded in a public market or it is in the process of issuing(a)such instruments for trading in a public market (a domestic or foreign stock exchange or anover-the-counter market, including local and regional markets), or

it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary(b)businesses. This is typically the case for banks, credit unions, insurance companies, securitiesbrokers/dealers, mutual funds and investment banks.

AASB1053(Appendix-B) 17. The following for-profit entities are deemed to have public accountability:

disclosing entities (see paragraph 34 below), even if their debt or equity instruments are not(a)traded in a public market or are not in the process of being issued for trading in apublic market

co-operatives that issue debentures(b)

registered managed investment schemes(c)

superannuation plans regulated by the Australian Prudential Regulation Authority (APRA)(d)other than Small APRA Funds as defined by APRA Superannuation Circular No. II.E.1Regulation of Small APRA Funds, December 2000, and

authorised deposit-taking institutions.(e)



IFRS-for-SMEs(1.4)IFRS-for-SMEs(BC57)

18. Not all entities that hold assets in a fiduciary capacity for a broad group of outsiders are publiclyaccountable. If the assets are held merely for reasons incidental to the entity’s primary business,the definition of public accountability would not be satisfied. Examples of such entities may includetravel or real estate agents, schools, charitable organisations, co-operative enterprises and utilitycompanies. An entity only has public accountability under the second leg of the definition if theholding of assets in a fiduciary capacity is one of the entity’s primary businesses.

Not-for profit and public sector entitiesAASB1053(11),(13),(15) 19. The Australian Government and all of the State, Territory and Local Governments must continue to

apply the tier 1 requirements for their whole-of-government and general government sectorfinancial reports. All other public sector entities and all not-for-profit private sector entities arepermitted to use tier 2 and provide reduced disclosures, unless a relevant regulator requirescompliance with tier 1.

IFRS complianceAASB101(RDR15.2),(RDR16.1)

20. Because of the reduced disclosures, entities applying tier 2 reporting requirements will not be ableto state compliance with IFRSs. Instead, entities will have to make an explicit and unreservedstatement of compliance with Australian Accounting Standards – Reduced DisclosureRequirements where they comply with all requirements of the reduced disclosure regime.

Further information

21. For more detailed information about the reduced disclosure regime please refer to Appendix H.

Reporting entity concept and general purpose financial statements

AASB101(Aus1.1)AASB107(Aus1.1)AASB108(Aus2.1)AASB1048(2)(a)AASB1054(2)

22. AASB accounting standards generally only apply to reporting entities and financial statements thatare, or are held out to be, GPFSs. However, AASB 101 Presentation of Financial Statements,AASB 107 Statement of Cash Flows, AASB 108 Accounting Policies, Changes in AccountingEstimates and Errors, AASB 1048 Interpretation and Application of Standards and AASB 1054Australian Additional Disclosures all apply to each entity that is required to prepare financial reportsin accordance with Chapter 2M of the Act. As a result, these standards must be applied whenpreparing statutory financial reports for all:

public companies(a)

large proprietary companies(b)

small proprietary companies required to comply with the large proprietary company reporting(c)requirements (eg certain foreign controlled small proprietary companies)

registered schemes(d)

even if they are not reporting entities.(e)

Small proprietary companiesCA293,294 23. Small proprietary companies requested to prepare financial reports by ASIC or members holding at

least 5% of the voting rights will not need to apply the above standards if the requests specify thatthe reports do not have to comply with them.

CA45A(2) 24. A proprietary company is a small proprietary company for a financial year if at least two of thefollowing conditions are satisfied:

consolidated revenue is less than $25 million(a)

consolidated gross assets at the end of the year are less than $12.5 million(b)

the company and the entities it controls have fewer than 50 employees at the end of the(c)financial year.

CA45A(6) 25. Consolidated revenue and consolidated assets must be calculated in accordance with accountingstandards in force at the relevant time even if the standards do not otherwise apply, eg becausethe company is not a reporting entity. The consolidation must include the parent entity and anyentities it controls under the principles in AASB 10 Consolidated Financial Statements, butexcludes any controlling entity or sister entities.

CA45A(5) 26. Employees are to be counted on a full-time equivalent basis as at the end of the financial year.Part-time employees are counted as an appropriate fraction of a full-time equivalent. Seasonal orcasual employees are only included if they were employed on the last day of the financial year.

27. There is no definition of ‘employees’ in the Corporations Act 2001 so the common law must berelied on for guidance. The most commonly applied criterion is the presence of a right of control bythe employer over the manner in which an employee works.



Reporting entitiesSAC1(40)AASB101(Aus7.2)AASB1053(Appendix-A)

28. Reporting entities are defined in SAC 1 Definition of the Reporting Entity as ‘’all entities (includingeconomic entities) in respect of which it is reasonable to expect the existence of users dependenton general purpose financial statements for information which will be useful to them for making andevaluating decisions about the allocation of scarce resources’’.

AASB101(7) 29. General purpose financial statements are defined in AASB 101 as ‘’those intended to meet theneeds of users who are not in a position to require an entity to prepare reports tailored to theirparticular information needs’’.

SAC1(19)-(22) 30. Guidance on determining whether an entity is a reporting or non-reporting entity is set out inSAC 1. The primary factors outlined in SAC 1 include:

the level of separation of management and ownership(a)

economic or political importance/influence; for example, dominant market position, and(b)

financial characteristics such as size and indebtedness.(c)

ASIC-RG85 31. ASIC has issued a guide Reporting requirements for non-reporting entities in which it expressesconcern that some companies which are required to prepare financial reports under the Actprepare special purpose financial statements on the basis they are not reporting entities when thismay not be the case.

32. ASIC will look closely at cases where entities claim to be non-reporting entities and will seekexplanations from directors where it appears reasonable to expect that there are users dependenton general purpose financial statements. An entity should not be regarded as a non-reportingentity solely because there is little or no separation between its members and management. If thecompany has a significant number of creditors or employees, ASIC believes it would bereasonable to expect the existence of users dependent on general purpose financial statements.Directors should bear this in mind when deciding whether or not an entity is a reporting entity.

CA296 33. Directors of an entity that identifies itself as a non-reporting entity and elects not to adopt therequirements of all accounting standards would be in breach of the requirement to comply withaccounting standards contained in CA 296 if the circumstances of the entity indicate it is areporting entity.

Disclosing entities

CA111ACCA111AD

34. A body is a disclosing entity if it has issued ED (short for ‘enhanced disclosure’) securities.Disclosing entities include:

CA111AE entities that are listed on a prescribed financial market (limited to Australian markets)(a)

CA111AF entities that issue securities (other than debentures and managed investment products)(b)pursuant to a disclosure document, and after such an issue, and at all times since the issue, atleast 100 persons held securities in the relevant class

CA111AFA entities that issue managed investment products under a Product Disclosure Statement, if at(c)least 100 persons hold such products

CA111AG(1) entities that issue securities (other than debentures) as consideration for offers under an off-(d)market takeover bid, and after such an issue, and at all times since the issue, at least 100persons held securities in the relevant class

CA111AG(2) entities whose securities are issued under a compromise or scheme of arrangement, and after(e)such an issue, and at all times since the issue, at least 100 persons held securities in therelevant class

CA111AI borrowers required to appoint a trustee under CA 283AA.(f)

35. By their very nature, all disclosing entities are reporting entities and therefore have to preparegeneral purpose financial statements.

Modifications to disclosing entity provisions

36. Modifications to the disclosing entity provisions have been made as follows:

the following securities have been declared not to be ED securities:(a)

CR1.2A.01(a) (i) listed securities of an entity classified as an exempt foreign entity under ASX Listing Rule1.11 (known as an ASX Foreign Exempt Listing)

CR1.2A.01(b) (ii) securities quoted on the Australian Bloodstock Exchange Limited

the following entities have been exempted from the disclosing entity provisions:(b)

CR1.2A.02 (i) foreign companies issuing securities under foreign takeover offers or schemes ofarrangement (where the requirements of CR 1.2A.02 are met)

CR1.2A.03 (ii) foreign companies offering shares for issue or sale to Australian employees under anemployee share scheme in respect of which a disclosure document is lodged with ASIC



ASIC98/106 regulated superannuation funds, approved deposit funds and pooled superannuation trusts(c)(within the meaning of the Superannuation Industry (Supervision) Act 1993) have beenexempted from the financial records and reporting requirements of Parts 2M.2 and 2M.3 of theCorporations Act 2001 by ASIC Class Order 98/106.

Disclosing entities which cease to be disclosing entities before deadline

ASIC98/2016ASIC-RG68(49),(50)

37. ASIC Class Order 98/2016 applies to entities which cease to be disclosing entities after the end ofa financial year but before the earlier of:

3 months after the end of the financial year, and(a)

if the entity is required to have an annual general meeting (AGM), 21 days before the date of(b)the next AGM after the end of the financial year.

ASIC98/2016ASIC-RG68(49),(50)

38. The Class Order provides relief from the full-year financial reporting requirements of Chapter 2M ofthe Act to the extent that those requirements apply to the entity as a disclosing entity, oncondition that:

the entity complies with the requirements of Chapter 2M as if it had not been a disclosing(a)entity at the end of the financial year, and

the directors of the entity resolve before the earlier of the dates in paragraph 37 that there are(b)no reasons to believe that the entity may become a disclosing entity before the end of the nextfinancial year.

Companies limited by guarantee

39. Companies limited by guarantee are subject to a three-tiered differential reporting framework:

CA45BCA292(3)CA294ACA294B

(a) Companies with revenue less than $250,000 thatare not deductible gift recipients within themeaning of the Income Tax Assessment Act 1997

no longer need to prepare or lodge anyfinancial reports, unless they are directedto do so by members or ASIC

CA301(3) (b) Companies with revenue less than $250,000 thatare deductible gift recipients, and Companies withrevenue more than $250,000 but less than $1million

will need to prepare and lodge a fullfinancial report, but they can choose tohave that report reviewed ratherthan audited

(c) Companies with revenue of $1 million or more must lodge an audited financial report

Companies limited by guarantee that are registered charities are currently exempt from complyingwith the financial reporting requirements of the Act and must instead comply with the requirementsin the Australian Charities and Not-for-Profit Commission (ACNC) Act 2012. At the time of writing,the Government was in the process of abolishing the ACNC legislation, but it was unclear when therepeal will become effective. Please subscribe to our regular updates(www.pwc.com.au/assurance/ifrs) if you would like us to keep you informed of future developments.

Accounting standards and materiality


40. Accounting standards apply when information resulting from their application is material.Information is material if its omission, misstatement or non–disclosure has the potential,individually or collectively, to influence the economic decisions of users taken on the basis of thefinancial statements.

41. In deciding whether an item or an aggregate of items is material, the size and nature of theomission or misstatement of the items usually need to be evaluated together. In particularcircumstances, either the nature or the amount of an item or an aggregate of items could be thedetermining factor. Further discussion of materiality is set out in the Framework for the Preparationand Presentation of Financial Statements.

Accounting interpretations

AASB InterpretationsModel

42. Accounting interpretations are issued by the AASB under the AASB Interpretations Model(December 2007). Issue proposals are assessed by the AASB. Issues relating to interpretingAustralian equivalents to IFRS are in the first instance forwarded to the IFRS InterpretationsCommittee (IFRS IC) for consideration. If the IFRS IC does not add the issue to its work program,or if the issue proposal relates to domestic requirements that relate only to not-for-profit entities inthe public and/or private sectors, the AASB may decide to form an advisory panel on a topic-by-topic basis. The role of the panel is to prepare alternative views and provide recommendations forconsideration by the AASB. However, the AASB expects that unique domestic interpretations ofAustralian Accounting Standards will only be required in rare and exceptional circumstances.

43. Until June 2006, guidance on urgent financial reporting issues not dealt with, or not dealt withspecifically in accounting standards was provided by the UIG. Consensus views werecommunicated in UIG Interpretations that were prepared by the UIG and issued by the AASB.



AASB1048(9) 44. Compliance with AASB and UIG interpretations is mandatory by virtue of paragraph 9 of AASB1048 Interpretation and Application of Standards. AASB and UIG Interpretations on issue as at15 January 2015 are listed in Appendix D.

Framework

Framework(1) 45. The Framework for the Preparation and Presentation of Financial Statements (Framework) wasissued by the AASB in July 2004 as part of Australia’s convergence with IFRS. The Frameworksets out the concepts that underlie the preparation and presentation of financial statements forexternal users. The purpose of the Framework is to:

assist the AASB in the development of future accounting standards and in its review of(a)existing accounting standards, including evaluating proposed IASB pronouncements

assist the AASB in promoting harmonisation of regulations, accounting standards and(b)procedures relating to the presentation of financial statements by providing a basis forreducing the number of alternative accounting treatments permitted by accounting standards

assist preparers of financial statements in applying accounting standards and in dealing with(c)topics that have yet to form the subject of an accounting standard

assist auditors in forming an opinion as to whether financial statements conform with(d)accounting standards

assist users of financial statements in interpreting the information contained in financial(e)statements prepared in conformity with accounting standards

provide those who are interested in the work of the AASB with information about its approach(f)to the formulation of accounting standards.

Framework(2),(3) 46. The Framework is not an accounting standard and hence does not define standards for anyparticular measurement or disclosure issue. Nothing in the Framework overrides any specificaccounting standard. In a limited number of cases there may be a conflict between the Frameworkand an accounting standard. In those cases where there is a conflict, the requirements of theaccounting standard prevail over those of the Framework. As, however, the AASB will be guidedby the Framework in the development of future standards and in its review of existing standards,the number of cases of conflict between the Framework and accounting standards will diminishthrough time.

AASB108(11)(b)

AASB-CF2013-1

47. Entities shall refer to the Framework as a source of guidance in developing and applying anaccounting policy if there is no accounting standard or interpretation dealing with an accountingissue. The IASB is in the process of updating the conceptual framework and completed Phase Aby issuing revised objectives and qualitative characteristics of financial reports in September 2010.The AASB has incorporated the revised objectives and qualitative characteristics into theAustralian Framework in December 2013. The Australian material also includes specific guidancefor not-for-profit entities.

Statements of Accounting Concepts

Framework(Aus1.4) 48. Since December 2013, the Statements of Accounting Concepts are now all superseded with theexception of SAC 1 Definition of the Reporting Entity. SAC 1 remains in existence and form part ofthe overall conceptual framework for general purpose financial reporting in Australia.

APES205(4.1) 49. While compliance with SACs in the preparation, presentation or audit of general purpose financialstatements as such is not mandatory for members of the Accounting Bodies, members must takeall reasonable steps to apply the principles and guidance in the SAC1 and the Framework whenassessing whether an entity is a reporting entity.

Entity-specific disclosures

50. Certain accounting standards are applicable only to specified classes of entities:AASB8(Aus2.1)(Aus2.2) AASB 8 Operating Segments – applies only to listed entities and entities that file, or are in the(a)

process of filing, their financial statements with a regulator for the purpose of issuing financialinstruments in a public market

AASB133(Aus1.1) AASB 133 Earnings per Share – applies to entities required to prepare financial reports in(b)accordance with Part 2M.3 of the Act that:

(i) are reporting entities and have listed ordinary shares or are in the process of listing if theyhave ordinary shares, or

(ii) elect to disclose earnings per shareAASB134(Aus1.1) AASB 134 Interim Financial Reporting – applies to all general purpose interim financial(c)

reports, including half-year financial reports of each disclosing entity required to be preparedunder Part 2M.3 of the Act

AASB1038(1.1) AASB 1038 Life Insurance Contracts – applies only to life insurers or to parent entities in(d)groups that include a life insurer



AAS25(3) AAS 25 Financial Reporting by Superannuation Plans – applies to superannuation plans (will(e)be superseded by AASB 1056 Superannuation Entities for annual reporting periodscommencing on or after 1 July 2016)

AASB1004(1) AASB 1004 Contributions – applies to not-for-profit entities and to financial statements of(f)General Government Sectors (GGS)

AASB1049(2) AASB 1049 Whole of Government and General Government Sector Financial Reporting –(g)applies to each government’s whole of government general purpose financial statements andGGS financial statements

AASB1050(2) AASB 1050 Administered Items – applies to government departments(h)AASB1051(2) AASB 1051 Land Under Roads – applies to local governments, government departments,(i)

whole of governments and financial statements of GGSsAASB1052(3) AASB 1052 Disaggregated Disclosures – applies to local governments and government(j)

departmentsAASB1055(2) AASB 1055 Budgetary Reporting – applies to each government’s whole-of government(k)

general purpose financial statements, GGS financial statements and general purpose financialstatements of not-for-profit reporting entities within the GGS.

Corporations Act reliefCA111AT,340,341ASIC-RG43ASIC-RG51ASIC-RG95

51. ASIC may grant relief from certain of the financial reporting and audit requirements of the Actunder CA 340 or CA 341, and disclosing entity relief may be provided under CA 111AT. RegulatoryGuide 43 sets out ASIC’s policy on applications for relief under CA 340 and CA 341 and indicateshow it will exercise its discretionary power in granting relief. Policy relating to the granting of reliefunder CA 111AT is set out in Regulatory Guide 95. Further discussion of ASIC’s policies andprocedures on the processing of applications for relief is set out in Regulatory Guide 51.

Pro-forma financial information in the financial report

ASIC-CP69ASIC-RG230

52. In July 2005, ASIC issued a consultative paper Disclosing pro forma financial information whichexplains under which circumstances an entity is permitted to include pro-forma financialinformation, being information that is not specifically required to be disclosed and/or that is notprepared in accordance with relevant accounting standards, in its statutory financial report.According to the paper, pro-forma financial information may be included in the notes to thefinancial statements if the additional information is necessary to give a true and fair view of thefinancial position and financial performance of the entity for the reporting period. Where pro-formainformation is included, it must not be misleading and not be presented with greater prominencethan the statutory information. Pro-forma financial statements, being financial statements thatpurport or appear to be, for example, a balance sheet, income statement or statement of cashflows but have not been prepared in accordance with statutory financial reporting requirements,must not be included in a financial report. Similar views are expressed in ASIC’s Regulatory GuideRG 230 Disclosing non-IFRS financial information.

53. ASIC may grant special relief from these requirements, however, it is expected that this will onlyoccur in rare and exceptional circumstances. One example of where relief has been grantedrelates to the disclosure of pro forma information for a business combination which occurred afterthe reporting period. See the commentary to note 14 for further information.


CA295(2)(b)AASB10(Aus3.1),(4)(Aus4.2)

54. A parent entity must prepare consolidated financial statements in accordance with AASB 10Consolidated Financial Statements if:

- it is a reporting entity itself, or

- the group of which it is the parent entity is a reporting entity

AASB10(Appendix A) 55. A parent entity is an entity that controls one or more entities (subsidiaries). An investor controlsanother entity, and therefore is a parent entity, where the investor is exposed, or has rights, tovariable returns from its involvement with the investee and has the ability to affect those returnsthrough its power of the investee.

AASB10(Appendix A),(B86)

56. Consolidated financial statements are the financial statements of a group in which the assets,liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presentedas those of a single economic entity. They combine like items of assets, liabilities, equity, income,expenses and cash flows of the parent with those of its subsidiaries and offset the carrying amountof the parent’s investment in each subsidiary with the parent’s portion of equity of each subsidiary.Intragroup balances, transactions, income and expenses are eliminated in full.

CA323 57. If an entity is required to prepare consolidated financial statements, a director or officer of asubsidiary must give the parent entity all information requested that is necessary to prepare theconsolidated financial statements and the notes to those statements.



58. Relief from preparing consolidated financial statements is only available where:

- the impact of consolidation is not material (see paragraphs 40 and 41 above)

AASB10(4),(Aus4.1) - the parent is an intermediate parent and the conditions in AASB 127 paragraphs 4 and Aus4.1are satisfied (see paragraphs 7 and 8 of the commentary to the financial statements in the fullannual report on pages 23 and 24 for further information), or

ASIC98/1418 - the parent entity is relieved from preparing financial reports under ASIC Class Order 98/1418because it is a wholly-owned subsidiary company which has entered into a deed of crossguarantee with its holding company.

59. The preparation of consolidated financial reports by non-reporting entities is discussed inparagraphs 72 and 73 below.

Stapled securities and dual listed company arrangements

AASB3(43)(c) 60. The following transactions are business combinations that are achieved by contract alone:

- the stapling of equity securities of two or more legal entities, such that the securities cannottraded or transferred independently and those entities have the same owners, and

- dual-listed company (DLC) arrangements between two listed legal entities in which theiractivities are managed under contractual arrangements as a single economic entity whileretaining their separate legal identities.

AASB3(43)(c),(44) 61. AASB 3 Business Combinations specifically includes business combinations that are achieved bycontract alone in its scope. One of the combining entities must therefore be identified as the parententity. This parent entity will prepare consolidated financial statements in accordance with thegeneral principles in AASB 3 and AASB 10 Consolidated Financial Statements. Accordingly, theidentifiable assets, liabilities and contingent liabilities of the acquired entity (entities) must berecognised at their fair value. However, they will be attributed to non-controlling interest. Goodwillwill only be recognised where the entity elects to measure the non-controlling interest at fair value.Where the non-controlling interest is measured at the proportionate share of the net assets,no goodwill arises

62. On transition to AASB 10 from AASB 127 Consolidated and Separate Financial Statements, someexpressed concern that the new control definition in AASB 10 could prevent stapled entities frompreparing consolidated financial statements, despite them falling within the scope of AASB 3. InMay 2014, the IFRS Interpretations Committee confirmed that this was not the case. Thecombining entity in the stapling arrangement that is identified as the acquirer for the purpose ofAASB 3 must prepare consolidated financial statements of the combined entity in accordance withAASB 10.

ASIC13/1050ASIC13/1644

63. In the meantime, ASIC had issued Class Order 13/1050 Financial reporting by stapled entities(amended by CO 13/1644) which preserves the status quo for existing stapled groups, assummarised in the table below. ASIC noted that the Class Order may be amended or withdrawndepending on the outcome of the discussions at the IFRS IC. However, at the time of writing theCO was still in place.

64. In addition to the consolidated financial statements for the stapled group as a whole, eachindividual stapled entity that is required to prepare financial reports under Chapter 2M of theCorporations Act 2001 must also prepare individual financial statements that cover the entity itselfand any subsidiaries controlled by that entity. To ease the reporting burden, ASIC has issuedClass Order 05/642 Combining financial reports of stapled security issuers which permits issuers ofstapled securities to present their financial statements and the consolidated or combined financialstatements of the stapled group in adjacent columns in one financial report. Class Order 13/1050extends the relief provided in Class Order 05/642 and requires some minor additional disclosuresto be provided in the financial statements of stapled groups.

ASIC-RG29 65. ASIC Regulatory Guide 29 Financial reporting by Australian entities in dual listed companyarrangements sets out the financial reporting requirements for entities in DLC arrangements,including what type of information must be lodged and distributed to members.



66. As a result of various transitional relief and Class Order 13/1050, financial reports of stapledentities and DLCs are prepared on different bases, depending on when the stapling was formed orthe DLC arrangement was entered into. The following table summarises the different methods thatapplied at different times. This explains, for example, why not all stapled groups will show non-controlling interests for their stapled entities.

When stapling was formed orDLC arrangement entered into Requirements

AASB3(43)(c),(44) After AASB 3 (revised) becameeffective – 1 July 2009

Entities are required to identify an acquirer under AASB 3 andprepare consolidated financial statements under AASB 10.

Identifiable assets, liabilities and contingent liabilities of theacquired entity (entities) must be recognised at their fair value.However, they are attributed to non-controlling interest. Goodwillis only recognised where the entity elects to measure the non-controlling interest at fair value. Where the non-controllinginterest is measured at the proportionate share of the net assets,no goodwill arises.

AASB-I1002

UIG1001(16),(17)

After adoption of IFRS (1January 2005) but before AASB3 (revised) became effective

Business combinations that are achieved by contract alone wereexcluded from the scope of AASB 3.

Stapled entities were required to identify an acquirer underAASB Interpretation 1002 Date-of-Transition StaplingArrangements, and prepare consolidated financial statements.

The principles of AASB-I 1002 were generally consistent withAASB 3 (revised), except that there was no choice to measurethe non-controlling interest at its fair value and hence goodwillcould never be recognised.

DLC arrangements were required to apply the requirements ofAASB 108 to determine an appropriate accounting policy.

AASB1(18),Appendix CUIG1013(7)-(9)

UIG1001(6)-(9)

Before transition to IFRS, wherethe entity has applied theexemptions for businesscombinations in AASB 1

Entities with stapling arrangements had to identify one of thecombining entities as the parent entity on the date of transition toIFRS. This parent entity prepares a consolidated financial reportfor the stapled entity, but is permitted to do so on the same basisas the combined financial report for those entities immediatelybefore adopting IFRS (ie without applying purchase accountingprinciples and eliminating the equity of the controlled entities).

The consolidated financial report of each DLC parent entity shallbe the combined financial report of the dual listed entitiesprepared on the same basis as the combined financial report forthose entities immediately before adopting IFRS.

Reporting requirements for non-reporting entities

CA297 67. An entity reporting under Chapter 2M of the Act that is not a reporting entity need not comply withaccounting standards other than AASB 101, AASB 107, AASB 108, AASB 1048 and AASB 1054when preparing statutory financial reports which are special purpose financial statements. The Act,however, still requires that the financial reports give a true and fair view of the financial positionand performance of the entity. The comments in paragraphs 68 to 77 below should be borne inmind, especially paragraph 70. These comments summarise ASIC’s views as expressed inRegulatory Guide 85 Reporting requirements for non-reporting entities, which discusses theapplication of accounting standards to non-reporting entities required to prepare financial reportsunder the Act and of the reporting entity test.

AASB1054(6) 68. Special purpose financial statements are financial statements other than general purpose financialstatements. For guidance on determining when an entity may be a non-reporting entity refer toparagraphs 30 to 33 above.

69. Where financial statements are to be prepared for a non-reporting entity as special purposefinancial statements, the directors (or their equivalent) must ensure that the shareholders and otherpotential users of the financial statements:

understand that the financial statements can only be used for the special purpose for which(a)they are prepared and cannot be used for any other purpose, and

understand that the auditor, where applicable, will issue a special purpose audit report on the(b)financial statements.



Compliance with recognition and measurement requirementsASIC-RG85 70. ASIC believes that non-reporting entities, which are required to prepare financial reports in

accordance with the Act, must still comply with the recognition and measurement requirements ofall applicable accounting standards in order to give a true and fair view of their financial positionand results of their operations. Non–compliance with the recognition and measurementrequirements may further result in a breach of CA 1308 (giving false and misleading information)and CA 254T (paying dividends).

71. The recognition and measurement requirements of accounting standards include, but are notlimited to, requirements relating to depreciation of non–current assets, tax effect accounting, leaseaccounting, measurement of inventories, and recognition and measurement of liabilities foremployee entitlements. The provisions of accounting standards dealing with the classification ofitems as assets, liabilities, equity, income and expenses also apply. This would include theprovisions of AASB 132 Financial Instruments: Presentation concerning the classification offinancial instruments issued as debt or equity.

Consolidated financial statementsASIC-RG85AASB10(Aus3.1),(4),(Aus4.1),(Aus4.2)

72. Consolidation is prima facie also a recognition and measurement requirement. However, ASIC didnot consider consolidation necessary for the financial report to give a true and fair view whenRegulatory Guide 85 was issued in July 2005. As the guide has neither been withdrawn norupdated, it can still be applied, although in the context of AASB 10. Consolidated financialstatements should therefore be prepared if either the parent entity or the group is a reporting entityunless the criteria in AASB 10 paragraph 4 are met (see paragraph 58 above). This is in contrastto RG 85 which states that the sole determining factor is whether the group is a reporting entity.

73. The financial statements of a non-reporting parent entity which does not prepare consolidatedfinancial statements should include a note stating that consolidated financial statements have notbeen prepared because neither the parent nor the group is a reporting entity. An example of sucha note is as follows:

Consolidated financial statements have not been prepared for the company and its subsidiariesbecause neither the company nor the group is a reporting entity and the directors have decidednot to comply with AASB 10 Consolidated Financial Statements. These financial statementsshould be read in conjunction with the separate financial statements of the subsidiaries listed innote X.

Compliance with disclosure requirementsCA295(3)(c)CA297

74. Directors of non-reporting entities must also consider carefully the need to make disclosures whichare not prescribed by the mandatory accounting standards, but which may be necessary in orderfor the financial statements to give a true and fair view. If knowledge of the matters is necessary forthe financial statements to give a true and fair view, the directors should include the appropriatedisclosures in the financial statements. Such disclosures could include significant related partytransactions or contingent liabilities.

75. Non-reporting entities that hold out their financial statements to be general purpose financialstatements must comply with all relevant requirements of accounting standards andinterpretations.

APES205(6) 76. Members of the Accounting Bodies who are involved in, or are responsible for, the preparation,presentation, audit, review or compilation of an entity’s special purpose financial statements arerequired, except where the statements will be used solely for internal purposes, to take allreasonable steps to ensure that the special purpose financial statements, and any associatedaudit, review or compilation report clearly states:

that the financial statements are special purpose financial statements(a)

the purpose for which the financial statements have been prepared, and(b)

the significant accounting policies adopted in the preparation and presentation of the special(c)purpose financial statements.

77. Illustrative special purpose financial statements for a proprietary company that is required toprepare financial reports under the Act, but is not a reporting entity, are included in the VALUEACCOUNTS Special Purpose publication covering the reporting obligations of non-reportingproprietary companies. This publication is available in electronic form from your usual PwCcontacts.



Reduced disclosure regime and special purpose financial statements

78. Tier 2 of the reduced disclosure regime in AASB 1053 can only be applied by entities that preparegeneral purpose financial statements. Non-reporting entities that prepare special purpose financialstatements will therefore have to comply with all disclosures requirements in AASB 101, AASB107, AASB 108 and AASB 1054 even if there are some disclosures in these standards that couldbe omitted by entities reporting under tier 2 of the reduced disclosure regime (eg auditor’sremuneration and reconciliation of operating cash flows).

Non-statutory financial reports

79. A small proprietary company that is not a reporting entity and is not required by the Act or ASIC toprepare a financial report has more scope to adopt accounting policies which do not comply withspecific recognition or measurement requirements than entities which are required to preparefinancial statements which give a ‘true and fair view’. Provided such an entity is not subject tosome other legislation, agreement or constituent document which requires the preparation offinancial statements which give a true and fair view it will not normally need to comply with the Act,AASB or AAS accounting standards or AASB and UIG interpretations if the financial statementsare prepared as special purpose financial statements. However, it may choose to do so voluntarily,particularly with the recognition and measurement rules if they are relevant for the specific purposefor which the statements are being prepared. If special purpose financial statements are prepared,the requirements of APES 205 Conformity with Accounting Standards described in paragraph 76above are applicable.

CA293,294 80. Small proprietary companies that prepare financial statements at the request of shareholders orASIC will need to comply with accounting standards to the extent required by the request.

SAC1APES205

81. The reporting entity and general purpose financial reporting concepts discussed above in thecontext of companies are also generally applicable to non-corporate entities in the private andpublic sectors by virtue of the requirements of SAC 1 and APES 205. The financial statements ofmany unincorporated joint ventures may be special purpose financial statements.

Financial yearsCA323D(1),(2) 82. The first financial year of entities reporting under the Act starts on the day on which the entity is

registered or incorporated and lasts for 12 months, or a period not longer than 18 monthsdetermined by the directors. Subsequent financial years must be 12 months long plus/minusseven days.

CA323D(2A) 83. Having said that, entities can change their financial year-end at any time, provided the change:

is made in good faith(a)

is in the best interest of the entity, and(b)

the entity has not already changed its financial year in the previous five years.(c)CA323D(2A) 84. However, a word of caution. If an entity changes its year-end under the new rules, this cannot

result in a financial year that is longer than 12 months. For example, if a company intends to movefrom a June year-end to a December year-end, it will need to do this by having a six monthfinancial year from July 2015 to December 2015 as opposed to an 18 month financial year.

CA323D(4)ASIC98/96ASIC-RG58(45)-(52)

85. Entities are also permitted to change their year-end in order to synchronise it with the year-end ofan Australian controlling entity, provided the accounting standards require the preparation ofconsolidated financial statements and the change is made within 12 months after the change ofcontrol occurred. Controlled entities of a foreign parent can apply ASIC class order 98/96 tochange their year-end provided there is a synchronisation requirement in the parent’s place oforigin.

CA323D(4)ASIC98/96CA250P

86. Entities that change their year-end to synchronise it with the year-end of a controlling entity maystill do this by having a financial year up to 18 months in length. Public companies need to keep inmind, though, that they are required to lay the annual report for the financial year before an AGMand to hold an AGM at least once in each calendar year. They may need to apply to ASIC for anextension of time to hold their AGM.

ASIC-INFO17 87. Where an entity has changed its financial year as permitted under the Act or class order 98/96, itneeds to notify ASIC of the change in writing. The notification should include the start and enddates of the old and new financial year and the exception under which the entity is changing itsfinancial year.

CA340,342ASIC-INFO17

88. If everything else fails, entities can also apply to ASIC under section 340 of the Act for individualrelief to change their financial year (see paragraph 51 above). However, ASIC can only grant reliefif the entity can demonstrate that not changing the year-end, or having to do this by having ashorter financial year would impose unreasonable burdens.


Appendix B: Preparation and audit of annual statutory financial reports

This flowchart identifies which entities must prepare audited financial reports under Chapter 2M of the Corporations Act 2001 (the Act).

Entity type Is a statutory financial report required under the Act? Must report be audited?

Disclosing entity or registeredscheme

Company limited by guarantee(not registered charity)

Public company

Large proprietary company

Small proprietary company

Yes Yes

Does the company have revenue of less than $250,000 and isnot a deductible gift recipient within the meaning of the Income TaxAssessment Act 1997?

Is the company eligible to apply the wholly-owned subsidiaries ASIC relieffrom the requirement to prepare annual financial reports? (CO 98/1418)

Is the company eligible to apply the wholly-owned subsidiaries ASIC relieffrom the requirement to prepare annual financial reports? (CO 98/1418)

Was the small proprietary company controlled by a foreigncompany for all or part of the financial year?

Was the foreign controlled small propriety company consolidated for the period of control in a financial report lodgedwith ASIC by the registered foreign company or by an intermediate Australian parent entity, which is a disclosingentity, company or registered scheme? (CA 292(2))

Is the company eligible to apply the relief for a member of a ‘small group’under ASIC CO 98/0098?

Is the company eligible to apply the wholly owned subsidiaries ASIC relief from the requirement to prepare annualfinancial reports? (ASIC 98/1418)

Have ASIC or shareholders with at least 5% of the votes in the company requested thesmall propriety company to prepare an annual financial report? (CA 293,294)

Is revenue lessthan$1 million?

Company can choose tohave its report reviewedor audited

Is the ASIC auditrelief Class Orderapplied?(CO 98/1417)

Does ASIC / doshareholders wantthe report audited?

No

Yes

No

Yes

Yes

No

Yes Yes

No

YesYes

No

No

Yes

No Yes

Yes No

Yes No

Yes

Is the ASIC auditrelief Class Orderapplied?(CO 98/1417)

Yes

No

No

Yes

Yes

No

Yes

No

Yes

No

Yes

No

Yes

No

Yes

No

Yes

No

No

Yes

Appendix B: Preparation and audit of annual statutory financial reports


Corporations Act entities

The following table provides a brief summary of the types of entities that are regulated under theCorporations Act 2001.

Type of company Description

CA45A,112,113,148 Proprietary company Can have no more than 50 non-employee shareholders

Must have ‘Proprietary’ in its name (or Pty)

Normally limited by shares, but can also be unlimited

Name must indicate whether limited (‘Limited’ or ‘Ltd’) or unlimited

Financial reporting obligations depend on whether the company is‘large’ or ‘small’, see paragraphs 24 to 27 of Appendix A

CA9,112 Public company A company other than a proprietary company

Can be limited by shares, limited by guarantee, no liability (miningcompanies only) or unlimited

Name must indicate whether the company is a no liability company(NL) or a limited company; an exception exists for companies limited byguarantee which are set up for charitable purposes.

CA9 Managed investmentscheme

A scheme with the following features:

people contribute consideration to acquire rights to benefits producedby the scheme

the contributions are pooled or used in common enterprise, and

the members do not have day-to-day control over the operation of thescheme.

Time sharing schemes are also MIS. Other types of entities are, however,specifically excluded, see the definition of MIS in section 9 of the Act.

MIS have to be registered if

CA601ED they have more than 20 members,

they were/are promoted by a person in the business of promotingschemes, or

ASIC determines that there are a number of schemes that are closelyrelated and which, in aggregate, have more than 20 members.

CA601FACA601FB

Registered MIS must have a responsible entity which is a public companythat holds an AFS licence authorising it to operate a scheme. Theresponsible entity is liable to scheme members for all aspects of thescheme’s operation. It can delegate any aspect of operations to a thirdparty (eg a custodian), but it cannot delegate its liability.

CA9CR2C.1.01

Listed entity(company or registeredscheme)

A reference to ‘listed’ means inclusion in the official list of a prescribedfinancial market operated in Australia. At present, the following markets areprescribed:

Asia Pacific Exchange Limited

ASX Limited

Chi-X Australia Pty Ltd

National Stock Exchange of Australia Limited

SIM Venture Securities Exchange Ltd.

Disclosing entity All listed companies & listed registered schemes are disclosing entities.

Other public companies and unlisted registered schemes may also satisfythe definition of a disclosing entity in certain circumstances (see paragraph34 of Appendix A for details).


Appendix C: Annual reporting deadlines

The annual reporting deadlines for disclosing entities, other public and proprietary companies andregistered schemes are summarised in the following table. ‘Annual report’ refers to the financial reportfor the financial year, including the directors’ declaration, and the audit report on that financial report. Itmay also refer to a concise financial report prepared under CA 314(2).

The deadlines refer to periods after the year end, except in relation to responses to the extract ofparticulars, and the deadline for sending a notice of annual general meeting (AGM), which refers to aperiod prior to the date of the meeting.

Action

Disclosing entities

Other publiccompanies26

Unlistedregisteredschemes

Proprietary companies

Listed Unlisted Small 21 Large

‘Grandfathered’

large

Sign directorsdeclaration andreport1

3 months 3 months 4 months 3 months -2,3 4 months2 4 months

ASX(4.3A),(4.3B),

Listed entities only

Lodge Appendix4E with ASX

2 months4-7 - - - - - -

CA319(3) Lodge annual reportwith ASIC 19,20,24,25

3 months8-11

3 months 4 months 3 months -2

4 months2,22

-23

CA315(1),(3),(4) Send annual reportto members 24,25

4 months(schemes– 3months)

12,13

4 months12

4 months12

3 months -3

4 months 4 months

CA249H(1),249HA Send notice of AGM 28 days15 21 days14,15 21 days14,15 -17 -17 -17 -17

CA250N(2) Hold AGM 26 5 months 5 months 5 months -17 -17 -17 -17

CA346A–346C Respond to ASIC reextract of particulars

Within 28 days of the date of issue of the extract by ASIC18

Directors’ declaration and directors’ report

CA319(3)(a) 1. There is no specific deadline for signing the directors’ declaration and report, but they will need tobe signed by the stated deadlines to enable the annual report to be lodged with ASIC on time.

Proprietary company is a disclosing entity

CA319(3)(a) 2. A deadline of 3 months applies if the company is a disclosing entity.

Financial reports requested by shareholders or ASIC

CA315(2)

CA294(3)

3. If financial reports are requested by shareholders with at least 5% of the votes in the company, orASIC, the deadline is the later of 4 months after year end or 2 months after the shareholderrequest, or, as specified in the ASIC request (the date must be a reasonable one in view ofASIC’s request).

Listed entities

ASX(4.3A)

Listed entities only

4. A listed entity (except a mining or oil and gas exploration entity) must lodge the information set outin Appendix 4E (preliminary final report) with ASX. A responsible entity must give the information toASX with any necessary adaptation. The information in Appendix 4E must use the sameaccounting policies as the accounts on which it is based and must comply with all relevantaccounting standards. Foreign entities may provide the information in accordance with accountingstandards acceptable to the ASX (eg International Financial Reporting Standards).

ASX(4.3B)Listed entities only

5. The information referred to in paragraph 4 above must be given to ASX immediately all of itbecomes available, and no later than it lodges any accounts with ASIC or the regulatory bodies inthe jurisdiction in which it is established. In any event, Appendix 4E must be lodged with the ASXno later than 2 months after the end of the relevant financial year.

ASX(4.3D),(4.5A)Listed entities only

6. Once a listed entity is or becomes aware of any circumstances which are likely to affect the resultsor other information contained in the preliminary final report given to the ASX under Listing Rules4.3 or 4.3A, the entity must immediately give the ASX an explanation of the circumstances and theeffects they are expected to have on the entity’s current or future financial performance or financialposition. There is no requirement to also include information about the circumstances in thefinancial statements, but some entities may wish to continue to make this disclosure, as previouslyrequired under Listing Rule 4.10.1.



ASX(5.5)Listed entities only

7. Mining and oil and gas exploration entities are not required to lodge either Appendix 4E orAppendix 4D (half-year reporting). However, they must lodge quarterly reports which show theircash flows, changes in mining tenements and in issued securities with the ASX within one monthafter the end of the relevant quarter (Appendix 5B). Listed exploration entities must also lodge theirannual financial report with the ASX and/or ASIC within the 3 months deadline that applies to alllisted entities.

ASX(4.5)ASIC-RG28ASIC98/104ASIC99/90Listed entities only

8. All listed entities that are established in Australia must give the annual report to the ASX when theylodge it with ASIC. They must also give the ASX a copy of any concise report at the same time.Under ASIC Regulatory Guide 28 and Class Order 98/104, lodgement with the ASX can alsosatisfy a listed entity’s obligation to lodge documents with ASIC. Special rules apply to entities thatare not established in Australia, see ASX Listing Rules 4.5.2 and 4.5.3 for details.

ASX(4.7A)Listed entities only

9. If an ASX Debt Listing is required to comply with CA 319 (disclosing entities) or CA 601CK(registered foreign companies), it must give ASX a copy of the documents that it lodges with ASICno later than the time that it lodges them. If it is not required to comply with CA 319 or CA 601CK, itmust give to ASX, in English, a copy of any annual accounts that it lodges with the regulatoryauthorities in the jurisdiction in which it is established within 10 business days of lodging them.

ASX(4.7A.1)Listed entities only

10. If an ASX Debt Issuer was admitted on the basis of a guarantee provided by a parent entity, andthe parent entity is required to comply with CA 601CK, the ASX Debt Issuer must give ASX a copyof the documents that the parent entity lodges with ASIC no later than the time that the parententity lodges them. If the parent entity is not required to comply with CA 601CK, the ASX DebtIssuer must give to ASX, in English, a copy of any annual accounts that the parent entity lodgeswith the regulatory authorities in the jurisdiction in which it is established, immediately after theparent entity lodges them.

ASX(4.8)Listed entities only

11. If securities in, or loans or advances to, an unlisted entity are a listed entity’s main asset, the listedentity must give the ASX the latest accounts of the unlisted entity, together with any auditor’s reportor statement when the listed entity gives its annual report and any concise report to the ASX. Thisis not required if the unlisted entity is included in the listed entity’s consolidatedfinancial statements.

Sending annual reports to members

CA315(1)CA314(1AA),(1AE)

12. The deadline is the latest date for sending annual reports to members. They must be sent at least21 days before the AGM if that date is earlier. Entities may elect to make their annual reportavailable on their web site and only send hard copy reports to those members that have requestedthem.

ASX(4.7),(4.7.1)Listed entities only

13. If the annual report or concise report sent to members of a listed entity under CA 314 containsinformation additional to that lodged with the ASX/ASIC under Listing Rule 4.5 within 3 monthsafter the year end (eg information required under ASX 4.10), it must give the ASX a copy of thereport sent to members on the earlier of the first day it sends it to members or the last day for it tobe given to members under CA 315 (ie 4 months, or 3 months for schemes). If the annual reportsent to members does not include additional information/documents to those already lodged, theentity must tell the ASX that this is the case.

Annual general meeting (AGM)

CA249H(1)–(4) 14. Companies other than listed companies may specify a longer minimum period of notice ofmeetings if they have a Constitution. Such companies may call an AGM on shorter notice if allmembers entitled to attend and vote at the AGM agree beforehand. However, shorter notice is notpermitted for an AGM of a public company at which a resolution will be moved to remove a directorunder CA 203D or to appoint a director in place of a director removed under that section. Shorternotice is also not permitted for a meeting of a company at which a resolution will be moved toremove an auditor under CA 329.

CA249J(4),(5)CA135(1)(a),(2)

15. Under CA 249J(4), a notice of meeting sent by post is taken to be given 3 days after it is posted. Anotice sent by fax, or other electronic means, or made available by electronic means, is taken to begiven on the business day after it is sent or the member is notified that the notice is available.CA 249J(4) is a replaceable rule. Replaceable rules apply to each company registered after 1 July1998 and to any company registered before that date that repeals its Constitution. A replaceablerule may be displaced or modified by a company’s Constitution.

CA250N(4) 16. A public company that has only one member is not required to hold an AGM unless specificallyrequired to do so under its Constitution.

17. Registered schemes and proprietary companies are not required to hold AGMs unless specificallyrequired to do so under their Constitution.



Extract of particulars

CA346A–346CCA1351(3)(4)

18. ASIC must issue an extract of particulars to each company and registered scheme within twoweeks of the entity’s review date (generally the anniversary of the entity’s registration), and theentity is required to correct any incorrect information within 28 days of the issue date of the extract.If the information in the extract of particulars is correct no response is required, but the annualreview fee must be paid within 2 months of the review date. Companies also have the option ofprepaying their annual review fee for a period of 10 years by way of a single lump sum payment.

Solvency resolution

CA347A 19. Directors who have not lodged a financial report with ASIC under Chapter 2M of the CorporationsAct 2001 within the period of 12 months before the entity’s review date are required to pass asolvency resolution within 2 months after the review date. Entities to which this requirement appliesinclude:

small proprietary companies that are not required to prepare and lodge financial reports(a)

wholly-owned subsidiaries that have entered into deeds of cross guarantee with their parent(b)entities and apply the ASIC Class Order relief from preparing financial reports

large proprietary companies that qualify as ‘grandfathered’ former exempt proprietary(c)companies and are not required to lodge their financial reports with ASIC (see paragraph 22below), and

companies that have failed to lodge their financial reports with ASIC, as required by the Act.(d)

CA347B(1),(2) 20. If the directors pass a negative solvency resolution the company must notify ASIC of that factwithin 7 days of passing the resolution. If the directors do not pass a solvency resolution within 2months after the review date the company must notify ASIC of that fact within 7 days after the 2month period following the review date.

Proprietary companies

CA315(4),319(3) 21. The large proprietary company reporting deadlines apply to foreign controlled small proprietarycompanies which are required to report under CA 292(2)(b) if they are not eligible to apply therelief provided by ASIC Class Order 98/1418 (see Appendix B).

ASIC05/638 22. Large proprietary companies eligible for relief under ASIC Class Order 05/638 (formerly ClassOrder 98/99) need not lodge annual reports with ASIC. Financial reports must still be prepared,audited and distributed to shareholders.

CA1408 23. Under the Class Order, a large proprietary company that is not a disclosing entity does not need tolodge an annual report with ASIC if it qualifies as a ‘grandfathered’ exempt proprietary companyunder section 319(4) of the old Corporations Law, which continues to have application by virtue ofCA 1408. A company is a ‘grandfathered’ exempt proprietary company if:

it was an exempt proprietary company on 30 June 1994 and has continued to meet the(a)definition of exempt proprietary company (as in force at 30 June 1994) at all times sincethat date

it was a large proprietary company at the end of the first financial year that ended after 9(b)December 1995

its financial statements and financial reports for the financial year ending during 1993 and(c)each later financial year have been audited before the deadline for reporting to members forthat year, and

it lodged the required notice with ASIC after the commencement of the First Corporate Law(d)Simplification Act on 9 December 1995.



Externally administered companies

ASIC03/392 24. A company that has a liquidator appointed does not have to comply with Part 2M.3 (financialreporting) of the Corporations Act 2001. Such a company will not need to lodge an annual reportwith ASIC or send it to members.

ASIC03/392 25. Where a relevant external administrator is appointed in relation to a company no earlier than 3months before the end of the company’s reporting period, the company does not have to lodge anannual report with ASIC or send it to members until 6 months after that appointment. To rely onthis relief, the company must comply with certain conditions set out in ASIC Class Order 03/392.For the purposes of the Class Order, a relevant external administrator is:

an administrator of a company(a)

a managing controller appointed to the whole or substantially the whole of the property of(b)a company

a provisional liquidator of a company,(c)

where no other person was acting in one of those capacities in relation to the company at the(d)time of their appointment.

ASIC-RG174(64)–(81) 26. ASIC may grant and externally administered public company an extension of time within which thecompany is required to hold an AGM. ASIC’s policy in this regard is set out in Interim PolicyStatement 174 Externally administered companies: Financial reporting and AGMs.

Other public companies – companies limited by guarantee

CA292(3) 27. Companies limited by guarantee are also public companies. However, they are only required toprepare and lodge a financial report if they:

CA45B are a ‘deductible gift recipient’ within the meaning of the Income Tax Assessment Act 1997, or(a)

CA45B have revenue of more than $250,000, or(b)

CA292(3),294A,294B have been directed by members or ASIC to do so.(c)

Companies limited by guarantee that are registered charities are currently exempt from complyingwith the financial reporting requirements of the Act and must instead comply with the requirementsin the Australian Charities and Not-for-Profit Commission (ACNC) Act 2012. At the time of writing,the Government was in the process of abolishing the ACNC legislation, but it was unclear when therepeal will become effective. Please subscribe to our regular updates(www.pwc.com.au/assurance/ifrs) if you would like us to keep you informed of futuredevelopments.


Appendix D: Accounting and reporting pronouncements

Accounting and reporting pronouncements on issue at 15 January 2015 are listed below and on the following pages. Newor revised pronouncements since 15 January 2014 are highlighted as ‘new’ or ‘revised’ as appropriate. However, this doesnot include consequential amendments made to other standards as a result of the release of a new or revised standard (egAASB 2014-5, 2014-7 or 2014-8), or editorial corrections made by AASB 2014-1.

AASB Standards

AASB Issued/Amended

New/Revised

1 8/14 Revised First-time Adoption of Australian Equivalents to International Financial ReportingStandards (revised standard applicable 1 January 2016)

2 6/14 Revised Share-based Payment

3 6/14 Revised Business Combinations

4 4/09 Insurance Contracts

5 5/09 Non-current Assets Held for Sale and Discontinued Operations

6 4/07 Exploration for and Evaluation of Mineral Resources

7 8/13 Financial Instruments: Disclosures

8 6/14 Revised Operating Segments

9 12/14 Revised Financial Instruments (applicable 1 January 2018)

10 10/13 Consolidated Financial Statements

11 8/14 Revised Joint Arrangements (revised standard applicable 1 January 2016)

12 10/13 Disclosure of Interests in Other Entities

13 6/14 Revised Fair Value Measurement

14 6/14 New Regulatory Deferral Accounts (applicable 1 January 2016)

15 12/14 New Revenue from Contracts with Customers (applicable 1 January 2017)

101 6/12 Presentation of Financial Statements

102 7/08 Inventories

107 8/13 Statement of Cash Flows

108 7/08 Accounting Policies, Changes in Accounting Estimates and Errors

110 7/08 Events after the Reporting Period

111 4/09 Construction Contracts (will be superseded by AASB 15 effective 1 January 2017)

112 8/13 Income Taxes

116 8/14 Revised Property, Plant and Equipment (revised standard applicable 1 January 2016)

117 5/09 Leases

118 5/09 Revenue (will be superseded by AASB 15 effective 1 January 2017)

119 6/14 Revised Employee Benefits

120 7/08 Accounting for Government Grants and Disclosure of Government Assistance

121 6/10 The Effects of Changes in Foreign Exchange Rates

123 6/10 Borrowing Costs

124 6/14 Revised Related Party Disclosures

127 8/13 Separate Financial Statements

128 12/12 Investments in Associates and Joint Ventures

129 7/08 Financial Reporting in Hyperinflationary Economies

132 8/13 Financial Instruments: Presentation



AASB Standards

AASBIssued/Amended

New/Revised

133 3/08 Earnings per Share

134 8/13 Interim Financial Reporting

136 9/13 Impairment of Assets

137 6/14 Revised Provisions, Contingent Liabilities and Contingent Assets

138 8/14 Revised Intangible Assets (revised standard applicable 1 January 2016)

139 6/14 Revised Financial Instruments: Recognition and Measurement

140 6/14 Revised Investment Property

141 12/14 Revised Agriculture (revised standard applicable 1 January 2016)

1004 12/07 Contributions

1023 4/09 General Insurance Contracts

1031 12/13 Materiality

1038 10/13 Life Insurance Contracts

1039 12/12 Concise Financial Reports

1048 12/13 Interpretation and Application of Standards

1049 10/13 Whole of Government and General Government Sector Financial Reporting

1050 12/07 Administered Items

1051 12/07 Land Under Roads

1052 12/07 Disaggregated Disclosures

1053 6/14 Revised Application of Tiers of Australian Accounting Standards

1054 5/11 Australian Additional Disclosures

1055 3/13 Budgetary Reporting

1056 6/14 New Superannuation Entities (applicable 1 July 2016)

2014-1 6/14 New Amendments to Australian Accounting Standards

2014-2 6/14 New Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2Disclosure Requirements [AASB 1053]

2014-3 8/14 New Amendments to Australian Accounting Standards – Accounting for Acquisitions ofInterests in Joint Operations [AASB 1 and AASB 11]

2014-4 8/14 New Amendments to Australian Accounting Standards – Clarification of AcceptableMethods of Depreciation and Amortisation [AASB 116 and AASB 138]

2014-5 12/14 New Amendments to Australian Accounting Standards arising from AASB 15;

2014-6 12/14 New Amendments to Australian Accounting Standards – Agriculture: Bearer Plants[AASB 101, 116, 117, 123, 136, 140 & 141]

2014-7 12/14 New Amendments to Australian Accounting Standards arising from AASB 9 (December2014)

2014-8 12/14 New Amendments to Australian Accounting Standards arising from AASB 9 (December2014) – Application of AASB 9 (December 2009) and AASB 9 (December 2010)

2014-9 12/14 New Amendments to Australian Accounting Standards – Equity Method in SeparateFinancial Statements [AASB 1, AASB 127, AASB 128]

2014-10 12/14 New Amendments to Australian Accounting Standards – Sale or Contribution of Assetsbetween an Investor and its Associate or Joint Venture [AASB 10, AASB 128]

Note: Amending standards issued before 2014 are not listed above.

AAS Standards

AASIssued/Amended

25 12/05 Financial Reporting by Superannuation Plans (will be superseded by AASB 1056 SuperannuationEntities for financial years commencing 1 July 2016)



Conceptual Framework

Issued/Amended

7/04 Framework for the Preparation and Presentation of Financial Statements

CF2013-1 12/13 Amendments to the Australian Conceptual Framework

SAC 1 8/90 Definition of the Reporting Entity

AASB Interpretations1

Interpretation Issued/Amended

New/Revised

AASB Interpretations corresponding to IASB Interpretations

2 6/12 Members’ Shares in Co-operative Entities and Similar Instruments

4 2/07 Determining whether an Arrangement contains a Lease

9 5/09 Reassessment of Embedded Derivatives

10 9/06 Interim Financial Reporting and Impairment

11 2/07 AASB 2 – Group and Treasury Share Transactions

12 2/07 Service Concession Arrangements

13 6/10 Customer Loyalty Programmes (will be superseded by AASB 15 effective 1January 2017)

14 12/09 The Limit on a Defined Benefit Asset, Minimum Funding Requirements andtheir Interaction

15 8/08 Agreements for the Construction of Real Estate (will be superseded by AASB15 effective 1 January 2017)

16 5/09 Hedges of a Net Investment in a Foreign Operation

17 12/08 Distribution of Non cash Assets to Owners

18 3/09 Transfer of Assets from Customers (will be superseded by AASB 15 effective1 January 2017)

19 12/09 Extinguishing Financial Liabilities with Equity Instruments

20 11/11 Stripping Costs in the Production Phase of a Surface Mine

21 6/13 New Levies (applicable 1 January 2014)

129 2/07 Service Concession Arrangements: Disclosures

Other AASB Interpretations

1003 11/07 Australian Petroleum Resource Rent Tax

1038 12/07 Contributions by Owners Made to Wholly-Owned Public Sector Entities

1 The AASB also publishes rejection statements for issues raised but not taken onto the AASB’s agenda. These canbe found on the AASB’s web site at www.aasb.com.au under Pronouncements/Board agenda decisions.

Urgent Issues Group Interpretations


New/Revised

UIG Interpretations corresponding to IASB Interpretations

1 7/04 Changes in Existing Decommissioning, Restoration and Similar Liabilities

5 6/05 Rights to Interests arising from Decommissioning, Restoration andEnvironmental Rehabilitation Funds

6 10/05 Liabilities arising from Participating in a Specific Market Waste Electrical andElectronic Equipment




New/Revised

UIG Interpretations corresponding to IASB Interpretations

7 2/06 Applying the Restatement Approach under AASB 129 Financial Reporting inHyperinflationary Economics

8 3/06 Scope of AASB 2

107 3/08 Introduction of the Euro

110 7/04 Government Assistance - No Specific Relation to Operating Activities

112 12/04 Consolidation - Special Purpose Entities

113 7/04 Jointly Controlled Entities - Non-Monetary Contributions by Venturers

115 7/04 Operating Leases – Incentives

121 7/04 Income Taxes - Recovery of Revalued Non-Depreciable Assets

125 7/04 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

127 7/04 Evaluating the Substance of Transactions Involving the Legal Form of a Lease

131 7/04 Revenue Barter Transactions Involving Advertising Services (will besuperseded by AASB 15 effective 1 January 2017)

132 7/04 Intangible Assets Web Site Costs

Other UIG Interpretations

1017 11/04 Developer and Customer Contributions for Connection to a Price-RegulatedNetwork

1019 9/04 The Superannuation Contributions Surcharge

1030 9/04 Depreciation of Long-Lived Physical Assets: Condition-Based Depreciationand Related Methods

1031 7/04 Accounting for the Goods and Services Tax (GST)

1042 12/04 Subscriber Acquisition Costs in the Telecommunications Industry (will besuperseded by AASB 15 effective 1 January 2017)

1047 11/04 Professional Indemnity Claims Liabilities in Medical Defence Organisations

1052 6/05 Tax Consolidation Accounting

1055 9/04 Accounting for Road Earthworks

AASB Exposure Drafts2

ED Issued

214 7/11 Extending Related Party Disclosures to the Not-for-Profit Public Sector

242 5/13 Leases (including tier 2 supplement)

244 6/13 Insurance Contracts

253 8/14 Recognition of Deferred Tax Assets for Unrealised Losses (proposed amendments to AASB112)

254 9/14 Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair value(proposed amendments to AASB 10, AASB 12, AASB 127, AASB 128 and AASB 136)

255 9/14 Financial Reporting Requirements for Australian Groups with a Foreign Parent

256 10/14 Removal of Cross-References from Financial Statements to Other Documents

257 11/14 Classification and Measurements of Share-based Payment Transactions (proposedamendments to AASB 2)

258 12/14 Disclosure Initiative: proposed amendments to IAS 7

2 These are current exposure drafts that have not yet resulted in the issue or reissue of an accounting standard



Australian Invitations to Comment and Consultation papers

ITC Issued

30 2/14 Request for Comment on IASB Request for Information on Post-implementation Review:IFRS 3 Business Combinations

31 5/14 Accounting for Dynamic Risk Management: a Portfolio Revaluation Approach to MacroHedging

32 9/14 Reporting the Financial Effects of Rate Regulation

IASB Releases without Australian equivalent

Listed below are pronouncements that did not have an Australian equivalent standard or exposure draft as at 15 January2015. With the exception of the IFRS for SMEs and the IFRS Practice Statement Management Commentary the documentswill be issued as Australian standard or exposure draft in due course.

International Financial Reporting Standards

As at 15 January 2015, the following standards or amendments had not yet been issued as Australian equivalentstandards:

IFRSIssued/Amended

New/Revised

IAS 27 8/14 Revised Equity Method in Separate Financial Statements (amendments to IAS 27)

Various 9/14 Revised Annual Improvements to IFRSs 2012-2014 Cycle [IFRS 5, IFRS 7, IAS 19and IAS 34]

IFRS 10, IAS 28 9/14 Revised Sale or contribution of assets between an investor and its associate or jointventure (amendments to IFRS 10 and IAS 28)

IAS 1 12/14 Revised Disclosure Initiative (amendments to IAS 1)

IFRS 10IFRS 12, IAS 28

12/14 Revised Investment Entities: Applying the Consolidation Exception (amendments toIFRS 10, IFRS 12 and IAS 28)

International Financial Reporting Standards for Small and Medium Sized Enterprises (SMEs)

Document IssuedNew/Revised

7/09 International Financial Reporting Accounting Standard for Small Medium-sized Entities

Q&A 2011/01 6/11 Use of the IFRS for SMEs in parent’s separate financial statements

Q&A 2011/02 12/11 Entities that typically have public accountability

Q&A 2011/03 12/11 Interpretation of ‘traded in a public market’ in applying the IFRS for SMEs

Q&A 2012/01 4/12 Application of ‘undue cost or effort’

Q&A 2012/02 4/12 Jurisdiction requires fallback to full IFRSs

Q&A 2012/03 4/12 Fallback to IFRS 9 Financial Instruments

Q&A 2012/04 4/12 Recycling of cumulative exchange differences on disposal of a subsidiary

International Interpretations - IFRS Interpretations Committee

The IFRS Interpretations Committee maintains a list of items not taken onto its agenda, including reasons why an issue wasrejected. This list is regularly updated and can be accessed on the IASB’s web site at www.iasb.org under Standardsdevelopment/Work plan for interpretations.



Other IASB pronouncements

IssuedNew/Revised Document

12/10 Management Commentary – A framework for presentation

IASB exposure drafts and similar documents

ED Issued

2013/9 101/3 IFRS for SMEs: Proposed amendments to the International Financial Reporting Standardsfor Small and Medium-sized Entities

International Interpretations (IFRIC) exposure drafts and similar documents

ED Issued

DI/2013/2 5/12 Put Options Written on Non-controlling Interests

ASIC Regulatory Guides

RGNew/Revised

New/Revised

13 8/95 ACN, ARBN and company names

16 7/08 External administrators: reporting matters and lodging documents

22 6/92 Directors' statement as to solvency

26 6/92 Resignation of auditors

28 7/03 Relief from dual lodgment of financial reports

29 3/07 Financial reporting by Australian entities in dual listed companyarrangements

34 5/13 Auditors’ obligations: reporting to ASIC

43 5/11 Financial reports and audit relief

44 7/99 Annual general meetings – extension of time

51 12/09 Applications for relief

58 5/11 Financial reporting requirements: Registered foreign companies andAustralian companies

64 1/00 Failure to lodge documents (currently under review)

68 3/07 New financial reporting and procedural requirements

81 5/00 Destruction of books

85 7/05 Reporting requirements for non-reporting entities

89 Disclosing pro forma financial information – yet to be released (currently CP69)

95 3/97 Disclosing entity provisions relief

108 12/09 No-action letters

112 3/11 Independence of experts

115 8/10 Audit relief for proprietary companies

157 2/00 Financial reports for offer information statements

166 11/13 Licensing: Financial requirements

170 4/11 Prospective financial information

174 6/03 Externally administered companies: Financial reporting and AGMs (InterimPolicy Statement)

187 2/07 Auditor rotation



ASIC Regulatory Guides

RGNew/Revised

New/Revised

198 6/09 Unlisted disclosing entities: continuous disclosure obligations

217 7/10 Duty to prevent insolvent trading: Guide for directors

230 12/11 Disclosing non-IFRS financial information

247 3/13 New Effective disclosure in an operating and financial review

ASIC Class Orders and other instruments

COIssued/Amended

New/Revised

98/96 7/07 Synchronisation of financial year with foreign parent company (amended byCO 07/505)

98/98 8/09 Small foreign controlled proprietary companies (not part of large group)financial reporting relief (amended by CO 00/321,03/67, 07/505, 7/822 and09/626)

98/100 9/06 Rounding in financial reports and directors’ reports (amended by CO 99/90,CO 00/321, 04/667, 05/641, 06/51 and 6/709)

98/101 2/99 Members of companies, registered schemes and disclosing entities who areuncontactable (amended by CO 99/90)

98/104 7/99 Dual lodgement relief listed disclosing entities other than undertakings(amended by CO 99/90 and CO 99/837)

98/106 7/98 Financial reports of superannuation funds, approved deposit funds andpooled superannuation trusts

98/1417 8/14 Revised Audit relief for proprietary companies (amended by CO 99/90, CO 01/1086,02/247, 02/1016, 06/51, 10/545 and 14/757)

98/1418 8/14 Revised Wholly-owned entities (amended by CO 98/2017, 00/321, 01/1087, 02/248,02/1017, 04/663, 04/682, 04/1624, 05/542, 06/51, 08/11, 08/255, 08/618,09/626, 13/1051 and 14/757)

98/2016 8/14 Revised Entities which cease to be disclosing entities before their deadline (amendedby CO 14/757)

98/2395 7/05 Transfer of information from the directors’ report (amended by CO 05/641)

99/90 2/99 Concise reports

00/172 2/00 Offer information statements: relief in relation to financial statements

00/2449 6/12 ASX electronic lodgment facility - relief from paper form lodgment (amendedby CO 02/267 and 12/722)

00/2451 6/12 Electronic lodgment of certain reports with the ASX – approval (amended byCO 12/722 and 12/726)

01/1519 6/12 Disclosure of directors’ interests (amended by CO 08/382 and 12/722)

02/968 9/02 Interim relief from financial reporting obligations for companies in externaladministration

02/1432 7/07 Registered foreign companies - financial reporting requirements (amendedby CO 07/550)

03/392 6/03 Externally administered companies: Financial reporting relief

03/748 8/03 Reporting requirements under s989B

03/823 9/03 Relief from licensing, accounting and audit requirements for foreignauthorised deposit-taking institutions

05/638 7/05 Anomalies preventing certain large proprietary companies from beinggrandfathered

05/639 7/05 Application of accounting standards by non-reporting entities



ASIC Class Orders and other instruments

COIssued/Amended

New/Revised

05/642 7/10 Combining financial reports of stapled security issuers (amended by CO10/655)

05/644 7/05 Disclosing post-balance date acquisitions and disposals

06/06 1/06 Dual lodgment relief for NSX-listed disclosing entities

06/68 2/06 Conditional relief for foreign licensees from financial reporting and recordkeeping obligations

06/441 8/14 Revised Including different registered scheme financial reports in a single document(amended by CO 14/757)

08/15 1/08 Disclosing entities - half-year financial reporting relief

10/654 8/14 Revised Inclusion of parent entity financial statements in financial reports (amendedby CO 14/757)

13/1050 1/14 Revised Financial reporting by stapled entities (amended by CO 13/1644)

ASIC provides regular reports on its recent decisions on applications for relief. These can be found on the ASIC web siteunder Publications/Reports. For reports issued in 2014 see REP 382, REP 395 and REP 411.

ASIC financial reporting Advisories and Media Releases – 2014

MR Issued

14-004 1/14 Presentation of financial statements by stapled entities

14-047 3/14 ASIC information sheet on audit quality

14-120 5/14 Focuses for 30 June 2014 financial reports

14-140 6/14 ASICs audit inspection findings for 2012-13

14-141 6/14 Findings from 31 December 2013 financial reports

14-146 7/14 ASIC provides interim relief on key management personnel equity instrument disclosures

14-190 8/14 Statement on auditor registration

14-294 11/14 Focus for 31 December 2014 financial reports

14-332 12/14 ASIC findings from review of 30 June 2014 financial reports

14-343 12/14 ASIC steps up action on lodging financial reports

ASIC Consultation Papers

CPIssued/Amended

69 07/05 Disclosing pro forma financial information (Draft guide)


Appendix E: Indemnification and insurance of officers andauditors

CA9,199A,199B,

300(1)(g),(8),(9)

1. The directors’ report must disclose information about any indemnification or insurancearrangements that are permitted under CA 199A and 199B of the Corporations Act 2001. Theprovisions cover past and present officers or auditors. An officer is defined in CA 9 to mean:

(a) a director or secretary of the corporation, or

(b) a person:

(i) who makes, or participates in making, decisions that affect the whole, or a substantialpart, of the business of the corporation, or

(ii) who has the capacity to affect significantly the corporation’s financial standing, or

(iii) in accordance with whose instructions or wishes the directors of the corporation areaccustomed to act (excluding advice given by the person in the proper performance offunctions attaching to the person’s professional capacity or their business relationshipwith the directors or the corporation), or

(c) a receiver, or receiver and manager, of the property of the corporation, or

(d) an administrator of the corporation, or

(e) an administrator of a deed of company arrangement executed by the corporation, or

(f) a liquidator of the corporation, or

(g) a trustee or other person administering a compromise or arrangement made between thecorporation and someone else.

Insurance

CA199B 2. The disclosure in the VALUE ACCOUNTS Reduced Disclosure Pty Ltd directors’ report relates toan insurance arrangement. CA 199B prohibits a company or a related body corporate frominsuring an officer or an auditor (whether the premium is paid directly or through an interposedentity) against liabilities (other than for legal costs) arising out of:

CA199B(1)(a) (a) conduct involving a wilful breach of duty in relation to the company, or

CA199B(1)(b) (b) a contravention of CA 182 or 183 (improper use of position or information by individual to gainadvantage for self or some other person, or to cause detriment to company).

CA300(1)(g),(8)(b) 3. For insurance arrangements that are not prohibited under CA199B, CA 300(8) requires disclosureof details of any premium paid, or agreed to be paid, for insurance against a current or formerofficer’s or auditor’s liability for legal costs.

CA300(9)(a)–(c),(f) 4. Specific disclosures required in relation to insurance arrangements are:

(a) for officers – their name or the class of officer to which they belong or belonged

(b) for auditors – their name

(c) except where prohibited by the insurance contract:

(i) the nature of the liability, and

(ii) the amount of the insurance premium.

Indemnities for officers and auditors

CA300(1)(g),(8)(a) 5. The directors’ report must disclose details of any indemnity given to a current or former officer orauditor against a liability that is permitted under CA 199A(2) or (3), or any relevant agreementunder which an officer or auditor may be given an indemnity of that kind. Generally, the disclosureof an indemnity will mirror the wording of the relevant indemnity in the contract or auditor’sengagement letter.

6. CA 199A(2) prohibits a company or a related body corporate from indemnifying an officer or anauditor (whether by agreement or by making a payment and whether directly or through aninterposed entity) against any of the following liabilities:

CA199A(2)(a) (a) owed to the company or a related body corporate

CA199A(2)(b) (b) for a pecuniary penalty order under CA 1317G or a compensation order under CA 1317H orCA 1317HA, and

CA199A(2)(c) (c) owed to a third party and which did not arise out of conduct in good faith.

CA199A(2) CA 199A(2) does not apply to a liability for legal costs.

Appendix E: Indemnification and insurance of officers and auditors


7. CA 199A(3) prohibits a company or a related body corporate from indemnifying an officer or anauditor (whether by agreement or by making a payment and whether directly or through aninterposed entity) against legal costs incurred in defending an action if the costs are incurred:

CA199A(3)(a) (a) in defending or resisting proceedings in which the person is found to have a liability for whichthey could not be indemnified under CA 199A(2)

CA199A(3)(b) (b) in defending or resisting criminal proceedings in which the person is found guilty

CA199A(3)(c) (c) in defending or resisting proceedings brought by ASIC or a liquidator for a court order if thegrounds for making the order are found by the court to have been established, or

CA199A(3)(d) (d) in connection with proceedings for relief to the person under the Corporations Act 2001 inwhich the court denies the relief.

CA199A(3) 8. CA 199A(3)(c) (paragraph 7(c) above) does not apply to costs incurred in responding to actionstaken by ASIC or a liquidator as part of an investigation before commencing proceedings for thecourt order.

CA300(9)(a)–(e) 9. Specific disclosures required where an indemnity has been given or agreed to be given are:

(a) for officers – their name or the class of officer to which they belong or belonged

(b) for auditors – their name

(c) the nature of the liability

(d) for an indemnity given – the amount the company paid and any other action the company tookto indemnify the officer or auditor, and

(e) for an agreement to indemnify – the amount that the agreement requires the company to payand any other action the relevant agreement requires the company to take to indemnify theofficer or auditor.

Other illustrative disclosures

10. Following are illustrative examples of disclosures which might be made with respect to anindemnity to comply with CA 300(8). Whether an indemnity requires disclosure and the detailsrequired to be disclosed will need to be decided on a case by case basis. Legal advice should besought if there is any doubt as to the disclosure required to comply with CA 300(8).

Indemnities for officers

CA300(1)(g),(8)(a),(9)(a),(c),(d)

During the financial year, VALUE ACCOUNTS Reduced Disclosure Pty Ltd gave the chiefexecutive officer, Mr N T Toddington and the company secretary, Ms S M Smith an indemnityagainst legal costs incurred in successfully defending proceedings brought against MrToddington and Ms Barker, in their capacity as officers of the company under the Fair TradingAct. The amount paid by the company was $20,000.

Agreement to indemnify officers

CA300(1)(g),(8)(a),(9)(a),(c),(e)

During the financial year, VALUE ACCOUNTS Reduced Disclosure Pty Ltd agreed to indemnifyeach director and secretary of the company and of its Australian based subsidiaries against anyliability:

(a) to a party other than VALUE ACCOUNTS Reduced Disclosure Pty Ltd or a related bodycorporate, but only to the extent that the liability arises out of conduct in good faith, and

(b) for legal costs incurred in connection with proceedings for relief to the director or secretaryunder the Corporations Act 2001 in which the court grants the relief.

The amount payable under the agreement is the full amount of the liability. No liability has arisenunder these indemnities as at the date of this report.

Agreement to indemnify auditor

CA300(1)(g),(8)(a),(9)(b),(c),(e)

During the financial year, VALUE ACCOUNTS Reduced Disclosure Pty Ltd agreed to indemnifyChecker & Co, the former auditors of its subsidiary, VALUE ACCOUNTS Trading Limited,against:

(a) all liabilities (other than liabilities to VALUE ACCOUNTS Reduced Disclosure Pty Ltd,VALUE ACCOUNTS Trading Limited or a related body corporate) arising out of their dutiesas auditor of VALUE ACCOUNTS Trading Limited in the period 1 July 2013 up to the dateof their resignation on 29 April 2014, but only to the extent that the liability arises out ofconduct in good faith

(b) legal costs incurred in defending an action for a liability within the scope of the indemnityreferred to in paragraph (a).

The amount payable under the agreement is the full amount of the liability. No liability has arisenunder this indemnity as at the date of this report.


Appendix F: Rounding of amounts

AASB 101 disclosure requirements

AASB101(51)(e) 1. The level of rounding used in presenting amounts in the financial report shall be displayedprominently, and repeated when it is necessary for a proper understanding of theinformation presented.

Rounding of amounts

ASIC98/100 2. A company, registered scheme or disclosing entity with total assets in excess of $10 million in itsown or consolidated balance sheet (statement of financial position) may round off amounts shownin the financial report and directors’ report in accordance with ASIC Class Order 98/100. Subject tocertain exclusions and conditions, amounts may be rounded off to the followingprescribed amounts:

Assets greater than: Round off to nearest:

$10 million (but less than $1,000m) $1,000

$1,000 million (but less than $10,000m) $100,000

$10,000 million $1 million

Lower prescribed amounts

ASIC98/100 3. An entity may substitute a lower amount (the Lower Prescribed Amount) for a prescribed amountotherwise required by the Class Order (the Replaced Prescribed Amount) provided that the LowerPrescribed Amount is:

(a) one-tenth of one cent, one cent, $1, $1,000 or $100,000

(b) less than the Replaced Prescribed Amount, and

(c) applied for all amounts in the financial report and directors’ report to which the ReplacedPrescribed Amount otherwise applied.

4. An example of the application of the above paragraph, is a company with assets in excess of$10,000 million which decides to round off to the nearest $100,000, rather than the also permitted$1 million. In such a case the company must round-off all amounts to the nearest $100,000 (exceptas stated in paragraphs 5 and 7–9 below). It cannot choose to round some amounts to $100,000and others to $1 million.

Exclusions

ASIC98/100 5. The Class Order does not permit any amount to be rounded, the rounding of which has thepotential to adversely affect:

(a) decisions about the allocation of scarce resources made by users of the financial report andthe directors’ report, or

(b) the discharge of accountability by management or the directors of the entity or in relation tothe auditors.

Conditions

ASIC98/100 6. The following conditions apply:

(a) if the amount is half or less than half the prescribed amount it must be shown as ‘nil’ or theequivalent thereof – except that if the amounts in the financial report (including theconsolidated financial statements) and the comparative figures are half or less than half theprescribed amount, the item and the amount may be omitted

(b) comparative amounts must also be rounded

(c) the financial report or directors’ report must state that the entity is an entity to which the ClassOrder applies and that amounts have been rounded off in accordance with the Class Order

(d) each page where rounding has occurred must clearly disclose the extent of rounding, and

(e) where amounts are rounded to the nearest $100,000, they must be presented in the form ofmillions of dollars and one decimal place representing hundreds of thousands of dollars, with aclear indication that the amounts are presented in millions of dollars.

Appendix F: Rounding of amounts


Items not subject to full rounding

ASIC98/100 7. The following disclosures must be shown to the nearest dollar by entities with assets (orconsolidated assets) of more than $10 million but not more than $1,000 million, and may only berounded to the nearest $1,000 by entities with assets (or consolidated assets) of more than$1,000 million:

Financial statement disclosures

AASB 2(44),(46),(51) Share-based payments

AASB 101(Aus126.1), (Aus126.2) * Remuneration of auditors

AASB 124(16) Compensation of key management personnel

AASB 124(17),(18) Related party transactions

AASB 124 (Aus25.4), (Aus25.6), (Aus25.7.1)to (Aus25.9.2) *

Other key management personnel information

* These paragraph references are to superseded versions of AASB 101 and AASB 124. While the Class Order has not yet been updated, webelieve that they should be read as referring to AASB 1054 paragraphs 10 and 11 (for remuneration of auditors) and paragraphs 17, 18, 19 ofAASB 124 (for compensation of key management personnel and related party transactions) and section 300A for the other key managementpersonnel information.

Directors’ report disclosures

CA 300(1)(d) Options granted over unissued shares orinterests to directors and the 5 most highlyremunerated officers

CA 300(1)(g),(8),(9) Indemnification/insurance of officers or auditors

CA 300(11),(12) Directors’ interests in securities

CA 300(11B),(11C) Non-audit services

CA 300(13)(a) Fees paid to responsible entity and associates

CA 300A(1)(c),(1)(e) Remuneration of directors and executives

8. The following directors’ report disclosures may only be rounded to the nearest cent:

CA 300(6)(c) Issue price of unissued shares or interests underoption

CA 300(7)(d),(e) Amounts unpaid, paid, or agreed to beconsidered as paid, on shares or interests issuedas a result of the exercise of an option.

ASIC98/100Earnings per share

ASIC98/100 9. Basic and diluted earnings per share to be disclosed under AASB 133(66)–(69) may only berounded to the nearest one-tenth of a cent.

Illustrative wording

ASIC98/100AASB101(51)(e)

10. Suggested wording for the directors’ report and financial report where amounts are rounded off tothe nearest tenth of a million dollars or million dollars is set out below:

Rounding of amounts

The company is of a kind referred to in Class Order 98/100 issued by the Australian Securities andInvestments Commission, relating to the ‘rounding off’ of amounts in the directors’ report (orfinancial report). Amounts in the directors’ report (or financial report) have been rounded off inaccordance with that Class Order to the nearest tenth of a million dollars (or million dollars), or incertain cases, to the nearest thousand dollars.

Concise reports

ASIC98/100ASIC99/90

11. Relief adopted in the full financial report must also be reflected in the concise financial report,where prepared. Exactly the same conditions apply in relation to rounding in the concise report asin the full report, including the requirement for a clear disclosure of the extent of rounding, andreference to ASIC Class Order 98/100.


Appendix G: New standards and amendments

This appendix provides a summary of (a) new standards and amendments that are effective for the firsttime for periods commencing on or after 1 July 2014 (ie years ending 30 June 2015) and (b)forthcoming requirements, being standards and amendments that will become effective on or after 1January 2015.

(a) New standards and amendments – applicable 1 July 2014

The following standards and interpretations apply for the first time to financial reporting periodscommencing on or after 1 July 2014:

Title Key requirementsEffectiveDate *

Interpretation 21 Accountingfor Levies

The interpretation confirms that:

the obligating event is the event that triggers the obligation to paythe levy under the legislation (eg the entity is operating in aspecified market on a specified day, or the entity generates revenuein excess of a threshold), and

a liability is recognised when the obligating event occurs (eg thespecified day, or when the entity reaches the threshold revenueamount).

The same recognition principles apply to interim and annualfinancial statements. The obligation should not be anticipated ordeferred in the interim financial report if it would not be anticipatedor deferred in annual financial statements.

The interpretation applies to all levies imposed by governments inaccordance with legislation, but excludes income taxes from its scope.The application to liabilities arising from emissions trading schemes isoptional.

1 January 2014

AASB 2013-2 Offsetting FinancialAssets and Financial Liabilities

The amendments clarify the offsetting rules in AASB 132 FinancialInstruments: Presentation and explain when offsetting can be applied. Inparticular, they clarify that the right of set-off must be available today (ienot contingent on a future event) and must be legally enforceable in thenormal course of business as well as in the event of default, insolvency orbankruptcy.

1 January 2014

AASB 2013-3 Amendments toAASB 136 – Recoverable AmountDisclosures for Non-FinancialAssets

AASB 2013-6 Amendments toAASB 136 arising from ReducedDisclosure Requirements

The AASB has made amendments to the disclosures required by AASB136 Impairment of Assets which:

remove the requirement to disclose the recoverable amount of allcash generating units (CGU) that contain goodwill or identifiableassets with indefinite lives if there has been no impairment; thisdisclosure was introduced with AASB 13 and will become applicablefrom 1 January 2013 unless the entity adopts the amendmentsmade by AASB 2013-3 early

require disclosure of the recoverable amount of an asset or CGUwhen an impairment loss has been recognised or reversed

require detailed disclosure of how the fair value less costs ofdisposal has been measured when an impairment loss has beenrecognised or reversed.

1 January 2014

AASB 2013-4 Amendments toAustralian Accounting Standards –Novation of Derivatives andContinuation of Hedge Accounting

The AASB has made a limited scope amendment to AASB 139 FinancialInstruments: Recognition and measurement.

AASB 139 requires an entity to stop hedge accounting when a novation(replacement of one party of the derivative contract with a new party)occurs, because the original hedging instrument envisaged in the hedgedocumentation has changed.

The amendment allows the continuation of hedge accounting providedspecific conditions are met. It will be beneficial to entities applying hedgeaccounting that are subject to mandatory novation of ‘over the counter’derivatives.

1 January 2014

AASB 2013-5 Amendments toAustralian Accounting Standards –Investment Entities

In August 2013, the AASB made amendments to AASB 10, AASB 12 andAASB 127 which exempt ‘investment entities’ from consolidatingcontrolled investees.

Investment entities are entities that:

obtain funds from one or more investors for the purpose of providingthose investors with investment management services

commit to their investor(s) that their business purpose is to investfunds solely for returns from capital appreciation, investment incomeor both, and

measure and evaluate the performance of substantially all of theirinvestments on a fair value basis.

Affected entities will account for controlled entities at fair value throughprofit or loss, except for subsidiaries that provide services which willcontinue to be consolidated.

1 January 2014

* applicable to reporting periods commencing on or after the given date

^ applicable only to not-for-profit and/or public sector entities



New standards and amendments – applicable 1 July 2014


AASB 2013-7 Amendments toAASB 1038 arising from AASB 10in relation to Consolidation andInterests of Policyholders

This amendment removes the specific requirements for a life insurer toconsolidate policyholders’ interests. Instead, entities will need to assesswhether the policyholder interests are a ‘deemed separate entity’ that iscontrolled under the principles in AASB 10 (see above).

1 January 2014

AASB 2013-8 Amendments toAustralian Accounting Standards –Australian ImplementationGuidance for Not-for-Profit Entities– Control and Structured Entities

The AASB has issued application guidance which clarifies how theprinciples in AASB 10 and AASB 12 apply to not-for-profit entities. Theguidance:

does not replace or modify the principles in AASB 10 and AASB 12

explains how for assessing control in AASB 10 apply to not-for-profitentities, particularly in circumstances where these principles do notreadily translate to a not-for-profit context, and provides a number ofpractical examples

explains how the concept of a “structured entity” in AASB 12translates to a not-for-profit context.

1 January 2014

AASB 2014-1 Part A: Annualimprovements 2010-2012 and2011-2013 cycles

In June 2014, the AASB has made the following amendments:

AASB 1 – confirms that first-time adopters of AASs can adoptstandards that are not yet mandatory, but do not have to do so

AASB 2 – clarifies the definition of ‘vesting condition’ and nowdistinguishes between ‘performance condition’ and ‘servicecondition’

AASB 3 – clarifies that an obligation to pay contingent considerationis classified as financial liability or equity under the principles inAASB 132 and that all non-equity contingent consideration (financialand non-financial) is measured at fair value at each reporting date.

AASB 3 – clarifies that AASB 3 does not apply to the accounting forthe formation of any joint arrangement

AASB 8 – requires disclosure of the judgements made bymanagement in aggregating operating segments and clarifies that areconciliation of segment assets must only be disclosed if segmentassets are reported.

AASB 13 confirms that short-term receivables and payables cancontinue to be measured at invoice amounts if the impact ofdiscounting is immaterial.

AASB 13 – clarifies that the portfolio exception in AASB 13(measuring the fair value of a group of financial assets and financialliabilities on a net basis) applies to all contracts within the scope ofAASB 139 or AASB 9

AASB 116 and AASB 138 – clarifies how the gross carrying amountand accumulated depreciation are treated where an entity measuresits assets at revalued amounts

AASB 124 – where an entity receives management personnelservices from a third party (a management entity), the fees paid forthose services must be disclosed by the reporting entity, but not thecompensation paid by the management entity to its employees ordirectors.

AASB 140 – clarifies that AASB 140 and AASB 3 are not mutuallyexclusive when distinguishing between investment property andowner-occupied property and determining whether the acquisition ofan investment property is a business combination.

1 July 2014

AASB 2014-1 Part B DefinedBenefit Plans: EmployeeContributions (Amendments toAASB 119)

The amendments clarify the accounting for defined benefit plans thatrequire employees or third parties to contribute towards the cost of thebenefits.

Under the previous version of AASB 119, most entities deducted thecontributions from the cost of the benefits earned in the year thecontributions were paid. However, the treatment under the 2011 revisedstandard was not so clear. It could be quite complex to apply, as itrequires an estimation of the future contributions receivable and anallocation over future service periods.

To provide relief, changes were made to AASB 119. These allowcontributions that are linked to service, but that do not vary with the lengthof employee service (eg a fixed % of salary), to be deducted from the costof benefits earned in the period that the service is provided. Thereforemany entities will be able to (but not be required) continue accounting foremployee contributions using their existing accounting policy.

1 January 2014

AASB 2014-2 Amendments toAASB 1053 – Transition to andbetween Tiers and related Tier 2Disclosure Requirements

Tier 2 entities that did not previously comply with all of the recognition andmeasurement requirements of the accounting standards may apply theprinciples in AASB 108 (full retrospective restatement) rather than thosein AASB 1 when they report under the tier 2 reporting requirements for thefirst time, or resume reporting under tier 2.

1 July 2014





New standards and amendments – applicable 1 July 2014


AASB 1055 Budgetary Reportingand

AASB 2013-1 Amendments toAASB 1049 – Relocation ofBudgetary ReportingRequirements

Where an entity is required to present certain budgeted information toparliament, the financial statements must disclose the original budgetedinformation to allow comparison with the actual reported financialinformation. This disclosure now also applies to not-for-profit entitieswithin the General Government Sector (GGS) and was moved from AASB1049 Whole of Government and General Government Sector FinancialReporting into a new, separate standard. Previously, only the financialreports of governments and GGSs had to disclose budgeted information.

1 July 2014

ASX Corporate GovernancePrinciples and Recommendations

The ASX has released the third edition of its Corporate GovernancePrinciples and Recommendations. The main changes are:

There is a greater focus on risk management, including riskcommittees, the internal audit function and exposure toenvironmental and sustainability risk.

Certain recommendations have been revised to allow entities todemonstrate their compliance with the spirit of the recommendationthrough alternative governance practices instead of the previous “ifnot, why not’ approach’.

Entities will be able to post the corporate governance statement ontheir web site instead of including it in the annual report.

Entities must lodge a statement with the ASX confirming theircompliance with the corporate governance requirements of theListing Rules.

Listed entities are expected to regularly assess the independence ofdirectors with a tenure of more than 10 years.

There is more guidance on effective gender diversity policies.

The updated Principles and Recommendations will apply to listed entitiesfrom 1 July 2014. Refer to the commentary for the Corporate GovernanceStatement for further information.

1 July 2014





(b) Forthcoming requirements

As at 31 October 2014, the following standards and interpretations had been issued but were notmandatory for annual reporting periods ending 31 December 2014. For more recent information pleaserefer to our web site at www.pwc.com.au/assurance/ifrs.


AASB 9 Financial Instruments

AASB 2009-11 Amendments toAustralian Accounting Standardsarising from AASB 9

AASB 2010-7 Amendments toAustralian Accounting Standardsarising from AASB 9(December 2010)

AASB 2012-6 Amendments toAustralian Accounting Standards –Mandatory Effective Date of AASB9 and Transition Disclosures

AASB 2013-9 Amendments toAustralian Accounting Standards –Conceptual Framework, Materialityand Financial Instruments

AASB 2014-1 Amendments toAustralian Accounting Standard:Part E: Financial Instruments

AASB 2014-7 Amendments toAustralian Accounting Standardsarising from AASB 9 (December2014)

AASB 2014-8 Amendments toAustralian Accounting Standardsarising from AASB 9 (December2014) – Application of AASB 9(December 2009) and AASB 9(December 2010)

AASB 9 replaces the multiple classification and measurement models inAASB 139 Financial instruments: Recognition and measurement with asingle model that has initially only two classification categories: amortisedcost and fair value.

Classification of debt assets will be driven by the entity’s business modelfor managing the financial assets and the contractual cash flowcharacteristics of the financial assets. A ‘simple’ debt instrument ismeasured at amortised cost if: a) the objective of the business model is tohold the financial asset for the collection of the contractual cash flows,and b) the contractual cash flows under the instrument solely representpayments of principal and interest.

All other financial assets, including investments in complex debtinstruments and equity investments, must be recognised at fair value.

All fair value movements on financial assets are taken through the incomestatement, except for equity investments that are not held for trading,which may be recorded in the income statement or in reserves (withoutsubsequent recycling to profit or loss).

For financial liabilities that are measured under the fair value optionentities will need to recognise the part of the fair value change that is dueto changes in the their own credit risk in other comprehensive incomerather than profit or loss.

The new hedge accounting rules (released in December 2013) alignhedge accounting more closely with common risk management practices.As a general rule, it will be easier to apply hedge accounting goingforward. The new standard also introduces expanded disclosurerequirements and changes in presentation.

In December 2014, the AASB made further changes to the classificationand measurement rules and also introduced a new impairment model.With these amendments, AASB 9 is now complete. The changesintroduce:

a third measurement category (FVOCI) for certain financial assetsthat are debt instruments

a new expected credit loss (ECL) model which involves a three-stage approach whereby financial assets move through the threestages as their credit quality changes. The stage dictates how anentity measures impairment losses and applies the effective interestrate method. A simplified approach is permitted for lease and tradereceivables. On initial recognition, entities will record a day-1 lossequal to the 12 month ECL (or lifetime ECL for trade receivables),unless the assets are considered credit impaired.

For financial years commencing before 1 February 2015, entities canelect to apply AASB 9 early for any of the following:

the own credit risk requirements for financial liabilities

classification and measurement (C&M) requirements for financialassets

C&M requirements for financial assets and financial liabilities, or

the full current version of AASB 9 (C&M requirements for financialassets and liabilities and hedge accounting).

After 1 February 2015, the new rules must be adopted in their entirety.

1 January2018







AASB 15 Revenue from contractswith customers

AASB 2014-5 Amendments toAustralian Accounting Standardsarising from AASB 15

The AASB has issued a new standard for the recognition of revenue. Thiswill replace AASB 118 which covers contracts for goods and services andAASB 111 which covers construction contracts.

The new standard is based on the principle that revenue is recognisedwhen control of a good or service transfers to a customer – so the notionof control replaces the existing notion of risks and rewards.

A new five-step process must be applied before revenue can berecognised:

identify contracts with customers

identify the separate performance obligation

determine the transaction price of the contract

allocate the transaction price to each of the separate performanceobligations, and

recognise the revenue as each performance obligation is satisfied.

Key changes to current practice are:

Any bundled goods or services that are distinct must be separatelyrecognised, and any discounts or rebates on the contract price mustgenerally be allocated to the separate elements.

Revenue may be recognised earlier than under current standards ifthe consideration varies for any reasons (such as for incentives,rebates, performance fees, royalties, success of an outcome etc) –minimum amounts must be recognised if they are not at significantrisk of reversal.

The point at which revenue is able to be recognised may shift: somerevenue which is currently recognised at a point in time at the endof a contract may have to be recognised over the contract term andvice versa.

There are new specific rules on licenses, warranties, non-refundable upfront fees and, consignment arrangements, to name afew.

As with any new standard, there are also increased disclosures.

These accounting changes may have flow-on effects on the entity’sbusiness practices regarding systems, processes and controls,compensation and bonus plans, contracts, tax planning and investorcommunications.

Entities will have a choice of full retrospective application, or prospectiveapplication with additional disclosures.

1 January 2017

AASB 2014-3 Amendments toAustralian Accounting Standards –Accounting for Acquisitions ofInterests in Joint Operations

The amendments to AASB 11 clarify the accounting for the acquisition ofan interest in a joint operation where the activities of the operationconstitute a business. They require an investor to apply the principles ofbusiness combination accounting when it acquires an interest in a jointoperation that constitutes a business.

This includes:

measuring identifiable assets and liabilities at fair value

expensing acquisition-related costs

recognising deferred tax, and

recognising the residual as goodwill, and testing this for impairmentannually.

Existing interests in the joint operation are not remeasured on acquisitionof an additional interest, provided joint control is maintained.

The amendments also apply when a joint operation is formed and anexisting business is contributed.

1 January 2016

AASB 2014-4 Amendments toAustralian Accounting Standards –Clarification of AcceptableMethods of Depreciation andAmortisation

The amendments clarify that a revenue-based method of depreciation oramortisation is generally not appropriate.

The AASB has amended AASB 116 Property, Plant and Equipment toclarify that a revenue-based method should not be used to calculate thedepreciation of items of property, plant and equipment.

AASB 138 Intangible Assets now includes a rebuttable presumption thatthe amortisation of intangible assets based on revenue is inappropriate.This presumption can be overcome if either

The intangible asset is expressed as a measure of revenue (iewhere a measure of revenue is the limiting factor on the value thatcan be derived from the asset), or

It can be shown that revenue and the consumption of economicbenefits generated by the asset are highly correlated.

1 January 2016

* applicable to reporting periods commencing on or after the given date.






AASB 2014-9 Amendments toAustralian Accounting Standards:Equity method in separate financialstatements

The AASB has made amendments to AASB 127 Separate FinancialStatements which will allow entities to use the equity method in theirseparate financial statements to measure investments in subsidiaries,joint ventures and associates.

AASB 127 currently allows entities to measure their investments insubsidiaries, joint ventures and associates either at cost or as a financialasset in their separate financial statements. The amendments introducethe equity method as a third option. The election can be madeindependently for each category of investment (subsidiaries, jointventures and associates). Entities wishing to change to the equity methodmust do so retrospectively.

1 January 2016

AASB 2014-6 Amendments toAustralian Accounting Standards:Agriculture: Bearer Plants

AASB 141 Agriculture now distinguishes between bearer plants and otherbiological asset. Bearer plants must be accounted for as property plantand equipment and measured either at cost or revalued amounts, lessaccumulated depreciation and impairment losses.

A bearer plant is defined as a living plant that:

is used in the production or supply of agricultural produce

is expected to bear produce for more than one period, and

has a remote likelihood of being sold as agricultural produce, exceptfor incidental scrap sales.

Agricultural produce growing on bearer plants remains within the scope ofAASB 141 and is measured at fair value less costs to sell with changesrecognized in profit or loss as the produce grows.

1 January 2016

AASB 2014-10 Amendments toAustralian Accounting Standards:Agriculture: Sale or contribution ofassets between an investor and itsassociate or joint venture

The AASB has made limited scope amendments to AASB 10Consolidated financial statements and AASB 128 Investments inassociates and joint ventures.

The amendments clarify the accounting treatment for sales or contributionof assets between an investor and its associates or joint ventures. Theyconfirm that the accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint ventureconstitute a ‘business’ (as defined in IFRS 3 Business Combinations).

Where the non-monetary assets constitute a business, the investor willrecognise the full gain or loss on the sale or contribution of assets. If theassets do not meet the definition of a business, the gain or loss isrecognised by the investor only to the extent of the other investor’sinvestors in the associate or joint venture. The amendments applyprospectively.

1 January 2016

Improvements project 2012-2014cycle #

The latest annual improvements clarify:

IFRS 5 – when an asset (or disposal group) is reclassified from‘held for sale’ to ‘held for distribution’ or vice versa, this does notconstitute a change to a plan of sale or distribution and does nothave to be accounted for as such

IFRS 7 – specific guidance for transferred financial assets to helpmanagement determine whether the terms of a servicingarrangement constitute ‘continuing involvement’ and, therefore,whether the asset qualifies for derecognition

IFRS 7 – that the additional disclosures relating to the offsetting offinancial assets and financial liabilities only need to be included ininterim reports if required by IAS 34

IAS 19 – that when determining the discount rate for post-employment benefit obligations, it is the currency that the liabilitiesare denominated in that is important and not the country where theyarise

IAS 34 – what is meant by the reference in the standard to‘information disclosed elsewhere in the interim financial report’ andadds a requirement to cross-reference from the interim financialstatements to the location of that information.

1 January 2016



# The AASB had not yet issued corresponding amendments as at 15 January 2015, but is expected to do so in the first quarter of 2015. Early adoptionwill be permitted once the amendments have been approved by the AASB.





Disclosure Initiative: Amendmentsto IAS 1 #

The amendments to IAS 1 Presentation of Financial Statements aremade in the context of the IASB’s Disclosure Initiative, which exploreshow financial statement disclosures can be improved. The amendmentsprovide clarifications on a number of issues, including:

Materiality – an entity should not aggregate or disaggregateinformation in a manner that obscures useful information. Whereitems are material, sufficient information must be provided toexplain the impact on the financial position or performance.

Disaggregation and subtotals – line items specified in IAS 1 mayneed to be disaggregated where this is relevant to an understandingof the entity’s financial position or performance. There is also newguidance on the use of subtotals.

Notes – confirmation that the notes do not need to be presented ina particular order.

OCI arising from investments accounted for under the equitymethod – the share of OCI arising from equity-accountedinvestments is grouped based on whether the items will or will notsubsequently be reclassified to profit or loss. Each group shouldthen be presented as a single line item in the statement of othercomprehensive income.

According to the transitional provisions, the disclosures in IAS 8 regardingthe adoption of new standards/accounting policies are not required forthese amendments.

1 January 2016

Investment entities – applying theconsolidation exception #

Amendments made to IFRS 10 Consolidated Financial Statements andIAS 28 Investments in associates and joint ventures clarify that:

The exception from preparing consolidated financial statements isalso available to intermediate parent entities which are subsidiariesof investment entities.

An investment entity should consolidate a subsidiary which is not aninvestment entity and whose main purpose and activity is to provideservices in support of the investment entity’s investment activities.

Entities which are not investment entities but have an interest in anassociate or joint venture which is an investment entity have apolicy choice when applying the equity method of accounting. Thefair value measurement applied by the investment entity associateor joint venture can either be retained, or a consolidation may beperformed at the level of the associate or joint venture, which wouldthen unwind the fair value measurement.

Early adoption will be permitted once equivalent amendments have beenapproved by the AASB.

1 January 2016



# The AASB had not yet issued corresponding amendments as at 15 January 2015, but is expected to do so in the first quarter of 2015. Early adoptionwill be permitted once the amendments have been approved by the AASB.


Appendix H: Application of the differential reporting frameworkAASB1053(7) 1. AASB 1053 Application of Tiers of Australian Accounting Standards establishes a differential financial

reporting framework consisting of two tiers of reporting requirements for preparing general purposefinancial statements:

Tier 1: Australian Accounting Standards, and(a)

Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.(b)

AASB1053(9) Tier 2 comprises the recognition, measurement and presentation requirements of tier 1 but withsubstantially reduced disclosures.

AASB1053(11) 2. The following entities must apply tier 1 requirements in preparing general purpose financialstatements:

for-profit entities in the private sector that have public accountability (see below), and(a)

the Australian Government and State, Territory and Local Governments.(b)

AASB1053(13) 3. The following entities can apply either tier 2 or tier 1 requirements in preparing general purposefinancial statements, unless a regulator specifically requires the use of tier 1:

for-profit private sector entities that do not have public accountability(a)

all not-for-profit private sector entities, and(b)

public sector entities other than the Australian Government and State, Territory and Local(c)Governments.

AASB1053(15) Despite the provisions in AASB 1053, regulators may exercise their power to require the applicationof tier 1 requirements by the entities they regulate.

4. The following flow chart can be used to determine whether or not an entity is eligible to apply thereduced disclosure regime and report under tier 2 of the differential reporting framework.

* General purpose financial statements are those intended to meet the needs of users who are not in a position to require an entity toprepare reports tailored to their particular information needs.

No

Is the entity publicly accountable? (that is, doesthe entity trade their securities on a public

market or hold assets in a fiduciary capacity astheir primary business?)

Is the entity a federal, state, territory or localgovernment (whole of government and general

government sector financial reports)?

Apply ‘full IFRS’ as currentlyadopted in Australia (no change

to current reporting)

Choice of alternatives

Apply ‘full IFRS’ as currently adopted inAustralia (tier 1)

Apply the reduced disclosure regime (tier 2),unless a relevant regulator (eg APRA) requires

‘full IFRS’ as adopted in Australia

Does the entity prepare general purposefinancial statements*?

Continue to prepare special purposefinancial statements

Is the entity for-profit andoperating in the private sector?

Is the entity operating in thepublic sector?

Is the entity a not-for-profitoperating in the private sector?

Yes

Yes Yes

Yes Yes

No

No Yes

No

No

Appendix H: Application of the differential reporting framework


Tier 2 reporting requirements

AASB1053(9) 5. Entities reporting under tier 2 are subject to the same recognition and measurement requirements asentities reporting under tier 1 (ie full IFRS), but have considerably fewer disclosures in the notes totheir financial statements. The primary financial statements will look the same for both tiers, exceptthat tier 2 entities do not need to include a third balance sheet if they restated their comparatives (egas a result of a retrospective change in accounting policy).

AASB101(RDR16.1)AASB1054(RDR7.1)

6. Because of the reduced disclosures, entities applying tier 2 reporting requirements will not be able tostate compliance with IFRSs. Instead, entities will have to make an explicit and unreserved statementof compliance with Australian Accounting Standards – Reduced Disclosure Requirements where theycomply with all requirements of the reduced disclosure regime.

CA297CA295(3)(c)

7. Entities intending to adopt the reduced disclosure regime for the first time should consider carefullywhich disclosures can be removed. There are circumstances where disclosures are required undermore than one standard and while the entity may be able to omit certain detailed information, it maystill need to provide some of the information in a more aggregated form (eg information aboutestimation uncertainty under AASB 101 Presentation of Financial Statements paragraph 125 and keymanagement personnel disclosures). In addition, financial statements prepared under Chapter 2M ofthe Corporations Act 2001 must still provide a true and fair view of the entity’s financial position andperformance and there may be situations where additional information should be provided eventhough specific paragraphs covering this disclosure do not apply to tier 2 entities (eg changes tocontingent consideration liabilities from a prior business combination where the amounts are materialto the group).

AASB1053(16) 8. AASB 1053 explains that the disclosures under tier 2 are the minimum disclosures required to beincluded in general purpose financial statements and that additional disclosures may be necessary incertain circumstances, to satisfy the objective of general purpose financial statements. Entities mayrefer to the tier 1 disclosure requirements as a guide to determine what additional information couldbe added to their financial report.

Public accountability

AASB1053Appendix A

9. Public accountability means accountability to those existing and potential resource providers andothers external to the entity who make economic decisions but are not in a position to demand reportstailored to meet their particular information needs.

10. A for-profit private sector entity has public accountability if:

its debt or equity instruments are traded in a public market or it is in the process of issuing such(a)instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets), or

it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary(b)businesses. This is typically the case for banks, credit unions, insurance companies, securitiesbrokers/dealers, mutual funds and investment banks.

Appendix H: Application of the differential reporting framework


AASB1053Appendix B

11. The following for-profit entities are deemed to have public accountability:

disclosing entities, even if their debt or equity instruments are not traded in a public market or are(a)not in the process of being issued for trading in a public market

co-operatives that issue debentures(b)

registered managed investment schemes(c)

superannuation plans regulated by the Australian Prudential Regulation Authority (APRA) other(d)than Small APRA Funds as defined by APRA Superannuation Circular No. II.E.1 Regulation ofSmall APRA Funds, December 2000, and

authorised deposit-taking institutions.(e)

IFRS for SMEs(1.4)IFRS for SMEs(BC57)

12. Not all entities that hold assets in a fiduciary capacity for a broad group of outsiders are publiclyaccountable. If the assets are held merely for reasons incidental to the entity’s primary business, thedefinition of public accountability would not be satisfied. Examples of such entities may include travelor real estate agents, schools, charitable organisations, co-operative enterprises and utilitycompanies. An entity only has public accountability under the second leg of the definition if theholding of assets in a fiduciary capacity is one of the entity’s primary businesses.

Australian Financial Services Licences (AFSL)

AASB1053(BC32) 13. Entities holding an AFSL will need to determine whether the entity is publicly accountable by applyingthe definition in AASB 1053 (see above). While the AASB did consider whether it should deem allentities holding AFSLs to be publicly accountable, it found that AFSL holders conduct a range ofactivities and are a diverse group of entities. It therefore agreed that it would not be appropriate todeem all AFSL holders as publicly accountable. Instead, each entity will need to assess whether itsatisfies the definition based on its own circumstances and the nature of services it provides.

Not-for-profit private sector entities

14. All not-for-profit private sector entities have a choice of applying tier 2 requirements, unless therelevant regulator requires application of tier 1. The term publicly accountable is only used in relationto for-profit private sector entities.

Impact on previous reporting relief

15. Some large proprietary companies are exempt from lodging their accounts because they areclassified as an ‘exempt proprietary company’, others are relieved from preparing and/or lodgingfinancial reports under ASIC class orders. We do not expect the reduced disclosure regime to impactany relief previously granted either under the Corporations Act 2001 or by ASIC. However, entitiesshould monitor any changes to the requirements of their class order relief and any announcements byASIC in this regard.

Non-reporting entities and special purpose financial reports

AASB Action Alert April2013

16. While the AASB tentatively decided in April 2013 to change the reporting entity concept, no finaldecisions have been made. At this stage, non-reporting entities therefore continue to have a choice ofpreparing special purpose financial reports or reduced disclosure general purpose reports. For furtherinformation about the status of the reporting entity concept see Appendix A paragraph 14.


Appendix I: Disclosure obligations of ‘tier 2’ general purposefinancial statements vs special purpose financial statements

The following information is intended to be used as a guide only. The entity’s directors areresponsible for determining which disclosures are required in order to meet the needs of financialstatement users and present a true and fair view of the business. This table highlights the significantdisclosure differences between reduced disclosure general purpose financial statements and specialpurpose financial statements of non-reporting entities that are required to prepare financial reportsunder Chapter 2M of the Corporations Act 2001. It does not analyse the disclosures that can beremoved from both sets of accounts, nor is it an exhaustive list of all differences that exist.

Financial statement note

Reference to VALUEACCOUNTS Holdingsand ReducedDisclosure (June 2015versions)

Disclosurerequired inreduceddisclosuregeneral purposefinancialstatements(tier 2)?

Disclosurerequired inspecial purposefinancialstatements?

Content page/general information about the entity:

Domicile, legal form, country of incorporation, address ofregistered office and description of the nature of theentity’s operations and principal activities(AASB 101(138))

Annual financial report –content page

No Yes

Balance sheet and related notes

Present a third balance sheet at the beginning of theearliest comparative period in certain circumstances(AASB 101(40A))

Balance sheet andrelated commentary

No Yes

Revenue

Breakdown of revenue by category (AASB 118(35) Note 3 Yes No *

Individually material items (AASB 101(97)) Note 4 Yes Yes

Other income and expenses

Other items required by standards other than AASB 101

Information about expenses classified by nature wherethe entity has classified expenses by function in theincome statement (AASB 101(104))

Note 5

Note 5(b)

Depending onstandard

No

No *

Yes

Income tax

Breakdown of income tax expense (AASB 112(79))

Reconciliation: income tax expense to prima facie incometax payable (AASB 112(81)(c))

Aggregate amounts recognised directly in equity (AASB112 (81)(a))

Aggregate amounts recognised directly in OCIAASB 112 (RDR81.1)

Tax expense relating to each component of OCI(AASB 101 (90))

Deferred tax assets not recognised (AASB 112 (81)(e))

Note 6(a)

Note 6(c)

Note 6(d)

Note 6(d)

Note 9(b)

Note 6(e)

Yes

Yes

Yes

Yes

No

Yes

No *

No *

No *

No *

Yes

No *

Financial assets and liabilities

Policy adopted in determining the composition of cashand cash equivalents (AASB 107(46))

Transferred financial assets (whether or notderecognised in their entirety) (AASB 7(42A)-(42E))

Specific amounts recognised in profit or loss and othercomprehensive income (AASB 7(20))

Information that enables users of the financial statementsto evaluate the significance of financial instruments (egabout debt defeasance; AASB 7(7))

Secured liabilities (AASB 7(14))

Loans payable - defaults and breaches(AASB 7(RDR18.1))

Finance lease liabilities (AASB 117(31))

Note 7(a)

Note 7(b)

Note 7(c),(d)Note 12(b),(c)

Note 7(g)

Note 7(g)

Note 7 (commentary)

Note 7(g)

No

Yes (limiteddisclosures)

Yes (with reduceddisclosures)

Yes

Yes

Yes


Yes

No *

No *

No *

No *

No *

No *

Appendix I: Disclosure obligations of ‘tier 2’ general purpose financial statements vs specialpurpose financial statements







Amount of inventory recognised as an expense andamount of any write down of inventory to net realisablevalue (AASB 102(36)(d))

Description of assets held for sale (AASB 5(41)(a)-(c))

Reconciliations from opening to closing balance (PPE,intangibles, investment property, provisions retirementbenefit obligations)

Net carrying amount of leased assets (AASB 117(31)(a)

Investment property (other disclosures) (AASB 140)

Finance and operating leases of lessors(AASB 117(47),(56))

Breakdown of deferred tax balances by type of temporarydifferences (AASB 112(81)(g))

Nature of provisions (AASB 137(85)(a))

Retirement benefit obligations (other disclosures) (AASB119)

Amounts expected to be recovered/settled within andafter 12 months (AASB 101 (61))

Note 8(a)

Note 8(b)

Notes 8(c),(d),(f)(g),(h)

Note 8(c)

Note 8(d)

Note 8(d)

Note 8(e)

Note 8(g)

Note 8(h)

Notes 8(e),(g)

Yes

Yes

Yes (but onlycurrent year)

Yes


Yes

Yes

Yes


No

No *

No *

No *

No *

No *

No *

No *

No *

No *

Yes

Impairment

Impairment losses and reversals for each class of asset(AASB 136(126); if not disclosed as part of thereconciliation from opening to closing balances)

The recoverable amount of the individual asset or CGUfor which an impairment loss has been recognised orreversed (AASB 136(130)(c) as amended by AASB2013-3)

Note 4

Note 4

Yes

Yes

No *

No *


If financial and non-financial assets and liabilities arerecognised at fair value, disclose valuation techniquesand inputs used (AASB 13(91)(a))

Notes 7 and 8 Yes No *


Reconciliation of profit after tax to cash flow fromoperating activities (AASB 1054(16))

Note 10 No Yes


Derivatives: information about hedges entered into by theentity (AASB 7(22)-(24))

Credit risk: Reconciliation of movement in impairmentprovision (AASB 7(16))

Note 12(a),(b)

Note 12(c)

Yes

Yes

No *

No *

Capital management: dividends

Dividends per share (AASB 101(107))

Dividends not recognised at the end of the reportingperiod (AASB 101(137))

Franked dividends available for subsequent financialyears (AASB 1054(13)-(15))

Note 13(b)

Note 13(b)

Note 13(b)

No

No

No

Yes

Yes

Yes


Purchase consideration & breakdown of assets/liabilitiesacquired (AASB 107(40))

Other information about the acquired entity/operation(AASB 3)

Cash flow information (AASB 107 (40))

Note 14(a)

Note 14(a)

Note 14(b)

No


No

Yes

No *

Yes

Appendix I: Disclosure obligations of ‘tier 2’ general purpose financial statements vs specialpurpose financial statements







description of discontinued operation (AASB 5(41)(a))

financial performance of discontinued operation(AASB 5(33), AASB 112(81)(h))

cash flows of discontinued operations (AASB 5(33)(c))

details of the sale of the subsidiary or other business:disposal consideration and carrying amount ofassets/liabilities sold (AASB 107(40))

Note 15(a)

Note 15(b)

Note 15(b)

Note 15(c)

Yes

No (except taxamounts)

Yes

No

No *

No *

No *

Yes

Interests in other entities (AASB 12)

Judgements and assumptions made in relation to non-control and agency/principal relationship

Composition of the group

Significant restrictions

Information about interests in joint arrangements andassociates

Note 16(a)

Note 16(a)

Note 16(a)

Note 16(d),(e)

Applies to all:


Applies to all:

No *

Contingencies (AASB 137(86),(89)) Note 17 Yes No (but oftennecessary toprovide a trueand fair view)

Commitments

Lease commitments (AASB 117(31)(b) and (35)(a))

Commitments re property, plant and equipment,intangible assets, investment property (AASB 116(74)(c),AASB 138(122)(e), AASB 140(75)(h))

Note 18(b)

Note 18(a)


Yes

No *

No *


Name of parent and ultimate parent (AASB 124(13) andAASB 101(138)(c))

Key management personnel (AASB 124(17))

Other related party disclosures (AASB 124)

Note 20 (a)

Note 20 (c)

Note 20(d)-(g)

Yes


Yes

Yes

No *

No *

Share-based payments (AASB 2) Note 21 Yes (with reduceddisclosures)

No *

Remuneration of auditors (AASB 1054(10),(11)) Note 22 No Yes

Assets pledged as security (various standards) Note 25 Yes No *


New accounting standards and interpretations issued butnot yet applicable (AASB 108(30))

Note 28(ae) No Yes

* While non-reporting entities do not need to comply with the relevant standards, they may need todisclose similar information where the amounts are material and the information is relevant to anunderstanding of the financial statements, or to provide a true and fair view. References: AASB 101paragraphs 97 and 112(c) and section 297 of the Corporations Act 2001.


Appendix J: Abbreviations

Abbreviations used in this publication are set out below.

AAS Australian Accounting Standards issued jointly by CPA Australia and TheInstitute of Chartered Accountants in Australia

AASB Australian Accounting Standards Board

AASB (Number) Accounting Standards issued by the AASB

AASB (Number)R Revised accounting standard – not yet operative

AASB-I (Number) Interpretations issued by the AASB

ABN Australian Business Number

ACN Australian Company Number

ADI Authorised Deposit-taking Institution

AfS Available-for-sale (financial assets)

AFSL Australian Financial Services Licence

AGM Annual General Meeting

AGS Auditing Guidance Statements

AIFRS Australian equivalents to International Financial Reporting Standards

APES Standards issued by the Accounting Professional & Ethical StandardsBoard (APESB)

APS Miscellaneous Professional Statements

ASA Auditing Standards issued by the AUASB under the Corporations Act2001

ASIC Australian Securities and Investments Commission

ASIC Act Australian Securities and Investments Commission Act 2001

ASIC CP ASIC Consultation Paper

ASIC IR ASIC Information Releases

ASIC RG ASIC Regulatory Guide

ASIC (Number) ASIC Class Orders

ASX ASX Limited, trading as Australian Securities Exchange

ASX (Number) ASX Listing Rules

AUASB Auditing and Assurance Standards Board

bps basis points

CA Corporations Act 2001

CGC (Number) ASX Corporate Governance Council - Principles of Good CorporateGovernance and Best Practice Recommendations

CGU Cash-Generating Unit

CODM Chief operating decision maker

CPA CPA Australia

CR Corporations Regulations 2001

DP Discussion Papers

ED Accounting Exposure Drafts

ED securities Enhanced Disclosure securities

Appendix I: Abbreviations


FRC Financial Reporting Council

FRS Financial Reporting Standard (UK)

FVLCOD Fair value less cost of disposal

FVOCI (Financial assets/liabilities at) fair value through other comprehensiveincome

FVPL (Financial assets/liabilities at) fair value through profit or loss

GAAP Generally Accepted Accounting Principles

GGS General Government Sectors

GPFS General Purpose Financial Statements

GS Guidance Statements issued by the AUASB

IAS International Accounting Standards

IASB International Accounting Standards Board

ICAA The Institute of Chartered Accountants in Australia

IFRIC Interpretations issued by the IFRS Interpretations Committee of the IASB

IFRS International Financial Reporting Standards

KPI Key Performance Indicator

LTI Long-term Incentive

MEC group Multiple Entry Consolidated group

MIS Managed Investment Scheme

NCI Non-controlling interest

OCI Other comprehensive income

PSASB Public Sector Accounting Standards Board (former)

RDR Reduced Disclosure Regime

SAC Statements of Accounting Concepts

STI Short-term Incentive

TSR Total shareholder return

UIG Urgent Issues Group

UIG (Number) UIG Interpretations


Adelaide

Level 11, 70 Franklin Street, Adelaide

GPO Box 418, Adelaide, SA 5001

Telephone: (08) 8218 7000

Fax: (08) 8218 7999

Newcastle

Level 3, 45 Watt Street, Newcastle, NSW

PO Box 798, Newcastle, NSW 2300

Telephone: (02) 4925 1100

Fax: (02) 4925 1199

Brisbane

Level 15, Riverside Centre,

123 Eagle Street, Brisbane

GPO Box 150, Brisbane, QLD 4001

Telephone: (07) 3257 5000

Fax: (07) 3257 5999

Perth

Level 15, Brookfield Place

125 St Georges Terrace, Perth

GPO Box D198, Perth, WA 6840

Telephone: (08) 9238 3000

Fax: (08) 9238 3999

Gold Coast

Ground Floor, Suite 4, The Point @ Varsity

47 Watts Drive, Varsity Lakes, QLD 4227

GPO Box 150, Brisbane, QLD 4001

Telephone: (07) 5689 1942

Fax: (07) 3257 5999

Sydney

Darling Park Tower 2

201 Sussex Street, Sydney

GPO Box 2650, Sydney, NSW 1171

Telephone: (02) 8266 0000

Fax: (02) 8266 9999

Canberra

28 Sydney Avenue, Forrest

GPO Box 447, Canberra, ACT 2601

Telephone: (02) 6271 3000

Fax: (02) 6271 3999

Greater Western Sydney

Level 1, 21 Solent Circuit

Baulkham Hills, NSW 2153

PO Box 7684, Baulkham Hills, NSW 2153

Telephone: (02) 9659 2476

Fax: (02) 8286 9999

Melbourne

Freshwater Place

Level 19, 2 Southbank Boulevard, Southbank

GPO Box 1331, Melbourne, VIC 3001

Telephone: (03) 8603 1000

Fax: (03) 8603 1999

Townsville

51 Sturt Street, Townsville

PO Box 1047, Townsville, QLD 4810

Telephone: (07) 4721 8500

Fax: (07) 4721 8599

Internet website

www.pwc.com.au


Notes

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