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Washington H. Soul Pattinson and
Company Limited
A.B.N. 49 000 002 728
ASX Code: SOL
Annual Report
2015
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Company Profile
Washington H. Soul Pattinson and Company Limited (WHSP) was incorporated on 21 January 1903 having previously traded
as two separate companies, Pattinson and Co. and Washington H. Soul and Co.
Following a public offering of shares, WHSP was listed on the Sydney Stock Exchange (now the Australian Securities Exchange)
on 21 January 1903.
OVER 100 YEARS AS A LISTED PUBLIC COMPANY
When Caleb Soul and his son Washington opened their first store at 177 Pitt Street, Sydney, in 1872 neither of them could have
envisaged that 143 years later their single pharmacy would have evolved into a company as prominent and diversified as WHSP.
WHSP is now a significant investment house with a portfolio encompassing many industries including, its traditional field
of pharmaceuticals, as well as coal mining, building materials, copper and gold exploration, equity investments, property
investment, telecommunications and corporate consulting.
OBJECTIVE
WHSP’s objective is to hold a diversified portfolio of assets which generate a growing income stream for distribution to
Shareholders in the form of increasing fully franked dividends and to provide capital growth in the value of the Shareholders’
investments.
DIVIDEND POLICY
Ordinary dividends are generally paid out of regular profits.
Special dividends are generally paid out of profits from non-regular items. Non-regular items typically include those which are
outside of the normal course of business or are of an unusually large size.
160 Pitt Street, Sydney Circa 1950
Contents and Corporate Directory
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
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16 November 2015
7 December 2015
4 December 2015 at 12.00 noon
Group Company displays open at 10.45am
The Wesley Theatre
Wesley Conference Centre
220 Pitt Street, Sydney
Chairman - Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Finance Director
Non-Executive Director
Non-Executive Director
Managing Director
CONTENTS
Performance highlights
Chairman’s review
Review of group entities
Directors’ report
Auditor’s independence declaration
Financial report
Directors’ declaration
Independent auditor’s report
ASX additional information
CORPORATE CALENDAR
Final Dividend
Record date
Payment date
Annual General Meeting
DIRECTORS
Robert D Millner
Michael J Hawker
Thomas C D Millner
Warwick M Negus
Melinda R Roderick
Robert G Westphal
David E Wills
Appointed on 14 October 2015
Todd J Barlow
CHIEF EXECUTIVE OFFICER
Todd J Barlow
COMPANY SECRETARY
Ian D Bloodworth
AUDITORS
Moore Stephens Sydney
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Performance Highlights
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Performance Highlights
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PERFORMANCE FOR THE 2015 FINANCIAL YEAR
PERFORMANCE OVER 15 YEARS
Regular Profit After Tax*
$156 million u 27%
Profit After Tax
$83 million t 37%
Pre-tax value of portfolio
$5.5 billion u 6.1%
Total dividends (fully franked)
50cps
u 4.2%
Delivered a Total Shareholder Return of 13.4%pa
(compared to the All Ordinaries Accumulation Index growing at 8.2%pa)
Increased dividends every year
(cumulative annual growth rate of 11.3%pa)
PORTFOLIO COMPANIES PERFORMANCE FY2015
PORTFOLIO COMPANIES PERFORMANCE FY2015
26.9% shareholding
44.2% shareholding
59.7% shareholding
24.6% shareholding
NPAT $224m u 31%
Share price u 72%
Value of WHSP holding $2,030m
NPAT1 $120m u 19%
Share price u 4.2%
Value of WHSP holding $978m
NPAT4 $52m u 25%
Share price t 36%
Value of WHSP holding $947m
NPAT5 $21m u 32%
Share price u 165%
Value of WHSP holding $191m
BRICKWORKS
L I M I T ED
1 Underlying NPAT
4 Regular NPAT
5 Half year ended 28 February 2015
11.1% shareholding
20.3% shareholding
30.3% shareholding
100% held
NPAT2 $43m u 15%
Share price u 3.2%
Value of WHSP holding $108m
NPAT3 $10m u 106%
Share price u 11%
Value of WHSP holding $61m
NPAT6 $5m t 7%
Share price u 20%
Value of WHSP holding $55m
Sold properties for $153m
Profit of $26m7
2 Year ended 30 June 2015
BKI INVESTMENT
COMPANY LIMITED
3 Half year ended 31 March 2015
6 Half year ended 30 June 2015
7 Profit before tax taken up over 2014 and 2015 financial years
* Regular profit after tax is a non-statutory profit measure and represents profit from continuing operations before non-regular items. A reconciliation to statutory profit is included
All results are for the year ended 31 July 2015 unless otherwise stated.
in the Consolidated Financial Statements – Note 3, Segment information.
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Chairman’s Review
Dear Shareholders,
I am pleased to present the 2015 Annual Report for Washington H. Soul Pattinson and Company Limited (WHSP, Parent
Company) on behalf of the Board of Directors of the Parent Company.
Consolidated Financial Performance
The regular profit after tax* attributable to shareholders for the year ended 31 July 2015 was $156.4 million, an increase of
27.0% over the $123.2 million for 2014. The result was driven by: another strong contribution by TPG Telecom Limited (up
30.5%); a solid operating result by New Hope Corporation Limited in a very difficult market (up 19.8%); Brickworks Limited
capitalised on the improving building sector (up 15.2%); Australian Pharmaceutical Industries Limited continued its recent
upward trend in profitability (up 24.3%); and an improved operating result from CopperChem Limited.
The profit after tax (including non-regular items) was $83.3 million, 36.7% lower than the $131.7 million for last year.
The net loss from non-regular items was $73.1 million, compared with a profit of $8.5 million last year.
Comparisons with the prior year are as follows:-
Regular profit after tax* attributable to shareholders
Profit after tax attributable to shareholders
2015
$’000
156,449
83,330
2014
$’000
123,205
131,729
%
Change
+ 27.0%
- 36.7%
Interim Dividend (paid in May each year)
Final Dividend (payable 7 December 2015)
20 cents
30 cents
19 cents
29 cents
+ 5.3%
+ 3.4%
Total Dividends
50 cents
48 cents
+ 4.2%
* Regular profit after tax is a non-statutory profit measure and represents profit from continuing operations before non-regular items. A reconciliation to
statutory profit is included in the Consolidated Financial Statements – Note 3, Segment Information.
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Chairman’s Review (continued)
Assets of the Parent Company Washington H. Soul Pattinson and Company Limited
The assets of WHSP are summarised below. The value of these assets at 31 July 2015 was $5.50 billion an increase of $318
million or 6.1% compared to $5.18 billion as at 31 July 2014.
As at 31 July 2015
WHSP’s
Holdings
%
Value
of WHSP’s
Holding
$m
12 month
Movement
$m
%
Major Strategic Investments - listed
(at market value)
TPG Telecom Limited
Brickworks Limited
New Hope Corporation Limited
Aust. Pharmaceutical Industries Limited
BKI Investment Company Limited
Ruralco Holdings Limited
Apex Healthcare Berhad
Other Listed Investments (at market value)
Unlisted Investments1
Property1
Cash and net funds on deposit
Loans and other assets
Gross value of the portfolio (pre-tax)2
1 At Directors’ valuations
26.9%
44.2%
59.7%
24.6%
11.1%
20.3%
30.3%
2,030
978
947
191
108
61
55
852
39
(540)
119
3
6
9
72.3%
4.2%
(36.3%)
165.0%
3.2%
11.0%
19.8%
4,370
488
12.6%
629
254
69
154
23
5,499
35
(71)
(132)
(8)
6
318
5.8%
(21.9%)
(65.7%)
(4.8%)
37.9%
6.1%
2 The tax payable if all of these assets had been disposed of on 31 July 2015 would have been approximately $1.10 billion.
The value of the Major Strategic Investments above grew by 12.6% during the year significantly outperforming the ASX All
Ordinaries Index which increased by 1.0%.
There were no further investments in the Major Strategic Investments during the year. Acquisitions of other listed investments
totalled $75.3 million and included: Insurance Australia Group Limited; Transurban Group; Westfield Corporation; Woolworths
Limited; and Challenger Limited. Proceeds from disposals totalled $17.0 million and included ALS Limited and Medibank Private
Limited.
Unlisted investments reduced in value by $71.2 million, primarily as a result of the impairment of copper assets. The sale of
the SRG properties resulted in the property portfolio decreasing in value by $132.2 million.
WHSP received interest income (from unrelated entities), dividends and distributions of $166.5 million for the year which was
in line with the $170.2 million received last year.
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Chairman’s Review (continued)
Washington H. Soul Pattinson and Company Limited
The following graph shows the total return over time of an initial investment made in WHSP shares in July 2000 assuming that
all dividends received are reinvested in WHSP shares. This return is compared to the ASX All Ordinaries Accumulation Index
which also includes the reinvestment of dividends.
15 Year Total Shareholder Return
WHSP
All Ords Accumulation Index
700%
600%
500%
400%
300%
200%
100%
0%
0
0
0
2
1
0
0
2
2
0
0
2
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Source: IRESS - Includes the re-investment of dividends.
WHSP is a long term investor with its focus on providing its shareholders with capital growth and increasing fully franked
dividends. This chart demonstrates WHSP’s success in significantly outperforming the ASX All Ordinaries Accumulation Index
over the last 15 years. Over that time WHSP has provided a total shareholder return of 13.4% per annum well above the All
Ordinaries Accumulation Index increase of 8.2% per annum.
- 6 -
Chairman’s Review (continued)
Dividends
The chart below demonstrates WHSP’s exceptional history of paying dividends to shareholders. The Company has never missed
paying a dividend since listing in 1903 (including during the Great Depression of the 1930s and the Global Financial Crisis of
2007-08).
20 Year Dividend History
Cents per Share
Total Ordinary Dividends
Special Dividends
25
12.5
15
15
4
3.5
3.5
10
11
0
0
0
2
1
0
0
2
5
14
2
0
0
2
6
6
9
9
1
7
7
9
9
1
10
8
9
9
1
12
9
9
9
1
5
5
20
17
27
28.5
30
25
32
34
46
44
40
48
50
3
0
0
2
4
0
0
2
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Final Dividend
The Directors have declared a fully franked final dividend of 30 cents per share in respect of the year ended 31 July 2015 (2014:
29 cents fully franked). This brings total dividends for the year to 50 cents fully franked (2014: 48 cents fully franked).
The record date for the final dividend will be 16 November 2015 with payment due on 7 December 2015.
The Directors consider the regular profit after tax* to be the underlying profit of the Group. Accordingly, interim and final
dividends are declared and paid based on that profit.
The Company receives dividends and distributions from its investments and interest from funds on deposit. This year it will
pay out, as dividends, 87.9% of the ordinary dividends and interest received net of regular operating costs (2014: 81.8%).
Property contributed to these inflows with distributions totalling $23.5 million received from the Australian Logistics Property
Fund. WHSP’s strong balance sheet and cash flows enable it to continue to deliver reliable cash returns to its shareholders in
the form of fully franked dividends.
* Regular profit after tax is a non-statutory profit measure and represents profit from continuing operations before non-regular items. A reconciliation to statutory
profit is included in the Consolidated Financial Statements – Note 3, Segment Information.
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Chairman’s Review (continued)
Changes to the Board of Directors and Management
This financial year we have had a number of changes to the Board of Directors.
Mr. Warwick Negus joined the Board on 1 November 2014 as a Non-executive Director. Warwick has over 20 years experience
in the banking and finance sectors including both senior management and director roles. He has extensive experience in
managing equity and property portfolios.
Ms. Melinda Roderick joined the Board on 1 November 2014 as a Finance Director. Melinda has over 25 years accounting and
operational experience having previously held senior financial roles within the financial services and insurance sectors including
eight years as an external auditor within a chartered accounting practice. She joined WHSP in 2006 as the Chief Financial
Officer and has a comprehensive understanding of the Company’s complex accounting matters.
Mr. David Fairfull retired by rotation from the Board at the 2014 Annual General Meeting on 5 December 2014 and did not
stand for re-election. Mr. Fairfull joined the Board in 1997 and has served on various Board committees. On behalf of the
Board, I wish to thank him for his dedication and significant contribution to the Company over his 17 year tenure.
Mr. Peter Robinson retired from his position as Executive Director of the Company on 31 March 2015. He joined the Company
in 1978 at Kingsgrove, later becoming the General Manager and then the Executive Director in 1984. In addition he has taken
on leading roles in a number of WHSP’s investee companies as the chairman of the board or as a director. These companies
include the following which are listed on the ASX: Australian Pharmaceutical Industries Limited; Clover Corporation Limited;
New Hope Corporation Limited; SP Telemedia Limited (now TPG Telecom Limited); and TPI Enterprises Limited.
Mr. Robinson has tirelessly served WHSP over the last 37 years. He has utilised his considerable skills to make WHSP a successful
and profitable company. The shareholders and staff of WHSP have benefited greatly from his outstanding leadership. On
behalf of the Board, I wish to thank him for his wonderful contribution.
Mr. Todd Barlow became the Chief Executive Officer of the Company following Mr. Robinson’s retirement. He was previously
the Managing Director of Pitt Capital Partners Limited and has an in depth knowledge of WHSP and its investments. On 14
October 2015 Mr Barlow was appointed to the Board, becoming the Managing Director.
On behalf of the Board, I wish to thank the management and staff of the WHSP Group for their contribution during the year.
I would also like to thank you, the Shareholders, for your continued support.
R D Millner
Chairman
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Review of Group Entities
TPG Telecom Limited
Associated entity: 26.9% held*
Contribution to Group profit: $60.2 million
Total Market Capitalisation: $7.55 billion*
Value of WHSP’s Holding: $2.03 billion*
ASX code: TPM
TPG reported a net profit after tax (NPAT) for the year ended 31 July 2015 of $224.1 million, an increase of 31% on last year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 33% to $484.5 million and earnings per
share increased by 31% to 28.2 cents per share.
2015 marks TPG’s seventh consecutive year of strong growth.
Operating Cash Flow (Pre-tax)
NPAT
500
400
300
200
100
0
250
200
150
100
50
0
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Consumer Business
The consumer division’s EBITDA for the year was $239.7 million with no material irregular items. The $205.6 million EBITDA
for 2014 included $3.3 million of non-recurring benefits therefore the underlying EBITDA growth for 2015 was $37.4 million
or 18.5%. This was driven by ongoing organic broadband subscriber growth as well as an increase in EBITDA contribution per
broadband subscriber.
As at 31 July 2015 TPG had 821,000 broadband subscribers and 320,000 mobile subscribers.
Corporate Business
TPG’s corporate division achieved an EBITDA of $242.3 million for the year compared to $159.0 million for 2014 representing
growth of $83.3 million or 52.4%.
A large component of this EBITDA growth was derived directly from the acquisition of AAPT which contributed for 12 months
in 2015 compared to only 5 months in 2014.
TPG has estimated that $42.5 million of the $83.3 million EBITDA growth is attributable to organic revenue growth and margin
expansion since the acquisition of AAPT.
Cash Flow
TPG delivered another strong cash flow result in the 2015 financial year with $492.8 million of cash being generated from
operations (pre-tax). Free cash flow after tax, capital expenditure and interest for the year was $213.8 million.
This free cash was deployed to; make equity investments in Covata and Amcom of $115.6 million; make debt repayments of
$21 million; and pay increased dividends to shareholders of $81.4 million.
* As at 31 July 2015
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Review of Group Entities (continued)
TPG Telecom Limited (continued)
Acquisition of iiNet
On 7 September 2015 TPG completed its acquisition of the iiNet Group by acquiring all of the share capital in iiNet Limited
that it did not already own.
As the change in control occurred subsequent to 31 July 2015 there has been no contribution from iiNet to TPG’s 2015 results.
Dividend
In light of TPG’s strong cash flow and earnings growth, its board of directors declared an increased final dividend of 6 cents
per share fully franked. This brings total dividends for the year to 11.5 cents per share fully franked an increase of 24% over
last year.
Outlook
TPG anticipates continued organic growth for the 2016 financial year. TPG is not yet in a position to forecast with sufficient
certainty the likely financial results for the combined TPG/iiNet group for the 2016 financial year. On 30 September 2015 TPG
and Vodafone announced that they had signed transmission and wholesale agreements with a combined value exceeding $1
billion.
TPG contributed a net profit of $60.2 million to the Group (2014: $46.2 million).
Brickworks Limited
Associated entity: 44.2% held*
Contribution to Group profit: $19.5 million
Total Market Capitalisation: $2.21 billion*
Value of WHSP’s Holding: $978 million*
ASX code: BKW
BRICKWORKS
L I M I T ED
Brickworks posted a record underlying net profit after tax (NPAT) for the year ended 31 July 2015 of $120.3 million, up 18.8%
on last year. A feature of this result was the diversified earnings contribution, with Building Products, Land and Development
and Investments all delivering an uplift in underlying earnings compared to 2014.
After including the impact of significant items statutory NPAT was down 24.0% to $78.1 million. The significant items primarily
relate to non-cash impairments in Austral Precast and Auswest Timbers, and in New Hope Corporation, CopperChem Limited
and Exco Resources Limited (via WHSP).
On record sales revenue of $700.9 million, Building Products’ underlying earnings before interest and tax (EBIT) was $56.4
million, up 25.0% on the prior year. The improved earnings were driven by a combination of continued sales growth and solid
price increases in some divisions.
Land and Development underlying EBIT was $64.4 million for the year, driven primarily by a strong revaluation profit in the Joint
Venture Industrial Property Trust and the sale of the Coles Chilled Distribution Centre.
Brickworks’ operating cash flow increased by 14.4% reflecting the higher level of trading and decreased working capital.
The directors of Brickworks have increased the final dividend by 2 cents per share to 30 cents fully franked. Together with the
interim dividend of 15 cents per share, this brings the total dividends paid for the year to 45 cents per share, up 3 cents or
7.1% on last year.
Building Products
Total dwelling commencements for Australia were up 15.8% to 209,601 for the twelve months to 30 June 2015. This level of
residential building activity is the highest on record in Australia, with detached housing activity now three years into a recovery
and other residential commencements continuing to record unprecedented growth.
* As at 31 July 2015
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Review of Group Entities (continued)
Brickworks Limited (continued)
Austral Bricks delivered a 40.5% increase in earnings for the twelve months ended 31 July 2015. Total sales revenue was up
12.7% to $379.7 million, driven by a 9.7% uplift in sales volume and strong selling price increases in most states. Excluding
the impact of Western Australia where pricing was flat, the average selling price was up 6.1% compared to last year.
Austral Masonry delivered another increase in earnings, up 9.6% compared to last year, on record sales revenue of $87.1
million. Sales volume increased by 4.0%, with strong growth being recorded in north and south-east Queensland.
Bristile Roofing’s earnings increased by 19.8% on last year, with sales revenue up 11.0% to $111.4 million. Higher earnings
were driven by strong gains in Queensland and Western Australia, with growth also returning in Victoria following a period
of declining earnings in that state.
Austral Precast’s revenue was down 5.0% to $66.4 million on flat sales volumes. Conditions varied across the country with
increased sales volume in Victoria and Queensland being offset by declines in New South Wales and Western Australia.
Auswest Timbers’ sales revenue increased by 17.2% to $55.7 million on record sales of around 63,200 cubic metres.
Land and Development
Land and Development produced an EBIT before significant items of $64.4 million for the year, up 3.1% from $62.4 million
last year.
The improved result was primarily due to growth in the Joint Venture Industrial Property Trust (Property Trust) which is a 50/50
partnership between Brickworks and the Goodman Industrial Trust. The Property Trust generated an EBIT of $61.1million, up
40.8% from $43.4 million last year.
In July 2015 the Property Trust sold the Coles Chilled Distribution Centre for $253 million. This price was considerably higher
than book value, reflecting a capitalisation rate of 5.7% and generating an EBIT of $12.1 million.
Outlook – Building Products
Current residential building activity is at the highest level on record and continued strong momentum in new building approvals
suggests that activity could rise further in the next six months, driven primarily by the major east coast capital cities.
In addition to market driven sales growth, significant success has been achieved in increasing the penetration of Brickworks
products in a number of key markets, despite the ongoing competition from alternatives. For example, the use of face brick
in high rise residential and commercial developments continues to increase, underpinned by Brickworks’ investment in design
studios across the country and strong promotional activity to the architectural community.
For further information please refer to Brickworks’ announcements to the ASX on 24 September 2015.
Brickworks contributed a net profit of $19.5 million (2014: $23.3 million 44.3% held) and a regular profit of $29.1 million
(2014: $25.2 million 44.3% held) to the Group. These contributions exclude the WHSP profit taken up by Brickworks under
the equity accounting method.
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Review of Group Entities (continued)
New Hope Corporation Limited
Controlled entity: 59.7% held*
Contribution to Group result: $13.0 million loss
Total Market Capitalisation: $1.59 billion*
Value of WHSP’s Holding: $947 million*
ASX code: NHC
New Hope reported a net profit after tax and before non-regular items of $51.7 million for the year ended 31 July 2015 which
was up 24.7% on the 2014 result of $41.5 million. This comprised: profit of $26.0 million from coal mining, marketing and
logistics operations; loss of $2.3 million from oil operations; and profit of $28.0 million from investments.
After non-regular items, the result for the year was a net loss after tax of $21.8 million. This result comprised: profit of $9.0
million from coal mining, marketing and logistics operations; loss of $42.4 million from oil operations; and profit of $11.6
million from investments. This result was down 137.3% on the 2014 profit of $58.4 million.
Before non-regular items, basic earnings for 2015 were 6.2 cents per share, compared to 5.0 cents per share in 2014. After
non-regular items basic earnings were negative 2.6 cents per share for 2015 against 7.0 cents in 2014.
New Hope has declared a final dividend of 2.5 cents per share (2014: 2 cents) and a special dividend of 3.5 cents per share
(2014: 3.5 cents). Both of these dividends are fully franked.
Compared to the previous corresponding period, the 2015 full year result was affected by:
lower coal sales volumes, including trade coal sales (down 3.0%);
lower revenues from continuing operations (down 7.9%);
improved operational cash flows, up $24.1 million on 2014 or 37.5%;
•
•
•
• higher clean coal production (up 2.0%);
•
• a non-regular impairment on oil producing tenements and the coal to liquids proof of concept plant; and
•
lower costs across all operational sites and the corporate office;
improved health and safety performance across all operations.
Mining Operations
Production for the year was 5.7 million tonnes compared to the 5.6 million tonnes produced during 2014. New Acland and
Jeebropilly production was up a combined 2.0% on 2014 production.
Sales for 2015 were 5.8 million tonnes (inclusive of trade coal sales of 0.1 million tonnes), which was below the 6.0 million
tonnes sold in 2014 (inclusive of trade coal sales of 0.3 million tonnes).
The New Acland open cut mine produced 5.1 million tonnes of product coal in 2015. This was an increase of 0.2 million
tonnes compared to 2014.
Queensland Bulk Handling (QBH)
QBH, New Hope’s 100% owned coal terminal at the Port of Brisbane, exported 7.1 million tonnes of coal on 89 vessels. This
result was down on last year by approximately 770,000 tonnes, predominantly caused by the closure of Peabody’s Wilkie Creek
mine. QBH remains essentially a demurrage free port.
New Hope Exploration and Development Projects
New Hope continues an active exploration program utilising its two drilling rigs. Exploration activities during 2015 focussed
on resource definition in the Bowen Basin and Surat Basin (MDL244 for the revised New Acland Coal Mine Stage 3 Project) as
well as Colton in the Maryborough Basin.
Oil and Gas
Sales revenue for the year was $11.8 million against prior year of $14.6 million, a decrease of 19%. The reduction in sales
revenue was entirely a consequence of the precipitous drop in oil prices in late 2014/early 2015. These declines in USD oil prices
were partially offset by increased production and a decrease in the Australian dollar.
Capital expenditure during the year was $7.7 million on producing assets and $3.6 million on exploration assets.
* As at 31 July 2015
- 12 -
Review of Group Entities (continued)
New Hope Corporation Limited (continued)
Outlook
In order to extend the life of the New Acland Mine beyond 2018 New Hope is seeking the required approvals for the New
Acland Stage 3 Project. Since the end of the financial year the Department of Environment and Heritage Protection has
approved the Environmental Authority for the project. New Hope anticipates that certain groups are likely to lodge objections
to the approval decision, with any objections expected to be referred to the Land Court for determination in late 2015.
Operationally, New Hope anticipates that group production for 2016 will be similar to the 2015 year. Rehabilitation work
currently underway at the West Moreton operations will continue during 2016.
New Hope will continue to develop its portfolio of assets, ensuring prudent expenditure continues on exploration and approvals
work to allow new projects to be brought on line when market conditions improve.
On 30 September 2015 New Hope announced that it had reached agreement to purchase a 40% interest in the Bengalla
thermal coal mine in the Hunter Valley in New South Wales for $865 million from a subsidiary of Rio Tinto Limited (Rio).
Completion of the acquisition is subject to certain conditions precedent including: the remaining participants in the mine not
exercising their pre-emptive rights under the joint venture agreement; and a corporate restructure by Rio.
New Hope contributed a net loss of $13.0 million (2014: $34.9 million profit) and a regular profit of $31.8 million (2014: $26.6
million) to the Group.
Australian Pharmaceutical Industries Limited
Associated entity: 24.6% held*
Contribution to Group profit: $11.3 million
Total Market Capitalisation: $776 million*
Value of WHSP’s Holding: $191 million*
ASX code: API
API’s financial year ended on 31 August 2015. The results for the full year were released to the market on 22 October 2015.
For the six months ended 28 February 2015, API reported overall revenue of $1.7 billion, an increase of 3.2% over the first half
last year. Net profit after tax (NPAT) was $21.3 million, up 32.1% on the underlying NPAT of $16.2 million for the first half last
year. API attributed this increase to growth in earnings from its core businesses, a stronger financial position and disciplined
cost control.
API reduced its average net debt by $29.1 million and its net financing costs reduced by 26.7% to $7 million. Cash generated
from operations increased by $18.4 million or 40% compared to the same period in 2014 and was used to accelerate the
repayment of debt.
In June 2015 API paid a fully franked interim dividend of 2 cents per share an increase of 33% over last year.
For further information please refer to API’s announcements to the ASX on 23 April 2015.
WHSP has equity accounted API’s result for the 12 months to 28 February 2015. API contributed a net profit of $11.3 million
(2014: $24.9 million loss) and a regular profit of $9.2 million (2014: $7.4 million) to the Group.
* As at 31 July 2015
- 13 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Review of Group Entities (continued)
BKI Investment Company Limited
Associated entity: 11.1% held*
Contribution to Group profit: $4.8 million
Total Market Capitalisation: $977 million*
Value of WHSP’s Holding: $108 million*
ASX code: BKI
BKI INVESTMENT
COMPANY LIMITED
For the year ended 30 June 2015 BKI reported a net operating result before special dividend income of $40.9 million, an
increase of 13.7% over 2014. Net profit attributable to shareholders increased by 14.8% to $43.0 million and basic earnings
per share before special dividend income increased by 3.5% to 7.4 cents per share.
BKI’s improved result was driven by higher dividend distributions from BHP Billiton Limited, Woodside Petroleum Limited, APA
Group, Commonwealth Bank of Aust., Transurban Group, Suncorp Group Limited, Westpac Banking Corp., ANZ Banking
Group Limited, ASX Limited, Wesfarmers Limited and Macquarie Bank Limited.
BKI has paid a fully franked final dividend of 3.65 cents per share, an increase of 4.3%.
WHSP has equity accounted BKI’s result for the 12 months to 30 June 2015. BKI contributed a net profit of $4.8 million to the
Group (2014: $4.5 million 11.8% held).
Ruralco Holdings Limited
Associated entity: 20.3% held*
Contribution to Group profit: $3.3 million
Total Market Capitalisation: $300 million*
Value of WHSP’s Holding: $61 million*
ASX code: RHL
Ruralco’s financial year ended on 30 September 2015. Ruralco’s results for the full year are not scheduled to be released to
the market until 17 November 2015.
Ruralco released its result for the six months to 31 March 2015 on 19 May 2015. Revenue increased by 36.4% to $742.8
million compared to the previous corresponding period. The net profit after tax was $10.5 million an increase of 105.6%
compared to the first half last year.
An interim dividend of 9 cents per share fully franked was paid on 26 June 2015 (2014: 8 cents per share).
WHSP has equity accounted Ruralco’s result for the 12 months to 31 March 2015. Ruralco contributed a net profit of $3.3
million to the Group (2014: $1.3 million 20.6% held).
Apex Healthcare Berhad
Associated entity: 30.3% held*
Contribution to Group profit: $3.4 million
Total Market Capitalisation: $183 million*
Value of WHSP’s Holding: $55 million*
Listed on Bursa Malaysia, code: APEX MK
Apex is a manufacturer, distributor and retailer of pharmaceuticals, diagnostic products and equipment, orthopaedics and
consumer healthcare products. It has operations in Malaysia, Singapore and Vietnam and is publicly listed on the Main Board
of Bursa Malaysia.
For the six months ended 30 June 2015 Apex generated revenue of $92.2 million, an increase of 9.9% over $83.9 million for
the previous corresponding six month period. Net profit after tax was $5.3 million, a decrease of $0.4 million compared to
2014. This result includes losses of $0.7million from associate Straits Apex Sdn Berhad.
An interim dividend of 1.7 cents per share has been paid for the six months ended 30 June 2015 an increase of 48.7%
compared to the prior year’s interim dividend.
WHSP has equity accounted Apex’s result for the 12 months to 30 June 2015. Apex contributed a net profit of $3.4 million
to the Group (2014: $3.1 million).
* As at 31 July 2015
- 14 -
Review of Group Entities (continued)
TPI Enterprises Limited
Associated entity: 19.4% held*
Contribution to Group result: $4.4 million loss
ASX code: TPE (listed 13 August 2015)
Founded in 2004, TPI is an Australian company with operations in Tasmania, Victoria and Portugal. It is one of only eight
companies worldwide which hold licences to manufacture narcotic raw material from which pain relievers such as morphine,
Panadeine and Panadeine Forte are produced.
During the year TPI:
• raised $36.5 million in equity ($7 million contributed by WHSP) to pay down debt, relocate the manufacturing facility and
fund European expansion;
• relocated its manufacturing facility from Cressy, Tasmania to expanded premises in Melbourne, Victoria providing
significant cost savings and access to a broader market for raw materials;
• established a facility in Portugal to store and export raw material resulting in TPI being the only company with northern
and southern hemisphere growing capacity; and
• contracted new growing areas in Australia and Europe to ensure long term sustainability for the supply of raw materials
to meet its customer’s requirements.
TPI was admitted to the official list of the ASX on 13 August 2015 and trades under the code TPE. TPI released its results
for the half year to 30 June 2015 showing a loss of $8.6 million which was primarily driven by a lack of production due to
the relocation of the manufacturing facility. TPI has commenced the commissioning of the facility in Victoria and will be in
production in 2016.
WHSP is TPI’s largest shareholder, holding 19.4% of its issued capital. WHSP’s investment in TPI is classified as an investment
in an associated company.
WHSP has equity accounted TPI’s result for the 12 months to June 2015. TPI contributed a net loss of $4.4 million to the Group
(2014: nil).
* As at 31 July 2015
- 15 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Review of Group Entities (continued)
CopperChem Limited and
Exco Resources Limited
Controlled entities: 100% held*
Contribution to Group result: $67.2 million loss
Unlisted entities
CopperChem and Exco are copper and gold exploration companies which have plant that is capable of producing copper
sulphate, copper concentrate, and gold bullion.
The completion of the Mt Colin open-cut mine during the year realised production of 359,538 tonnes of ore at 2.59% copper,
producing 9,303 tonnes of copper in feed which was 13% above forecast.
The copper price received by CopperChem fell from US$7,104 per tonne in July 2014 to US$5,456 per tonne in July 2015,
a decrease of 23.2%. In response, the copper sulphate production from the solvent extraction (SX) and crystal plants at the
Cloncurry Operations has been wound down in preparation for being placed on care and maintenance.
The Cloncurry Operations’ copper concentrator remained on care-and-maintenance for the year. Both the copper concentrator
and SX/crystal plants remain valuable assets for processing copper ores in the Cloncurry region. CopperChem will review the
options of re-starting both facilities, including the option of moving them to one of its project areas, as additional copper
resources become available and subject to the prevailing copper price.
Exploration activity is set to ramp up with the drilling of a number of prospective targets in the Cloncurry region.
Revenue from copper sales for the year was $43.9 million driving a much improved operational result. However, earnings were
below forecast as a direct result of the drop in the copper price. Unfortunately the price reduction corresponded with the sale
of the highest tonnage and grades of ore from the Mt Colin open-cut mine.
The lower copper price also resulted in the carrying values of plant and mining and exploration assets being impaired under
accounting standards.
CopperChem and Exco contributed a net loss of $67.2 million to the Group (2014: $40.8 million loss) of which non-regular
expenses (including impairments) totalled $59.6 million (2014: $11.5 million loss).
Other Unlisted Investments
Ampcontrol Pty. Limited
Belaroma Coffee Pty. Limited
Cromford Group Pty. Limited
Heritage Brands Limited
Pitt Capital Partners Limited
Specialist Oncology Property Pty. Limited
Supercorp Pty Limited
% held*
43.3
40.0
100
25.1
100
24.7
29.4
* As at 31 July 2015
- 16 -
Review of Group Entities (continued)
Investment Properties
100% held*
In prior years WHSP purchased land and financed the construction of two distribution centres, one at Erskine Park in New
South Wales which was completed in December 2013 and the other at Brendale in Queensland which was completed
in November 2014. In November 2014, the two assets were sold for a total consideration of $153 million. The projects
generated a net profit before tax of $26 million for the WHSP Group. Of this, $17 million was taken up in the 2014 year as
a revaluation gain.
WHSP is continuing to investigate the potential rezoning of a four hectare land parcel with 15,000 square metres of warehouse
and 5,000 square metres of office space located in Castle Hill which was purchased in early 2014. The area was announced
as an Urban Activation Precinct, now known as Priority Precinct, by the New South Wales Department of Planning in August
of 2014.
In October 2015 WHSP completed the acquisition of an office tower located in Pennant Hills. The property will generate strong
and sustainable income in the short to medium term and has the potential to benefit from rezoning in the future.
* As at 31 July 2015
- 17 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Directors’ Report
The Directors of Washington H. Soul Pattinson and Company Limited (WHSP, Parent Company) present their report and the
financial statements of the Consolidated Entity, being the Parent Company and its subsidiaries (the Group), for the financial
year ended 31 July 2015.
DIRECTORS
The following persons were Directors of WHSP for the whole of the financial year and up to the date of this report:
Mr R D Millner
Mr M J Hawker
Mr T C D Millner
Mr R G Westphal
Mr D E Wills
The following persons were appointed as Directors of WHSP on 1 November 2014 and remain Directors at the date of this
report:
Mr W M Negus
Ms M R Roderick
The following persons were Directors of WHSP until their retirement during the year:
Mr D J Fairfull – retired 5 December 2014
Mr P R Robinson – retired 31 March 2015
PRINCIPAL ACTIVITIES
The principal activities of the corporations in the Consolidated Entity during the course of the financial year were ownership
of shares, coal mining, copper mining and refining, property investment and consulting. There were no significant changes in
the nature of the Consolidated Entity’s principal activities during the year.
DIVIDENDS
Dividends paid or declared by the Company since the end of the previous financial year were:
Declared and paid during the year
Final ordinary dividend 2014
Interim ordinary dividend 2015
Dealt with in the financial report as dividends
Declared after the end of the year
Cents
Per Share
Total Amount
$’000
Franking
%
Date of
Payment
29
20
49
69,425
47,879
117,304
100%
100%
8 December 2014
14 May 2015
Final ordinary dividend 2015
30
71,819
100%
7 December 2015
REVIEW OF OPERATIONS
The profit after tax attributable to shareholders for the year ended 31 July 2015 was $83.3 million, 36.7% lower than the
$131.7 million for the prior year.
The result was impacted by impairments of assets most of which related to New Hope Corporation Limited, CopperChem
Limited and Exco Resources Limited. Impairments totalled $196.7 million which were partly offset by the reversal of prior period
impairments of $72.9 million to give a net expense for the year of $123.8 million.
Australian Pharmaceutical Industries Limited, TPG Telecom Limited and Ruralco Holdings Limited increased their contributions
to Group profit.
- 18 -
Directors’ Report (continued)
Comparison with the prior year is as follows:
Revenue from continuing operations
Profit after tax attributable to shareholders
Interim Dividend (paid in May each year)
Final Dividend (payable 7 December 2015)
Total Dividends
2015
$000
641,604
83,330
20 cents
30 cents
50 cents
2014
$000
685,116
131,729
19 cents
29 cents
48 cents
%
Change
- 6.35%
- 36.7%
+ 5.3%
+ 3.4%
+ 4.2%
For further information regarding the operations of the Group refer to the Chairman’s Review and the Review of Group Entities
on pages 4 to 17 of this annual report.
STATE OF AFFAIRS
In the opinion of the Directors there were no significant changes in the state of affairs of the Consolidated Entity that occurred
during the financial year under review not otherwise disclosed in this report or the Consolidated Entity’s financial statements.
FINANCIAL POSITION, FINANCIAL INSTRUMENTS AND GOING CONCERN
The Directors believe the Group is in a strong and stable position to grow its current operations.
Details of financial risk management objectives and policies are set out in note 18 of the consolidated financial statements.
The Directors, having made appropriate enquiries, consider that the Group has adequate resources to continue in its operational
businesses for the foreseeable future and have therefore continued to adopt the going-concern basis in preparing the financial
statements.
LITIGATION
In October 2013, entities acting on the directions of M.H. Carnegie & Co. Pty. Limited (Carnegie) and Perpetual Investment
Management Limited (Perpetual) called a general meeting of Brickworks Limited (Brickworks).
Brickworks commenced proceedings against Carnegie and Perpetual in the Federal Court in connection with the meeting and
Carnegie and Perpetual served cross-claims against both Brickworks and WHSP. The meeting has since been cancelled and
Brickworks have terminated their proceedings against Carnegie and Perpetual.
Carnegie has terminated its cross-claims against Brickworks and WHSP but Perpetual is proceeding with its cross-claims which
seek to have the cross shareholding between WHSP and Brickworks unwound. WHSP is vigorously defending Perpetual’s cross-
claim.
EVENTS SUBSEQUENT TO THE REPORTING DATE
The Directors are not aware of any other event or circumstance since the end of the financial year not otherwise dealt with
in this report or the consolidated financial statements that has or may significantly affect the operations of the Consolidated
Entity, the results of those operations, or the state of affairs of the Consolidated Entity in subsequent years. Refer to note 6 of
the consolidated financial statements.
LIKELY DEVELOPMENTS, BUSINESS STRATEGY AND PROSPECTS
Other than as discussed in the Review of Group Entities, information about likely developments, business strategy and prospects
and the expected results in subsequent financial years have not been disclosed because the Directors believe, on reasonable
grounds, that to include such information would be likely to result in unreasonable prejudice to the Consolidated Entity.
CORPORATE GOVERNANCE STATEMENT
The Parent Company’s Corporate Governance Statement may be viewed in the Corporate Governance section of the Company’s
web site at www.whsp.com.au.
- 19 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Directors’ Report (continued)
WORKPLACE GENDER EQUALITY
In accordance with the requirements of the Workplace Gender Equality Act 2012, WHSP lodged its annual public report for the
year ended 31 March 2015 with the Workplace Gender Equality Agency on 28 May 2015.
The report may be viewed in the Employment section of the Company’s web site at www.whsp.com.au.
ENVIRONMENTAL COMPLIANCE
The Group was subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007 during the
year. This Act requires the Group to report its annual greenhouse gas emissions and energy use. The Group has implemented
systems and processes for the collection and calculation of the data required and submitted its 2013/14 report to the
Greenhouse and Energy Data Officer on 31 October 2014.
New Hope Group (NHG)
The NHG was not prosecuted for any breach of environmental laws during the year.
Environmental performance
The majority of the NHG’s operations, which include coal mining operations and exploration tenements, the Jondaryan rail
loading facility, the Queensland Bulk Handling coal export port facility and oil and gas operations, are in Queensland. The key
piece of environmental legislation in Queensland is the Environmental Protection Act 1994 (EP Act). The EP Act protects our
environment with a focus on ecologically sustainable development.
The NHG’s operations have proactively undertaken initiatives to improve their environmental performance.
Environmental systems
During the year the NHG adopted a new environmental policy aligned with the requirements of the ISO 14001 standard and
it has continued the implementation of the Environmental Management System (EMS). The EMS assists the NHG to improve
its environmental performance by increasing environmental awareness, optimising operational control, monitoring compliance
and facilitating continuous improvement.
Environmental reporting
The NHG’s operational sites have submitted reports under the National Pollutant Inventory program.
CopperChem Limited (CopperChem) and Exco Resources Limited (Exco)
CopperChem’s mining operations (Great Australia Operations (GAO) and Mount Colin) and Exco’s Queensland exploration
tenements are regulated by the Queensland Department of Environment and Heritage Protection (DEHP) under Queensland’s
Environmental Protection Act (1994). Mining operations and exploration tenements each function under a site specific
Environmental Authority (EA).
As a result of a series of minor reportable incidents identified at GAO in prior years, the DEHP issued CopperChem an
Environmental Evaluation (EE) in June 2014. While CopperChem continues to consult with DEHP over their concerns no
infringements have resulted from the evaluation.
Major water infrastructure was constructed at the Mount Colin mine in November 2014 to meet water management objectives
and compliance with its Environmental Authority. Environmental monitoring, management and compliance activities are
continuing at GAO and Mount Colin.
Exco’s mining operations at White Dam Gold Mine (WDGM) and exploration tenements in South Australia are regulated by
the Department of State Development (DSD) under South Australia’s Mining Act 1971 and the South Australian Environmental
Protection Authority under the Environmental Protection Act 1993. WDGM is operated in compliance with its lease conditions
and has not received any environmental infringements this year. Regular compliance reports are submitted to DSD in
accordance with the lease conditions.
- 20 -
Directors’ Report (continued)
DIRECTORS
Information regarding the Directors of the Company.
Robert Dobson Millner F.A.I.C.D.
Chairman.
Non-executive Director since 1984, appointed Chairman 1998. Chairman of the Investment Committee and member of the
Nomination, Remuneration and Risk Committees.
Mr Millner has extensive experience in the investment industry.
Other current listed company directorships:
- Apex Healthcare Berhad – Appointed 2000
- Australian Pharmaceutical Industries Limited – Appointed 2000
- Brickworks Limited – Appointed 1997 Chairman since 1999
- BKI Investment Company Limited – Appointed 2003 Chairman since 2003
- Milton Corporation Limited – Appointed 1998 Chairman since 2002
- New Hope Corporation Limited – Appointed 1995 Chairman since 1998
- TPG Telecom Limited – Appointed 2000
Former listed company directorships in the past three years:
- Exco Resources Limited – Appointed November 2012 (company delisted January 2013)
Michael John Hawker AM B.Sc.(Sydney), F.A.I.C.D., SF Fin.
Non-executive Director since 2012. Chairman of the Nomination and Risk Committees, member of the Audit and Remuneration
Committees.
Mr Hawker is a professional company director with over 30 years experience in financial markets and investment. He was Chief
Executive Officer and Managing Director of Insurance Australia Group from 2001 to 2008. From 1995 to 2001, Mr Hawker
held a range of positions at Westpac, including Group Executive of Business and Consumer Banking and General Manager of
Financial Markets. Prior to this, he held a number of positions at Citibank, including Deputy Managing Director for Australia
and subsequently Executive Director, Head of Derivatives, Europe.
Mr Hawker has been: Chairman of the Insurance Council of Australia; Chairman of the Australian Financial Markets Association;
a member of the Australian Governments Financial Sector Advisory Committee; and a member of the Business Council of
Australia.
Other current listed company directorships:
- Aviva PLC – Appointed 2010
- Macquarie Group Limited – Appointed 2010
Thomas Charles Dobson Millner B.Des.(Industrial), GDipAppFin(Finsia), FFin, G.A.I.C.D.
Non-executive Director since 2011 and member of the Investment, Nomination and Risk Committees.
Mr Millner’s experience includes management of investment portfolios, research and analysis of listed equities and business
development. Mr Millner is the Chief Executive Officer of BKI Investment Company Limited (BKI). He joined BKI in 2008 from
Souls Funds Management Limited where he was responsible for the investment portfolio of BKI.
Mr Millner has a Bachelor of Industrial Design degree and a Graduate Diploma in Applied Finance. He is a Fellow of the
Financial Services Institute of Australasia and a Graduate of the Australian Institute of Company Directors.
Other current listed company directorships:
- PM Capital Global Opportunities Fund Limited – Appointed 2013
Former listed company directorships in the past three years:
- Exco Resources Limited – Appointed November 2012 (company delisted January 2013)
- 21 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Directors’ Report (continued)
Mr Warwick Martin Negus B.Bus.(UTS), M.Com.(UNSW), SFFin.
Non-executive Director since 1 November 2014 and member of the Audit, Investment, Nomination, Remuneration and Risk
Committees.
Mr Negus has over 20 years experience in the banking and finance sectors including both senior management and director
roles. He has extensive experience in managing equity and property portfolios.
He has a Bachelor of Business Degree from the University of Technology Sydney and a Master of Commerce from the University
of New South Wales. He is a Senior Fellow of the Financial Services Institute of Australasia (FINSIA).
Mr Negus is also a director of FINSIA, Tantallon Capital Advisors Pte. Limited and Terrace Tower Group Pty. Limited. He is a
Member of the Council of UNSW and the Sydney Advisory Board of the Salvation Army.
Melinda Rose Roderick B.Econ.(Macq), CA, G.A.I.C.D.
Finance Director since November 2014 and member of the Risk Committee.
Ms Roderick has over 25 years accounting and operational experience having previously held senior financial roles within the
financial services and insurance sectors including eight years as an external auditor within a chartered accounting practice.
She joined WHSP in 2006 as the Chief Financial Officer and has a comprehensive understanding of the Company’s complex
accounting matters.
Ms Roderick is a member of the Institute of Chartered Accountants and holds a Bachelor of Economics Degree from Macquarie
University.
Robert Gordon Westphal B.Com.(UNSW), F.C.A., FFin, M.A.I.C.D.
Non-executive Director since 2006. Chairman of the Audit Committee and member of the Nomination, Remuneration and
Risk Committees.
Mr Westphal is a Chartered Accountant and was a partner of Ernst & Young for 25 years. He has many years of experience
in corporate transactions with particular emphasis on mergers and acquisitions, due diligence and valuation across a variety of
industry sectors. Mr Westphal was formerly the Chairman of the Board of Governors of Queenwood School for Girls Limited
for 10 years.
Former listed company directorships in the past three years:
- Xanadu Mines Ltd - Appointed 2010. Resigned November 2013
David Edward Wills B.Com.(UNSW), F.C.A., M.A.I.C.D
Non-executive Director since 2006. Chairman of the Remuneration Committee and member of the Audit, Nomination and
Risk Committees.
Mr Wills is a Chartered Accountant, having been a partner of Coopers & Lybrand and then PricewaterhouseCoopers for 25
years. He was Managing Partner of the Sydney office and Deputy Chairman of the Australian firm immediately prior to his
retirement from the firm in 2004. As a result of Mr Wills’ experience and qualifications, he brings financial expertise to the
Board.
Former listed company directorships in the past three years:
- Clover Corporation Limited – Appointed 2005, Resigned June 2013
- Quickstep Holdings Limited – Appointed 2010, Resigned July 2013
COMPANY SECRETARY
Ian David Bloodworth
Mr Bloodworth is a Chartered Accountant with more than 30 years accounting and company secretarial experience and was
appointed Company Secretary of WHSP in 2007. He was also the Company Secretary of Clover Corporation Limited from 2007
to 2012. Prior to joining the Company, Mr Bloodworth was Company Secretary of the Garratts Limited Group of Companies
for 2 years and Chief Financial Officer for 6 years.
- 22 -
Directors’ Report (continued)
DIRECTORS’ MEETINGS
The number of Board meetings and meetings of committees of Directors and the number of meetings attended by each of the
Directors of the Company during the financial year were:
Board
Audit
Committee
Investment
Committee
Nomination
Committee
Remuneration
Committee
Risk
Committee
1 - Eligible to attend
2 - Number attended
Mr R D Millner
I,N,Re,Ri
Mr D J Fairfull
A,N,Re
Mr M J Hawker
A,N,Re,Ri
Mr T C D Millner
I,N,Ri
Mr W M Negus
A,I,N,Re,Ri
Mr P R Robinson
Ms M R Roderick
Ri
Mr R G Westphal
A,N,Re,Ri
Mr D E Wills
A,N,Re,Ri
1
15
7
15
15
9
13
9
15
15
2
15
7
15
15
9
13
9
14
13
1
-
4
2
-
4
11
11
-
7
-
-
-
7
-
-
11
11
11
10
1
1
-
-
1
1
-
-
-
-
2
1
-
-
1
1
-
-
-
-
1
4
4
4
4
-
-
-
4
4
2
4
4
4
4
-
-
-
4
3
1
4
-
4
-
4
-
-
4
4
2
4
-
4
-
4
-
-
4
4
1
1
-
1
1
1
-
1
1
1
2
1
-
1
1
1
-
1
-
1
A Member of the Audit Committee of Directors during the year.
I Member of the Investment Committee of Directors during the year.
N Member of the Nomination Committee of Directors during the year.
Re Member of the Remuneration Committee of Directors during the year.
Ri Member of the Risk Committee of Directors during the year.
DIRECTORS’ INTERESTS
The relevant interest of each Director in the share capital of the Company, as notified to the Australian Securities Exchange in
accordance with section 205G of the Corporations Act 2001, at the date of this report is as follows:
Mr R D Millner
Mr M J Hawker
Mr T C D Millner
Mr W M Negus
Ms M R Roderick
Mr R G Westphal
Mr D E Wills
Appointed as a Director on 14 October 2015
Mr T J Barlow
Ordinary Shares
20,898,602
23,690
18,182,977
35,000
5,000
22,739
376,433
5,000
- 23 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED)
Scope of Report
This Remuneration Report considers the key management personnel of the Parent Company and the Consolidated Entity. New
Hope Corporation Limited (New Hope) forms part of the Consolidated Entity and the remuneration of certain key management
personnel of New Hope is included in this Report.
New Hope is publicly listed and, accordingly, has its own Remuneration Committee and produces its own Remuneration Report
in accordance with the Corporations Act 2001 to be voted on by its shareholders.
Key management personnel of the Parent Company and Consolidated Entity
Non-executive Directors
Mr R D Millner – Chairman
Mr D J Fairfull (retired 5 December 2014)
Mr M J Hawker
Mr W M Negus (appointed 1 November 2014)
Mr T C D Millner
Mr R G Westphal
Mr D E Wills
Executive Directors
Mr P R Robinson (retired 31 March 2015)
Ms M R Roderick – Finance Director and Chief Financial Officer from 1 November 2014, formerly Chief Financial Officer.
Other key management personnel of the Parent Company and Consolidated Entity
Mr T J Barlow
Mr I D Bloodworth
Chief Executive Officer (appointed 1 April 2015)
Company Secretary
Key management personnel of the Consolidated Entity
Mr M J Busch
Mr B D Denney
Mr S O Stephan
Chief Financial Officer, New Hope.
Chief Operating Officer, New Hope.
Managing Director, New Hope, from 20 November 2014, formerly Chief Executive Officer of New Hope.
Remuneration Governance
The Remuneration Committee of WHSP consists of Non-executive Directors whose responsibility is to make recommendations
to the full Board on remuneration matters and other terms of employment for the Executive Directors, senior executives and
Non-executive Directors.
The Remuneration Committee ensures that remuneration levels for Directors and senior executives are competitively set to
attract and retain qualified and experienced personnel.
New Hope has its own Remuneration Committee which reports to the Board of New Hope.
Remuneration Consultants
The Remuneration Committee is authorised by the Board to obtain independent professional advice on the appropriateness of
remuneration packages if deemed necessary. No such advice was obtained during the financial year.
Non-executive Directors
Board policy is to remunerate Non-executive Directors at comparable market rates. Remuneration levels are reviewed annually
by the Remuneration Committee and are not subject to performance based incentives.
The Remuneration Committee reviews various publications/surveys annually to assist in setting Non-executive Director
remuneration. Based on these publications/surveys for 2014 the remuneration received by Non-executive Directors for the
year ended 31 July 2015 was under the 50th percentile for ASX listed Companies with a market capitalisation greater than $3
billion.
- 24 -
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
The aggregate amount of fees which may be paid to Non-executive Directors by the Parent Company is subject to the approval
of Shareholders in general meeting and is currently set at $1,500,000 per annum. Approval for this aggregate amount was
given at the 2009 Annual General Meeting (AGM).
During the year ended 31 July 2015 remuneration of the Non-executive Directors by the Parent Company amounted to
$1,239,251.
With effect from 31 July 2004 the retiring allowance for Non-executive Directors was frozen at three times the average annual
fees for the three years prior to that date. Non-executive Directors appointed after 31 July 2004 do not qualify for a retiring
allowance. Mr David Fairfull was paid a retiring allowance of $162,500 upon his retirement from the Board of Directors on 5
December 2014.
Executive Directors and Senior Executives
Parent Company
Remuneration levels are reviewed annually by the Remuneration Committee to reflect individual performance, the overall
performance of the Parent Company and Consolidated Entity and prevailing employment market conditions.
The Finance Director and senior executives of the Parent Company received fixed remuneration packages comprising a base
salary, superannuation and non-cash benefits where taken. The total value of each remuneration package is approved by the
Remuneration Committee based on data sourced from external sources, including independent salary survey providers.
The Remuneration Committee reviews various publications/surveys annually to assist in setting the remuneration of Executive
Directors and senior executives. Based on these publications/surveys for 2014 the remuneration they received for the year
ended 31 July 2015 was under the 50th percentile for ASX listed Companies with a market capitalisation greater than $3 billion.
There were no fixed term contracts of employment in place for any key management personnel of the Parent Company at any
time during the financial year.
As set out in the 2012, 2013 and 2014 Remuneration Reports, Mr Peter Robinson was entitled to an employment termination
payment (ETP) on cessation of his employment as part consideration for transferring from a defined benefit superannuation
plan to a target benefit superannuation plan in 2012. The ETP continued to increase by interest calculated at commercial rates
until Mr Robinson’s retirement on 31 March 2015. The interest for the financial year was $19,555 (2014: $29,350) and the
final amount of the ETP paid was $888,302.
Mr Robinson received total termination payments of $1,773,157 upon retirement. Shareholder approval was not required for
these payments under Division 2 of Part 2D.2 of the Corporations Act 2001 as the non-exempt payments did not exceed Mr
Robinson’s average annual base salary from the Group over the prior three years. The exempt components of the payment
were unused annual leave and long service leave which totalled $825,529.
New Hope Corporation Limited
New Hope aims to ensure that remuneration packages properly reflect the person’s duties, experience and responsibilities and
are aligned so that management is rewarded in creating value for shareholders. Remuneration of senior executives is reviewed
annually after taking into consideration the executives’ performance, the New Hope Group’s performance, market rates and
level of responsibility.
Executive remuneration comprises a mix of base remuneration, short term incentives (STIs), long term incentives (LTIs) and
retention payments. Target remuneration mix (based on the entitlement to 100% of the available STIs and LTIs which are at risk
and subject to performance hurdles) for the year ended 31 July 2015 was: base remuneration 62%; STIs 19%; and LTIs 19%.
Base remuneration
Base remuneration for senior executives is fixed annually by the New Hope Remuneration Committee (NHRC). It comprises
a cash salary, superannuation and other non-cash benefits such as a company vehicle. Executives may elect to take a vehicle
allowance in lieu of a company vehicle and may salary sacrifice a portion of their cash salary into superannuation or other
benefits.
Short-term incentives
STIs are designed to motivate and reward senior executives to achieve the short term goals of New Hope. Maximum allowable
STIs are provided for in senior executive employment contracts and are paid in the form of an annual cash bonus. At the end
of each period the NHRC awards executives a percentage of their maximum allowable STIs having regard to the performance
of the executive and New Hope during the period. The Key Performance Indicators (KPIs) set by the NHRC and their respective
weightings are detailed below.
- 25 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Short-term Incentives KPIs
Weighting
New Hope Group Profit, Sales and Investment Performance
New Hope Group Compliance – Safety, Environment and Risk Management
New Hope Group Production Cost, Project Development and Merger and Acquisition Activities
60%
20%
20%
Each of the STIs KPIs is made up of qualitative and quantitative measures with the quantitative measures set annually by the
NHRC. Based on the achievements of New Hope this year, the NHRC determined that executives had achieved 86% of their
maximum STIs.
Given the historically low coal price and profit performance of New Hope and despite meeting the STI measures, it was
recommended by the executive management of New Hope that no STI be paid for the 2015 financial year. The NHRC accepted
this proposal resulting in no STI being payable for the 2015 financial year.
Long-term Incentives
LTIs are designed to motivate and reward senior executives to achieve the strategic goals set by New Hope, align shareholder
and executive objectives and to retain the services of senior executives.
Maximum allowable LTIs are provided for in senior executive employment contracts. At the end of each period the NHRC
awards executives a percentage of their maximum allowable LTIs having regard to the performance of the executive and New
Hope during the period.
LTIs are paid in the form of Performance Rights at the discretion of the NHRC. The value of an executive’s LTIs is converted
into Performance Rights by reference to the five day volume weighted average share price of New Hope over the five days
immediately preceding issue. The NHRC has discretion to select alternative equity instruments for the award of LTIs in the event
that Performance Rights do not align to the strategic goals set by the NHRC or New Hope.
Performance Rights are issued subject to performance and service conditions. The service condition requires that the executive
remain an employee of New Hope for the duration of the three year vesting period. The performance conditions attaching
to the rights are measured over three years. The NHRC will determine the percentage of rights that will vest based on the
performance of the executive and New Hope during the three year period. The KPIs set by the NHRC and their respective
weightings are detailed below.
Long-term Incentives KPIs
Shareholder Value
Project Development and Merger and Acquisition Activities
Strategic Plan (including Succession Planning and Stakeholder Management)
Weighting
50%
25%
25%
Company Performance, Shareholder Wealth and Remuneration
The Parent Company did not pay bonuses or grant rights or options under long term or short term incentive plans during the
year. Since the end of the year, the Parent Company has developed a long term incentive plan linked to its performance which
is subject to Shareholder approval at the AGM to be held on 4 December 2015.
In its review of remuneration policies, in particular the base salaries of key management personnel of the Parent Company, the
Remuneration Committee has regard to the performance of the Consolidated Entity for the current and previous four financial
years, taking into account the following measures:
Revenue from continuing activities
Profit after tax attributable to shareholders
Share price at year end
Ordinary dividends paid/declared
2011
$’000
758,387
363,871
$12.93
40 cents
2012
$’000
912,359
142,989
$13.15
44 cents
2013
$’000
791,315
105,421
$13.50
46 cents
2014
$’000
658,116
131,729
$15.13
48 cents
2015
$’000
641,604
83,330
$13.70
50 cents
Voting on the Remuneration Report at the 2014 Annual General Meeting
The Parent Company’s Remuneration Report for the 2014 financial year was adopted by a show of hands with no votes against.
- 26 -
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Details of Remuneration
Remuneration of the key management personnel of the Parent Company by the Parent Company:
Key Management Personnel
of Parent Company
Short Term Benefits
Salary
& Fees
$
Cash Non-monetary
Bonus
$
Benefits (4)
$
Post Employment
Benefits
Super-
annuation
$
Long Term
Benefits
Long Service
Leave
$
Termination
Benefits
Total
Parent
Entity
$
Non-executive Directors - 2015
Mr R D Millner (1)
Mr D J Fairfull (1)(2)
(retired 5 December 2014)
Mr M J Hawker
Mr T C D Millner
Mr W M Negus
(appointed 1 November 2014)
Mr R G Westphal
Mr D E Wills (1)
Executive Directors - 2015
Mr P R Robinson (1)(3)
(retired 31 March 2015)
Ms M R Roderick –
Finance Director
Other Key Management
Personnel - 2015
Mr T J Barlow (1)
(appointed 1 April 2015)
Mr I D Bloodworth
Total
261,773
42,618
135,312
102,487
98,021
157,381
139,116
936,708
546,617
352,073
277,026
212,387
2,324,811
Non-executive Directors - 2014
Mr R D Millner (1)
Mr D J Fairfull (1)
Mr M J Hawker
Mr T C D Millner
Mr R G Westphal
Mr D E Wills (1)
230,118
124,307
124,307
94,657
147,948
133,460
854,797
Executive Director – 2014
Mr P R Robinson (1)
797,632
Other Key Management
Personnel - 2014
Mr I D Bloodworth
Ms M R Roderick
Total
280,121
553,790
2,486,340
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,979
-
-
30,308
-
-
-
57,287
18,835
4,049
12,855
9,538
9,312
14,951
13,216
82,756
61,930
18,308
-
-
-
-
-
-
-
-
-
-
162,500
307,587
209,167
-
-
-
-
-
148,167
142,333
107,333
172,332
152,332
162,500 1,239,251
1,773,157 2,400,012
235,211
29,940
11,619
-
628,843
-
6,307
31,143
-
-
314,476
329,024
5,765
48,527
1,935,657 4,911,606
89,596
444,024
21,276
158,587
32,401
-
-
32,400
-
-
64,801
17,868
11,525
11,525
8,775
13,718
12,374
75,785
-
-
-
-
-
-
-
62,640
17,868
29,466
13,127
-
25,345
25,375
140,568
144,373
6,202
14,632
50,300
-
-
-
-
-
-
-
-
-
-
280,387
135,832
135,832
135,832
161,666
145,834
995,383
907,606
324,795
593,797
- 2,821,581
(1) Also derive remuneration from controlled entities as shown elsewhere in this Report.
(2) Retiring allowance of $162,500 paid to Mr D J Fairfull upon his retirement from the Board of Directors on 5 December 2014. Refer to the Non-executive
Directors section of this report on page 25 for further details.
(3) Termination benefits of $1,773,157 paid to Mr P R Robinson upon retirement on 31 March 2015. Refer to the Executive Director and Senior Executives
section of this report on page 25 for further details.
(4) Car and other benefits inclusive of fringe benefits tax payable.
- 27 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Details of Remuneration (continued)
Remuneration of the key management personnel of the Consolidated Entity:
Key Management
Personnel
Short Term Benefits
Post
Employ-
ment
Benefits
Long
Term
Benefits
Termin-
ation
Share
Based
Benefits Payments Total
Received
From
Salary
& Fees
$
Cash Non-monetary Super-
Bonus Benefits (4) annuation
$
$
$
Long Service
Leave
$
Value of
Rights
$
$
$
Parent Controlled
Entity
$
Entities
$
Non-executive
Directors – 2015
Mr R D Millner
Mr D J Fairfull (1)
(retired 5 December 2014)
Mr M J Hawker
Mr T C D Millner
Mr W M Negus
604,773
89,433
135,312
102,487
98,021
(appointed 1 November 2014)
Mr R G Westphal
Mr D E Wills
157,381
164,116
-
-
-
-
-
-
-
26,979
42,368
-
-
30,308
-
-
-
8,496
12,855
9,538
9,312
14,951
15,591
-
-
-
-
-
-
-
-
162,500
-
-
-
-
-
-
-
-
-
-
-
-
674,120
307,587 366,533
260,429
209,167
51,262
148,167
148,167
142,333
142,333
107,333
107,333
172,332
172,332
-
-
-
-
179,707
152,332
27,375
1,239,251 445,170
Executive Directors
– 2015
Mr P R Robinson (2)
(retired 31 March 2015)
669,950
-
61,930
30,025
- 1,773,157
- 2,535,062 2,400,012 135,050
Ms M R Roderick –
352,073
- 235,211
29,940
11,619
-
-
628,843
628,843
-
Finance Director
Other Key
Management
Personnel – 2015
Mr T J Barlow
(appointed 1 April 2015)
331,023
Mr I D Bloodworth
212,387
-
-
-
11,436
31,143
Mr M J Busch (3)
513,950
(9,363)
44,970
Mr B D Denney (3)
673,774
(15,605)
72,920
Mr S O Stephan (3)
1,209,630
(24,967)
42,778
89,596
21,276
18,779
18,915
18,915
5,765
9,716
6,944
17,860
-
-
-
-
-
-
-
373,602
314,476
59,126
329,024
329,024
-
48,492
626,544
75,539
832,487
43,056 1,307,272
- 626,544
- 832,487
- 1,307,272
Total
5,314,310
(49,935) 604,692
262,397
83,047 1,935,657 167,087 8,317,255 4,911,606 3,405,649
(1) Retiring allowance of $162,500 paid to Mr D J Fairfull upon his retirement from the Board of Directors on 5 December 2014. Refer to the Non-executive
Directors section of this report on page 25 for further details.
(2) Termination benefits of $1,773,157 paid to Mr P R Robinson upon retirement on 31 March 2015. Refer to the Executive Director and Senior Executives
section of this report on page 25 for further details.
(3) Cash Bonus for 2015 represents the difference between the accrual for the 2014 STI and the actual payment made during the 2015 financial year. No STI
was awarded or accrued in respect of the 2015 year.
(4) Car and other benefits inclusive of fringe benefits tax payable.
- 28 -
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Details of Remuneration (continued)
Key Management
Personnel
Short Term Benefits
Post
Employ-
ment
Benefits
Long
Term
Benefits
Termin-
ation
Share
Based
Benefits Payments Total
Received
From
Salary
& Fees
$
Cash Non-monetary Super-
Bonus Benefits (1) annuation
$
$
$
Long Service
Leave
$
Value of
Rights
$
$
$
Parent Controlled
Entity
$
Entities
$
Non-executive
Directors – 2014
Mr R D Millner
Mr D J Fairfull
Mr M J Hawker
Mr T C D Millner
Mr R G Westphal
Mr D E Wills
573,118
259,307
124,307
94,657
147,948
158,460
Executive Director
– 2014
-
-
-
-
-
-
32,401
-
-
32,400
-
-
40,329
24,041
11,525
8,775
13,718
14,692
-
-
-
-
-
-
Mr P R Robinson
982,632
-
62,640
35,009
29,466
Other Key
Management
Personnel – 2014
Mr I D Bloodworth
280,121
-
13,127
Mr M J Busch
456,003
201,863
83,535
Mr B D Denney
592,280
340,813
24,555
25,345
18,873
18,027
6,202
47,005
1,838
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
645,848
280,387 365,461
283,348
135,832 147,516
135,832
135,832
135,832
135,832
161,666
161,666
-
-
-
173,152
145,834
27,318
995,383 540,295
- 1,109,747
907,606 202,141
-
324,795
324,795
-
67,055
874,334
87,605 1,065,118
- 874,334
- 1,065,118
- 1,704,693
Mr R C Neale
(retired 31 January 2014)
702,688
285,000
96,936
8,887
13,123
176,315 421,744 1,704,693
Ms M R Roderick
553,790
-
-
25,375
14,632
-
-
593,797
593,797
-
Mr S O Stephan
905,621
433,175 114,269
18,074
65,376
- 107,571 1,644,086
- 1,644,086
Total
5,830,932 1,260,851
459,863
262,670
177,642
176,315 683,975 8,852,248 2,821,581 6,030,667
(1) Car and other benefits inclusive of fringe benefits tax payable.
- 29 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Details of Remuneration (continued)
New Hope Corporation Limited
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Fixed Remuneration
At Risk - STI
At Risk - LTI
Mr M J Busch
Mr B D Denney
Mr S O Stephan
2015
92%
91%
97%
2014
69%
60%
67%
2015
0%
0%
0%
2014
23%
32%
26%
2014
2014
8%
9%
3%
8%
8%
7%
Since the LTIs are provided exclusively by way of rights, the percentages disclosed reflect the value of remuneration consisting
of rights, based on the value of rights expensed during the year.
Service Agreements
Parent Company
The agreements with the senior executives of the Parent Company provide for a cash salary and superannuation. Executives
may elect to salary sacrifice a portion of their cash salary into superannuation or other benefits.
Name
Mr T J Barlow
Mr I D Bloodworth
Ms M R Roderick
Term of agreement
and notice period (1)
Base remuneration
including
Superannuation
Termination Payments (2)
No fixed term
6 months notice period
No fixed term
3 months notice period
No fixed term
3 months notice period
$850,000
6 months base remuneration
$340,000
3 months base remuneration
$650,000
3 months base remuneration
(1) This notice applies equally to either party.
(2) Base salary payable if the company terminates employees with notice, and without cause (e.g. for reasons other than unsatisfactory performance).
New Hope Corporation Limited
The agreements with the senior executives of New Hope provide for a cash salary, superannuation and a fully maintained motor
vehicle. Executives may elect to take a vehicle allowance in lieu of a company vehicle and may salary sacrifice a portion of their
cash salary into superannuation or other benefits.
Name
Mr M J Busch
Mr B D Denney (3)
Mr S O Stephan
Term of agreement
and notice period (1)
Base remuneration
including
Superannuation
Termination Payments (2)
No fixed term
3 months notice period
No fixed term
3 months notice period
No fixed term
6 months notice period
$600,000
3 months base remuneration
$750,000
3 months base remuneration
$1,300,000
6 months base remuneration
(1)
(2)
(3)
This notice applies equally to either party.
Base salary payable if the company terminates employees with notice, and without cause (e.g. for reasons other than unsatisfactory performance).
The contract with Mr Denney includes provision for a separation payment in the event of his termination as a result of takeover or merger of New
Hope. The allowance is for less than one year’s remuneration.
- 30 -
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Share-based Compensation
Parent Company
WHSP did not provide share-based compensation to any key management personnel of the Consolidated Entity during the year.
New Hope Corporation Limited
Rights are granted under the New Hope Corporation Limited Employee Performance Rights Share Plan. Rights are granted for
no consideration. Rights are granted in accordance with the Rights Plan at the sole discretion of the Directors of New Hope
and in accordance with New Hope’s reward and retention strategy. They vest and automatically convert to ordinary shares in
New Hope following the satisfaction of the relevant performance and service conditions. Performance and service conditions
applicable to each issue of Rights are determined by the Directors of New Hope at the time of grant.
The assessed fair value at grant date of Rights granted to executives is allocated equally over the period from grant date to
vesting date and these amounts are included in the remuneration of that executive. Fair values at grant date are determined
by reference to the relevant volume weighted average price.
Rights granted under the plan carry no dividend or voting rights.
Details of Rights over ordinary shares in New Hope as at 31 July 2015, provided as remuneration to the key management
personnel of New Hope are set out below.
The minimum value of the rights yet to vest is nil, as the rights will be forfeited if the vesting conditions are not met. The
maximum value of the rights yet to vest has been determined as the amount of the grant date fair value of the right that is
yet to be expensed by New Hope.
Grant Vesting
Date
Date
Number Value per Number Vested Number
Forfeited
Vested
Granted Share ($)
%
Forfeited Maximum value
%
yet to vest
Name
Mr M J Busch
Mr B D Denney
5,020
Oct 11 Aug 14
4,005
Dec 11 Aug 14
4,005
Dec 11 Aug 15
8,408
Dec 12 Aug 14
8,408
Dec 12 Aug 15
Dec 12 Aug 16
8,408
Dec 14 Aug 17 50,336
8,010
Dec 11 Aug 14
8,010
Dec 11 Aug 15
Dec 12 Aug 14 11,211
Dec 12 Aug 15 11,211
Dec 12 Aug 16 11,210
Dec 14 Aug 17 83,893
Mr S O Stephan (1) Oct 11 Aug 14 10,040
Dec 11 Aug 14
8,432
8,432
Dec 11 Aug 15
Dec 12 Aug 14 11,211
Dec 12 Aug 15 11,211
Dec 12 Aug 16 11,210
5.95
5.84
5.84
4.08
4.08
4.08
1.58
5.84
5.84
4.08
4.08
4.08
1.58
5.95
5.84
5.84
4.08
4.08
4.08
5,020
4,005
-
8,408
-
-
-
8,010
-
11,211
-
-
-
10,040
8,432
-
11,211
-
-
100%
100%
-
100%
-
-
-
100%
-
100%
-
-
-
100%
100%
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,326
59,678
-
-
-
-
12,474
99,463
-
-
-
-
-
12,474
(1) Mr S O Stephan’s right relating to the 2014-2016 LTI of 134,228 rights will be put to New Hope shareholders for approval at New Hope’s 2015 Annual
General Meeting.
- 31 -
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Equity instruments held by key management personnel
The following tables show the number of:
• shares in WHSP;
• shares in New Hope;
• preference shares in Pitt Capital Partners Limited; and
• rights to shares in New Hope
that were held during the financial year by key management personnel of the Group, including their personally related parties.
Shares in Washington H. Soul
Pattinson and Company Limited
Balance at
start of year during year
Acquired
Received on
the vesting
of rights
Disposed of
during the
year
Balance at
end of year
2015
Directors of Washington H. Soul
Pattinson and Company Limited
Mr R D Millner
Mr P R Robinson
(retired 31 March 2015)
Mr D J Fairfull
(retired 5 December 2014)
Mr M J Hawker
Mr T C D Millner
Mr W M Negus
(appointed 1 November 2014)
Ms M R Roderick
Mr R G Westphal
Mr D E Wills
Other key management personnel
Mr T J Barlow
(appointed 1 April 2015)
20,228,602
74,210
650,000
-
163,587
-
19,000
17,517,977
N/A
500
22,739
266,433
-
645,000
35,000
4,500
-
110,000
N/A
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,878,602
N/A
N/A
19,000
18,162,977
35,000
5,000
22,739
376,433
5,000
Shares in New Hope
Corporation Limited
Balance at
start of year during year
Acquired
Received on
the vesting
of rights
Disposed of
during the
year
Balance at
end of year
2015
Directors of Washington H. Soul
Pattinson and Company Limited
Mr R D Millner
Mr P R Robinson
(retired 31 March 2015)
Mr D J Fairfull
(retired 5 December 2014)
Mr T C D Millner
Mr D E Wills
Other key management personnel
3,681,962
119,234
100,000
-
11,000
-
3,654,368
90,670
100,000
-
-
-
-
-
-
Mr M J Busch
Mr B D Denney
Mr S O Stephan
681,478
27,231
72,395
-
-
60,000
17,433
19,221
29,683
-
-
-
-
-
-
-
-
3,781,962
N/A
N/A
3,754,368
90,670
698,911
46,452
162,078
- 32 -
Directors’ Report (continued)
REMUNERATION REPORT (AUDITED) (continued)
Pitt Capital Partners Limited
Class RP01 Preference Shares
Balance at
start of year
Acquired
during year
Received on
the vesting
of rights
Disposed of
during the
year
Balance at
end of year
2015
Key management personnel
Mr T J Barlow
(appointed 1 April 2015)
N/A
-
-
-
1
New Hope Corporation Limited
Rights
Balance at
start of year remuneration
Granted as
Vested
Balance at
end of year
Unvested
2015
Key management personnel
Mr M J Busch
Mr B D Denney
Mr S O Stephan
Loans to key management personnel
38,254
49,652
60,536
50,336
83,893
-
(17,433)
(19,221)
(29,683)
71,157
114,324
30,853
71,157
114,324
30,853
No loans have been made to the Directors of WHSP or other key management personnel of the Consolidated Entity.
Other Transactions with key management personnel
The key management personnel and their related entities received dividends during the year in respect of their shareholdings
in Group companies consistent with other shareholders.
Mr P R Robinson received total termination payments of $1,773,157 upon retirement on 31 March 2015. Shareholder approval
was not required for these payments under Division 2 of Part 2D.2 of the Corporations Act 2001. Refer to the Executive
Director and Senior Executives section of this report on page 25 for further details.
Unsecured deposits are accepted from some Directors and former Directors of WHSP and their related entities and interest is
paid at normal commercial rates. Interest paid during the current financial year amounted to $1,590,264 (2014: $1,732,690).
The balance of deposits at 31 July 2015 was $47,326,145 (2014: $44,795,638). Deposits were received from Mr R D Millner,
Mr D J Fairfull, Mr T C D Millner, Mr P R Robinson and Mr R G Westphal and/or their related entities.
OPTIONS
The Parent Company did not issue any options over its unissued shares during the financial year.
INDEMNIFICATION OF OFFICERS AND AUDITORS
Indemnification
The Parent Company’s constitution provides for an indemnity of Directors, Secretaries and Executive Officers (as defined in the
Corporations Act 2001); where liability is incurred in the performance of their duties in those roles, other than conduct involving
a wilful breach of duty in relation to the Company. The Constitution further provides for an indemnity in respect of any costs
and expenses incurred in defending proceedings in which judgement is given in their favour, they are acquitted, or the Court
grants them relief under the Corporations Act 2001.
Insurance
In accordance with the provisions of the Corporations Act, the Parent Company has a Directors’ and Officers’ Liability policy
covering Directors and officers of the Parent Company and some of its controlled entities. The insurance policy prohibits
disclosure of the nature of the liability insured against and the amount of the premium.
Auditors
No indemnities have been given or insurance premiums paid during or since the end of the financial year in respect of any
person who is or has been an auditor of the Parent Company or its controlled entities.
- 33 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Directors’ Report (continued)
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Parent Company or to intervene in any
proceedings to which the Parent Company is a party for the purpose of taking responsibility on behalf of the Parent Company
for all or any part of those proceedings. The Parent Company was not a party to any such proceedings during the year.
NON AUDIT SERVICES
During the year, Moore Stephens Sydney, the Parent Company’s auditor, performed certain other services in addition to their
statutory duties. An entity associated with Moore Stephens Sydney was paid $99,500 for providing tax compliance services in
respect of the Group. Details of the amounts paid to the auditors are disclosed in note 33 of the financial statements.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of
those non-audit services by the auditor is compatible with, and did not compromise, the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
• All non-audit services were subject to the corporate governance procedures adopted by the Parent Company and have
been reviewed by the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor, and
• The non-audit services provided do not undermine the general principles relating to auditor independence as set out
in Professional Statement APES 110: Code of Ethics for Professional Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a management or decision making capacity for the Parent Company, acting as
an advocate for the Parent Company or jointly sharing risks and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 31 July 2015 has been received and is included on page 35.
ROUNDING OF AMOUNTS
The amounts contained in the accompanying financial statements have been rounded off to the nearest one thousand dollars
under the option available to the Company under Class Order 98/100.
Signed in accordance with a resolution of the Board of Directors:
R D MILLNER
Director
M R RODERICK
Finance Director
Dated this 23rd day of October 2015.
- 34 -
Auditor’s Independence Declaration
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney, NSW 2001
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
Auditor’s Independence Declaration
to the Directors of Washington H. Soul Pattinson and Company Limited
As lead auditor for the audit of Washington H. Soul Pattinson and Company Limited for the year ended 31 July
2015, I declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Washington H. Soul Pattinson and Company Limited and the entities it controlled
during the year.
Moore Stephens Sydney
Chartered Accountants
John Gavljak
Partner
Dated in Sydney, 22nd October 2015
Moore Stephens Sydney ABN 90 773 984 843. An independent member of Moore Stephens International Limited – members in principal cities throughout the
world. The Sydney Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
- 35 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Financial Report
For the year ended 31 July 2015
About this report
This financial report is for the Consolidated entity consisting of Washington H. Soul Pattinson and Company Limited and its
controlled entities for the year ending 31 July 2015. Throughout the report, the Consolidated entity is also referred to as the
“Group”.
We are continuously developing the Group’s financial reporting with the aim to enhance our shareholders understanding of the
Group and to highlight the parent company information of Washington H. Soul Pattinson and Company Limited, illustrating
the market value of our investments and the cash flows generated by them from which dividends to our shareholders are paid.
In this year’s report, we have re-ordered the notes to the financial statements to focus on what drives the Group’s performance.
Please refer to the contents page for how the notes are structured and ordered. In addition to the relevant financial information,
the notes now include a description of the accounting policies applied, and where applicable key judgements and estimates
used by management in applying these policies.
Consolidated entity perspective
This consolidated financial report combines the operating results, financial positions and cash flows of Washington H.
Soul Pattinson and Company Limited (the Parent company) and each entity that it controls (subsidiaries), into a single
set of financial statements.
A controlling stake in a subsidiary often occurs where the parent company owns less than 100% of the subsidiary. The
term ‘non-controlling interest’ is used to describe that portion not owned by the parent company. The non-controlling
interest’s share of the consolidated profit and net assets is disclosed separately in the consolidated income statement,
the consolidated statement of comprehensive income, the consolidated statement of financial position and the
consolidated statement of changes in equity.
Investments in which the Parent company or a subsidiary has significant influence but does not have control are
termed ‘associate entities’. Unlike controlled entities, the individual financial reports of associates are not consolidated.
Associates are equity accounted with the Group’s share of an associate’s result recorded in profit. The investment in
associates is disclosed as a line item (equity accounted associates) in the consolidated statement of financial position
and is adjusted for the Group’s share of the associate’s result and decreased by any dividends received. This method
treats dividends from associates as if they are a return of capital rather than being recognised in income.
Parent company perspective
Financial information for Washington H. Soul Pattinson and Company Limited, the ‘Parent company’ has also been
provided. In contrast to the consolidated financial report, the Parent company information reflects Washington H.
Soul Pattinson and Company Limited’s activities as an ‘investor’ and provides details of its investments (subsidiaries,
associate entities and other investments), together with the cash flows generated by them (dividend income).
Washington H. Soul Pattinson and Company Limited is a for profit company limited by shares, incorporated and domiciled
in Australia. The shares are publicly traded on the Australian Securities Exchange. Its registered office and principal place of
business is as follows:
Washington H. Soul Pattinson and Company Limited
Level 1
160 Pitt Street
SYDNEY NSW 2000
A description of the nature of the Consolidated entity’s operations and its principal activities is included in the Directors’ report,
which is not part of this financial report.
This financial report was authorised for issue in accordance with a resolution of the directors on 23 October 2015.
- 36 -
Financial Report
For the year ended 31 July 2015
CONTENTS
Financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Basis of preparation
page 38
page 39
page 40
page 41
page 42
page 43
Parent company
information
Accounting for
our Investments
1. Parent company
7. Investments in
•
including:
• statement
of financial
position;
income
statement;
• value of listed
investments;
• related cash
flows; and
source of
dividend
payments
•
Controlled entities
(subsidiaries)
8. Investments in
Associates
9. Other equity
investments
10. Investment
properties
11. Term deposits
12. Cash and cash
equivalents
Taxation
Fixed assets
Other notes
16. Income tax
expense
17. Deferred tax assets
and Deferred tax
liabilities
23. Property plant and
30. Related parties
equipment
24. Exploration and
evaluation assets
31. Commitments for
expenditure
32. Other accounting
25. Intangible assets
policies
33. Remuneration of
auditors
34. Share based
payments
35. Deed of cross
guarantee
2. Payment of
dividends to
shareholders
Group structure and
performance
Revenue and
expenses
3. Segment
13. Revenue
14. Other income
15. Expenses
information –
how the Group
is organised and
managed
4. Accounting
movements in
value that are not
reflected in profit:
Reserves
5. Share capital
and capital
management
6. Events after the
reporting date
Risk Management
18. Financial risk
management
19. Fair value
estimation
Other operating
assets and liabilities
26. Trade and other
receivables
27. Inventories
28. Trade and other
20. Derivative financial
payables
29. Provisions
instruments
21. Interest bearing
liabilities
22. Contingent
liabilities
Directors’ declaration
Independent auditor’s report
page 112
page 113
- 37 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Consolidated Income Statement
For the year ended 31 July 2015
Revenue from continuing operations
Other income
Cost of sales
Selling and distribution expenses
Administration expenses
Other expenses
Impairment (expense)/reversal
Finance costs
Share of results from equity accounted associates
Profit before income tax
Income tax benefit/(expense)
Profit after tax for the year
Notes
13
14
15
8b
16a
2015
$’000
641,604
4,504
(365,121)
(142,627)
(39,381)
(8,591)
(123,801)
(3,063)
95,079
58,603
16,951
75,554
2014
$’000
658,116
63,970
(415,135)
(139,572)
(49,343)
(6,900)
21,374
(3,549)
56,018
184,979
(29,391)
155,588
Loss/(profit) after tax attributable to non-controlling interests
7,776
(23,859)
Profit after tax attributable to members of
Washington H. Soul Pattinson and Company Limited
83,330
131,729
Earnings per share
Basic and diluted earnings per share attributable to
ordinary equity holders of Washington H. Soul Pattinson
and Company Limited
2015
cents
2014
cents
Earnings per share from all operations
34.81
55.03
Weighted average number of shares used in
calculating basic and diluted earnings per share
No. of shares
No. of shares
239,395,320
239,395,320
The above consolidated income statement should be read in conjunction with the accompanying notes.
- 38 -
Consolidated Statement of Comprehensive Income
For the year ended 31 July 2015
2015
$’000
2014
$’000
Profit after tax for the year
75,554
155,588
Other comprehensive income
Items that may be reclassified subsequently to the income statement
Net movement in the fair value of long term equity
investments, net of tax
Transfer to profit and loss on disposal of long term equity investments, net of tax
Net movement in hedge reserve, net of tax
Net movement in foreign currency translation reserve, net of tax
Net movement in equity reserve, net of tax
8,411
(3,950)
(14,139)
627
(3,593)
70,244
(14,227)
27,773
1,957
(3,832)
Total other comprehensive (expense)/income for the year, net of tax
(12,644)
81,915
Total comprehensive income for the year
Total comprehensive expense/(income) attributable to non-controlling interests
62,910
16,091
237,503
(36,959)
Total comprehensive income attributable to members of
Washington H. Soul Pattinson and Company Limited
79,001
200,544
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
- 39 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Consolidated Statement of Financial Position
As at 31 July 2015
Notes
31 July 2015
$’000
31 July 2014
$’000
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Inventories
Trading equities
Held for sale equities
Current tax asset
Other assets
Total current assets
Non-current assets
Trade and other receivables
Equity accounted associates
Long term equity investments
Other financial assets
Investment properties
Derivative financial instruments
Property, plant and equipment
Exploration and evaluation assets
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Derivative financial instruments
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Parent entity interest
Non-controlling interests
Total equity
12
11
26
27
9
9
26
8
9
9
10
20
23
24
25
17
28
21
20
29
21
17
29
5
4
59,424
1,217,011
74,979
72,870
21,300
-
-
369
1,445,953
4,299
1,088,592
615,645
5,425
20,720
-
584,703
407,831
20,538
59,309
2,807,062
64,933
1,272,912
85,900
72,959
14,695
27,183
3,693
271
1,542,546
13,308
944,726
562,208
7,659
139,421
2,447
701,526
388,210
26,847
37,483
2,823,835
4,253,015
4,366,381
49,329
47,347
23,144
4,903
36,675
161,398
104
253,042
64,036
317,182
478,580
74,679
44,829
4,943
61
32,132
156,644
45,425
265,840
58,347
369,612
526,256
3,774,435
3,840,125
43,232
661,279
2,322,067
3,026,578
747,857
3,774,435
43,232
665,424
2,334,728
3,043,384
796,741
3,840,125
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
- 40 -
Consolidated Statement of Changes in Equity
As at 31 July 2015
Year ended 31 July 2015
Total equity at the beginning of the year –
1 August 2014
Net profit for the year after tax
Other comprehensive income for the year
Net movement in asset revaluation reserve,
net of tax
Net movement in hedge reserve, net of tax
Net movement in foreign currency translation
reserve, net of tax
Net movement in equity reserve, net of tax
Total comprehensive income for the year
Transactions with owners
Dividends declared and paid
Net movement in share-based payments reserve
Non-controlling interests share of subsidiaries
Equity transfer from members on issue of
share capital in controlled entity
Total equity at the end of the year –
31 July 2015
Year ended 31 July 2014
Total equity at the beginning of the year –
1 August 2013
Net profit for the year after tax
Other comprehensive income for the year
Net movement in asset revaluation reserve,
net of tax
Net movement in hedge reserve, net of tax
Net movement in foreign currency translation
reserve, net of tax
Net movement in equity reserve, net of tax
Total comprehensive income for the year
Transactions with owners
Dividends declared and paid
Net movement in share-based payments reserve
Non-controlling interests share of subsidiaries
Equity transfer from members on issue of
share capital in controlled entity
Total equity at the end of the year –
31 July 2014
Share
capital
$’000
Retained
profits
Total Parent
Reserves entity interest
Non-
controlling
interest
Total
equity
$’000
$’000
$’000
$’000
$’000
43,232
2,334,728
665,424
3,043,384
796,741 3,840,125
-
-
-
-
-
-
-
-
-
-
83,330
-
83,330
(7,776)
75,554
-
-
6,495
(7,858)
-
-
83,330
627
(3,593)
(4,329)
6,495
(7,858)
627
(3,593)
79,001
(2,034)
(6,281)
4,461
(14,139)
-
-
(16,091)
627
(3,593)
62,910
(95,126)
(865)
-
-
184
-
(95,126)
(681)
-
(33,892)
800
(26)
(129,018)
119
(26)
-
-
-
325
325
43,232
2,322,067
661,279
3,026,578
747,857 3,774,435
43,232
-
2,295,642
131,729
597,249
-
2,936,123
131,729
813,898 3,750,021
155,588
23,859
-
-
-
-
-
-
-
-
-
-
-
54,386
16,304
54,386
16,304
1,631
11,469
56,017
27,773
-
-
131,729
1,957
(3,832)
68,815
(91,185)
563
-
-
(640)
-
1,957
(3,832)
200,544
(91,185)
(77)
-
-
-
36,959
1,957
(3,832)
237,503
(54,097)
(1,003)
(2,814)
(145,282)
(1,080)
(2,814)
(2,021)
-
(2,021)
3,798
1,777
43,232
2,334,728
665,424
3,043,384
796,741 3,840,125
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
- 41 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Consolidated Statement of Cash Flows
For the year ended 31 July 2015
Notes
2015
$’000
2014
$’000
12
Cash flows from operating activities
Receipts from customers inclusive of GST
Payments to suppliers and employees inclusive of GST
Dividends received
Interest received
Finance costs
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payment for property, plant and equipment and intangibles
Proceeds from sale of property, plant and equipment
Payments for exploration and evaluation activities
Net proceeds from term deposits
Payments for equity investments
Proceeds from sale of long term equity investments
Payments to acquire equity accounted associates
Payment for acquisition and development of investment properties
Proceeds from sale of investment properties
Loans advanced
Loan repayments received
Proceeds from sale of non-current assets
Net cash (outflow) from investing activities
Cash flows from financing activities
Joint venture partner contributions
Dividends paid to our shareholders
Dividends paid by subsidiaries to non-controlling interests
Proceeds/(payments) for interest bearing liabilities
Payment on close out of interest rate swap
Proceeds from external borrowings
Repayment of external borrowings
Net cash (outflow) from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
12
592,947
(502,923)
90,024
94,648
46,393
(1,438)
(6,937)
222,690
(77,430)
336
(60,350)
52,933
(80,905)
29,222
(5,014)
(31,204)
153,069
(17,843)
3,554
-
(33,632)
-
(117,304)
(33,891)
1,238
(2,112)
11,572
(56,951)
(197,448)
(8,390)
64,933
2,881
59,424
595,627
(526,459)
69,168
82,148
51,682
(1,444)
(25,965)
175,589
(121,854)
504
(42,722)
225,357
(29,419)
42,028
(34,982)
(62,433)
-
(11,859)
6,624
23,000
(5,756)
108
(112,516)
(54,097)
(6,081)
-
40,886
(121)
(131,821)
38,012
28,078
(1,157)
64,933
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
- 42 -
Notes to the financial statements For the year ended 31 July 2015
Basis of preparation
This financial report is a general purpose financial report which:
- has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards
and other authoritative pronouncements of the Australian Accounting Standards Board (AASB);
- complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB);
- has been prepared on a for profit basis;
-
is presented in Australian dollars with all values rounded to the nearest thousand dollars ($’000), or in certain cases, to the
nearest dollar, unless otherwise stated, in accordance with ASIC Class Order 98/100;
- presents reclassified comparative information where required for consistency with the current year’s presentation;
- adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the
operations of the Group and effective for reporting periods beginning on or after 1 August 2014;
- does not adopt any Accounting Standards and Interpretations that have been issued or amended but are not yet effective
such as AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments (December 2010) as amended
by 2013-9. Refer to note 32 Other accounting policies for more information; and
- has been prepared on a historical cost basis except for the following items, which are measured on an alternative basis.
Item
Measurement basis
Long term equity investments
Held for sale equities
Trading equities
Investment properties
Fair value
Fair value
Fair value
Fair value
- where Parent company information is disclosed, relevant accounting policies are described when different to the Group
accounting policies.
Basis of consolidation
The consolidated financial statements of the Group incorporate the financial statements of Washington H. Soul Pattinson
and Company Limited and its subsidiaries, and equity accounts its associates. A diagram is set out in note 3, listing the main
subsidiaries and associates.
i. Controlled entities (subsidiaries)
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
to direct the activities of the entity.
Subsidiaries are consolidated from the date on which control is obtained to the date on which control is disposed.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the income statement, statement of
comprehensive income, statement of changes in equity and statement of financial position respectively.
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. For purchases from non-controlling interests, the difference between any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary is deducted from equity. For disposals to non-
controlling interests, differences between any proceeds received and the relevant share of non-controlling interests are also
recorded in equity.
- 43 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Notes to the financial statements (continued) For the year ended 31 July 2015
Basis of preparation (continued)
ii. Associates
Associates are all entities over which the Group has significant influence and are neither subsidiaries nor jointly controlled.
This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are
accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at
cost. The Group’s investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement and its share of
post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. Dividends received/receivable from associates are
recognised in the consolidated financial statements by reducing the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the
associate.
iii. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are
eliminated. Unrealised gains arising from transactions with an associate are eliminated to the extent of the Group’s interest
in the associate. Unrealised losses are eliminated in the same way as unrealisd gains, but only to the extent that there is no
evidence of impairment. Where practical, accounting policies of the associates have been changed to ensure consistency with
the policies adopted by the Group.
Other accounting policies
Significant and other accounting policies relevant to gaining an understanding of the financial statements have been grouped
with the relevant notes to the financial statements.
- 44 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Key judgements and estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the financial statements are disclosed within the following notes:
Note 8
Fair value – reversal of previously recognised impairment
Note 9
Impairment of financial assets
Note 15
Recoverable value and impairment of financial assets
Note 16
Petroleum Resource Rent Tax (PRRT)
Note 17
Deferred tax assets
Note 23
Determination of reserves and resources – coal
Note 23
New Acland coal stage 3 approvals
Note 23
Copper assets
Note 24
Exploration and evaluation expenditure
Note 25
Impairment of goodwill
Note 26
Recoverability of receivables
Note 29
Mining restoration and site rehabilitation
Page
64
67
74
78
80
93
93
93
94
98
100
102
- 45 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Notes to the financial statements (continued) For the year ended 31 July 2015
Parent Company information
Parent Company Information
NOTE 1.
STATEMENT OF FINANCIAL POSITION
PARENT COMPANY FINANCIAL
INFORMATION
Source of shareholders dividends
The Board declares dividends having
regard to regular operating cash flows
before non-regular items. The following
information has been provided to
demonstrate the underlying value of
the Parent company’s investments
and the regular profit and cash flows
generated by them.
Regular profit after tax is a measure
of the Parent company’s performance.
This measurement excludes the effects
of non-regular items of income and
expense which by nature are outside
the ordinary course of business or are
part of ordinary operations but are
unusual due to their size.
The classification of income and
expenses as regular or non-regular
is consistent with the Consolidated
entity’s measurement of segment
results.
Accounting policies – Parent
company
The statement of financial position,
profit after tax and total comprehensive
income for the Parent company, have
been prepared on the same basis as
the consolidated financial statements
except for Investments in controlled
entities (subsidiaries) and Investments in
associates.
In the Parent company, investments in
subsidiaries and associates are carried
at the lower of cost or impaired cost.
Dividends from these entities are
recognised as income within profit.
This approach reflects Washington H.
Soul Pattinson and Company Limited’s
activities as an investor.
The consolidated financial statements
recognises the individual assets,
liabilities, income and expenses of
the controlled entities. Associates
are equity accounted, with the initial
investment being increased/(decreased)
by profits/(losses) recognised in the
income statement, movements in other
comprehensive income and decreased
by dividends received. Dividends from
both controlled entities and associates
are not recognised in the consolidated
income statement.
As at 31 July 2015
Current assets
Cash and term deposits
Other current assets
Total current assets
Non-current assets
Long term equity investments -
measured at market value
2015
$’000
2014
$’000
165,855
46,300
212,155
166,583
27,044
193,627
608,030
560,324
Other financial assets
– Listed controlled and associated entities -
measured at the lower of cost or impaired value
526,002
433,426
– Unlisted entities - measured at the lower of cost
or impaired value
297,410
348,951
Other non-current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Total Equity
INCOME STATEMENT
Profit after tax
Less: Non-regular items after tax
Special dividends received from New Hope
Net gain on disposal of investments
Net impairment (reversal)/expense on investments
Deferred taxes transferred in
Other expenses
Regular profit after tax
Other comprehensive income
Net movement in the fair value of the listed
investment portfolio
115,309
1,546,751
148,080
1,490,781
1,758,906
1,684,408
48,676
46,819
107,359
156,035
81,836
128,655
1,602,871
1,555,753
43,232
610,339
949,300
1,602,871
43,232
611,117
901,404
1,555,753
165,200
174,016
(17,349)
(1,595)
(14,837)
-
229
(24,785)
(18,910)
9,450
(3,090)
885
131,648
137,566
(776)
42,551
As at 31 July 2015
31 July 2015
$’000
REGULAR PROFIT AFTER TAX AND
REGULAR OPERATING CASH FLOWS
For the year ended 31 July 2015
Cash and term deposits
165,855
Market value of listed investments as at 31 July 2015
(based on ASX closing prices 31 July 2015)
Dividend and distribution income
$’000
Interest income
2015
$’000
7,413
Long term equity investments
Milton Corporation Limited
Commonwealth Bank of Australia
BHP Billiton Limited
National Australia Bank Limited
Perpetual Limited
Lindsay Australia Limited
Telstra Corporation Limited
Wesfarmers Limited
Bank of Queensland Limited
Brambles Limited
Other listed entities
$’000
161,580
68,919
41,047
30,311
27,499
24,709
24,441
21,280
20,618
17,621
170,005
Market value of long term equity investments
608,030
Listed controlled and
associated entities
TPG Telecom Limited
Brickworks Limited
New Hope Corporation Limited
Australian Pharmaceutical Industries
BKI Limited
Ruralco Holdings Limited
Apex Healthcare Berhad
Clover Limited
Market value of listed controlled
and associated entities
Holding
26.9%
44.2%
59.7%
24.6%
11.1%
20.3%
30.3%
28.6%
2,029,441
978,113
946,780
191,142
108,371
60,921
55,364
8,017
Total market value of WHSP’s
listed investments
4,986,179
Tax payable if WHSP’s listed investments were
disposed of:
WHSP is a long term equity investor.
If WHSP had disposed of its listed investments on 31 July 2015,
a capital gains tax liability of approximately $1.188 billion would
have arisen based on market values as at 31 July 2015. Of this
amount, only $76.357 million has been recognised in the Parent
company accounts at 31 July 2015.
The market values of the listed investments are based on the
last sale prices as quoted on the ASX on 31 July 2015 and are
therefore subject to price fluctuations.
Milton Corporation Limited
Commonwealth Bank of Australia
BHP Billiton Limited
National Australia Bank Limited
Perpetual Limited
Lindsay Australia Limited
Telstra Corporation Limited
Wesfarmers Limited
Bank of Queensland Limited
Brambles Limited
Other listed entities
TPG Telecom Limited
Brickworks Limited
New Hope Corporation Limited
Australian Pharmaceutical Industries
BKI Limited
Ruralco Holdings Limited
Apex Healthcare Berhad
Clover Limited
Unlisted controlled and associates
6,147
3,274
2,222
1,598
1,288
937
1,130
1,091
1,050
445
6,284
21,874
28,227
29,742
4,809
4,353
2,711
1,155
236
23,500
Total dividend and distribution income
Net pharmacy profit
Other revenue
Fair value losses on equities
Other expenses
Finance costs
142,073
1,457
826
(6,018)
(6,271)
(1,592)
137,888
(6,240)
131,648
6,018
(1,462)
136,204
4,378,149
Regular profit before tax
Income tax (expense)
Regular profit after tax
Non-cash fair value losses on equities
Net movements in working capital
Regular operating cash flows
The Board declares dividends having regard to the Parent
company’s regular operating cash flows.
Dividends paid/payable
- Interim of 20 cents per share paid 14 May 2015
47,879
- Final of 30 cents per share payable
7 December 2015
Total dividends paid/payable
Payout ratio
Dividends as a percentage of regular
operating cash flows
71,819
119,698
87.9%
- 46 -
- 47 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Parent Company Information
NOTE 1. PARENT COMPANY FINANCIAL INFORMATION (continued)
a) Interest bearing liabilities
The Parent company accepts deposits from its Directors and Director-related parties under normal commercial terms and
conditions. As at 31 July 2015, the balance of these deposits was $47.326 million (2014: $44.796 million) refer note 21.
At 31 July 2015, the Parent company has no external borrowings from financial institutions and is not subject to any
externally imposed capital requirements.
b) Guarantees entered into by the Parent company
The Parent company provides cash backed guarantees for environmental bonds that are required by CopperChem Limited.
During the year, these guarantees were increased by $639,000 to $5.013 million.
c) Contingent liabilities of the Parent company
Washington H. Soul Pattinson and Company Limited is in litigation with Perpetual Limited which is proceeding with
cross-claims in seeking to have the cross-shareholding between Washington H. Soul Pattinson and Company Limited and
Brickworks Limited unwound.
Washington H. Soul Pattinson and Company Limited is vigorously defending Perpetual Limited’s cross-claim.
The Parent company did not have any contingent liabilities as at 31 July 2014.
d) Contractual commitments for the acquisition of property, plant or equipment
The Parent company did not have any contractual commitments as at 31 July 2015 or 31 July 2014.
- 48 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Parent Company Information
NOTE 2. PAYMENT OF DIVIDENDS TO SHAREHOLDERS
Accounting policy
A liability is recognised for the amount of any dividend declared on or before the end of the financial year but not
distributed at reporting date. As the final dividend was declared by Directors after year end, the final dividend has not
been recognised as a liability.
a) Ordinary shares
Final dividend for the year ended 31 July 2014 of 29 cents (2013 – 28 cents)
per fully paid share paid on 8 December 2014 (2013 – 9 December 2013)
fully franked based on tax paid at 30%.
Interim dividend for the year ended 31 July 2015 of 20 cents (2014 – 19 cents)
per fully paid share paid on 14 May 2015 (2014 – 8 May 2014)
fully franked based on tax paid at 30%.
Total dividends paid
b) Dividends not recognised at year end
In addition to the above dividends, since year end the Directors have
declared the payment of:
A final dividend of 30 cents per fully paid ordinary share, (2014 – 29 cents)
fully franked based on tax paid at 30%.
This dividend is due to be paid on 7 December 2015 (2014 – 8 December 2014) out
of retained profits as at 31 July 2015, and has not been recognised as a liability at
year end.
c) Franking of dividends
The final dividend for 31 July 2015 will be franked out of existing franking credits or
out of franking credits arising from the payment of income tax in the year ending
31 July 2015.
Franking credits available for future dividend payments
Franking credits available for subsequent financial years based on an
Australian company tax rate of 30% (2014 – 30%).
The above amounts represent the balance of the franking account as at
the end of the financial year, adjusted for franking credits that will arise
from the payment of provision for income tax, franking debits that will arise
from the payment of dividends recognised as a liability at the reporting date,
and franking credits that will arise from the receipt of dividends recognised as receivables
at the reporting date.
2015
$’000
2014
$’000
69,425
67,031
47,879
117,304
45,485
112,516
71,819
69,425
529,996
523,523
Subsequent to year end, the franking account will be reduced by the final dividend
to be paid on 7 December 2015 (2014 – 8 December).
(30,779)
(29,753)
Balance of franking credits available after payment of the final dividend
499,217
493,770
- 49 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 3. SEGMENT INFORMATION – how the Group is organised and managed
How the group is organised - Corporate structure
The Parent company invests in a diversified range of companies.
Larger holdings in a single entity are classified as follows:
Controlled entities:
(subsidiaries)
Associates:
The Parent company is able to control the activities of the organisation.
The Parent company has significant influence but does not control the activities of the
organisation.
There were no significant changes to the Group structure in the current financial year.
How the Group is managed - Segment reporting
The Parent company, its subsidiaries and associates operate within five segments. Segments are based on product and
service type and are predominantly based in Australia.
The level of ownership determines the extent to which the Parent company is able to manage the underlying operations of
its investment. The Group is managed by operating segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision
Maker. The Chief Operating Decision Maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as comprising the Board and the Chief Executive Officer.
As the Chief Operating Decision Maker is not regularly provided with the operating results from the listed associates (material
contributors to reported profit) these associates are included within the Investing activities segment except for Syndicated
Metals Limited, which is included within the Copper and gold operations segment. Results for listed associates are sourced
from publicly available information. Unlisted associates are considered not to be material contributors to the Group. These
have been included within segments as disclosed in the diagram on the following page:
The Group’s operating segments are described as:
Investing activities
The Group invests in cash, term deposits, and equity investments.
Energy
The Group engages in coal, oil and gas activities which include exploration, development, production, processing, associated
transport infrastructure and ancillary activities.
Copper and gold operations
The Group engages in copper and gold mining activities which includes exploration, mining and processing of ore into
copper concentrate, copper sulphide and gold.
Corporate advisory
The Group provides corporate advisory services.
Property
The Group engages in property investment activities including the identification and management of real estate to be held,
sold or developed to earn rental income or capital appreciation, or both.
- 50 -
CONTROLLED ENTITIES (SUBSIDIARIES)
WHSP Consolidated Group
WHSP group
percentage
ownership of
subsidiaries
Washington H.
Soul Pattinson &
Company Limited
WHSP: 100%
New Hope
Corporation
Limited
WHSP: 59.7%
CopperChem
Limited
100%
Exco Resources
Limited
100%
Australian Logistics
Property Fund
100%
PSRE 46
Carrington Road
Trust
100%
Pitt Capital
Partners Limited
100%
Investing
activities
Energy
Copper and gold
operations
Property
Corporate
advisory
SEGMENTS – How the Group is managed
Pitt Street
Real Estate Partners
Pty Limited
WHSP 75%
-
5
1
-
WHSP Listed
Equities Portfolio
WHSP Cash and
Term Deposits
WHSP Unlisted
Equities
New Hope Cash
and Term Deposits
New Hope Listed
Equities Portfolio
Coal
Assets
Oil
Assets
Gas
Assets
ASSOCIATES – SIGNIFICANT INFLUENCE
WHSP group
percentage
ownership of
associates
Australian
Pharmaceutical
Industries Limited
WHSP: 24.6%
Ampcontrol
Pty Limited
WHSP: 43.3%
Ruralco Holdings
Limited
WHSP: 20.3%
Syndicated
Metals Limited
WHSP: 30.9%
Xact Property
Solutions Pty
Limited
WHSP: 33.8%
BKI Investment
Company Limited
WHSP: 11.1%
Apex Berhand
Healthcare Limited
WHSP: 30.3%
TPG Telecom
Limited
WHSP: 26.9%
Brickworks
Limited
WHSP: 44.2%
Clover Corporation
Limited
WHSP: 28.6%
TPI Enterprises
Limited
WHSP: 19.4%
Various
Unlisted
Associates
G
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 3. SEGMENT INFORMATION - how the Group is organised and managed (continued)
Business performance - measurement of segment results
Segment performance is measured by regular profit and regular profit after tax attributable to members. These results are
non-statutory profit measures and represent profit from continuing operations before non-regular items. The measurement
basis in general, excludes the effects of non-regular items of income and expense which by nature are outside the ordinary
course of business or part of ordinary activities but are unusual due to their size.
Regular profit after tax attributable to members is the main measure of segment profit.
A reconciliation between regular profit after tax attributable to members and profit after tax is set out on page 53, and for
each segment is set out in note 3a.
The Directors have presented this information which is used by the Chief Operating Decision Maker, as they consider the
disclosure enhances the understanding of the results to members and users of the financial statements. Non-regular items
are disclosed in note 3b.
The allocation of income and expense items between regular and non-regular profit is consistent with the prior year.
Transactions between business segments are on an arm’s length basis in a manner similar to transactions with third parties.
Segment revenue, expenses and results include transactions between business segments. These transfers are eliminated on
consolidation.
- 52 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 3. SEGMENT INFORMATION - how the Group is organised and managed (continued)
Business performance - measurement of segment results (continued)
Reconciliation between regular profit after tax attributable to members and profit after tax
Regular profit after tax attributable to members
Non-regular items – net of tax
Gain on disposal of equity investments
Gain on disposal of associate
Gain on deemed disposal of associates
Fair value gain on acquisition of associate
Recognition of deferred tax assets
Impairment reversal on equity accounted associates
Impairment (expense) on long term equity investments
Impairment (expense) on oil producing and exploration assets
Impairment (expense) on goodwill
Impairment (expense) on non-current assets – coals to liquids facility
Impairment (expense) on non-current assets – copper assets
Impairment (expense) on other assets
Share of significant (expenses) from associate entities
Deferred tax (expense) recognised on equity accounted associate entities
Restructuring costs
Consulting and legal costs
Other
Total non-regular (losses)/profits after tax attributable to members
2015
$’000
2014
$’000
156,449
123,205
2,410
-
1,450
-
-
72,947
(16,170)
(21,949)
(2,480)
(10,638)
(58,114)
(6,632)
(17,435)
(13,902)
(1,217)
(227)
(1,162)
(73,119)
28,879
153
644
4,233
6,150
45,331
(5,747)
(1,823)
-
-
(4,787)
(5,171)
(36,271)
(17,074)
(1,165)
(885)
(3,943)
8,524
Profit after tax attributable to members
83,330
131,729
- 53 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
NOTE 3.
SEGMENT INFORMATION (continued)
a) Reporting segments
Year ended 31 July 2015
Copper
Investing
activities
$’000
and gold Corporate
Intersegment
Energy operations
$’000
$’000
advisory Property /unallocated Consolidated
$’000
$’000
$’000
$’000
Revenue from external customers
108,679
465,420
51,636
Intersegment revenue
Total revenue
37,758
-
-
146,437
465,420
51,636
1,949
6,152
8,101
2,290
2,100
4,390
11,630
641,604
(46,010)
-
(34,380)
641,604
Regular profit/(loss) before income tax
203,334
31,546
(9,967)
4,866
9,251
(41,897)
197,133
Non-regular items before tax (note 3b)
29,913
(79,880)
(88,563)
-
-
-
(138,530)
Profit/(loss) before income tax
Less income tax benefit/(expense)
233,247
(48,334)
(98,530)
4,866
9,251
(41,897)
(28,773)
14,898
24,884
(296)
(831)
7,069
-
5
4
-
Profit/(loss) after tax
204,474
(33,436)
(73,646)
4,570
8,420
(34,828)
Less loss/(profit) attributable to non-controlling interests
(4,687)
13,493
-
-
(1,030)
-
Profit/(loss) after tax attributable to members
199,787
(19,943)
(73,646)
4,570
7,390
(34,828)
58,603
16,951
75,554
7,776
83,330
Profit/(loss) after tax attributable to members (as above)
199,787
(19,943)
(73,646)
4,570
7,390
(34,828)
83,330
(25,604)
35,066
63,657
-
-
-
73,119
174,183
15,123
(9,989)
4,570
7,390
(34,828)
156,449
Non-regular loss/(profit) after tax attributable to
members (note 3b)
Regular profit/(loss) after tax attributable
to members
Profit/(loss) before income tax includes the
following items:
Interest revenue
Interest (expense)
Depreciation and amortisation (expense)
(2,267)
(61,181)
(19,181)
Impairment (expense)/reversal
42,189
(79,880)
(86,110)
Share of results from equity accounted associates
90,122
-
(249)
43,803
(1,595)
230
(1)
11
(825)
163
-
(16)
-
-
109
(642)
(104)
-
-
-
-
-
44,316
(3,063)
(82,749)
(123,801)
3,156
2,050
95,079
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NOTE 3.
SEGMENT INFORMATION (continued)
a) Reporting segments
Year ended 31 July 2014
Copper
Investing
activities
$’000
and gold Corporate
Intersegment
Energy operations
$’000
$’000
advisory Property /unallocated Consolidated
$’000
$’000
$’000
$’000
Revenue from external customers
108,876
508,210
23,728
2,241
3,723
11,338
658,116
Intersegment revenue
Total revenue
23,151
-
-
3,059
-
(26,210)
-
132,027
508,210
23,728
5,300
3,723
(14,872)
658,116
Regular profit/(loss) before income tax
177,676
19,043
(33,077)
3,903
19,036
(26,146)
160,435
Non-regular items before tax (note 3b)
40,452
(4,365)
(11,543)
-
-
-
-
5
5
-
Profit/(loss) before income tax
Less income tax (expense)/benefit
Profit/(loss) after tax
218,128
14,678
(44,620)
3,903
19,036
(26,146)
(23,820)
(479)
1,937
(1,318)
(5,711)
-
194,308
14,199
(42,683)
2,585
13,325
(26,146)
Less (profit) attributable to non-controlling interests
(17,712)
(5,727)
-
(420)
-
-
Profit/(loss) after tax attributable to members
176,596
8,472
(42,683)
2,165
13,325
(26,146)
24,544
184,979
(29,391)
155,588
(23,859)
131,729
Profit/(loss) after tax attributable to members (as above)
176,596
8,472
(42,683)
2,165
13,325
(26,146)
131,729
Non-regular (profit)/loss after tax attributable to
members (note 3b)
(21,889)
1,822
11,543
-
-
-
(8,524)
Regular profit/(loss) after tax attributable to members
154,707
10,294
(31,140)
2,165
13,325
(26,146)
123,205
Profit/(loss) before income tax includes the
following items:
Interest revenue
Interest (expense)
50,200
(1,961)
156
(172)
4
(290)
128
1
-
(1,126)
Depreciation and amortisation (expense)
(2,080)
(59,835)
(14,950)
(22)
(208)
Impairment reversal/(expense)
Share of results from equity accounted associates
32,183
55,781
(4,365)
(6,444)
-
(140)
-
-
-
2,427
(2,050)
-
-
-
-
50,489
(3,549)
(77,095)
21,374
56,018
G
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n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
(
c
o
n
t
i
n
u
e
d
)
F
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
1
J
u
l
y
2
0
1
5
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
NOTE 3.
SEGMENT INFORMATION (continued)
b)
Analysis of non-regular items excluded from segment results
Year ended 31 July 2015
Gain on disposal of equity investments
Gain on deemed disposal of associates
Impairment reversal on equity accounted associate
Impairment (expense) of assets
Share of significant (expenses) from associate entities
Deferred tax recognised on equity accounted associate entities
Restructuring costs
Consulting and legal costs
Other
Before
tax
$’000
3,408
2,076
72,947
(196,748)
(17,435)
-
(1,291)
(325)
(1,162)
Tax
$’000
(534)
(626)
-
49,960
-
(13,902)
74
98
-
After
tax
$’000
2,874
1,450
72,947
(146,788)
(17,435)
(13,902)
(1,217)
(227)
(1,162)
Attributable to:
Non-controlling
interest
$’000
Members
$’000
464
-
-
(30,805)
-
-
-
-
-
2,410
1,450
72,947
(115,983)
(17,435)
(13,902)
(1,217)
(227)
(1,162)
Total non-regular items – (loss)
(138,530)
35,070
(103,460)
(30,341)
(73,119)
-
5
6
-
Year ended 31 July 2014
Gain on disposal of long term equity investments
Gain on disposal of associates
Fair value gain on acquisition of associate
Recognition of deferred tax assets
Impairment reversal/(expense)
Share of significant (expenses) from associate entities
Deferred tax recognised on equity accounted associate entities
Restructuring costs
Consulting and legal costs
Other
38,518
1,251
6,048
-
21,374
(36,271)
-
(1,165)
(1,264)
(3,947)
(2,898)
(354)
(1,815)
6,150
5,196
-
(17,074)
-
379
4
35,620
897
4,233
6,150
26,570
(36,271)
(17,074)
(1,165)
(885)
(3,943)
Total non-regular items – profit
24,544
(10,412)
14,132
6,741
100
-
-
(1,233)
-
-
-
-
-
5,608
28,879
797
4,233
6,150
27,803
(36,271)
(17,074)
(1,165)
(885)
(3,943)
8,524
G
r
o
u
p
S
t
r
u
c
t
u
r
e
a
n
d
P
e
r
f
o
r
m
a
n
c
e
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
(
c
o
n
t
i
n
u
e
d
)
F
o
r
t
h
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y
e
a
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e
n
d
e
d
3
1
J
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l
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2
0
1
5
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 4.
ACCOUNTING MOVEMENTS IN VALUE THAT ARE NOT REFLECTED IN PROFIT: RESERVES
Accounting policies - Reserves
Reserves represent the portion of the consolidated entity’s reserves that are attributable to our shareholders. Certain
changes in values of assets and liabilities are not recognised in the income statement but are instead included in other
comprehensive income.
The Group’s share of movements in the reserves of equity accounted associates are also included within the reserves.
Asset Revaluation reserve
Changes in the fair value of certain assets including long term equity investments are not recognised in the income
statement but instead are recognised in other comprehensive income and accumulated in the asset revaluation reserve
within equity. Amounts are reclassified to the profit or loss when the investment is sold or impaired. Refer note 9.
Hedge Reserve
The hedge reserve records the effective portion of changes in the fair value of derivatives that are designated and qualify
as cash flow hedges, as described in note 20. The gain or loss relating to the ineffective portion is recognised in the
income statement.
a) Reserves
General reserve
Asset revaluation reserve
Capital profits reserve
Hedge reserve
Share-based payments reserve
Foreign currency translation reserve
Treasury share reserve
Equity reserve
Balance 31 July
b) Major movements in reserves consist of:
Asset revaluation reserve
Balance 1 August
Revaluation of long term equity investments, gross
Revaluation of long term equity investments, deferred tax
Transfer on sale of long term equity investments to profit, gross
Transfer on sale of long term equity investments to profit, deferred tax
Transfer on impairment of long term equity investments to profit, gross
Transfer on impairment of long term equity investments to profit, deferred tax
Share of associates increments
Balance 31 July
2015
$’000
404,548
271,242
11,368
(9,735)
709
90
(327)
(16,616)
661,279
264,747
(5,933)
(60)
(4,691)
1,205
8,138
(2,444)
10,280
271,242
2014
$’000
404,548
264,747
11,368
(1,877)
525
(537)
(327)
(13,023)
665,424
210,361
73,221
(19,414)
(15,994)
1,767
7,810
(2,427)
9,423
264,747
At balance date, the asset revaluation reserve is predominantly related to the unrealised gains and losses of Washington
H. Soul Pattinson and Company Limited’s long term equity investments.
- 57 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 4.
ACCOUNTING MOVEMENTS IN VALUE THAT ARE NOT REFLECTED IN PROFIT: RESERVES
(continued)
Hedge reserve
Balance 1 August
Revaluation, gross
Revaluation, deferred tax
Transfer to profit, gross
Transfer to profit, deferred tax
Share of associates (decrements)/increments
Balance 31 July
2015
$’000
(1,877)
(27,115)
8,638
15,471
(4,599)
(253)
(9,735)
2014
$’000
(18,181)
11,469
(3,701)
11,898
(3,570)
208
(1,877)
The hedge reserve predominantly relates to New Hope Corporation Limited’s derivative financial instruments which are
used to hedge exposures to foreign currency exchange rates. Refer to note 20 for further details.
c) Nature and purpose of other reserves
General reserve
The general reserve records funds set aside for future requirements of the Group and relate to Washington H. Soul Pattinson
and Company Limited (the Parent company).
Capital profits reserve
This reserve represents amounts allocated from retained profits that were profits of a capital nature.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued to employees but not yet exercised.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign currency differences which arise from the translation of self-
sustaining foreign operations, and foreign exchange movements.
Treasury share reserve
The treasury share reserve represents the value of shares held by an equity compensation plan as issued by group or
associate entities. The reserve will be reversed against share capital in the relevant entity when the underlying shares vest
with employees.
Equity reserve
This reserve includes the tax effect of movements in the carrying value of equity accounted associates where this movement
has been recognised directly in equity.
- 58 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 5.
SHARE CAPITAL AND CAPITAL MANAGEMENT
Accounting policy - Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction net of tax, from the proceeds. The amounts of any capital returns are applied against
share capital.
Group and Parent company
Group and Parent company
2015
No of shares
2015
$’000
2014
No of shares
2014
$’000
Fully paid ordinary shares
239,395,320
43,232
239,395,320
43,232
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares
have no par value.
Capital management
The Group’s capital management approach is conservative with the objective to maintain a strong capital base in order to
maintain investor, creditor and market confidence and to sustain the future development of the Consolidated entity.
There were no changes to the Group’s approach to capital management during the year.
The Group’s capital consists of shareholders’ equity net of debt. The movement in shareholders equity is shown in the
statement of changes in equity. Refer to page 41.
At 31 July 2015, the Parent entity has no external borrowings from financial institutions and is not subject to any externally
imposed capital requirements. The Parent entity has accepted deposits from Directors and their related parties totalling
$47.326 million (2014: $44.796 million) refer to note 21.
In the prior year, non-recourse debt of $45.303 million was used to finance investment properties held within 100%
controlled entities. In November 2014, these investment properties were sold for a total consideration of $153 million and
the non-recourse debt repaid.
The Board also monitors the level of dividends ensuring that ordinary dividends are paid from the Parent company’s regular
operating cash flows, refer to note 1.
- 59 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Group Structure and Performance
NOTE 6.
EVENTS AFTER THE REPORTING DATE
Since the end of the financial year the following matters or circumstances not referred to elsewhere in this report have arisen
that have or will significantly affect the operations of the Group, the results of those operations or the state of affairs of the
Group in subsequent financial years:
New Hope Corporation Limited reaches agreement to acquire 40% interest in Bengalla Coal Mine
On 30 September 2015 New Hope Corporation Limited announced that it had reached agreement to purchase a 40%
interest in the Bengalla thermal coal mine in the Hunter Valley in New South Wales for $865 million from a subsidiary of Rio
Tinto Limited. Completion of the acquisition is subject to certain conditions precedent including: the remaining participants
in the mine not exercising their pre-emptive rights under the joint venture agreement; and a corporate restructure by Rio
Tinto Limited.
If none of the remaining participants in the Bengalla joint venture exercise their pre-emptive rights, and all conditions
precedent are satisfied or waived, the parties expect completion of the purchase will take place in the first quarter of 2016.
TPG Telecom Limited acquisition of iiNet Limited
On 7 September 2015 TPG Telecom Limited completed its acquisition of iiNet Limited by acquiring all of the share capital in
iiNet Limited that it did not already own.
TPG Telecom Limited and Vodafone Hutchison Australia sign transmission and wholesale agreements
On 30 September 2015 TPG and Vodafone announced that they had signed transmission and wholesale agreements with a
combined value exceeding $1 billion.
- 60 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
The Group invests in equities (subsidiaries, associated entities, and other equity investments), investment properties,
term deposits and cash. This section describes how each of these investments are recognised and measured in the
consolidated financial statements.
NOTE 7.
INVESTMENTS IN CONTROLLED ENTITIES (Subsidiaries)
Accounting policy – Investments in controlled entities
Investments in controlled entities such as New Hope Corporation Limited, the Australian Logistics Property Fund
and CopperChem Limited (refer to segment information in note 3 for the corporate structure) are not recognised as
individual investments in the consolidated financial statements. The assets and liabilities of each controlled entity are
instead recognised in the statement of financial position. Dividends from controlled entities are not recognised in the
consolidated income statement, instead the results from each controlled entity are included in profit and loss.
NOTE 8.
INVESTMENTS IN ASSOCIATES
Accounting policy – Investments in associates
Associates are equity accounted, with the initial investment being increased/(decreased) by the Group’s share of the
associate’s profits/(losses) as recognised in the income statement, movements in their reserves (other comprehensive
income) and decreased by dividends received. Dividends from associates are not recognised in the consolidated income
statement.
As the accounting policy for Investments in associates is considered key to understanding the Group’s results and financial
position, the detailed accounting policy is set out in the basis of preparation at the beginning of this financial report.
Equity accounted associates
The equity accounted carrying amount of an associate does not reflect
the fair value of the Group’s investment in the associate. Details of the fair
value of investments in listed associates are provided in note 8b.
a) Movements in equity accounted carrying values
Carrying amount at 1 August
New investments during the period
Reclassification of unlisted investment to equity accounted associate
Fair value gain on acquisition of an equity accounted associates
Gain on deemed disposal of equity accounted associates
Share of profits after income tax, before write downs
Impairment reversal of equity accounted associate
Dividends received/receivable
Add back share of dividends received by associate
Share of associates increment in reserves
Disposal of equity accounted associates
Equity accounted carrying amount at 31 July
- 61 -
2015
$’000
2014
$’000
1,088,592
944,726
944,726
13,059
-
-
2,076
95,079
72,947
(69,339)
22,178
7,866
-
1,088,592
813,648
36,603
11,567
6,048
994
56,018
45,331
(58,213)
21,331
12,042
(643)
944,726
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 8. INVESTMENTS IN ASSOCIATES (continued)
b) Details of investments and results in associates
Name of associated entity
Balance date
Group’s percentage of holding at balance date*
Contribution to Group net profit for the year **
Fair value of listed investments***
July 2015
July 2014
2015
2014
July 2015
July 2014
%
%
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Regular Non-Regular#
Total
Regular Non-regular#
Total
Associates – held by WHSP
Apex Healthcare Berhad
Pharmaceutical manufacturer and distributor
Australian Pharmaceutical Industries Limited
Pharmaceutical wholesaler
BKI Investment Company Limited (iii)
Listed investment company
Brickworks Limited (iii)
Manufacturer of clay products
Clover Corporation Limited
Refinement and processing of natural oil
Ruralco Holdings Limited (iii)
Rural supplies and services
TPG Telecom Limited
Telecommunications and internet provider
TPI Enterprises Limited
Manufacturer of narcotic concentrate from poppy straw
Associates – held by controlled entities
Ampcontrol Pty Limited (ii)
Supplier of electrical and electronic products
Belaroma Coffee Company Pty Ltd
Coffee roaster and distributor
Heritage Brands Limited (ii)
Distributor of hair care and skin care products
Specialist Oncology Property Pty Limited (iii)
Specialist medical services
Supercorp Pty Limited
Financial services administration
Syndicated Metals Limited (i)
Explorator/developer of copper-gold deposits
Xact Property Solutions Pty Limited
Property management services
31 Dec
31 Aug
30 June
31 July
31 July
30 Sept
31 July
31 Dec
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30.3
24.6
11.1
44.2
28.6
20.3
26.9
19.4
43.3
40.0
25.1
24.7
29.4
30.9
33.8
30.3
24.6
11.8
44.3
28.6
20.6
26.9
19.4
43.3
40.0
25.1
25.5
29.4
18.9
33.8
3,381
-
3,381
3,144
-
3,144
55,364
46,201
9,186
2,118
11,304
7,390
(32,265)
(24,875)
191,142
72,129
4,777
-
4,777
4,491
-
4,491
108,371
104,974
29,089
(9,558)
19,531
25,241
(1,980)
23,261
978,113
938,725
3
-
3
276
-
276
8,017
19,808
3,735
(473)
3,262
2,800
(1,469)
1,331
60,921
54,860
60,245
-
60,245
46,153
(2,585)
(1,779)
(4,364)
-
-
-
46,153
2,029,441
1,179,972
-
n/a
(751)
(7,743)
(8,494)
2,022
(734)
1,288
615
293
228
(659)
(249)
5,206
-
-
-
-
-
-
615
293
228
(659)
563
7
230
(87)
(249)
(141)
5,206
377
-
-
-
-
-
-
563
7
230
(87)
(141)
377
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2,659
2,495
n/a
n/a
Share of results from equity accounted associates before impairment reversal
Impairment reversal of investment in associates (refer note 3b and key estimate and judgements)
- Australian Pharmaceutical Industries Limited
- Other equity accounted associate
Total impairment reversal of investment in associates
112,514
(17,435)
95,079
92,466
(36,448)
56,018
-
-
-
72,947
-
72,947
72,947
-
72,947
-
-
-
44,373
958
45,331
44,373
958
45,331
Share of results and impairment reversal from equity accounted associates
112,514
55,512
168,026
92,466
8,883
101,349
* The percentage holding represents the Group’s total holding in each Associate.
** Contribution to Group net profit represents the amount included in profit after tax before non-controlling interest. As the Group does not
control associates, an associates’ balance date may not be the same as the Group’s balance date. An associate’s contribution to Group profit
is based on the annual result reported for each associate, adjusted for any change in the Group’s holding of that associate.
*** Fair value of listed investments represents the last sale price of listed associates at balance date. These investments are subject to capital gains
tax and other transaction costs.
Non-regular items defined in note 3. All associates are incorporated in Australia except for Apex Healthcare Berhad (incorporated in Malaysia).
#
- 62 -
- 63 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 8. INVESTMENTS IN ASSOCIATES (continued)
b) Details of investments and results in associates (continued)
(i) Syndicated Metals Limited holding increase to 30.9% (up from 18.9%)
During the year, Syndicated Metals Limited completed a non-renounceable entitlement offer. Pitt Capital Partners Limited, a
controlled entity of Washington H. Soul Pattinson and Company Limited were the underwriters of this offer.
CopperChem Limited, a controlled entity of Washington H. Soul Pattinson and Company Limited participated in the offer and Pitt
Capital Partners Limited took up the short fall from the entitlement offer, resulting in the Group’s holding in Syndicated Metals
Limited to increase from 18.9% to 30.9%.
(ii) The following associates issued shares by way of a capital raising:
- Ampcontrol Pty Limited; and
- Heritage Brands Limited.
Washington H. Soul Pattinson and Company Limited participated in the issue of shares, accordingly there has been a change in
the Group’s holding in each of these investments.
(iii) The following associates issued shares by way of a dividend reinvestment plan, employee share scheme or capital raising:
- BKI Investment Company Limited;
- Brickworks Limited;
- Ruralco Holdings Limited; and
- Specialist Oncology Property Pty Limited.
Washington H. Soul Pattinson and Company Limited did not participate in the above share issues. As a result there has been a
change in the Group’s holding in each of these investments.
Key estimate and judgements
Fair value – Reversal of previously recognised impairment
The recoverable amount of investments in equity accounted associates is reviewed at each reporting date after taking
into consideration any applicable impairment indicators. Judgement was used when reversing the impairment previously
recognised on Australian Pharmaceutical Industries Limited. During the year ended 31 July 2015, $72.947 million (2014:
$44.373 million) of previously recognised impairment has been reversed increasing the equity accounted carrying value
to $152.316 million or $1.27 per share. At 31 July 2015, the last sale price of Australian Pharmaceutical Industries
Limited was $1.59 per share. The previous impairment recognised on Australian Pharmaceutical Industries Limited has
now been reversed in full.
c) Groups share of associates’ expenditure commitments
Capital commitments
Lease commitments
2015
$’000
2014
$’000
56,962
155,695
20,428
149,741
d) Group’s share of associates’ contingent liabilities
Share of contingent liabilities incurred jointly with other investors of the associate
15,141
17,768
- 64 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 8. INVESTMENTS IN ASSOCIATES (continued)
e) Summarised Group’s share of associates financial information
Assets
Liabilities
Net assets
Revenue
Profit before income tax
Income tax expense
Profit after income tax
2015
$’000
2014
$’000
2,258,532
(830,422)
1,428,110
2,202,945
(841,822)
1,361,123
1,983,496
1,809,441
136,051
(40,972)
95,079
89,285
(33,267)
56,018
f) Extract of financial information as reported by associates that are material to the Group
The information disclosed reflects the total amounts reported in the financial statements of Brickworks Limited and TPG
Telecom Limited amended to reflect adjustments made by the Group in applying the equity method.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Brickworks Limited
2015
$’000
316,851
1,055,363
(183,480)
(333,864)
2014
$’000
317,364
994,223
(157,545)
(332,488)
TPG Telecom Limited
2015
$’000
253,900
1,399,900
(258,100)
(392,500)
2014
$’000
221,459
1,287,835
(257,840)
(419,032)
Net assets
854,870
821,554
1,003,200
832,422
Group’s percentage holding
44.23%
44.34%
26.88%
26.88%
Group’s share of total net assets
Goodwill
Equity accounted carrying value
Fair value (note 8b)
Revenue
Profit after tax from continuing operations
Other comprehensive income
Total comprehensive income
Dividends received by Washington H. Soul
Pattinson Company Limited from the associate
378,109
15,085
393,194
978,113
723,611
78,090
(1,732)
76,358
364,277
14,139
378,416
938,725
670,268
102,755
20,866
123,621
269,660
1,140
270,800
2,029,441
1,270,600
224,100
31,900
256,000
223,755
1,119
224,874
1,179,972
970,920
171,679
12,573
184,252
28,227
26,915
21,874
18,139
Refer to note 8b) for associates profit contributions to the Group.
- 65 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 9. OTHER EQUITY INVESTMENTS
Accounting policies - other equity investments (excluding controlled entities and associates)
Recognition
Purchases of equity investments are recognised on trade date being the date on which the Group commits to purchase
the asset.
Classification
The Group classifies its equity investments into the following categories: long term equity investments, trading
equities and held for sale equities. The classification depends on the purpose for which the investments are acquired.
Management determines the classification of its investments at initial recognition.
Trading equities
Trading equities are initially recognised at fair value and any transaction costs are immediately expensed. The portfolio
consists of equities that are principally held for the purpose of selling in the short to medium term. Trading equities are
included in current assets.
Held for sale equities
Where there is an intention to sell a long term equity investment, these financial assets have been reclassified from non-
current to current assets and are disclosed as held for sale equities. Held for sale equities are stated at fair value less cost
to sell if their carrying value is expected to be recovered through a sale transaction rather than through continuing use.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less cost to sell. A gain
is recognised for any subsequent increase in fair value less cost to sell of an asset, but not in excess of any cumulative
impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the asset is
recognised at the date of de-recognition.
Long term equity investments
Long term equity investments are initially recognised at fair value plus any transaction costs. These investments are
intended to be held for the long term for capital growth and dividend income. These investments are included in non-
current assets unless management intends to dispose of the investment within 12 months of the reporting date at which
time they are transferred to held for sale equities.
Subsequent measurement
At each balance date, trading equities and long term equity investments are remeasured to fair value. Gains or losses
arising from changes in the fair value of trading equities are recognised in the income statement within other income
in the period in which they arise. Changes in the fair value of long term equity investments are recognised in equity
through the asset revaluation reserve after allowing for deferred capital gains tax. All long term equities are subject to
capital gains tax.
Impairment
The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial
assets is impaired. In the case of equity securities classified as long term equity investments, a significant or prolonged
decline in the value of a security below its cost is considered an indicator that the security may be impaired. Impairment
losses are recognised in the income statement unless the asset has previously been revalued through the asset revaluation
reserve, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any
excess recognised in the income statement. An impairment recognised for a long term equity investment is prohibited
from being reversed through profit and loss. Any future increments in the fair value of these investments will be
recognised as a fair value increment in the asset revaluation reserve.
Dividend income
Dividend income is recognised as revenue when the right to receive the dividend is established, and is generally the
ex-date.
Derecognition
Equity investments are derecognised when the rights to receive cash flows from the equity investments have expired or
have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as long term equity investments are sold, the accumulated fair value adjustments previously
recognised in equity, are transferred to the income statement.
- 66 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 9. OTHER EQUITY INVESTMENTS (continued)
CURRENT ASSETS
Trading equities - Listed
Trading equities - Unlisted
Total Trading equities
Held for sale equities - Listed
NON-CURRENT ASSETS
Long term equity investments - Listed
Long term equity investments - Unlisted
Total long term equity investments
2015
$’000
12,956
8,344
21,300
-
2014
$’000
11,992
2,703
14,695
27,183
615,642
3
615,645
562,205
3
562,208
Other financial assets - unlisted equity investments
5,425
7,659
Information regarding the Group’s exposure to price risk is set out in note 18 and fair value classification is set out in
note 19.
The fair value of listed investments is based on quoted market prices being the last sale price, at the reporting date.
Listed equities are traded in an active market, with the majority of the Group’s investments being publicly traded on the
Australian Securities Exchange.
Unlisted securities do not trade in an active market. The fair value measurement of other financial assets is approximated
by the cost price.
Long term equity investments - Listed
At 31 July 2015, Washington H. Soul Pattinson and Company Limited (the Parent company) held $608.030 million
(2014: $560.324 million) of long term equity investments.
Listed and unlisted trading equities
Represents equities held by the Washington H. Soul Pattinson and Company Limited (the Parent company).
Held for sale equities
In the prior year, the held for sale equities related to Dart Energy Limited which had been reclassified from long term
equity investments. This investment was held by New Hope Corporation Limited and was disposed of in the current year.
Key estimate and judgements
Impairment of financial assets
In the 2015 financial statements, the Group made significant judgements about the impairment of a number of its long
term equity investments.
Where there was a decrease in the share price below the cost of a long term equity investment, judgement was made
as to whether the decrease was ‘significant and prolonged’, and if so the investment was considered to be impaired.
- 67 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 10. INVESTMENT PROPERTIES
Accounting policy – investment properties
Investment properties consist of properties held for long term rentals and/or capital appreciation and properties being
constructed or developed for future use as investment properties.
Investment properties are initially recognised at cost including transaction costs. Other costs capitalised into the carrying
value of investment properties include development, construction, redevelopment, refurbishment (other than repairs and
maintenance) and interest (until the property is ready for its intended use).
Investment properties are subsequently stated at fair value. Changes in fair value are recognised as gains or losses in the
Income Statement as part of ‘Other income’.
Valuations are obtained periodically, and at least every three years, from independent Registered Property Valuers who
hold recognised and relevant qualifications and have recent valuation experience in the location and categories of each
property held.
At the end of each reporting period, the Directors update their assessment of the fair value of each property, taking
account of the most recent independent valuations.
Amounts provided to customers as lease incentives and assets relating to fixed rental income increases in operating lease
contracts are included within investment property values. Lease incentives are amortised over the term of the lease on a
straight line basis. The amortisation is applied to reduce gross rental income. Rental income is recognised on a straight
line basis within Revenue.
On disposal of an investment property, a gain or loss is recognised in the income statement in the year of disposal. It
is calculated as the difference between the carrying amount of the asset at the date of disposal and the net proceeds
received.
NON-CURRENT ASSETS
Investment properties
Industrial property - completed
Properties under development
Reconciliation
Opening net book amount
Acquisitions
Capitalised costs
Movement in tenant incentives, contracted rent uplift balances and leasing fee asset
Fair value gains recognised through the Income statement
Disposal of investment properties
Closing net book amount
2015
$’000
20,720
-
20,720
139,421
-
26,844
1,649
-
(147,194)
20,720
2014
$’000
88,821
50,600
139,421
50,223
20,771
47,794
3,852
16,781
-
139,421
In November 2014, the Australian Logistics Property Fund, a 100% controlled entity, sold two distribution warehouses
for consideration of $153 million. In the current year, a pre tax gain on disposal (after applicable disposal costs)
of $4.991 million has been recognised. In the prior year a $16.781 million fair value gain was recognised for these
properties. In addition, an equity accounted associate earned management and development fees of $4.189 million from
these projects. The cumulative pre-tax gain on these properties attributable to members amounted to $25.961 million
(recognised over the 2014 and 2015 years).
- 68 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 10. INVESTMENT PROPERTIES (continued)
a) Measuring investment properties at fair value
The basis of valuations for investment properties is fair value, being the amounts for which the assets could be exchanged
between knowledgeable willing parities in an arm’s length transaction, based on current prices in an active market for
similar properties in the same location and condition and subject to similar leases.
Castle Hill industrial property
For the year ended 31 July 2015, the Industrial Property represents land and buildings (including 15,000 square metres of
warehouse and 5,000 square metres of office space) located in the Castle Hill industrial zone. This property was purchased
in April 2014. In August 2014, this area was announced as an Urban Activation Precinct (now known as Priority Precinct)
by the New South Wales Department of Planning. The Group is continuing to investigate the potential rezoning of this
property and the Directors have therefore determined that at balance date, there had been no material change in its fair
value and hence continue to carry the property at its cost of $20.720 million.
Distribution warehouses
The distribution warehouses were sold in November 2014 for $153 million.
For the year ended 31 July 2014, the combined fair value of the distribution warehouses was $118.701 million after
allowing for $15.116 million in costs required to complete the project.
Fair value was determined by using the capitalisation method, capitalising net rental income in perpetuity. Capitalisation
rates between 7.00% and 7.50% used and were determined based on industry experience and knowledge and where
possible, a direct comparison to third party rates for similar assets in comparable locations. Rental revenue from current
leases and assumptions about future leases, as well as any expected operational cash outflows in relation to the property,
were reflected in fair value.
The fair value of the completed warehouse was $68.101 million. The fair value of the warehouse under development was
$50.600 million and was based on the market value of the property on the assumption it had already been completed at
the valuation date less costs to complete of $15.116 million, including an appropriate adjustment for profit and risk.
The fair value hierarchy, as discussed in note 19 to this report, provides an indication about the reliability of the inputs
used in determining fair value. The fair value estimates for Investment properties are included in level 3 of the hierarchy
due to significant unobservable inputs (capitalisation rates and costs to complete) used in the valuation methodology.
b) Non-current assets pledged as security
In the prior year ending 31 July 2014, $118.650 million of the Group’s investment property was pledged as security.
Refer to note 21 for information on non-current assets pledged as security by the Group.
c) Leasing arrangements
In the prior year, the industrial property was leased to a tenant under a long term operating lease with rentals payable
monthly. Minimum lease payments (rental income) from this property but not recognised as a receivable in the financial
statements, totaled $81.183 million (comprising $2.880 million receivable within one year, $25.423 million receivable
between one and five years, and $52.880 million receivable later than five years). The Group’s right to receive this future
income was terminated on the date of sale of this property.
- 69 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 11. CURRENT ASSETS – TERM DEPOSITS
Accounting policy – term deposits
Term deposit investments are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the Group’s management has the positive intention and ability to hold to maturity. Term deposit financial assets
are included in current assets, except those with maturities of more than 12 months from the reporting date, which are
classified as non-current assets.
Recognition and derecognition
A term deposit is recognised on the date when the cash funds are deposited with the bank. The term deposit is
derecognised on the term maturity date of the deposit.
Subsequent measurement
Term deposits are carried at amortised cost using the effective interest method.
Term deposits
2015
$’000
2014
$’000
1,217,011
1,272,912
Term deposits are held to their maturity of less than one year and carry a weighted average interest rate of 2.77% per
annum (2014: 3.44%).
Term deposits in the statement of financial position at reporting date include term deposits held by the Parent company
and its controlled entities.
At 31 July 2015, New Hope Corporation, a controlled entity of Washington H. Soul Pattinson and Company Limited held
$1.040.480 million (2014: $1.067.241 million) of the consolidated balance.
- 70 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Accounting for Our Investments
NOTE 12. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
Accounting policy – cash and cash equivalents
Cash and cash equivalents includes cash on hand, cash at bank, and deposits held with financial institutions for which
there is a short-term identified use in the operating cash flows of the Group. Bank overdrafts, should they occur, are
shown within borrowings in current liabilities in the statement of financial position.
Cash at bank and on deposit
2015
$’000
2014
$’000
59,424
64,933
Cash at bank and on deposit attracts interest at rates between 0% and 2.93% per annum (2014: 0% and 2.65%).
Cash at bank in the statement of financial position at reporting date includes cash held by the Parent company and its
controlled entities. At 31 July 2015, New Hope Corporation Limited, a controlled entity of Washington H. Soul Pattinson
and Company Limited held $24.789 million (2014: $57.015 million) of the consolidated balance.
Reconciliation of profit after income tax to net cash
inflow from operating activities
Profit after tax for the year
Adjustments for non-cash items:
Depreciation and amortisation
Impairment charges/(reversals)
Net (gain) on disposal of long term equity investments
Fair value loss/(gain) on revaluation of trading equities
Loss on disposal of unlisted investments
Net (gain) on sale of held for sale assets
Net (gain) on disposal of investment properties
Fair value (gain) on revaluation of investment properties
Revaluation of interest rate swap
Share of (profits)/losses of associates not received as dividends or distributions
Net foreign exchange (gain)/losses
Fair value (gain) on acquisition of equity accounted entity
(Gain) on sale and deemed disposal of associates
Other non-cash items
Changes in operating assets and liabilities, net of effects from purchase and
sales of business
Decrease/(increase) in trade debtors, other debtors and prepayments
Decrease in inventory
(Decrease)/increase in trade creditors and accruals
Increase in employee entitlements, other liabilities and provisions
Decrease in current tax asset
Increase/(decrease) in current tax payable
(Decrease)/increase in deferred tax liability
(Increase) in deferred tax asset
Net cash inflow from operating activities
- 71 -
2015
$’000
2014
$’000
75,554
155,588
82,749
123,801
(5,543)
6,018
2,135
(1,151)
(4,991)
-
2,112
(27,815)
(2,881)
-
(2,076)
(331)
19,832
89
(21,350)
2,627
3,693
4,842
(12,798)
(21,826)
222,690
77,095
(21,374)
(38,518)
(1,280)
-
-
-
(16,781)
-
146
1,157
(6,048)
(1,251)
600
(3,400)
7,276
14,318
4,770
708
(18,863)
36,733
(15,287)
175,589
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Revenue and Expenses
NOTE 13. REVENUE
Accounting policy - revenue
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic
benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below.
• Coal sales revenue is recognised at the time the risks and benefits of ownership have been transferred to the
customer in accordance with the sale terms. For export sales this is normally at the time of loading the shipment,
and for domestic sales this is generally at the time the coal is delivered to the customer.
• Revenue from the sale of goods (net of returns, discounts and allowances) is recognised when title has transferred
to the customer in accordance with the sales terms. Where a sale is settled through instalments, interest revenue is
recognised over the contract term, using the effective interest rate method.
Interest income is recognised on a time proportion basis using the effective interest method.
• Service fee income, including consulting and management fee income, is recognised as the services are performed.
•
• Dividend income is taken into revenue when the right to receive payment is established. As earnings from
controlled entities and associates are included in consolidated profit, dividends from controlled entities and
associates are not included in consolidated revenue.
• Rental income is recognised on a straight-line basis over the lease term.
From continuing operating activities
Sales revenue
Sale of goods
Services
Total Sales revenue
Other revenue
Dividends received
- Other corporations
Interest received
- Other corporations
Rental income
Other
Total other revenue
Total revenue
2015
$’000
2014
$’000
537,583
25,192
562,775
547,488
27,835
575,323
25,491
23,976
44,316
2,695
6,327
78,829
641,604
50,489
4,270
4,058
82,793
658,116
Revenue Composition
Significant portion of Group sales revenue is derived from New Hope Corporation Limited $441.009 million (2014:
$478.138 million) through the sale of:
-
-
Coal, both internationally and domestically; and
Oil and gas, domestically.
Sales revenue also includes the sale of:
-
-
-
-
Pharmaceutical products sold through Washington H. Soul Pattinson and Company Limited’s Pitt Street chemist;
Copper concentrate and copper sulphate sold domestically and internationally through CopperChem Limited;
Gold, domestically through Exco Resources Limited; and
Sales of Pipe and film, domestically through Cromford Pty Limited.
- 72 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Revenue and Expenses
NOTE 14. OTHER INCOME
Accounting policies – other income
Other income represents gains or losses made on:
• changes in fair value for certain assets including trading equities, unlisted investments, investment property and
where a previously held equity investment becomes an equity accounted associate.
• the sale of an asset including the sale of equity investments, investment property and equity accounted associates.
With the exception of the long term equity investments, the gain or (loss) is calculated as the difference between
the proceeds received and the carrying value of the asset. For the sale of long term equity investments, whilst the
gain is calculated in the same manner, it also includes any fair value changes that have previously been recognised
in equity (through reserves). As these amounts have not previously been recognised in the profit and loss, they are
included in the gain when the long term equity investment is sold.
• deemed disposals of equity accounted associates. This occurs when the Group’s percentage holding in an associate
decreases but there has not been a loss of significant influence. The Group continues to equity account the
associate.
Gain on sale of investment properties
Fair value gain on revaluation of investment properties
Gain on deemed disposal of equity accounted associates
(Loss)/gain on trading equities fair valued through profit and loss
Gain on disposal of long term equity investments
Gain on disposal of equity accounted associate
Fair value gain on acquisition of equity accounted associate
(Loss) on disposal of unlisted investment
Other items
Total other income
2015
$’000
4,991
-
2,076
(6,018)
5,543
-
-
(2,135)
47
4,504
2014
$’000
-
16,781
994
1,280
38,518
257
6,048
-
92
63,970
- 73 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Revenue and Expenses
NOTE 15. EXPENSES
Accounting policies - expenses
Depreciation and amortisation
Depreciation and amortisation expenses are non-cash expenses and represent the allocation of the cost of certain fixed
assets such as buildings, plant and equipment and mining reserves and development, over the time that the asset is
expected to generated revenue for the Group.
Different depreciation rates apply to each asset and are included within the notes for each asset.
Impairment
Impairment charges are non-cash expenses and are recognised when the carrying value of an asset or group of assets is
no longer recoverable either through the use or sale of the asset. Recoverable value assessment for each asset class is
discussed within the notes for each asset.
Impairment losses are expensed to the income statement unless the asset has been previously revalued. Where the asset
has been previously revalued, the reduction in value is recognised as a reversal to the extent of the previous revaluation,
and any residual is recognised as an impairment expense.
An impairment expense recognised on goodwill or a long term equity investment is permanent and is prohibited from
being reversed.
For all other assets, an assessment is made at each reporting date as to whether an impairment loss recognised in a
prior period no longer exists or has decreased. If it is determined that the impairment is no longer required, the carrying
value of the asset is increased and the previously recognised impairment expense is reversed in the income statement.
Employee benefits expense
Employee benefits expense includes the payment of salary and wages (including the value of non-cash benefits such as
share-based payments), sick leave and accruals for annual leave and long service leave.
Finance costs
Finance costs are expensed when incurred, except for interest incurred on borrowings that relate to the construction of
Investment properties. This interest was included in the cost of the properties.
Exploration costs expensed
Exploration costs that do not satisfy the criteria to be capitalised are expensed. Refer note 24 for discussion on the
criteria.
Key Estimate
Recoverable value and impairment
The assessments of the recoverable value of non-current assets involves significant areas of estimation and judgement
by management. Valuations have an element of uncertainty and therefore may not reflect the actual values of these
assets in the future.
- 74 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Revenue and Expenses
NOTE 15. EXPENSES (continued)
Profit before income tax expense includes the
following specific expenses:
Depreciation
Buildings
Plant and equipment
Total depreciation
Amortisation
Mining reserves and mine development
Intangible assets
Oil producing assets
Lease incentive and leasing fee assets
Total amortisation
Impairment (reversals)/charges
Equity accounted associates (i)
Long term equity investments (ii)
Oil producing assets (iii)
Goodwill (iii)
Non-current assets - coal to liquids facility (iv)
Non-current assets – copper assets (v)
Other assets
Total impairment charges/(reversals)
Impairment is allocated to asset classes:
Equity accounted associates
Long term equity investments
Other equity investments
Property, plant and equipment
Exploration and evaluation assets
Intangible assets - goodwill
Intangible assets – other
Other operating assets
Total impairment charges/(reversals)
Employee benefits expense (vi)
Finance costs (vii)
Rental expense relating to operating leases
Exploration costs expensed (viii)
Note
2015
$’000
2014
$’000
1,261
58,018
59,279
18,805
1,568
2,993
104
23,470
(72,947)
25,697
51,456
4,157
24,267
83,021
8,150
123,801
(72,947)
25,697
-
127,801
34,800
4,157
1,018
3,275
123,801
1,183
60,178
61,361
11,771
1,767
1,988
208
15,734
(45,331)
8,210
4,365
-
-
4,787
6,595
(21,374)
(45,331)
8,210
4,938
5,687
3,465
-
-
1,657
(21,374)
107,823
119,342
3,063
4,811
3,549
5,115
15,976
18,227
8
23
24
25
25
- 75 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Revenue and Expenses
NOTE 15. EXPENSES (continued)
i)
Impairment reversal on equity accounted associates
In prior years, an impairment expense had been recognised for several equity accounted associates, including Australian
Pharmaceutical Industries Limited (API). At the reporting date, API’s share price (ASX code: API) was $1.59 per share
which was above API’s impaired carrying value. As the API share price was above the carrying value, it was determined
that the recoverable value of API had increased and therefore the previously recognised impairment was to be reversed
by $72.947 million (2014: $44.373 million). The previous impairment recognised on API has now been reversed in full.
ii) Impairment of long term equity investments
During the year ended 31 July 2015, there were significant and prolonged decreases in the share prices of listed equity
investments held by the Group. Management has determined the recoverable value of these investments to be below
their costs and have therefore recognised an impairment expense in respect of these investments. Impairments were
recognised by WHSP ($8.139 million) and New Hope Corporation Limited ($17.558 million). The impairment loss after
tax impacted the result attributable to members by $16.170 million.
iii) Impairment of goodwill and oil producing assets
During the year ended 31 July 2015, New Hope Corporation Limited determined that the significant decline in global oil
prices and reduction in reserves estimates in the Cooper Basin assets, indicated the carrying value of goodwill arising on
the Bridgeport Energy Limited acquisition and certain oil producing assets were impaired.
New Hope Corporation Limited classified its Cooper Basin assets as separate cash generating units (CGU) on a per field
basis and has measured the recoverable amount of each CGU using the Fair value less cost of disposal method with
all fair value measurements categorised as level 3 in the fair value hierarchy. The impairment loss of $55.613 million
constitutes $4.157 million on goodwill and $51.456 million on Oil producing assets. The impairment loss after tax
impacted the result attributable to members by $24.429 million.
iv) Impairment of non-current assets - coal to liquids facility
New Hope Corporation Limited has assessed the recoverable value of its coal to liquids proof of concept plant, and
impaired these assets by $24.267 million. The impairment loss after tax impacted the result attributable to members by
$10.638 million.
v) Impairment of non-current assets - copper assets
As a result of significant declines in the global copper price, the Group has determined that the carrying values of certain
copper mining and exploration assets were no longer economically viable and therefore impaired. The recoverable value
of copper assets have been assessed as one cash generating unit (CGU). The Group has measured the copper CGU
on a value in use basis and has estimated future cash flows by making assumptions in respect of key variables including
commodity prices, foreign exchange rates, operating costs, future development costs and economically recoverable
resource tonnage. Copper prices and foreign exchange rates assumptions have been based on consensus market data.
The copper assets recoverable value has been assessed at $91.800 million resulting in an impairment loss of $83.021
million recognised on these assets. The impairment has reduced the carrying value of property, plant equipment by
$47.203 million (2014: $4.787 million), exploration and evaluation assets by $34.800 million (2014: $nil) and other
intangible assets by $1.018 million (2014: $nil). The impairment loss after tax impacted the result attributable to
members by $58.114 million.
vi) Employee benefits expense
Includes $86.573 million (2014: $93.571 million) relating to New Hope Corporation Limited.
vii) Finance costs
The Parent company incurred interest of $1.592 million on interest bearing deposits from Directors and their related
parties. A 100% controlled entity, the Australian Logistics Property Fund incurred $0.642 million relating to the
Investment properties (industrial warehouses). These properties were sold in November 2014.
viii) Exploration costs expensed
Includes exploration costs expensed, $15.976 million (2014: $18.195 million) relating to New Hope Corporation Limited.
- 76 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Taxation
NOTE 16.
INCOME TAX EXPENSE
Accounting policy – income tax expense
The income tax expense or benefit for the period represents the tax payable on the current period’s taxable income based
on the Australian corporate income tax rate (30%) adjusted by changes in deferred tax assets and liabilities attributable
to the temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Tax consolidation legislation
Some of the entities within the Consolidated entity have formed tax consolidated groups under the tax consolidation
regime. The Australian Tax Office has been notified on these decisions.
Controlled entities within the relevant tax consolidated groups, continue to be responsible under tax funding agreements,
for funding their share of tax payments that are required to be made by the head entity in their tax consolidation group.
These tax amounts are measured as if each entity in the tax consolidated groups continues to be a stand-alone tax payer
in their own right.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group.
Any differences between the amounts assumed and amounts receivable or payable under the tax funding agreements
are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
a) Income tax (benefit)/expense comprises:
Current income tax (benefit)/expense
Current year
Adjustments in respect of prior years
Deferred income tax (benefit)/expense
- Relating to the origination and reversal of temporary differences
- Adjustments in respect of prior years
- Petroleum resource rent tax benefit
Income tax (benefit)/expense recognised in the income statement
Deferred income tax (benefit)/expense included in income tax expense comprises:
(Increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
2015
$’000
2014
$’000
18,152
(3,422)
(30,720)
-
(961)
(16,951)
(19,188)
(12,493)
(31,681)
7,882
63
28,256
507
(7,317)
29,391
(15,287)
36,733
21,446
- 77 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Taxation
NOTE 16.
INCOME TAX EXPENSE (continued)
b) Reconciliation of prima facie tax expense to
income tax (benefit)/expense:
Profit before income tax
Tax at the Australian tax rate of 30% (2014: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Sale of long term equity investments
Net impairment (reversal)
Franking credits received (excluding controlled and associate entities)
Deferred tax asset recognised on losses transferred into the Washington
H. Soul Pattinson and Company Limited tax consolidated group
Deferred tax asset not recognised on current year net losses
Net effect of New Hope’s Corporation Limited’s Petroleum Resource
Rent Tax benefit
Tax (benefit)/expense on carrying value of equity accounted associates
Other
Total income tax (benefit)/expense
The effective tax rates are as follows:
c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not
recognised in net profit or loss but directly charged or credited to equity
(Charged)/credited to deferred tax assets
Credited to deferred tax liabilities
Net deferred tax – (credited)/charged directly to equity
d) Tax effect of impairments and tax losses
Impairments and unused tax losses for which no deferred tax
asset has been recognised
Potential tax benefit at 30%
Key Estimates:
Petroleum Resource Rent Tax (PRRT)
2015
$’000
2014
$’000
58,603
17,581
184,979
55,494
(345)
(13,662)
(9,965)
-
3,749
(673)
(14,622)
986
(16,951)
(29%)
(7,232)
(11,608)
(9,428)
(3,090)
6,612
(5,122)
269
3,496
29,391
16%
(3,638)
695
(2,943)
12,143
22,148
34,291
237,732
273,321
71,320
81,996
As a result of the 100% acquisition of Bridgeport Energy Limited during 2013, the Group is subject to Petroleum
Resource Rent Tax (PRRT) effective 1 July 2012 being the date of the extension of the PRRT to onshore petroleum
projects. The Group has accounted for the current and deferred tax impact of PRRT in accordance with the requirements
outlined in the income tax expense accounting policy. As such, the Group has recorded current and deferred tax assets
and liabilities relating to PRRT at the prevailing PRRT rate at 31 July 2015 and 31 July 2014.
A subsidiary of the Group, New Hope Corporation Limited (New Hope), as head company of the New Hope income tax
consolidated group, has made a PRRT consolidation election and as such the New Hope tax consolidated group includes
two PRRT consolidated groups at 31 July 2015 and 31 July 2014. New Hope has accounted for its PRRT tax balances in
accordance with the stand alone taxpayer method in alignment with the tax funding arrangements.
- 78 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Taxation
NOTE 17. DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES
Accounting policy – deferred tax assets and deferred tax liabilities
Deferred tax assets and liabilities are calculated on the differences (temporary differences) between the carrying amount
of assets and liabilities as recognised in the consolidated financial statements and their tax cost base multiplied by the
tax rate expected to apply when these assets are recovered or liabilities are settled. The current Australian corporate tax
rate is 30%.
Deferred tax assets or liabilities are provided in full, using the liability method. An exception is made for certain temporary
differences arising from the initial recognition of an asset or liability. No deferred tax asset or liability is recognised in
relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time
of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Deferred tax assets temporary differences attributed to:
Amounts recognised in the income statement
Provisions
Accrued expenses
Impairment losses
Capitalised exploration
Property, plant and equipment
Petroleum resource rent tax
Tax value of losses carried-forward
Other
Amounts recognised directly in equity
Cash flow hedges
Long term equity investments
Share issue costs
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
Movements:
Opening balance at 1 August
Credited to the income statement – operating profit (note 16a)
Credited/(charged) to equity (note 16c)
Closing balance at 31 July
- 79 -
2015
$’000
2014
$’000
29,559
1,979
29,286
6,479
696
3,574
48,674
7,142
127,389
6,943
2,414
10
9,367
136,756
(77,447)
59,309
113,930
19,188
3,638
136,756
26,955
2,306
14,697
-
-
2,614
56,440
5,071
108,083
242
5,595
10
5,847
113,930
(76,447)
37,483
110,786
15,287
(12,143)
113,930
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Taxation
NOTE 17. DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES (continued)
Key Estimate and judgement
Deferred tax assets
Deferred tax assets have been recognised relating to carried forward capital losses, income losses and temporary
differences, based on current tax rates. Utilisation of capital tax losses and income losses requires the realisation of capital
gains and taxable income respectfully in subsequent years, and the ability to satisfy certain tests at the time the losses
are recouped. The actual tax results in future periods may differ from the estimate made at the time the deferred taxes
are recognised.
Deferred tax liabilities temporary differences attributed to:
Amounts recognised in the income statement
Property, plant and equipment
Mine reserves
Capitalised exploration
Inventories
Investments
Receivables
Other
Amounts recognised directly in equity
Long term equity investments
Property, plant and equipment
Other investments
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions
2015
$’000
2014
$’000
14,591
345
90,013
6,933
105,687
440
5,192
223,201
90,684
7,160
9,444
107,288
330,489
(77,447)
35,003
65,276
24,205
7,185
96,048
3,343
4,632
235,692
92,567
7,160
6,868
106,595
342,287
(76,447)
Net deferred tax liabilities
253,042
265,840
Movements:
Opening balance 1 August
Charged to the income statement – operating profit (note 16a)
Charged to equity (note 16c)
Closing balance at 31 July
342,287
(12,493)
695
330,489
283,406
36,733
22,148
342,287
It is important to note, that the deferred tax liability as recognised above does not represent the total tax that would
be incurred if all assets of the Group were to be disposed. This is predominantly due to subsidiaries and the associate
entities not being carried at their market value in the consolidated financial statements. The market values of the listed
investments together with the estimate of capital gains tax payable thereon is set out in note 1, Parent Company
financial information.
- 80 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 18. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks; market risk (including currency risk, price risk and interest risk),
credit risk, and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. Entities within the
Group use derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk
exposures. Derivatives are used exclusively for hedging purposes, i.e. not as trading or other speculative instruments. The
Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analyses in the case of interest rate, foreign exchange and other price risks and ageing analyses for credit risk.
Risk management policies cover specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of
forward exchange contracts and investment of excess liquidity.
The Group holds the following financial instruments:
2015
$’000
2014
$’000
Financial assets
Cash and cash equivalents
Term deposits
Loans and receivables
Trading equities
Held for sale equities
Derivative financial instruments
Long term equity investments
Other financial assets
Total financial assets
Financial liabilities
Trade and other payables
Deposits accepted
Derivative financial instruments
Borrowings
Lease liabilities
Total financial liabilities
a) Market risk
i. Foreign exchange risk
59,424
1,217,011
79,278
21,300
-
-
615,645
5,425
1,998,083
49,329
47,326
23,144
-
125
119,924
64,933
1,272,912
99,208
14,695
27,183
2,447
562,208
7,659
2,051,245
74,679
44,796
4,943
45,303
155
169,876
Foreign exchange risk arises when in local currency terms that the value of a financial commitment or a recognised asset
or liability, will fluctuate due to changes in foreign currency exchange rates. The Group is exposed to foreign exchange risk
arising from currency exposures to the US Dollar. Sales of coal and copper related products are quoted in US Dollars.
Forward contracts are used to manage foreign exchange risk. Senior management is responsible for managing exposures in
each foreign currency by using external forward currency contracts. Contracts are designated as cash flow hedges. External
foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific future transactions.
The Group’s export coal sales risk management policy is to hedge up to 65% of anticipated transactions in US Dollars for
the subsequent year, up to 57% of anticipated revenue beyond a year but less than two years and up to 50% for revenue
beyond two years but less than three years. All hedges of projected export coal sales qualify as “highly probable” forecast
transactions for hedge accounting purposes.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
US Dollar exposure
Cash and cash equivalents
Trade receivables
Forward exchange contracts – sell foreign currency (cash flow hedge)
Trade payables
- 81 -
2015
USD $’000
2014
USD $’000
3,867
11,383
137,000
11
26,596
18,003
168,000
12
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 18. FINANCIAL RISK MANAGEMENT (continued)
a) Market Risk (continued)
Sensitivity analysis
Based on the trade receivables, cash held and trade payables at 31 July 2015, had the Australian dollar weakened/
strengthened by 10% against the US dollar with all other variables held constant, the Group’s post-tax profit for the year
would have increased/(decreased) by $1,638,000/($1,380,000) (2014: $3.769 million/($3.165 million)), mainly as a result of
foreign exchange gains/(losses) on translation of US dollar receivables and cash balances as detailed in the above table. The
Group’s equity as at reporting date would have increased/(decreased) by the same amounts.
Based on the forward exchange contracts held at 31 July 2015, had the Australian dollar weakened/strengthened by 10%
against the US dollar with all other variables held constant, the Group’s equity would have increased/ (decreased) by $21.075
million/($17.208 million) (2014: $20.314 million/($16.569 million)). There is no effect on post-tax profits.
ii. Price Risk
The Group is an investment company and is exposed to equity securities price risk. The majority of the Group’s investments
are publicly traded on the Australian Securities Exchange.
Investments held for the long-term are classified in the statement of financial position as ‘long term equity investments’.
As the market value of individual companies fluctuate, the fair value of the portfolio changes with the movement being
recognised directly to equity. Where an investment’s value falls below its cost, management may consider the investment to
be impaired. An impairment expense is recognised in the income statement.
Investments held for the short to medium term are classified in the statement of financial position as trading equities. As the
market value of individual companies fluctuate, the fair value of this portfolio changes with the movement being recognised
through the income statement.
In the prior year, held for sale equities represented an investment that was disposed of following the completion of a
takeover in the current year.
Sensitivity analysis
The following table summarises the financial impacts of a hypothetical 5% decrease in the market value of investments for
the Group as at reporting date. Where this decrease results in an individual security being valued below its cost, the reduction
below cost may be recognised in the income statement where Directors consider the investment to be impaired. For long
term equity investments, a 5% increase in market values would have no impact on the income statement as all increases
are recognised directly in equity.
Impact to post-tax profit
Impact on reserves
2015
$’000
(648)
-
(648)
2014
$’000
(600)
(75)
(675)
2015
$’000
-
(21,578)
(21,578)
2014
$’000
-
(21,289)
(21,289)
Trading equities
Long term equity investments
Total
iii. Fair value interest rate risk Refer to (e)
- 82 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 18. FINANCIAL RISK MANAGEMENT (continued)
b) Credit Risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Group.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial
institutions, as well as credit exposure to export and domestic customers, including outstanding receivables and committed
transactions. The Group has no significant concentrations of credit risk.
The Group’s derivative counterparties, term deposits and cash transactions are limited to financial institutions with a rating
of at least BBB. The Group has policies that limit the maximum amount of credit exposure to any one financial institution.
Credit risk further arises in relation to financial guarantees given to certain parties (refer note 21b). Such guarantees are only
provided in exceptional circumstances and are subject to specific Board approval.
The credit quality of financial assets that are neither past due nor impaired, can be assessed by reference to historical
information about counterparty defaults. To mitigate credit risk, management within each of the Group entities apply policies
to assess and monitor the credit worthiness of customers and set appropriate credit limits for each customer, taking into
account their financial positions, past experience and other factors pertaining to each industry segment.
The maximum exposure to credit risk at the reporting date is the carrying amount of assets as stated in the statement of
financial position. The following table summarises these assets:
Cash and cash equivalents
Term deposits
Loans and receivables
Derivative financial instruments
2015
$’000
59,424
1,217,011
79,278
-
1,355,713
2014
$’000
64,933
1,272,912
99,208
2,447
1,439,500
The loans and receivables balances as stated above reflect the recoverable value and are net of any impairments or provisions.
Refer note 26 for further description on certain impairments.
c) Liquidity risk
Liquidity risk is the risk that an entity is unable to meet its financial obligations as they fall due.
Prudent liquidity risk management is adopted by the Group through maintaining sufficient cash and marketable securities,
the ability to borrow funds from credit providers and to close-out market positions.
The Group entities manage liquidity risk by continually monitoring forecast and actual cashflows and matching maturity
profiles of financial assets and liabilities. Surplus funds are only invested in conservative financial instruments such as term
deposits with major banks.
Financing arrangements
Details of financial facilities available are set out in note 21.
- 83 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 18. FINANCIAL RISK MANAGEMENT (continued)
d) Maturity of financial liabilities
The Group’s trade and other payables are all payable within one year. The Group’s maturity analysis for derivative financial
instruments is set out in note 20.
e) Cash flow and fair value interest rate risk
The Group currently has significant interest-bearing assets which are placed with reputable investment counterparties for up
to 12 months. The Group has treasury investment policies approved by each of the relevant entity’s Board which stipulates
the maximum exposure to each financial institution. Significant changes in market interest rates may have an effect on the
Group’s income and operating cash flows. Cash flow interest rate risk is managed by placing excess funds in term deposits
and other fixed interest bearing assets. Refer to notes 11 and 12 for details. Based on the deposits held at reporting date,
the sensitivity to a hypothetical 1% per annum increase or decrease in interest rates would increase/(decrease) after tax
profit by $8.935 million (2014: $9.365 million). This scenario assumes all cash and term deposits at balance date continue
to remain invested for the whole year.
Investment properties were partly funded by borrowings. These borrowings were extinguished following the sale of the
industrial warehouses in November 2014. The long term borrowings were issued at variable rates and the Group hedged
its exposure to interest rate risk by using a derivative financial instrument, an interest rate swap, to effectively convert the
variable interest rate facility into a fixed interest rate facility. This interest rate swap was also closed out following the disposal
of the properties. Refer to note 21a for further details.
NOTE 19. FAIR VALUE ESTIMATION
Accounting policy - fair value estimation
Throughout this financial report, the fair value of financial assets and financial liabilities are required to be estimated for
recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date.
The quoted market price used for financial assets held by the Consolidated entity is the last sale price.
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. The Group uses a variety of methods and makes assumptions that are based
on market conditions existing at each balance date. The fair value of forward exchange contracts is determined using
forward exchange market rates at the reporting date.
The carrying value less estimated credit adjustments and impairment provision of trade receivables and payables are
assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available
to the Group for similar financial instruments.
Fair value hierarchy
Judgements and estimates are made in determining the fair values of assets and liabilities. To provide an indication of the
reliability of the inputs used in determining fair value, the Group categorises each asset and liability into one of the following
three levels as prescribed by accounting standards:
Level 1: Fair value is determined by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities
as at the end of the reporting period.
Level 2: Fair value is determined by using valuation techniques incorporating observable market data inputs.
Level 3: Fair value is determined by using valuation techniques that rely on inputs that are not based on observable market
data.
- 84 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 19. FAIR VALUE ESTIMATION (continued)
Fair value measurements
The following table presents the Group’s assets and liabilities measured and recognised at fair value as at 31 July 2015 and
31 July 2014.
Note
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
As at 31 July 2015
Financial assets
Trading equities
Long term equity investments
Other financial assets - equity investments
Non-financial assets
Investment properties
Total assets
Financial liabilities
Derivatives - Foreign exchange hedge
Total liabilities
As at 31 July 2014
Financial assets
Trading equities
Held for sale equity
Long term equity investments
Other financial assets - equity investments
Derivatives - Foreign exchange hedge
Non-financial assets
Investment properties
Total assets
Financial liabilities
Derivatives - Foreign exchange hedge
Derivatives - Interest rate swaps
Total liabilities
12,956
615,642
-
-
628,598
-
-
-
-
-
8,344
3
5,425
21,300
615,645
5,425
20,720
20,720
34,492
663,090
-
-
23,144
23,144
-
-
23,144
23,144
11,992
27,183
562,205
-
-
-
-
-
-
2,447
2,703
-
3
7,659
-
14,695
27,183
562,208
7,659
2,447
-
-
139,421
139,421
601,380
2,447
149,786
753,613
-
-
-
3,255
1,688
4,943
-
-
-
3,255
1,688
4,943
9
9
9
10
20
9
9
9
9
20
10
20
20
- 85 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 20. DERIVATIVE FINANCIAL INSTRUMENTS
Accounting policy – derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group
designates derivatives as hedges of highly probable forecast transactions (cash flow hedges).
The Group documents at the inception of the transaction, the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair
values or cash flows of hedged items.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the
income statement.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect
profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction
that is hedged results in the recognition of a non-financial asset (for example, inventory) or a non-financial liability, the
gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial
cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
At reporting date the outstanding contractual receivables/payables
at fair value are (AUD Equivalents):
NON-CURRENT ASSETS
- Forward exchange contracts
CURRENT LIABILITES
- Forward exchange contracts
- Interest rate swaps
2015
$’000
2014
$’000
-
2,447
23,144
-
23,144
3,255
1,688
4,943
Fair value measurement
The fair value measurement of forward exchange contracts is determined using forward exchange market rates at the
reporting date.
The fair value of interest rate swaps is determined using forward interest rates at the reporting date.
New Hope Corporation Limited and its controlled entities are parties to derivative financial instruments in the normal
course of business in order to hedge exposure to fluctuations in foreign currency exchange rates.
In the year ended 31 July 2014, the Australian Logistics Property Fund and its controlled entities were also party to
derivative financial instruments to hedge exposure to fluctuations in interest rates. During the current year the derivative
financial instruments were closed out following the sale of these investment properties in November 2014.
These instruments are used in accordance with the Group’s financial risk management policies.
- 86 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 20. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Credit risk exposures of derivative financial instruments – forward exchange contracts
Credit risk arises from the potential failure of counterparties to meet their obligations under the respective contracts at
maturity. A material exposure arises from forward exchange contracts and the Group is exposed to losses in the event that
counterparties fail to deliver the contracted amount. Refer to note 18 for additional information.
At balance date the details of outstanding forward exchange contracts are:
Maturity
0 to 6 months
6 to 12 months
1 to 2 years
Sell US dollars
Buy Australian dollars
2014
2015
$’000
$’000
82,116
84,188
-
166,304
93,974
42,242
45,954
182,170
Average exchange rate
2015
2014
0.84027
0.80771
-
0.95771
0.92325
0.84867
NOTE 21.
INTEREST BEARING LIABILITIES
Accounting policy – interest bearing liabilities
Interest bearing liabilities are initially recognised at fair value, net of any transactions costs incurred. These balances
are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognised in the income statement over the period of the liability using the effective interest
method. Interest bearing liabilities are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting period.
CURRENT LIABILITIES
Deposits accepted - Directors and Director related parties (refer below)
Lease liabilities
NON-CURRENT LIABILITIES
Long term borrowings (refer note 21a)
Lease liabilities
2015
$’000
2014
$’000
47,326
21
47,347
-
104
104
44,796
33
44,829
45,303
122
45,425
Fair value disclosures
The carrying value of financial liabilities as disclosed approximates their fair values.
Director deposits
The Parent company accepts deposits from Directors and Director related parties under normal commercial terms and
consistent with deposits received from other parties. Deposits are repayable at call and carry a market interest rate of
2.56% per annum (2014: 3.23%) at the reporting date. The effective interest rate applicable to these Directors and
Director related deposits is consistent with the interest rate that deposits of the Parent company receives and ensures
a margin of at least 25 basis points is earned by the Parent company. Refer to note 15 for interest incurred on Director
related deposits.
- 87 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 21. INTEREST BEARING LIABILITIES (continued)
a) Borrowings
Financing facilities secured by assets pledged as security
The total secured financing facilities are as follows:
Bank loan facilities (i)
Lease liabilities
2015
$’000
-
125
125
2014
$’000
68,066
155
68,221
(i) In the prior year, bank loan facilities were in place in relation to the Industrial warehouses which were classified as
Investment properties within the financial statements. Following the sale of these warehouses in November 2014, the
bank facilities were terminated. These properties were disposed of earlier than planned which resulted in an interest
rate swap expense of $2.112 million being incurred and charged as an expense to the income statement in the current
year. The bank loan facilities were secured by registered mortgages over these properties (refer note 10). Each facility
was for a period of five years with a variable interest rate. To manage fluctuations in interest rates over the term of the
facilities, five year interest rate swap arrangements were also established, effectively fixing interest rates as follows:
Industrial property
Facility commenced 25 June 2013
Construction phase interest rate
6.555% per annum to 25 June 2014
Property under development
Facility commenced 28 May 2014
6.005% per annum
Interest rates there after
6.155% per annum from
25 June 2014
not applicable as property had
been disposed off
- 88 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Risk Management
NOTE 21. INTEREST BEARING LIABILITIES (continued)
b) Other financing arrangements
The Consolidated entity has access to bank overdraft and bank guarantee facilities as follows:
2015
$’000
1,000
-
1,000
2014
$’000
1,000
-
1,000
106,377
(82,276)
24,101
105,738
(69,674)
36,064
50,836
39,054
25,063
24,882
5,013
80,912
4,374
68,310
2015
$’000
2014
$’000
20,981
19,206
9,095
30,076
10,049
29,255
Bank overdraft
Total facility
Used at balance date
Unused at balance date
Bank guarantees
Total facility
Used at balance date
Unused at balance date
Bank guarantees include:
Unsecured facilities, for no fixed term and bear variable rates:
i. Mining restoration and rehabilitation - coal operations
The liability has been recognised by New Hope Corporation Limited in relation
to its rehabilitation obligations.
ii. Statutory body suppliers
No liability was recognised by New Hope Corporation Limited in relation to these
guarantees as no losses are foreseen on these contingent liabilities.
Secured, for no fixed term and bear variable rates:
iii. Environmental bond
The net present value of this liability has been recognised by CopperChem
Limited in relation this guarantee. The guarantee has been provided by
Washington H. Soul Pattinson and Company Limited (the parent company).
NOTE 22. CONTINGENT LIABILITIES
The Group had contingent liabilities at 31 July in respect of:
i. Undertakings and guarantees issued by a Controlled entity’s bankers to the
Department of Minerals & Energy, Statutory Power Authorities and various
other entities
ii. Undertakings and guarantees issued by a Controlled entity’s bankers for
stages 1 and stages 2 of the Wiggins Island Coal Export Terminal expansion
project and expansion of rail facilities
The contingent liabilities as described above are not secured by any charges on the
Consolidated entity’s assets.
For contingent liabilities relating to associates refer to note 8d.
- 89 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 23. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Accounting policy - property, plant and equipment
Freehold land is carried at the lower of cost and recoverable amount.
Property, plant and equipment, (excluding investment properties, refer to note 10), are stated at historical cost less
accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the
acquisition of the items. Cost may also include transfers from equity relating to any gains/losses on qualifying cash flow
hedges of foreign currency purchases of property, plant and equipment. The cost of self-constructed assets includes the
cost of materials, direct labour, the initial estimate where relevant, of the cost of dismantling and removing the items
and restoring the site under which they are located and an appropriate portion of production overhead.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the income statement during the reporting
period in which they are incurred.
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land,
is depreciated commencing from the time the asset is held ready for use.
Depreciation is calculated so as to write off the cost of each item of property, plant and equipment during its expected
economic life to the Consolidated entity. Each item’s useful life has due regard both to its own physical life limitations and
to present assessments of economically recoverable resources (when related to mining activities). Estimates of residual
values and remaining useful lives are made on an annual basis. The straight line method is predominantly used (Copper
float and solvent extraction plants are depreciated on the units of production method). The expected useful life of plant
and equipment is 4 to 20 years, buildings is 25 to 40 years and motor vehicles is 4 to 8 years. Land is not depreciated.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
income statement.
Accounting policy - mine development, mining reserves and leases and oil producing assets
Development expenditure incurred by the Group is accumulated separately for each area of interest in which economically
recoverable mineral resources have been identified to the satisfaction of the Directors. Direct development expenditure,
pre-operating mine start-up costs, and an appropriate portion of related overhead expenditure are capitalised as mine
development costs up until the relevant mine is in commercial production.
Mining reserves, leases and mine development costs are amortised over the estimated productive life of each applicable
mine on either a unit of production basis or years of operation basis, as appropriate. Amortisation commences when a
mine commences commercial production.
The cost of acquiring mineral reserves and mineral resources are capitalised in the statement of financial position as
incurred.
Oil producing assets are amortised on a unit of production basis. The method uses the actual costs of the asset to date
plus all its projected future costs. Amortisation commences when an area of interest is ready for use.
- 90 -
NOTE 23. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
2015
At 1 August 2014
Cost
Accumulated depreciation/amortisation
Net book amount
Land
$’000
Buildings
$’000
Plant,
fixtures,
motor vehicles
$’000
Oil
producing
assets
$’000
Mining
reserves and
leases
$’000
Mine
development
$’000
Total
$’000
153,343
-
153,343
30,380
(7,001)
23,379
702,277
(344,780)
357,497
95,013
(3,939)
91,074
38,242
(16,451)
21,791
119,867
1,139,122
(65,425)
(437,596)
54,442
701,526
Year ended 31 July 2015
Opening net book amount
Additions
Transfers in/(out)
Disposal of assets
Impairment of assets
Depreciation/amortisation charge
-
9
1
-
153,343
11,322
-
-
-
-
Closing net book amount
164,665
23,379
306
3,222
-
(5,180)
(1,261)
20,466
357,497
44,006
(4,155)
(352)
(33,905)
(58,018)
305,073
91,074
11,208
(489)
-
(51,456)
(2,993)
47,344
21,791
530
-
-
(5,677)
(2,989)
13,655
54,442
19,061
7,396
-
701,526
86,433
5,974
(352)
(31,583)
(127,801)
(15,816)
33,500
(81,077)
584,703
At 31 July 2015
Cost
164,665
33,908
Accumulated depreciation/amortisation
-
(13,442)
Net book amount
164,665
20,466
741,776
(436,703)
305,073
105,732
(58,388)
47,344
38,772
(25,117)
13,655
146,324
1,231,177
(112,824)
(646,474)
33,500
584,703
i. Pledged assets
For the year ending 31 July 2015, none of the Group’s property, plant and equipment was pledged as security.
F
i
x
e
d
A
s
s
e
t
s
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
(
c
o
n
t
i
n
u
e
d
)
F
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
1
J
u
l
y
2
0
1
5
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
NOTE 23. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
2014
At 1 August 2013
Cost
Accumulated depreciation/amortisation
Net book amount
Year ended 31 July 2014
Opening net book amount
Additions
Transfers in/(out)
Disposal of assets
Impairment of assets
-
9
2
-
Depreciation/amortisation charge
Closing net book amount
153,343
At 31 July 2014
Cost
Accumulated depreciation/amortisation
Net book amount
153,343
-
153,343
Land
$’000
Buildings
$’000
Plant,
fixtures,
motor vehicles
$’000
Oil
producing
assets
$’000
Mining
reserves and
leases
$’000
Mine
development
$’000
Total
$’000
144,986
-
144,986
30,429
(5,818)
24,611
656,200
(284,602)
371,598
144,986
24,611
11,561
1,141
(4,345)
-
-
623
148
(820)
-
(1,183)
23,379
30,380
(7,001)
23,379
371,598
50,668
(3,288)
(1,303)
-
(60,178)
357,497
702,277
(344,780)
357,497
62,483
(1,051)
61,432
61,432
32,429
101
-
(900)
(1,988)
91,074
95,013
(3,939)
91,074
40,588
(13,410)
27,178
86,207
1,020,893
(51,908)
(356,789)
34,299
664,104
27,178
-
(2,346)
-
-
(3,041)
21,791
34,299
31,151
2,509
-
(4,787)
(8,730)
54,442
664,104
126,432
(1,735)
(6,468)
(5,687)
(75,120)
701,526
38,242
(16,451)
21,791
119,867
1,139,122
(65,425)
(437,596)
54,442
701,526
i. Pledged assets
For the year ending 31 July 2014, none of the Group’s property, plant and equipment was pledged as security.
F
i
x
e
d
A
s
s
e
t
s
N
o
t
e
s
t
o
t
h
e
fi
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
(
c
o
n
t
i
n
u
e
d
)
F
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
1
J
u
l
y
2
0
1
5
Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 23. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
Reclassification of asset balance from mining reserves and leases to exploration and evaluation assets
During the current year, mining reserve assets acquired in prior periods by New Hope Corporation Limited, which relate
to exploration programs rather than coal mining operations, have been reclassified from Property, plant and equipment –
mining reserves and leases to Exploration and evaluation assets (note 24). The total amount reclassified is $218.484 million.
This reclassification has been made to provide clearer and more relevant disclosure in the financial statements regarding the
Group’s exploration and evaluation assets. There has been no change in the accounting policy relating to Exploration and
evaluation assets.
The prior year comparatives have been adjusted to ensure consistent classification year on year. The impact of this
reclassification on the prior year comparatives is:
Property, plant and equipment - mining reserves and leases as at 31 July 2014 has been reduced by $218.484 million to
$21.791 million.
Exploration and evaluation assets (note 24) as at 31 July 2014 has increased by $218.484 million to $388.210 million.
Impairments of Property plant and equipment
During the year impairment charges of Property, plant and equipment include write downs on copper assets of $47.203
million (2014: $4.787 million), Oil producing assets of $51.456 million (2014:$900,000) and Coal to liquid assets of $24.267
million (2014: $nil). Refer to note 15 for details.
Copper assets include the copper sulphate plant and solvent extraction plants which have now been placed on care and
maintenance.
Key estimates in determining the recoverable value of non-current assets
Determination of reserves and resources – Coal
The Group estimates its coal reserves and coal resources based on information compiled by Competent Persons as
defined in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves of December
2004 (the “JORC code”). Reserves determined in this way are used in the calculation of depreciation, amortisation and
impairment charges, the assessment of mine lives and for forecasting the timing of the payment of decommissioning
and restoration costs.
New Acland Coal Stage 3 approvals
A subsidiary of Washington H. Soul Pattinson and Company Limited, New Hope Corporation Limited (New Hope)
has coal operations that assumes the Acland Coal Stage 3 approvals will be received with sufficient time to allow the
uninterrupted operation of the mine. During the year and up to the date of this report there have been no matters come
to the attention of New Hope that suggest that approvals will not be received in a timely manner.
Oil producing assets
Key assumptions and estimates relating to recoverable value are detailed in note 25, intangible assets.
Determination of recoverable value – copper processing plant, equipment and capitalised mine development costs
The assessment of recoverable value includes key estimates in relation to quantities of economically recoverable reserves
and resources, resource grades and mine plans. These are based upon interpretations of geological models and other
matters. It also requires key assumptions to be made regarding a number of factors including short and long-term
exchange rates, short and long-term copper prices, future capital expenditure and working capital. Estimates are also
required to be made in relation to the economic life of the plant and its residual value. Changes in these estimates
and applying different assumptions may impact significantly the assessment of the recoverable value of the plant,
equipment and capitalised mine development costs, as well as the amount of depreciation and amortisation charged to
the income statement. The directors are satisfied that the estimates and assumptions made are based on observable and
other supportable inputs and therefore that the impaired carrying value of the copper processing plant, equipment and
capitalised mine development costs at 31 July 2015 is appropriate.
- 93 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 24. NON-CURRENT ASSETS – EXPLORATION AND EVALUATION ASSETS
Accounting policy – exploration and evaluation assets
Exploration, evaluation and relevant acquisition costs are accumulated separately for each area of interest for which
mining tenement is current. They are initially recognised at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching, sampling and an appropriate portion of related overhead expenditure.
Costs are carried forward only if they relate to an area of interest for which rights of tenure are current and such costs
are expected to be recouped through successful development and exploitation or from sale of the area.
Exploration and evaluation expenditure which does not satisfy these criteria is written off.
Where a decision is made to proceed to the development of a mine, the relevant exploration and evaluation costs for
that area of interest are transferred to mine development (disclosed within note 23- Property, plant and equipment).
Exploration and evaluation at cost
Reconciliation
Opening net book amount (a)
Additions
Impairment (b)
Transfers (out)/in)
Closing net book amount
2015
$’000
2014
$’000
407,831
388,210
388,210
60,565
(34,800)
(6,144)
407,831
348,112
41,908
(3,465)
1,655
388,210
Exploration and evaluation assets includes New Hope Corporation Limited of $377.120 million (2014: $323.816 million)
and Exco Resources Limited of $19.436 million (2014: $55.535 million).
(a) Refer to Property, plant and equipment (note 23) in relation to reclassification of mining reserve assets acquired in prior
periods by New Hope Corporation Limited, which relate to exploration programs rather than coal mining operations,
have been reclassified from Property, plant and equipment – mining reserves and leases to Exploration and evaluation –
mining reserves. The total amount reclassified is $218.484 million.
The prior year comparatives have been adjusted to ensure consistent classification year on year. The impact of this
reclassification on the prior year comparatives is:
Property, plant and equipment - mining reserves and leases (note 23) as at 31 July 2014 has been reduced by
$218.484 million to $21.791 million.
Exploration and evaluation – mining reserves acquired as at 31 July 2014 has increased by $218.484 million to
$388.210 million.
(b) Impairment expense of $34.800 million in the current year relates to Copper exploration assets which are allocated to the
copper cash generating unit for the purpose of assessing recoverable value. Refer to note 15. Prior year impairment of
$3.465 million relates to oil producing assets.
Key Estimate
Exploration and evaluation expenditure
During the year, the controlled entities New Hope Corporation Limited, CopperChem Limited and Exco Resources
Limited, capitalised various items of expenditure to exploration and evaluation assets. The relevant items of expenditure
were deemed to be part of the capital cost of developing future mining operations, which would then be amortised
over the useful life of the mine.
The key judgement applied in considering whether the costs should be capitalised, is that costs are expected to be
recovered through either successful development (through mining operations) or sale of the relevant mining interest.
Factors that could impact the exploration and evaluation costs being transferred to future mine operations include the
level of reserves and resources, changes in commodity prices and foreign exchange rates, future legal changes and any
future technology changes.
- 94 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 25.
INTANGIBLE ASSETS
Accounting policy – intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill on acquisitions of associates is included in the carrying amount of investments in associates.
Goodwill is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes
in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Goodwill
acquired is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those
cash generating units or group of cash generating units that are expected to benefit from the business combination in
which the goodwill arose. Cash generating units are discussed in the impairment section below.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Software
Software is stated at historical cost less applicable amortisation. Historical cost includes expenditure that is directly
attributable to the acquisition of software. Amortisation is calculated so as to write off the cost of each item of software
during its expected economic life to the Group.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment
losses.
Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.
Amortisation of intangible assets
Amortisation is charged to the income statement on a straight line basis, unless otherwise stated, over the estimated
useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life are
systematically tested for impairment at each balance date.
Other intangible assets are amortised from the date they are available for use. The estimated useful lives of intangibles
are as follows:
Class of intangible
Useful life
Goodwill
Software
Indefinite life
3 – 5 years
Impairment
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment or more frequently if changes or circumstances indicate that they may be impaired. Other assets are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Intangible assets
other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Impairment losses for intangible assets are recognised in the income statement.
- 95 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 25.
INTANGIBLE ASSETS (continued)
Non-current assets
At 31 July 2013
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 31 July 2014
Opening net book amount
Additions
Amortisation (charged) to the income statement (refer note 15)
Disposals
Transfers (out)
Closing net book amount
At 31 July 2014
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 31 July 2015
Opening net book amount
Additions
Amortisation (charged) to the income statement (refer note 15)
Impairments (charged) to the income statement (refer note 15)
Transfers in
Closing net book amount
At 31 July 2015
Cost
Accumulated amortisation and impairment
Net book amount
Goodwill
$’000
22,830
-
22,830
22,830
-
-
-
-
22,830
22,830
-
22,830
22,830
-
-
(4,157)
-
18,673
22,830
(4,157)
18,673
Other
$’000
14,816
(9,335)
5,481
5,481
474
(1,767)
(28)
(143)
4,017
14,748
(10,731)
4,017
4,017
264
(1,568)
(1,018)
170
1,865
15,182
(13,317)
1,865
Total
$’000
37,646
(9,335)
28,311
28,311
474
(1,767)
(28)
(143)
26,847
37,578
(10,731)
26,847
26,847
264
(1,568)
(5,175)
170
20,538
38,012
(17,474)
20,538
- 96 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 25.
INTANGIBLE ASSETS (continued)
a) Recoverable amount of goodwill
Intangible assets, which have indefinite lives are allocated to the Group’s cash generating units (CGU’s) identified according
to business segment and country of operation.
A segment-level summary of the goodwill allocation is presented below:
Energy
- Goodwill
Carrying amount at beginning of year
Impairment
Consulting
- Goodwill
Carrying amount at beginning of year
Closing net book value
Country of operation
Australia
Australia
2015
$’000
22,255
(4,157)
18,098
575
18,673
2014
$’000
22,255
-
22,255
575
22,830
The recoverable amount of the cash generating units for which goodwill has been allocated is determined based on fair value
less cost of disposal method. Assumptions and methodology applied to each cash-generating unit are as follows:
(i) Energy
Brought forward balance of goodwill relates to prior years acquisitions by New Hope Corporation Limited, including
Queensland Bulk Handling Pty Limited (goodwill of $5.596 million), Northern Energy Corporation Limited (goodwill of
$12.271 million) and Bridgeport Energy Limited (goodwill of $4.157 million).
Impairment of goodwill and oil producing assets (arising from the acquisition of Bridgeport Energy Limited)
The Group has determined that the significant decline in global oil prices and resultant reduction in reserves estimates in
Cooper Basin assets indicate the carrying value of goodwill arising on the Bridgeport acquisition and certain oil producing
assets may be impaired.
The Group has classified its Cooper Basin assets as separate Cash Generating Units (CGU) on a per field basis and has
measured the recoverable amount of each CGU using the Fair value less cost of disposal method with all fair value
measurements categorised as Level 3 in the fair value hierarchy. All CGU’s are included in the Energy segment.
The Group has estimated the future cash flows of each CGU making assumptions in respect of key variables including:
economically recoverable reserves, future production profiles, commodity prices, foreign exchange rates, operating costs
and future development costs necessary to produce the reserves. The commodity price and foreign exchange assumptions
have been based on consensus market data in the range of oil prices of USD $62- USD $91 (before escalation) and AUD/
USD exchange rates of 0.75-0.93. The future cash flows have been discounted using an after tax discount rate of 10%
(2014: 10%). The recoverable amount and impairment loss calculated under the Fair value less cost of disposal method of
the CGUs determined to be impaired are:
Recoverable
amount/(liability)
Cooper Basin PL98
Cooper Basin PL214
Cooper Basin PL24-26, PL35, PL36, PL62, PL76-79, PL82,PL87,
PL105, PL107, PL109, PL133, PL149, PL175, PL181, PL182, PL189
and PL302
Cooper Basin PL15
$’000
12,869
6,719
(277)
-
19,311
- 97 -
Impairment loss on
goodwill and oil
producing assets
$’000
51,410
1,545
1,613
1,045
55,613
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Fixed Assets
NOTE 25.
INTANGIBLE ASSETS (continued)
The total impairment loss on these assets of $55.613 million constitutes $4.157 million of goodwill and $51.456 million of
Oil producing assets. This has been recognised as an expense in the income statement. Refer note 15.
Impairment assessment on the goodwill arising on the acquisition of Northern Energy Corporation Limited
(NEC)
The recoverable amount of the CGU to which the NEC goodwill is attributable has been based on the Fair value less cost
of disposal method. This assessment is determined under Level 2 of the fair value hierarchy based on observable external
market data for reserve and resources transaction multiples, rather than quoted prices (refer note 19 for an explanation on
Fair value hierarchy). The transaction multiples observed are based on recent transactions only for similar coal type of the
CGU and for Australian coal exploration projects.
Impairment assessment on goodwill on Queensland Bulk Handling Pty Ltd (QBH)
The recoverable amount of QBH cash generating units has been based on value in use calculations using discounted cash
flow model. The future cash flows have been discounted using a post-tax rate of 10% (2014: 10%).
(ii) Consulting
Brought forward goodwill relates to obtaining control of Pitt Street Real Estate Partners Pty Limited.
Key Estimates
Impairment of goodwill
At each reporting date the Group considers the recoverable value of goodwill. Goodwill is allocated to cash generating
units for which the recoverable value is determined. The recoverable value may be determined based on fair value less
costs to sell and is estimated based on recent market transaction information or value in use. These calculations require
the use of assumptions.
- 98 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Operating Assets and Liabilities
NOTE 26. TRADE AND OTHER RECEIVABLES
Accounting policy – trade and other receivables
Trade receivables are recognised initially at fair value and subsequently at amortised cost, using the effective interest rate
method, less provision for impairment. Trade receivables are due for settlement between 30 and 45 days from the date
of recognition.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is
used when there is objective evidence that the Group will not be able to collect all amounts due according to the original
terms of the receivables. 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 to 45 days overdue) are considered
indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in the income statement. When a trade receivable for which an
impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited to the income statement.
Classification
Loans and receivables are carried at amortised cost using the effective interest method.
CURRENT
Trade receivables
Less impairment of receivables
Loans to other parties – secured
Other receivables
Prepayments
Total current receivables
NON-CURRENT
Loans to related entities
Less impairment on loans to related entities
Loans to others – secured
Prepayments
Other receivables
Total non-current receivables
2015
$’000
35,827
(1,733)
34,094
22,246
13,942
4,697
74,979
112
-
112
-
213
3,974
4,299
2014
$’000
51,519
(5)
51,514
6,927
22,961
4,498
85,900
3,332
(2,146)
1,186
7,426
729
3,967
13,308
a) Impairment – non-current loan receivables
The provision for impairment relates to loans provided by a controlled entity to its related parties. At reporting date, these
loans were determined to be unrecoverable and were fully impaired.
- 99 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Operating Assets and Liabilities
NOTE 26. TRADE AND OTHER RECEIVABLES (continued)
b) Credit, foreign exchange, fair value and interest rate risk.
Information about the Group’s exposure to these risks in relation to trade and other receivables is provided in note 18. The
carrying value less impairment provisions of trade receivables are assumed to approximate their fair value.
Key Estimate
Recoverability of amounts owing from Peabody (Wilke Creek) Pty Limited to – Coal
As at reporting date, trade receivables past due but not impaired were $6.498 million. These receivables relate to invoices
issued by Queensland Bulk Handling Limited (QBH) (wholly owned subsidiary of New Hope Corporation) to Peabody
(Wilkie Creek) Pty Limited for coal port services. The balances outstanding with Peabody are the subject of an action in
the Supreme Court of Queensland brought by QBH. At the date of this report, all amounts invoiced are considered to
be recoverable.
NOTE 27.
INVENTORIES
Accounting policy - inventory
Inventories are measured at the lower of cost and net realisable value. Cost comprises direct materials, direct labour
and an appropriate portion of variable and fixed overheads, the latter being allocated on the basis of normal operating
capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
CURRENT ASSETS
Raw materials and stores – at cost
Work in progress – at cost
Finished goods – at cost
2015
$’000
28,348
7,714
36,808
72,870
2014
$’000
29,832
8,362
34,765
72,959
Inventory expense
Inventories recognised as an expense during the year ended 31 July 2015 amounted to $227.428 million
(2014: $268.482 million).
Write-down of inventory to net realisable value recognised as an expense during the year amounted to $666,000
(2014: $2.242 million).
NOTE 28. TRADE AND OTHER PAYABLES
CURRENT LIABILITIES
Trade and other payables
2015
$’000
2014
$’000
49,329
74,679
Trade and other payables
The balance at 31 July 2015 mainly relates to New Hope Corporation Limited’s $42.512 million and Souls Private Equity
Limited’s $6.668 million.
In the prior year, the balance is predominantly due to New Hope Corporation Limited’s $42.504 million, CopperChem
Limited’s $13.645 million, Souls Private Equity Limited’s $7.894 million and Australian Logistics Property Fund (ALPF)
balance of $9.903 million when the fund was still constructing the industrial property warehouses. There is no current
year balance, as ALPF sold these warehouses in November 2014.
- 100 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Operating Assets and Liabilities
NOTE 29. PROVISIONS
Accounting policy - provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Restoration, rehabilitation and environmental expenditure
Provisions are raised for restoration, rehabilitation and environmental expenditure as soon as an obligation exists, with
the cost being charged progressively to the income statement in respect of ongoing rehabilitation. Where the obligation
relates to decommissioning of assets and restoring the sites on which they are located, the costs are carried forward in
the value of the asset and amortised over its useful life.
The obligations include profiling, stabilisation and revegetation of the completed area, with cost estimates based on
current statutory requirements and current technology.
Employee entitlements
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and vesting sick leave, expected to
be settled wholly within 12 months after the end of the period in which the employees render the related service are
recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts
expected to be paid when the liabilities are settled. The liability of annual leave and accumulating sick leave is recognised
in the provision for employee benefits. All other short-term benefit obligations are presented as payables.
Other long-term employee benefit obligations
The liabilities for long service leave and annual leave which is not expected to be settled within 12 months after the end
of the period in which the employees render the related service is recognised in the provision for employee benefits and
measured as the present value of expected future payments to be made in respect of services provided by employees
up to the end of the reporting period using the projected unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the end of the reporting period on national government bonds with terms to maturity
and currency that match, as closely as possible, the estimated future cash outflows.
CURRENT LIABILITIES
Mining restoration and site rehabilitation (ii)
Employee benefits (i)
Native title claims
NON-CURRENT LIABILITIES
Mining restoration and site rehabilitation (ii)
Employment benefits
Native title claims
- 101 -
2015
$’000
6,156
30,382
137
36,675
59,280
4,746
10
64,036
2014
$’000
4,150
27,845
137
32,132
52,249
6,088
10
58,347
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Operating Assets and Liabilities
NOTE 29. PROVISIONS (continued)
i) Employee benefits
Current liabilities not expected to be settled within the next 12 months
The current provision for employee benefits includes accrued annual leave, vested sick leave and long service leave for all
unconditional settlements where employees have completed the required period of service and also those where employees
are entitled to pro-rata payment in certain circumstances. The entire amount is presented as current, since the Group does
not have an unconditional right to defer settlement. However, on past experience, the Group does not expect all employees
to take the full amount of accrued long service leave or require payment within the next 12 months.
ii) Mining restoration and site rehabilitation reconciliation
Carrying amount at beginning of year
Additional provisions recognised
Additional provisions credited to income statement
Charged to income statement – unwinding of discount
Carrying amount at end of year
Disclosed as:
Current liabilities
Non-current liabilities
2015
$’000
56,399
8,687
(2,348)
2,698
65,436
6,156
59,280
65,436
2014
$’000
50,950
5,709
(2,295)
2,035
56,399
4,150
52,249
56,399
Key Estimate
Mining restoration and site rehabilitation
The Group makes estimates about the future cost of rehabilitating tenements which are currently disturbed, based on
legislative requirements and current costs. Cost estimates take into account past experience and expectations of future
events that are expected to alter past experiences. Any changes to legislative requirements could have a significant
impact on the expenditure required to restore these areas.
- 102 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 30. RELATED PARTIES
a) Parent company
The ultimate Parent company is Washington H. Soul Pattinson and Company Limited.
b) Subsidiaries and Associates
Interests in Subsidiaries and Associates are set out in note 3.
c) Key management personnel (KMP) compensation
Short-term employee benefits
Post-employment benefits
Long-term employee benefits
Termination benefits
Share-based payments
Paid to KMP of the
Consolidated entity
2015
$’000
5,869
262
83
1,936
167
8,317
2014
$’000
7,552
263
178
176
683
8,852
Paid to KMP of the
Parent company
2015
$’000
3,361
206
48
1,936
-
5,551
2014
$’000
3,315
199
50
-
-
3,564
Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report
on pages 24 to 33.
d) Related parties transactions and balances
Details of loans to and transactions with key management personnel are included in the Directors report on page 33.
The Parent company accepts deposits from Director and Director related parties on normal commercial terms. Refer to note
21 for further details.
i. Subsidiaries
Transactions between the Parent company and its subsidiaries and between subsidiaries are at normal commercial terms and
conditions. Transactions consist of the transfer of funds for day to day financing, provision of consulting, management and
advisory services, loans advanced and repaid, interest, dividend and rental payments.
Transactions between members of the Group which are eliminated on consolidation and are not disclosed in this note.
ii. Associates
Transactions with associates are at normal commercial terms and conditions.
Transactions consist of the supply of pharmaceutical products to the Parent company, advisory, consulting, underwriting,
management fees, rent and insurance commissions received from/paid to associates, loans advanced and repaid, interest
and dividend payments.
- 103 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 30. RELATED PARTIES (continued)
Summary of transactions
Advisory, consulting, underwriting and management fees:
-
-
-
received by subsidiaries from associates
received by associates from subsidiaries
rent income received by Parent company from associate
Purchases of pharmaceutical products from associate
Interest income from associate
2015
$’000
262
10,349
12
5,671
248
2014
$’000
2,194
8,678
10
5,472
198
The controlled entity, Pitt Capital Partners Limited (PCP) owns 45% of Xact Property Solutions Pty Limited (XPS). As a result
of this ownership, XPS is an associate of PCP and the Group has equity accounted its share of the results of XPS.
XPS provided project management and related services for the development of the distribution warehouses that were held
within the 100% controlled entity, Australian Property Logistics Fund (ALPF). These properties were sold in November 2014.
Costs charged by XPS were capitalised in the carrying value of investment properties and recognised as income in the
accounts of XPS.
During the year, total fees charged by XPS to ALPF totalled $10.349 million (2014: $8.678 million).
Unrealised profits and losses resulting from transactions between the Group and an equity accounted associate are eliminated
to the extent of the Group’s interest in the associate. In the prior year, this accounting treatment was applicable to the fees
charged by XPS to ALPF as the industrial warehouses were not sold until the current year. The Group’s share of these fees
($2.928 million) was deferred from being recognised as fee income of the associate and as a cost of the investment property
until the current year.
Loans to associates
During the year, the Parent company converted a loan balance of $7.0 million owed from TPI Enterprises Limited (TPI) to
equity. Outstanding accrued interest of $77,000 was repaid. Interest was charged at market rates.
NOTE 31. COMMITMENTS FOR EXPENDITURE
a) Capital commitments
Capital expenditure contracted for at the reporting date
Property, plant and equipment and investment properties under development
Payable:
Within one year
2015
$’000
2014
$’000
7,002
24,301
Capital commitments at 31 July 2015 relate mainly to New Hope Corporation Limited for plant and equipment
$7.002 million (2014: $10.014 million). At 31 July 2014, the Australian Logistics Property Fund had committed costs of
$13.942 million to complete the construction of the Industrial warehouses that were sold in November 2014.
- 104 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 31. COMMITMENTS FOR EXPENDITURE (continued)
b) Lease commitments:
Commitments in relation to leases consist of:
i. Operating leases
Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
For commitments relating to associates refer to note 8c.
2015
$’000
4,589
20,047
41,389
66,025
2014
$’000
6,966
23,562
48,915
79,443
The Group’s main leases relates to the leasing of port facilities (operated by New Hope Corporation Limited) under non-
cancellable operating leases expiring within one to fifteen years. The leases have varying terms, escalation clauses and
renewal rights. On renewal, the terms of the leases are renegotiated.
NOTE 32. OTHER ACCOUNTING POLICIES
a) New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 July 2015
reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is set out below:
i. AASB 15 Revenue from Contracts with Customers
This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts
with customers. It supersedes current revenue recognition guidance including AASB 118 Revenues, AASB 111 Construction
Contracts and related interpretations. The core principle is that an entity recognises revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. This standard also allows costs associated with obtaining a contract to be
capitalized and amortised over the life of the new contract. The Group has not yet assessed how its own revenue recognition
would be affected by the new rule. The Group does not intend on adopting the new standard before its operative date,
which means that it would be first applied in the annual reporting period ending 31 July 2018.
ii. AASB 9 Financial Instruments
This standard will be applicable retrospectively and includes revised classification, measurement and derecognition of
financial assets and financial liabilities and simplified requirements for hedge accounting. The Group does not intend on
adopting the new standard before its operative date, which means that it would be first applied in the annual reporting
period ending 31 July 2018.
The Group has considered the adoption of AASB 9 and the major impact to the Consolidated entity will be to the Group’s
long term equity investments. Currently, changes in market value of these investments are recognised in the revaluation
reserve. When an investment is disposed of, the gain or loss measured from the original cost is then recognised in the income
statement.
Under the new standard, no gain or loss on the disposal of an investment would be recognised in the income statement
and investments would no longer be subject to impairment reviews as all movements in market value are only recognised
in the revaluation reserve.
- 105 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 32. OTHER ACCOUNTING POLICIES (continued)
There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting
for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities.
The new hedging rules align hedge accounting more closely with the Group’s risk management practices. As a general rule,
it will be easier to apply hedging going forward. The new standard also introduces expanded disclosure requirements and
changes in presentation. The Group has not yet assessed how its own hedging arrangements would be affected by the new
rules.
b) Foreign currency translation
i. Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are
presented in Australian dollars, which is Washington H. Soul Pattinson and Company Limited’s functional and presentation
currency.
ii. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss. For example, differences on non-monetary assets and liabilities such as investments fair
valued through profit and loss are recognised in the income statement, as part of the fair value gain or loss and translation
differences on non-monetary assets, such as long term equity investments are included in the asset revaluation reserve in
equity.
iii. Group entities
The results and financial position of all of the Group entities that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
- assets and liabilities are translated at the closing rates at the reporting date;
-
income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at
the dates of the transactions); and
- all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, 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 borrowings forming part of the net investment are repaid, a proportionate share of
such exchange differences is reclassified to the income statement, as part of the gain or loss where applicable.
- 106 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 32. OTHER ACCOUNTING POLICIES (continued)
c) Business Combinations
The acquisition method of accounting is used to account for all business combinations. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement
and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group
recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-
date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the
subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in the
income statement as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in the income statement.
If the Group recognises previous acquired deferred tax assets after the initial acquisition accounting is completed there will
be no adjustment to goodwill. As a consequence, the recognition of the deferred tax asset will increase the Group’s net
profit after tax.
d) Deferred stripping costs
The Group does not recognise any deferred stripping costs. Based on the nature of the Group’s mining operations and the
stripping ratio for the components of its operations, the recognition criteria of a deferred stripping asset are not satisfied.
Further, it is anticipated that the operations will maintain a consistent stripping ratio at the component level and as such no
overburden in advance should be recognised. In the event that a stripping campaign is undertaken in the future a deferred
stripping asset will be recognised at that time and amortised in accordance with the requirements of Australian Interpretation
20. An asset will be recognised for stripping activity where the following criteria are met:
•
It is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity
will flow to the entity;
• The entity can identify the component of the ore body for which access has been improved; and
• The costs relating to the stripping activity associated with that component can be measured reliably.
e) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and benefits incidental to
the ownership of the asset are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at
the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments,
including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the
lease interest expense for the period. Leased assets are depreciated on a straight line basis over their estimated useful lives
where it is likely that the Group will obtain ownership of the asset or over the term of lease.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group, as lessee, are
classified as operating leases. Payment made under operating leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis over the period of the lease.
- 107 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728 Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 32. OTHER ACCOUNTING POLICIES (continued)
f) Trade and other payables
Trade and other payables are stated at their amortised cost. These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured and usually
paid within 30 to 45 days of recognition.
g) Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required
to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
h) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to members, excluding any costs of servicing equity other than ordinary shares; and
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements
in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
i) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST receivable or payable. The net
amount of GST recoverable from, or payable to the ATO is included with other receivables or payables in the statement of
financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
- 108 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 33. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor.
a) Audit Services
Moore Stephens Sydney for audit and review of financial reports and other
audit work under the Corporations Act 2001
Other audit firms for the audit or review of financial reports of any entity in the Group
b) Other services
Moore Stephens Sydney
Tax compliance services
Other auditors
Transaction advisory services
Tax compliance services
Other services
Total remuneration for other services
2015
$’000
466
300
766
100
-
-
23
123
2014
$’000
479
511
990
176
436
140
280
1,032
NOTE 34. SHARE-BASED PAYMENTS
New Hope Corporation Limited grants rights under the New Hope Corporation Ltd Employee Performance Rights Share
Plan. Membership of the Plan is open to those senior employees and those Directors of New Hope Corporation Limited, its
subsidiaries and associated bodies corporate whom, the Directors believe have a significant role to play in the continued
development of the Group’s activities.
Rights are granted for no consideration. Rights will vest and automatically convert to ordinary shares in New Hope Corporation
Limited following the satisfaction of the relevant service conditions. Service conditions applicable to each issue of rights are
determined by the New Hope Corporation Limited’s Board at the time of the grant. Total expense arising from rights issued
under the employee performance share rights plan during the financial year was $167,000 (2014:$ 684,000). The total
value of the performance rights outstanding at year end was $583,000 (2014: 696,000). Further details are provided in the
Remuneration report pages 31 to 33.
- 109 -
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 35. DEED OF CROSS GUARANTEE
During 2012, Washington H. Soul Pattinson and Company Limited and Souls Private Equity Limited entered into a deed of
cross guarantee under which each company guarantees the debts of the other. During 2013, Exco Resources Limited and its
wholly- owned subsidiaries became party to the deed of cross guarantee.
By entering into the deed, Souls Private Equity Limited and Exco Resources Limited are relieved from the requirements to
prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities
and Investments Commission.
i) Consolidated income statement, statement of comprehensive income and summary of movements in
consolidated retained profits and consolidated statement of financial position
The above companies represent a ‘closed group’ for the purposes of the Class Order, and as there are no other parties to
the deed of cross guarantee that are controlled by Washington H. Soul Pattinson and Company Limited, they also represent
the ‘extended closed group’.
Set out below is a consolidated income statement, a consolidated statement of comprehensive income, a summary of
movements in consolidated retained earnings for the year ended 31 July 2015 of the closed group and a consolidated
statement of financial position as at 31 July 2015 for the closed group.
Consolidated income statement – closed group
Profit before income tax
Income tax benefit
Profit after income tax attributable to the closed group
Other comprehensive income
Net movement in fair value of long term equity investments, net of tax
Share of other comprehensive income movements, net of tax
Total other comprehensive income for the year, net of tax
2015
$’000
123,263
17,718
140,981
9,504
(3,220)
6,284
2014
$’000
166,044
3,514
169,558
51,970
(1,672)
50,298
Total comprehensive income attributable to the closed group
147,265
219,856
Summary of movements in consolidated retained earnings
Retained profits attributable to the closed group
Retained profits at the beginning of the year
Profit for the year
Dividends declared and paid
Retained profits at the end of the year
1,244,028
1,165,655
140,981
169,558
(95,126)
(91,185)
1,289,883
1,244,028
- 110 -
Notes to the financial statements (continued) For the year ended 31 July 2015
Other Notes
NOTE 35. DEED OF CROSS GUARANTEE (continued)
Consolidated statement of financial position – closed group
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Inventories
Trading equities
Total current assets
Non-current assets
Trade and other receivables
Equity accounted associates
Long term equity investments
Other financial assets
Property, plant and equipment
Exploration and evaluation costs
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Total equity
- 111 -
2015
$’000
2014
$’000
27,492
154,831
19,296
2,205
21,300
225,124
43,313
1,093,408
608,030
108,533
10,634
23,360
68,683
1,955,961
2,181,085
8,078
47,407
2,038
57,523
154,181
877
155,058
3,835
202,121
10,861
2,512
14,695
234,024
99,559
948,452
559,952
167,904
10,761
59,459
28,373
1,874,460
2,108,484
9,852
44,877
2,242
56,971
133,178
2,249
135,427
212,581
1,968,504
192,398
1,916,086
43,232
635,389
1,289,883
1,968,504
43,232
628,826
1,244,028
1,916,086
Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Directors’ Declaration
In the opinion of the Directors of the Company:
1. the financial statements and notes, as set out on pages 36 to 111 are in accordance with the Corporations Act 2001,
including:
a) complying with Accounting Standards and the Corporations Regulations 2001;
b) giving a true and fair view of the financial position as at 31 July 2015 and the performance for the year ended on that
date of the consolidated entity;
2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
3. at the date of this declaration, there are reasonable grounds to believe that the Company and the wholly owned subsidiaries
identified in Note 35 to the financial statements as being parties to a Deed of Cross Guarantee will be able to meet any
obligations or liabilities to which they are, or may become subject to, by virtue of the Deed.
The Basis of Preparation on page 43 confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
R D MILLNER
Director
M R RODERICK
Finance Director
Dated this 23rd day of October 2015.
- 112 -
Independent Auditor’s Report
Independent Auditor’s Report
To the Members of Washington H. Soul Pattinson
and Company Limited
A.B.N. 49 000 002 728
Level 15, 135 King Street
Sydney NSW 2000
GPO Box 473
Sydney, NSW 2001
T +61 (0)2 8236 7700
F +61 (0)2 9233 4636
www.moorestephens.com.au
Report on the Financial Report
We have audited the accompanying financial report of Washington H. Soul Pattinson and Company Limited, which comprises
the consolidated statement of financial position as at 31 July 2015, the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information
and the directors’ declaration of the consolidated entity comprising Washington H. Soul Pattinson and Company Limited and
the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of Washington H. Soul Pattinson and Company Limited are responsible for the preparation and fair presentation
of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations
Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In the Basis of Preparation on page 43, the
directors also state that, in accordance with Australian Accounting Standard AASB 101: Presentation of Financial Statements,
that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to
audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Moore Stephens Sydney ABN 90 773 984 843. An independent member of Moore Stephens International Limited – members in principal cities throughout the world. The Sydney
Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Independent Auditor’s Report (continued)
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm
that the independence declaration required by the Corporations Act 2001, provided to the directors of Washington H. Soul
Pattinson and Company Limited on 22 October 2015, would be on the same terms if provided to the directors as at the date
of signing this audit report.
Auditor’s Opinion
In our opinion:
a. the financial report of Washington H. Soul Pattinson and Company Limited and its controlled entities is in accordance with
the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 31 July 2015 and of its performance for
the year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in the Basis of Preparation
on page 43.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 24 to 33 of the directors’ report for the year ended 31 July 2015.
The directors of Washington H. Soul Pattinson and Company Limited are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Washington H. Soul Pattinson and Company Limited for the year ended 31 July
2015, complies with section 300A of the Corporations Act 2001.
Moore Stephens Sydney
Chartered Accountants
John Gavljak
Partner
Dated in Sydney, this 23 October 2015
Moore Stephens Sydney ABN 90 773 984 843. An independent member of Moore Stephens International Limited – members in principal cities throughout the world. The Sydney
Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
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Additional ASX Information
DISTRIBUTION OF EQUITY SECURITIES AS AT 1 OCTOBER 2015
Size of Shareholding
Number of Shareholders
Number of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
Holding less than a marketable parcel
5,335
4,410
1,007
833
90
11,675
201
2,597,581
11,134,982
7,542,695
21,197,387
196,922,675
239,395,320
731
SUBSTANTIAL SHAREHOLDERS AS AT 1 OCTOBER 2015
As disclosed in notices received by the Company.
Brickworks Limited and its subsidiaries
Perpetual Limited and subsidiaries
Mr Robert Dobson Millner
Mr Thomas Charles Dobson Millner
Ordinary Shares
Held
102,257,830
% of Issued
Shares
42.72
23,542,033
19,921,975
17,211,350
9.83
8.32
7.19
Notice
Received
18 Nov 2013
10 Apr 2015
3 Mar 2014
3 Mar 2014
17,195,965 of the above ordinary shares in which Mr R Millner and Mr T Millner have an interest relate to holdings by the
same entities. For further details refer to the notices lodged on 3 March 2014 on the ASX announcements list for WHSP
(ASX code: SOL).
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Washington H. Soul Pattinson and Company Limited ABN 49 000 002 728
Additional ASX Information (continued)
TOP 20 SHAREHOLDERS AS AT 1 OCTOBER 2015
Brickworks Limited
Ordinary
Shares Held
102,257,830
% of Issued
Shares
42.72
RBC Investor Services Australia Nominees Pty Limited (PI Pooled A/C)
11,005,258
Milton Corporation Limited
Dixson Trust Pty Limited
J S Millner Holdings Pty Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
T G Millner Holdings Pty Limited
National Nominees Limited
Hexham Holdings Pty Limited
9,174,640
8,611,540
8,537,859
5,520,565
3,730,728
3,361,051
3,296,356
2,913,127
Mr Robert Dobson Millner & Mr Michael John Millner (Est James S Millner A/C)
2,522,092
BNP Paribas Noms Pty Ltd (DRP)
Argo Investments Limited
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Australian Foundation Investment Company Limited
RBC Investor Services Australia Nominees Pty Limited (PIIC A/C)
Farjoy Pty Ltd
Dixson Trust Pty Limited (A/C NO 1)
Mary Millner Holdings Pty Limited
2,365,174
2,182,606
1,901,345
1,784,364
1,708,571
1,671,144
1,344,463
1,175,290
1,156,860
4.60
3.83
3.60
3.57
2.31
1.56
1.40
1.38
1.22
1.05
0.99
0.91
0.79
0.75
0.71
0.70
0.56
0.49
0.48
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5
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7
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13
14
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16
17
18
19
20
VOTING RIGHTS
Votes of Members –The Company’s Constitution provides:
(a) on a show of hands, each member has one vote;
(b) subject to section 250L(4) of the Corporations Act 2001, on a poll each member has:
(i) for each fully paid share held by the member, one vote; and
(ii) for each partly-paid share held by the member, a fraction of a vote equivalent to the proportion which the amount
paid (not credited nor paid in advance of a call) is of the total amounts paid and payable (excluding amounts credited)
for the share.
UNQUOTED EQUITY SECURITIES
The Company had no unquoted equity securities at any time during the year ended 31 July 2015 or for the period to the
date of this report.
ON-MARKET BUY-BACK
No on-market buy-back was current at any time during the year ended 31 July 2015 or during the period to the date of this
report.
AUSTRALIAN SECURITIES EXCHANGE LISTING
Washington H. Soul Pattinson and Company Limited shares are listed on the Australian Securities Exchange under the ASX
Code: SOL.
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REGISTERED OFFICE
LEVEL 1, 160 PITT STREET MALL
SYDNEY NSW 2000
Telephone: (02) 9232 7166
Facsimile: (02) 9233 1025
Internet Website Address: www.whsp.com.au
SHARE REGISTER
ADVANCED SHARE REGISTRY LIMITED
110 Stirling Highway, Nedlands WA 6009
Telephone: (08) 9389 8033 (within Australia)
(02) 8096 3502 (NSW)
(07) 3103 3838 (Qld)
(03) 9018 7102 (Vic)
Telephone: +61 8 9389 8033 (outside Australia)
Facsimile: (08) 9262 3723
Facsimile: +61 8 9262 3723 (outside Australia)
Internet Website Address: www.advancedshare.com.au
AUDITORS
MOORE STEPHENS SYDNEY
Level 15, 135 King Street, Sydney NSW 2000
GPO Box 473, Sydney NSW 2001
Telephone: (02) 8236 7700
Facsimile: (02) 9233 4636
T O N H SOUL PA
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