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Notes to the Financial Statements
Washington H. Soul Pattinson and Company Limited
Annual Report 2016
102
Risk Management
23
NOTE 23
INTEREST BEARING LIABILITIES (continued)
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 2.43% per annum (2015: 2.56%) 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 17vii for interest incurred on Director related deposits.
a) Borrowings
Financing facilities secured by assets pledged as security
The total secured financing facilities are as follows:
2016
2015
$’000
$’000
Bank loan facilities
(i)
22,825
–
Lease liabilities
15,039
125
37,864
125
(i) On 23 October 2015, the Group entered into a bank loan facility agreement for $22.825 million for the purpose of acquiring a commercial
property at Pennant Hills. This property is classified as an Investment property in these financials statements. The loan was fully drawn from the
first day of the loan. The loan is for a period of three years and is a variable rate facility. A three year interest rate swap agreement has also been
established to manage the fluctuations in interest rates over the term of the facility. The interest rate for 50% of the loan facility is effectively
fixed at 3.42% per annum. The variable rate at balance date was 3.07% per annum. The bank loan facility is secured by a first mortgage over this
commercial property (refer note 12).
b) Secured – finance lease liabilities
2016
2015
$’000
$’000
Commitments in relation to finance leases are payable as follows:
Within one year
2,802
21
Later than one year but not later than five years
13,813
121
Minimum finance lease
16,615
142
Future finance charges
(1,576)
(17)
15,039
125
The present value of finance lease liabilities is as follows:
Current
2,306
21
Non-current
12,733
104
Recognised as a liability
15,039
125
Secured liability
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements
revert to the lessor in the event of default. No other assets are pledged as security for borrowings.