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Notes to the Financial Statements
Washington H. Soul Pattinson and Company Limited
Annual Report 2016
114
Other Operating Assets and Liabilities
NOTE 28
TRADE AND OTHER RECEIVABLES (continued)
NOTE 29
INVENTORIES
28
29
a) 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
20. The carrying value less impairment provisions of trade receivables are assumed to approximate their fair value.
Key Estimate
Recoverability of receivables
As at reporting date, trade receivables past due but not impaired were $14.251 million (2015: $6.498 million).
This receivable relates solely to invoices issued by Queensland Bulk Handling Limited (QBH) (a wholly owned
subsidiary of New Hope Corporation) to Peabody (Wilkie Creek) Pty Limited for coal port services. The balances
outstanding with Peabody were the subject of an action in the Supreme Court of Queensland brought by QBH.
At the date of this report, all amounts invoiced were considered to be recoverable.
Subsequent to reporting date, an agreed settlement (in principle conditional upon the execution of a Settlement
Deed which is currently being negotiated) for an amount of $12.950 million plus GST has been achieved.
A doubtful debt expense of $6.377 million has been recognised against the total amount initially invoiced and
recognised as a receivable in order to bring the amount outstanding at 31 July 2016 in line with the in principle
settlement amount. While the amount is past due, it is considered recoverable at year end.
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.
2016
2015
$’000
$’000
Current Assets
Raw materials and stores – at cost
35,050
28,348
Work in progress – at cost
14,011
7,714
Finished goods – at cost
29,978
36,808
79,039
72,870
Inventory expense
Inventories recognised as an expense during the year ended 31 July 2016 amounted to $283.704 million
(2015: $227.428 million).
In the current year, write-down of inventory to net realisable value recognised as an expense during the year
amounted $1.086 million (2015:$666,000).