Annual Report

Notes to the Financial Statements

Washington H. Soul Pattinson and Company Limited

Annual Report 2016

Revenue and Expenses

NOTE 17

EXPENSES (continued)

Impairment (expense)/reversal on equity accounted associates

The recoverable amount of investments in equity accounted associates has been assessed as at 31 July 2016.

Where carrying values of an investment exceeded the recoverable amount, the investment has been impaired.

During the year ended 31 July 2016, an impairment expense of $7.554 million was recognised on the investment

in TPI Enterprises Limited. In the prior year, previously recognised impairment on the investment in Australian

Pharmaceutical Industries Limited was reversed by $72.947 million.

ii) Impairment of long term equity investments

During the year ended 31 July 2016, 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 cost and have therefore recognised an impairment expense in respect of these investments.

Impairments were recognised by the Parent company ($12.934 million) and New Hope Corporation Limited

($4.978 million). The impairment loss after tax impacted the result attributable to members by $12.023 million

(2015: $16.170 million).

iii) Impairment of goodwill and oil producing assets

During the year ended 31 July 2016, New Hope Corporation Limited determined that the continued significant

decline in global oil prices indicated the carrying value of certain oil producing and exploration assets were

impaired. Refer to notes 25 and 26.

Impairment expenses have been recognised on the following asset classes: Oil producing assets $15.029 million

(2015: $51.456 million); Oil exploration assets $13.117 million (2015: nil); and goodwill nil (2015: $4.157 million).

The impairment loss after tax impacted the result attributable to members by $13.277 million (2015: $24.429 million).

iv) Impairment of non-current assets – coal to liquids facility

In the prior year, New Hope Corporation Limited 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 continued and significant declines in the global copper price, the Group has determined that the

carrying values of certain mining and exploration assets were no longer recoverable. An impairment loss on

these assets of $45.293 million (2015: $83.021 million) was recognised during the year. An additional impairment

expense of $8.099 million was recognised on other copper assets. These impairment losses after tax impacted the

result attributable to members by $22.374 million (2015: $58.114 million).

vi) Employee benefits expense

Includes $100.782 million (2015: $86.513 million) relating to New Hope Corporation Limited.

vii) Finance costs

The Parent company incurred interest of $1.335 million (2015: $1.592 million) on interest bearing deposits from

Directors and their related parties. A 100% controlled entity, the PSRE Urban Regeneration Trust incurred interest

of $644,000 (2015: nil) relating to Investment properties (commercial properties).

viii) Exploration costs expensed

Includes exploration costs expensed, $14.150 million (2015: $15.976 million) relating to New Hope Corporation

Limited

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.