Pelikan-Artline Pty Ltd Audited Financial Statements

EX-99.1 10 d275335dex991.htm PELIKAN-ARTLINE PTY LTD AUDITED FINANCIAL STATEMENTS Pelikan-Artline Pty Ltd Audited Financial Statements

Exhibit 99.1

Financial Statements of Pelikan Artline Joint Venture and Controlled Entities

The accompanying consolidated financial statements of Pelikan Artline Joint Venture and Controlled Entities, a 50% owned joint venture investment of ACCO Brands Corporation (“ACCO”), are being provided pursuant to Rule 3-09 of the Securities and Exchange Commission’s (“SEC”) Regulation S-X. These financial statements are audited as of September 30, 2011 and are prepared in accordance with accounting principles generally accepted rules in Australia and as permitted by the SEC Regulations.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

A.B.N. 51 084 958 556

FINANCIAL REPORT - 30 SEPTEMBER 2011

CONTENTS


Independent Auditor’s Report			1

Directors’ Declaration			2

Statement of Comprehensive Income			3

Statement of Financial Position			4

Statement of Changes in Equity			5

Statement of Cash Flows			6

Notes to the Financial Statements			7

LOGO

Report of Independent Registered Public Accounting Firm

To the members of Pelikan Artline Joint Venture

We have audited the accompanying financial statements of Pelikan Artline Joint Venture (the “parent entity”), which comprises the statement of financial position as at September 30, 2011 and 2010, and the related statement of comprehensive income, statement of changes in equity and statement of cash flows for the years then ended for both the parent entity and the consolidated entity. The consolidated entity comprises the parent entity and the entities it controlled at the year’s end or from time to time during the year. These financial statements are the responsibility of the parent entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We did not audit the parent entity’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent entity’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the parent entity and the consolidated entity at September 30, 2011 and 2010, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in Australia on the basis as described in note 1.

The financial statements for 2009 (refer to note 32) are presented for comparative purposes only. The financial statements for 2009 have not been audited by us in accordance with auditing standards generally accepted in the United States of America.

PKF

Sydney, Australia

21 December 2011

Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au

PKF | ABN 83 236 985 726

Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia

The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other Individual member firm or firms.

Liability limited by a scheme approved under Professional Standards Legislation.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

FINANCIAL REPORT - 30 SEPTEMBER 2011

DIRECTORS’ DECLARATION

The directors of Pelikan Artline Pty Limited, the agent for the joint venture, declare that:

The financial statements, which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and notes to the financial statements:

comply with Australian Accounting Standards; and

give a true and fair view of the financial position as at 30 September 2011 and of the performance for the year ended on that date of the joint venture and consolidated entity.

In the directors’ opinion there are reasonable grounds to believe that the joint venture will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the board of directors and is signed for and on behalf of the directors by:

LOGO

A.G. Kaldor

Director

LOGO

B.R. Haynes

Director

Sydney, 21 December 2011

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2011


		Consolidated						Parent
	Note	2011 $			2010 $			2011 $			2010 $

Revenue	2		127,910,566			131,308,301			131,452,716			135,727,057

			127,910,566			131,308,301			131,452,716			135,727,057


Expenses
Purchases, distribution & selling			(85,681,067	)		(89,466,083	)		(77,792,675	)		(81,829,984	)
Marketing			(14,312,918	)		(12,663,744	)		(14,302,797	)		(12,655,998	)
Administration, IT & other expenses			(2,892,233	)		(2,163,752	)		(24,698,291	)		(25,058,679	)
Finance costs			(1,466,274	)		(1,878,429	)		(3,089,588	)		(3,209,695	)

			(104,352,492	)		(106,172,008	)		(119,883,351	)		(122,754,356	)


Profit before income tax			23,558,074			25,136,293			11,569,365			12,972,701

Income tax expense	1,5		(4,800,914	)		(4,922,678	)		—			—


Profit for the year			18,757,160			20,213,615			11,569,365			12,972,701


Other Comprehensive Income
Available for sale financial assets			60,205			33,179			—			—


Other comprehensive income for the year, net of tax			60,205			33,179			—			—


Total comprehensive income for the year			18,817,365			20,246,794			11,569,365			12,972,701


Profit attributable to:
Owners of the parent entity			16,791,642			18,181,165			11,569,365			12,972,701
Minority interest			1,965,518			2,032,450			—			—

			18,757,160			20,213,615			11,569,365			12,972,701


Total comprehensive income attributable to:
Owners of the parent entity			16,839,910			18,207,766			11,569,365			12,972,701
Minority interest			1,977,455			2,039,028			—			—

			18,817,365			20,246,794			11,569,365			12,972,701

The above statement of comprehensive income should be read in conjunction with the accompanying notes

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2011


		Consolidated				Parent
	Note	2011 $		2010 $		2011 $		2010 $

ASSETS
Current Assets
Cash and cash equivalents	6		26,162,953		27,205,691		3,119,293		2,527,774
Trade and other receivables	7		36,779,458		36,205,486		36,331,187		35,807,318
Inventories	8		22,499,902		22,503,626		22,499,902		22,503,626
Prepayments			922,226		727,708		843,002		671,674

Total current assets			86,364,539		86,642,511		62,793,384		61,510,392


Non-Current Assets
Receivables	9		—		—		10,701,395		9,926,160
Financial assets	10		495,252		409,245		40,853,792		40,853,792
Property, plant and equipment	11		1,606,649		2,297,720		1,149,926		1,388,650
Deferred tax assets	12		683,237		897,520		n/a		n/a
Intangible assets	13		30,469,175		30,467,403		50,015		48,243

Total non-current assets			33,254,313		34,071,888		52,755,128		52,216,845


*Total assets*			119,618,852		120,714,399		115,548,512		113,727,237


LIABILITIES
Current Liabilities
Trade and other payables	14		27,781,809		30,371,498		34,176,061		34,682,832
Provisions	15		1,644,271		1,121,980		966,271		687,518
Short-term borrowings	16		4,000,000		4,000,000		4,000,000		4,000,000
Current tax liabilities			2,622,300		2,351,731		—		—

Total current liabilities			36,048,380		37,845,209		39,142,332		39,370,350


Non-Current Liabilities
Trade and other payables	17		—		—		31,541,045		23,935,547
Long-term borrowings	18		14,000,000		19,000,000		14,000,000		19,000,000
Deferred tax liabilities	19		233,199		171,492		n/a		n/a
Provisions	20		241,307		274,786		54,307		46,247

Total non-current liabilities			14,474,506		19,446,278		45,595,352		42,981,794


*Total liabilities*			50,522,886		57,291,487		84,737,684		82,352,144


*Net assets*			69,095,966		63,422,912		30,810,828		31,375,093


EQUITY
Capital introduced	21		1,652,804		1,652,804		1,652,804		1,652,804
Reserves	22		167,693		119,425		—		—
Retained earnings	23		57,674,759		53,016,747		29,158,024		29,722,289
Outside equity interest	24		9,600,710		8,633,936		—		—

*Total equity*			69,095,966		63,422,912		30,810,828		31,375,093

The above statement of financial position should be read in conjunction with the accompanying notes

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2011


		Consolidated						Parent
	Note	2011 $			2010 $			2011 $			2010 $

Total equity at the beginning of the financial year			63,422,912			54,037,158			31,375,093			28,255,808


Total comprehensive income attributable to:
Owners of the parent entity			16,839,910			18,207,766			11,569,365			12,972,701
Minority interest			1,977,455			2,039,028			—			—

Distribution of profit during the year			(12,133,630	)		(9,853,416	)		(12,133,630	)		(9,853,416	)
Dividends provided for or paid	4		(1,010,681	)		(1,007,624	)		—			—

			5,673,054			9,385,754			(564,265	)		3,119,285


Total equity at the end of the financial year			69,095,966			63,422,912			30,810,828			31,375,093

The above statement of changes in equity should be read in conjunction with the accompanying notes

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


		Consolidated						Parent
		2011			2010			2011			2010
	Note	$			$			$			$

Cash Flows From Operating Activities
Receipts from customers (inclusive of GST)			141,800,130			146,235,117			139,327,807			143,331,735
Payments to suppliers and employees (inclusive of GST)			(120,255,564	)		(118,083,956	)		(132,361,625	)		(130,051,010	)
Dividend received			4,717			4,855			—			—
Interest received			1,320,482			745,012			949,942			1,239,016
Finance costs			(1,466,274	)		(1,764,260	)		(2,682,366	)		(4,037,190	)
Income tax paid			(4,235,297	)		(3,225,568	)		—			—

Net cash flows from operating activities	29		17,168,194			23,911,200			5,233,758			10,482,551


Cash Flows From Investing Activities
Purchase of property, plant and equipment			(130,575	)		(440,006	)		(130,575	)		(440,006	)
Proceeds from sale of property, plant and equipment			63,954			32,821			—			23,980
Loans to related party			—			—			(775,235	)		(1,181,110	)

Net cash flows from investing activities			(66,621	)		(407,185	)		(905,810	)		(1,597,136	)


Cash Flows From Financing Activities
Repayment of borrowings			(5,000,000	)		(4,000,000	)		(5,000,000	)		(4,000,000	)
Loans from (to) related parties (net)			—			—			13,397,201			(4,663,180	)
Profit distributions paid			(12,133,630	)		(9,853,416	)		(12,133,630	)		(9,853,416	)
Dividends paid			(1,010,681	)		(1,007,624	)		—			—

Net cash flows from financing activities			(18,144,311	)		(14,861,040	)		(3,736,429	)		(18,516,596	)


Net increase (decrease) in cash and cash and cash equivalents			(1,042,738	)		8,642,975			591,519			(9,631,181	)

Cash and cash equivalents at the beginning of the year			27,205,691			18,562,716			2,527,774			12,158,955

Cash and cash equivalents at the end of the year	1, 6		26,162,953			27,205,691			3,119,293			2,527,774

The above statement of cash flows should be read in conjunction with the accompanying notes

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

This financial report is a general purpose financial report prepared in order to satisfy Pelikan Artline Joint Venture’s (referred to in this report as the parent entity) financial report preparation requirements under the Joint Venture Agreement dated 24 December 1998.

The financial report covers Pelikan Artline Joint Venture as an individual parent entity and Pelikan Artline Joint Venture and controlled entities as a consolidated entity.

The financial report was authorised for issue by the directors of Pelikan Artline Pty Limited, the agent for the Joint Venture, on 21 December 2011.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements, other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Interpretations.

Compliance with Australian Accounting Standards - Reduced Disclosure Requirements

The financial statements of Pelikan Artline Joint Venture comply with Australian Accounting Standards -Reduced Disclosure Requirements as issued by the Australian Accounting Standards Board (AASB).

Early adoption of standards

The parent and consolidated entities have elected to apply the following pronouncements to the annual reporting period beginning 1 October 2009:


AASB 1053:		Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements

Historical cost convention

The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Principles of Consolidation

A controlled entity is any entity controlled by Pelikan Artline Joint Venture. Control exists where Pelikan Artline Joint Venture has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Pelikan Artline Joint Venture to achieve the objectives of Pelikan Artline Joint Venture.

The financial statements of controlled entities are included from the date control commences to the date control ceases.

Inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

Income Tax

The parent entity is not a legal entity subject to Australian or New Zealand income tax. Its income is taxable in the hands of the Joint Venture parties.

The controlled entities are subject to Australian or New Zealand income tax and the tax balances disclosed in this report relate to these controlled entities.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Tax (continued)

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or non-allowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the statement of financial position date.

Deferred tax is accounted for using the statement of financial position liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited direct to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Revenue Recognition

Sale of goods revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue

Interest revenue is recognised on an accruals basis taking into account the interest rates applicable to the financial assets.

Dividend revenue

Dividend revenue is recognised when the right to receive a dividend has been established.

Promotional Expenditure

Advertising and promotional expenditure (primarily catalogue expenditure) is recognised when incurred. The expenditure is incurred when the entity enters into a binding commitment with the service provider.

Foreign Currency Transactions and Balances

The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s presentation currency.

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income. Exchange difference arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of comprehensive income.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

Trade and Other Current Receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment.

Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment is established when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of receivables.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the statement of comprehensive income.

Inventories

Inventories are measured at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out or average cost basis.

Investments and Other Financial Assets

The parent entity accounts for investments in subsidiaries at cost less impairment. The consolidated entity classifies its investments as available for sale financial assets. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.

Available for sale financial assets, comprising marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.

Purchases and sales of investments are recognised on trade date - the date on which the consolidated entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Available for sale financial assets are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available for sale are recognised in equity in the available for sale financial assets revaluation reserve. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses from investment securities.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments and Other Financial Assets (continued)

The consolidated entity assesses at each balance 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 available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removed from equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the statement of comprehensive income.

Impairment of Financial Assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each statement of financial position date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment 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.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of a provision account. When a trade receivable is uncollectible, it is written off against the provision account. Subsequent recoveries of amounts previously written off are credited against the provision account. Changes in the carrying amount of the provision account are recognised in profit or loss.

Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost, less where applicable, any accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. 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 consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Plant and equipment

Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by the directors to ensure that it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, are depreciated on a straight line basis over their useful lives to the consolidated entity commencing from the time each asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:


Class of Fixed Asset	Depreciation Rate
Plant and equipment		7.50% - 66.77%
Motor vehicles		15.00% - 20.00%

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant and Equipment (continued)

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These gains or losses are included in the statement of comprehensive income.

Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the consolidated entity are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the present value of minimum lease payments, including any guaranteed residual values. Leased assets are depreciated on a straight line basis over their estimated useful lives where it is likely that the consolidated entity will obtain ownership of the asset over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the year.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the year in which they are incurred.

Intangibles

Intangibles – Trademark Licences

Trademark licences are initially recognised at cost of acquisition. They have an indefinite useful life because they are subject to a written trademark agreement which does not limit the period over which they are expected to generate cash inflows. They are not subject to amortisation.

Trademark licences are tested for impairment annually and are subsequently carried at cost less any accumulated impairment losses. An impairment loss is recognised for the amount by which the trademark licence’s carrying amount exceeds its recoverable amount.

Goodwill

Goodwill and goodwill on consolidation are initially recorded as an intangible asset at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at the date of acquisition. Goodwill has an indefinite life on the basis there is no foreseeable limit to the period over which the asset is expected to generate cash inflows. They are not subject to amortisation.

Goodwill is tested annually for impairment and carried at a cost less accumulated impairment losses.

Impairment of Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. 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 (cash generating units).

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Trade and Other Payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition, with the exception of certain liabilities to employees that are usually paid within 12 months of the statement of financial position date.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of the loan facilities are recognised in the statement of comprehensive income when they are incurred.

Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

Employee Benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

Long service leave

The liability for long service leave 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 reporting date. 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 reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Retirement Benefit Obligations

Superannuation contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred.

Provisions

Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions recognised represent the best estimate of the amounts required to settle the obligation at the end of the reporting period.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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. 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. The net amount of GST recoverable from or payable to the Australian Taxation Office is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the Australian Taxation Office, are presented as operating cash flow.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the Australian Taxation Office.

Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the economic entity commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’ in which case transaction costs are expensed to the statement of comprehensive income immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

•

the amount at which the financial asset or financial liability is measured at initial recognition;

•

less principal repayments;

•

plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method;

•

less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in the statement of comprehensive income.

The consolidated entity does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial Instruments (continued)

(i)

Financial assets at fair value through profit or loss

Financial assets are classified at ‘fair value through profit or loss’ when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

(ii)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period, which will be classified as non-current assets.

(iii)

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the consolidated entity’s intention to hold these investments to maturity.

They are subsequently measured at amortised cost.

Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period, which will be classified as current assets. If during the period the consolidated entity sold or reclassified more than an insignificant amount of the held-to-maturity investments before maturity, the entire category of held-to-maturity investments would be tainted and would be reclassified as available-for-sale.

(iv)

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Available-for-sale financial assets are included in non-current assets, except for those which are expected to be disposed of within 12 months after the end of the reporting period, which will be classified as current assets.

(v)

Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At the end of each reporting period, the consolidated entity assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of comprehensive income.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial Instruments (continued)

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in the statement of comprehensive income.

Comparatives

Where required by Accounting Standards and/or for improved presentation purposes comparative figures have been adjusted to conform with changes in presentation for the current year.

Critical Accounting Estimates and Assumptions

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the consolidated entity.

Key Estimates – Impairment of Goodwill and Trademark Licences

The consolidated entity tests annually whether goodwill and other intangible assets that have an indefinite useful life have suffered any impairment, in accordance with the accounting policy stated in note 1.

In assessing goodwill for impairment, sensitivity analysis was applied to key assumptions (being the growth and discount rates) used in value in use calculations. As a result of this sensitivity analysis, there were no changes in key assumptions that were considered reasonably possible, which would cause the carrying amount of goodwill to exceed its recoverable amount and therefore no impairment has been recognised in respect of goodwill amounting to $28,492,523 or trademark licences amounting to $1,976,652 for the year ended 30 September 2011.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated					Parent
	2011			2010		2011			2010
	$			$		$			$

Note 2 Revenue

Revenue
Sales net of discounts and rebates allowed		126,288,905			130,163,227		126,288,905			130,309,235


Other revenue
Dividend received		4,717			4,855		4,086,923			4,074,561
Interest received		1,415,432			1,013,514		949,942			1,216,731
Other operating revenue		201,512			126,705		126,946			126,530

		1,621,661			1,145,074		5,163,811			5,417,822


Total revenue		127,910,566			131,308,301		131,452,716			135,727,057


Note 3 Expenses

Depreciation - property, plant & equipment		613,395			671,172		367,257			350,860

Bad and doubtful debts expense
Bad debts		123,276			30,433		123,276			30,433
Provision for impairment		(62,499	)		—		(62,499	)		—

Total bad and doubtful debts		60,777			30,433		60,777			30,433


Foreign currency translation losses		73,884			21,571		—			16,286

Loss on disposal of property, plant and equipment		144,297			63,090		2,042			6,862

Rental expenses relating to operating leases		4,667,381			5,559,663		3,161,293			3,033,062

Note 4 Dividends

Fully franked dividends - franked at tax rate of 30%		1,010,681			1,007,624		—			—


Balance of franking account at year end adjusted for franking credits arising from payment of provision for income tax, franking debits arising from payment of dividends recognised as a liability at reporting date and franking credits arising from receipt of dividends recognised as receivable at reporting date.		23,175,163			20,991,213		—			—

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated						Parent
	2011			2010			2011			2010
	$			$			$			$
Note 5 - Income tax

*(a) The components of income tax expense comprise*
Current income tax		4,549,150			4,291,118			n/a			n/a
Deferred income tax - recoupment of (increase in) tax losses		(12,723	)		394,083			n/a			n/a
Deferred income tax - other items		262,016			229,553			n/a			n/a
Deferred income tax - changes in tax rates		1,860			10,971			n/a			n/a
Under (over) provision in respect of prior years		611			(3,047	)		n/a			n/a

Total income tax expense		4,800,914			4,922,678			n/a			n/a


Deferred income tax expense included in income tax expense
Decrease (increase) in deferred tax assets (note 12)		213,388			532,804			n/a			n/a
Increase (decrease) in deferred tax liabilities (note 19)		35,905			90,832			n/a			n/a

		249,293			623,636			n/a			n/a

*(b) Income tax reconciliation*
The prima facie tax on profit before income tax is reconciled to the income tax as follows:-
Prima facie tax payable on profit before income tax at 30%		7,067,422			7,540,888			n/a			n/a
Add (less) tax effect of:-
Non allowable items		(23,611	)		43,317			n/a			n/a
Non assessable items		239			(680	)		n/a			n/a
Change in tax rates		1,860			10,971			n/a			n/a
Over (under) provision in respect of prior years		—			(3,047	)		n/a			n/a
Increase in tax losses not recognised		(263	)		671			n/a			n/a
Income tax not payable by parent entity - non taxable entity		(2,244,733	)		(2,669,442	)		n/a			n/a

Income tax expense		4,800,914			4,922,678			n/a			n/a


The applicable weighted average effective tax rates are as follows:		20	%		20	%		n/a			n/a


Tax effect relating to other comprehensive income:
Deferred tax		25,802			14,220			n/a			n/a


Note 6 Current Assets - Cash and Cash Equivalents

Cash at bank		3,263,833			3,302,852			2,168,604			146,491
Cash on deposit		22,899,120			23,902,839			950,689			2,381,283

		26,162,953			27,205,691			3,119,293			2,527,774


Note 7 Current Assets - Trade and Other Receivables

Trade receivables		35,510,561			35,265,481			35,510,562			35,265,481
Less provision for impairment		(37,501	)		(100,000	)		(37,501	)		(100,000	)

		35,473,060			35,165,481			35,473,061			35,165,481
Current tax assets		47,093			91,953			—			—
Other receivables		1,259,305			948,052			858,126			641,837

		36,779,458			36,205,486			36,331,187			35,807,318

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated				Parent
	2011		2010		2011		2010
	$		$		$		$

Note 8 Current Assets - Inventories

Stock on hand (note 1)		22,499,902		22,503,626		22,499,902		22,503,626


Note 9 Non-Current Assets - Receivables

Loan to controlled entity - unsecured		—		—		10,701,395		9,926,160


Note 10 Non-Current Assets - Financial Assets

Other Financial Assets
Unlisted investments
Shares in subsidiary companies (at cost)		—		—		40,853,792		40,853,792
Shares in unlisted corporations (at fair value)		495,252		409,245		—		—

		495,252		409,245		40,853,792		40,853,792


Parent Entity - Shares in other controlled corporations

On 29 April 2005 the joint venture acquired 80.17% of the share capital of Geoff Penney (Australia) Pty Limited, which is also the 100% holding company of Custom Xstamper Australia Pty Limited and Pelikan Artline Limited.

On 14 January 2009 the joint venture acquired 100% of the share capital of Spirax Holdings Pty Limited, which is also the 100% holding company of Spirax Industries Pty Limited, Spirax Office Products Pty Limited, Spirax Holdings NZ Limited and Spirax New Zealand Limited.

Consolidated Entity - Shares in unlisted corporations
Shares in other corporations represent an investment in Shachihata (Malaysia) Sdn. Bhd., a private company incorporated in Malaysia that manufactures certain products sold by the Consolidated Entity. The percentage owned is 2.38% and is carried at fair value.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated						Parent
	2011			2010			2011			2010
	$			$			$			$

Note 11 Non-Current Assets - Property, Plant and Equipment

Plant and equipment (at cost)		10,177,139			11,557,469			2,767,337			2,811,757
Less accumulated depreciation		(8,570,490	)		(9,259,749	)		(1,617,411	)		(1,423,107	)

Total property, plant and equipment		1,606,649			2,297,720			1,149,926			1,388,650


Movements in carrying amounts								Plant and equipment			Total
*Consolidated Entity*								$			$
At 1 October 2010
Cost								11,557,469			11,557,469
Accumulated depreciation and impairment								(9,259,749	)		(9,259,749	)

Net carrying amount								2,297,720			2,297,720


Year ended 30 September 2011
Net carrying amount at 1 October 2010								2,297,720			2,297,720
Additions								151,638			151,638
Disposals								(229,314	)		(229,314	)
Depreciation and amortisation charge								(613,395	)		(613,395	)

Net carrying amount at 30 September 2011								1,606,649			1,606,649


At 30 September 2011
Cost								10,177,139			10,177,139
Accumulated depreciation and impairment								(8,570,490	)		(8,570,490	)

Net carrying amount								1,606,649			1,606,649


*Parent Entity*								Plant and equipment $			Total $
At 1 October 2010
Cost								2,811,757			2,811,757
Accumulated depreciation and impairment								(1,423,107	)		(1,423,107	)

Net carrying amount								1,388,650			1,388,650


Year ended 30 September 2011
Net carrying amount at 1 October 2010								1,388,650			1,388,650
Additions								151,638			151,638
Disposals								(23,105	)		(23,105	)
Depreciation and amortisation charge								(367,257	)		(367,257	)

Net carrying amount at 30 September 2011								1,149,926			1,149,926


At 30 September 2011
Cost								2,767,337			2,767,337
Accumulated depreciation and impairment								(1,617,411	)		(1,617,411	)

Net carrying amount								1,149,926			1,149,926

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated						Parent
	2011			2010			2011		2010
	$			$			$		$
Note 12 Non-Current Assets - Deferred Tax Assets

Deferred tax assets		683,237			897,520			n/a		n/a

Deferred tax assets - movement
Opening balance		897,520			1,446,465			n/a		n/a
Change in tax rates		(1,912	)		(11,323	)		n/a		n/a
Unrealised currency gains and losses		1,022			(8,414	)		n/a		n/a
Provisions		60,600			(35,400	)		n/a		n/a
Accruals		(8,989	)		(101,411	)		n/a		n/a
Property, plant and equipment		(2,988	)		1,686			n/a		n/a
Tax losses		(262,016	)		(394,083	)		n/a		n/a

Closing balance		683,237			897,520			n/a		n/a


Deferred tax assets comprise
Provisions		259,500			376,001			n/a		n/a
Accruals		396,662			259,503			n/a		n/a
Property, plant and equipment		27,075			—			n/a		n/a
Tax losses		—			262,016			n/a		n/a

		683,237			897,520			n/a		n/a

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated				Parent
	2011		2010		2011		2010
	$		$		$		$
Note 13 Non-Current Assets - Intangible Assets

Trademark licence (at cost)		1,976,652		1,976,652		—		—
Goodwill (at cost)		28,492,523		28,490,751		50,015		48,243

		30,469,175		30,467,403		50,015		48,243


Movements in carrying amounts	Trademark licence	Goodwill	Total
*Consolidated Entity*	$	$	$
At 1 October 2010
Cost	1,976,652	28,490,751	30,467,403
Accumulated amortisation and impairment	—	—	—

Net carrying amount	1,976,652	28,490,751	30,467,403


Year ended 30 September 2011
Net carrying amount at 1 October 2010	1,976,652	28,490,751	30,467,403
Currency fluctuations	—	1,772	1,772

Net carrying amount at 30 September 2011	1,976,652	28,492,523	30,469,175


At 30 September 2011
Cost	1,976,652	28,492,523	30,469,175
Accumulated amortisation and impairment	—	—	—

Net carrying amount	1,976,652	28,492,523	30,469,175


	Trademark licence	Goodwill	Total
*Parent Entity*	$	$	$
At 1 October 2010
Cost	—	48,243	48,243
Accumulated amortisation and impairment	—	—	—

Net carrying amount	—	48,243	48,243


Year ended 30 September 2011
Net carrying amount at 1 October 2010	—	48,243	48,243
Currency fluctuations	—	1,772	1,772

Net carrying amount at 30 September 2011	—	50,015	50,015


At 30 September 2011
Cost	—	50,015	50,015
Accumulated amortisation and impairment	—	—	—

Net carrying amount	—	50,015	50,015

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated					Parent
	2011		2010			2011		2010
	$		$			$		$
Note 14 Current Liabilities - Trade and Other Payables

Trade payables		11,230,530		15,088,224			11,510,273		15,488,730
Liabilities to employees		4,116,698		4,994,504			3,121,108		4,033,258
Other payables		12,434,581		10,288,770			12,059,162		9,787,328
Loans - unsecured		—		—			7,485,518		5,373,516

		27,781,809		30,371,498			34,176,061		34,682,832

Note 15 Current Liabilities - Provisions

Employee benefits - long service leave		1,644,271		1,121,980			966,271		687,518

Note 16 Current Liabilities - Short-term Borrowings

Loans - Westpac (secured)		4,000,000		4,000,000			4,000,000		4,000,000

Note 17 Non-Current Liabilities - Trade and Other Payables

Loans - unsecured		—		—			31,541,045		23,935,547

Note 18 Non-Current Liabilities - Long-term Borrowings

Loans - Westpac (secured)		14,000,000		19,000,000			14,000,000		19,000,000

Note 19 Non-Current Liabilities - Deferred Tax Liabilities

Deferred tax liabilities		233,199		171,492			n/a		n/a


Deferred tax liabilities - movement
Opening balance		171,492		66,440			n/a		n/a
Receivables		28,485		91,069			n/a		n/a
Prepayments		7,420		(237	)		n/a		n/a
Revaluation of available for sale financial assets charged directly to other comprehensive income		25,802		14,220			n/a		n/a

Closing balance		233,199		171,492			n/a		n/a


Deferred tax liabilities comprise
Receivables		119,936		91,451			n/a		n/a
Prepayments		23,622		16,202			n/a		n/a
Revaluation of available for sale financial assets		89,641		63,839			n/a		n/a

		233,199		171,492			n/a		n/a


Note 20 Non-Current Liabilities - Provisions

Employee benefits - long service leave		241,307		274,786			54,307		46,247

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

		26,603,004			26,603,004			26,603,004			26,603,004
	Consolidated						Parent
	2011			2010			2011			2010
	$			$			$			$
Note 21 Joint Venture Equity

Columbia Pelikan Pty Ltd
Capital introduced		826,402			826,402			826,402			826,402
Share of joint venture profits - prior years		26,508,374			22,344,499			14,861,145			13,301,502
Share of joint venture profits - current year		8,395,821			9,090,583			5,784,683			6,486,351
Share of transfers to reserves - prior year		59,713			46,412			—			—
Share of transfers to reserves - current year		24,134			13,301			—			—
Distribution of profit		(6,066,815	)		(4,926,708	)		(6,066,815	)		(4,926,708	)

Joint venture interest at the end of the financial year		29,747,628			27,394,488			15,405,414			15,687,547


ACCO Brands Australia Pty Ltd/GBC Fordigraph Pty Ltd*
Capital introduced		826,402			826,402			826,402			826,402
Share of joint venture profits - prior years		26,508,374			22,344,499			14,861,145			13,301,502
Share of joint venture profits - current year		8,395,821			9,090,583			5,784,683			6,486,351
Share of transfers to reserves - prior year		59,713			46,412			—			—
Share of transfers to reserves - current year		24,134			13,301			—			—
Distribution of profit		(6,066,815	)		(4,926,708	)		(6,066,815	)		(4,926,708	)

Joint venture interest at the end of the financial year		29,747,628			27,394,488			15,405,414			15,687,547


Total joint venture interests
Capital introduced		1,652,804			1,652,804			1,652,804			1,652,804
Share of joint venture profits - prior years		53,016,747			44,688,998			29,722,289			26,603,004
Share of joint venture profits - current year		16,791,642			18,181,165			11,569,365			12,972,701
Share of transfers to reserves - prior year		119,425			92,824			—			—
Share of transfers to reserves - current year		48,268			26,601			—			—
Distribution of profit		(12,133,630	)		(9,853,416	)		(12,133,630	)		(9,853,416	)

Joint venture interest at the end of the financial year		59,495,256			54,788,976			30,810,828			31,375,093
Outside equity interests in controlled entities (note 24)		9,600,710			8,633,936			—			—

Total equity as per the statement of financial position		69,095,966			63,422,912			30,810,828			31,375,093


* Under a Deed of Transfer and Novation dated 25 May 2011 ACCO Brands Australia Pty Ltd replaced GBC Fordigraph Pty Ltd as a holder of GBC Fordigraph Pty Ltd’s 50% interest in the Pelikan Artline Joint Venture and as a party to the Joint Venture Agreements.

The parties also agreed that the Joint Venture and its business as evidenced in the Joint Venture documents is a continuing partnership.

Note 22 Reserves

Available for sale financial assets revaluation reserve
Opening balance		119,425			92,824			—			—
Movement during the year		48,268			26,601			—			—

Closing balance		167,693			119,425			—			—


The available for sale financial assets revaluation reserve records revaluations of available for sale financial assets.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated						Parent
	2011			2010			2011			2010
	$			$			$			$
Note 23 Retained Earnings

Movements in retained earnings were as follows:
Balance at the beginning of the year		53,016,747			44,688,998			29,722,289			26,603,004
Profit attributable to owners of the parent for the year		16,791,642			18,181,165			11,569,365			12,972,701
Distribution of profit during the year		(12,133,630	)		(9,853,416	)		(12,133,630	)		(9,853,416	)
Dividends paid or provided		(1,010,681	)		(1,007,624	)		—			—
Dividends attributable to outside equity interest		1,010,681			1,007,624			—			—

Balance at the end of the year		57,674,759			53,016,747			29,158,024			29,722,289


Distribution to joint venture partners
Columbia Pelikan Pty Ltd		28,837,380			26,508,374			14,579,012			14,861,145
ACCO Brands Australia Pty Ltd/GBC Fordigraph Pty Ltd		28,837,380			26,508,374			14,579,012			14,861,145

		57,674,759			53,016,747			29,158,024			29,722,289


Note 24 Outside Equity Interests in Controlled Entities

Outside equity interest comprises:
Share capital		141,562			141,562			—			—
Reserves		653,992			642,055			—			—
Retained earnings		8,805,156			7,850,319			—			—

		9,600,710			8,633,936			—			—


Note 25 Commitments

(a) Operating lease commitments
Aggregate amount contracted for but not capitalised in the financial statements and payable:
Not later than 1 year		3,356,674			2,843,651			2,440,583			1,225,858
Later than 1 year but not later than 5 years		4,719,072			3,332,209			4,499,295			2,226,954
Greater than 5 years		156,494			377,382			156,494			377,382

		8,232,240			6,553,242			7,096,372			3,830,194

Operating lease commitments relate to:
(i) Controlled entities lease property, equipment and motor vehicles under operating leases expiring from one to ten years. Leases generally provide controlled entities with a right of renewal at which all terms are negotiated. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals are based on either movements in the Consumer Price Index or operating criteria.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated				Parent
	2011		2010		2011		2010
	$		$		$		$

Note 26 Assets Pledged as Security

The parent entity has a bank overdraft, letter of credit, bill facilities and bank loan which are secured by a registered mortgage by Pelikan Artline Pty Limited over all its assets and uncalled capital and over all the assets of the joint venture and the consolidated entity. The overdraft was unused at 30 September 2011 but an interest rate of 10.41% was chargeable on overdrawn balances.

The carrying amounts of assets pledged as security for the registered mortgage debenture are:
Cash and cash equivalents assets		26,162,953		27,205,691		3,119,293		2,527,774
Trade and other receivables		36,779,458		36,205,486		36,331,187		35,807,318
Inventories		22,499,902		22,503,626		22,499,902		22,503,626
Prepayments		922,226		727,708		843,002		671,674
Receivables		—		—		10,701,395		9,926,160
Financial assets		495,252		409,245		40,853,792		40,853,792
Property, Plant & Equipment		1,606,649		2,297,720		1,149,926		1,388,650
Deferred tax assets		683,237		897,520		n/a		n/a
Intangible assets		30,469,175		30,467,403		50,015		48,243

Total assets		119,618,852		120,714,399		115,548,512		113,727,237

Note 27 Economic Dependence

A significant portion of the consolidated entity’s trading products are supplied by Shachihata, Inc., Japan.

Note 28 Events after Balance Date

Since the end of the year cash distributions of $1,164,812 in total have been made to the joint venture parties.

Apart from the matter referred to above, no matters or circumstances have arisen since the end of the year which significantly affected or may significantly affect the operations of the joint venture, the results of those operations or the state of affairs of the joint venture in future financial years.

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated						Parent
	2011			2010			2011			2010
	$			$			$			$

Note 29 Cash Flow Information

Reconciliation of profit after income tax to net cash inflow from operating activities:
Profit after income tax		18,757,160			20,213,615			11,569,365			12,972,701

Adjustments for:
Depreciation		613,395			671,172			367,257			350,860
Net loss on disposal of plant and equipment		144,297			63,090			2,042			6,862
Impairment provision - receivables		(62,499	)		—			(62,499	)		—
Employee benefits - provision		488,812			(71,145	)		286,813			46,854

Changes in assets and liabilities
Decrease (increase) in trade and other receivables		(556,333	)		(952,963	)		(461,370	)		(874,686	)
Decrease (increase) in current tax assets		44,860			—			—			—
Decrease (increase) in inventories		3,724			(1,653,123	)		3,724			(1,653,123	)
Decrease (increase) in prepayments		(194,518	)		44,389			(171,328	)		42,986
Decrease (increase) in deferred tax assets		214,283			548,945			—			—
Increase (decrease) in trade and other payables		(2,591,461	)		3,807,102			(6,300,246	)		(409,903	)
Increase (decrease) in current tax liabilities		270,569			1,149,286			—			—
Increase (decrease) in deferred tax liabilities		35,905			90,832			—			—

Net cash flows from operating activities		17,168,194			23,911,200			5,233,758			10,482,551

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011


	Consolidated				Parent
	2011		2010		2011			2010
	$		$		$			$
Note 30 Related Party Transactions

Parent and controlled entities
The consolidated entity consists of the parent entity, Pelikan Artline Joint Venture and its controlled entities Spirax Holdings Pty Limited, Spirax Industries Pty Limited, Spirax Office Products Pty Limited, Spirax Holdings NZ Limited, Spirax New Zealand Limited, Geoff Penney (Australia) Pty Limited, Custom Xstamper Australia Pty Limited and Pelikan Artline Limited.

Loans from related parties
Aggregate amounts payable to related parties at reporting date:-

Loans unsecured (current) - controlled entities						7,485,518			5,373,516
Loans unsecured (non-current) - controlled entities						31,541,045			23,935,548

						39,026,563			29,309,064


Loans to related parties
Aggregate amounts receivable from related parties at reporting date:-

Loans unsecured (non-current) - controlled entities						10,701,395			9,926,160

						10,701,395			9,926,160


Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Transactions between the parent entity and its controlled entities during the year consisted of:-

Payment of interest on the above loans						(1,623,938	)		(1,445,435	)
Receipt of interest on the above loans						775,235			719,370
Receipt of dividends						4,086,923			4,074,561
Recovery of overheads						(9,701,491	)		(10,081,537	)
Distribution fee						(13,905,155	)		(15,070,348	)

Key management personnel compensation		3,975,948		2,869,670		3,975,948			2,869,670

Purchase of inventory from joint venture partner related parties						(1,450,225	)		(2,051,014	)

Recovery of administration and accounting services provided to a joint venture partner						60,000			60,000

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

	36,779,458000	36,779,458000	36,779,458000	36,779,458000
	Consolidated		Parent
	2011	2010	2011	2010
	$	$	$	$

Note 30 Related Party Transactions (continued)

Guarantees provided to related parties
Refer to note 26 for assets pledged as security by related parties

Note 31 Financial Risk Management

The consolidated entity’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, loans to and from subsidiaries and leases.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows:

	36,779,458	36,779,458	36,779,458	36,779,458

*Financial assets*
Cash and cash equivalents (refer note 6)	26,162,953	27,205,691	3,119,293	2,527,774
Trade and other receivables (refer note 7)	36,779,458	36,205,486	47,032,582	45,733,478
Other financial assets (refer note 10)	495,252	409,245	40,853,792	40,853,792

	63,437,663	63,820,422	91,005,667	89,115,044

*Financial Liabilities*
Trade and other payables (refer note 14 & 17)	27,781,809	30,371,498	65,717,106	58,618,379
Other loans and borrowings (refer note 16 & 18)	18,000,000	23,000,000	18,000,000	23,000,000

	45,781,809	53,371,498	83,717,106	81,618,379

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

Note 32 Additional Information - Unaudited

The following additional financial data is in accordance with the books and records of the consolidated entity which have been subjected to the auditing procedures applied by the auditors of the consolidated entity’s financial report for the year ended 30 September 2009.

The audit of the financial report for the year ended 30 September 2009 did not cover all details of this additional financial data, which does not form part of the financial report. Accordingly, the auditor of the company’s financial report does not express an audit opinion on such financial data and no warranty of accuracy or reliability is given.


*(a) Statement of Comprehensive Income for the year ended 30 September 2009*	Consolidated			Parent
	2009			2009
	$			$
Revenue
Revenue
Sales net of discounts and rebates allowed		121,870,757			118,551,554


Other revenue
Dividend received		5,796			3,726,387
Interest received		468,900			810,037
Other operating revenue		175,536			175,536

		650,232			4,711,960

Total revenue		122,520,989			123,263,514


Expenses
Purchases, distribution & selling		(94,171,886	)		(83,834,592	)
Marketing		(11,582,511	)		(11,419,743	)
Administration, IT & other expenses		(866,735	)		(18,375,427	)
Finance costs		(1,731,901	)		(3,731,221	)

		(108,353,033	)		(117,360,983	)

Profit before income tax		14,167,956			5,902,531
Income tax expense		(2,768,432	)		—

Profit for the year		11,399,524			5,902,531


Other Comprehensive Income
Available for sale financial assets		48			—


Other comprehensive income for the year, net of tax		48			—

Total comprehensive income for the year		11,399,572			5,902,531


Profit attributable to:
Owners of the parent entity		9,976,669			5,902,531
Minority interest		1,422,855			—

		11,399,524			5,902,531

Total comprehensive income attributable to:
Owners of the parent entity		9,976,708			5,902,531
Minority interest		1,422,864			—

		11,399,572			5,902,531

PELIKAN ARTLINE JOINT VENTURE

and Controlled Entities

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 SEPTEMBER 2011

Note 32 Additional Information - Unaudited (continued)


*(b) Statement of Cash Flows for the year ended 30 September 2009*	Consolidated			Parent
	2009			2009
	$			$
Cash Flows From Operating Activities
Receipts from customers (inclusive of GST)		138,177,055			123,011,940
Payments to suppliers and employees (inclusive of GST)		(124,435,064	)		(126,021,019	)
Dividend received		5,796			3,732,183
Interest received		437,342			787,752
Finance costs		(1,693,966	)		(3,002,454	)
Income tax paid		(5,287,633	)		—

Net cash flows from operating activities (note 32(c))		7,203,530			(1,491,598	)


Cash Flows From Investing Activities
Purchase of property, plant and equipment		(219,861	)		(220,174	)
Proceeds from sale of property, plant and equipment		7,255			7,163
Purchase of subsidiary		19,245,050			(10,500,000	)
Loans to related party		—			(8,745,050	)

Net cash flows from investing activities		19,032,444			(19,458,061	)


Cash Flows From Financing Activities
Proceeds from borrowings		21,000,000			21,000,000
Repayment of borrowings		(4,000,000	)		(4,000,000	)
Loans from related parties (net)		—			9,480,393
Profit distributions paid		(10,245,054	)		(10,245,054	)
Dividends paid		(921,522	)		—

Net cash flows from financing activities		5,833,424			16,235,339


Net decrease in cash and cash and cash equivalents		(6,420,702	)		(4,714,320	)
Cash and cash equivalents at the beginning of the year		24,983,418			16,873,275

Cash and cash equivalents at the end of the year		18,562,716			12,158,955


*(c) Reconciliation of profit after income tax to net cash inflow from operating activities:*

Profit after income tax		11,399,524			5,902,531

Adjustments for:
Depreciation		729,565			329,151
Net gain on disposal of plant and equipment		82,995			11,848
Impairment provision - receivables		(253,212	)		(253,212	)
Employee benefits - provision		355,114			105,114

Changes in assets and liabilities
Decrease in trade and other receivables		(161,116	)		(8,584,824	)
Increase in inventories		4,036,879			(415,121	)
Increase in prepayments		456,498			372,980
Increase in deferred tax assets		(1,112,359	)		—
Increase in trade and other payables		(6,923,516	)		1,039,935
Increase in current tax liabilities		(1,417,390	)		—
Decrease in deferred tax liabilities		10,548			—

Net cash flows from operating activities		7,203,530			(1,491,598	)