REG - Jupiter Energy - Final Results <Origin Href="QuoteRef">JPR.AX</Origin> - Part 2
30/09/2016 09:45
- Part 2: For the preceding part double click ID:nRSd3263La
- -
A Beardsall 2,500,000 - - (2,500,000) - - -
B Kuandykov 2,500,000 - - (2,500,000) - - -
S Mison 575,000 - - (575,000) - - -
Option Holdings
There were no options held by, granted to or exercised by Key Management Personnel during the financial years ended 30 June
2016 or 30 June 2015.
REMUNERATION REPORT (Audited) (continued)
Details of remuneration (Audited)
Remuneration of Directors and Executives (continued)
Service agreements
Remuneration and other terms of employment for the Executive Chairman/CEO, Company Sec/CFO, and all other key management
positions held in Kazakhstan have been formalised in service agreements. The main provisions of the agreements in relation
to Directors holding management roles are set out below.
Geoff Gander, Executive Chairman (Effective - 30 May 2016)
Base Terms
· This agreement was effective from 30 May 2016 and has no set term.
· Base Salary of GBP200,000 (A$360,000) including Director Fees and the current Superannuation Levy of 9.5%.
· Living expenses of GBP 85,000 (A$155,000) per year, covering the cost of an apartment/office in London.
· Director fees of A$3,333 per month (included in Base Salary figure above), deferred until such time that at least
US$5,000,000 in new equity is raised or alternatively the Group sells the Block 31 licence and receives the funds
associated with that sale.
The termination provisions are as follows:
Notice period Payment in lieu of notice
Contractor - initiated termination with reason or for Contractor incapacitation 1 month 12 months
Company - initiated termination without reason 12 months 12 months
Company - initiated termination for serious misconduct None None
Contractor - initiated termination without reason 12 months 12 months
Contractor - initiated termination with reason 30 days 12 months
Scott Mison, CFO / Company Secretary / Executive Director (Effective - 1 June 2015)
Base Terms
· This agreement is effective from 1 June 2015. The term is on a rolling month basis.
· CFO / Company Secretary Fees of $6,500 per month.
· Director fees of $2,500 per month, deferred until such time that at least US$5,000,000 in new equity is raised or
alternatively the Group sells the Block 31 licence and receives the funds associated with that sale.
The termination provisions are as follows:
Notice period Payment in lieu of notice
Contractor - initiated termination with reason 1 or 3 months 1 or 3 months
Contractor - initiated termination without reason 3 months 3 months
Termination for serious misconduct None None
Contractor - initiated termination 1 or 3 months None
End of Remuneration Report (Audited)
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group has entered into Deeds of Indemnity with the Directors, indemnifying them against certain liabilities and costs
to the extent permitted by law.
The Group has also agreed to pay a premium in respect of a contract insuring the Directors and Officers of the Group
against certain liabilities and costs to the extent permitted by law. Full details of the cover and premium are not
disclosed as the insurance policy prohibits the disclosure.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Group has agreed to indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young during or since the financial year.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Jupiter
Energy Limited adhere to strict principles of corporate governance. The Group's corporate governance statement is included
on page 21 of this annual report.
AUDITOR INDEPENDENCE
The Directors received the declaration included on page 27 of this annual report from the auditor of Jupiter Energy
Limited.
NON-AUDIT SERVICES
There were no non-audit services provided by the entity's auditors, Ernst & Young during the year.
This report has been made in accordance with a resolution of the Directors.
G A Gander
Director
Perth, Western Australia
30 September 2016
CORPORATE GOVERNANCE STATEMENT
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Jupiter
Energy adhere to strict principles of corporate governance.
The Board of Directors of Jupiter Energy Limited is responsible for the overall corporate governance of the consolidated
entity, guiding and monitoring the business and affairs of Jupiter Energy on behalf of the shareholders by whom they are
elected and to whom they are accountable.
The Group's corporate governance principles and policies are structured with reference to the Corporate Governance Councils
best practice recommendations, which are as follows:
Principle 1. Lay solid foundations for management and oversight
Principle 2. Structure the Board to add value
Principle 3. Act ethically and responsibly
Principle 4. Safeguard integrity in corporate reporting
Principle 5. Make timely and balanced disclosure
Principle 6. Respect the rights of shareholders
Principle 7. Recognise and manage risk
Principle 8. Remunerate fairly and responsibly
The Board's Corporate Governance Charter includes procedures for compliance with the ASX Listing Rules continuous
disclosure requirements, trading in the Group's securities, the management of risk, and a Code of Conduct. Jupiter Energy's
corporate governance practices were in place throughout the year ended 30 June 2016.
BOARD OF DIRECTORS
Role of the Board
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies,
practices, management and operations of the Group. It is required to do all things that may be necessary to be done in
order to carry out the objectives of the Group.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board
include the following:
· To set the strategic direction for the Group and monitor progress of those strategies;
· Establish policies appropriate for the Group;
· Monitor the performance of the Group, the Board and management;
· Approve the business plan and work programmes and budgets;
· Authorise and monitor investment and strategic commitments;
· Review and ratify systems for health, safety and environmental management; risk and internal control; codes of
conduct and regulatory compliance;
· Report to shareholders, including but not limited to, the Financial Statements of the Group; and
· Take responsibility for corporate governance.
CORPORATE GOVERNANCE STATEMENT (continued)
Composition of the Board
To add value to the Group the Board has been formed so that it has effective composition, size and commitment to adequately
discharge its responsibilities and duties given its current size and scale of operations.
The names of Directors of the Group in office at the date of this statement are set out in the Directors' Report.
Information regarding Directors' experience and responsibilities are included in the Directors' Report section of this
Annual Report.
The number of Directors is specified in the Constitution of the Group as a minimum of three up to a maximum of ten.
The preferred skills and experiences for a Director of the Group include:
· Exploration for oil and gas accumulations;
· Development and production operations of hydrocarbon accumulations;
· Financing of operations;
· Business Development; and
· Public Group financial reporting and administration.
Chairman of the Board
The Chairman of the Board should be a Non-Executive Director and the Chairman will be elected by the Directors. Mr. Geoff
Gander, however is an Executive Chairman and is not independent. Given his skills, experience and knowledge of the Group,
the Board considers that it is appropriate for him to be Chairman.
Independent Directors
The Board considers that a Director is independent if that Director complies with the following criteria:
· Apart from Director's fees and shareholding, independent Directors should not have any business dealings which could
materially affect their independent judgment;
· Must not have been in an Executive capacity in the Group in the last 3 years;
· Must not have been in an advisory capacity to the Group in the last 3 years;
· Must not be a significant customer or supplier for the Group;
· Must not be appointed through a special relationship with a Board member;
· Must not owe allegiance to a particular group of shareholders which gives rise to a potential conflict of interest;
· Must not hold conflicting cross Directorships; and
· Must not be a substantial shareholder or a nominee of a substantial shareholder (as defined under section 9 of the
Corporations Act).
Using the ASX Best Practice Recommendations on the assessment of the independence of Directors, the Board considers that of
a total of four Directors, only one is considered independent.
Mr. Geoff Gander is an Executive Chairman of the Group and is not considered to be independent. However, his experience and
knowledge of the Group makes his contribution to the Board such that it is appropriate for him to remain on the Board.
Mr. Baltabek Kuandykov is an independent Non-Executive Director of the Group. His oil industry experience, especially
within Kazakhstan, makes his contribution to the Board significant.
Mr. Scott Mison is an Executive Director / CFO / Company Secretary of the Group and is not considered to be independent.
However, his experience and knowledge of the Group makes his contribution to the Board such that it is appropriate for him
to remain on the Board.
CORPORATE GOVERNANCE STATEMENT (continued)
Retirement and Rotation of Directors
Retirement and rotation of Directors are governed by the Corporations Act 2001 and the Constitution of the Company. Each
year one third Directors must retire and offer themselves for re-election. Any casual vacancy filled will be subject to
shareholder vote at the next Annual General Meeting of the Company.
Independent Professional Advice
Each Director has the right to seek independent professional advice at the Group's expense after consultation with the
Chairman. Once received the advice is to be made immediately available to all Board members.
Access to Employees
Directors have the right of access to any employee. Any employee shall report any breach of corporate governance principles
or Group policies to a Director and/or Company Secretary/CFO who shall remedy the breach. If the breach is not rectified to
the satisfaction of the employee, they shall have the right to report any breach to an independent Director without further
reference to senior managers of the Group.
Insurance
The Directors review the requirements for insurance cover for the associated risks for its field operations, including
drilling, production and storage of hydrocarbons and other activities and procures insurance cover at levels and costs they
feel are appropriate.
Directors and officers insurance for Directors will be arranged by the Company at the Company's expense.
Share Ownership
Directors are encouraged to own Company shares.
Board Meetings
The following points identify the frequency of Board Meetings and the extent of reporting from management at the meetings:
· A minimum of four meetings are to be held per year;
· Other meetings will be held as required, meetings can be held by telephone link; and
· Information provided to the Board includes all material information on: operations, budgets, cash flows, funding
requirements, shareholder movements, broker activity in the Company's securities, assets and liabilities, disposals,
financial accounts, external audits, internal controls, risk assessment, new venture proposals, and health, safety and
environmental (HSE) reports.
The number of Directors' meetings and the number of meetings attended by each of the Directors of the Company during the
financial year are set out in the Directors' Report.
Board Performance Review
There was no evaluation conducted during the financial year.
CORPORATE GOVERNANCE STATEMENT (continued)
Other Areas for Board Review
· Reporting to shareholders and the market to ensure trade in the Company's securities takes place in an efficient,
competitive and informed market; and
· Insurance, both corporate and joint venture related insurances.
Board Committees
Audit Committee
The Company does not have an audit committee. The Board is of the opinion that due to the size of the Group, the functions
performed by an audit committee can be adequately handled by the full Board.
The CEO and the CFO declare in writing to the Board that the Group's financial statements for the year ended 30 June 2016
present a true and fair view, in all material aspects, of the Group's financial condition and operational results and are
in accordance with relevant accounting standards. This representation is made by the CEO and the CFO prior to the
Director's approval of the release of the annual and six monthly accounts. This representation is made after enquiry of,
and representation by, appropriate levels of management.
A non-executive Director meets with the Auditors without Executives present to go through the financial statements prior to
sign off on the accounts.
Jupiter Energy Limited has requested the external auditors to attend the annual general meeting to be available to answer
shareholders questions regarding the audit.
Nomination Committee
The Company does not have a nomination committee. The Board is of the opinion that due to the size of the Group, the
functions performed by a nomination committee can be adequately handled by the full Board.
Remuneration Committee
The Group does not have a remuneration committee. The Board is of the opinion that due to the size of the Group, the
functions performed by a remuneration committee can be adequately handled by the full Board.
Remuneration levels for Directors, Secretaries, Senior Executives of the Group, and relevant group Executives of the
consolidated entity ("the Directors and Senior Executives") are competitively set to attract and retain appropriately
qualified and experienced Directors and Senior Executives.
The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement
of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structures
take into account:
· the capability and experience of the Directors and Senior Executives;
· the Directors and Senior Executives ability to control the relevant segment/s' performance;
· the consolidated entity's performance including:
o the consolidated entity's earnings;
o the growth in share price and returns on shareholder wealth
· the amount of incentives within each Directors and Senior Executives remuneration
For details of remuneration paid to Directors and officers for the financial year please refer to the Directors' Report on
page 16.
CORPORATE GOVERNANCE STATEMENT (continued)
Risk Management
The risks involved in oil and gas exploration Group and the specific uncertainties for the Group continue to be regularly
monitored and the full Board of the Company meets on an annual basis to formally review such risks. All proposals reviewed
by the Board include a consideration of the issues and risks of the proposal.
The potential exposures, including financial, reputation, and HSE, with running the Group have been managed by the Board
and senior management in Kazakhstan who together have significant broad-ranging industry experience.
Additionally, it is the responsibility of the Board to assess the adequacy of the Group's internal control systems and that
its financial affairs comply with applicable laws and regulations and professional practices. The CEO and the CFO declare
in writing to the Board that the financial reporting risk management and associated compliance controls have been assessed
and found to be operating efficiently and effectively. This representation is made by the CEO and CFO prior to the
Director's approval of the release of the annual and six monthly accounts. This representation is made after enquiry of,
and representation by, appropriate levels of management.
PROMOTION OF ETHICAL AND RESPONSIBLE DECISION-MAKING
Code of Conduct
The goal of establishing the Jupiter Energy Limited as a significant Australian-based petroleum exploration and production
Company is underpinned by its core values of honesty, integrity, common sense and respect for people. The Group desires to
remain a good corporate citizen and appropriately balance, protect and preserve all stakeholders' interests.
The Board has adopted a Code of Conduct for Directors and employees of the Group. The Company's goal of achieving above
average wealth creation for our shareholders should be enhanced by complying with this Code of Conduct which provides
principles to which Directors and employees should be familiar and to which they are expected to adhere and advocate.
It is the responsibility of the Board to ensure the Group performs under this Code and for its regular review.
Diversity
The Board has not adopted a separate diversity policy, however is committed to workplace diversity and recognizes the
benefits arising from recruitment, development and retention of talented, diverse and motivated workforce. The Group is not
of a sufficient size to justify measurable objectives at this stage. As at 30 June 2016, there were four women in the
Groups workforce, one of which held key executive positions.
Trading in Company Securities by Directors, officers and employees
Trading of shares is covered by, amongst other things, the Corporations Act, the ASX Listing Rules, the AIM Listing Rules
and the KASE Listing Rules. The Board has established a Securities Trading Policy that establishes strict guidelines as to
when a Director, officer or an employee can deal in Company shares. The policy prohibits trading in the Company's
securities whilst the Directors, officer or employee is in the possession of price sensitive information.
For details of shares held by Directors and Officers please refer to the Directors' Report on page 3.
CORPORATE GOVERNANCE STATEMENT (continued)
SHAREHOLDER COMMUNICATION
The Board aims to ensure that shareholders and the general investing community have equal access to the Company's
information.
The Company has policies and procedures that are designed to ensure compliance with ASX, AIM and KASE Listing Rules
disclosure requirements and to ensure accountability at a senior management level for that compliance. This disclosure
policy includes processes for the identification of matters that may have material effect on the price of the Company's
securities, notifying them to the ASX and posting them on the Company's website.
The Group also has a strategy to promote effective communication with shareholders and encourage effective participation at
general meetings through a policy of open disclosure to shareholders, regulatory authorities and the broader community of
all material information with respect to the Group's affairs including, but not limited to:
· the activities of the Group;
· Conflicts of interest and related party transactions;
· Executive remuneration;
· The grant of options and details of Share Option and Performance Rights Plans;
· The process for performance evaluation of the Board, its committees, individual Directors and key managers;
· The link between remuneration paid to Directors and Executives and corporate performance; and
· The use of clear and concise text in all communications.
The following information is communicated to shareholders and available on the Company web site (www.jupiterenergy.com):
· The Annual Report and notices of meetings of shareholders;
· Quarterly reports reviewing the operations, activities and financial position of the Group;
· All documents that are released to the ASX, AIM and KASE are made available on the Company's website; and
· All other information on the Company's website is updated on an ongoing basis.
AUDITORS INDEPENDENCE DECLARATION
[INSERT AUDITORS INDEPENDENCE DECLARATION]
Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Note Consolidated
2016$ 2015$
Revenue - 3,896,359
Cost of sales - (3,478,951)
Gross profit - 417,408
Foreign exchange loss (1,101,692) (4,468,778)
Gain on extinguishment of convertible notes 17 282,672 -
(Loss) / Gain on derivative financial instrument (54) 227,788
General and administrative costs 4 (3,635,152) (3,238,047)
Impairment - (787,046)
Operating loss (4,454,226) (7,848,675)
Finance income 20,687 28,198
Finance costs (6,041,331) (3,161,784)
Loss before tax (10,474,870) (10,982,261)
Income tax expense 5 - -
Loss after income tax (10,474,870) (10,982,261)
Other comprehensive (loss)/income to be reclassified to profit or loss in subsequent periods net of tax
Foreign currency translation (27,468,783) 12,738,847
Total comprehensive (loss)/income for the period (37,943,653) 1,756,586
Earnings per share for loss attributable to the ordinary equity holders of the Group:
Basic loss per share (cents) 24 (6.81) (7.16)
Diluted loss per share (cents) 24 (6.81) (7.16)
The consolidated statement of comprehensive income is to be read in conjunction with the notes of the financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Note Consolidated
2016 2015
$ $
ASSETS
Current Assets
Cash and cash equivalents 6 663,446 1,613,560
Trade and other receivables 7 24,064 78,051
Other current assets 8 67,459 122,110
Inventories 9 17,886 68,535
Total Current Assets 772,855 1,882,256
Non-Current Assets
Trade and other receivables 7 2,787,367 4,842,743
Oil and gas properties 10 14,976,550 24,399,029
Plant and equipment 11 417,142 967,247
Exploration and evaluation expenditure 12 28,215,402 44,166,103
Other financial assets 13 387,732 640,238
Total Non-Current Assets 46,784,193 75,015,360
Total Assets 47,557,048 76,897,616
Current Liabilities
Trade and other payables 14 755,133 1,280,749
Deferred revenue 15 - 60,111
Derivative liability 17 - 1,612
Total Current Liabilities 755,133 1,342,472
Non-current Liabilities
Provisions 16 154,442 527,827
Other financial liabilities 17 42,936,226 33,372,417
Total Non-Current Liabilities 43,090,668 33,900,244
Total Liabilities 43,845,801 35,242,716
Net Assets 3,711,247 41,654,900
Equity
Contributed equity 18 85,633,935 85,633,935
Share based payment reserve 19 5,764,014 5,764,014
Foreign currency translation reserve 19 (26,303,650) 1,165,133
Accumulated losses (61,383,052) (50,908,182)
Total Equity 3,711,247 41,654,900
The consolidated statement of financial position is to be read in conjunction with the notes of the financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Note Consolidated
2016 2015
$ $
Cash flow from operating activities
Receipts from customers - 3,952,759
Payments to suppliers and employees (3,478,686) (7,870,285)
Interest received 20,687 28,198
Net cash flows (used in) operating activities 26 (3,457,999) (3,889,328)
Cash flows from investing activities
Payments for exploration and evaluation expenditure (279,759) (5,519,880)
Net Cash flows (used in) investing activities (279,759) (5,519,880)
Cash flows from financing activities
Proceeds from unsecured loan 2,803,474 9,141,370
Net cash flows from financing activities 2,803,474 9,141,370
Net (decrease) in cash held (934,284) (267,838)
Effects of exchange rate changes (15,830) 596,040
Cash at beginning of the year 1,613,560 1,285,358
Cash at end of the year 6 663,446 1,613,560
The statement of cash flows is to be read in conjunction with the notes of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Note Contributed Equity Share Based PaymentReserve Foreign Currency Translation Reserve Accumulated Losses Total
$ $ $ $ $
CONSOLIDATED
As at 1 July 2014 85,633,935 5,695,838 (11,573,714) (39,925,921) 39,830,138
Loss for the period - - - (10,982,261) (10,982,261)
Other comprehensive income 19 - - 12,738,847 - 12,738,847
Total comprehensive income - - 12,738,847 (10,982,261) 1,756,586
Transactions by owners recorded directly in equity:
Share based payments - 68,176 - - 68,176
At 30 June 2015 85,633,935 5,764,014 1,165,133 (50,908,182) 41,654,900
As at 1 July 2015 85,633,935 5,764,014 1,165,133 (50,908,182) 41,654,900
Loss for the period - - - (10,474,870) (10,474,870)
Other comprehensive loss 19 - - (27,468,783) - (27,468,783)
Total comprehensive loss - - (27, 468,783) (10, 474,870) (37,943,653)
Transactions by owners recorded directly in equity:
Share based payments - - - - -
At 30 June 2016 85,633,935 5,764,014 (26,303,650) (61,383,052) 3,711,247
The statements of changes in equity are to be read in conjunction with the notes of the financial statements.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016
1 CORPORATE INFORMATION
The financial report of Jupiter Energy Limited for the year ended 30 June 2016 was
authorised for issue in accordance with a resolution of the directors on 30 September
2016.
Jupiter Energy Limited is a Company limited by shares incorporated in Australia whose
shares are publicly traded on the Australian Stock Exchange, on London's AIM Market
(as CDI's) and on the Kazakh Stock Exchange. Jupiter Energy Limited is a for profit
entity.
The nature of the operations and principal activities of the Group are described in
the Directors Report on pages 2 to 11 of this report.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The 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. The financial report has also been prepared on a
historical cost basis except for certain financial instruments measured at fair
value. The financial report is presented in Australian dollars. The amounts
contained within this report have been rounded to nearest $1 (where rounding is
applicable) under the option available to the Company under ASIC Corporations
(Rounding in Financial/Directors' Report) Instrument 2016/191. Going Concern The
consolidated financial statements have been prepared on a going concern basis with
the Directors of the opinion that the Group can meet its obligations as and when they
fall due. At 30 June 2016 the Group has a current net asset position of $17,720 (30
June 2015: current asset position of $539,784). Based on current forecasts, the
Group has sufficient working capital, including its access to the remaining funding
under the Waterford Funding Framework, for the 12 months from the signing date of
this report based on its current Care & Maintenance budget. The Group is reviewing
its ongoing funding requirements for 2017 and beyond, to enable the Company to carry
out its 2017-2019 Work Program and develop Block 31 to the stage where export oil
sales are being achieved and further development of the field is self-funding.
Funding options may include the further issue of new equity, reserve based debt,
convertible debt or a combination of these and other funding instruments. The
Directors, after consultation with the major shareholders and debt providers, are
confident of being able to raise the required capital, but note that financing has
not been secured at the date of this report and that the recommencement of production
is dependent on a recovery in the Kazakh domestic oil price which is in turn linked
to an overall recovery in world oil prices. Should the Group not achieve the matters
set out above, there is uncertainty whether the Group would continue as a going
concern and therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts stated in the
financial report. The financial report does not include adjustments relating to the
recoverability or classification of the recorded assets amounts nor to the amounts or
classification of liabilities that might be necessary should the Group not be able to
continue as a going concern.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
(b) Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
From 1 July 2015, the Group has adopted the following Standards and Interpretations, mandatory for annual periods beginning on 1 July 2015. Adoption of these standards and interpretations did not have any significant effect on the financial position or performance of the Group:
AASB 2013-9 - Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments
AASB 2015-3 - Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
AASB 2015-4 - Amendments to Australian Accounting Standards - Financial Reporting Requirements for Australian Groups with a Foreign Parent
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
have not been adopted by the Group for the annual reporting period ending 30 June 2016. These are outlined in the following
table.
AASB 9 Financial Instruments AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version 1 January 2018 The group has not yet determined the financial impact of the change. 1 July 2018
supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in December
2010) and includes a model for classification and measurement, a single, forward
-looking 'expected loss' impairment model and a substantially-reformed approach to
hedge accounting. AASB 9 is effective for annual periods beginning on or after 1
January 2018. However, the Standard is available for early adoption. The own credit
changes can be early adopted in isolation without otherwise changing the accounting
for financial instruments. Classification and measurement AASB 9 includes
requirements for a simpler approach for classification and measurement of financial
assets compared with the requirements of AASB 139. There are also some changes made
in relation to financial liabilities.The main changes are described below.
AASB 9 (continued) Financial Instruments Financial assetsa. Financial assets that are debt instruments will be classified 1 January 2018 The group has not yet determined the financial impact of the change. 1 July 2018
based on (1) the objective of the entity's business model for managing the financial
assets; (2) the characteristics of the contractual cash flows.b. Allows an
irrevocable election on initial recognition to present gains and losses on
investments in equity instruments that are not held for trading in other
comprehensive income. Dividends in respect of these investments that are a return on
investment can be recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.c. Financial assets can be designated and
measured at fair value through profit or loss at initial recognition if doing so
eliminates or significantly reduces a measurement or recognition inconsistency that
would arise from measuring assets or liabilities, or recognising the gains and losses
on them, on different bases.Financial liabilitiesChanges introduced by AASB 9 in
respect of financial liabilities are limited to the measurement of liabilities
designated at fair value through profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the change in fair
value is to be accounted for as follows:► The change attributable to changes in
credit risk are presented in other comprehensive income (OCI)► The remaining
change is presented in profit or lossAASB 9 also removes the volatility in profit or
loss that was caused by changes in the credit risk of liabilities elected to be
measured at fair value. This change in accounting means that gains or losses
attributable to changes in the entity's own credit risk would be recognised in OCI.
These amounts recognised in OCI are not recycled to profit or loss if the liability
is ever repurchased at a discount.Impairment The final version of AASB 9 introduces a
new expected-loss impairment model that will require more timely recognition of
expected credit losses. Specifically, the new Standard requires entities to account
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