IGO Interactive Annual Report 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2019 Notes to the consolidated financial statements 30 June 2019 (continued) 30 Summary of significant accounting policies (continued) (a) New and amended standards and interpretations adopted by the Group (continued) • The Group sells a significant proportion of its products on Cost, Insurance and Freight (CIF) terms, which means that the Group is responsible for shipping the product to a destination port specified by the buyer. There is not a significant impact on the Group’s other commodity sales contracts under AASB 15. Under the Group's prior period accounting policy, the Group recognised the total contract revenue when there was persuasive evidence indicating that there has been a transfer of risks and rewards to the customer, typically on the bill of lading date when the concentrate is delivered to the ship and the related shipping costs were recognised in full at that point. Under AASB 15, the sale of the concentrate is recognised when control has passed to the customer, which is upon loading onto the ship or delivered to the customer’s premises. The revenue recognised in relation to the sale of the concentrate is priced at the amount for which it is expected to be highly probable of not reversing. The shipping and insurance service represents a separate performance obligation, being recognised separately from the sale of the concentrate over the period the shipping and insurance service is provided. • The Group’s nickel and copper concentrate sales contracts provide for provisional pricing of sales at the time the product is delivered to the vessel, with final pricing determined using the relevant metal price index on or after the vessel’s arrival to the port of discharge. The provisional pricing related to the quality and quantity of the commodity sold is included in sales revenue. The provisional pricing related to the pricing of the commodity sold is an embedded derivative which is accounted for in accordance with AASB 9 Financial Instruments. Following the adoption of AASB 15, provisional pricing adjustments to revenue relating to the embedded derivative are separately identified as movements in the financial instrument and disclosed separately as Provisional pricing adjustments in Other revenue, rather than being included within Sales revenue. New Revenue Accounting Policy Revenue from Sale of Goods Revenue is recognised when control of the goods has passed to the buyer based upon agreed delivery terms. For sales of concentrate, this is when the product is loaded onto the ship or delivered to the customer’s premises. In cases where control of product is transferred to the customer before shipping takes place, revenue is recognised when the customer has formally acknowledged their legal ownership of the product, which includes all inherent risks associated with control of the product. In these cases, the product is clearly identified and immediately available to the customer. The price to be received on sales of concentrate is provisionally priced and recognised at the estimate of the consideration receivable that is highly probable of not reversing by reference to the relevant contractual price and the estimated mineral specifications. Subsequently, provisionally priced sales are repriced at each reporting period up until when final pricing and settlement is confirmed, with revenue adjustments relating to the quality and quantity of commodities sold being recognised in sales revenue. Provisionally priced sales for which price finalisation is referenced to the relevant metal price index have an embedded commodity derivative. The embedded derivative is carried at fair value through profit or loss as part of trade receivables. The period between provisional pricing and final invoices is approximately 30 to 90 days. Revenue from Services - Shipping and Insurance Sales of nickel and copper concentrates are on terms that include the Group being responsible for shipping and insurance costs. Shipping and insurance is a separate performance obligation from the sale of the commodity with the revenue allocated to shipping and insurance being recognised over the period of transfer to the customer. Application of new and revised Australian Accounting Standards The Group adopted AASB 15 using the retrospective method. The nature and effect of these disclosures changes are shown below. Independence Group NL 61 120 — IGO ANNUAL REPORT 2019