IGO Interactive Annual Report 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2020 (continued) 9 Inventories (continued) (c) Key estimates and judgements (continued) Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the amount of contained metal based on assay data, and the estimated recovery percentage based on the expected processing method. 10 Financial assets at fair value through profit or loss 2020 $'000 2019 $'000 Shares in listed companies - at fair value through profit or loss 107,759 27,531 107,759 27,531 (i) Amounts recognised in profit or loss Changes in fair values of financial assets at fair value through profit or loss are recorded in fair value movement of financial investments in the profit or loss. During the current year, the changes in fair values of financial assets resulted in a gain to the profit or loss of $33,207,000 (2019: loss of $6,915,000). (ii) Recognition and measurement The Group classifies financial assets at fair value through profit or loss if they are acquired principally for the purpose of selling in the short term, ie are held for trading. They are presented as current assets if they are expected to be sold within 12 months after the end of the reporting period; otherwise they are presented as non-current assets. Refer to note 22(d) for fair value measurement. 11 Trade and other payables 2020 $'000 2019 $'000 Current liabilities Trade and other payables 53,013 49,902 53,013 49,902 (a) Recognition and measurement These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. IGO Limited 22 Notes to th nsolidated financial statement 30 Jun 2020 (continued) 12 Provisions 2020 $'000 2019 $'000 Current Provision for employee entitlements 7,058 5,180 7,058 5,180 2020 $'000 2019 $'000 Non-current Provision for employee entitlements 2,042 1,185 Provision for rehabilitation costs 66,599 62,441 68,641 63,626 (a) Movements in provisions Movements in the provision for rehabilitation costs during the financial year are set out below: 2020 $'000 2019 $'000 Carrying amount at beginning of financial year 62,441 61,267 Additional provision 3,567 5,564 Rehabilitation and restoration borrowing costs expense 869 1,416 Payments during the period (278) (122) Disposal of subsidiary - (4,497) Write-back of provision - (1,187) Carrying amount at end of financial year 66,599 62,441 (b) Recognition and measurement Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Movements in the provision for rehabilitation costs during the financial year are set out below: 2020 $'000 2019 $'000 Carrying amount at beginning of financial year 62,441 61,267 Additional provision 3,567 5,564 Rehabilitation and restoration borrowing costs expense 869 1,416 Payments during the period (278) (122) Disposal of subsidiary - (4,497) Write-back of provision - (1,187) Carrying amount at end of financial year 66,599 62,441 (b) Recognition and measurement Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. (i) Rehabilitation and restoration Long-term environmental obligations are based on the Group’s environmental management plans, in compliance with current environmental and regulatory requirements. Full provision is made based on the net present value of the estimated cost of rehabilitating and restoring the environmental disturbance that has occurred up to the reporting date. To the extent that future economic benefits are expected to arise, these costs are capitalised and amortised over the remaining lives of the mines. Annual increases in the provision relating to the change in the net present value of the provision are recognised as finance costs (and disclosed within Borrowing and finance costs in the profit or loss). The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Cost estimates are not reduced by the potential proceeds from the sale of assets or from plant clean-up at closure. (ii) Employee benefits The provision for employee benefits represents annual leave and long service leave entitlements accrued by employees. IGO Limited 23 Notes to the consolidated financial statements 30 June 2020 (continued) 12 Provisions (continued) ( ) iti r t (continued) (ii) Employee benefits (continued) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 m nths after the end of the p riod in which the employees rend r the related service, are recognised in respect of employees’ services up to the end of the reporting period and are measured at the a ounts expected to be p id when the liabiliti s are settl d. The amount are present d as current e ployee entitl ments in the balance sheet. Other long-term employ e benefit obligations The liabiliti s for long service leave and annual leave that are not expected to be settl d wholly withi 12 months after the d of the period in which the employees r der the related service are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period. 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 end of the reporting period of government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurement as a result of exp rie ce adjustme ts and cha ges in actuarial assumptions are recognised n profit or loss. The obligations are presented as current liabilities in the consolidated balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. (c) Key estimates and judgements Rehabilitation and restoration provisions The provision for rehabilitation and restoration costs is based on the net present value of the estimated cost of rehabilitating and restoring the environmental disturbance that has occurred up to the reporting date. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Long service leave Long service leave is measured at the present value of benefits accumulated up to the end of the reporting period. The liability is discounted using an appropriate discount rate. Management requires judgement to determine key assumptions used in the calculation, including future increases in salaries and wages, future on-costs rates and future settlement dates of employees' departures. IGO Limited 24 Notes to the consolidated financial statements 30 June 2020 (continued) 12 Provisions (continued) (b) Recognition and measurement (continu d) (ii) Employee benefits (continued) Short-term obligations Liabiliti s for wages and alaries, including no -monetary benefits that ar expected to be s ttled wholly within 12 months after the end of the period in which t mployees render the related service, are recogni ed in respect of employees’ services up to the end of the reporti peri d a d are measured at the amounts expected to be paid whe the liabilities are settled. The amounts are pr sented as current employe entitl ments i the balance sheet. Other long-term employee benefit obligations The liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the end of th period in which the employees render the related service are measured as the present value of expected future payments to be made in respect of servic s provided by e ploy es up to the end of the reporting period. Consideration is giv n to expected future wage and salary l vels, exp ri ce of employee departures and periods of service. Expected future p yments are discounted usi g m rket yields at the end of the reporting period of government bonds with t rms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as current liabilities in the consolidated balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. (c) Key estimates and judgements Rehabilitation and restoration provisions The provision for rehabilitation and restoration costs is based on the net present value of the estimated cost of rehabilitating and restoring the environmental disturbance that has occurred up to the reporting date. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate liability payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Long service leave Long service leave is measured at the present value of benefits accumulated up to the end of the reporting period. The liability is discounted using an appropriate discount rate. Management requires judgement to determine key assumptions used in the calculation, including future increases in salaries and wages, future on-costs rates and future settlement dates of employees' departures. 92 — IGO ANNUAL REPORT 2020 IGO ANNUAL REPORT 2020— 93