Notes to the consolidated financial statements 30 June 2022 (continued) 18 Contributed equity (continued) (c) Capital management (continued) The Company's capital management framework aims to respond to a dynamic commodity and investment cycle. To this end, the goals of the framework are to: • Ensure that the Company's operations are able to generate cash flows safely, at appropriate margins, and according to plan; • Provide a buffer from future potential adverse price movements as a result of the Company operating in a cyclical commodity price environment; • Raise and repay debt and invest in growth and replenish and acquire new assets; and • Raise capital and to repay capital to shareholders by way of dividends or capital returns in accordance with the Company's shareholder returns policy. The policy targets the return of 15 to 25 percent of underlying free cash flow to shareholders whenever liquidity (comprising primarily cash and undrawn available debt facilities) is less than $500.0 million. When liquidity is in excess of $500.0 million, further discretion will be applied by the Board to return a greater proportion of cash to shareholders. The policy remains generally at the discretion of the Board, noting however that it expects to consistently pay dividends over the near to medium term and that these dividends will be frankable based on the expected ongoing payment of tax by the Company, together with the expectation of franked dividends from its investment in the Lithium joint venture. None of the Group’s entities are currently subject to externally imposed capital requirements. There were no changes in the Group’s approach to capital management during the year. (d) Recognition and measurement (i) Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. Every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (ii) Treasury shares Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. 19 Reserves and retained earnings (a) Reserves 2022 $M 2021 $M Distributable profits reserve 700.5 483.2 Financial assets at fair value through other comprehensive income (1.4) - Hedging reserve 8.2 1.9 Share-based payments reserve 23.4 20.4 Foreign currency translation reserve 14.6 - Other reserves 2.3 - 747.6 505.5 Notes to the consolidated financial statements 30 June 2022 (continued) 19 Reserves and retained earnings (continued) (a) Reserves (continued) (i) Movements in reserves The following table shows a breakdown of the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table. Distributable profits reserve $M Hedging reserve $M Sharebased payments reserve $M Financial assets at FVOCI $M Foreign currency translation reserve $M Other reserve $M Total $M Balance at 1 July 2021 483.2 1.9 20.4 - - - 505.5 Revaluation - gross - 11.7 - (2.0) - - 9.7 Deferred tax - (3.5) - 0.6 - - (2.9) Transfer to profit or loss - gross - (2.7) - - - - (2.7) Deferred tax - 0.8 - - - - 0.8 Share-based payment expenses - - 6.3 - - - 6.3 Issue of shares under the Employee Incentive Plan - - (3.3) - - - (3.3) Transfer of 2022 profits from retained earnings 330.9 - - - - - 330.9 Dividends paid during the period (113.6) - - - - - (113.6) Share of other comprehensive income of associate - - - - 14.6 - 14.6 Share of other equity of associate - - - - - 2.3 2.3 Balance at 30 June 2022 700.5 8.2 23.4 (1.4) 14.6 2.3 747.6 Balance at 1 July 2020 - 0.2 18.7 - - - 18.9 Revaluation - gross - 2.4 - - - - 2.4 Deferred tax - (0.7) - - - - (0.7) Share-based payment expenses - - 4.9 - - - 4.9 Issue of shares under the Employee Incentive Plan - - (3.2) - - - (3.2) Transfer of 2021 profits from retained earnings 483.2 - - - - - 483.2 Balance at 30 June 2021 483.2 1.9 20.4 - - - 505.5 Notes to the consolidated financial statements 30 June 2022 Notes to the consolidated financial statements 30 June 2022 122 — IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022 — 123
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