Notes to the consolidated financial statements 30 June 2022 (continued) 19 Reserves and retained earnings (continued) (a) Reserves (continued) (ii) Nature and purpose of reserves Distributable profits reserve The distributable profits reserve is used to record profits generated by the parent entity, IGO Limited, for the purpose of future dividend distributions by the Company. Profits of $330.9 million were transferred to the reserve in the current year (2021: $483.2 million), as approved by a resolution of the Directors. Hedging reserve The hedging reserve is used to record gains or losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss. Share-based payments reserve The share-based payments reserve is used to record the value of share-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to note 29 for further details of these plans. Financial assets at fair value through other comprehensive income (FVOCI) The Group has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income, as explained in note 10(b). These changes are accumulated within the FVOCI reserve within equity. The Group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised. Foreign currency translation reserve Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. Other reserve The other reserve is used to record the Group's share of other changes in the equity of associates. (b) Retained earnings Movements in retained earnings were as follows: Notes 2022 $M 2021 $M Balance at beginning of financial year 45.8 9.8 Net profit for the year 330.9 548.7 Dividends paid during the year 20 - (29.5) Transfer to distributable profits reserve 19(a) (330.9) (483.2) Balance at end of financial year 45.8 45.8 Notes to the consolidated financial statements 30 June 2022 (continued) 20 Dividends paid and proposed (a) Ordinary shares 2022 $M 2021 $M Final dividend for the year ended 30 June 2021 of 10 cents (2020: 5 cents) per fully paid share 75.7 29.5 Interim dividend for the year ended 30 June 2022 of 5 cents (2021: nil cents) per fully paid share 37.9 - Total dividends paid during the financial year 113.6 29.5 The dividends paid during the current year were paid out of the Distributable profits reserve (refer note 19(a)). (b) Dividends not recognised at the end of the reporting period 2022 $M 2021 $M In addition to the above dividends, since year end the Directors have recommended the payment of a final dividend of 5 cents per fully paid ordinary share, fully franked (2021: 10 cents per fully paid ordinary share, fully franked). The aggregate amount of the proposed dividend expected to be paid on 30 September 2022 out of the distributable profits reserve at 30 June 2022, not recognised as a liability at year end, is: 37.9 75.7 (c) Franked dividends The final dividends recommended after 30 June 2022 will be fully franked out of existing franking credits, or out of franking credits arising from the payment of income tax in the year ending 30 June 2023. 2022 $M 2021 $M Franking credits available for subsequent reporting periods based on a tax rate of 30.0% (2021: 30.0%) 225.7 172.5 The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for franking credits and debits that will arise from the settlement of liabilities or receivables for income tax and dividends after the end of the year. The impact on the franking account of the dividend recommended by the Directors since the end of the reporting period, but not recognised as a liability at the reporting date, will be a reduction in the franking account of $16.2 million (2021: $32.5 million). (d) Recognition and measurement Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. A provision for dividends is not recognised as a liability unless the dividends are declared, determined or publicly recommended on or before the reporting date. Notes to the consolidated financial statements 30 June 2022 Notes to the consolidated financial statements 30 June 2022 124 — IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022 — 125
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