Notes to the consolidated financial statements 30 June 2022 (continued) 26 Interests in associates (continued) (b) Recognition and measurement Equity method Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses of the investee in profit or loss, and the Group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. Where the Group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 34. (c) Key estimates and judgements Control exists where the parent entity is exposed or has the rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Power over the investee exists when it has existing rights to direct the relevant activities of the investee which are those which significantly affect the investee’s returns. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Significant influence exists if the Group holds 20% or more of the voting power of an investee, and has the power to participate in the financial and operating policy decisions of the entity. Estimates and judgements are required by the Group to consider the existence of control, joint control or significant influence over an investee. The Group has considered its investment in TLEA and the rights and obligations contained within the Investment Agreement concluding the Group has significant influence but not control or joint control. Notes to the consolidated financial statements 30 June 2022 (continued) Other information This section of the notes includes other information that must be disclosed to comply with the accounting standards and other pronouncements, but are not considered critical in understanding the financial performance or position of the Group. 27 Commitments and contingencies (a) Capital commitments Significant capital expenditure contracted for at the end of the reporting year but not recognised as liabilities is as follows: 2022 $M 2021 $M Corporate office fitout - 4.8 Cosmos Project mine development expenditure 82.8 - 82.8 4.8 (b) Contingencies The Group had guarantees outstanding at 30 June 2022 totalling $1.7 million (2021: $1.5 million) which have been granted in favour of various third parties. The guarantees primarily relate to environmental and rehabilitation bonds at the various mine sites. 28 Events occurring after the reporting period On 29 August 2022, the Company resolved to pay a fully franked final dividend of 5 cents per share, to be paid on 30 September 2022. Other than the above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years, other than as stated elsewhere in the financial report. 29 Share-based payments The Group provides benefits to employees (including executive directors) of the Group through share-based incentives. Information relating to these schemes is set out below. (a) Employee Incentive Plan The IGO Limited Employee Incentive Plan (EIP) was approved by shareholders at the Annual General Meeting of the Company in November 2019. The EIP incorporates both broad based equity participation for eligible employees, as well as key executive incentive schemes designed to provide long-term incentives to senior management (including executive directors) to deliver long-term shareholder returns. The EIP comprised the following schemes during the current financial year: • Long-term incentive (LTI) - performance rights; • Short-term incentive (STI) - service rights; • Employee share ownership award; and • Employee salary sacrifice share plan. Notes to the consolidated financial statements 30 June 2022 Notes to the consolidated financial statements 30 June 2022 142 — IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022 — 143
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