2021 Annual Report

Notes to the consolidated financial statements 30 June 2021 (continued) 2 Revenue (continued) (a) Recognition and measurement (continued) Sale of concentrates (continued) 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 generally between 30 to 90 days. (ii) 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. (iii) Provisional pricing adjustments The Group’s sales contracts may provide for provisional pricing of sales at the time the product is delivered to the vessel with final pricing determined using the index on or after the vessel’s arrival to the port of discharge. This provisional pricing relates to the quality and quantity of the commodity sold, which is included in sales revenue, and an embedded derivative relating to the pricing of the commodity sold. Provisional pricing adjustments relating to the embedded derivative are separately identified as movements in the financial instrument rather than being included within Sales revenue. The final pricing adjustment mechanism, being an embedded derivative, is separated from the host contract and recognised at fair value through profit or loss. These amounts are disclosed separately as Provisional pricing adjustments in Other revenue, rather than being included within Sales revenue for the Group. (iv) Interest revenue Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. (b) Key estimates and judgements Judgement is exercised in estimating variable consideration. This is determined by past experience with respect to the goods returned to the Group where the customer maintains a right of return pursuant to the customer contract or where goods or services have a variable component. Revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved. 3 Other income 2021 $'000 2020 $'000 From continuing operations Net foreign exchange gains 3,599 - Net gain on disposal of property, plant and equipment 67 1,602 Net gain on sale of investments - 1,965 3,666 3,567 IGO Limited 7 Notes to the consolidated financial statements 30 June 2021 (continued) 2 Revenue ( ontinued) (a) R c gnition and measurement (continued) Sale of concentrates (continued) Provisi nally priced sales for whi h p ic fin lisation is referenced to the relevant m tal price index have an embedde commodity derivative. The embedded d rivative is c rried at fair value through p fit or lo s as part of trade receivables. Th period between provision l pricing d final invoi es is generally between 30 to 90 days. ii) Revenue from Services - Shipping and Insurance Sales f nickel and copper concentrat s are on terms that includ the Group b ing responsib e for shipping and insura ce costs. Shipping and insurance is a sepa ate performanc obligation from the sale of t e commodity w th the reve ue allocated to shipping and insurance b ing rec gnised over the period of transfer to the customer. (iii) Provisional pricing adjustments The Group’s sales contracts may provide for provisional pricing of sales at the tim the product is delivered t the vessel with final pricing determined using t e index on or after the vessel’ rrival to th port of disch rge. This provisional pricing r lates to the quality and quantity of the commo ity sold, which is i cluded in sales revenue, and an embedded derivative relating to the pricing of the commodity sold. Provisional pricing adjustments relating to the embedded derivative are separately identified as movements in the financial instrument rather than being included within Sales rev nue. The final pri in adjustme t mechanism, bei an embedd d d rivativ , is separated from the host ontract and recognised a fair value through profit or loss. T se amounts ar disclos d s p rately as Provisional pri ing adjustmen s in Other rev nue, rather th n being included within Sales r venue for the Group. (iv) Interest revenue Interest r venue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. (b) Key estimates and judgements Judgement is exercised in estimating variable consideration. This is determined by past experience with respect to the goods returned to the Group where the customer maintains a right of return pursuant to the customer contract or where goods or services have a variable component. Revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved. 3 Other come 2021 $'000 2020 $' 00 From continuing operations Net foreign exchange gains 3,599 - Net gain on disposal of property, plant and equipment 67 1,602 Net gain on sale of investments - 1,965 3,666 3,567 IGO Limited 7 Notes to The Consolidated Financial Statements 30 June 2021 IGO ANNUAL REPORT 2021 — 85