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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Annual Report 2015 101
Notes to the consolidated financial statements
30 June 2015
2 Summary of significant accounting policies (continued)
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
(i) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an
original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value.
For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the
balance sheet.
(j) Trade receivables
Trade receivables are generally received up to four months after the shipment date. The receivables are initially
recognised at fair value.
Trade receivables are subsequently revalued by the marking-to-market of open sales. The Group determines
mark-to-market prices using forward prices at each period end for copper and zinc concentrates and nickel ore.
Collectibility of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible
are written off when identified. An impairment provision is recognised when there is objective evidence that the Group
will not be able to collect the receivable. Financial difficulties of the debtor or default payments are considered objective
evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present
value of estimated future cash flows, discounted at the original effective interest rate.
(k) Inventories
(i)
Ore, concentrate and gold inventories
Inventories, comprising copper and zinc in concentrate, gold dore, gold in circuit and ore stockpiles, are valued at the
lower of weighted average cost and net realisable value. Costs include fixed direct costs, variable direct costs and an
appropriate portion of fixed overhead costs. A portion of the related depreciation, depletion and amortisation charge is
included in the cost of inventory.
(ii)
Stores and fuel
Inventories of consumable supplies and spare parts are valued at the lower of cost and net realisable value. Cost is
assigned on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of
business less estimated costs of completion, and the estimated costs necessary to make the sale.
The recoverable amount of surplus items is assessed regularly on an ongoing basis and written down to its net
realisable value when an impairment indicator is present.
(l) Derivatives and hedging activities
The Group uses derivative financial instruments to manage its risks associated with metals price and foreign currency
fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured to fair value at the end of each reporting period.
The Group uses derivative financial instruments such as foreign currency contracts and commodity contracts to hedge
its risks associated with gold, nickel, copper and zinc prices and foreign currency fluctuations. Such derivative financial
instruments are recognised at fair value.
Independence Group NL
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