3.
Material accounting policies
3.1
General information
The
financial statements cover Locafy Limited as a consolidated entity consisting of Locafy Limited and the entities it controlled at the
end of, or during, the year. The financial statements are presented in Australian dollars, which is Locafy Limited’s functional
and presentation currency.
A
description of the nature of the consolidated entity’s operations and its principal activities are included in the directors’
report, which is not part of the financial statements. The financial statements were authorized for issue, in accordance with a resolution
of directors, on November 12, 2024.
3.2
Basis of preparation
These
general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented
entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
Historical
cost convention
The
financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial
assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment
properties, certain classes of property, plant and equipment and derivative financial instruments.
Going
concern basis
The
financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation
of assets and the settlement of liabilities in the ordinary course of business.
The
Consolidated Entity and Company have incurred a net loss after tax of $2,988,469 and experienced net cash outflows from operating activities
of $1,112,902 for the year ended 30 June 2024.
As
at 30 June 2024, the Consolidated Entity and Company had cash assets of $275,875
and reported current liabilities exceed its current assets by $1,033,667.
During July 2024, the Company sold 70,708
ordinary shares for total gross proceeds of US$554,428.
Following this capital raise, on a proforma basis as of 1 July 2024, the Consolidated Entity and Company has cash assets of $1,097,689
and current liabilities exceed current assets by $211,853.
The
Consolidated Entity and Company’s ability to continue as going concerns and to pay their debts as and when they fall due is dependent
on generating additional revenues from its operations, managing all costs in line with management’s forecasts and, if necessary,
raising further capital. Management have prepared a cash flow forecast on this basis which indicates that the Consolidated Entity will
have sufficient cash flows to meet minimum operating overheads and committed expenditure requirements for the 12 month period from the
date of signing the financial report if they are successful in meeting those forecasts.
The
Directors believe the Consolidated Entity and Company will continue as a going concern, after consideration of the following factors:
| |
● |
regular
review of management accounts and cash flow forecast, incorporating expected cash inflows from sales and collection of trade receivables; |
| |
● |
close
management of both its operating costs and corporate overheads; |
| |
● |
sales
pipeline continues to grow and the Company is confident of achieving further sales growth across a number of existing and new reseller
customers and different product offerings; and |
| |
● |
the
Company has the ability to raise funds through equity issues, currently up to US$1,549,173, pursuant to an At The Market Offering
with H.C. Wainwright & Co., LLC. |
The
financial report has therefore been prepared on the going concern basis. Should the Consolidated Entity and the Company be unable to
achieve successful outcomes in relation to each of the matters referred to above, there is substantial doubt whether the Consolidated
Entity and the Company will be able to continue as a going concern and, therefore, whether they will realise their assets and discharge
their liabilities in the normal course of business.
The
financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the
amounts and classification of liabilities that might be necessary should the Consolidated Entity and the Company not continue as a going
concern.
3.3
Basis of consolidation
The
consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled
by the Company and its subsidiaries. Control is achieved when the Company:
| |
● |
has
power over the investee; |
| |
● |
is
exposed, or has rights, to variable returns from its involvement with the investee; and |
| |
● |
has
the ability to use its power to affect its returns. |
The
Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of
the three elements of control listed above.
Consolidation
of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement
of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control
the subsidiary.
Profit
or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests.
Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Company’s
accounting policies.
All
intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the group are
eliminated in full on consolidation.
3.4
Segment Reporting
The
Company has two operating segments: publishing and SEO agency. In identifying these operating segments, management generally follows
the Company’s service lines representing its main products and services (see Note 7). Each of these operating segments are managed
separately as each requires different technologies, marketing approach and other resources.
3.5
Revenue
Overview
Revenue
arises mainly from the sale of digital marketing solutions and associated services. To determine whether to recognise the revenue, the
Company follows a 5-step process:
| |
1. |
Identifying
the contract with a customer. |
| |
2. |
Identifying
performance obligations. |
| |
3. |
Determining
the transaction price. |
| |
4. |
Allocating
the transaction price to the performance obligations. |
| |
5. |
Recognising
revenue when/as performance obligations are satisfied. |
The
Company often enters into transactions involving a range of the Company’s products and services, for example for the delivery of
software and related after-sales support.
In
all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative
stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties.
Revenue
is recognised either at a point in time or over time, when (or as) the Company satisfies performance obligations by transferring the
promised goods or services to its customers.
The
Company recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these
amounts as contract liabilities in the statement of financial position (see Note 20). Similarly, if the Company satisfies a performance
obligation before it receives the consideration, the Company recognises either a contract asset or a receivable in its statement of financial
position, depending on whether something other than the passage of time is required before the consideration is due.
Consideration
received can be variable in nature, based upon customer usage in excess of contractually agreed units. The variable consideration is
included in the transaction price at the company’s best estimate, using either an expected value or most likely outcome, whichever
provides the best estimate and is included in revenue to the extent that it is highly probable that there will be no significant reversal
of the cumulative amount of revenue when any price uncertainty is resolved.
Revenue
from operating segments
The
Company operates two segments: Publishing and SEO Agency, with the key differentiation being website ownership. Under the Publishing
segment are products and services that the Company offers that are related to digital properties (i.e. mastheads) that it owns e.g. business
data published on Hotfrog, advertising placed on AussieWeb, articles published on scoop.com.au. In contrast, under the SEO Agency segment
are products and services that are applied to digital properties that are owned and operated by third parties
Revenue
from products and services
Subscriptions
Revenues
from the sale of product licences are recognised during the period in which the subscription is made available to our customers for use.
The SaaS and related support revenue (if any) is recognised over time, being the subscription period, as the customer simultaneously
receives and consumes the benefit of accessing product licences.
Access
to the product licence is not considered distinct from other performance obligations, as access to any product licence alone does not
allow the customer to obtain substantially all the benefits of the access, and is therefore accounted for as a single performance obligation.
Advertising
We
own and operate a network of more than 60 million web pages. The vast majority of these web pages are related to business directories;
however, we are focused on increasing the number of article web pages as the content for these types of web pages a generally more “rich”
and therefore more engaging for readers. In situations where a web page is published for free (i.e. non-sponsored content) we may choose
to monetize those pages through advertising placements. Advertising revenue is generally derived on a Pay-Per-Impression or similar basis
and recognised during the period in which the advertisements are published.
Services
Where
the Company provides services which involve developing a customer-specific website design or solution, in such cases, revenue is recognised
during the period in which the professional services were delivered or upon the achievement of agreed performance obligations.
3.6
Foreign currencies
The
individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity
operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each
group entity are expressed in Australian dollars (A$), which is the functional currency of the Company and the presentation currency
for the consolidated financial statements.
In
preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional
currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary
items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.
For
the purpose of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are translated into Australian dollars using exchange rates prevailing at the end of the reporting period, unless exchange rates fluctuated
significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising,
if any, are recognised in other comprehensive income and accumulated in equity.
3.7
Government grants
Government
grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied
with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs,
for which it is intended to compensate, are expensed.
When
the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset. When the
Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss
over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual
instalments.
3.8
Employee benefits
A
liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, when it
is probable that settlement will be required and they are capable of being measured reliably.
Liabilities
recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply
at the time of settlement.
Liabilities
recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made
by the Group in respect of services provided by employees up to reporting date.
3.9
Share-based payments arrangements
Equity-settled
share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the
grant date.
Equity-settled
share-based payment transactions with parties other than employees are measured at the fair value of the goods or service received, except
where that fair value cannot be estimated reliably, in which case they are measured at their fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty renders the service.
Performance
rights
Share-based
compensation benefits are provided to employees via the Company’s Incentive Performance Rights Plan (Plan). The objective
of the Plan is to assist in the recruitment, reward, retention and motivation of eligible persons of the Group. The fair value of performance
rights granted under the Plan are recognized as a share-based payment expense with a corresponding increase in equity.
The
fair value is measured at grant date and recognized over the period of service during which the employees become unconditionally entitled
to the performance rights. The fair value of the performance rights at grant date excludes the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). These non-market vesting conditions are included in assumptions about the number
of performance rights that are expected to vest.
At
each statement of financial position date, the entity revises its estimate of the number of performance rights that are expected to vest.
The share-based payment expense recognized each period considers the most recent estimate. The impact of the revision to original estimates,
if any, is recognized in the statement of profit or loss and other comprehensive income with a corresponding adjustment to equity.
3.10
Taxation
Income
tax expense represents the sum of the tax currently payable and deferred tax.
Current
tax
The
tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the consolidated
statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other
years, and items that are never taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted
or substantively enacted by the end of the reporting period.
Deferred
tax
Deferred
tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements
and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred
tax assets and liabilities are not recognised if the temporary differences arise from the initial recognition of assets and liabilities
in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred
tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or
the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reported period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the group
expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
3.11
Property, plant and equipment
Fixtures
and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation
is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the diminishing
value method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with
the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are applied:
Schedule of fixed asset depreciation rate
| Class of fixed asset | |
Depreciation rate |
| Leasehold improvements | |
Remaining lease term |
| IT equipment | |
10-25% |
| Other equipment | |
20% |
An
item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
In
the case of right-of-use assets, expected useful lives are determined by reference to comparable owned assets or the lease term, if shorter.
Material residual value estimates and estimates of useful life are updated as required, but at least annually.
Gains
or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and
the carrying amount of the assets and are recognised in profit or loss within other income or other expenses.
3.12
Intangible assets other than goodwill
Research
and development
Expenditure
on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising
from development is recognised if, and only if, all of the following have been demonstrated:
| |
● |
the
technical feasibility of completing the intangible asset so that it will be available for use or sale; |
| |
● |
the
intention to complete the intangible asset and use or sell it; |
| |
● |
the
ability to use or sell the intangible asset; |
| |
● |
how
the intangible asset will generate probable future economic benefits; |
| |
● |
the
availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;
and |
| |
● |
the
ability to measure reliably the expenditure attributable to the intangible asset during its development. |
The
amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the
intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised,
development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent
to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment
losses.
Patents
and trademarks
Patents
and trademarks are recognised at cost of acquisition and amortised over their useful lives. They have a finite life and are reported
at cost less accumulated amortisation and accumulated impairment losses.
Databases
Databases
are recognised at cost of acquisition and amortised over their useful lives. They have a finite life as data becomes dated and are reported
at cost less accumulated amortisation and accumulated impairment losses.
The
following useful lives are applied:
Schedule
of intangible asset amortisation rate
| Class of fixed asset | |
Amortisation rate | |
| Patents | |
| 5 | % |
| Trademarks | |
| 10 | % |
| Databases | |
| 16.67 | % |
| Websites | |
| 20 | % |
At
the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible
assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and
whenever there is an indication that the asset may be impaired.
Recoverable
amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If
the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a revaluation decrease.
When
an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no loss been recognised
for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset
is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
3.13
Provisions
Provisions
for product warranties, legal disputes, onerous contracts or other claims are recognised when the Company has a present legal or constructive
obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Company and amounts
can be estimated reliably. The timing or amount of the outflow may still be uncertain.
Provisions
are not recognised for future operating losses.
Provisions
are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at
the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar
obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a
whole. Provisions are discounted to their present values, where the time value of money is material.
No
liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed
as contingent liabilities unless the outflow of resources is remote.
3.14
Financial instruments
Recognition
and derecognition
Financial
assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial
assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled
or expires.
Classification
and initial measurement of financial assets
All
financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets are classified
into one of the following categories:
| |
● |
amortised
cost |
| |
● |
fair
value through profit or loss (FVTPL), or |
| |
● |
fair
value through other comprehensive income (FVOCI). |
In
the periods presented the Group does not have any financial assets categorised as FVTPL or FVOCI.
The
classification is determined by both:
| |
● |
the
entity’s business model for managing the financial asset, and |
| |
● |
the
contractual cash flow characteristics of the financial asset. |
All
revenue and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income
or other financial items.
Subsequent
measurement of financial assets
Financial
assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
| |
● |
they
are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows, and |
| |
● |
the
contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal
amount outstanding. |
After
initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect
of discounting is immaterial.
Impairment
of financial assets
IFRS
9’s impairment requirements use forward-looking information to recognise expected credit losses – the “expected credit
loss (ECL) model”. Instruments within the scope of the requirements included loans and other debt-type financial assets measured
at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial
guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
The
Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events,
current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In
applying this forward-looking approach, a distinction is made between:
| |
● |
financial
instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage
1’); and |
| |
● |
financial
instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage
2’). |
“Stage
3” would cover financial assets that have objective evidence of impairment at the reporting date.
“12-month
expected credit losses” are recognised for the first category (i.e. Stage 1) while “lifetime expected credit losses”
are recognised for the second category (i.e. Stage 2).
Trade
and other receivables and contract assets
The
Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss
allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential
for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the expected credit losses. The Group assesses impairment of trade receivables
on an individual account basis.
Classification
and measurement of financial liabilities
The
Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial
liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss.
Subsequently,
financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative
financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes
in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.
Convertible
Notes
The
component parts of convertible notes issued by the Group are classified separately as financial liabilities and equity in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Conversion
options that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company’s
own equity instruments is an equity instrument.
At
the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible
instruments. This amount is recognised as a liability on an amortised cost basis using the effective interest method until extinguished
upon conversion or at the instrument’s maturity date.
3.15
Trade and other receivables
The
Company makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected
credit losses. These are expected shortfalls in contractual cash flows, considering the potential for default at any point during the
lifetime of the financial instrument. In calculating, the Company uses its historical experience, external indicators and forward-looking
information to calculate expected credit losses using a provision matrix.
The
Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they have been
grouped based on the days past due. Refer to Note 3.14 for a detailed analysis of how the impairment requirements of IAS 9 are applied.
3.16
Goods and services tax
Revenues,
expenses and assets are recognised net of the amount of goods and services tax (GST), except:
| |
i. |
where
the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of
an asset or as part of an item of expense; or |
| |
ii. |
for
receivables and payable which are recognised inclusive of GST. |
The
net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash
flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing
activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows.
3.17
Leases
For
any new contracts entered into the Company considers whether a contract is, or contains a lease. A lease is defined as “a contract,
or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration”.
To apply this definition the Company assesses whether the contract meets three key evaluations which are whether:
| |
1. |
the
contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified
at the time the asset is made available to the Company; |
| |
2. |
the
Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period
of use, considering its rights within the defined scope of the contract; |
| |
3. |
the
Company has the right to direct the use of the identified asset throughout the period of use. The Company assess whether it has the
right to direct ‘how and for what purpose’ the asset is used throughout the period of use. |
At
lease commencement date, the Company recognises a right of use asset and a lease liability on the balance sheet. The right of use asset
is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Company,
an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any incentives received).
The
Company depreciates the right of use assets on a straight-line basis from the lease commencement date to the earlier of the end of the
useful life of the right of use asset or the end of the lease term. The Company also assesses the right of use asset for impairment when
such indicators exist.
At
the commencement date, the Company measures the lease liability at the present value of the lease payments unpaid at that date, discounted
using the interest rate implicit in the lease if that rate is readily available or the Company’s incremental borrowing rate.
Lease
payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments
based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably
certain to be exercised.
Subsequent
to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment
or modification, or if there are changes in in-substance fixed payments.
When
the lease liability is remeasured, the corresponding adjustment is reflected in the right of use asset, or profit and loss if the right
of use asset is already reduced to zero.
The
Company has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising
a right of use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line
basis over the lease term.
Short-term
leases and leases of low value
Short-term
leases (lease term of 12 months or less) and lease of low value assets (under A$5,000) are recognised as incurred as an expense in the
consolidated income statement.
3.18
Equity, reserves and dividend payments
Share
capital represents the nominal value of shares that have been issued.
Other
components of equity include the following:
| |
● |
share
option reserve – comprises equity-settled employee benefits and equity-settled supplier payments (see Notes 3.8 and 3.9); and |
| |
● |
translation
reserve – comprises foreign currency translation differences arising from the translation of financial statements of the Group’s
foreign entity into functional currency (see Note 3.6). |
Accumulated
losses include all current and prior period accumulated losses.
All
transactions with owners of the parent are recorded separately within equity.
Dividend
distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting
prior to the reporting date.
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