24 the conversion option is recognised as either equity or a liability separately from the host liability under IAS 32 Financial Instruments: Presentation. The IASB has now clarified that when a company classifies the host liability as current or non-current, it can ignore only those conversion options that are recognised as equity. The group has taken note of the updated definition and will consider and apply going forward. Classification of liabilities as current or non-current To promote consistency in application and clarify the requirements on determining if a liability is current or non-current, the IASB has amended IAS 1. Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period. As part of its amendments, the IASB has removed the requirement for a right to be unconditional and instead, now requires that a right to defer settlement must have substance and exist at the end of the reporting period. The Group is still in the process of determining the impact of the amendments to the accounting standard. AASB 2023-1 Amendments to Australian Accounting Standards – Supplier Finance Arrangements– Effective 1 January 2024 The amendments introduce two new disclosure objectives – one in AASB 107 and another in AASB 7 – for a company to provide information about its supplier finance arrangements that would enable users (investors) to assess the effects of these arrangements on the company’s liabilities and cash flows, and the company’s exposure to liquidity risk. The Group has assessed that the following amendment to the standards do not have an impact on the Group currently, it will be reconsidered in future as and when it does become applicable. NEW ACCOUNTING STANDARDS ISSUED NOT YET EFFECTIVE The Group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Group’s accounting periods beginning on or after 1 July 2025. All other standards and interpretations that are not disclosed have been assessed and are not applicable to the Group. AASB 2023-5 Amendments to Australian Accounting Standards – Lack of Exchangeability– Effective 1 January 2025 Under AASB 121 The Effects of Changes in Foreign Exchange Rates, a company uses a spot exchange rate when translating a foreign currency transaction. However, in rare cases, it is possible that one currency cannot be exchanged into another. This lack of exchangeability might arise when a government imposes controls on capital imports and exports, for example, or when it provides an official exchange rate but limits the volume of foreign currency transactions that can be undertaken at that rate. Consequently, market participants are unable to buy and sell currency to meet their needs at the official exchange rate and turn instead to unofficial, parallel markets. In October 2023, the Australia Accounting Standards Board (AASB) amended AASB 121 to clarify: • when a currency is exchangeable into another currency; and • how a company estimates a spot rate when a currency lacks exchangeability. The Group has assessed that the following amendment to the standards do not have a material impact on the Group currently. It will be reconsidered in future as and when it does become applicable. AASB 7 and AASB 9 Classification and Measurement of Financial Instruments (Amendments) – Effective 1 January 2026 Under AASB 9 Financial Instruments, it was unclear whether the contractual cash flows of some financial assets with ESG-linked features represented sole payments of principal and interest (SPPI), which is a condition for measurement at amortised cost. This could have resulted in financial assets with ESG-linked features being measured at fair value through profit or loss. Although the new amendments are more permissive, they apply to all contingent features, not just ESG-linked features. While the amendments may allow certain financial assets with contingent features to meet the SPPI criterion, companies may need to perform additional work to prove this. Judgement will be required in determining whether the new test is met. The amendments introduce an additional SPPI test for financial assets with contingent features that are not related directly to a change in basic lending risks or costs – e.g. where the cash flows change depending on whether the borrower meets an ESG target specified in the loan contract. Under the amendments, certain financial assets including those with ESG-linked features could now meet the SPPI criterion, provided that their cash flows are not significantly different from an identical financial asset without such a feature. The amendments also include additional disclosures for all financial assets and financial liabilities that have certain contingent features that are: • not related directly to a change in basic lending risks or costs; and • are not measured at fair value through profit or loss. The amendments clarify the key characteristics of contractually linked instruments (CLIs) and how they differ from financial assets with non-recourse features. The amendments also include factors that a company needs to consider when assessing the cash flows underlying a financial asset with non-recourse features (the ‘look through’ test).
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