Investor Presentaiton
Armour Energy and controlled entities
Financial report continued
Notes to the consolidated financial statements continued
NOTE 42. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd and related entities.
armourenergy.com.au
In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the
operating expense is now replaced by interest expense and depreciation in profit or loss.
Audit services - BDO Audit Pty Ltd
Audit
or
review of the financial statements
Other services - BDO Audit Pty Ltd and related entities
Grant funding audit
Other non-audit services*
personal use only
The non-audit services included the advice on the redemption of the convertible notes.
NOTE 43. ACCOUNTING POLICIES
Consolidated
30 June
2020
$
30 June
2019
$
For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal
portion of the lease payments are separately disclosed in financing activities. The standard does not substantially change how a
lessor accounts for leases. The impact of the adoption of AASB 16 on Armour's consolidated financial statements is below.
The change in accounting policy affected the following items in the balance sheet on 1 July 2019:
88,642
87,552
6,700
24,905
3,200
16,001
"
right-of-use assets - increase by $314,278
lease liabilities - increase by $277,658
Using a weighted average incremental borrowing rate of 6.2%, the net impact on retained earnings on 1 July 2019 was a decrease of
$36,620. A reconciliation of note 39 Commitments of the 30 June 2019 annual report is as follows:
31,605
19,201
1 July 2019
$
120,247
106,753
Operating lease commitments disclosed as at 30 June 2019
358,744
Impact of discounting operating lease commitments to present value
(81,086)
Operating lease commitments discounted using the lessees incremental borrowing rate at the date of
initial application
277,658
Add: finance lease liabilities recognised as at 30 June 2019
67,167
344,825
NEW AND REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS
Adoption of new and revised accounting standards
The accounting policies adopted are consistent with those of the previous financial year except for changes arising from the
adoption of the following new accounting pronouncements which came into effect in the current reporting period:
AASB 16 Leases
Interpretation 23 Uncertainty over Income Tax Treatments
Armour elected to apply the modified retrospective approach on transition to AASB16, with the cumulative effect being recognised
in retained earnings at 1 July 2019. The comparative period has not been restated.
The other amendments did not have any impact on the amounts recognised in prior periods and are not expected to have a
significant effect on the current or future periods.
AASB 16 Leases
AASB 16 supersedes AASB 17 Leases and sets out the principles for the recognition, measurement, presentation, and disclosure
of leases. Armour has adopted AASB 16 from 1 July 2019. The standard eliminates the distinction between operating leases
and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease
liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with
a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease
liabilities (included in finance costs).
Lease Liability recognised as at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
Impact of the new definition of a lease
207,178
137,647
Armour has elected to use the transition practical expedient allowing the standard to be applied only to contracts that were
previously identified as leases, applying AASB 117 at the date of initial application. Therefore, the definition of a lease in accordance
with AASB 117 and Interpretation 4 Determining whether an Arrangement contains a Lease will continue to be applied for those
leases entered into or modified before 1 July 2019.
Upon application Armour excluded initial direct costs from the measurement of the rights-of use asset and used hindsight in
determining the term if the contract contained options to extend or terminate the lease.
The change to the definition of a lease mainly relates to the concept of control. AASB 16 determines whether a contract contains a
lease on the basis of whether the customer has the right to control the use of an identified asset for a period of time in exchange for
consideration.
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