Speciality Metals International Limited Annual Report 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Page | 35 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Going Concern Basis for Preparation of Financial Statements These financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. The ability of the Company to continue to adopt the going concern assumption is based upon the Company now having a source of income from its recent acquisition of the Mt Carbine Quarry along with that from the Company’s joint venture with Cronimet Asia Pte Ltd for development of the Mt Carbine Retreatment Projects. Should additional funds be necessary t he Directors are confident of securing these funds if and when necessary to meet the Company’s obligations as and when they fall due and consider the adoption of the going concern basis to be appropriate in the preparation of these financial statements. (b) Basis of Preparation These general purpose financial statements have been prepared in accordance with the requirements of the Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 . These financial statements have been prepared on a historical cost basis. The financial report is presented in Australian currency. The consolidated entity operates on a for-profit basis. (c) Statement of Compliance The financial statements have been prepared and comply with Australian Accounting Standards. The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. (d) Basis of Consolidation The consolidated financial statements comprise the financial statements of Speciality Metals International Limited (“the Company” or “Speciality Metals”) and its subsidiaries (“the Group”) as at 30 June each year. Subsidiaries are entities over which the Company has control. Control is defined as entities which the group has rights to or is exposed to variable returns from its involvement with the entity and has the ability to use its power to affect those returns. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Subsidiaries are fully consolidated from the date upon which control is transferred to the Group and cease to be consolidated from the date upon which control is transferred out of the Group. (e) Derivative Financial Instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re- measured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on the nature of the derivative. Derivatives are classified as current or non-current depending on the expected period of realisation.