Annual Report 200486
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2004
32. Additional Financial Instruments Disclosure (continued)
(e) Net fair values of financial assets and liabilities
The carrying amounts of all financial assets and liabilities including hedges approximate net fair value.
At 31 December 2004 the Santos Group has open derivative financial instruments contracts relating to future operating profit which if closed out
at their market rates would have resulted in a gain of $32.8 million (2003: gain of $61.5 million).
33. Economic Dependency
There are in existence long-term contracts for the sale of gas, but otherwise the Directors believe there is no economic dependency.
34. Post Balance Date Events
The following events occurred subsequent to 31 December 2004, the financial effects of which have not been brought to account in the financial
statements for the year ended 31 December 2004:
(a) For dividends declared after 31 December 2004 refer note 20;
(b) On 17 February 2005, the Company entered into a contract to acquire Basin Oil Pty Ltd effective 1 January 2005. Basin Oil Pty Ltd has a 2.1%
interest in SA Cooper Basin, 40% interests in Patricia-Baleen and Sole, and 33.3% interests in Golden Beach and Vic/P55.
35. Australian Equivalents to International Financial Reporting Standards
Following the implementation by the Australian Accounting Standards Board (“AASB”) of the Financial Reporting Council’s policy of adopting the
accounting standards issued by the International Accounting Standards Board (“IASB”), the Santos Group must comply with the Australian
equivalents to International Financial Reporting Standards (“A-IFRS”) from 1 January 2005. Accordingly, the Santos Group will prepare a financial
report under A-IFRS for the first time for the half-year ending 30 June 2005. The prior period comparatives in that report will be based on an
opening A-IFRS statement of financial position dated 1 January 2004 except for the A-IFRS pertaining to financial instruments described below.
A project team has been in place throughout the year and is well advanced to achieve the transition from Australian GAAP to A-IFRS.
At 31 December 2004, the following activities are underway and are expected to be completed by 30 June 2005:
• complete assessment of accounting standard AASB 6 “Exploration for and Evaluation of Mineral Resources” which was issued by the AASB in
December 2004 as an A-IFRS with an effective date of 1 January 2005;
• implement changes to information systems and business processes;
• conduct training programs;
• engage KPMG to audit the Santos Group’s A-IFRS compliant accounting policies and submit revised accounting policies to the Board for approval;
and
• restate the 2004 half-year and full year operating results and financial position from Australian GAAP to A-IFRS for comparative purposes.
Under current Australian GAAP the financial report is generally prepared on the basis of historical cost while under the IASB conceptual framework
there is an emphasis on recording assets and liabilities at their fair values. Accordingly, this will increase the volatility in reported results in future
years. The transition to A-IFRS will lead to the derecognition of some assets and the recognition of additional assets and liabilities. Additionally, the
transition will lead to increased disclosures in the notes to the financial statements.
The transition to A-IFRS at 1 January 2005 is not expected to change the Santos Group’s underlying business operations nor have any impact on
either the quantity or the value of its oil and gas reserves, its future cash flows, or its current borrowing facilities. Also, the ability of the Santos
Group to raise additional finance for normal business expansion or to pay dividends consistent with past practice is not expected to be impacted.