Racing Australia Annual Report 2017

64 | Racing Australia Annual Report 2017 (k) Non repayable grants to Principal Racing Authorities (“PRAs”) Under the terms of the company constitution, net surplus and the ongoing retained surpluses of the company cannot be distributed as dividends to the participating Principal Racing Authorities (“PRAs”). The company may pay to each Principal Racing Authority (or set off in accordance with the Participation Agreement) a proportion of any surplus calculated in accordance with the constitution by way of a non repayable grant. Such distributions to PRAs are classified as expenses within the Statement of Profit or Loss and Other Comprehensive Income. (l) New accounting standards and interpretations not yet mandatory or early adopted Accounting Standards issued by the AASB that are not yet mandatorily applicable to the company, together with an assessment of the potential impact of such pronouncements on the company when adopted in future periods, are discussed below: AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018). The Standard will be applicable retrospectively (subject to the provisions on hedge accounting) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and recognition requirements for financial instruments, and simplified requirements for hedge accounting. The key changes that may affect the company on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. The Directors anticipate this will not have a material impact on the company’s financial instruments. AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases. The main changes introduced by the new Standard include: (i) recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets); (ii) depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; (iii) variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; (iv) by applying a practical expedient, a lessee is permitted to elect not to separate non- lease components and instead account for all components as a lease; and (v) additional disclosure requirements. The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application. The Directors anticipate this will not have a material impact on the reporting requirements of the company. AASB 15: Revenue from contracts with customers (applicable to annual reporting periods beginning on or after 1 January 2018) Racing Australia Limited | ACN 105 994 330 and Controlled Entities | Annual Report for the Financial Year Ended 30 June 2017 Notes to and Forming Part of the Financial Statements continued For the year ended 30 June 2017