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19-268MR Wollongong Coal writes down mine assets
ASIC notes the decision by Wollongong Coal Limited (Wollongong Coal) to write down the value of its major assets relating to the Russell Vale and Wongawilli mines by $431 million in its financial report for the year ended 31 March 2019.
ASIC had previously raised concerns on the value of these assets in Wollongong Coal’s financial report for the year ended 31 March 2018. ASIC was concerned with the company’s estimate of the fair value of the mines, and as a result, ASIC restricted Wollongong Coal from issuing any reduced-content prospectus until 11 March 2020, as outlined in a media release issued on 25 March 2019 (refer: 19-068MR).
As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, the impairment of non-financial assets remains a focus area for financial reporting at 30 June 2019.
Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality financial information on a timely basis. Companies must have appropriate processes, records and analysis to support information in the financial report.
Companies should also apply appropriate experience and expertise to financial reporting, and to the processes and analyses supporting the information in the financial report. This is particularly important for potentially complex areas such as assessing impairment of non-financial assets.