Under the Placement in August 2022, the Company agreed to issue to investors one (1) free-attaching option for every two (2) new shares subscribed for (“Placement Options”). On 5 October 2022, the Group issued 30,177,505 options exercisable at AUD$0.20 each and expiring on 5 April 2025.
Under IAS 32 Financial Instruments: Presentation, the offer of the Placement Options is treated as a derivative liability because they were denominated in a currency other than the Company’s functional and presentation currency of US dollars, and accordingly the Group was not able to demonstrate that it was issuing a fixed number of shares for a fixed amount of US dollars, which is the criterion under IFRS to account for the options in shareholders equity.
However, where an entity does not meet the fixed for fixed criterion, such options could be accounted for as equity when the instruments are offered pro rata to all of its existing owners of the same class of its own non‑derivative equity instruments, regardless of the denominated currency of the offered instruments. Judgement was required in determining that the investors in the placement did not constitute their own class of equity holders and not all other investors in the Company’s ordinary shares were offered the same options pro-rata to their existing ordinary shareholding. Derivatives are carried at fair value and changes in fair value are recognised in the profit or loss in the period it arises.
The fair value of the placement options at initial recognition upon issuance was $1.4 million (AU$2.1 million) valued at 5 October 2022 using the Black-Scholes option valuation model. The level of the fair value hierarchy measurement of derivative liability is categorised as Level 3 (non-market observable inputs).
SPT Price at posting:
7.5¢ Sentiment: None Disclosure: Not Held
