## (r) Issued Capital 

Ordinary shares are classified as equity. 

Cash received from shareholders and investors at the end of the reporting period, pending allotment and issue of fully paid ordinary shares, is held as funds in escrow in the consolidated statement of financial position. 

Transaction costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of any related income tax benefit, from the proceeds. Transaction costs are the costs that are incurred directly in connection with the issue of new ordinary shares and which would not have been incurred had those ordinary shares not been issued. These directly attributable transaction costs include registration and other regulatory fees, amounts paid to legal, accounting and other professional advisers, printing costs and marketing costs. 

The costs of an equity raising that is abandoned are recognised as an expense in the consolidated statement of comprehensive income. 

## (s) Interests in Joint Venture Operations 

The proportionate interests in the assets, liabilities, revenue and expenses of a joint venture operation are incorporated in the financial statements under the appropriate headings. 

The Group’s share of assets and liabilities employed in joint venture operations is set out in Note 23. 

## (t) Leases 

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. 

## Group as a Lessee 

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Operating lease payments (net of any incentives received from the lessor) are recognised as an expense in the consolidated statement of comprehensive income on a straight-line basis over the financial period of the lease. 

## (u) Earnings Per Share 

## Basic Earnings Per Share 

Basic earnings per ordinary share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any bonus elements in ordinary shares issued during the financial year. 

## Diluted Earnings Per Share 

Diluted earnings per ordinary share adjusts the figures used in the determination of basic earnings per ordinary share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. 

## (v) Parent Company Financial Information 

The financial information for the Parent Company, Karoon Gas Australia Ltd, disclosed in Note 30 has been prepared on the same basis as the consolidated financial statements, except as set out below: 

## Investments in Subsidiaries 

Investments in subsidiaries are accounted for at cost in the financial statements of Karoon Gas Australia Ltd. 

The Parent Company does not designate any investments in subsidiaries as being subject to the requirements of Australian Accounting Standards specifically applicable to financial instruments. They are held for strategic and not trading purposes. 

Investments in subsidiaries and receivables from subsidiaries are tested for impairment in accordance with the accounting policy described in Note 1(n). 

