INDEPENDENCE GROUP NL ANNUAL REPORT 2017

Notes to the consolidated financial statements 30 June 2017 (continued) 17 Contributed equity (continued) (a) Share capital (continued) (b) Movements in ordinary share capital Details 2017 Number of shares 2017 $'000 2016 Number of shares 2016 $'000 Balance at beginning of financial year 511,422,871 1,601,458 234,256,573 737,324 Issue of shares under the Employee Performance Rights Plan 268,796 820 1,323,614 3,505 Acquisition of subsidiary - - 275,842,684 860,629 Share placement and share purchase plan issues 75,055,356 281,459 - - Less: Transaction costs arising on share issue (net of tax) - (5,268) - - Balance at end of financial year 586,747,023 1,878,469 511,422,871 1,601,458 (c) Capital management The Board’s policy is to preserve a strong balance sheet so as to maintain investor, creditor and market confidence, and to sustain ongoing and future development of the business. Demonstrating the Company's balance sheet strength are various financing and liquidity ratios, supported by strong EBITDA margins: 2017 2016 Current ratio (times) 1.4 0.8 Debt to equity 12% 19% Underlying EBITDA margin 35% 33% The Group's capital comprises equity, including reserves, and net debt/(cash). As at 30 June 2017 this totalled $1,897,021,000, an increase of 13% over 2016. Contributing to the increase was an equity raising in July 2016 and the continued investment during 2017 in building and commissioning the Nova Operation. An appropriate allocation and deployment of capital is required to maintain a strong balance sheet. Primarily, capital is allocated to ensure that the Company’s operations are able to generate cash flows, at appropriate margins, and to continue to operate safely according to plan. In addition, the Company operates in a cyclical commodity price environment, and in that context considers the allocation of capital in order to provide a buffer from future potential adverse price movements. The Company also preserves and manages its capital to repay debt and invest in growth and acquire assets. The Company also returns capital to shareholders by way of dividend payments which target 30 % of net profit after tax, after excluding non-recurring items. Sources of capital of the Company are equity markets, through the raising of capital, as well as debt markets. None of the Group’s entities are currently subject to externally imposed capital requirements. There were no changes in the Group’s approach to capital management during the year. (d) Recognition and measurement Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. Every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Independence Group NL 63 IGO ANNUAL REPORT 2017— 93 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017