notes to and forming part of the financial statements  for the year ended 30 June 2004 (continued) Employee Option Schemes Income Tax Other Financial Assets Goods and Services Tax (GST) Financial Instruments, Unearned Income and Deferred Put Option Expenditure Borrowing Costs Earnings Per Share (“EPS”) Provision for Employee Entitlements Comparative Figures RESOLUTE MINING LIMITED 2004 ANNUAL REPORT Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures. Provision has been made in the financial statements for benefits accruing to employees in relation to annual leave and long service leave. All on-costs, including payroll tax, superannuation and workers’ compensation premiums are included in the determination of provisions. Liabilities arising in respect of employee benefits expected to be settled within 12 months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. The non-current portion of long service leave is measured by estimating the present value of estimated cash flows of future entitlements. No provision is made for sick leave. divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as the net profit attributable to members, adjusted for: 43 - costs of servicing equity (other than dividends) and preference share dividends; - the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and - other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Borrowing costs (excluding interest) incurred in relation to the negotiation of financing facilities, are capitalised when incurred and amortised over the term of the loan. Interest is expensed as incurred, except where they relate to the financing of qualifying assets where they are capitalised up to the date of commissioning or sale and amortised over the life of the asset. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Where the physical delivery is no longer expected to occur, the gain or loss on termination is taken to the Statement of Financial Performance in the period the instrument was closed out. If a hedge instrument is terminated early or restructured, the gain or loss on termination or restructure is deferred and amortised in the period where the physical transaction originally hedged occurs. The put options purchased that have not expired at period end are recorded in the accounts at historical cost. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Statement of Financial Performance recognition of premiums received or paid in respect of instruments entered into as part of the consolidated entity’s hedging activities are deferred until the period in which the physical delivery of the gold or foreign exchange originally hedged is delivered or the option expires. In the normal course of business the consolidated entity enters into financial transactions for the purpose of managing its exposure to foreign exchange and commodity prices. Revenues, expenses and assets are recognised net of the amount of GST except: Tax effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the accounts and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of being realised. The net future tax benefit relating to timing differences is not carried forward as an asset unless the realisation of the benefit is virtually certain of being realised. A future income tax benefit is brought to account where it offsets deferred tax liabilities in the same accounting period.  Interests in non-subsidiary, non-associated corporations are included in investments at the lower of cost and recoverable amount. Investments which are held for trading purposes are classified as current other financial assets. Investments which are held for long-term benefits are classified as non-current other financial assets. Certain employees are entitled to participate in option ownership schemes. The details are provided in Note 36. No remuneration expense is recognised in respect of employee options issued. -  where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and -  receivables and payables are stated with the amount of GST included.