NOTES TO THE FINANCIAL STA TEMENTS for the year ended 31 December 2004 32. Additional Financial Instruments Disclosure (continued) (e) Net fair values of financial assets and liabilities 33. Economic Dependency 34. Post Balance Date Events 35. Australian Equivalents to International Financial Reporting Standards The carrying amounts of all financial assets and liabilities including hedg es approximate net fair value. At 31 December 2004 the Santos Group has open derivative financial in struments contracts relating to future operating profit which if closed out at their market rates would have resulted in a gain of $32.8 million (2003: gain of $61.5 million). There are in existence long-term contracts for the sale of gas, but otherwise th e Directors believe there is no economic dependency. The following events occurred subsequent to 31 December 2004, the financi al effects of which have not been brought to account in the financial statements for the year ended 31 December 2004: Following the implementation by the Australian Accounting Standards Board (“ AASB”) of the Financial Reporting Council’s policy of adopting the accounting standards issued by the International Accounting Standards Boar d (“IASB”), the Santos Group must comply with the Australian equivalents to International Financial Reporting Standards (“A-IFRS”) from 1 J anuary 2005. Accordingly, the Santos Group will prepare a financial report under A-IFRS for the first time for the half-year ending 30 Jun 2005. The prior period comparatives in that report will be based on an opening A-IFRS statement of financial position dated 1 January 2004 except f or the A-IFRS pertaining to financial instruments described below. A project team has been in place throughout the year and is well advanced to achieve the transition from Australian GAAP to A-IFRS. At 31 December 2004, the following activities are underway and are expected to be completed by 30 June 2005: Under current Australian GAAP the financial report is generally prepared on th e basis of historical cost while under the IASB conceptual framework there is an emphasis on recording assets and liabilities at their fair values. A ccordingly, this will increase the volatility in reported results in future years. The transition to A-IFRS will lead to the derecognition of som assets and the recognition of additional assets and liabilities. Additionally, the transition will lead to increased disclosures in the notes to the financial statements. The transition to A-IFRS at 1 January 2005 is not expected to change the San tos Group’s underlying business operations nor have any impact on either the quantity or the value of its oil and gas reserves, its futur cash flows, or its current borrowing facilities. Also, the ability of the Santos Group to raise additional finance for normal business expansion or to pay divid ends consistent with past practice is not expected to be impacted. The differences between current Australian GAAP and A-IFRS which are more  likely to have a significant effect on the Santos Group’s financial performance and financial position are summarised below: Changes in the fair value of certain financi al instruments will be recorded in the statement of financial performance. Where financial instruments satisfy strict he dge criteria, changes in the fair value will be recognised in equity, or will offset the hedged exposure in th statement of financial performance. The A-IFRS relating to financial instruments applies from 1 January 2005. Unlike the majority of other A-IFRS standards which require retrospective appli cation as at 1 January 2004, this accounting standard does not require retrospective application. The effect of th first time application of this standard on the opening statement of financial position at 1 January 2005 will be to recognise additional financial assets and liabilities. Santos intends to continue to align its hed ging transactions to underlying exposures to achieve accounting eligibility and thereby reduce profit an loss volatility. Annual Report 2004 86 (a) For dividends declared after 31 December 2004 refer note 20; (b) On 17 February 2005, the Company entered into a contract to acquir Basin Oil Pty Ltd effective 1 January 2005. Basin Oil Pty Ltd has a 2.1% interest in SA Cooper Basin, 40% interests in Patricia-Baleen and Sole, an d 33.3% interests in Golden Beach and Vic/P55. • implement changes to information systems and business processes; • complete assessment of accounting standard AASB 6 “Exploration for an d Evaluation of Mineral Resources” which was issued by the AASB in December 2004 as an A-IFRS with an effective date of 1 January 2005; • conduct training programs; • engage KPMG to audit the Santos Group’s A-IFRS compliant accountin policies and submit revised accounting policies to the Board for approval; and • restate the 2004 half-year and full year operating results and financial position from Australian GAAP to A-IFRS for comparative purposes. All financial instruments including d erivatives will be recognised in the statement of financial position and all derivatives will be carried at fair value. Financial instruments