b'NOTES TO THE FINANCIAL STATEMENTS >for the year ended 30 June 2019NOTE 1. SIGNIFICANTNEW, REVISED OR AMENDING ACCOUNTING ACCOUNTING POLICIES STANDARDS AND INTERPRETATIONS ADOPTEDThe principal accounting policies adopted in the preparationThe consolidated entity has adopted all of the new, revisedof the financial statements are set out below. These policiesor amending Accounting Standards and Interpretations issued have been consistently applied to all the years presented,by the Australian Accounting Standards Board (AASB) that are unless otherwise stated. mandatory for the current reporting period. The new and revised standards adopted by the consolidated entity are listed below.GOING CONCERN AASB 9 Financial InstrumentsAt 30 June 2019, the consolidated entity recorded net currentAASB 9 Financial Instruments and applicable amendments liabilities of AUD30.8 million. The consolidated entity recorded address the classification, measurement and derecognition a net profit after tax of AUD6.1 million before impairment (netof financial assets and financial liabilities. This standard loss after tax of AUD194.0 million after impairment charge introduces new classification and measurement models for of AUD200.1 million) and net operating cash inflows of financial assets, using a single approach to determine whether AUD26.5 million for the year ended on that date. a financial asset is measured at amortised cost or fair value. The net current liabilities primarily arise due to theThe impairment model under the new standard requires the management fee of AUD22.7 million (as at 30 June 2019 spotrecognition of impairment provisions based on expected credit rate) claimed by the Thai vendor of the Star Vegas business.losses rather than only incurred credit losses. It applies to This claim is disputed, and having considered legal advice,financial assets classified at amortised cost, debt instruments the Board considers that the claim is not payable. The claimsmeasured at fair value through other comprehensive income, are unresolved as at 30 June 2019 (Note 39) and as a result thecontract assets under AASB 15 Revenue from Contracts with amount continued to be recognised as a liability in accordanceCustomers, lease receivables, loan commitments and certain with the relevant accounting standards. Without thefinancial guarantee contracts.management fee payable, the consolidated entitys net currentThe consolidated entity has applied AASB 9 for the first timeliabilities would total approximately AUD8.1 million. in the current period. Based on the directors assessment, Notwithstanding the net current liability position,debts which are known to be uncollectable have been written management have prepared the 30 June 2019 financial reportoff by directly reducing the carrying amount of the trade on a going concern basis. It is managements estimate thatreceivable balance (see Note 6).the consolidated entity will be able to generate sufficientAASB 15 Revenue from Contracts with Customersoperating cash inflows to cover the net current liabilities, and therefore will be able to pay its debts as and when theyThe standard provides a single standard for revenue become due and payable. recognition. The core principle of the standard is that The consolidated entity met all of its obligations to repayan entity will recognise revenue to depict the transfer of principal and interest under its loans during the period andpromised goods or services to customers in an amount that up to the date of this report. The consolidated entity alsoreflects the consideration to which the entity expects to be remains in compliance with its loan covenants. Managemententitled in exchange for those goods or services. The standard has signed binding agreements with Mega Bank to refinancewill require: contracts (either written, verbal or implied) and restructure its existing term loan facility during the year.to be identified, together with the separate performance As part of the restructure, the principal repayment that wasobligations within the contract; the transaction price to be previously due in August 2019 was brought forward and determined, adjusted for the time value of money excluding repaid in June 2019. As at 30 June 2019, approximately credit risk; allocation of the transaction price to the separate AUD32.5 million remains unpaid under the loan. Subsequentperformance obligations on a basis of relative stand-alone principal repayments have also been reduced to USD5 millionselling price of each distinct good or service, or estimation (AUD7.1 million at spot rate) with the next repayment dueapproach if no distinct observable prices exist; and recognition in December 2019. Certain loan covenants have also beenof revenue when each performance obligation is satisfied.relaxed. The consolidated entity expects to receive continualFor goods, the performance obligation would be satisfied whenfinancing from Mega Bank in regard to the existing loan, andthe customer obtains control of the goods. For services, the thus the going concern basis has not been affected. performance obligation is satisfied when the service hasbeen provided, typically for promises to transfer servicesto customers.42 DONACO INTERNATIONAL LIMITED 2019 ANNUAL REPORT'