Announcement PDF LITHIUM AUSTRALIA NL (FORMERLY COBRE MONTANA NL) ABN 29 126 129 413 FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2015 CONTENTS PAGE CORPORATE DIRECTORY .......................................................................................................................................... 1 DIRECTORS’ REPORT ................................................................................................................................................. 2 AUDITORS’ INDEPENDENCE DECLARATION .............................................................................................................. 7 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............... 8 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ....................................................................... 9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...................................................................... 10 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................. 11 NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................ 12 DIRECTORS’ DECLARATION .................................................................................................................................... 21 INDEPENDENT AUDITOR’S REVIEW REPORT .......................................................................................................... 22 CORPORATE DIRECTORY DIRECTORS AUDITORS George Bauk (Non-executive Chairman) Adrian Griffin (Managing Director) Bryan Dixon (Non-executive Director) Bentleys London House Level 3 216 St Georges Terrace PERTH WA 6000 COMPANY SECRETARY SHARE REGISTRY Barry Woodhouse (appointed 21 August 2015) Amanda Wilton-Heald (appointed 10 November 2014) and resigned 21 August 2015) Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009 Telephone: Facsimile: +618 9389 8033 +618 9389 7871 REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS STOCK EXCHANGE LISTING Suite 3 23 Belgravia Street BELMONT WA 6104 The Company is listed on the Australian Securities Exchange Limited. Home Exchange: Perth ASX Codes: LIT and LITCC Phone: Facsimile: Email: Website: +618 6145 0288 +618 9475 0847 info@lithium-au.com www. lithium-au.com Page 1 DIRECTORS’ REPORT The Directors present their report on Lithium Australia NL (formerly Cobre Montana NL) and its controlled entities (“Consolidated Entity”) for the half-year ended 31 December 2015. BOARD OF DIRECTORS The names and details of the Consolidated Entity directors in office during the financial period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. George Bauk Adrian Griffin Bryan Dixon Eduardo Valenzuela Non-executive Chairman (appointed 15 July 2015) Managing Director Non-executive Director Non-executive Chairman (retired 15 July 2015) COMPANY SECRETARY Barry Woodhouse (appointed 21 August 2015) Amanda Wilton-Heald (appointed 10 November 2014 and resigned 21 August 2015) REVIEW OF OPERATIONS RECOGNISING AND ADDRESSING AN UNPARALLELED OPPORTUNITY Early in the 2014/15 year, Lithium Australia NL (LIT) noticed an important change in the dynamics of lithium supply – a broadening supply gap and a potential shortage of available lithium. The dynamics on the supply side are complex and controlled by only a handful of producers. LIT saw an unparalleled opportunity to develop an independent supply stream. Lithium micas, long considered waste by the lithium chemical industry, comprise the most abundant group of lithium minerals worldwide. Recognising this, LIT sought to develop a metallurgical process that could well create a supply-stream solution; that is, producing lithium carbonate from the waste from mining operations to fill the widening supply gap projected for the battery market. Initial laboratory tests confirmed the efficacy of a process that permits what was previously 'waste' to be labelled 'ore'. The test work was undertaken by Strategic Metallurgy Pty Ltd and the process named “L-Max”. The L-Max process has a very low energy footprint, and unlike other processes investigated in the past, requires no roasting. Significant by-product credits enhance the economics and estimated operating costs suggest the LMax process will be competitive with the world’s most efficient producers provided the feed to the carbonate plant incurs a low mining cost. LIT has identified a number of projects where this waste feed is available. The abundance and availability of lithium micas not historically assessed for resource potential have provided LIT with scope for establishing a project portfolio of significance in the lithium industry and reaping the rewards of first-mover advantage. LIT has now made significant progress towards its goal of controlling the world’s largest lithium inventory. This has been achieved by strengthening strategic relationships, which has provided immediate access to mineralised material, and targeting areas of high prospectivity for lithium micas, until now a 'forgotten resource'. Identifying the opportunity In July 2014, a projected long-term supply deficit in the lithium market prompted LIT to review lithium occurrences in Western Australia. It soon became apparent that much of the State's lithium was locked in the micas, lepidolite and zinnwaldite, neither of which has previously been mined to produce lithium chemicals. The materials themselves were not a 'Resource' or 'Ore' under the JORC 2012 Code as there was no way of economically recovering the lithium from them. As a consequence, there was little point in undertaking field programs to quantify their abundance in any locality, as by JORC definition, this would not result in defining a “resource” as there could be no commercial outcome without an expectation of being able to profitably recover Page 2 DIRECTORS’ REPORT (Continued) lithium without first having a viable process to do so. Therefore, a metallurgical breakthrough was needed prior to detailed deposit evaluation. The first successful leach tests were conducted upon a lepidolite specimen purchased on the internet. Larger samples were subsequently required for bulk testing, which necessitated access to identified mineralisation. Negotiations to acquire the first of LIT's identified lithium mica deposits commenced in July 2014. First access to lepidolite deposits – September 2014 A number of areas of abundant lepidolite were targeted for evaluation, not only to supply the bulk test material needed to prove the veracity of the leach process but also to recover enough leach solutions to investigate downstream processing and the production of lithium chemicals. LIT's first project, Ravensthorpe, was procured by way of an option to purchase from Dempsey Minerals Ltd (ASX: DMI). Located near Ravensthorpe in Western Australia, the project covers the Cocanarup Pegmatite Field, which in the past has produced various commodities hosted by the pegmatites. The second project, the Coolgardie Rare Metals Venture, also in Western Australia, is an initiative with Focus Minerals Limited (ASX: FML). It includes the historic lithium production centre of Lepidolite Hill. Under the terms of its agreement with FML, LIT has the rights to all metals derived from pegmatites on the property and will freecarry a 20% FML interest to the point at which a decision is made to commit to feasibility. Production of battery-grade lithium carbonate – October 2014 Bulk samples from Lepidolite Hill were subjected to flotation, producing a high-grade lepidolite concentrate that was subsequently leached. Further processing of the leach liquor removed unwanted impurities and precipitated battery-grade lithium carbonate. This result was achieved less than three months after obtaining access to the first of the Western Australian deposits. Lithium process breakthrough delivers 25-year license agreement In recognition of LIT’s collaboration in developing the lithium mica extraction technology, the owners of L-Max granted LIT an exclusive licence to use the technology in Western Australia for more than 25 years, plus two other licences that can be used anywhere in the world. One of these licences has been assigned to the Cinovec Project for which LIT has a Memorandum of Understanding with European Metals Holdings Limited (ASX: EMH). Access to more deposits in Western Australia LIT's success in producing battery-grade lithium carbonate from lithium mica has prompted global interest and led to a number of collaborative agreements. Those agreements include the Seabrook Rare Metals Venture with Tungsten Mining NL (ASX: TGN), where LIT has the rights to all metals except tungsten. A 20% TGN interest will be free-carried to the point at which a decision is made to commit to feasibility. LIT has extended an agreement with Pilbara Minerals Limited (ASX: PLS) to assess PLS’s Pilgangoora project in the north-west of Western Australia, with a view to presenting PLS with a commercial development proposal by December 2016. Material from Pilgangoora is presently the subject of metallurgical testing. Subsequent to the period end, LIT entered into an agreement with Venus Metals Corporation Limited (ASX:VMC) to assess VMC’s Pilgangoora project in the north-west of Western Australia, with a view to presenting VMC with a commercial development proposal. LIT’s strategy is to create a processing hub in or around Port Hedland and process material currently considered to be uneconomic. From a focus on tin to a major lithium resource in two months In December 2014, LIT announced an agreement with European Metals Holdings Ltd (ASX: EMH). Under the terms of that agreement, LIT agreed to assess the lithium potential of the 100% EMH-owned Cinovec tin/tungsten deposit in the Czech Republic. Page 3 DIRECTORS’ REPORT (Continued) 5. REVIEW OF OPERATIONS (CONTINUED) Although a published lithium resource existed there, EMH recognised that the proposed techniques for lithium extraction involved roasting and hence were high-cost processing routes which historically had not been competitive. Laboratory tests revealed that the Cinovec zinnwaldite responds well to both concentration by flotation and further acid leaching. As a consequence of that metallurgical success and additional drilling, the deposit has been re-modelled, the result being publication of the following resource statement:   an Inferred Resource of 5.5 Mt LCE*, 514.8 Mt @ 0.43% Li2O (0.1% Li cut-off), and an additional Exploration Target of 3.4–5.3 Mt LCE, being 350–450 Mt @ 0.39–0.47% Li2O. *LCE = lithium carbonate equivalent, a common measure for reporting lithium production and demand. LCE = Li2O % x 2.473. *Cautionary statement The potential quantity and grade of the Exploration Target, is conceptual in nature, there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource. Both the conversion of an opportunity into reality via the application of new technology to a 'forgotten resource' and the elevation of an unknown deposit into one of the world's five largest hard-rock lithium deposits are testament to the potential of LIT to realise its ultimate goal: that of controlling the greatest lithium inventory of any company. The rapid progress of developing this processing system is a credit to all involved. The potential to improve recoveries to the extent demonstrated is the holy grail of hydrometallurgical processing. But that isn’t where it ends – the ability to recover value added products from every major metal in the solution suggests LIT is on the verge of unveiling a lithium extraction process commercially unrivalled by anything else presently in production…. …Introducing the Sileach™ process – the Company applied for provisional patent in early February 2016. Further comments in relation to the Sileach™ process are listed below. Looking ahead Subsequent to year end, LIT patented its own process, the Sileach™ process, to extract lithium from spodumene and other lithium silicates. This currently provisional patent will reduce LIT’s reliance on third party technologies. LIT intends to refine and commercialise the Sileach™ process in the coming months by pilot plant testing of a variety of material types. It is currently expected to commence pilot plant testing in June 2016. LIT continues to pursue the production of battery-grade lithium carbonate from micas, and now spodumene, with cost competitive processing techniques. This gives it significant 'first mover' advantage, as does the exclusive nature of its wholly owned Sileach™ process and other extraction technology licences. LIT will assess the Electra Project in Sonora Mexico in joint venture with Alix Resources Corporation (TSXV: AIX). LIT is reviewing other opportunities in Africa, Europe, the Americas and Australia. RESULTS OF OPERATIONS The operating loss after income tax of the Consolidated Entity for the half-year ended 31 December 2015 was $1,759,795 (31 December 2014: $522,601). No dividend has been paid during or is recommended for the financial period ended 31 December 2015. Page 4 DIRECTORS’ REPORT (Continued) FINANCIAL POSITION The Consolidated Entity’s working capital, being current assets less current liabilities was $526,558 at 31 December 2015 (30 June 2015: working capital of $527,523). There has been a marked improvement in the working capital position since LIT changed its strategy to pursue lithium opportunities. LIT continues to receive keen interest from partly-paid shareholders in relation to the conversion of the five cent partly paid shares that are currently paid to $0.021. Subsequent to year end the Company was successful in raising $6.5m which has secured its ability to progress its medium term business objectives. Further information on this is listed in After Balance Date events. In the Directors’ opinion, there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable. SUBSEQUENT EVENTS On 11 January 2016, the Company issued 2,780,750 ordinary fully paid shares on conversion of the five cent partly paid shares paid to $0.021 (LITCC) to fully paid ordinary shares (LIT) at an issue price $0.029 to raise $80,642 before costs. On 15 January 2016, the Company issued 855,000 ordinary fully paid shares on conversion of LITCC to LIT, at an issue price $0.029 to raise $24,795 before costs. On 20 January 2016, the Company issued 30,000,000 ordinary fully paid shares at an issue price $0.14 per share following completion of a $4.2m funding package before costs. LIT initially received $600,000 of the Lanstead investment upfront with the remainder of the investment to be distributed under the terms of an equity sharing agreement between the two parties. Under the agreement, LIT will receive 18 monthly cash settlements for the remaining $3.4m of the investment by Lanstead. This sharing agreement allows LIT to secure much of the potential upside arising from future news flow and any share price appreciation of LIT. The value of further advances subject of the equity sharing agreement will be determined by LIT’s share price each month based on a volume weighted average price for 5 trading days prior to each settlement date measured against a benchmark price of $0.1867 per share. If the LIT share price exceeds the benchmark price for that month, LIT will receive more than 100% of the monthly settlement due on a pro rata basis. Importantly, there is no upper limit placed on the additional funds receivable by the Company as part of the monthly settlements. Should the LIT share price dip below the benchmark price for the month, LIT will receive less than 100% of the expected monthly settlement due, on a pro rata basis (so the total cash received may exceed or fall below $4m). In addition, LIT has agreed to make a value payment to Lanstead of 1,428,571 ordinary shares as consideration for the sharing agreement. The future performance of the LIT share price will not result in any increase to the number of shares issued to Lanstead. On 20 January 2016, the Company issued 150,000 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $4,350. On 20 January 2016, the Company issued 1,485,403 ordinary fully paid shares at various deemed issue prices per share as part of the Director and Senior Management Fee & Remuneration Sacrifice Share Plan. On 22 January 2016, the Company issued 1,028,285 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $29,821. On 29 January 2016, the Company issued 1,563,462 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $45,340. On 5 February 2016, the Company issued 79,735 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $2,312. Page 5 DIRECTORS’ REPORT (Continued) On 26 February 2016, the Company issued 2,160,445 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $62,653. On 4 March 2016, the Company issued 2,927,639 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $84,902. On 11 March 2016, the Company issued 1,242,004 ordinary fully paid shares on conversion of LITCC to LIT at an issue price $0.029 to raise $36,018. Other than as listed above, there have not been any other material events subsequent to the end of the reporting date and the date of this report that have not been included in this financial report. AUDITOR’S INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, Bentleys, to provide the directors of the Consolidated Entity with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on page 6 and forms part of this directors’ report for the half-year ended 31 December 2015. This report has been made in accordance with a resolution of the Board of Directors. Adrian Griffin Managing Director Dated at Perth this 15th day of March 2016 Competent Person’s Statement The information contained in the report relates to Exploration Results of projects owned by Lithium Australia NL and is based on information compiled or reviewed by Mr Adrian Griffin, an employee of the Company and a Member of the Australasian Institute of Mining and Metallurgy. Mr Griffin has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person, as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Griffin has given consent to the inclusion in the report of the matters based on his information in the form and context in which it appears. Page 6 To the Board of Directors Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 As lead audit director for the review of the financial statements of Lithium Australia NL for the half year ended 31 December 2015, I declare that to the best of my knowledge and belief, there have been no contraventions of: the auditor independence requirements of the Corporations Act 2001 in relation to the review; and any applicable code of professional conduct in relation to the review. Yours faithfully BENTLEYS Chartered Accountants Dated at Perth this 15th day of March 2016 MARK DELAURENTIS CA Director CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Half-Year Ended 31 December 2015 Note 31 December 2015 31 December 2014 $ $ Continuing Operations Revenue Other revenue 4,690 25 22 - Occupancy costs Professional fees Corporate fees (35,000) (44,935) (120,168) (16,000) (109,056) (41,878) Employee benefits expense Share based payment expense Administration costs Fair value of investments adjustment Exploration and evaluation costs written off Loss on disposal of subsidiary (369,728) (792,243) (48,712) (256,084) (97,640) (304,553) (8,692) (15,583) (1,522) (25,339) - Loss before income tax Income tax expense (1,759,795) - (522,601) - Loss from continuing operations (1,759,795) (522,601) - - - (50,145) 94,304 - Total comprehensive income for the period (1,665,491) (572,746) Loss for the year attributable to: Members of the controlling entity (1,759,795) (521,776) - (835) (1,759,795) (572,746) (1,665,491) - (571,911) (835) (1,665,491) (572,746) 1.33 0.62 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operation Foreign exchange translation of subsidiary disposed of, transferred to income statement Non-controlling interest Total comprehensive income attributable to: Members of the controlling entity Non controlling interest Basic loss per share (cents per share) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Page 8 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2015 Note Current Assets Cash and cash equivalents Trade and other receivables Other assets Total Current Assets 31 December 2015 30 June 2015 $ $ 999,574 103,236 1,102,810 852,685 91,328 9,375 953,388 3,097 22,000 268,552 8,384 302,033 3,322 22,000 3,365 28,687 1,404,843 982,075 Current Liabilities Trade and other payables 576,252 425,535 Total Current Liabilities 576,252 425,535 TOTAL LIABILITIES 576,252 425,535 NET ASSETS 828,591 556,540 11,710,766 800,935 (11,683,110) 10,565,467 35,583 (10,044,510) 828,591 556,540 Non Current Assets Financial assets Exploration Expenditure Intangibles Property, plant and equipment Total Non Current Assets 5 6 TOTAL ASSETS Equity Issued capital Reserves Accumulated losses 7 TOTAL EQUITY The above statement of financial position should be read in conjunction with the accompanying notes. Page 9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Half-Year Ended 31 December 2015 Share Based Payment Reserve Issued Capital Foreign Currency Translation Reserve $ (41,471) Accumulated Losses Non Controlling Interest $ (8,791,905) $ (171,073) (521,766) (835) (522,601) - Total $ 8,567,085 $ 457,094 Loss for the period - - Exchange differences on translation of foreign subsidiary - - (50,145) - - (50,145) Total comprehensive loss for the period - - (50,145) (521,766) (835) (572,746) Balance at 1 July 2014 $ 19,730 Transaction with owner, directly recorded in equity: Issue of shares Capital raising costs Option valuation reserve 909,371 (88,766) - 8,692 - - - 909,371 (88,766) 8,692 Balance at 31 December 2014 9,387,690 465,786 (91,616) (9,313,671) (171,908) 276,281 Balance at 1 July 2015 10,565,467 129,887 (94,304) (10,044,510) - 556,540 Loss for the period - - (1,759,795) - (1,759,795) Other comprehensive income - - - - - - Exchange differences on translation of foreign subsidiary - - 94,304 - - 94,304 Total comprehensive loss for the period - - 94,304 (1,759,795) - (1,665,491) 1,156,920 (11,621) - - - - 1,156,931 (11,632) - 792,243 - - - 792,243 11,710,766 (121,195) 800,935 - 121,195 (11,683,110) - 828,591 Transaction with owner, directly recorded in equity: Issue of shares Capital raising costs Issue of performance rights and performance option rights Options expired Balance at 31 December 2015 The above statement of changes in equity should be read in conjunction with the accompanying notes. Page 10 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Half-Year Ended 31 December 2015 31 December 2015 31 December 2014 $ $ Payments to suppliers and employees (478,033) (157,280) Payments for exploration and evaluation (219,356) (125,478) Cash Flows from Operating Activities Interest received Net cash outflow from operating activities 4,690 22 (692,699) (282,736) 250 - Cash Flows from Investing Activities Sale of financial assets Purchase of property, plant and equipment (8,123) - Payments for intangible assets (151,511) - Net cash outflow from investing activities (159,384) - Proceeds from issue of shares and options 1,010,593 800,000 Payment for capital raising costs (11,621) (3,591) Net cash inflows from financing activities 998,972 796,409 Net increase in cash held 146,889 513,673 Cash and cash equivalents at the beginning of the period 852,685 334,193 Cash and cash equivalents at the end of the period 999,574 847,866 Cash Flows from Financing Activities The above statement of cash flows should be read in conjunction with the accompanying notes. Page 11 NOTES TO THE FINANCIAL STATEMENTS For The half-year ended 31 December 2015 (continued) 1. CORPORATE INFORMATION The financial report of Lithium Australia NL and controlled entities (“the Consolidated Entity”) for the half-year ended 31 December 2015 was authorised for issue in accordance with a resolution of the directors on 15 March 2016. Lithium Australia NL is a no liability company incorporated in Australia and its shares are publicly traded on the Australian Securities Exchange. The Company changed its name from Cobre Montana NL on 15 July 2015. The nature of the operations and principal activities of the Consolidated Entity are described in the directors’ report that is included in this report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting The half-year financial report is a general-purpose financial statement, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 “Interim Financial Reporting” and other mandatory professional reporting requirements. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. The half-year financial report has been prepared on a historical cost basis, except where applicable for financial assets that have been measured at fair value. Cost is based on the fair value of the consideration given in exchange for assets. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted. For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period. The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report. It is recommended that this financial report be read in conjunction with the annual financial report of Lithium Australia NL as at 30 June 2015 and any public announcements made by the Consolidated Entity during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules. The half-year financial statements have been prepared in accordance with the accounting policies adopted in the consolidated entity’s last annual financial statements for the year ended 30 June 2015. The Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to their operations and effective for the current half year. The Consolidated Entity adopted the following new accounting policies during the half year period: Intangible assets Intangible assets acquired separately Intangible assets with finite lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. The useful live of the intangible asset acquired – Licence fee is 25 years. Internally-generated intangible assets - research and development expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: • the technical feasibility of completing the intangible asset so that it will be available for use or sale; • the intention to complete the intangible asset and use or sell it; • the ability to use or sell the intangible asset; • how the intangible asset will generate probable future economic benefits; • the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and • the ability to measure reliably the expenditure attributable to the intangible asset during its development. Page 12 NOTES TO THE FINANCIAL STATEMENTS For The half-year ended 31 December 2015 (continued) The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criter