Cosalt plc Annual report & financial statements 2008

Financial statements
Notes to the financial statements
continued
50 Cosalt plc Annual report & financial statements 2008
Notes to the financial statements
q Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will
be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the
obligation at the balance sheet date, and are discounted to present value where the effect is material.
r Discontinued operations
Discontinued operations are separate major lines of business that have been disposed of or classified as held for sale.
s Inventories
Inventories are stated at the lower of cost including an appropriate proportion of production overheads and net realisable values.
t Long-term contracts
The amount of profit attributable to the stage of completion of a long-term contract is recognised when the outcome of the contract
can be foreseen with reasonable certainty. Turnover for such contracts is stated appropriate to the stage of completion plus
attributable profits, less amounts recognised in previous years. Provision is made for any losses as soon as they are foreseen.
Contract work in progress is stated at costs incurred, less those transferred to the profit and loss account, after deducting
foreseeable losses and payments on account not matched with turnover.
Amounts recoverable on contracts are included in debtors and represent turnover recognised in excess of payments on account.
u Government grants
Capital grants received for additions to buildings and plant are taken to deferred income and are released to the income statement
in instalments relating to the relevant asset lives.
Other grants are recognised in the profit and loss account in the same period as the related expenditure.
v Revenue recognition
Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have
been transferred to the buyer.
Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction
at the balance sheet date. The stage of completion is assessed by reference to review of work completed.
No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs for
the possible return of goods, or if there is continuing managerial involvement with goods.
w New standards and interpretations not applied
The Directors have considered new standards and interpretations issued by the IASB and IFRIC, with effective dates after the
date of these financial statements. The Directors do not anticipate that adoption of these standards will have a material impact
on the Group.
The main standards to be applied in future are as follows:
• IFRIC 14 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction clarifies when refunds or
reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on
the impact of minimum funding requirements (MFR) on such assets. It also addresses when a MFR might give rise to a liability.
IFRIC will become mandatory for the Group’s 2009 financial statements with retrospective application required. The Group does
not expect this to impact on the financial statements.
The following Adopted IFRSs were available for early application but have not been applied by the Group in these financial
statements. Their adoption is not expected to have a material affect on the financial statements except for additional disclosure:
• Revised IAS 23 ‘Borrowing Costs’ (mandatory for the year commencing on or after 1 January 2009).
• Revised IAS 1 ‘Presentation of Financial Statements’ (mandatory for the year commencing on or after 1 January 2009).
• Revised IAS 27 ‘Consolidated and Separate Financial Statements’ (mandatory for the year commencing on or after 1 July 2009).
• Amendments to IFRS 2 ‘Share based payment – Vesting Conditions and Cancellations’ (mandatory for the year commencing
on or after 1 January 2009).
• IFRS 8 Operating Segments (Applicable for periods beginning on or after 1 January 2009).