Cosalt plc Annual report & financial statements 2008

Financial statements
Notes to the Company financial statements
continued
78 Cosalt plc Annual report & financial statements 2008
Notes to the Company financial statements
32. Statement of accounting policies continued
The rental costs of all operating leases is charged to the profit and loss account or straight line basis over the lives of the leases.
Profit or loss arising on the sale of properties represents the difference between the net carrying amount and proceeds of sale.
Government grants
Capital grants received for additions to buildings and plant are taken to deferred income and are released to profit and loss
account 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.
Deferred taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without discounting, in
respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen
but not reversed by the balance sheet date, except as otherwise required by FRS 19.
Pension costs
The Company participates in a Group wide pension scheme providing benefits based on final pensionable pay. The assets of the
scheme are held separately from those of the Company. The Company is unable to identify its share of the underlying assets and
liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS 17 ‘Retirement benefits’, accounts
for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the profit and loss account
represents the contributions payable to the scheme in respect of the accounting period.
For defined contribution schemes all contributions are charged directly to the profit and loss account in the periods in which they
are payable.
Foreign currency
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. The exchange
difference arising on the translation of investments in foreign operations is taken to reserves to the extent that there is an effective
hedge in place. Monetary assets and liabilities denominated in foreign currency are translated using the rate of exchange ruling
at the balance sheet date and the gains or losses on translation are included in the profit and loss account.
Share based payments
Equity settled share based payments are measured at fair value (excluding the effect of non market based vesting conditions) at
the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight
line basis over the vesting period, based on the Company’s estimate of the shares that will eventually vest.
For share options where there are no market based vesting conditions, fair value is measured using the Black-Scholes
pricing model.
Share capital
(i) Share capital
Share capital is classified as equity if it is non-redeemable and any dividends are discretionary, or is redeemable but only at the
Company’s option. Dividends on share capital are classified as a liability if it is redeemable on a specific date or at the option
of the Shareholders or if dividend payments are not discretionary. Dividends thereon are recognised in the Consolidated income
statement as a financial expense.
(ii) Dividends
Dividends on non-equity shares are recognised as a liability at the date and expensed on an accruals basis. Equity dividends are
recognised as a liability in the period in which they are paid or approved by Shareholders and recorded directly in equity.
Financial guarantees
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group,
the Company considers these to be insurance arrangements, and accounts for them as such. In this respect the Company treats
the guarantee contracts as a contingent liability until payment under the guarantee becomes probable.