Annual Report 2010 - Ophir Energy

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Ophir energy plc | 2010 ANNUAL REPORT
grOUp AccOUnTs | NOTEs TO THE fiNANCiAL sTATEmENTs
Notes to the
financial statements
IFRS 3 (revised) introduces significant changes in the
accounting for business combinations occurring after this
date. Changes affect the valuation of non-controlling
interests (previously “minority interests”), the accounting
for transaction costs, the initial recognition and subsequent
measurement of contingent consideration and business
combinations achieved in stages. These changes will impact
the amount of goodwill recognised, the reported results
in the period when an acquisition occurs and future
reported results.
IAS 27 (revised) requires that a change in the ownership
interest of a subsidiary (without a change in control) is to be
accounted for as a transaction with owners in their capacity
as owners. The revised Standard changes the accounting for
losses incurred by a partially owned subsidiary as well as the
loss of control of a subsidiary.
The changes in IFRS 3 (revised) and IAS 27 (revised)
will affect future acquisitions, changes in, and loss of
control of, subsidiaries and transactions with noncontrolling
interests.
standards and interpretations issued but not yet
effective
Standards issued but not yet effective at the date of these
Financial Statements are listed below.
eFFecTive DATe
(for periods beginning
on or after)
IAS 32 Classification of rights issues
1 February 2010
IFRIC 19 Extinguishing financial
liabilities with equity instruments
IAS 24 (Amended) Related party
disclosures
IFRIC 14 Prepayments of a minimum
funding requirement (amendment)
Improvements to IFRS (issued in May
2010)
IFRS 9 Financial instruments, covering
classification and measurement of
financial assets
1 July 2010
1 January 2011
1 January 2011
1 January 2011
1 January 2013
The impact of the adoption of the above standards has not
yet been assessed by the Group.
2.4 Basis of consolidation
The Group Financial Statements consolidate the Financial
Statements of the Company and the entities it controls
(its subsidiaries) drawn up to 31 December each year.
Basis of consolidation from 1 January 2010
subsidiaries
Subsidiaries are consolidated from the date of their
acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date that
such control ceases. Control comprises the power to govern
the financial and operating policies of the investee so as to
obtain benefit from its activities and is achieved through
direct or indirect ownership of voting rights; currently
exercisable or convertible potential voting rights; or by way
of contractual agreement. The Financial Statements of
subsidiaries are prepared for the same reporting year as the
Parent Company, using consistent accounting policies. All
intercompany balances and transactions, including
unrealised profits arising there from, are eliminated.
A change in the ownership interest of a subsidiary,
without loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it
(i) derecognises the assets (including goodwill) and liabilities
of the subsidiary; (ii) derecognises the carrying amount of
any non-controlling interest; (iii) derecognises the cumulative
translation differences, recorded in equity; (iv) recognises
the fair value of the consideration received; (v) recognises
the fair value of any investment retained; (vi) recognises
any surplus or deficit in profit and loss; (vii) reclassifies the
parent’s share of components previously recognised in other
comprehensive income to profit and loss or retained
earnings, as appropriate.
non-controlling interests
Non-controlling interests represent the equity in a subsidiary
not attributable, directly and indirectly, to the parent
company and is presented separately within equity in
the Consolidated Balance Sheet, separately from equity
attributable to owners of the parent. Losses within a
subsidiary are attributed to the non-controlling interest
even if that results in a deficit balance.
Basis of consolidation prior to 1 January 2010
Certain of the above-mentioned requirements were applied
on a prospective basis. The following differences, however,
are carried forward in certain instances from the previous
basis of consolidation:
Non-controlling interest represents the portion of profit or
loss and net assets in subsidiaries that is not held by the
Group and is presented separately within equity in the
Consolidated Balance Sheet, separately from parent
shareholder’s equity.
Acquisitions of non-controlling interests, prior to 1 January
2010, were accounted for using the entity method.
Losses incurred by the Group were attributed to the
non-controlling interest until the balance was reduced to nil.
Any further excess losses were attributed to the parent,
unless the non-controlling interest had a binding obligation
to cover these.