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Nautical Petroleum plc Annual report and accounts 2010
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Notes to the financial statements continued
2. Accounting policies for the consolidated financial statements continued
(2.11) Financial liabilities
Trade and other payables
Current trade and other payables are initially recognised at fair value. Fair value is considered to be the original invoice amount,
discounted where material.
All financial liabilities as defined under IAS 39 are held at amortised cost.
(2.12) Taxation
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on
tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, with the following exceptions:
»» where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
»» in respect of taxable temporary differences associated with investment in subsidiaries, associates and joint ventures, where the
timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future; and
»» deferred income assets are recognised only to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the
related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date. Deferred income tax assets and liabilities are
offset, only if a legally enforcement right exists to set off current tax assets against current tax liabilities, the deferred income taxes relate
to the same taxation authority and that authority permits the Group to make a single net payment.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is
recognised in the income statement.
(2.13) Employee benefits
The Group operates a defined contribution pension scheme. Contributions payable for the year are charged to the income statement.
(2.14) Share-based payments
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the year in which the
performance and/or service conditions are fulfilled, ending on the date on which the relevant individuals become fully entitled to the
award (“vesting point”). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments and value
that will ultimately vest. The income statement charge for the year represents the movement in cumulative expense recognised as at the
beginning and end of that year.
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the income statement on a
straight-line basis over the vesting period, taking account of the estimated number of shares that will vest.
The fair value is determined by use of a binomial model.
(2.15) Separately disclosable items
Items that are both material in size and unusual and infrequent in nature are presented as separately disclosable items in the income
statement or separately disclosed in the notes to the financial statements. The Directors are of the opinion that the separate disclosure of
these items provides helpful information about the Group’s underlying business performance.
(2.16) Commitments and contingencies
Commitments and contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an
outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but
disclosed when an inflow of economic benefits is probable.
(2.17) Changes in accounting policy
The accounting policies adopted are consistent with those of the previous financial year except as described below. The following new
and amended IFRS and IFRIC Interpretations are mandatory for periods beginning on or after 1 July 2009 unless otherwise stated. For
each of the new or amended IFRS and IFRIC interpretations adopted in the period the impact on the financial statements or performance
of the Group is described below:
Amendment to IFRS 2 Share-based Payment: Vesting Conditions and Cancellations
The amendment to IFRS 2 clarifies the definition of vesting conditions and prescribes the treatment for an award that is cancelled. This
amendment did not have an impact on the financial position or performance of the Group.