NATS-Annual-Report-2015

Annual Report and Accounts 2015 | NATS Holdings Limited
Financial Statements 95
Notes forming part of the
consolidated accounts
(continued)
Internally-generated intangible assets are amortised on
a straight-line basis over their useful lives, typically over
3 to 12 years. Assets in the course of construction are not
amortised. Where no internally-generated intangible asset
can be recognised, development expenditure is recognised
as an expense in the period in which it is incurred.
Impairment of tangible and intangible assets
excluding goodwill
At each balance sheet date, the group reviews the carrying
amounts of its tangible and intangible assets, including
those in the course of construction, to determine whether
there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order
to determine the extent of the impairment (if any).
Where the asset does not generate cash flows that are
independent from other assets, the group estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.
Recoverable amount is the higher of net realisable value
less costs to sell and the value in use. In assessing value in
use, the estimated future cash flows are discounted to their
present value using the pre-tax nominal regulated rate of
return.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss on an intangible or tangible
asset, excluding goodwill, subsequently reverses, the
carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset (cashgenerating
unit) in prior years. A reversal of an impairment
loss is recognised in the income statement immediately.
Emissions allowances
Consistent with the withdrawal of IFRIC 3, emissions
allowances previously recognised at a valuation are now
recognised at cost. Emissions allowances granted free of
charge are recognised at nil value on the balance sheet as
an intangible asset. As carbon is produced and an obligation
to submit allowances arises, a provision is created. The
provision is measured at book value (nil or carrying amount
of purchased emissions certificates) of the recognised
emissions certificates. If there is an obligation that is not
covered by allowances already on the balance sheet, the
corresponding provision made is measured at current
market prices.
Amounts recoverable on contracts
Where the outcome of a contract can be estimated reliably,
revenue and costs are recognised by reference to the stage
of completion of the contract activity at the balance sheet
date. This is normally measured by the proportion that
contract costs incurred for work performed to date bear
to the estimated total contract costs, except where this
would not be representative of the stage of completion.
Variations in contract work, claims and incentive payments
are included to the extent that they have been, or are more
likely than not to be, agreed with the customer.
Where the outcome of a contract cannot be estimated
reliably, contract revenue is recognised to the extent
of contract costs incurred that it is probable will be
recoverable. Contract costs are recognised as expenses
in the period in which they are incurred.
When it is probable that total contract costs will exceed
total contract revenue, the expected loss is recognised as
an expense immediately.
Share-based payments
The group has applied the requirements of IFRS 2: Share-
Based Payments.
In 2001, the company established an All-Employee Share
Ownership Plan for the benefit of its employees to hold 5%
of the share capital of NATS Holdings Limited. The Plan
Financial
Statements