Prospectus re Admission to the Official List - Heritage Oil

equity are recognised in the income statement, as part of the gain or loss on sale whereapplicable.u) Share-based compensation plansThe Group applies the fair value method of accounting to all equity-classified stock-basedcompensation arrangements for both employees and non-employees. Compensation cost ofequity-classified awards to employees are measured at fair value at the grant date and recognisedover their vesting period with a corresponding increase in equity. The amount recognised as anexpense is adjusted to reflect the actual number of share options that vest.The compensation cost of equity-classified awards to non-employees is initially measured at fairvalue, and periodically remeasured to fair value until the non-employees’ performance iscomplete, and recognised over their vesting period with a corresponding increase to contributedsurplus. Upon the exercise of the award, consideration received is recognised in equity.v) Share capitalCommon Shares are classified as share capital. Incremental costs directly attributable to the issueof new shares or options are shown in equity as a deduction, net of tax, from the proceeds.If the Corporation reacquires its own equity instruments the cost is deducted from equity and theassociated shares are cancelled.w) Earnings per shareBasic earnings per share is calculated by dividing the profit attributable to equity holders of theCorporation by the weighted average number of Common Shares outstanding during thefinancial period.Diluted earnings per share adjusts the figures used in the determination of basic earnings pershare to take into account the after income tax effect of interest and other financing costsassociated with dilutive potential Common Shares and the weighted average number of sharesassumed to have been issued for no consideration in relation to dilutive potentialCommon Shares.The if-converted method used in the calculation of diluted earnings per share assumes theconversion of convertible securities at the later of the beginning of the reported period orissuance date, if dilutive.x) New accounting standards and interpretationsCertain new accounting standards and interpretations have been published that are notmandatory for the 30 September 2007 reporting period. The Corporation’s assessment of theimpact of these new standards and interpretations which have not been adopted is set out below.i) IFRS 8, ‘‘Operating segments’’ (effective from 1 January 2009), replaces IAS 14 and alignssegment reporting with the requirements of the US standard SFAS 131, ‘‘Disclosures aboutsegments of an enterprise and related information’’. The new standard requires a‘‘management approach’’, under which segment information is presented on the same basisas that used for internal reporting purposes. The expected impact is still being assessed bymanagement, but is expected to only impact the disclosures of the Group.The following standards are assessed not to have any impact on the Corporation’s financialstatements:i) IAS 23 (Amendment), ‘‘Borrowing costs’’ (effective from 1 January 2009), requires theGroup to capitalise borrowing costs directly attributable to the acquisition, construction orproduction of a qualifying asset (one that takes a substantial period of time to get ready foruse or sale) as part of the cost of that asset. The Group currently applies the capitalisationapproach to borrowing costs.ii) IFRIC 11, ‘‘IFRS 2—Group and treasury share transactions’’ (effective from 1 January2008), provides guidance on whether share-based transactions involving treasury shares orinvolving group entities (for example, options over a parent’s shares) should be accountedfor as equity-settled or cash-settled share-based payment transactions in the stand-aloneaccounts of the parent and group companies.188