NIG Prospectus - London Stock Exchange

Level: 8 – From: 8 – Thursday, August 9, 2007 – 2:20 pm – mac5 – 3776 Section 10b : 3776 Section 10bsubstantially all the activities necessary to prepare the asset for its intended use or sale arecomplete. Other finance costs are recognised as an expense in the period in which they areincurred.Development costsExpenditure on development activities which are not expected to generate future economicbenefits are written off as incurred. Development costs are carried forward only if specific criteriaare met. Such development costs carried forward are amortised over their estimated useful liveson a straight line basis and are subject to regular impairment review.Share-based PaymentCertain employees of the company receive remuneration in the form of share-based paymenttransactions, whereby the employees render services in exchange for shares (“equity settledtransactions”).Equity-settled transactionsThe cost of equity-settled transactions with employees is measured under the intrinsic valuemethod. Under this method, the cost is determined by comparing the period end market value ofthe company’s shares with the issue price. The cost of equity settled transactions is recognised,together with a corresponding increase in equity, over the period in which the performanceconditions are fulfilled, ending on the date on which the shares vest.GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the netidentifiable assets acquired at the date of acquisition. Goodwill is measured at cost lessimpairment losses. Goodwill is tested for impairment, annually or more frequently if events orchanges in circumstances indicate that the carrying value may be impaired. For the purpose ofimpairment testing, goodwill is allocated to cash generating units.Property, plant and equipment and depreciationProperty, plant and equipment are stated at cost/valuation less accumulated depreciation andimpairment losses. Depreciation is calculated to write off the cost or valuation, less the estimatedresidual value of property, plant and equipment, on a straight-line basis over their estimated usefullives as follows:Freehold propertyLong leasehold propertyShort leasehold propertyProperty on leasehold landPlant and machineryMotor vehiclesFurniture and equipmentLower of 50 years or remaining useful lifeLower of 50 years or remaining lease termLease term4 to 20 years1 to 15 years2 to 10 years4 to 10 yearsAny increase arising on revaluation is credited directly to shareholders’ equity as “revaluationreserve” except to the extent where the increase reverses a revaluation decrease related to thesame asset for which a decrease in valuation has previously been recognised as an expense, it iscredited to the consolidated statement of income. Any decrease in the net carrying amount arisingon revaluation is charged directly to the consolidated statement of income, or charged to therevaluation reserve to the extent that the decrease is related to an increase for the same assetwhich was previously recorded as a credit to the revaluation surplus.F-23