Annual Report 2007 in PDF - Cairn Energy PLC
Annual Report 2007 in PDF - Cairn Energy PLC
Annual Report 2007 in PDF - Cairn Energy PLC
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NOTES TO THE ACCOUNTS<br />
For the year ended 31 December <strong>2007</strong><br />
1. Account<strong>in</strong>g Policies<br />
(a) Basis of preparation<br />
<strong>Cairn</strong> prepares its accounts on a historical cost basis. Where there are assets and liabilities calculated on a different basis, this<br />
fact is disclosed <strong>in</strong> the relevant account<strong>in</strong>g policy.<br />
(b) Account<strong>in</strong>g standards<br />
<strong>Cairn</strong> prepares its accounts <strong>in</strong> accordance with applicable International F<strong>in</strong>ancial <strong>Report</strong><strong>in</strong>g Standards (‘IFRS’) as adopted by the<br />
EU. The Group’s f<strong>in</strong>ancial statements are also consistent with IFRS as issued by the International Account<strong>in</strong>g Standards Board<br />
(‘IASB’).<br />
Relevant new standards and <strong>in</strong>terpretations issued by the IASB, but not yet effective and not applied <strong>in</strong> these f<strong>in</strong>ancial<br />
statements, are as follows:<br />
Date of adoption<br />
Title Change to account<strong>in</strong>g policy by <strong>Cairn</strong> Impact on <strong>in</strong>itial application<br />
Effective date from 1 March <strong>2007</strong><br />
IFRIC 11 ‘Group and Treasury<br />
Share Transactions’<br />
Share-based payment awards<br />
relat<strong>in</strong>g to employees of a subsidiary<br />
will be recognised <strong>in</strong> the equity of<br />
that company.<br />
Effective date from 1 January 2009<br />
IFRS 8 ‘Operat<strong>in</strong>g Segments’ No changes to current account<strong>in</strong>g<br />
policy.<br />
Revised IAS 23 ‘Borrow<strong>in</strong>g<br />
Costs’<br />
Revised IAS 1 ‘Presentation of<br />
F<strong>in</strong>ancial Statements’<br />
Effective date from 1 July 2009<br />
Revised IAS 27 ‘Consolidated<br />
and Separate F<strong>in</strong>ancial<br />
Statements’<br />
Revised IFRS 3 ‘Bus<strong>in</strong>ess<br />
Comb<strong>in</strong>ations’<br />
May result <strong>in</strong> more borrow<strong>in</strong>g costs<br />
be<strong>in</strong>g capitalised than under current<br />
policy.<br />
No changes to current account<strong>in</strong>g<br />
policy.<br />
No changes to current policy for<br />
<strong>Cairn</strong> <strong>Energy</strong> <strong>PLC</strong> but will impact<br />
Group subsidiaries.<br />
1 Jan 2008 Decrease <strong>in</strong> reta<strong>in</strong>ed earn<strong>in</strong>gs<br />
of <strong>Cairn</strong> <strong>Energy</strong> <strong>PLC</strong>, with<br />
correspond<strong>in</strong>g adjustment <strong>in</strong><br />
other debtors. There will be no<br />
impact at Group level.<br />
1 Jan 2009 Alternative disclosures regard<strong>in</strong>g<br />
segmental performance.<br />
1 Jan 2009 Decrease <strong>in</strong> borrow<strong>in</strong>g costs<br />
charged to the Income<br />
Statement, with correspond<strong>in</strong>g<br />
<strong>in</strong>crease <strong>in</strong> assets.<br />
1 Jan 2009 Presentation and disclosure<br />
requirements for certa<strong>in</strong> items<br />
<strong>in</strong> the Income Statement.<br />
I Jan 2009 No impact on <strong>Cairn</strong> <strong>Energy</strong> <strong>PLC</strong><br />
Group or Company accounts.<br />
Expens<strong>in</strong>g of all transaction costs. 1 Jul 2009 Applies only to bus<strong>in</strong>ess<br />
comb<strong>in</strong>ations after effective<br />
date.<br />
No other IFRS as issued by the IASB which are not yet effective are expected to have an impact on the Group’s or Company’s<br />
f<strong>in</strong>ancial statements.<br />
Dur<strong>in</strong>g the year, the Group adopted IFRIC 8 ‘Scope of IFRS 2’; amendment to IFRS 2 ‘Share-based Payment – Vest<strong>in</strong>g<br />
Conditions and Cancellations’; amendment to IAS 1 ‘Presentation of F<strong>in</strong>ancial Statements – Capital Disclosures’; and IFRS 7<br />
‘F<strong>in</strong>ancial Instruments: Disclosures’, amendment to IAS 32 ‘F<strong>in</strong>ancial Instruments: Disclosure and Presentation’.<br />
(c) Presentational currency<br />
The functional currency of <strong>Cairn</strong> <strong>Energy</strong> <strong>PLC</strong>, the ultimate parent company of the Group, is Sterl<strong>in</strong>g. These accounts have been<br />
presented <strong>in</strong> US Dollars ($), the functional currency of most companies with<strong>in</strong> the Group. It is deemed to be more appropriate to<br />
present the f<strong>in</strong>ancial statements <strong>in</strong> l<strong>in</strong>e with the functional currency of the majority of the Group. The Group’s policy on foreign<br />
currencies is detailed <strong>in</strong> Note 1(p).<br />
CAIRN ENERGY <strong>PLC</strong> ANNUAL REPORT <strong>2007</strong> 77