NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
NOT E 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued  
 
An impairment loss is recognized in the income statement whenever the carrying amount of an asset or its cash -
generating unit exceeds its recoverable amount. 
 
The recoverable amount of an asset is the greater of its fair value less costs to sell and its value-in-use.  In assessing 
value-in-use, an asset’s estimated future cash flows are discounted to their present value using a pre -tax discount 
rate that reflects current market assessments of the time value of money and the risks specific to the assets/CGUs.  
In addition, the Group considers market data related to recent transactions for similar assets.  
 
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only 
when it is probable that future economic benefits associated with the item will flow to the group and the cost of the 
item can be measured reliably. All other repairs and maintenance are charged to the consolidated statement of 
profit or loss and comprehensive income during the financial period in which are they are incurred.  
 
Depreciation and Amortisation Expense 
Property and equipment are depreciated on a straight-line basis over their useful lives from the time the asset is 
held and ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period 
of the lease or the estimated useful life of the improvement. 
The depreciation rates used for each class of depreciable assets are:  
 
Class of Non-Current                       Asset Depreciation                          Rate Basis of Depreciation 
Plant and Equipment                       10 – 33%                                             Straight Line 
 
The Group uses the units-of-production method to amortise costs carried forward in relation to its development and 
production assets.  For this approach, the calculation is based upon economically recoverable reserves, being proved 
developed reserves and probable developed reserves, over the life of an asset or group of assets. 
 
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting 
period.  An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying 
amount is greater than its estimated recoverable amount, and recorded as impairment expense within the 
consolidated statement of profit or loss and other comprehensive income.  
 
Gains and losses on disposal s are determined by comparing proceeds with the carrying amount.   These gains and 
losses are included in the statement of profit or loss. 
 
d) Leases 
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement 
at date of inception.  The arrangement is assessed to determine whether its fulfillment is dependent on the use of a 
specific asset or assets and whether the arrangement conveys a right to use the asset, even if that right is not 
explicitly specified in an arrangement. 
 
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and benefits 
incidental to the ownership of the asset, but not the legal ownership to the entities in the Group.  All other leases 
are classified as operating leases.  
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