Annual Report

Notes – Marine Subsea Consolidated
establishes joint control over the economic activities of the entity.
Investments in joint ventures are accounted for using the equity method
of accounting and are initially recognised at cost.
Unrealised gains on transactions between the group and its joint
ventures are eliminated to the extent of the group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting
policies of joint ventures have been changed where necessary to ensure
consistency with the policies adopted by the group.
Dilution gains and losses arising in investments in joint ventures are
recognised in the income statement.
2.3 Operating segments
An operating segment is a group of assets and operations engaged in
providing products or services that are subject to risks and returns that
are different from those of other operating segments. A geographical
segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns that are
different from those of segments operating in other economic environments.
The segment information is presented on the same basis as that
used for internal reporting purposes.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the group’s entities
are measured using the currency of the primary economic environment
in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in USD. This is also the functional
currency of all the significant subsidiaries in the Group.
(b) Transactions and balances
All transactions in currencies other than USD are included in the
accounts at exchange rate on the date of the transactions. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement.
2.5 Vessels, rig and other equipment
Vessels, rig and other equipment comprise mainly of multipurpose/
intervention vessels, work accommodation barge vessels and semi
submersiable. All vessels, rig and equipment are stated at historical cost
less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the 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. The carrying amount
of the replaced part is derecognised. All other repairs and maintenance
are charged to the income statement during the period in which they
are incurred. Dry-docking expenses are capitalised as incurred and
depreciated over the estimated useful life of the asset, i.e. until the next
dry-docking. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income statement
during the period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to
allocate their cost less residual values over their estimated useful lives.
Borrowing cost directly attributable to the aqusition or construction
of a qualifying asset is capitalized as part of the cost of that asset.
(note 2.20)
The assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
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 (note 2.6).
Gains and losses on disposals are determined by comparing the proceeds
with the carrying amount and are recognised within ‘Other (losses)/gains
– net’ in the income statement.
2.6 Impairment of non-financial assets
Goodwill and assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units).
These groups can not be on a higher level than the operating segments
are divided into. Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at each
reporting date.
2.7 Financial assets
The group classifies its financial assets in the following categories: at fair
value through profit or loss, loans and receivables, and available-for-sale.
The classification depends on the purpose for which the financial assets
were acquired. Management determines the classification of its financial
assets at initial recognition.
(a) Financial assets at fair value through profit or loss
Derivatives are categorised as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are included in current assets, except for maturities greater than 12
months after the balance sheet date. These are classified as non-current
assets. The group’s loans and receivables comprise ‘trade and other
Annual Report 2009 Marine Subsea 27