REG - IG Seismic Services - FY2015 Financial Report <Origin Href="QuoteRef">IGSSq.L</Origin> - Part 2

IG Seismic ServicesAnnouncement

28/04/2016 15:30

- Part 2: For the preceding part double click  ID:nRSb7126Wa 

and is neither amortised nor individually
tested for impairment. 
 
The profit or loss reflects the Group's share of the results of operations of
the associate. When there has been a change recognised directly in the equity
of the associate, the Group recognises its share of any changes, when
applicable, in the statement of changes in equity. Unrealised gains and losses
resulting from transactions between the Group and the associate are eliminated
to the extent of the interest in the associate. 
 
The Group's share of profit or loss of an associate is shown on the face of
the profit or loss and represents profit or loss after tax and non-controlling
interests in the subsidiaries of the associate. 
 
The financial statements of the associate are prepared for the same reporting
period as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group. 
 
After application of the equity method, the Group determines whether it is
necessary to recognise an impairment loss on its investment in its associate.
At each reporting date, the Group determines whether there is objective
evidence that the investment in the associate is impaired. If there is such
evidence, the Group calculates the amount of impairment as the difference
between the recoverable amount of the associate and its carrying value, then
recognises the loss as separate line item in the profit or loss. 
 
3.       Summary of significant accounting policies (continued) 
 
Investment in associates (continued) 
 
Upon loss of significant influence over the associate, the Group measures and
recognises any retained investment at its fair value. Any difference between
the carrying amount of the associate upon loss of significant influence and
the fair value of the retained investment and proceeds from disposal is
recognised in profit or loss. 
 
Non-controlling interest 
 
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately within the Group's equity and consist of the amount of
those interests at the date of obtaining control plus their share of changes
in equity since that date. They are measured at acquisition fair value or at
proportionate share of net assets acquired and this choice is made for each
acquisition separately. Losses within a subsidiary are attributed to the
non-controlling interest even if that results in a deficit balance. Changes in
the Parent's interest in a subsidiary that do not result in a loss of control
are accounted for as equity transactions. 
 
Revenue recognition 
 
Revenue is measured at the fair value of the consideration received or
receivable for goods provided or services rendered less any trade discounts,
value-added tax and similar sales-based taxes after eliminating sales within
the Group. 
 
Revenue is recognized as follows: 
 
•      Revenue arising from production activity is recognized on the date of
delivery of goods and the transfer of title thereto. 
 
•      Interest income is accrued on a regular basis by reference to the
outstanding principal amount and the applicable effective interest rate, which
is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount. 
 
•      Dividend income is recognized where the shareholder's right to receive
a dividend payment is established. 
 
•      Revenue under long-term contracts is recognized in accordance with IAS
11 Construction Contracts as described below. 
 
Construction type contracts 
 
The Group principally operates fixed price contracts. If the outcome of such a
contract can be reliably measured, revenue associated with the construction
contract is recognized by reference to the stage of completion of the contract
activity at year end (the percentage of completion method). 
 
The outcome of a construction contract can be estimated reliably when: (i) the
total contract revenue can be measured reliably; (ii) it is probable that the
economic benefits associated with the contract will flow to the entity; (iii)
the costs to complete the contract and the stage of completion can be measured
reliably; and (iv) the contract costs attributable to the contract can be
clearly identified and measured reliably so that actual contract costs
incurred can be compared with prior estimates. When the outcome of a
construction cannot be estimated reliably, contract revenue is recognized only
to the extent of costs incurred that are expected to be recoverable. 
 
3.       Summary of significant accounting policies (continued) 
 
Construction type contracts (continued) 
 
In applying the percentage of completion method, revenue recognized
corresponds to the total contract revenue (as defined below) multiplied by the
actual completion rate based on the proportion of total contract costs (as
defined below) incurred to date and the estimated costs to complete. 
 
Contract revenue - contract revenue corresponds to the initial amount of
revenue agreed in the contract and any variations in contract work, claims and
incentive payments to the extent that it is probable that they will result in
revenue, and they are capable of being reliably measured. 
 
Contract costs - contract costs include costs that relate directly to the
specific contract and costs that are attributable to contract activity in
general and can be allocated to the contract. Costs that relate directly to a
specific contract comprise: site labor costs (including site supervision);
costs of materials used in construction; depreciation of equipment used on the
contract; costs of design, and technical assistance that is directly related
to the contract. 
 
The Group's contracts are typically negotiated for the construction of a
single asset or a group of assets which are closely interrelated or
interdependent in terms of their design, technology and function. In certain
circumstances, the percentage of completion method is applied to the
separately identifiable components of a single contract or to a group of
contracts together in order to reflect the substance of a contract or a group
of contracts. 
 
Assets covered by a single contract are treated separately when: 
 
•      The separate proposals have been submitted for each asset; 
 
•      Each asset has been subject to separate negotiation and the contractor
and customer have been able to accept or reject that part of the contract
relating to each asset; 
 
•      The costs and revenues of each asset can be identified. 
 
A group of contracts are treated as a single construction contract when: 
 
•      The group of contracts is negotiated as a single package; the contracts
are so closely interrelated that they are, in effect, part of a single project
with an overall profit margin; 
 
•      The contracts are performed concurrently or in a continuous sequence. 
 
Exploration and evaluation assets 
 
The Company recognizes exploration and evaluation costs using the successful
efforts method as permitted by IFRS 6 Exploration for and Evaluation of
Mineral Resources. Under this method, costs related to exploration and
evaluation (license acquisition costs, exploration and appraisal drilling) are
temporarily capitalized until the drilling program results in the discovery of
economically feasible oil and gas reserves. If a determination is made that
the well did not encounter oil and gas in economically viable quantities, the
well costs are expensed to Exploration expenses in the consolidated statement
of profit or loss. Exploration and evaluation assets are recognized at cost
less impairment, if any, as property, plant and equipment until the existence
(or absence) of commercial reserves has been established. 
 
3.       Summary of significant accounting policies (continued) 
 
Exploration and evaluation assets (continued) 
 
Exploration and evaluation assets are subject to technical, commercial and
management review as well as review for indicators of impairment at least once
a year. This is to confirm the continued intent to develop or otherwise
extract value from the discovery. When indicators of impairment are present,
impairment test is performed. If subsequently commercial reserves are
discovered, the carrying value, less losses from impairment of the respective
exploration and evaluation assets, is classified as oil and gas properties
(development assets). However, if no commercial reserves are discovered, such
costs are expensed after exploration and evaluation activities have been
completed. 
 
Non-current assets held for sale and discontinued operations 
 
The Group classifies non-current assets and disposal groups as held for sale
if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. The criteria for held for
sale classification is regarded as met only when the sale is highly probable
and the asset or disposal group is available for immediate sale in its present
condition. Management must be committed to the sale, which should be expected
to qualify for recognition as a completed sale within one year from the date
of classification. 
 
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount as profit or loss after tax from
discontinued operations in the income statement. Property, plant and equipment
and intangible assets are not depreciated or amortised once classified as held
for sale. 
 
Property, plant and equipment 
 
Property, plant and equipment are stated at cost, less accumulated
depreciation and accumulated impairment losses, if any. The initial cost of
the asset includes the purchase price or expenditures incurred that are
directly attributable to the acquisition of the assets. The purchase price is
the aggregate amount paid and the fair value of any other consideration given
to acquire the asset. Major replacements of property, plant and equipment are
capitalized. All other repair and maintenance costs are charged to the profit
and loss component of the consolidated statement of comprehensive income
during the financial period in which they are incurred. 
 
Depreciation on property, plant and equipment is calculated using the
straight-line method over the estimated useful lives, as follows: 
 
 Buildings and structures  30-40 years  
 Machinery and equipment   5-25 years   
 Vehicles                  3-8 years    
 Other                     2-10 years   
 
 
Depreciation methods, useful lives and residual values are reviewed at each
reporting date. 
 
3.       Summary of significant accounting policies (continued) 
 
Leases 
 
Group as a lessee 
 
The determination of whether an arrangement is, or contains, a lease is based
on the substance of the arrangement at the inception date. The arrangement is
assessed for whether fulfillment of the arrangement is dependent on the use of
a specific asset or assets or the arrangement conveys a right to use the asset
or assets, even if that right is not explicitly specified in an arrangement. 
 
Finance leases that transfer substantially all the risks and benefits
incidental to ownership of the leased item to the Group, are capitalised at
the commencement of the lease at the fair value of the leased property or, if
lower, at the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and reduction of the lease liability so as
to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in the profit or
loss. 
 
A leased asset is depreciated over the useful life of the asset. However, if
there is no reasonable certainty that the Group will obtain ownership by the
end of the lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term. Operating lease
payments are recognised as an operating expense in the profit or loss on a
straight-line basis over the lease term. 
 
Group as a lessor 
 
Leases in which the Group does not transfer substantially all the risks and
benefits of ownership of an asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the
carrying amount of the leased asset and recognised over the lease term on the
same basis as rental income. Contingent rents are recognised as revenue in the
period in which they are earned. 
 
Borrowing costs 
 
Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalised as part of the cost of
the asset. All other borrowing costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds. 
 
Intangible assets other than goodwill 
 
Intangible assets acquired separately are measured on initial recognition at
cost. The cost of intangible assets acquired in a business combination is
their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and expenditure
is reflected in profit and loss in the period in which the expenditure is
incurred. The useful lives of intangible assets are assessed as either finite
or indefinite. 
 
3.       Summary of significant accounting policies (continued) 
 
Intangible assets other than goodwill (continued) 
 
Intangible assets with finite lives are amortised over the useful economic
life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least
at the end of each reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits embodied in
the asset are considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is recognised in
the profit or loss as the expense category that is consistent with the
function of the intangible assets. 
 
Intangible assets with a finite life are amortized on a straight-line basis
over their expected useful lives. The useful lives of the Group's intangible
assets are as follows: 
 
 Software  5-10 years  
 Other     3-10 years  
 
 
Intangible assets with indefinite useful lives are not amortised, but are
tested for impairment annually, either individually or at the cash-generating
unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the
change in useful life from indefinite to finite is made on a prospective
basis. 
 
Research costs are expensed as incurred. Development expenditures on an
individual project are recognised as an intangible asset when the Group can
demonstrate: 
 
•      The technical feasibility of completing the intangible asset so that
the asset will be available for use or sale; 
 
•       Its intention to complete and its ability to use or sell the asset; 
 
•       How the asset will generate future economic benefits; 
 
•       The availability of resources to complete the asset; 
 
•       The ability to measure reliably the expenditure during development. 
 
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is
complete and the asset is available for use. It is amortised over the period
of expected future benefit. Amortisation is recorded in cost of sales. During
the period of development, the asset is tested for impairment annually. 
 
Gains or losses arising from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognised in the profit or loss when the asset is
derecognised. 
 
3.       Summary of significant accounting policies (continued) 
 
Financial assets 
 
Initial recognition and measurement 
 
Financial assets within the scope of IAS 39 are classified as financial assets
at fair value through profit or loss, loans and receivables, held-to-maturity
investments, available-for-sale financial assets, or as derivatives designated
as hedging instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial assets at initial recognition. 
 
All financial assets are recognised initially at fair value plus transaction
costs, except in the case of financial assets recorded at fair value through
profit or loss. 
 
Purchases or sales of financial assets that require delivery of assets within
a time frame established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e., the date that the
Group commits to purchase or sell the asset. 
 
Subsequent measurement 
 
The subsequent measurement of financial assets depends on their classification
as described below: 
 
Financial assets at fair value through profit or loss 
 
Financial assets at fair value through profit or loss include financial assets
held for trading and financial assets designated upon initial recognition at
fair value through profit or loss. Financial assets are classified as held for
trading if they are acquired for the purpose of selling or repurchasing in the
near term. Derivatives, including separated embedded derivatives are also
classified as held for trading unless they are designated as effective hedging
instruments as defined by IAS 39. 
 
Financial assets at fair value through profit or loss are carried in the
statement of financial position at fair value with net changes in fair value
presented as finance costs (negative net changes in fair value) or finance
income (positive net changes in fair value) in the profit or loss. 
 
Financial assets designated upon initial recognition at fair value through
profit or loss are designated at their initial recognition date and only if
the criteria under IAS 39 are satisfied. The Group has not designated any
financial assets at fair value through profit or loss. 
 
The Group evaluates its financial assets held for trading, other than
derivatives, to determine whether the intention to sell them in the near term
is still appropriate. When, in rare circumstances, the Group is unable to
trade these financial assets due to inactive markets and management's
intention to sell them in the foreseeable future significantly changes, the
Group may elect to reclassify them. The reclassification to loans and
receivables, available-for-sale or held to maturity depends on the nature of
the asset. This evaluation does not affect any financial assets designated at
fair value through profit or loss using the fair value option at designation,
as these instruments cannot be reclassified after initial recognition. 
 
Derivatives embedded in host contracts are accounted for as separate
derivatives and recorded at fair value if their economic characteristics and
risks are not closely related to those of the host contracts and the host
contracts are not held for trading or designated at fair value though profit
or loss. These embedded derivatives are measured at fair value with changes in
fair value recognised in profit or loss. Reassessment only occurs if there is
a change in the terms of the contract that significantly modifies the cash
flows that would otherwise be required. 
 
3.       Summary of significant accounting policies (continued) 
 
Financial assets (continued) 
 
Loans and receivables 
 
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial
measurement, such financial assets are subsequently measured at amortised cost
using the effective interest rate (EIR) method, less impairment. Amortised
cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance income in the profit or loss. The losses
arising from impairment are recognised in the profit or loss in finance costs
for loans and in cost of sales or other operating expenses for receivables. 
 
Held-to-maturity investments 
 
Non-derivative financial assets with fixed or determinable payments and fixed
maturities are classified as held to maturity when the Group has the positive
intention and ability to hold them to maturity. After initial measurement,
held to maturity investments are measured at amortised cost using the EIR,
less impairment. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included as finance income in the profit
or loss. The losses arising from impairment are recognised in the profit or
loss in finance costs. The Group did not have any held-to-maturity investments
during the years ended 31 December 2015 and 2014. 
 
Available-for-sale financial investments 
 
Available-for-sale financial investments include equity investments and debt
securities. Equity investments classified as available for sale are those that
are neither classified as held for trading nor designated at fair value
through profit or loss. Debt securities in this category are those that are
intended to be held for an indefinite period of time and that may be sold in
response to needs for liquidity or in response to changes in the market
conditions. 
 
After initial measurement, available-for-sale financial investments are
subsequently measured at fair value with unrealised gains or losses recognised
as other comprehensive income in the available-for-sale reserve until the
investment is derecognised, at which time the cumulative gain or loss is
recognised in other operating income, or the investment is determined to be
impaired, when the cumulative loss is reclassified from the available-for sale
reserve to the profit or loss in finance costs. Interest earned whilst holding
available-for-sale financial investments is reported as interest income using
the EIR method. 
 
The Group evaluates whether the ability and intention to sell its
available-for-sale financial assets in the near term is still appropriate.
When, in rare circumstances, the Group is unable to trade these financial
assets due to inactive markets and management's intention to do so
significantly changes in the foreseeable future, the Group may elect to
reclassify these financial assets. Reclassification to loans and receivables
is permitted when the financial assets meet the definition of loans and
receivables and the Group has the intent and ability to hold these assets for
the foreseeable future or until maturity. Reclassification to the held to
maturity category is permitted only when the entity has the ability and
intention to hold the financial asset accordingly. 
 
3.       Summary of significant accounting policies (continued) 
 
Financial assets (continued) 
 
For a financial asset reclassified from the available-for-sale category, the
fair value carrying amount at the date of reclassification becomes its new
amortised cost and any previous gain or loss on the asset that has been
recognised in equity is amortised to profit or loss over the remaining life of
the investment using the EIR. Any difference between the new amortised cost
and the maturity amount is also amortised over the remaining life of the asset
using the EIR. If the asset is subsequently determined to be impaired, then
the amount recorded in equity is reclassified to the profit or loss. The Group
did not have any available-for-sale investments during the years ended 31
December 2015 and 2014. 
 
Derecognition 
 
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is derecognised when: 
 
•     The rights to receive cash flows from the asset have expired; 
 
•      The Group has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a "pass-through" arrangement;
and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred
control of the asset. 
 
When the Group has transferred its rights to receive cash flows from an asset
or has entered into a pass-through arrangement, it evaluates if and to what
extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the asset is recognised to the
extent of the Group's continuing involvement in the asset. In that case, the
Group also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained. 
 
Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset
and the maximum amount of consideration that the Group could be required to
repay. 
 
Impairment of financial assets 
 
The Group assesses, at each reporting date, whether there is objective
evidence that a financial asset or a group of financial assets is impaired. A
financial asset or a group of financial assets is deemed to be impaired if
there is objective evidence of impairment as a result of one or more events
that has occurred since the initial recognition of the asset (an incurred
"loss event") and that loss event has an impact on the estimated future cash
flows of the financial asset or the group of financial assets that can be
reliably estimated. Evidence of impairment may include indications that the
debtors or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the
probability that they will enter bankruptcy or other financial reorganisation
and observable data indicating that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions
that correlate with defaults. 
 
3.       Summary of significant accounting policies (continued) 
 
Financial assets (continued) 
 
Financial assets carried at amortised cost 
 
For financial assets carried at amortised cost, the Group first assesses
whether objective evidence of impairment exists individually for financial
assets that are individually significant, or collectively for financial assets
that are not individually significant. If the Group determines that no
objective evidence of impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset in a group of
financial assets with similar credit risk characteristics and collectively
assesses them for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is, or continues to be, recognised
are not included in a collective assessment of impairment. 
 
If there is objective evidence that an impairment loss has been incurred, the
amount of the loss is measured as the difference between the asset's carrying
amount and the present value of estimated future cash flows (excluding future
expected credit losses that have not yet been incurred). The present value of
the estimated future cash flows is discounted at the financial asset's
original effective interest rate. If a loan has a variable interest rate, the
discount rate for measuring any impairment loss is the current EIR. The
carrying amount of the asset is reduced through the use of an allowance
account and the loss is recognised in profit or loss. Interest income
continues to be accrued on the reduced carrying amount and is accrued using
the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss. The interest income is recorded as finance
income in the profit or loss. Loans together with the associated allowance are
written off when there is no realistic prospect of future recovery and all
collateral has been realised or has been transferred to the Group. If, in a
subsequent year, the amount of the estimated impairment loss increases or
decreases because of an event occurring after the impairment was recognised,
the previously recognised impairment loss is increased or reduced by adjusting
the allowance account. If a write-off is later recovered, the recovery is
credited to finance costs in the profit or loss. 
 
Available for sale financial investments 
 
For available-for-sale financial investments, the Group assesses at each
reporting date whether there is objective evidence that an investment or a
group of investments is impaired. 
 
In the case of equity investments classified as available-for-sale, objective
evidence would include a significant or prolonged decline in the fair value of
the investment below its cost. "Significant" is evaluated against the original
cost of the investment and "prolonged" against the period in which the fair
value has been below its original cost. When there is evidence of impairment,
the cumulative loss - measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that investment
previously recognised in the profit or loss - is removed from other
comprehensive income and recognised in the profit or loss. Impairment losses
on equity investments are not reversed through profit or loss; increases in
their fair value after impairment are recognised directly in other
comprehensive income. 
 
In the case of debt instruments classified as available for sale, impairment
is assessed based on the same criteria as financial assets carried at
amortised cost. However, the amount recorded for impairment is the cumulative
loss measured as the difference between the amortised cost and the current
fair value, less any impairment loss on that investment previously recognised
in the profit or loss. 
 
3.       Summary of significant accounting policies (continued) 
 
Available for sale financial investments (continued) 
 
Future interest income continues to be accrued based on the reduced carrying
amount of the asset, using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss. The interest
income is recorded as part of finance income. If, in a subsequent year, the
fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in the
profit or loss, the impairment loss is reversed through the profit or loss. 
 
Financial liabilities 
 
Initial recognition and measurement 
 
Financial liabilities within the scope of IAS 39 are classified as financial
liabilities at fair value through profit or loss, loans and borrowings, or as
derivatives designated as hedging instruments in an effective hedge, as
appropriate. The Group determines the classification of its financial
liabilities at initial recognition. 
 
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings, net of directly attributable transaction costs. 
 
The Group's financial liabilities include trade and other payables, bank
overdrafts, loans and borrowings, financial guarantee contracts, and
derivative financial instruments. 
 
Subsequent measurement 
 
The measurement of financial liabilities depends on their classification as
described below: 
 
Financial liabilities at fair value through profit or loss 
 
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. 
 
Financial liabilities are classified as held for trading if they are acquired
for the purpose of selling in the near term. This category includes derivative
financial instruments entered into by the Group that are not designated as
hedging instruments in hedge relationships as defined by IAS 39. Separated
embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. 
 
Gains or losses on liabilities held for trading are recognised in the profit
or loss. 
 
Financial liabilities designated upon initial recognition at fair value
through profit or loss are designated at the initial date of recognition, and
only if the criteria in IAS 39 are satisfied. The Group has not designated any
financial liability as at fair value through profit or loss. 
 
Loans and borrowings 
 
After initial recognition, interest bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses
are recognised in profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process. 
 
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the profit or loss. 
 
3.       Summary of significant accounting policies (continued) 
 
Financial liabilities (continued) 
 
Financial guarantee contracts 
 
Financial guarantee contracts issued by the Group are those contracts that
require a payment to be made to reimburse the holder for a loss it incurs
because the specified debtor fails to make a payment when due in accordance
with the terms of a debt instrument. Financial guarantee contracts are
recognised initially as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the best estimate of
the expenditure required to settle the present obligation at the reporting
date and the amount recognised less cumulative amortisation. 
 
Derecognition 
 
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled, or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the profit or loss. 
 
Offsetting of financial instruments 
 
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated statement of financial position if there is a
currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the
liabilities simultaneously. 
 
Inventories 
 
Inventories are valued at the lower of cost and net realisable value. Costs
incurred in bringing each product to its present location and condition are
accounted for as follows: 
 
•      Raw materials: purchase cost on a first in, first out basis; 
 
•      Finished goods and work in progress: cost of direct materials and
labour and a proportion of manufacturing overheads based on the normal
operating capacity, but excluding borrowing costs. 
 
Where payment for inventories is deferred and such an arrangement actually
contains elements of financing, the difference between the purchase price
which is normally paid on trade credit terms and the consideration paid is
recognized as interest expense over the term of the credit and is charged to
the statement of comprehensive income. 
 
Net realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary
to make the sale. 
 
3.       Summary of significant accounting policies (continued) 
 
Impairment of non-financial assets 
 
The Group assesses, at each reporting date, whether there is an indication
that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's (CGU) fair value less costs to sell and its value in
use. Recoverable amount is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets. When the carrying amount of an asset or
CGU exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. 
 
In assessing value in use, the 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 asset. In
determining fair value less costs to sell, recent market transactions are
taken into account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded companies or other
available fair value indicators. 
 
The Group bases its impairment calculation on detailed budgets and forecast
calculations, which are prepared separately for each of the Group's CGUs to
which the individual assets are allocated. These budgets and forecast
calculations generally cover a period of five years. For longer periods, a
long-term growth rate is calculated and applied to project future cash flows
after the fifth year. 
 
Impairment losses of continuing operations, including impairment on
inventories, are recognised in the profit or loss in expense categories
consistent with the function of the impaired asset, except for a property
previously revalued when the revaluation was taken to other comprehensive
income. In this case, the impairment is also recognised in other comprehensive
income up to the amount of any previous revaluation. 
 
The following assets have specific characteristics for impairment testing: 
 
Goodwill 
 
Goodwill is tested for impairment annually as at 31 December and when
circumstances indicate that the carrying value may be impaired. 
 
Impairment is determined for goodwill by assessing the recoverable amount of
each CGU (or group of CGUs) to which the goodwill relates. When the
recoverable amount of the CGU is less than its carrying amount, an impairment
loss is recognised. Impairment losses relating to goodwill cannot be reversed
in future periods. 
 
Intangible assets 
 
Intangible assets with indefinite useful lives are tested for impairment
annually as at 31 December either individually or at the CGU level, as
appropriate, and when circumstances indicate that the carrying value may be
impaired. 
 
3.       Summary of significant accounting policies (continued) 
 
Cash and cash equivalents 
 
Cash represents cash in hand and in the Group's bank accounts and interest
bearing deposits, which can be effectively withdrawn at any time without prior
notice or penalties reducing the principal amount of the deposit. Cash
equivalents are highly liquid short-term investments that are readily
convertible to known amounts of cash and have original maturities of three
months or less from their date of purchase. They are carried at cost plus
accrued interest, which approximates fair value. 
 
Share capital 
 
Ordinary shares are classified as equity. Any excess of the fair value of
consideration received over the par value of shares issued is recognized also
as share premium. 
 
Dividends 
 
Dividends are not recognized as a liability or deducted from equity as at the
reporting date unless they have been declared/approved by the shareholders on
or before the reporting date. Dividends are disclosed in financial statements
if they have been declared after the reporting date, but before the date when
the financial statements are authorized for issue. 
 
Government grants 
 
A government grant is recognized in the statement of financial position
initially as deferred income when there is reasonable assurance that it will
be received and that the company will comply with the conditions attached to
it. Grants that compensate the company for expenses incurred are recognized as
other operating income on a systematic basis in the same periods in which the
expenses are incurred. Government grants include grants for research and
development. 
 
Provisions 
 
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Group expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the profit or
loss net of any reimbursement. 
 
If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is recognized as
finance costs. 
 
Warranties 
 
Provisions for warranty-related costs are recognised when the product is sold
or service provided to the customer. Initial recognition is based on
historical experience. The initial estimate of warranty-related costs is
revised annually. 
 
3.       Summary of significant accounting policies (continued) 
 
Provisions (continued) 
 
Restructuring provisions 
 
Restructuring provisions are recognised only when the recognition criteria for
provisions are fulfilled. The Group has a constructive obligation when a
detailed formal plan identifies the business or part of the business
concerned, the location and number of employees affected, a detailed estimate
of the associated costs, and an appropriate timeline. Furthermore, the
employees affected have been notified of the plans main features. 
 
Contingent liabilities recognised in a business combination 
 
A contingent liability recognised in a business combination is initially
measured at its fair value. Subsequently, it is measured at the higher of the
amount that would be recognised in accordance with the requirements for
provisions above or the amount initially recognised less, when appropriate,
cumulative amortisation recognised in accordance with the requirements for
revenue recognition. 
 
Income tax for the year comprises current and deferred tax. Income tax is
recognized in the statement of income except to the extent that it relates to
items recognized directly in equity, in which case it is recognized in equity.
Parent company is Cyprus resident whereas all subsidiaries are registered in
Russia and Kazakhstan. 
 
Income tax 
 
Current income tax 
 
Current income tax assets and liabilities for the current period are measured
at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date in the
countries where the Group operates and generates taxable income. 
 
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the profit or loss. Management periodically
evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate. 
 
Deferred tax 
 
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. 
 
Deferred tax liabilities are recognised for all taxable temporary differences,
except: 
 
•      When the deferred tax liability arises from the initial recognition of
goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; 
 
•      In respect of taxable temporary differences associated with investments
in subsidiaries, associates and interests in joint ventures, when the timing
of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable
future. 
 
3.       Summary of significant accounting policies (continued) 
 
Income tax (continued) 
 
Deferred tax assets are recognised for all deductible temporary differences,
the carry forward of unused tax credits and any unused tax losses. Deferred
tax assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses can be
utilised, except: 
 
•      When the deferred tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or
loss; 
 
•      In respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures,
deferred tax assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differences can be
utilized. 
 
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to be
recovered. 
 
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. 
 
Deferred tax relating to items recognised outside profit or loss is recognised
outside profit or loss. Deferred tax items are recognised in correlation to
the underlying transaction either in other comprehensive income or directly in
equity. 
 
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets against current income
tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority. 
 
Tax benefits acquired as part of a business combination, but not satisfying
the criteria for separate recognition at that date, are recognised
subsequently if new information about facts and circumstances change. The
adjustment is either treated as a reduction to goodwill (as long as it does
not exceed goodwill) if it was incurred during the measurement period or
recognised in profit or loss. 
 
Value-added tax 
 
The Russian tax legislation permits settlement of value added tax ("VAT") on a
net basis. VAT is payable to the state budget upon invoicing and delivery of
goods, performing work or rendering services, as well as upon collection of
prepayments from customers. VAT on purchases, even not settled at the
reporting date, is deducted from the amount of VAT payable. 
 
Where provision has been made for impairment of receivables, impairment loss
is recorded for the gross amount of the debtor, including VAT. VAT recoverable
arises when VAT input related to purchases exceeds VAT output related to
sales. 
 
3.       Summary of significant accounting policies (continued) 
 
Offsetting 
 
Assets and liabilities are only offset and reported at the net amount in the
consolidated statement of financial position when there is a legally
enforceable right to offset the recognized amounts and the Group intends to
either settle on a net basis, or to realize the asset and settle the liability
simultaneously. 
 
Social expenditures 
 
To the extent that the Group's contributions to social programs benefit the
community at large and are not restricted to the Group's employees, they are
recognized in the statement of comprehensive income as incurred. 
 
Employee benefits 
 
In the normal course of business the Group contributes to the Russian
Federation state pension scheme on behalf of its employees. Mandatory
contributions to the governmental pension scheme are expensed when incurred.
Discretionary pensions and other post-employment benefits are included in
labor costs in the statement of comprehensive income, however, separate
disclosures are not provided as these costs are not material. There are no
other pension plans. The Group contributes to the Russian Federation state
social insurance, medical insurance and unemployment funds on behalf of its
employees. 
 
Financial income and expenses 
 
Finance income comprises interest income on funds invested, dividend income,
and changes in the fair value of financial assets at fair value through profit
or loss, and foreign currency gains. 
 
Interest income is recognized as it accrues in the statement of comprehensive
income, using the effective interest method. Dividend income is recognized in
the statement of income on the date that the Group's right to receive payment
is established, except for dividends from associates, which are deducted from
investment in associates and not recognised in profit and loss. 
 
Finance expenses comprise interest expense on loans and borrowings, unwinding
of the discount on provisions, dividends on preference shares classified as
liabilities, foreign currency losses, changes in the fair value of financial
assets at fair value through profit or loss and impairment losses recognized
on financial assets. All borrowing costs are recognized in the statement of
comprehensive income using the effective interest method. Foreign currency
gains and losses are reported on a net basis. 
 
4.       Changes in accounting policies and disclosures 
 
The accounting policies adopted are consistent with those of the previous
financial year. 
 
During the current year the Group adopted all the new and revised
International Financial Reporting Standards (IFRS) that are relevant to its
operations and are effective for accounting periods beginning on 1 January
2015. 
 
As of 31 December 2015 the Group has early adopted IFRS 10 Consolidated
Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of
Interests in Other Entities. This adoption did not have a material effect on
the accounting policies of the Group. 
 
4.       Changes in accounting policies and disclosures (continued) 
 
The Group has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective. 
 
Standards, interpretations and amendments to published standards that are
issued but not yet effective 
 
Up to the date of approval of the financial statements, certain new Standards,
Interpretations and Amendments to existing standards have been published that
are not yet effective for the current reporting period and which the Group has
not early adopted, as follows: 
 
Issued by the IASB and adopted by the European Union 
 
•      Annual improvements to IFRSs 2010-2012 cycle (effective for annual
periods beginning on or after 1 February 2015). 
 
•      Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
(effective for annual periods beginning on or after 1 February 2015). 
 
•      Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of
Depreciation and Amortisation (effective for annual periods beginning on or
after 1 January 2016). 
 
•      Annual improvements to IFRSs 2012-2014 cycle (effective for annual
periods beginning on or after 1 January 2016). 
 
•      Amendments to IFRS 11: Accounting for Acquisitions of Interests in
Joint Operations (effective for annual periods beginning on or after 1 January
2016). 
 
•      Amendments to IAS 27: Equity Method in Separate Financial Statements
(effective for annual periods beginning on or after 1 January 2016). 
 
•      Amendments to IAS 1: Disclosure Initiative Operations (effective for
annual periods beginning on or after 1 January 2016). 
 
•      Amendments to IAS 16 and IAS 41: Bearer Plants (effective for annual
periods beginning on or after 1 January 2016). 
 
Issued by the IASB but not yet adopted by the European Union 
 
•      IFRS 9 Financial Instruments -Classification and Measurement
(tentatively effective for annual periods beginning on or after 1 January
2018). 
 
•      IFRS 14 Regulatory Deferral Accounts (effective for annual periods
beginning on or after 1 January 2016). 
 
•      IFRS 15 Revenue from Contracts with Customers (effective for annual
periods beginning on or after 1 January 2018) 
 
•      IFRS 16 Leases (effective for annual periods beginning on or after 1
January 2019). 
 
•      Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities:
Applying the Consolidation Exception (effective for annual periods beginning
on or after 1 January 2016). 
 
4.       Changes in accounting policies and disclosures (continued) 
 
Standards, interpretations and amendments to published standards that are
issued but not yet effective (continued) 
 
•      Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture (differed
indefinitely). 
 
•      Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised
Losses (effective for annual periods beginning on or after 1 January 2017). 
 
•       Amendments to IAS 7: Disclosure Initiative (effective for annual
periods beginning on or after 1 January 2017). 
 
The above are expected to have no significant impact on the Group's financial
statements when they become effective. 
 
5.       Significant accounting judgments, estimates and assumptions 
 
The Group makes a number of assumptions and estimates, which may affect the
reporting of assets and liabilities in the next financial year. Estimates and
assumptions are continuously assessed and are based on the management
experience and other factors, including expectations of future events, and are
reasonable under the circumstances. In addition to these estimates, management
also relies on certain judgments in applying the accounting policies. Most
significant judgments, which affect the amounts recorded in the consolidated
financial statements, and estimates, which may result in significant
adjustment of the carrying value of assets and liabilities in the next
financial year are presented below. 
 
Business valuation and impairment test 
 
The preparation of the consolidated financial statements in conformity with
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the consolidated
financial statements and reported amounts of revenues and expenses during the
reporting period. Actual outcomes could differ from these estimates. The key
assumptions concerning the future and other key sources of estimation
uncertainty at the statement of financial position date, that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed below. 
 
The following methodologies (in the course of priority) were applied to most
assets valuations: 
 
•          market valuation; 
 
•          discounted cash flow (DCF) method; 
 
•          multiples method. 
 
5.       Significant accounting judgments, estimates and assumptions
(continued) 
 
Business valuation and impairment test (continued) 
 
In most cases the asset value obtained using the primary method is controlled
using a secondary method. If the controlling method produces a result which is
different from that obtained using the primary method, the following algorithm
is used: 
 
•          the assumptions used in the primary and controlling methods are
double-checked; 
 
•          the factors causing the variation are tried to be determined. 
 
In case of identification of objective factors explaining the variation in
valuation results, the result produced by the primary method shall be used. In
the absence of objective factors explaining the difference in valuation
results, the average of the two value estimates is used. Valuation techniques
are in part based on assumptions that are not supported by observable market
prices or rates. Management believes that changing any such assumption would
not result in a significantly different value. 
 
Management has made a number of judgments, estimates and assumptions relating
to the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these consolidated financial statements in
conformity with IFRS. Actual results may differ from those estimates. 
 
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected. 
 
Construction type contracts 
 
The Group applies judgments in measuring and recognizing contracts accounted
for in accordance with IAS 11 Construction Contracts. Revenue from
construction contracts is recognized in the amount referred to the stage
(percent) of the work performed depending on the completion of the contract.
The percentage of completion is determined based on the proportion that
contract costs incurred for work performed to date bear to the estimated total
contract costs. 
 
Provision for doubtful accounts receivable 
 
Provision for doubtful accounts receivable is based on the assessment of
probability of collecting receivables from certain counterparties. In case of
overall deterioration of the customers' solvency or when an actual outstanding
debt exceeds the estimated level, the actual results may differ from these
estimates. 
 
Contingent tax liabilities 
 
Russian tax legislation is subject to varying interpretations and changes
occur frequently. When the Group's management believes that it is highly
probable that tax authorities may 

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