KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
F-93
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign currencies
The individual financial statements of each Group entity are presented in the currency of the primary
economic environment in which the entity operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial position of each entity are expressed in USD,
which is the functional and presentation currency of the Company.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the
transactions. At each consolidated statement of financial position date, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at the consolidated statement of financial position date. Non-
monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in the consolidated statement of income in the period in which they arise
except for exchange differences on monetary items receivable from or payable to a foreign operation for
which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign
operation, and which are recognised in the foreign currency translation reserve and recognised in consolidated
statement of income on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are expressed in USD using exchange rates prevailing at the consolidated statement of
financial position date. Income and expense items are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates
of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the
Group’s foreign currency translation reserve. Such exchange differences are recognised in the consolidated
statement of income in the period in which the foreign operation is disposed of.
Contingencies
A contingent asset is not recognised in the consolidated financial statements but disclosed when an inflow of
economic benefits is probable.
Contingent liabilities are not recognised in the consolidated financial statements unless the outflow of resources
embodying economic benefits is probable and the amount of the obligation can be measured reliably. They are
disclosed as contingent liabilities unless the possibility of an outflow of resources embodying economic
benefits is remote.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Other borrowing costs are calculated on the accrual basis and are recognised in the consolidated statement of
income in the period in which they are incurred.
Share-based payments
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at
the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions
are set out in note 25.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest.
