content_image/214638.jpg content_image/214654.jpg content_image/214655.jpg
## 1 ACCOUNTING POLICIES CONTINUED 

Management has made the following judgements which have the most significant effects on the amounts recognised in the financial statements: 

## RECOVERABILITY OF EXPLORATION AND EVALUATION COSTS 

Expenditure is capitalised as an intangible asset by reference to appropriate CGUs and is assessed for impairment when circumstances suggest that the carrying amount may exceed its recoverable value. This assessment involves judgement as to: 

(i) the timing of future development of the asset; 

(ii) funding structures and financing costs of development; 

(iii) commercial development opportunities for extracting value from the asset; and 

(iv) modelling inputs such as the appropriateness of discount rates, reserve and resource estimates, oil and gas pricing predictions, etc. 

## SHARE OPTIONS 

The Group’s share-based payments were recognised at fair value using a 60% volatility rate based on long-term average standard deviation of the Company’s share price and a 1.5% risk free rate based on current UK Government bond yields. See note 7. 

## 2 LOSS FROM OPERATIONS 

<img src='content_image/214638.jpg'>

<img src='content_image/214654.jpg'>

## 3 BASIC AND DILUTIVE LOSS PER SHARE 

The calculation of the basic and dilutive loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The loss for the financial year for the Group was $3,887,512 (2013 – loss $2,955,526) and the weighted average number of shares in issue for the year was 484,098,484 (2013 – 484,098,484). During the year the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated. At the statement of financial position date, there were 6,150,000 (2013 – 6,150,000) potentially dilutive ordinary shares being the share options (see note 7 for further details). 

## 4 SEGMENT ANALYSIS 

The Company operates in one operating segment (exploration for oil and gas) and in substantially one geographical market (the Falkland Islands), therefore no additional segmental information is presented. 

Of the Group’s total non-current assets, the property, plant and equipment is based in the UK and all other non-current assets are located in the Falkland Islands. 

## 5 STAFF COSTS 

## COMPANY AND GROUP: 

Staff costs (including Directors) comprise: 

<img src='content_image/214655.jpg'>

