Amortization of the asset begins when development is complete and the asset is available for use or sale. It is amortized over the period of expected future benefit. Amortization is recorded in cost of sales. 

High Liner monitors the level of product development costs and process development costs against all the criteria set out above. These include the requirement to establish that a flow of economic benefits and the ability to use or sell the product or process developed is probable, before costs are capitalized. For High Liner this is evident only shortly before a product is launched into the market or a process is integrated into production. The level of costs incurred after these criteria have been met is currently not material. 

## operating SegmentS 

The Company’s operating segments are based on the geographic markets it serves and are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”). The Chief Executive Officer has authority for resource allocation and assessment of the Company’s performance and is therefore the CODM. 

## employee future benefitS 

## (i) Defined benefit plans 

For defined benefit pension plans and other post-employment benefits, the net periodic pension expense is actuarially determined on an annual basis by independent actuaries using the projected unit credit method pro-rated on service and management’s best estimate of expected plan investment performance, salary escalation and retirement ages of employees. 

The determination of benefit expense requires assumptions such as the expected return on assets available to fund pension obligations, the discount rate to measure obligations, the projected age of employees upon retirement, the expected rate of future compensation and the expected mortality rate of pensioners. For the purpose of calculating the expected return on plan assets, the assets are valued at fair value. Actual results will differ from results, which are estimated based on assumptions. The vested portion of past service cost arising from plan amendments is recognized immediately in the income statement. The unvested portion is amortized on a straight-line basis over the average remaining period until the benefits become vested. The asset or liability recognized in the statement of financial position is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability. All actuarial gains and losses that arise in calculating the present value of the defined benefit obligation and the fair value of plan assets are recognized immediately in the statement of comprehensive income. For funded plans, surpluses are recognized only to the extent that the surplus is considered recoverable. Recoverability is primarily based on the extent to which the Company can unilaterally reduce future contributions to the plan. 

Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to the creditors of the Company, nor can they be paid directly to the Company. Fair value is based on market price information and in the case of quoted securities it is the published bid price. The value of any defined benefit asset recognized is restricted to the sum of any past service costs and actuarial gains and losses not yet recognized and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. 

## (ii) Defined contribution plans 

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. 

## (iii) Share-based payments 

The Company has a share-based payment plan, which is described in note 18  and recognizes compensation expense for option awards using the fair value method of accounting. 

The Company’s share option plan includes tandem Share Appreciation Rights (“SARs”) to option grants, which allow the employee to either exercise the share option for shares, or to exercise the tandem SARs and thereby receive the value of the share option in cash. As this is an option for the holder, the Company applies the cash settled share-based payments rules in its accounting for the plan. 

The Company accrues compensation expense with a corresponding increase in liabilities in the amount that represents the fair value of the amount payable to employees in respect of SARs, over the period that the employees unconditionally become entitled to payment. The liability is re-measured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as personnel expense in the respective functional area in profit or loss. 

When employees exercise their share options for shares, thereby cancelling the tandem SARs, share capital is increased by the sum of the consideration paid by the employee and the liability reversed, with any difference being recorded in income. 

