2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Intangible assets (continued) (iv) Amortisation Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired. Intangible assets with definite useful lives are amortised from the date that they are available for use. Amortisation is based on the cost of an asset less its residual value. Amortisation is recognised in profit or loss on a straight–line basis over the estimated useful lives of intangible assets as follows: • Capitalised development costs, software and licence 3 – 6 years Amortisation of producing oil and gas properties (development and production assets) is computed based on the unit of production method using proven and probable reserves. Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate. (v) Exploration and evaluation assets Exploration and evaluation assets are not amortised prior to the conclusion of evaluation activities. At completion of evaluation activities, if technical feasibility is demonstrated and commercial reserves are discovered then, following development sanction, the carrying value of the exploration and evaluation asset is reclassified as a development and production asset, but only after the carrying value is assessed for impairment and where appropriate its carrying value adjusted. If, after completion of evaluation activities in an area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore expires or if the Group decides not to continue exploration and evaluation activity, then the costs of such unsuccessful exploration and evaluation are written off to profit or loss in the period the relevant events occur. MFRS 6 Exploration for and Evaluation of Mineral Resources requires exploration and evaluation assets to be assessed for impairment when facts and circumstances suggest that the carrying amounts may exceed the recoverable amounts. One or more of the following facts and circumstances indicate that an impairment test should be conducted: • The period for which the right to explore in the specific area has expired during the period or will expire in the near future, and it is not expected to be renewed; • Substantive expenditure on further exploration in the specific area is neither budgeted or planned; • Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue activities in the specific area; and • Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Integrated Report 2023 215
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