98Group financial statementsNotes to the financial statements continued(e) Taxation (Note 25)Tax provisions are recognised when it is considered probable that there will be a future outflow of funds to the tax authorities. In this case, provision is made for the amount that is expected to be settled. The provision is updated at each reporting date by management by interpretation and application of known local tax laws with the assistance of established legal, tax and accounting advisors. These interpretations can change over time depending on precedent set and circumstances in addition new laws can come into effect which can conflict with others and, therefore, are subject to varying interpretations and changes which may be applied retrospectively. A change in estimate of the likelihood of a future outflow or in the expected amount to be settled would result in a charge or credit to income in the period in which the change occurs. Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the level of deferred tax assets recognised that can result in a charge or credit in the period in which the change occurs. Tax provisions are based on enacted or substantively enacted laws. To the extent that these change there would be a charge or credit to income both in the period of charge, which would include any impact on cumulative provisions, and in future periods. (f) Derivatives (Note 13)Under the pre-paid swap transaction with Credit Suisse International (see note 12) JKX has sold forward 36,000 bbl/month of crude at $94.00 Urals Med per barrel while retaining value if prices rise above $130 per bbl. This derivative financial instrument is stated in the statement of financial position at the reporting date at its fair value. Changes in the fair value of this derivative are recorded each period in comprehensive income as specific hedge accounting criteria have been met. The fair value is determined using forward oil price curves which represent the Group's estimates of the prices at which a buyer or seller could contract today for delivery of oil or settlement of an oil-price contract, at future dates. The Group generally bases forward price curves upon readily obtainable market price quotations, as the Group's oil contracts do not generally extend beyond the actively traded portion of these curves. However, the forward price curves used are only an estimate of how future prices will move and are, therefore, subjective. 4. Segmental analysisThe Group has one single class of business, being the exploration for, appraisal, development and production of oil and gas reserves. Accordingly the reportable operating segments are determined by the geographical location of the assets.There are five reportable operating segments which are based on the internal reports provided to the Chief Operating Decision Maker. The Ukraine and Hungary are involved with production and exploration; Russia and the 'Rest of World' are involved in exploration and development and the UK is the home of the head office and purchases material, capital assets and services on behalf of other segments. The 'Rest of the World' segment comprises operations in Bulgaria and Slovakia. Transfer prices between segments are set on an arms length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and segment results include transfers between segments. Those transfers are eliminated on consolidation.Segment results and assets include items directly attributable to the segment. Segment assets consist primarily of property, plant and equipment, inventories and receivables. Capital expenditures comprise additions to property, plant and equipment.
JKX Oil & Gas plc Annual Report 201199At a glance01-17Board statements18-23Operational review24-36Financial review37-47CSR review48-61Directors' reports62-83Financial statements84-136Rest of world 2011Sub Total Eliminations Total $000 $000 $000 $000 $000 $000 $000 $000 External revenue Revenue by location of asset: - Oil - 80,000 - 1,508 - 81,508 - 81,508- Gas - 133,288 - 9,779 - 143,067 - 143,067- Liquefied petroleum gas - 10,881 - - - 10,881 - 10,881- Management services/other 132 1,266 - - - 1,398 - 1,398132 225,435 - 11,287 - 236,854 - 236,854Inter segment revenue: - Management services/other 17,260 - - - - 17,260 (17,260) -- Equipment 11,338 - - - 3,907 15,245 (15,245) -28,598 - - - 3,907 32,505 (32,505) -Total revenue 28,730 225,435 - 11,287 3,907 269,359 (32,505) 236,854Profit before tax (Loss)/profit from operations (9,465) 106,632 (3,745) (3,579) (6,240) 83,603 (1,589) 82,014Finance income 915 - 915Finance cost (852) - (852) 83,666 (1,589) 82,077Assets Property, plant and equipment 1,599 226,667 246,238 20,937 3,393 498,834 - 498,834Intangible assets - 4,119 - 12,916 6,511 23,546 - 23,546Other receivable - - 24,238 - - 24,238 - 24,238Deferred tax 3,828 1,634 7,916 54 - 13,432 - 13,432Cash and cash equivalents 5,406 3,356 5,953 15 4,392 19,122 - 19,122Restricted cash 9,504 - - 273 - 9,777 - 9,777Other segment assets 2,889 7,436 6,997 8,016 (264) 25,074 - 25,074Total assets 23,226 243,212 291,342 42,211 14,032 614,023 - 614,023Total liabilities (43,157) (28,482) (22,780) (11,007) (1,822) (107,248) - (107,248) Non cash expense (other than depreciation and impairment) 1,569 403 - - 176 2,148 - 2,148Impairment of fixed assets/write off of exploration costs - - - 6,704 6,216 12,920 - 12,920Increase in property, plant and equipment and intangible assets 1,924 41,447 101,428 12,382 2,819 160,000 - 160,000Depreciation, depletion andamortisation 618 29,632 56 3,938 83 34,327 - 34,327