KUWAIT ENERGY PLC
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
For the six month period ended 30 June 2017
17
11.
CONVERTIBLE LOANS
30 June
31 December
2017
2016
Unaudited
Audited
US$ 000’s
US$ 000’s
Non-current portion
23,933
117,198
Current portion
124,197
19,075
148,130
136,273
Movement in convertible loan
30 June
31 December
2017
2016
Unaudited
Audited
US$ 000’s
US$ 000’s
As at 1 January
136,273
119,400
Change in fair value
17,011
27,211
Payment
(5,154)
(10,338)
As end of the period
148,130
136,273
The change in fair value since the prior period arises as a result of changes in the forecasted cash flows, and forecasted
likelihood and timing of an equity offering. Of this amount US$ 1.9 million (31 December 2016: US$ 2.4 million) has
been capitalised to qualifying assets in the period, see note 7, resulting in a net charge to the income statement of US$
15.1 million (31 December 2016: US$ 24.8 million).
During 2017 the Group and one of the lenders holding 50% of the principal amended certain terms of the convertible
murabaha agreement. The Group and Qatar First Bank have agreed that, subject to a certain conditions, the principal
and part of the premium amounts outstanding under the convertible murabaha agreement will mandatorily convert
into ordinary shares of the Company prior to the first repayment date. Following this amendment, the loan from this
lender has been recognised entirely as a current liability.
The convertible loans are classified as Level 3 in the fair value hierarchy in all the years presented. Level 3 fair value
measurements are those derived from inputs that are not based on observable market data (unobservable inputs). The
group uses a weighted average discounted cash flow technique to determine the fair value of the loans. The significant
inputs considered in the valuation are likelihood and timing of a conversion event and the discount rate. The discount
rate used was in the range of 10-18% (31 December 2016: 10-18%). Possible changes to the likelihood and timing
assumptions in the fair value measurement could have a maximum impact of increasing the liability by US$2.5 million
or reducing the liability by US$22.5 million.
12.
TRADE AND OTHER PAYABLES
30 June
31 December
2017
2016
Unaudited
Audited
US$ 000’s
US$ 000’s
Trade Payables and accruals
124,617
118,514
Advance against farm-out of working interest (note 10)
12,000
3,500
Joint venture partners payables
5,328
7,568
Accrued interest payable
10,278
10,313
Salaries and bonus payables
3,099
4,473
155,322
144,368