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KUWAIT ENERGY plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2014
16
3.
SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These non-statutory consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union.
Basis of preparation
These consolidated financial statements have been prepared on the historical cost basis except for the measurement at
fair value of certain financial instruments. The accounting policies have been applied consistently by the Group.
These consolidated financial statements are presented in US Dollars (“USD”), which is the Company’s functional and
presentation currency, rounded off to the nearest thousand. The principal accounting policies are stated below.
Basis of consolidation
These consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries) as detailed in note 32. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has the ability to affect those returns through its power
over the investee. Specifically, the Group controls an investee if and only if the Group has:
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee)
•
Exposure, or rights, to variable returns from its involvement with the investee, and
•
The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee, including:
•
The contractual arrangement with the other vote holders of the investee
•
Rights arising from other contractual arrangements
•
The Group’s voting rights and potential voting rights
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of
income from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses
are eliminated in full on consolidation.
Going concern
As at 30 June 2014 the Group was funded principally by a combination of its cash balances (see note 21), equity (see
note 22), long-term loans (see notes 24) and convertible loans (see note 25). The Group has significant levels of
planned capital expenditure during the next 12 months, although a significant portion of this is discretionary. In order
to enable it to fund these plans, subsequent to the period ended 30 June 2014, the Group has issued USD 250 million
aggregate principal amount of its Senior Guaranteed Notes due 2019 (see note 35). It also continues to focus on
collecting the amounts owed from its major customer in Egypt, Egyptian General Petroleum Corporation (“EGPC”),
and is actively pursuing collection of these balances, as evidenced by the significant amounts collected during 2014 to
date (see note 20).
The Group’s projections, taking into account reasonably possible changes in trading conditions, indicate that it should
have enough cash flows to meet its minimum commitments, including loan repayments, and continue its operations
for at least 12 months from the date of approval of these financial statements.
Accordingly the Directors have, at the time of approving these financial statements, a reasonable expectation that the
Company and the Group have adequate resources to continue in operational existence for the foreseeable future.
Thus the Directors continue to adopt the going concern basis of accounting in preparing these consolidated financial
statements.