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KUWAIT ENERGY plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2014
54
28.
DERIVATIVE FINANCIAL INSTRUMENTS
As at 30 June
As at 31 December
2014
2013
2013
2012
2011
Audited
Unaudited
Audited
Audited
Audited
USD 000’s USD 000’s USD 000’s USD 000’s USD 000’s
Financial liabilities carried
at fair value through profit
or loss
Held for trading derivatives
not designated in hedge
accounting relationships
(interest rate cap - see below)
-
327
162
484
750
The Group’s derivative financial instruments are all classified as Level 2 in all years. Level 2 fair value measurements
are those derived from inputs other than quoted prices that are observable for the asset or liability either directly (i.e.
as prices) or indirectly (i.e. derived from prices). The reduction in the fair value amounting to USD nil for the period
ended 30 June 2014 (30 June 2013: USD 158 thousand, year ended 31 December 2013: USD 322 thousand, 31
December 2012: USD 266 thousand, 31 December 2011: USD 75 thousand loss) was recognised in the consolidated
income statement.
During 2011 & 2010 the group had an oil put option designated as a cash flow hedge in order to reduce the Group’s
exposure to fluctuations in oil prices. The change in the fair value of oil put option amounting to USD 3,662 thousand
was recognised in the 2011 consolidated statement of comprehensive income and a realised hedge loss of USD 7,101
thousand was recognised in the 2011 consolidated income statement. The oil options were settled in full in 2011 and
no further commodity instruments were entered into.
Derivatives used for hedging purposes but which do not meet the qualifying criteria for hedge accounting are
classified as ‘Held for trading derivatives’.
Interest rate cap is an agreement to cap the interest rate on facilities at 2 % when the LIBOR is more than 2 % and
equal to or less than 5 %. The interest rate cap matured on 30 June 2014.
The notional amounts of interest rate cap together with the fair value is summarised as follows:
Held for trading Derivatives
Notional principal value
As at 30 June
As at 31 December
2014
2013
2013
2012
2011
Audited
Unaudited
Audited
Audited
Audited
USD 000’s USD 000’s USD 000’s USD 000’s USD 000’s
-Interest rate cap
-
50,000
50,000
50,000
50,000
Fair value (Negative)/ Positive
As at 30 June
As at 31 December
2014
2013
2013
2012
2011
Audited
Unaudited
Audited
Audited
Audited
USD 000’s USD 000’s USD 000’s USD 000’s USD 000’s
-Interest rate cap
-
(327)
(162)
(484)
(750)
.