94-95 / 116
95
94
KUWAIT ENERGY plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
35
15.
ACQUISITION OF SUBSIDIARIES (CONTINUED)
2014 restructuring (continued)
*This represents 31,750 thousand shares of the Company held by KEC. After combination, as at 31 December 2014 it
has been classified as treasury shares of the Group (note 22) in the consolidated balance sheet. Subsequent to the year
ended 31 December 2014, these shares have been purchased by the Company and directly held as treasury shares.
USD 000’s
Consideration settled by way of share for share exchange
60,842
Non-controlling interest in the subsidiary acquired
8,778
69,620
Net assets acquired
(71,951)
Difference between the historical carrying amounts of net assets acquired and
consideration paid has been recognised as a merger reserve
(2,331)
Acquisition of Jannah Hunt Oil Company in 2013
On the 31 January 2013 the Group completed the acquisition of 100% of Jannah Hunt Oil Company (JHOC) by
acquiring its shares, a company with oil and gas assets in Yemen. The acquisition of JHOC added a 15% participating
interest in the producing Block 5 licence. The transaction had an effective date of 1 October 2012 but completed on 31
January 2013 and this is therefore the acquisition date. The transaction is accounted for in 2013 as a business
combination in accordance with IFRS 3, ‘Business Combinations’.
Fair value on
acquisition
USD 000’s
Non-current assets
Property, plant and equipment
129,922
Current assets and current liabilities
Inventories
8,098
Trade and other receivables
175
Cash and cash equivalents
961
Trade and other payables
(4,466)
Non-current liabilities
Future decommissioning provision
(965)
Purchase consideration paid in cash
133,725
USD 30 million was paid in 2012 and was recognised as advance for subsidiary on the balance sheet at 31 December
2012.
The total purchase consideration equals the aggregate of the fair value of the identifiable assets and liabilities of JHOC
and therefore no goodwill has been recorded on acquisition. The fair value is arrived at by Level 3 fair value
measurements.
Transaction costs of USD 996 thousand in respect of the acquisition were recognised in the 2013 consolidated income
statement.
From the date of acquisition to 31 December 2013, JHOC contributed USD 54.9 million to Group revenues and a
profit of USD 4.6 million to the profit of the Group. If the acquisition had been completed on the first day of 2013,
Group revenues and loss for the year would have been USD 267.1 million and USD 295.4 million respectively.
KUWAIT ENERGY plc
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2014
36
16.
INVESTMENT IN JOINT VENTURE
The Group owns a 20% equ
ity interest in Medco L.L.C. (“Medco”), a jointly controlled entity incorporated in Oman,
engaged as operator for Karim Small fields in Oman. In accordance with IFRS 11 Joint Arrangements, the Group has
determined its interest in Medco to be a Joint Venture and accordingly accounts for it using the equity method (see
note 2).
Movement in investment in Joint Venture
2014
2013
USD 000’s
USD 000’s
As at 1 January
10,598
9,055
Share of profit of Medco
1,040
1,543
Dividend received from Medco
(3,500)
-
As at 31 December
8,138
10,598
Summarised financial statement information (100%) of Medco, based on its IFRS financial statements adjusted to
bring the accounting policies of Medco in line with those of the Group, and reconciliation with the carrying amount of
the investment in the Group’s consolidated financial statements are set out below:
Selected information from Medco financial statements
2014
2013
USD 000’s
USD 000’s
Cash and cash equivalents
18,214
19,849
Other current assets
31,516
31,900
Non-current assets
5,535
8,859
Current liabilities
(25,087)
(24,227)
Dividend payable
(10,000)
-
Non-current liabilities
(332)
(295)
Equity
19,846
36,086
Group’s
20% equity interest in Medco
Medco equity attributable to the Group
3,969
7,217
Medco dividend payable attributable to the Group
2,000
-
Adjustments made to bring the accounting policies of Medco in line with
those of the Group*
2,169
3,381
Carrying amount of the Group’s interest in Medco
8,138
10,598
Selected information from Medco financial statements
Year ended
2014
Year ended
2013
USD 000’s
USD 000’s
Revenue
107,466
109,490
Operating cost
(91,356)
(94,103)
Amortization
(3,325)
(3,325)
Taxation charges
(1,525)
(1,452)
Profit and total comprehensive income for the year
11,260
10,610
Group’s 20% equity interest in Medco
Group’s share of pr
ofit of Medco
2,252
2,122
Adjustments made to bring the accounting policies of Medco in line with
those of the Group*
(1,212)
(579)
Share of results from Medco recognised in consolidated income statement
1,040
1,543
*Adjustment represents impact of capitalisation of oil and gas assets development expenditures in accordance with
the Group’s accounting policy which have been charged to the income statement
of Medco.