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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Presentation of financial information
The financial information in this document comprises audited financial information for the Group for the financial years
ended 31 December 2011, 2012 and 2013 and unaudited financial information for the three months ended 31 March
2013 and 2014, in each case, prepared in accordance with International Financial Reporting Standards (“IFRS”) and
extracted without material adjustment from the consolidated financial statements set forth elsewhere in this document.
Unless otherwise indicated, the financial information presented in this Offering Memorandum has been prepared in
accordance with IFRS. The consolidated financial statements of the Group, as at and for each of the years ended 31
December 2011, 2012 and 2013 included in this Offering Memorandum, have been audited by Deloitte LLP,
independent auditors, as stated in their reports appearing herein.
The Group has published on its website financial statements for the years ended 31 December 2011, 2012 and 2013
which differ from, and are therefore not comparable to, the corresponding financial information presented in this
Offering Memorandum. These differences are due to:
•
Discontinued Operations in Russia and Ukraine
. The financial information presented in this Offering Memorandum
for the years ended 31 December 2011, 2012 and 2013 includes the results of operations of the Group for a period in
which the Group received revenues and production, and/or incurred expenses and incurred capital expenditures in,
its Russian and Ukrainian operations. In April 2014 the Group completed the sale of its assets in Ukraine and the
Group is currently engaged in negotiations in respect of the sale of its assets in Russia and expects to complete the
sale during the third quarter of 2014. As a result, the Group has classified its operations in Ukraine and Russia as
discontinued operations in its financial statements included in this Offering Memorandum for the years ended 31
December 2011, 2012 and 2013 and for the three months ended 31 March 2013 and 2014. The financial statements
published on the Group’s website for the years ended 31 December 2011 and 2012 do not classify the results of the
Group’s operations in Ukraine and Russia as discontinued operations.
•
Adoption of IFRS 11
. As a result of adopting IFRS 11 as at 1 January 2014, the Group changed its accounting policy
for its interests in joint ventures. Entities over which the Group exercises joint control are now accounted for using
the equity method, whereas they were previously proportionately consolidated. The Group has applied IFRS 11
retrospectively, in accordance with the transitional provisions and therefore the Group’s consolidated financial
statements included in this Offering Memorandum for the years ended 31 December 2011, 2012 and 2013 have been
restated accordingly.
Non-IFRS financial measures
This Offering Memorandum contains certain financial measures which are not accounting measures within the scope of
IFRS. These measures include EBITDAX and NPV of 1P reserves.
For purposes of this Offering Memorandum the
Group defines:
• EBITDAX as earnings from continuing operations before finance cost, fair value loss on convertible loans, taxes,
depreciation, depletion and amortisation, exploration written off, investment revenue and impairment charges/
(reversal) of oil and gas assets; and
• NPV of 1P reserves as the discounted future net revenue the Group currently expects to receive from proved crude
oil and natural gas reserves of the Group, according to GCA. The oil and gas industry uses NPV of 1P reserves and
similar measures to compare the relative size and value of proved reserves. However such measurements are used by
different companies for differing purposes and the Group’s use or computation of the term NPV of 1P reserves may
not be comparable to the use or computation of similarly titled measures reported by other companies in the oil and
gas industry.
The Group presents these non-IFRS financial measures because it believes that they and similar measures are widely
used by certain investors, securities analysts and other interested parties as supplemental measures of performance and
liquidity. EBITDAX is not a measure of operating performance prepared in accordance with IFRS, and should not be
considered a substitute for gross profit, operating profit, profit/(loss) before tax or cash flow statement data as
determined by IFRS, or as a measure of profitability or liquidity. The Group’s calculation of EBITDAX and NPV of 1P
reserves may be different from the calculation used by other companies. The non-IFRS measures the Group presents may
also be defined differently from similar terms under the Indenture. Some of the limitations of EBITDAX are:
• it does not reflect the Group’s cash expenditures or future requirements for capital expenditures or contractual
commitments;
