KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2013
F-35
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 30. Control is achieved where the Company has
the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
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 31 December 2013 the Group was funded principally by a combination of its cash balances (see note 20),
equity (see note 21) and long-term debt (see notes 22 and 23). The Group has significant levels of planned capital
expenditure during the next 12 months, although the majority of this is discretionary. In order to enable it to fund
these plans, the Group is also looking to sell partial interests in its Iraq interests, to reduce the capital expenditure
requirement and receive sales proceeds, which will help the Group meet its capital expenditure plans in Iraq. It
also continues to focus on collecting the amounts owed from its major customer in Egypt, EGPC, and is actively
pursuing collection of these balances, as evidenced by the significant amounts collected during the year 2013 and
subsequently (see note 19).
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. 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, being 12 months from the date of approval of these financial statements. Thus the Directors
continue to adopt the going concern basis of accounting in preparing these consolidated financial statements.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the
acquisition is measured at the aggregate of the consideration transferred, measured at acquisition date fair value
and the amount of any non-controlling interest in the acquiree. For each business combination the acquirer
measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the
acquiree’s identifiable net assets. Acquisition related costs are recognised in the consolidated statement of income
as incurred.
Where appropriate, the cost of acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted
against the cost of acquisition where they qualify as measurement period adjustments. All other subsequent
changes in the fair value of contingent consideration classified as an asset or liability are accounted for in
accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not
recognised.
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business combinations (continued)
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition
under IFRS 3 (revised 2008) are recognised at their fair value at the acquisition date, except for non-current assets
(or disposal groups) that are classified as held for sale in accordance with
“
IFRS 5
Non-current Assets Held for
Sale and Discontinued Operations”
, which are measured at fair value less costs to sell.
