25
(1)
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,
impairment charges/ (reversal) of oil and gas assets. The Group has included EBITDAX because management
believes it is a useful indicator of operating performance before items which are believed to be exceptional and
not relevant to an assessment of its operational performance. EBITDAX and similar measures are used by
different companies for differing purposes and are often calculated in ways that reflect the circumstances of
those companies. You should exercise caution in comparing the Group’s EBITDAX to the EBITDAX data of
other companies. EBITDAX is not a substitute for operating profit as a measure of operating results or a
substitute for cash flow as a measure of liquidity. EBITDAX is not a measure of performance under IFRS.
EBITDAX as presented below differs from the definition of “Consolidated Cash Flow” contained in the
Indenture. See “
Management’s discussion and analysis of financial condition and results of operations
.”
The following table reconciles EBITDAX to profit for the period from continuing operations for the twelve
months ended 31 March 2014.
For the twelve months
ended 31 March 2014
($ millions)
Profit for the period from continuing operations
..................................................................
28.7
Taxation charges.........................................................................................................................
8.1
Depreciation, depletion and amortisation ................................................................................... 85.0
Net impairment losses / reversal.................................................................................................
1.8
Exploration expenditure written off ........................................................................................... 47.8
(Gain)/loss on held for trading derivative...................................................................................
(0.3)
Fair value loss on convertible loans ........................................................................................... 12.2
Finance costs (net)......................................................................................................................
9.0
EBITDAX.................................................................................................................................. 192.3
(2)
GCA’s estimate of the Group’s NPV of 1P reserves carries an inherent degree of uncertainty and may not take
into account all relevant considerations. Accordingly, investors are advised not to place undue reliance on them
and to consult their own professional advisers in order to assess the value of the Group. The Group’s NPV of 1P
reserves presented above is based on a discount rate of 10%, which, in the judgment of GCA, is appropriate to
calculate the Group’s NPV of 1P reserves, but which may not reflect properly the likelihood that any risk event
discussed in the “
Risk Factors
” section of the Offering Memorandum or other risk unknown to the Group may
occur. As a result, the Group’s NPV of 1P reserves based on this discount rate may not accurately reflect the
real value of the Group or any of its assets. Finally, the Group’s NPV of 1P reserves may be affected by other
risks relating to estimating reserves, producing oil or any other risk discussed in “
Risk Factors—Risks relating
to the Group—The economic valuations contained in the CPR may not provide an accurate estimate of the
value of the Group or its assets.
”
(3)
Total borrowings is the aggregate of the Group’s current and non-current long-term loans and convertible loans.
(4)
Net borrowings is calculated as the Group’s total borrowings less cash and bank balances.
(5)
Pro forma cash and bank balances represents cash and bank balances as at 31 March 2014 adjusted to give
effect to the Offering after the application of proceeds from therefrom in the Refinancing as described in “
Use
of proceeds
.”
(6)
Pro forma total borrowings represents total borrowings as at 31 March 2014 adjusted to give effect to the
Offering and the application of proceeds therefrom in the Refinancing as described in “
Use of proceeds.
”
(7)
Pro forma net borrowings is calculated as pro forma total borrowings less pro forma cash and cash equivalents.
(8)
Pro forma interest expense represents interest expense on total borrowings for the twelve months ended 31
March 2014 after giving effect to the application of net proceeds from the offering of the Notes as described in
“
Use of proceeds
” in this Offering Memorandum, based on the actual interest rate for the Notes. This
calculation does not take into account the fair market valuation effect of conversion of the Convertible Loans.
