KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2013
F-65
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset and financial liability are disclosed in note 3 to these consolidated financial statements.
Categories of financial instruments*
2013
2012
USD 000’s
USD 000’s
Financial assets
Trade and other receivables
156,845
208,103
Cash and bank balances
131,563
48,384
Financial liabilities
At amortised cost
-Trade and other payables
93,617
44,401
-Long-term loans
88,867
60,000
-Current portion of long term loans
75,649
-
At fair value through profit and loss account (FVTPL)
-Designated as FVTPL - convertible loans
112,551
87,244
-Derivative financial instruments
162
484
*
excluding amounts classified as Held for Sale, details of which are provided in note 14
Fair value of financial instruments
(a)
Cash, Bank, trade and other receivables / payables balances approximates the carrying value due to short-
term nature of these instruments.
(b)
Fair value of long-term loans from banks approximates carrying value which is recognised at amortised
cost. The fair value is based on cash flows discounted using a rate based on the borrowing rate and are
within level 2 of the fair value hierarchy.
(c)
Financial assets and liabilities that are measured subsequent to initial recognition at fair value are
derivatives (note 26) and convertible loans (note 23).
There have been no transfers between categories during the period.
Financial risk management objectives
The Group’s management monitors and manages the financial risks relating to the operations of the Group
through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include
market risk (including commodity price risk, interest rate risk and foreign currency risk), credit risk and liquidity
risk.
Market risk
Market risk is the risk that changes in market prices, such as commodity prices, interest rates and foreign
exchange rates will affect the Group’s income or the value of its holdings of financial instruments. The objective
of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
The Group is exposed to international commodity-based markets. As a result, it can be affected by changes in
crude oil, natural gas and petroleum product prices and interest rates and foreign exchange rates.
