KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
F-130
3.
SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the International Accounting Standards Board.
Basis of preparation
These consolidated financial statements have been prepared on the historical cost basis except for the
measurement at fair value of share-based payments and certain financial instruments. The accounting policies
have been applied consistently by the Group.
These consolidated financial statements are presented in US Dollars (“USD”), which is the Company’s
functional and presentation currency, rounded off to the nearest thousand. The principal accounting policies are
stated below.
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 27. 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
The directors have, at the time of approving these consolidated financial statements, a reasonable expectation
that the Company and the Group have adequate resources to continue in operational existence for the
foreseeable future, being twelve months from the date of approval of these financial statements. Thus they
continue to adopt the going concern basis of accounting in preparing these consolidated financial statements.
Most of the Group’s planned capital expenditure during the next twelve months is discretionary and the
Group’s projections, taking into account reasonably possible changes in trading conditions, indicate that it
should have enough cash flow to meet minimum commitments, including loan repayments, and continue its
operations as a going concern. In order to provide additional flexibility, the Company has recently signed an
agreement providing additional financing of USD 150 million in the form of a convertible loan, as described
further in note 31.
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.
