70
Impairment (losses)/reversals
Impairment losses are recognised on the Group’s consolidated income statement when there is objective evidence that, as
a result of one or more events that occurred after the initial recognition of the financial asset, the Group’s estimate of the
present value of the future cash flows from the asset will be lower than the asset’s balance sheet carrying amount on the
date of the impairment test. The difference between the present value and the carrying amount will be recognised on the
Group’s consolidated income statement as an impairment loss.
Exploration expenditure written off
Exploration expenditure written off represents intangible exploration and appraisal assets which fail an impairment test,
as described below in “—
Critical accounting policies subject to significant judgments, estimates and assumptions—
Capitalised costs and intangible non-current assets—Impairment of intangible exploration and appraisal assets
”. These
amounts may include those resulting from the Group deciding to relinquish certain licences, for which the Group is
required to provide letters of credit of specified amounts, as a bond of future performance under its minimum work
commitments.
General and administrative expense
General and administrative expense comprises salaries for employees other than operational, technical and engineering
staff, social expenses, provisions for liability and legal costs and other operating costs. General and administrative
expense includes primarily the expensed (i.e., non-capitalised) portion of the Group’s exploration, appraisal and
development costs but also including impairment of trade receivables.
Net result from joint venture
Net result from joint venture represents the Group’s interest in the Karim Small Fields in Oman, which under IFRS 11
cannot be consolidated with the Group’s revenue or expense items, as the Group does not control this asset.
Fair value gain or loss on convertible loans
Under IFRS, the value of the conversion options within the Group’s Convertible Loans are treated as embedded
derivatives which have been determined not to be closely related to the loan arrangements. As a result the Group has
opted to recognise the Convertible Loans as financial liabilities at fair value through its consolidated income statement.
Any change in the fair value of the Convertible Loans during a period which results from a change in the forecasted cash
flows is recognized in the Group’s consolidated income statement as fair value gain or loss on convertible loans. See “—
Critical accounting policies subject to significant judgments, estimates and assumptions—Fair value gain or loss on
convertible loans
.”
Finance costs (net)
Finance costs (net) comprises borrowing costs on bank overdrafts and loans, interest income on funds invested, gains or
losses on hedging instruments, and the unwinding of decommissioning provisions. The Group’s borrowing costs on
loans is generally recognised on the consolidated income statement in the period in which the interest is payable to
lenders, but this amount is reduced by the proportion of the interest in a given period which is capitalised in the cost of
qualifying assets. Qualifying assets are assets which the Group estimates will take a substantial amount of time before
achieving their intended use or sale, and the interest and fees paid to lenders in conjunction with funding these assets are
capitalised and added to the carrying cost of the asset until such time as the assets are substantially ready for their
intended use or sale. As part of the carrying cost of a given asset, these capitalised interest costs result in increased
depletion expenses through cost of sales.
Taxation charge
Taxation charges comprise income tax payable to governments in several of the Group’s operating jurisdictions, based
on taxable profit for the period. Payments to governments of production and royalty taxes are not shown as taxation
charges, but are instead recognised as a reduction to the Group’s recognised revenue.
Comparison of three-month periods ended 31 March 2013 and 31 March 2014
Three months ended 31 March
($ thousands)
2013
2014
