72
This increase in cost of sales was primarily attributable to higher recognised depletion expense of $20.9 million in the
three months ended 31 March 2014 compared to $19.0 million in the three months ended 31 March 2013, resulting from
the increase in the Group’s production, as described above. Also contributing to higher cost of sales in 2013 was an
increase in operating costs, from $12.8 million in the three months ended 31 March 2013 to $14.3 million in the three
months ended 31 March 2014, as a result of the significant increase in the Group’s working interest production volumes
in 2013, particularly in ERQ and Abu Sennan in Egypt.
General and administrative expenses
General and administrative expenses increased by $0.3 million, or 4.7%, from $6.4 million in the three months ended 31
March 2013 to $6.7 million in the three months ended 31 March 2014. This increase was primarily attributable to an
increase in staff costs (which were $2.8 million in the three months ended 31 March 2014 compared to $1.4 million in
the three months ended 31 March 2013) and a higher level of IT expenses resulting from a reduced recovery of central
headquarters costs that were previously charged to assets in jurisdictions where the Group has its discontinued
operations. The increase was partly offset by decreased professional expenses and new acquisition expenses due to fewer
new exploration and development projects in the three months ended 31 March 2014 as compared to the three months
ended 31 March 2013.
Net result from joint venture
Net result from joint venture increased by $0.7 million from $0.4 million in the three months ended 31 March 2013 to
$1.1 million in the three months ended 31 March 2014 due to an increase in profit reported by the Oman joint venture.
This increase in profit was primarily attributable to a decrease in operating expenses.
Fair value loss on convertible loans
Fair value loss on convertible loans increased by $0.1 million, or 3.4%, from $2.9 million in the three months ended 31
March 2013 to $3.0 million in the three months ended 31 March 2014. This increase was primarily attributable to the
Group’s extension of its estimate of the timing of a qualifying IPO. 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) decreased by $1.0 million, or 41.7%, from $2.4 million in the three months ended 31 March 2013 to
$1.4 million in the three months ended 31 March 2014. This decrease was primarily attributable to finance costs on a
short-term loan with Kuwait International Bank in the three months ended 31 March 2013, which was subsequently
repaid.
Taxation charge
Taxation charge increased by $0.1 million, or 5.0%, from $2.0 million in the three months ended 31 March 2013 to $2.1
million in the three months ended 31 March 2014. This increase was primarily attributable to increase in tax due in
Egypt, resulting from the Group’s Area A operations.
Comparison of years ended 31 December 2012 and 31 December 2013
Year ended 31 December
($ thousands)
2012
2013
Revenue ........................................................................................
182,976
262,494
Cost of sales ..................................................................................
(79,044)
(134,919)
Gross profit
.................................................................................
103,932
127,575
Net impairment (loss)/reversal.......................................................
-
(1,801)
Exploration expenditure written off ..............................................
(3,680)
(47,822)
General and administrative expenses ............................................
(20,791)
(26,261)
Operating profit
..........................................................................
79,461
51,691
Net result from joint venture .........................................................
3,052
1,543
Gain/(loss) on held for trading derivative .....................................
266
322
