74
impairment losses of $1.5 million and $0.3 million on Block 5 and Block 43 fields in Yemen, respectively, in 2013 in
order to match the carrying value of the assets to their recoverable value on a value in use basis as at 31 December 2013.
Exploration expenditure written off
Exploration expenditures written off were $47.8 million in 2013, compared to $3.7 million in 2012. These write offs
were primarily attributable to $29.2 million in respect of the Group’s operations in Latvia, where in 2013 the Group
decided to relinquish or sell its licences after initial exploration efforts were unsuccessful. Also included in the Group’s
impairment losses in 2013 were amounts of $15.8 million relating to Pakistan, $1.8 million relating to Block 83 in
Yemen and $1.1 million relating to Somalia, due to unsuccessful exploration efforts in these countries.
General and administrative expenses
General and administrative expenses increased by $5.5 million, or 26.4%, from $20.8 million in 2012 to $26.3 million in
2013. This increase was primarily attributable to an increase in staff costs (which were $10.3 million in 2013 compared
to $6.2 million in 2012) resulting from an increase in full-time employee headcount, increase in salaries, one time
termination costs of certain employees and diminished ability to recover central headquarters costs previously charged to
assets in jurisdictions where the Group has discontinued operations. Increases in legal and professional fees (relating to
financing transactions in 2013) and rent expenses (relating to the office relocation in Kuwait) also contributed to this
increase.
Net result from joint venture
Net result from joint venture decreased by $1.6 million, or 51.6%, from $3.1 million in 2012 to $1.5 million in 2013 due
to a decrease in profit reported by the Oman joint venture. This decrease in profit was primarily attributable to an
increase in operating expenses, partly offset by an increase in revenue.
Fair value loss on convertible loans
Fair value loss on convertible loans increased by $7.6 million from $4.5 million in 2012 to $12.1 million in 2013. This
increase was primarily attributable to a full twelve months of fair valuation in 2013 on convertible loans, all of which
were first drawn during mid of 2012 and the Issuer’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
.”
Foreign exchange gain/(loss)
Foreign exchange loss was $3.8 million in 2013, as compared to a foreign exchange gain of $0.3 million in 2012. This
change was primarily attributable to an exchange rate loss on the one-off conversion to US dollars of amounts received
from EGPC in Egyptian pounds. See “
—Material factors affecting results of operations—Receipt of cash payments from
EGPC
.”
Finance costs (net)
Finance costs (net) increased by $8.9 million, or 641.6%, from $1.2 million in 2012 to $10.1 million in 2013. This
increase was primarily attributable to a full twelve months of interest in 2013 on borrowings under the Group’s
Borrowing Base Facilities and Convertible Loans, all of which were first drawn during 2012. The increase was also due
to the initial draw on the Group’s Arab Bank Facility in 2013 and further draws on the Group’s Borrowing Base
Facilities and Convertible Loans in 2013, resulting in higher debt levels and interest payments.
Taxation charge
Taxation charge decreased by $0.2 million, or 2.4%, from $8.3 million in 2012 to $8.1 million in 2013. This decrease
was primarily attributable to decrease in tax due in Egypt, resulting from Area A operations.
Comparison of years ended 31 December 2011 and 31 December 2012
Year ended 31 December
($ thousands)
2011
2012
Revenue ........................................................................................
138,518
182,976
Cost of sales ..................................................................................
(54,764)
(79,044)
