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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 30 June 2016
39
23.
OBLIGATIONS UNDER FINANCE LEASES
30 June
31 December
2016
2015
Audited
Audited
US$ 000’s
US$ 000’s
Minimum lease payments
Amounts payable under finance leases
Within one year
1,383
1,766
In the second to fifth years inclusive
3,873
4,469
5,256
6,235
Less: future finance charges
(467)
(589)
Present value of lease obligation
4,789
5,646
Present value of minimum lease
payments
Amounts payable under finance leases
Within one year
1,360
1,735
In the second to fifth years inclusive
3,429
3,911
Present value of lease obligation
4,789
5,646
During 2015, the Group sold its new office building in Egypt with a carrying value of US$ 7.1 million for a sales
consideration of US$ 7.5 million. The Group leased back the sold building under a finance lease for a total lease value
of US$ 8.2 million which was settled by a US$ 1.5 million down payment and the remaining lease payments to be paid
over a lease term of 5 years. The Group has the right to buy the leased building at the end of lease period for an agreed
nominal sale price of US$ 1 only. The leased building was recognised as an asset in the consolidated balance sheet at
US$ 7.5 million equal to the present value of the minimum lease payments discounted at an implicit interest rate of
5%. US$ 0.4 million excess of sales consideration over the original carrying amount of building has been deferred and
amortised over the lease term. The Group’s obligations under finance leases are secured by the lessor’s rights over the
leased asset. The lease is on a fixed repayment basis and no arrangements have been entered into for contingent rental
payments.
The fair value of the Group’s lease obligation is approximately equal to the carrying value.
24.
PROVISIONS
30 June
31 December
2016
2015
Audited
Audited
US$ 000’s
US$ 000’s
Decommissioning provisions
12,581
12,397
Retirement benefit obligations
3,301
3,061
15,882
15,458
a)
Decommissioning provisions
The movements in the decommissioning provision over the period is as follows:
30 June
31 December
2016
2015
Audited
Audited
US$ 000’s
US$ 000’s
As at 1 January
12,397
12,433
Unwinding of discount
140
362
New provision and changes in estimate
44
(398)
As at end of end of the period
12,581
12,397