Prospectus re Admission to the Official List - Heritage Oil

PART VIII—ILLUSTRATIVE PROJECTIONS OF THE GROUPBasis of PreparationSet out below, for the purposes of illustration only, is a summary of the illustrative projected cash flows ofthe Group for the period from 1 October 2007 to 31 December 2010 (the ‘‘Illustrative Projections’’). TheIllustrative Projections have been prepared by the Directors and should be read in conjunction with theassumptions and the description of the basis of preparation set out below.The Illustrative Projections have been prepared solely for the purpose of complying with the requirementin paragraph 133(b)(ii) of the Committee of European Securities Regulators’ recommendations for theconsistent implementation of the European Commission’s Regulation on Prospectuses no 809/2004(the ‘‘CESR recommendation’’) that this document includes particulars of estimated cash flow for eitherthe two years following publication of this document or, if greater, the period until the end of the first fullfinancial year in which extraction of mineral resources is expected to be conducted on a commercial scaleand for no other reason. In the absence of this requirement in the CESR recommendation, the Directorswould not have included the Illustrative Projections in this document.It is emphasised that the Illustrative Projections, which are unaudited, do not constitute any form offorecast, whether of cash, profit or otherwise. The Illustrative Projections relate to an extended futureperiod and accordingly the estimates and assumptions underlying the projections are inherently highlyuncertain and are based on events that have not taken place, and are subject to significant economic,competitive and other uncertainties and contingencies beyond the Company’s control. Further, given thenature of the Group’s business and industry which is subject to a number of significant risk factors, therecan be no assurance that the projected cash flows can be realised and it is probable that the actual cashflows will be higher or lower, possibly materially, than those projected. The attention of prospectiveinvestors is drawn to the ‘‘Risk Factors’’ set out elsewhere in this document.Since the Illustrative Projections are based on assumptions and factors which may be affected byunforeseen events and relate to an extended future period, the actual results reported may not correspondto those shown in the Illustrative Projections and any differences may be material.Illustrative Projections15 months ending 12 months ending 12 months ending31 December 2008 31 December 2009 31 December 2010$ million $ million $ millionNet cashflow (used by) from operating activities . . . (10) 5 21Taxation ................................ 0 0 0Cashflows from (used by) financing activities ..... 186 (1) (1)Capital expenditure ....................... 116 107 134Movement in cash ........................ 60 (103) (114)Opening cash balance ...................... 62 122 19Closing cash balance ....................... 122 19 (95)The Illustrative projections are not presented in statutory format.For the purposes of the above Illustrative Projections the Directors have assumed that the productionprofile and the operating and capital expenditure assumptions are based on the production profile and theoperating and capital expenditure levels set out in the RPS report in Part III of this document.The following principal bases and assumptions have been used by the Directors in preparing the aboveIllustrative Projections.240