1996 Annual report PDF 36.77MB - Cairn Energy PLC

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Financial Review (continued)Balance SheetOil and Gas AssetsIn 1996, addions and acquisitions of oil and gas assets amounted to£195.1 million (1995: £79.1 million), of which £95.7 million was explorationexpenditure and £99.4 million was development and production expenditure.Most of the 1996 expenditure related to acquiring Command's assets,particularly in lndia. In addition, approximately £10.5 million was spenton Sangu.The Group's two main oil and gas assets are the Sangu gas field, offshoreBangladesh, and the Rawa oil field, offshore lndia. At the year end, thecost of these assets were £1 7.1 million and £ 11 1.2 million respectively.Net Debt and GearingAt 31 December 1996, the Group had net funds of £35.9 million (1995:net debt of £23.2 million, adjusted for £4.9 million share issue proceedsreceived after the year end); there was no gearing (1995: 33%).Going ConcernThe Directors have considered the factors relevant to support a statementon going concern. They have a reasonable expectation that the Companywill continue in operational existence for the foreseeable future and havetherefore used the going concern basis in preparing the financial statements.Financial Risk ManagementCairn's policy is to limit risk associated with adverse movements in the$/£ foreign exchange rate and oil price. As appropriate, Cairn undeltakeslimited hedging of short-term $/£ exchange rate and oil price exposureswithin clearly defined limits, whilst retaining exposure to oil and gas pricesin the medium and long term. For specific capital projects, or acquisitionsdenominated in foreign cunencies, Cairn undertakes appropriate hedgingto limit its exposure to adverse currency movements.Net Assets and Shareholders' FundsNet assets and shareholders' funds were £318.4 million at 31 December1996 (1995: £69.6 million). The main movements in shareholders' fundscame from shares issued in the two rights issues and the new sharesissued as part of the consideration for the Command acquisition.
Report of the AuditorsTo the Members of Cairn Energy PLCWe have audited the accounts on pages 30 to 45 which have been preparedunder the historical cost convention and the accounting policies set outon page 32. We have also examined the amounts disclosed relating to theemduments, share options and long-term incentive scheme interests of theDirectors which form part of the report to Shareholders by the RemunerationCommittee on pages 26 to 28.Respective responsibilties of Directors and Auditors As described onpage 25 the Companyk Directors are responsible for the preparation of theaccounts. It is our responsibility to form an independent opinion, based onour audit, of those accounts and to report our opinion to you.Basis of Opinion We conducted our audt in accordance with AuditingStandards issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the accounts. It also includes an assessment of the signficantestimates and judgements made by the Directors in the preparation of theaccounts, and of whether the accounting policies are appropriate to theGroup's circumstances, consistently applied and adequately disclosed.We planned and performed our audt so as to obtain all the informationand explanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the accounts are freefrom material misstatement, whether caused by fraud or other irregularity orerror. In forming our opinion we also evaluated the overall adequacy of thepresentation of information in the accounts.Opinion In our opinion the accounts give a true and fair view of the state ofaffiirs of the Company and of the Group as at 31 December 1996 and of theproft of the Group for the year then ended and have been properly preparedin accordance with the Companies Act 1985.Emd & YoungChartered Accountants, Registered Auditor, Edinburgh 19 March 1997Report by the Auditors to Cairn Energy PLC on CorporateGovernance MattersIn addiiion to our audit of the accounts, we have reviewed the Directors'statements on pages 24 and 25 concerning the Company's compliancewith the paragraphs of the Code of Best Practice specified for ourreview by the London Stock Exchange and their adoption of thegoing concem basis in preparing the accounts. The objective of ourreview is to draw attention to any non-compliance with Listing Rules12.43(j) and 12.43(v).We carried out our review in accordance with guidance issued by theAuditing Practices Board, and assessed whether the Directors' statementson going concem and internal financial control are consistent with theinformation of which we are aware from our audit. That guidance doesnot require us to perform the additional work necessary to, and we do not,express any opinion on the effectiveness of either the Group's system ofinternal financial control or the Company's corporate governanceprocedures nor on the ability of the Group to continue in operationalexistence.Opinion With respect to the Directors' statements on internal financialcontrol on page 25 and going concern on page 20, in our opinion theDirectors have provided the disclosures required by the Listing Rulesreferred to above and such statements are consistent with the informationof which we are aware from our audit work on the accounts. Based onenquiry of certain Directors and officers of the company, and examinationof relevant documents, in our opinion the Directors' statement on page 24appropriately reflects the Company's compliance with the other paragraphsof the Code specfied for our review by Listing Rule 12.43h).Emst & YoungChartered Accountants, Edinburgh 19 March 1997
Page 2 and 3: Glossary of termsContents1 Highligh
Page 4 and 5: Chairman 's Statement"During 1996,C
Page 6: Chief Executive's Report"Today, Cai
Page 11: Operational ReviewSummaryGroup prod
Page 15 and 16: Operational Review (continued)"Cair
Page 17: North AfricatMiddle EastTunisiaComm
Page 20 and 21: Financial ReviewNet Asset Gmwth 199
Page 24 and 25: Norman Lessels CBE'ChairmanBill Gam
Page 26 and 27: Report of the Directors (continued)
Page 28 and 29: Report of the Remuneration Committe
Page 30 and 31: Report of the Remuneration Committe
Page 32 and 33: Consolidated Profit and Loss Accoun
Page 34 and 35: w zw1.mzLLL'L
Page 36 and 37: Notes to the Accounts (continued)Fo
Page 42 and 43: ~ --Notes to the Accounts (continue
Page 44 and 45: Notes to the Accounts (continuedFor
Page 46 and 47: Notes to the Accounts (continuedlFo
Page 48 and 49: Five Year SummarvConsolidated pmm a
Page 50: Notice of Annual General Meeting!No

1996 Annual report PDF 36.77MB - Cairn Energy PLC

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