(Preliminary Results Announcement) PDF 0.71MB - Cairn Energy PLC

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3 Assets and Investments: Financial Assets and Working Capital3.1 Available-for-sale Financial AssetsGroupListed equityshares$mFair value of the residual available-for-sale financial asset recognised at date of sale 2,591.0Deficit on valuation (127.7)As at 31 December 2011 2,463.3Disposals (1,380.5)Surplus on valuation 55.6As at 31 December 2012 1,138.4Available-for-sale financial assets represent the Group's remaining strategic investment in the fully-diluted share capital of<strong>Cairn</strong> India, listed in India, which by its nature has no fixed maturity or coupon rate. These listed equity securities presentthe Group with an opportunity for return through dividend income and trading gains.Following the 2011 disposal of its majority shareholding in <strong>Cairn</strong> India, the Group disposed of a further 11.5% of itsshareholding in two separate transactions in June and September 2012 resulting in the recognition of a loss of $81.5m inthe Income Statement. The remaining minority holding of 10.3% is not held for trading and continues to be classified asavailable-for-sale. The fair value of $1,138.4m (2011: $2,463.3m) is based on the closing market value of INR 319.10(2011: INR 314.25) at 31 December 2012.3.2 Net Funds31 December 31 December20122011$m $mBank deposits 2.3 -Cash and cash equivalents 1,586.3 4,730.7Bank loan (29.6) -Net funds 1,559.0 4,730.7Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varyingperiods from overnight deposits to three months depending on the cash requirements of the Group and Company. Thebank loan represents amounts drawn under the Agora Oil & Gas AS revolving exploration loan facility.26
4 Assets and Investments: Intangible Assets4.1 Intangible Assets – OtherGroupGoodwill$mSoftwareCosts$mTotal$mCostAt 1 January 2011 67.2 8.9 76.1Exchange differences arising - (0.1) (0.1)Additions - 1.8 1.8At 1 January 2012 67.2 10.6 77.8Exchange differences arising 11.6 0.6 12.2Additions 473.9 4.5 478.4At 31 December 2012 552.7 15.7 568.4Amortisation and impairmentAt 1 January 2011 4.4 6.8 11.2Exchange differences arising - (0.1) (0.1)Charge for the year - 2.7 2.7Impairment 62.8 - 62.8At 1 January 2012 67.2 9.4 76.6Exchange differences arising - 0.5 0.5Charge for the year - 2.0 2.0At 31 December 2012 67.2 11.9 79.1Net book value at 31 December 2012 485.5 3.8 489.3Net book value at 31 December 2011 - 1.2 1.2Net book value at 1 January 2011 62.8 2.1 64.9Goodwill additions in 2012 relate to the corporate acquisitions during the year. Details of these can be found in note 2.1.For impairment testing, this goodwill has been allocated to the North Sea operating segment. No impairment of goodwillwas identified at 31 December 2012. At that date, the recoverable amount of North Sea assets is not materially differentfrom its carrying value.The key assumptions in determining the recoverable amount of the North Sea assets are the values attributed to firmexploration prospects and the Skarfjell discovery currently under appraisal and the underlying oil price and discount rateestimates used in the discounted cash flow calculations.The fair value attributed to exploration prospects and assets under appraisal is estimated using discounted cash flows,risk-weighted for future exploration and appraisal success. Until completion of exploration and appraisal workprogrammes these valuations remain highly subjective. A change in the assessment of technical risk could result in thecarrying value equalling or exceeding the recoverable value.The goodwill impairment test is also sensitive to changes in commodity price and discount rate. Any reasonable changein assumptions to increase the discount rate applied or reduce the oil price assumption would result in an impairment ofgoodwill.Goodwill relating to the Greenland operating segment was fully impaired in 2011. As the 2010 and 2011 drillingcampaign offshore Greenland did not result in the discovery of commercial hydrocarbon reserves, the fair value ofGreenland assets no longer supported the carrying value of the $62.8m of goodwill allocated to the operating segment.Consequently, the remaining goodwill was fully impaired.27
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Page 16 and 17: Cairn Energy PLCGroup Income Statem
Page 18 and 19: Cairn Energy PLCGroup Balance Sheet
Page 20: Cairn Energy PLCGroup Statement of
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(Preliminary Results Announcement) PDF 0.71MB - Cairn Energy PLC

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