Annual Report 2007 in PDF - Cairn Energy PLC

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NOTES TO THE ACCOUNTS CONTINUED 30. Financial Risk Management: Objectives and Policies (continued) Company capital and net debt were made up as follows: 2007 2006 Company $’000 $’000 Bank loans and borrowings – 47,000 Trade and other payables 11,309 113,810 Less cash and short-term deposits (16,591) (19,513) ––––––––––– ––––––––––– Net debt (5,282) 141,297 Equity 717,791 450,716 ––––––––––– ––––––––––– Company capital and net debt 712,509 592,013 ––––––––––– ––––––––––– Gearing ratio – 23.9% ––––––––––– ––––––––––– 31. Financial Instruments The Group and Company calculates the fair value of assets and liabilities by reference to amounts considered to be receivable or payable on the Balance Sheet date. The Group’s financial assets and liabilities, together with their fair values, are as follows: Financial assets Carrying amount Fair value 2006 2006 2007 (Restated) 2007 (Restated) Group $’000 $’000 $’000 $’000 Bank deposits 30,053 – 30,053 – Cash and cash equivalents 872,272 856,266 872,272 856,266 Derivative financial assets 2,479 – 2,479 – Available-for-sale financial asset 15,905 7,868 15,905 7,868 Trade receivables 41,915 62,487 41,915 62,487 ––––––––––– ––––––––––– ––––––––––– ––––––––––– 122 CAIRN ENERGY PLC ANNUAL REPORT 2007 962,624 926,621 962,624 926,621 ––––––––––– ––––––––––– ––––––––––– ––––––––––– All of the above financial assets are current and unimpaired with the exception of trade receivables. An analysis of the ageing of trade receivables is provided in Note 20. Financial liabilities Carrying amount Fair value 2007 2006 2007 2006 Group $’000 $’000 $’000 $’000 Bank loans 75,000 155,000 75,000 155,000 Trade payables 3,844 2,816 3,844 2,816 Finance leases 4,380 4,472 4,380 4,472 Decommissioning provision 34,713 24,097 34,713 24,097 Derivative financial liabilities – 9,694 – 9,694 ––––––––––– ––––––––––– ––––––––––– ––––––––––– 117,937 196,079 117,937 196,079 ––––––––––– ––––––––––– ––––––––––– ––––––––––– The derivative financial assets in 2007 relate to forward foreign exchange options to hedge the exposure of future Indian Rupee requirements as part of the Rajasthan Development entered into by the Cairn India Group. The fair value of the currency options is determined by reference to market values for similar options at the year end. The cost to the Group of exercising the currency options on contractual maturity was paid on purchase of the options. The fair value movement in the carrying value of the option has been included in the 2007 financial statements. The options are not hedge accounted. The available-for-sale financial asset relates to listed equity shares held by Cairn India. Refer to Note 17 for further detail. The derivative financial liabilities in 2006 represent foreign exchange currency options entered into to manage the currency risk from the IPO of Cairn India. These options were not hedge accounted for. The options matured during 2007 and were not exercised.
NOTES TO THE ACCOUNTS CONTINUED The fair value of financial assets and liabilities has been calculated by discounting the expected future cash flows at prevailing interest rates. The following table sets out the amount, by maturity, of the Group’s financial liabilities. At 31 December 2007 Less than One to Two to Three to Four to More than one year two years three years four years five years five years Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 Bank loans* (5,372) (5,372) (5,372) (67,136) (1,014) (16,276) (100,542) Trade payables (3,844) – – – – – (3,844) Finance leases* (2,268) (1,557) (894) (176) (15) – (4,910) Decommissioning provision** (288) – – – – (68,621) (68,909) ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– At 31 December 2006 (11,772) (6,929) (6,266) (67,312) (1,029) (84,897) (178,205) ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– Less than One to Two to Three to Four to More than one year two years three years four years five years five years Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 Bank loans* (10,631) (10,631) (10,631) (10,631) (137,880) (29,201) (209,605) Trade payables (2,816) – – – – – (2,816) Finance leases* (1,613) (1,509) (1,260) (742) (103) – (5,227) Decommissioning provision** – (200) – – – (50,435) (50,635) Derivative financial liabilities (9,694) – – – – – (9,694) ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– (24,754) (12,340) (11,891) (11,373) (137,983) (79,636) (277,977) ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– * Bank loans and finance leases include interest for the purposes of the maturity analysis. ** The decommissioning provision is discounted at a rate of 7% to give the net present value which is carried at the balance sheet date. The gross amount is included in the maturity analysis table in accordance with the requirements of IFRS. The Company’s financial assets and liabilities, together with their fair values are as follows: Financial assets Carrying amount Fair value 2007 2006 2007 2006 Company $’000 $’000 $’000 $’000 Cash and cash equivalents 16,591 19,513 16,591 19,513 ––––––––––– ––––––––––– ––––––––––– ––––––––––– All of the above financial assets are current and unimpaired. 16,591 19,513 16,591 19,513 ––––––––––– ––––––––––– ––––––––––– ––––––––––– CAIRN ENERGY PLC ANNUAL REPORT 2007 123
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ANNUAL REPORT & ACCOUNTS 2007 CAIRN
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CAIRN is an edinburgh based oil and
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CAIRN INDIA performance First comme
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2000 lakshmi disCovery 2001 sarasWa
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THE RESTRUCTURING OF THE GROUP INTO
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ajasthan midstream the government o
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Cambay Basin, India CAIRN ENERGY PL
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Cairn india assets 30% 30% 49% 40%
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Rajasthan, India the increased reso
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Detail heading here relore min ullu
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uk (West Of shetland) Block 214/19
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nePal the security situation in nep
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angladesh reserves sangu gross 2p r
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activities in all operated blocks.
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2007 marked the beginning of a new
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key financial performance indicator
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CAIRN INDIA CAPITAL EXPENDITURE FOR
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3 9 12 4 8 1 Sir Bill Gammell, Chie
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2007 ACCOUNTS Risk Factors 36 Corpo
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RISk FACTORS CONTINUED The developm
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RISk FACTORS CONTINUED Corporate Re
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CORPORATE GOVERNANCE STATEMENT CONT
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DIRECTORS’ REPORT CONTINUED At 31
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DIRECTORS’ REPORT CONTINUED Elect
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DIRECTORS’ REPORT CONTINUED Age o
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DIRECTORS’ REMUNERATION REPORT Re
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DIRECTORS’ REMUNERATION REPORT CO
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INDEPENDENT AUDITOR’S REPORT TO T
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