20th May 2014 07:00
Afren plc: Interim Management Statement
· OPL 310 follow on programme progressing; Fast track 3D seismic acquisition complete
· Progress on development drilling: Field Development Plan approvals received for Okoro Further Field Development and Okwok; installation of the Ebok CFB Extension platform and batch drilling on Ebok North Fault Block underway
· Q1 2014 net production at 35,465 bopd, in line with expectations; Q1 2014 Revenue of US$269 million; Operating Cash Flow of US$169 million; Capex US$127 million; Net Debt US$791 million
London, 20 May 2014 - Afren plc ("Afren" or the "Group"), (LSE: AFR, FTSE 250 index), announces its Interim Management Statement ("IMS") and financial results for the three months ended 31 March 2014 and an update on its operations year-to-date 2014, in accordance with the reporting requirements of the EU Transparency Directive. Information contained within this release is un-audited and is subject to further review.
Continued strong operating performance.
Afren delivered sales revenue of US$269 million (Q1 2013: US$386 million) and operating cash flows before movement in working capital of US$169 million (Q1 2013: US$274 million) in Q1 2014 driven by net production of 35,465 bopd. Installation of the Central Fault Block (CFB) extension platform has started on Ebok and is expected to be completed by the end of Q2 2014, with development drilling planned for Q3 2014 targeting additional reservoirs in the CFB. Batch drilling has started on the North Fault Block (NFB) from the West Fault Block (WFB) platform with production to the existing MOPU. The Okoro field continued to perform well with gross production at the field averaging 15,648 bopd in the period, incorporating planned downtime. The Field Development Plans (FDP) for the Okoro Further Field Development and Okwok were approved by the Nigerian authorities. The Okwok wellhead jacket has been fabricated and is currently in transit to the Okwok field area, with platform installation to be completed in Q2 2014 prior to development drilling planned for Q3 2014. On OML 26 we expect the rig to arrive in June with a view to drilling three wells in 2H 2014 (two producers and one water injector).
On the Barda Rash block in Kurdistan, the BR-4 well has tested two horizons in the Triassic Kurra Chine formation at 6,100 bopd and 1,750 bopd respectively. The BR-5 well has intersected a similar hydrocarbon-bearing sequence in the Kurra Chine formation and will be tested in due course. Flow lines and facilities have been updated and BR-4 is online. BR-5 will be brought into production later this year. On the Ain Sifni block in Kurdistan, the Simrit-4 well was spudded early 2014 and is drilling ahead, targeting Jurassic and Triassic reservoirs. Following success at Simrit, the Partners expect further growth in reserves and resources at Ain Sifni in 2014.
Following the play-opening Ogo discovery, offshore Nigeria, Afren completed the fast track 2,716 km2 marine 3D seismic programme across OPL 310 and OML 113 to establish the full extent of the syn-rift play and further dip-closed structures to the north and east of the Ogo discovery. Processing of the data is expected to commence shortly. At Ebok, preparations are ongoing for a step-out exploration well, Ebok Deep, planned for Q4 2014. In Côte d'Ivoire, having negotiated additional acreage in two new blocks in 2013, CI‐523 and CI‐525, Afren is planning an extensive 3D seismic programme in 2014. In Tanzania, EIA surveys and drilling prognosis have been completed for both the Chungwa-1 and Mkonge-1 wells which are in ready-to-drill status. On Block 1 in Kenya, the Partners plan to shoot 150-250 km of additional 2D seismic in Q2 2014 followed by an exploration well. In Ethiopia the El Kuran‐3 well has reached a total depth of 11,575 ft encountering a significant amount of oil and gas penetrated in several intervals. Commerciality studies have commenced to assess the optimal way of developing these reservoirs.
Capex guidance for 2014 remains at circa US$845 million focussed on both high cash return projects and further exploration drilling.
Commenting today, Osman Shahenshah, Chief Executive of Afren plc, said:
"Afren continues to deliver operationally on all fronts with revenues in Q1 2014 of US$269 million and operating cash flow of US$169 million. We are moving forward with the play opening Ogo discovery and elsewhere development drilling is on track. Our focus remains on allocating our capital to the highest return projects, which we expect to provide significant production and cash flow growth, while we continue to de-risk our unprecedented exploration opportunity set."
Production
Production Q1 2014 (bopd) |
Working interest | Average gross production | Average net production |
Okoro | 50% | 15,648 | 7,824 |
Ebok | 50%(1) | 31,596 | 25,971 |
OML 26 | 45% | 2,664 | 1,199 |
Barda Rash | 60% | 785 | 471 |
Total | 50,693 | 35,465 |
(1 )Afren's net production includes its 50% economic interest plus additional barrels to recover costs of capital investment funded by Afren.
Financial Position
Revenue for the period from continuing operations was US$269 million (Q1 2013: US$386 million). The 30% decrease in revenue is principally attributable to reduced share of production and liftings from the Ebok field, following cost recovery. Furthermore, in the three months to 31 March 2014, the Group realised a lower average oil price from continuing operations of US$106.5/bbl (2013 US$107.8/bbl). Operating cash flow before movements in working capital was US$169 million in the three months to 31 March 2014 (Q1 2013: US$274 million). After movements in working capital, including tax payments of US$3 million, net cash generated by operating activities was US$114 million (Q1 2013: US$293 million).
Profit after tax from continuing activities for the period was US$73 million (Q1 2013: US$28 million). The increase on the comparative period arises principally from an income tax credit to the income statement of US$17 million (Q1 2013: US$111 million charge) as a result of now being in a five-year tax exemption period in the Ebok field and a smaller loss on the derivative financial instruments of US$4 million (Q1 2013: US$25 million), both of which offset the lower gross profit for the period.
During the three months to 31 March 2014 the Group spent US$126 million developing its assets (US$94 million investment in producing and development assets and US$32 million on exploration and evaluation projects).
Gross debt at 31 March 2014 was US$1,151 million, excluding finance leases. Cash at bank at 31 March 2014 was US$361 million, resulting in net debt (excluding finance leases) of US$790 million (31 December 2013: gross debt of US$1,129 million; cash of US$390 million; net debt of US$739 million).
Condensed consolidated statement of comprehensive income
Three months ended 31 March 2014
Restated (1) |
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| 3 months to | 3 months to | ||
31 March 2014 | 31 March 2013 | ||||
Unaudited | Unaudited | ||||
Notes | US$m | US$m | |||
Continuing operations | |||||
Revenue | 269.0 | 385.5 | |||
Cost of sales | (186.0) | (194.3) | |||
Gross profit | 83.0 | 191.2 | |||
Administrative expenses | (6.4) | (11.3) | |||
Other operating expenses | |||||
- derivative financial instruments | (3.6) | (25.2) | |||
- impairment of exploration and evaluation assets | (0.6) | - | |||
Operating profit | 72.4 | 154.7 | |||
Finance income | 2 | 0.6 | 0.8 | ||
Finance costs | 2 | (19.9) | (18.4) | ||
Other gains | |||||
- foreign currency | 2.3 | 1.3 | |||
- fair value of financial liabilities and financial assets | 0.4 | 0.4 | |||
Profit before tax from continuing operations | 55.8 | 138.8 | |||
Income tax credit/(expense) | 5 | 16.7 | (110.6) | ||
Profit after tax from continuing operations | 72.5 | 28.2 | |||
Discontinued operations | |||||
Profit for the period from discontinued operations attributable to equity holders of Afren plc | - | 1.8 | |||
Profit for the period | 72.5 | 30.0 | |||
Attributable to: | |||||
Equity holders of Afren plc | 74.3 | 39.1 | |||
Non-controlling interests | (1.8) | (9.1) | |||
72.5 | 30.0 | ||||
Other comprehensive income | |||||
(Loss)/gain on revaluation of available-for-sale investment | (0.1) | 0.6 | |||
Total comprehensive income for the period | 72.4 | 30.6 | |||
Attributable to: | |||||
Equity holders of Afren plc | 74.2 | 39.7 | |||
Non-controlling interests | (1.8) | (9.1) | |||
72.4 | 30.6 | ||||
Earnings per share from continuing activities | |||||
Basic | 3 | 6.8 | c | 3.4 | c |
Diluted | 3 | 6.5 | c | 3.3 | c |
Earnings per share from all activities | |||||
Basic | 3 | 6.8 | c | 3.6 | c |
Diluted | 3 | 6.5 | c | 3.5 | c |
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8 |
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Condensed consolidated balance sheet
As at 31 March 2014
31 March 2014 | 31 December 2013 | ||||
Unaudited | Audited | ||||
Notes | US$m | US$m | |||
Assets | |||||
Non-current assets | |||||
Intangible oil and gas assets | 936.1 | 1,090.2 | |||
Property, plant and equipment | 2,224.8 | 2,052.2 | |||
Goodwill | 115.2 | 115.2 | |||
Deferred tax assets | 123.1 | 97.5 | |||
Available for sale investments | 1.2 | 1.3 | |||
Investments in joint ventures | 1.6 | 1.7 | |||
3,402.0 | 3,358.1 | ||||
Current assets | |||||
Inventories | 124.0 | 80.9 | |||
Trade and other receivables | 183.5 | 209.6 | |||
Prepayments and advances to Partners | 99.7 | 99.3 | |||
Derivative financial instruments | - | 0.1 | |||
Cash and cash equivalents | 360.7 | 389.9 | |||
767.9 | 779.8 | ||||
Total assets | 4,169.9 | 4,137.9 | |||
Liabilities | |||||
Current liabilities | |||||
Trade and other payables | (659.9) | (717.2) | |||
Borrowings | 7 | - | (77.3) | ||
Current tax liabilities | (80.2) | (72.3) | |||
Deferred consideration on acquisitions | (22.0) | (22.0) | |||
Obligations under finance lease | (20.7) | (22.1) | |||
Derivative financial instruments | (23.8) | (28.2) | |||
(806.6) | (939.1) | ||||
Net current liabilities | (38.7) | (159.3) | |||
Non-current liabilities | |||||
Deferred tax liabilities | (143.9) | (146.3) | |||
Provision for decommissioning | (27.8) | (30.1) | |||
Borrowings | 7 | (1,151.4) | (1,051.7) | ||
Obligations under finance leases | (72.4) | (77.7) | |||
Deferred consideration on acquisitions | (19.0) | (18.1) | |||
Other payables | (53.5) | (52.3) | |||
Derivative financial instruments | (15.1) | (17.1) | |||
(1,483.1) | (1,393.3) | ||||
Total liabilities | (2,289.7) | (2,332.4) | |||
Net assets | 1,880.2 | 1,805.5 | |||
Equity | |||||
Share capital | 19.1 | 19.1 | |||
Share premium | 928.2 | 926.8 | |||
Merger reserve | 179.4 | 179.4 | |||
Other reserves | 28.4 | 27.5 | |||
Retained earnings | 716.2 | 642.0 | |||
Total equity attributable to parent company | 1,871.3 | 1,794.8 | |||
Non-controlling interest | 8.9 | 10.7 | |||
Total equity | 1,880.2 | 1,805.5 | |||
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Condensed consolidated cash flow statement
Three months ended 31 March 2014
Restated (1) | |||
| 3 months to | 3 months to | |
31 March 2014 | 31 March 2013 | ||
Unaudited | Unaudited | ||
US$m | US$m | ||
Operating profit for the period from continuing operations | 72.4 | 154.7 | |
Operating profit for the period from discontinuing operations | - | 0.5 | |
Operating profit for the period from continuing and discontinued operations | 72.4 | 155.2 | |
Depreciation, depletion and amortisation | 100.2 | 101.5 | |
Unrealised (gains)/losses on derivative financial instruments | (6.4) | 14.9 | |
Impairment charge on exploration and evaluation assets | 0.6 | - | |
Share-based payments charge | 2.3 | 2.1 | |
Operating cash flows before movements in working capital | 169.1 | 273.7 | |
Decrease in trade and other operating receivables | 26.1 | 118.6 | |
Decrease in trade and other operating payables | (47.8) | (65.6) | |
Increase in inventory of crude oil | (29.8) | (27.1) | |
Current tax paid | (3.4) | (6.6) | |
Net cash generated by operating activities | 114.2 | 293.0 | |
Purchases of property, plant and equipment | (94.4) | (88.9) | |
Exploration and evaluation expenditure | (31.7) | (119.5) | |
(Increase)/decrease in inventories - spare parts and materials | (13.4) | 4.2 | |
Investment inflow | 0.2 | 0.6 | |
Net cash used in investing activities | (139.3) | (203.6) | |
Issue of ordinary share capital - share-based plan exercises | 1.4 | 2.1 | |
Investment in subsidiary - shares purchased from third parties | - | (10.3) | |
Investment in treasury shares | (3.1) | - | |
Net proceeds from borrowings | 98.5 | - | |
Repayment of borrowings and finance leases | (86.6) | (11.4) | |
Interest and financing fees paid | (16.9) | (36.3) | |
Net cash used in financing activities | (6.7) | (55.9) | |
Net (decrease)/increase in cash and cash equivalents | (31.8) | 33.5 | |
Cash and cash equivalents at beginning of the period | 389.9 | 598.7 | |
Effect of foreign exchange rate changes | 2.6 | 0.5 | |
Cash and cash equivalents at end of period | 360.7 | 632.7 | |
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8 |
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Condensed consolidated statement of changes in equity
As at 31 March 2014
Share capital | Share premium account | Merger reserve | Other reserves | Retained earnings | Attributable to equity holders of parent | Non-controlling Interest | Total equity | |
US$m | US$m | US$m | US$m | US$m | US$m | US$m | US$m | |
At 1 January 2013 (previously stated) | 18.9 | 920.3 | 179.4 | 35.9 | 272.9 | 1,427.4 | - | 1,427.4 |
Effect of change in accounting policy (note 1) | - | - | - | (29.0) | (7.5) | (36.5) | 31.6 | (4.9) |
At 1 January 2013 as restated | 18.9 | 920.3 | 179.4 | 6.9 | 265.4 | 1,390.9 | 31.6 | 1,422.5 |
Issue of share capital | - | 2.1 | - | - | - | 2.1 | - | 2.1 |
Share-based payments | - | - | - | 4.3 | - | 4.3 | 1.7 | 6.0 |
Transfer to retained earnings | - | - | - | (0.8) | 0.8 | - | - | - |
Change in equity ownership of subsidiary | - | - | - | (1.0) | (11.5) | (12.5) | 2.1 | (10.4) |
Net profit/(loss) for the period | - | - | - | - | 39.1 | 39.1 | (9.1) | 30.0 |
Other comprehensive income for the period | - | - | - | 0.6 | - | 0.6 | - | 0.6 |
Balance at 31 March 2013 | 18.9 | 922.4 | 179.4 | 10.0 | 293.8 | 1,424.5 | 26.3 | 1,450.8 |
At 1 January 2014 | 19.1 | 926.8 | 179.4 | 27.5 | 642.0 | 1,794.8 | 10.7 | 1,805.5 |
Issue of share capital | - | 1.4 | - | - | - | 1.4 | - | 1.4 |
Share based payments | - | - | - | 4.0 | - | 4.0 | - | 4.0 |
Exercise of warrants | - | - | - | 0.1 | (0.1) | - | - | - |
Investment in treasury shares | - | - | - | (3.1) | - | (3.1) | - | (3.1) |
Net profit/(loss) for the period | - | - | - | - | 74.3 | 74.3 | (1.8) | 72.5 |
Other comprehensive loss for the period | - | - | - | (0.1) | - | (0.1) | - | (0.1) |
Balance at 31 March 2014 | 19.1 | 928.2 | 179.4 | 28.4 | 716.2 | 1,871.3 | 8.9 | 1,880.2 |
Notes to the condensed consolidated financial statements
Three months ended 31 March 2014
1. Basis of accounting and presentation of financial information
The condensed Group interim financial statements, comprised of Afren plc (''Afren'') and its subsidiaries (together, ''the Group''), have been prepared in accordance with the same accounting policies, presentation and methods of computation as applied in the audited financial statements for the year ended 31 December 2013. The Group policies are in accordance with International Financial Reporting Standards ("IFRS"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with IFRS, as issued by the IASB, have been omitted or condensed as is normal practice for interim reporting periods. The condensed Group interim financial statements are unaudited, and do not constitute statutory accounts as defined in sections 435(1) and (2) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 were published and copies of which have been delivered to Companies House. The report of the auditors on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006.
Changes in accounting policy
These interim financial statements should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2013. Details of the changes in accounting policies arising from the adoption of IFRS 10 and IFRS 11 are provided in detail in the Group's consolidated financial statements for the year ended 31 December 2013. A summary of the impact of the adoption of these standards on the financial statements for the three month period ended 31 March 2013 is provided in note 8.
Going concern
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.
2. Finance costs
| Restated (1) | ||
| 3 months to | 3 months to | |
31 March 2014 | 31 March 2013 | ||
US$m | US$m | ||
Finance costs: | |||
Bank interest payable | 2.5 | 2.0 | |
Borrowing costs amortisation and facility fees | 6.3 | 6.9 | |
Interest on finance lease | 1.5 | 1.6 | |
Interest on loan notes | 19.7 | 22.1 | |
Corporate facility interest payable | - | 0.6 | |
Unwinding of discount on decommissioning and deferred consideration | 3.8 | 0.6 | |
33.8 | 33.8 | ||
Less: capitalised interest | (13.9) | (15.4) | |
19.9 | 18.4 | ||
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Finance income: | |||
Bank interest received | 0.6 | 0.8 | |
0.6 | 0.8 | ||
'(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8 |
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3. Earnings per share
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3 months to 31 March 2014 |
Restated (1) 3 months to 31 March 2013 | ||||
From continuing operations | ||||||
Basic | 6.8 | c | 3.4 | c | ||
Diluted | 6.5 | c | 3.3 | c | ||
From continuing and discontinued operations | ||||||
Basic | 6.8 | c | 3.6 | c | ||
Diluted | 6.5 | c | 3.5 | c | ||
The profit and weighted average number of ordinary shares used in the calculation of the earnings per share are as follows: | ||||||
Profit for the period used in the calculation of the basic and diluted earnings per share for continuing and discontinued operations (US$m) | 74.3 | 39.1 | ||||
Result for the period from discontinued operations (US$m) | - | 1.8 | ||||
Profit used in the calculation of the basic and diluted earnings per share from continuing operations (US$m) | 74.3 | 37.3 | ||||
The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: | ||||||
Weighted average number of ordinary shares used in the calculation of basic earnings per share | 1,098,949,169 | 1,088,374,408 | ||||
Effect of dilutive potential ordinary shares: | ||||||
Share based payments schemes | 45,545,768 | 50,742,536 | ||||
Warrants | 71,032 | 217,917 | ||||
Weighted average number of ordinary shares used in the calculation of diluted earnings per share | 1,144,565,969 | 1,139,334,861 | ||||
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8 |
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4. Reconciliation of profit before tax to normalised profit before tax
3 months to | Restated(1) 3 months to | |||
31 March 2014 | 31 March 2013 | |||
US$m | US$m | |||
Profit before tax from continuing operations | 55.8 | 138.8 | ||
Unrealised (gains)/losses on derivative financial instruments (2) |
| (6.4) | 14.9 | |
Share-based payment charge | 2.3 | 2.1 | ||
Foreign exchange gains | (2.3) | (1.4) | ||
Fair value gain on financial liabilities | (0.4) | (0.5) | ||
Impairment of exploration and evaluation assets | 0.6 | - | ||
Normalised profit before tax from continuing operations | 49.6 | 153.9 | ||
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8 (2) excludes realised losses on derivative financial instruments of US$ 9.9 million (31 March 2013: US$ 10.4 million loss). | ||||
Normalised profit before tax is a non-IFRS measure of financial performance of the Group, which in management's view more accurately reflects the Group's underlying financial performance. This may not be comparable to similarly titled measures reported by other companies.
5. Taxation
3 months to | Restated (1) 3 months to | ||
31 March 2014 | 31 March 2013 | ||
US$m | US$m | ||
Overseas corporation tax | 11.3 | 25.8 | |
Total current tax | 11.3 | 25.8 | |
Deferred tax (credit)/charge | (28.0) | 84.8 | |
(16.7) | 110.6 |
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8
The Group's effective tax rate has decreased as a result of now being in a five-year tax exemption period in the Ebok field.
6. Operating segments
The Group currently operates in three geographical markets which form the basis of the information evaluated by the Group's chief operating decision-maker: Nigeria and other West Africa, East Africa and Kurdistan region of Iraq. Unallocated operating expenses, assets and liabilities relate to the general management, financing and administration of the Group.
Assets in Cote d'Ivoire which have been classified as discontinued operations in 2013 are included in the Nigeria and other West Africa segment for management purposes but have been deducted in a separate column to enable reconciliation to the income statement and balance sheet.
Nigeria and other West Africa | East Africa | Kurdistan region of Iraq | Unallocated | Consolidated | |
US$m | US$m | US$m | US$m | US$m | |
Three months to March 2014 | |||||
Sales revenue by origin | 269.0 | - | - | - | 269.0 |
Operating gain/(loss) before derivative financial instruments | 81.7 | (0.1) | (2.5) | (3.1) | 76.0 |
Derivative financial instruments losses | (2.9) | - | - | (0.7) | (3.6) |
Segment result | 78.8 | (0.1) | (2.5) | (3.8) | 72.4 |
Finance costs | (19.9) | ||||
Other gains and losses - fair value of financial assets & liabilities | 0.4 | ||||
Other gains and losses - forex and finance income | 2.9 | ||||
Profit from continuing operations before tax | 55.8 | ||||
Income tax credit | 16.7 | ||||
Profit from continuing operations after tax | 72.5 | ||||
Profit for the period | 72.5 | ||||
Segment assets - non-current | 2,023.6 | 304.6 | 1,052.8 | 21.0 | 3,402.0 |
Segment assets - current | 615.2 | 3.4 | 15.8 | 133.5 | 767.9 |
Segment liabilities | (1,254.7) | (38.2) | (24.2) | (972.6) | (2,289.7) |
Capital additions - oil and gas assets | 52.8 | - | 42.6 | - | 95.4 |
Capital additions - exploration and evaluation | 8.7 | 8.7 | 6.5 | (0.5) | 23.4 |
Capital additions - other | 0.6 | 0.1 | 0.1 | 1.9 | 2.7 |
Depletion, depreciation and amortisation | (99.4) | (0.1) | (0.1) | (0.6) | (100.2) |
Exploration costs write-off | (0.3) | (0.3) | - | - | (0.6) |
6. Operating segments continued
Nigeria and other West Africa | East Africa | Kurdistan region of Iraq | Unallocated | Discontinued operations | Consolidated | |
US$m (1) | US$m (1) | US$m (1) | US$m (1) | US$m (1) | US$m (1) | |
Year to December 2013 | ||||||
Sales revenue by origin | 1,666.1 | - | - | - | (21.8) | 1,644.3 |
Operating gain/(loss) before derivative financial instruments | 624.2 | (23.6) | (3.0) | (44.0) | (16.0) | 537.6 |
Derivative financial instruments losses | (30.9) | - | - | (15.7) | - | (46.6) |
Segment result | 593.3 | (23.6) | (3.0) | (59.7) | (16.0) | 491.0 |
Finance costs | (157.3) | |||||
Other gains and losses - fair value of financial assets & liabilities | 3.5 | |||||
Other gains and losses - forex and investment revenue | 7.5 | |||||
Share of joint venture loss | (26.6) | (26.6) | ||||
Profit from continuing operations before tax | 318.1 | |||||
Income tax credit | 156.7 | |||||
Profit from continuing operations after tax | 474.8 | |||||
Profit from discontinued operations | 38.1 | |||||
Profit for the year | 512.9 | |||||
Segment assets - non-current | 2,003.9 | 329.4 | 1,003.9 | 20.9 | - | 3,358.1 |
Segment assets - current | 601.3 | 7.3 | 23.4 | 147.8 | - | 779.8 |
Segment liabilities | (1,252.3) | (45.9) | (57.2) | (977.0) | - | (2,332.4) |
Capital additions - oil and gas assets | 386.1 | - | 224.1 | - | - | 610.2 |
Capital additions - exploration and evaluation | 190.4 | 52.3 | 43.7 | 13.0 | - | 299.4 |
Capital additions - other | 3.2 | 1.1 | 0.4 | 4.9 | - | 9.6 |
Depletion, depreciation and amortisation | (406.0) | (0.2) | (0.7) | (1.8) | - | (408.7) |
Share of joint venture loss | (26.6) | - | - | - | - | (26.6) |
Exploration costs write-off | (36.6) | (23.9) | - | - | - | (60.5) |
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in 8 |
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6. Operating segments continued
Nigeria and other West Africa | East Africa | Kurdistan region of Iraq | Unallocated | Discontinued operations | Consolidated | |
US$m (1) | US$m (1) | US$m (1) | US$m (1) | US$m (1) | US$m (1) | |
Three months to March 2013 (restated) (1) |
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Sales revenue by origin | 394.1 | - | - | - | (8.6) | 385.5 |
Operating gain/(loss) before derivative financial instruments | 186.8 | (0.1) | (2.3) | (2.9) | (1.6) | 179.9 |
Derivative financial instruments losses | (17.9) | - | - | (7.3) | - | (25.2) |
Segment result | 168.9 | (0.1) | (2.3) | (10.2) | (1.6) | 154.7 |
Finance costs | (18.4) | |||||
Other gains and losses - fair value of financial assets & liabilities | 0.4 | |||||
Other gains and losses - forex and investment revenue | 2.1 | |||||
Profit from continuing operations before tax | 138.8 | |||||
Income tax expense | (110.6) | |||||
Profit from continuing operations after tax | 28.2 | |||||
Loss from discontinued operations | 1.8 | |||||
Profit for the period | 30.0 | |||||
Segment assets - non-current | 1,905.4 | 296.5 | 781.6 | 48.7 | - | 3,032.2 |
Segment assets - current | 655.1 | 26.8 | 24.6 | 255.2 | - | 961.7 |
Segment liabilities | (1,495.5) | (48.9) | (14.9) | (983.8) | - | (2,543.1) |
Capital additions - oil and gas assets | 69.2 | - | 37.2 | - | - | 106.4 |
Capital additions - exploration and evaluation | 54.9 | 25.9 | 8.0 | 11.1 | - | 99.9 |
Capital additions - other | 0.8 | 0.1 | 0.3 | 0.4 | - | 1.6 |
Depletion, depreciation and amortisation | (100.9) | - | (0.1) | (0.3) | - | (101.3) |
(1) restated due to the adoption of IFRS 10 and IFRS 11, as described in note 8 |
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7. Borrowings
OML 26 facility
On 27 February 2014 Afren signed a new US$100 million term loan facility for OML 26. This replaces the OML 26 Facility of US$80 million that existed as at 31 December 2013 which was repaid on 28 February 2014. The new facility has a four-year term and bears an interest rate of Libor plus 6.5%. The new facility will be used to fund ongoing capital expenditure, operational expenditure and general corporate purposes with respect to OML 26.
8. Effect of change in accounting policies
The financial performance and position of the Group has been restated for the three months ended 31 March 2013 to reflect the adoption of IFRS 10 and IFRS 11. The quantitative impact on the prior period financial statements of adopting these standards is set out in the following tables. The adoption of IFRS 10 has resulted in the consolidation of FHN as a subsidiary in all comparative periods restated. The adoption of IFRS 11 has had an effect on the accounting for Afren's two joint ventures held through Afren Global Energy Resources Limited and Dangote Energy Equity Resources Limited.
Adjustments to the consolidated balance sheet | 31 March 2013 as previously stated | Adoption of IFRS 10 | Adoption of IFRS 11 | 31 March 2013 as restated | ||||
US$m | US$m | US$m | US$m | |||||
Assets | ||||||||
Intangible oil and gas assets | 969.4 | 7.0 | - | 976.4 | ||||
Property, plant and equipment | 1,710.9 | 147.4 | - | 1,858.3 | ||||
Goodwill | - | 115.2 | - | 115.2 | ||||
Derivative financial instruments | 10.4 | (10.4) | - | - | ||||
Available for sale investments | 21.7 | (18.6) | - | 3.1 | ||||
Inventories | 117.3 | - | - | 117.3 | ||||
Trade and other receivables | 174.5 | 33.1 | 0.2 | 207.8 | ||||
Cash and cash equivalents | 562.5 | 57.2 | (0.1) | 619.6 | ||||
Liabilities | ||||||||
Trade and other payables | (347.7) | (46.8) | (0.1) | (394.6) | ||||
Current borrowings | (49.8) | (27.0) | - | (76.8) | ||||
Current tax liabilities | (177.2) | 1.5 | - | (175.7) | ||||
Derivative financial instruments - current | (17.6) | - | - | (17.6) | ||||
Deferred tax liabilities | (467.0) | (95.3) | - | (562.3) | ||||
Provision for decommissioning | (38.2) | (2.8) | - | (41.0) | ||||
Non-current borrowings | (965.5) | (115.2) | - | (1,080.7) | ||||
Derivative financial instruments - non-current | (15.6) | (22.7) | - | (38.3) | ||||
Other payables | - | (43.5) | - | (43.5) | ||||
Equity | ||||||||
Other reserves | 38.8 | (28.8) | - | 10.0 | ||||
Retained earnings | 312.2 | (18.4) | - | 293.8 | ||||
Non-controlling interest | - | 26.3 | - | 26.3 |
8. Effect of change in accounting policies continued
Adjustments to the consolidated cash flow statement
| 3 months to 31 March 2013 as previously stated | Adoption of IFRS 10 | Adoption of IFRS 11 | 3 months to 31 March 2013 restated | |||
US$m | US$m | US$m | US$m | ||||
Operating profit for the period from continuing and discontinued operations | 168.3 | (13.1) | - | 155.2 | |||
Depreciation, depletion and amortisation | 99.5 | 2.0 | - | 101.5 | |||
Unrealised losses on derivative financial instruments | 12.5 | 2.4 | - | 14.9 | |||
Share-based payments charge | 2.1 | - | - | 2.1 | |||
Decrease in trade and other operating receivables | 88.3 | 30.3 | - | 118.6 | |||
Decrease in trade and other operating payables | (49.0) | (16.6) | - | (65.6) | |||
Increase in inventory of crude oil | (27.0) | (0.1) | - | (27.1) | |||
Tax paid | (6.6) | - | - | (6.6) | |||
Net cash generated by operating activities | 288.1 | 4.9 | - | 293.0 | |||
Purchases of property, plant and equipment | (96.8) | 7.9 | - | (88.9) | |||
Exploration and evaluation expenditure | (112.6) | (6.9) | - | (119.5) | |||
Decrease in inventories - spare parts and materials | 4.1 | 0.1 | - | 4.2 | |||
Investment revenue | 0.5 | 0.1 | - | 0.6 | |||
Net cash used in investing activities | (204.8) | 1.2 | - | (203.6) | |||
Issue of ordinary share capital - share based plan exercises | 2.1 | - | - | 2.1 | |||
Investment in subsidiary | (10.3) | - | - | (10.3) | |||
Repayment of borrowings and finance leases | (4.7) | (6.7) | - | (11.4) | |||
Interest and financing fees paid | (33.1) | (3.2) | - | (36.3) | |||
Net cash used in financing activities | (46.0) | (9.9) | - | (55.9) | |||
Net increase in cash and cash equivalents | 37.3 | (3.8) | - | 33.5 | |||
Cash and cash equivalents at beginning of the period | 524.8 | 73.9 | - | 598.7 | |||
Effect of foreign exchange rate changes | 0.4 | 0.1 | - | 0.5 | |||
Cash and cash equivalents at end of period | 562.5 | 70.2 | - | 632.7 |
8. Effect of change in accounting policies continued | ||||||
Adjustments to the consolidated income statement | 3 months to 31 March 2013 as previously stated | Adoption of IFRS 10 | Adoption of IFRS 11 | Disposal group held for sale | 3 months to 31 March 2013 as restated | |
US$m | US$m | US$m | US$m | US$m | ||
Revenue | 372.9 | 20.8 | - | (8.2) | 385.5 | |
Cost of sales | (182.3) | (19.0) | - | 7.0 | (194.3) | |
Administrative expenses | (5.5) | (5.4) | - | (0.4) | (11.3) | |
- derivative financial instruments | (17.2) | (8.0) | - | - | (25.2) | |
- service fees receivable from associate company | 0.4 | (0.4) | - | - | - | |
Finance income | 0.5 | 0.3 | - | - | 0.8 | |
Finance costs | (13.7) | (4.8) | - | 0.1 | (18.4) | |
- foreign currency gains | 2.0 | 0.1 | - | (0.8) | 1.3 | |
- fair value of financial liabilities and financial assets | 0.5 | (0.1) | - | - | 0.4 | |
Share of loss of associate company | (7.4) | 7.4 | - | - | - | |
Income tax expense | (111.7) | 0.6 | - | 0.5 | (110.6) | |
Profit for the period | 38.5 | (8.5) | - | - | 30.0 | |
Attributable to: | ||||||
Equity holders of Afren plc | 38.5 | 0.6 | - | - | 39.1 | |
Non-controlling interests | - | (9.1) | - | - | (9.1) | |
38.5 | (8.5) | - | - | 30.0 | ||
Earnings per share from continuing activities | ||||||
Basic | 3.6c | (0.2c) | - | - | 3.4c | |
Diluted | 3.4c | (0.1c) | - | - | 3.3c | |
Earnings per share from all activities | ||||||
Diluted | 3.4c | 0.1c | - | - | 3.5c | |
Advisers and Company Secretary
Company Secretary and Registered Office Elekwachi Ukwu Afren plc Kinnaird House 1 Pall Mall East London SW1Y 5AU
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Legal Advisers White & Case LLP 5 Old Broad Street London EC2N 1DW www.whitecase.com
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Sponsor and Joint Broker Bank of America Merrill Lynch 2 King Edward Street London EC1A 1HQ www.ml.com
| Dr Ken Mildwaters Walton House 25 Bilton Road Rugby CV22 7AG
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Joint Broker Morgan Stanley 20 Bank Street London E14 4AD www.morganstanley.com
| Principal Bankers HSBC Bank PLC 60 Queen Victoria Street London EC4N 4TR www.hsbc.co.uk
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Auditor Deloitte LLP Chartered Accountants and Registered Auditor 2 New Street Square London EC4A 3BZ www.deloitte.com
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Financial PR Advisers Pelham Bell Pottinger 5th Floor Holborn Gate 330 High Holborn London WC1V 7QD www.pelhambellpottinger.co.uk
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Registrars Computershare Investor Services PLC PO Box 82, The Pavilions Bridgwater Road Bristol BS99 7NH www-uk.computershare.com
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