GENEL ENERGY PLC At 31 December 2020 and 1 January 2021 43.8 3,991.9 (3,105.9) 929.8 Profit and total comprehensive income - - 25.6 25.6 Share-based payments - - 3.0 3.0 Purchase of shares for employee share awards - - (0.3) (0.3) Dividends provided for or paid1 - (29.0) - (29.0) At 30 June 2021 43.8 3,962.9 (3,077.6) 929.1
1 The Companies (Jersey) Law 1991 does not define the expression "dividend" but refers instead to "distributions". Distributions may be debited to any account or reserve of the Company (including share premium account).
Condensed consolidated cash flow statement
For the period ended 30 June 2021
31 Dec
30 June 2021 30 June 2020
2020
Note USDm USDm USDm
Cash flows from operating activities
Profit / (Loss) for the year 25.6 (354.7) (416.9)
Adjustments for:
Net finance expense 5 15.7 14.7 52.2
Taxation 6 - - 0.2
Depreciation and amortisation 83.0 82.6 153.7
Exploration expense 4 - 1.3 2.2
Impairments 4 - 321.2 323.2
Other non-cash items (2.9) (0.3) (3.7)
Changes in working capital:
(Increase) / Decrease in trade receivables (25.9) 22.0 15.8
Decrease in other receivables - 0.1 0.6
(Decrease) in trade and other payables (4.3) (2.7) 0.4
Cash generated from operations 91.2 84.2 127.7
Interest received 5 - 1.6 2.0
Taxation paid (0.1) (0.3) (0.3)
Net cash generated from operating activities 91.1 85.5 129.4
Cash flows from investing activities
Purchase of intangible assets (16.8) (13.7) (24.2)
Purchase of property, plant and equipment (37.1) (49.7) (85.5)
Movement in restricted cash - (0.1) 3.0
Net cash used in investing activities (53.9) (63.5) (106.7)
Cash flows from financing activities
Dividends paid to company's shareholders, including expenses (29.0) (41.3) (55.3)
Purchase of own shares (0.3) (0.7) (3.4)
Bond refinancing: part-settlement and new issuance 11 (81.0) - 28.9
Other (1.7) (0.5) (3.3)
Interest paid (13.3) (15.0) (25.8)
Net cash used in financing activities (125.3) (57.5) (58.9)
Net decrease in cash and cash equivalents (88.1) (35.5) (36.2)
Foreign exchange loss on cash and cash equivalents - 0.1 -
Cash and cash equivalents at the beginning of the period 354.5 390.7 390.7
Cash and cash equivalents at the end of the period 266.4 355.3 354.5 Notes to the consolidated financial statements
1. Basis of preparation
Genel Energy Plc - registration number: 107897 (the Company) is a public limited company incorporated and domiciled in Jersey with a listing on the London Stock Exchange. The address of its registered office is 12 Castle Street, St Helier, Jersey, JE2 3RT.
The half-year condensed consolidated financial statements for the six months ended 30 June 2021 and six months ended 30 June 2020 are unaudited and have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, with Article of 106 of the Companies (Jersey) Law 1991 and with IAS 34 'Interim Financial Reporting' as adopted by the European Union and were approved for issue on 3 August 2021. They do not comprise statutory accounts within the meaning of Article 105 of the Companies (Jersey) Law 1991. The half-year condensed consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2020, which have been prepared in accordance with IFRS as adopted by the European Union. The annual financial statements for the period ended 31 December 2020 were approved by the board of directors on 17 March 2021. The report of the auditors was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under the Article 113A of Companies (Jersey) Law 1991. The financial information for the year to 31 December 2020 has been extracted from the audited accounts.
There have been no changes in related parties since year-end and no related party transactions that had a material effect on financial position or performance in the period. There are not significant seasonal or cyclical variations in the Company's total revenues.
Going concern
The Company regularly evaluates its financial position, cash flow forecasts and its compliance with financial covenants by considering multiple combination of oil price, discount rates, production volumes, payments, capital and operational spend scenarios. The Company has reported liquidity of USD266.4 million, with no debt maturing until the second half of 2025 and significant headroom on both the equity ratio and minimum liquidity covenant. Our business model has demonstrated its resilience in 2020, when oil price was low, 4 months of payments with a value of USD120.8 million that were due were not received, and override income of USD38 million was not paid, by delivering a small free cash out flow after investing significantly in growth, principally bringing Sarta to first production.
The strength of the balance sheet is expected to be maintained through 2021 and 2022, with Sarta adding a new income stream and diversifying production risk, and capital activity in the year focused on expanding the reserves and sources of income of the business further.
Our low-cost assets with flexibility on commitment of capital mean that we are resilient to oil prices as low as the levels reached last year, with the KRG also demonstrating its ability to pay consistently in times of financial stress. In addition, specifically for the purposes of the going concern, management have modelled a downside scenario, recognising the impact of the COVID19 pandemic, which includes a significant reduction in oil price from current levels combined with a reduction in production. Even with these downsides there is considered to be sufficient cash in the business and still more room for flexibility if needed given nature of the discretionary capex planned.
Longer term, our low-cost, low-carbon assets, located in a region where oil revenues provide a material proportion of funding to the government and its people means that we are well positioned to address the appropriate challenges and demands that climate change initiatives are bringing to the sector. Given the footprint and the benefit to society generated, we see our portfolio as being well-positioned for a future of fewer and better natural resources projects, while the global energy mix continues to require hydrocarbons.
As a result, the Directors have assessed that the Company's forecast liquidity provides adequate headroom over its forecast expenditure for the 12 months following the signing of the half-year condensed consolidated financial statements for the period ended 30 June 2021 and consequently that the Company is considered a going concern.
2. Summary of significant accounting policies
The accounting policies adopted in preparation of these half-year condensed consolidated financial statements are consistent with those used in preparation of the annual financial statements for the year ended 31 December 2020.
The preparation of these half-year condensed consolidated financial statements in accordance with IFRS requires the Company to make judgements and assumptions that affect the reported results, assets and liabilities. Where judgements and estimates are made, there is a risk that the actual outcome could differ from the judgement or estimate made. The Company has assessed the following as being areas where changes in judgements or estimates could have a significant impact on the financial statements.
Significant judgements
The significant judgements that the directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements include; i) IFRS 15 criteria have not been met for the suspended override revenue belonging to the period between 1 March 2020 to 31 December 2020; ii) the Bina Bawi and Miran projects will progress. These are explained in the context of the significant estimates below.
Significant estimates
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