(presented in US$ thousands)
Equity
attributable
Difference to
from Shareholders
conversion of Urals
of share Energy
capital Cumulative Public
Share Share into Translation Accumulated Company Non-controlling Total
Notes capital premium US$ Adjustment deficit Limited interest equity
Balance at 1
January 2012 1,569 656,988 (113) (30,672) (527,684) 100,088 883 100,971
--------------- ------ -------- -------- ----------- ------------ ------------ ------------- ---------------- --------
Effect of
currency
translation - - - (1,063) - (1,063) (18) (1,081)
Loss for the
year - - - (2,053) (2,053) 10 (2,043)
-------- -------- ----------- ------------ ------------ ------------- ---------------- --------
- - - (1,063) (2,053) (3,116) (8) (3,124)
Total
comprehensive
loss
Issuance of
shares 10 20 (20) - - - - - -
Balance at 30
June 2012 1,589 656,968 (113) (31,735) (529,737) 96,972 875 97,847
--------------- ------ -------- -------- ----------- ------------ ------------ ------------- ---------------- --------
Balance at 1
January 2013 1,589 656,968 (113) (26,770) (525,342) 106,332 1,231 107,563
Effect of
currency
translation - - - (4,827) - (4,827) (88) (4,915)
Loss for the
year - - - (2,552) (2,552) 15 (2,537)
-------- -------- ----------- ------------ ------------ ------------- ---------------- --------
- - - (4,827) (2,552) (7,379) (73) (7,452)
Total
comprehensive
loss
Balance at 30
June 2013 1,589 656,968 (113) (31,597) (527,894) 98,953 1,158 100,111
--------------- ------ -------- -------- ----------- ------------ ------------ ------------- ---------------- --------
Notes to the Consolidated Financial Statements (presented in US$
thousands)
1 Activities
Urals Energy Public Company Limited ("Urals Energy" or the
"Company" or "UEPCL") was incorporated as a limited liability
company in Cyprus on 10 November 2003. Urals Energy and its
subsidiaries (the "Group") are primarily engaged in oil and gas
exploration and production in the Russian Federation and processing
of crude oil for distribution on both the Russian and international
markets.
The registered office of Urals Energy is at 31 Evagorou Avenue,
Suite 34, CY-1066, Nicosia, Cyprus. UEPCL's shares are traded on
the AIM Market operated by the London Stock Exchange.
The Group comprises UEPCL and the following main
subsidiaries:
Effective ownership interest at
------------------------------- ----------------- ----------------------------------
Entity Jurisdiction 30 June 2013 31 December 2012
------------------------------- ----------------- -------------- ------------------
Exploration and production
ZAO Petrosakh ("Petrosakh") Sakhalin 97.2% 97.2%
ZAO Arcticneft ("Arcticneft") Nenetsky Region 100% 100%
Management company
OOO Urals Energy Moscow 100% 100%
------------------------------- ----------------- -------------- ------------------
2 Summary of Significant Accounting Policies
Basis of preparation.
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) under the
historical cost convention as modified by the change in fair value
of financial instruments.
The preparation of consolidated financial statements in
conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities at the reporting date and the reported amounts of
revenues and expenses during the reporting period. These policies
have been consistently applied to all the periods presented, unless
otherwise stated. Critical accounting estimates and judgments are
disclosed in Note 4. Actual results could differ from the
estimates.
Functional and presentation currency
The United States dollar ("US dollar or US$ or $") is the
presentation currency for the Group's operations as management have
used the US dollar accounts to manage the Group's financial risks
and exposures, and to measure its performance. Financial statements
of the Russian subsidiaries are measured in Russian Roubles, their
functional currency.
The functional currency of the Company is the US Dollar as
substantially all the cash flows affecting the Company are in US
Dollars.
Translation to functional currency
Monetary assets and liabilities denominated in foreign
currencies are retranslated into the functional currency at the
rate of exchange ruling at the reporting date. Any resulting
exchange differences are included in the profit or loss component
of the consolidated statement of comprehensive income. Non-monetary
assets and liabilities that are measured at historical cost and
denominated in a foreign currency are translated into the
functional currency using the rates of exchange as at the dates of
the initial transactions. The US dollar to Russian Rouble exchange
rates were 32.71 and 30.37 as of 30 June 2013 and 31 December 2012,
respectively.
Translation to presentation currency
The Group's consolidated financial statements are presented in
US dollars in accordance with IAS 21, The Effects of Changes in
Foreign Exchange Rates. The results and financial position of each
group entity having a functional currency different from the
presentation currency are translated into the presentation currency
as follows:
(i) Assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position. Monetary assets and
liabilities denominated in foreign currencies are translated into
the functional currency at the rate of exchange ruling at the
reporting date. Any resulting exchange differences are included in
the profit or loss component of the consolidated statement of
comprehensive income. Non-monetary assets and liabilities that are
measured at historical cost and denominated in a foreign currency
are translated into the functional currency the Company using the
rates of exchange as at the dates of the initial transactions.
Goodwill and fair value adjustments arising on the acquisitions are
treated as assets and liabilities of the acquired entity.
(ii) Income and expenses for each statement of comprehensive
income are translated to the functional currency of the Company at
average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions).
(iii) All resulting exchange differences are recognised as a
separate component of equity.
When a subsidiary is disposed of through sale, liquidation,
repayment of share capital or abandonment of all, or part of, that
entity, the exchange differences deferred in other comprehensive
income are reclassified to the profit and loss.
Uncertain tax positions
The Group's uncertain tax positions are reassessed by management
at the end of each reporting period. Liabilities are recorded for
income tax positions that are determined by management as more
likely than not to result in additional taxes being levied if the
positions were to be challenged by the tax authorities. The
assessment is based on the interpretation of tax laws that have
been enacted or substantively enacted by the end of the reporting
period, and any known court or other rulings on such issues.
Liabilities for penalties, interest and taxes other than on income
are recognised based on management's best estimate of the
expenditure required to settle the obligations at the end of the
reporting period.
Accounting standards adopted during the period
In the current period, the Group has adopted all of the new and
revised Standards and Interpretations issued by the International
Accounting Standards Board (the IASB) and the International
Financial Reporting Interpretations Committee (the IFRIC) of the
IASB that are relevant to its operations and effective for
reporting periods beginning on 1 January 2013.
3 Going Concern
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