TIDMAST
RNS Number : 8421M
Ascent Resources PLC
12 May 2015
Ascent Resources plc
("Ascent" or "the Company")
Final results for the year ended 31 December 2014
Ascent presents its audited results for the year ended 31
December 2014.
Chairman's Statement
Overview: Petišovci project
From the refinancing of Ascent in early 2013, the Company's
strategy has been to focus exclusively on the Petišovci project.
Accordingly, over the past two years we have exited from our
interests in Hungary, the Netherlands, Switzerland and Italy.
At the macro level, Slovenia's need for the Petišovci project
has never been greater:
-- Like much of the EU, the country is in a weak economic
condition and in need of new areas for growth.
-- Slovenia's banks are pushing hard to raise foreign direct
investment for their key industries.
-- We believe the Petišovci project is one of a relatively small
number of fundable and viable projects the country has to offer to
the international investment community.
-- Slovenia has very little domestic gas production and is
reliant on expensive and potentially unreliable foreign gas.
-- The verified P50 contingent resources in the Petišovci field
contain over 7 times the annual gas consumption in Slovenia.
Management production estimates for phase one equate to 10%- 15% of
the country's annual consumption and this proportion will increase
significantly as the project moves into phase two.
-- The region in which the Petišovci fields are located is one
of the less economically developed in Slovenia and would benefit
from additional employment opportunities.
Encouragingly we now understand that the Slovenian Government
has decided to adopt a more supportive view of the project than in
previous years in recognition of its strategic importance to the
country.
Farm-out process
Led by First Energy the Company has been conducting a farm-out
process to find industry partners interested in working with Ascent
to develop the Petišovci field to its full potential. Farm-out
partners would be expected to fund a large proportion of future
development costs.
The Board has been impressed with the calibre and financial
standing of the organisations expressing interest. In the opinion
of the Board all the organisations still remaining in the process
are satisfied with the technical aspects of the Petišovci project
and have the financial resources to see a deal through. We believe
this not only validates the asset, but also makes its
commercialisation more likely. Further announcements will be made
on a farm-out transaction as the process develops.
Funding
Historic
Between December 2012 and April 2015 the Company raised GBP9.5
million through the issue of convertible loan notes (GBP9m) and new
ordinary shares (GBP0.5m). The Company also generated GBP0.5
million net of selling expenses from the sale of its interests in
Hungary and the Netherlands.
Of the total GBP10m that was raised:
-- GBP3.5m was spent directly on the Petišovci project.
-- GBP3.0m was spent on debt repayments and servicing; this debt
had been incurred prior to 2012 largely in relation to operations
in Slovenia.
-- GBP3.1m was spent on group costs; the annual cost has been
reduced by 30% between 2013 and 2014 due to a reduction in
headcount and administrative expenses.
-- GBP0.4m was spent on former operations in Italy, Netherlands and Hungary.
Variation of loan note terms
The GBP8.5 million of convertible loan notes issued in 2013 and
2014 were due for repayment by the end of January 2015. Despite
vigorous efforts by the Board to attract alternative sources of
funding, Ascent did not have the funds required to pay the amounts
due. The Board therefore agreed with Henderson Global Investors
Limited and Henderson Alternative Investment Advisor Limited
(together, "Henderson"), being the majority holder of the
convertible loan notes, to adjust the conversion price of all the
convertible loan notes to 0.1 pence, in return for extending the
maturity date of the convertible loan notes and terminating the
accrual of interest on them. Accordingly, on a fully diluted basis,
the ordinary shareholders' interest in Ascent, other than
Henderson, fell from 28.7% to 13.7%.
Henderson's ability to convert the loans without being obliged
to make a general offer to all remaining shareholders was approved
by independent shareholders on 19 February 2015.
Recent funding
Short term funding of GBP550,000 was secured on 1 May 2015
through a placing of 275,000,000 new ordinary shares via the crowd
funding Primary Bid platform.
Additionally the Company has agreed terms on a new GBP7 million
loan facility with Henderson, demonstrating their continued
support. The loan can be drawn at any time from signing to the 30
June 2016 at the discretion of the lender. The loan accrues
interest at the rate of 7.5% per annum on the amount drawn and this
is added to the amount of the loan. The loan is subject to a
drawdown fee of 1.75% per draw down, which is deducted from the
funds advanced. The loan is also subject to a repayment fee of
1.25% on any amounts repaid by the Company. The balance outstanding
is repayable on demand at any time.
Project funding
For many years the bank most closely associated with the
Petišovci project was BNP Paribas. During 2014 we widened the
banking pool to include The European Bank for Reconstruction and
Development ("EBRD"), which has identified Slovenia as a country
for increased engagement. We expect in the coming weeks to receive
a conditional offer of project funding for the development of the
first phase of the Petišovci project jointly from EBRD and BNP
Paribas.
Operational issues at Petišovci
Power lines
Most of the delays experienced in 2014 stemmed from the decision
of the state-owned electricity company to route a new high-tension
power line directly over the existing gas gathering and separation
station (the "Plant" or "GGSS"). The field development plan had,
from the outset, proposed the construction of an expanded gas
processing facility on this site, to handle production from Pg-10,
Pg-11A and subsequent wells, primarily but not exclusively to
reduce the CO(2) content to meet national transmission pipeline
specifications. Studies were commissioned to evaluate the impact of
the high-voltage line on the proposed facility and it was concluded
that electromagnetic and other effects of the power line presented
an unacceptable safety hazard.
As a result of the above, the initial plans had to be abandoned
and the Company and its partners commenced a search for an
alternative site for the GGSS. Eventually, a range of suitable,
nearby land plots was identified and after extended negotiations
with the owners, a commercially acceptable transaction was entered
into for the acquisition of the land by the partners.
IPPC permits
In conjunction with the above, Ascent had to redesign the GGSS
and related infrastructure for the new site, which was a
time-consuming process. These designs were incorporated into the
application for an Integrated Pollution Prevention and Control
("IPPC") permit, required under the terms of EU directives adopted
by the Slovenian government. Again, this was a very complex and
extended process. In July 2014 the application was completed and
submitted to the Environmental Agency for approval. Encouragingly
the application was processed without undue delay and was approved,
subject to public consultation in December 2014.
At the close of the public consultation phase, comments had been
received from two potential stakeholders. These objectors have now
had an opportunity to present their cases and while it is not
possible to predict when this consultation process will conclude we
continue in the expectation that the economic interest of the
country and its inhabitants will prevail.
Nafta Petrochem
In September 2014 Nafta Petrochem, a leading subsidiary of Nafta
Lendava, entered into a voluntary liquidation process. Ascent was
in the process of negotiating certain easement rights with this
subsidiary for the routing of its 8" gas delivery pipeline. The
liquidation has disrupted this process and new negotiations now
need to be concluded with the administrator.
Field development programme
While the above problems have resulted in significant delays,
other aspects of the field development programme have progressed
satisfactorily. For example, the specification and design of the
measuring and metering station for delivery of processed gas to the
national transmission system was completed and the related contract
with the transmission operator was negotiated and signed.
GPS
A significant effort was made during 2014 in first negotiating
and then attempting to enforce the Subscription Agreement with
Global Power Sources s.r.l. ("GPS") under which GPS would have
invested some GBP11.7 million in Ascent by way of a subscription
for new ordinary shares in the Company at a price of 0.8p per
share.
As set out in the circular to shareholders dated 6 February
2015, since the failure of GPS to honour its commitment to
subscribe for new ordinary shares, the Board has worked hard with
GPS to try to find an alternative way forward. However, GPS
informed the Company towards the end of 2014 that it has
experienced further significant issues as the result of its
acquisition of Ascent Italia in 2013, which made the completion of
any alternative transaction highly unlikely.
Your Board is of the view that pursuing GPS through the UK and
Italian courts to seek redress for GPS's failure to perform under
the Subscription Agreement does not make commercial sense.
Outlook
As set out in the Operations Review, the Petišovci project
continues to be a very positive opportunity.
This, is in the opinion of the Board, is supported by the
continuing interest in the farm-out process that is currently in
progress, the recent funding transactions and the progression of
the formal bank led project finance.
Based on the recent actions of the Slovenian Government we
remain optimistic of an early award of the IPPC permit.
Clive Carver
Chairman
11 May 2015
Enquiries:
Ascent Resources plc.
Len Reece / Colin Hutchinson
Tel: +44 (0)20 7251 4905
finnCap (Nominated Adviser and Broker)
Christopher Raggett / Kate Bannatyne
Tel: +44 (0) 20 7220 0500
Operations Review
The Petišovci Project, Slovenia
Ascent Slovenia Ltd 75% (operator), Geoenergo d.o.o. 25%
(concession holder)
The Petišovci Tight Gas Project, in a 98 km(2) area in north
eastern Slovenia, targets the development of substantial tight gas
reservoirs known to be in Miocene clastic sediments.
Ascent first acquired an interest in the Petišovci project in
2007 and in 2009 an extensive 3D seismic survey was conducted
across the Petišovci concession area.
The structure has two sets of reservoirs, the shallower Upper
Miocene and the deeper Middle Miocene. The Middle Miocene Badenian
reservoirs, or Pg sands, are the focus of Ascent's development
objectives; however the shallow reservoirs, which were extensively
developed during the 1960s, are not considered to be fully
depleted.
Two new appraisal wells, Pg-10 and Pg-11, drilled in 2010/2011
to a total vertical depth of 3,497 m and 3,500 m respectively,
confirmed gas in all six Middle Miocene Badenian reservoirs ('A' to
'F' Pg sands). Gas flowed for the first time from the shallowest
'A' sands and, in addition, gas and condensate were sampled from
the Lower Badenian 'L' to'Q' sands. Pg-10 proved productive from
the 'F' sands and Pg--11A (Pg-11 was side-tracked for technical
reasons to Pg-11A) from the deeper 'L' to 'Q' sands. Both wells
were successfully fracture stimulated resulting in flow rates of 8
MMscfd from the 'F' sands and 2 MMscfd from the 'L, M and N' sands,
proving the commercial potential of both wells.
The data generated from the Pg-11 well, including three 18 m
core samples and state-of-the-art wireline logging, supplemented
the 2009 3D survey of the project area. The Company has reported
independently verified P50 estimate of gas in place of 456 Bcf (13
Bm3; 76 MMboe).
Both wells will require further recompletions in preparation for
a production testing phase which will help to better understand the
long-term productivity performance of the reservoirs. The test
production results will inform decisions regarding a possible full
field Petišovci development. The north east region of Slovenia has
been an oil and gas producing area since the early 1940s and
contains much of the infrastructure necessary for processing and
exporting produced hydrocarbons. Some improvements to these
existing facilities will be required for the test production
phase.
The next step in this project's redevelopment plan is to bring
gas from Pg-10 and Pg-11A on stream via dedicated well-site
facilities, through a newly constructed gas processing plant and
from there to the national gas pipeline terminal. This will be
followed by the deepening of 3 existing wells, Pg-6, 7 and 9.
Processing will be necessary to reduce the carbon dioxide content
of the gas from approximately 3% to less than the 1.5% required for
the national transmission system specifications, to remove
condensate for sale separately and to ensure dew point control by
dehydration.
Less than a kilometre from the wells is a methanol production
plant which was mothballed in 2010 as falls in methanol pricing had
made production uneconomic. There is scope for it to be sold to new
owners. The gas from Pg-10 and Pg-11A could be sold to this plant
for methanol production. The advantages of this option are that (i)
the gas would need very little processing before entering the
methanol plant; (ii) the local processing plant could manage this
without much modification; and (iii) the Company could derive an
early income from associated gas sales .
After a period of test gas production to monitor reservoir
performance, the partners will proceed to the next phase in
developing the Petišovci field, which includes: further upgrading
and expansion of the processing facility for a substantially higher
capacity; enlarged gas export capacity; and modifications to the
national grid connection. The Company has recently completed a
fully revised field development plan and strategy for the further
expansion of this significant Petišovci gas field complex.
Back-in Rights
The Hermrigen and Linden exploration permits in Switzerland
cover undeveloped discoveries made by Elf Aquitaine in 1972 and
1982 with a combined estimated gas resource base of over 360 Bcf.
As the original Hermrigen well was drilled before gas pipeline
infrastructure was built in the area, the discovery has remained
unappraised. Despite selling its interest in 2010 to eCORP, the
current operator of the project, Ascent retains various back-in
rights on any successful outcome of six conventional appraisal
prospects, provided relevant apportioned costs are covered.
As part of the Sale and Purchase agreement with Tulip Oil,
Ascent has the right to re-purchase a 10% interest in each of the
Dutch licences once Tulip has made a final investment decision with
respect to the commercial development of the Terschelling-Noord
Field.
Strategic report
Section 414C of the Companies Act ('the Act') requires that the
Company inform its members as to how the Directors have performed
their duty to promote the success of the Company by way of a
Strategic Report.
Fair review of the business
The Companies Act 2006 requires the Company to set out in the
Directors' Report a fair review of the business of the Company
during the financial year ended 31 December 2014 including an
analysis of the position of the business at the end of the
financial year and a description of the principal risks and
uncertainties facing the Company (the 'Business Review'). The
purpose of the Business Review is to enable shareholders to assess
how the Directors have performed their duties under Section 172 of
the Companies Act 2006, being the duty to promote the success of
the Company. The Chairman's Statement and the Group Operations
Review, starting on pages 3 and 7, together with the Corporate
Responsibility Statement, corporate governance statements and
Principal Risks and Uncertainties section of the Annual Report,
which are incorporated herein by reference, are considered to
fulfil the requirements of the Business Review.
Principal risks and uncertainties
The Group operates in an industry characterised by a range of
business risks. The Company maintains a risk register that
categorises risks under the headings: Strategic, Operations,
Financial, Compliance and Knowledge. The key risks and
uncertainties faced by the Group are summarised below.
-- Strategic - the achievement of corporate objectives is
dependent on the strategy followed by the Group, as well as the
interaction with stakeholders and shareholders, good governance and
an understanding of economic and market dynamics. This risk is
mitigated by the expertise of the Company's Directors and
specialists.
-- Operations - the operations of the Group may be adversely
affected by its ability to find and develop adequate gas and oil
reserves, to develop and exploit new gas and oil acreage and to
recruit and retain management and staff with the right technical
skills. This risk is mitigated through the experience and expertise
of the Company's specialists and consultants, the application of
appropriate technology and the selection of appropriate prospective
exploration and development assets.
-- Financial - the Group's ability to meet its obligations and
achieve objectives is influenced by its liquidity, gearing,
movements in commodity prices and costs, movements in foreign
exchange, funding and financial reporting requirements. Foreign
exchange risk is mitigated by close monitoring of exchange rate
movements and holding cash reserves with a variety of different
institutions in a variety of currencies being Euro, US Dollar and
British Pound. All other financial risks are mitigated by the
expertise of the Company's financial staff.
-- Compliance - the Group must comply with a range of corporate,
legal and industry regulations and the nature of its operations
necessitates strong controls around contractual arrangements,
especially in respect of areas such as joint venture agreements.
This risk is mitigated by the expertise of the Company's Directors
and advisers.
-- Knowledge - the Group is dependent on the efficient and
effective operation of its information systems, and the management
and reporting of project data and reserves information is key. Loss
of key personnel may also lead to the potential loss of corporate
'intellectual property'. This risk is mitigated by ensuring all
Company information is both readily available to the relevant
Company employees and is securely maintained on a regularly backed
up, password protected IT system.
Analysis of the development and performance of the business
This information is contained in pages 3 to 6 of the Chairman's
statement.
Analysis of the position of the business
This information is contained in pages 3 to 6 of the Chairman's
statement.
Analysis using other key performance indicators
The Directors consider a range of financial and non-financial
key performance indicators. Financial indicators are principally
focussed on the regular review of major projects, comparing actual
costs with budgets and projections. More detailed assessments are
also made of un-risked and risked net present values ('NPVs'),
project rates of return and investment ratios such as 'success case
investment efficiency'. Monthly trading and cash movements are also
reviewed for each of the Group companies. Specific
exploration-related key performance indicators include: the
probability of geological success (Pg), the probability of
commerciality or completion (Pc) and the probability of economic
success (Pe).
The projected NPV of the Petišovci project has been reassessed
during the year and offers a significant premium to the current
market capitalisation of the Company.
Approved for issue by the Board of Directors
and signed on its behalf
Clive Carver
Chairman
11 May 2015
Directors' Report
The Directors present their Directors' Report and Financial
Statements for the year ended 31 December 2014 ('the year').
Principal activities
The principal activities of the Group comprise gas and oil
exploration and production. The Company is registered in England
and Wales and is listed on the AIM Market of the London Stock
Exchange.
The Group has its headquarters in London and has oil and gas
interests in Slovenia. The Group operates its own undertakings both
through subsidiary companies and joint ventures. The subsidiary
undertakings affecting the Group's results and net assets are
listed in Note 9 to the Financial Statements.
Future developments
The Company has identified the European gas market as a
relatively stable and secure arena in which to compete. The
European market continues to be a net importer of gas whilst
diversity of supply is central to the energy security strategy of
most nations. The Petišovci field in Slovenia has the potential to
supply a significant proportion of the country's gas requirement
for many years.
Financial risk management
Details of the Group's financial instruments and its policies
with regard to financial risk management are given in Note 24 of
the Financial Statements.
Results and dividends
The loss for the year after taxation was GBP5.6 million (2013:
GBP3.5 million). The Directors do not recommend the payment of a
dividend (2013: Nil).
Post balance sheet events
On 2 February 2015 the Company announced the variation of the
terms of the 2013 and 2014 Loan notes. To date GBP5 million has
been drawn under the 2013 CLNs and GBP4 million has been drawn
under the 2014 CLNs. In total, including accrued interest, some
GBP10 million in aggregate was due for repayment under the 2013 and
2014 CLNs, in part on 23 December 2014 and in part on 31 January
2015.
In return for extending the maturity date of the Loan Notes and
terminating the accrual of further interest, the board of Ascent
has agreed to adjust the conversion price in respect of both the
2013 and 2014 Convertible Loan Notes from 0.5p and 0.2p
respectively to 0.1p for all Loan Notes. On a fully diluted basis
and assuming only Henderson convert this would take them to 88.6
per cent of the Company and accordingly the consent of the
Company's shareholders was required.
On 20 February 2015 at a General Meeting of the Company, the
shareholders approved the Whitewash and associated resolutions.
On 9 March 2015, the Company joined PrimaryBid.com, the online
platform dedicated to equity crowdfunding for AIM-listed companies.
On 1 May 2015 the Company has raised GBP550,000 via the placing of
275,000,000 ordinary shares in the capital of the Company at a
price of 0.2p per Ordinary Share with investors using the
Primarybid.com platform. The Company received GBP525,250 net of
costs which will provide the Company with additional working
capital to be used over as it concludes advanced negotiations with
potential sources of additional financing. The Directors are
confident that they will receive significant further funds as a
result of such negotiations that will allow the Company to develop
the project for the foreseeable future, towards cash flow.
On 1 May 2015 the Company announced that it had received a
notice of exercise to convert 420 convertible loan notes of GBP1
each which were issued in May 2013 as part of an open offer to all
shareholders (the "Loan Notes") and the terms of which were amended
in February 2015. The Loan Notes, including rolled up interest, are
convertible into new ordinary shares of 0.1 pence each in the
capital of the Company ("Ordinary Shares") at a price of 0.1 pence
per Ordinary Share. Consequently a total of 473,030 new Ordinary
Shares ("the Conversion Shares") were issued pursuant to the
Notice.
In May 2015 the Company agreed terms on a GBP7million loan
facility with Henderson Global Investors Limited. The loan can be
drawn at any time from signing to the 30 June 2016 at the
discretion of the lender. The loan accrues interest at the rate of
7.5% per annum on the amount drawn and this is added to the amount
of the loan. The loan is subject to a drawdown fee of 1.75% per
draw down which is deducted from the funds advanced. The loan is
also subject to a repayment fee of 1.25% on any amounts repaid by
the Company. The balance outstanding is repayable on demand at any
time.
Directors
The Directors of the Company that served during the year, and
subsequently, were as follows:
Leonard John Reece
Clive Nathan Carver
Nigel Sandford Johnson Moore
William Cameron Davies
Colin Hutchinson (appointed 20 August
2014)
Relevant details of the Directors, which include committee
memberships, are set out on page 14.
Directors' interests
The beneficial and non-beneficial interests in the issued share
capital and convertible loan notes of the Company were as
follows:
Ordinary shares Convertible loan
of 0.1p each. notes.
At 31 December At 31 December At 31 December At 31 December
2014 2013 2014 2013
Leonard
Reece - - 63,444 63,444
Clive Carver - - 17,500 17,500
Nigel Moore 119,500 119,500 - -
Cameron
Davies 150,000 150,000 - -
Colin Hutchinson - - - -
Details of Directors' share options and remuneration are set out
in Note 4 to the Financial Statements under the heading 'Directors'
remuneration'.
Directors' emoluments
For details of Directors' emoluments and share options please
see Note 4 of the Financial Statements.
Third party indemnity provision
The Company has provided liability insurance for its Directors.
The annual cost of the cover is not material to the Group. The
Company's Articles of Association allow it to provide an indemnity
for the benefit of its Directors which is a qualifying indemnity
provision for the purposes of the Companies Act 2006.
Share capital
Details of changes to share capital in the period are set out in
Note 18 to the Financial Statements.
As at 11 May 2015 the Company has been notified of the following
significant interests in its ordinary shares, being a holding of 3%
and above:
Number of %
ordinary
shares
Global Power Sources
Srl 307,126,793 17.71
Henderson Global Investors 185,325,944 10.69
EnQuest PLC 160,903,958 9.28
Seren Capital Management
Ltd 100,412,944 5.79
Shareholder communications
The Company has a website, www.ascentresources.co.uk, for the
purposes of improving information flow to shareholders, as well as
potential investors.
Employees
The Company's Board composition provides the platform for sound
corporate governance and robust leadership in implementing the
Company's strategies to meet its stated goals and objectives.
The Group's employees and consultants play an integral part in
executing its strategy and the overall success and sustainability
of the organisation. The Group has a highly skilled and dedicated
team of employees and consultants and places great emphasis on
attracting and retaining quality staff. As an international oil and
gas company, we facilitate the development of leadership from the
communities in which we operate. There is a large pool of qualified
upstream oil and gas exploration and production professionals in
the areas in which we operate, and we are committed to building and
developing our teams from these talent pools.
The Group holds its employees and consultants at all levels to
high standards and expects the conduct of its employees to reflect
mutual respect, tolerance of cultural differences, adherence to the
corporate code of conduct and an ambition to excel in their various
disciplines.
Disclosure of information to auditors
In the case of each person who was a Director at the time this
report was approved:
-- so far as that Director was aware there was no relevant audit
information of which the Company's auditors were unaware; and
-- that Director had taken all steps that the Director ought to
have taken as a Director to make himself aware of any relevant
audit information and to establish that the Company's auditors were
aware of that information.
This information is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act
2006.
Going Concern
The Financial Statements of the Group are prepared on a going
concern basis.
The Company has sufficient cash to fund its current trading
obligations but further funding will be required for working
capital through the year and to finance work programmes in
Slovenia. In addition both the 2013 & 2014 Convertible Loan
notes become due in November 2015 and the GBP3m due to EnQuest
becomes payable in December 2015. Consequently the Directors are
considering a range of funding options, including a strategic
investor.
However, there can be no guarantee over the outcome of these
negotiations and as a consequence there is a material uncertainty
of the Group's ability to raise additional finance, which may cast
significant doubt on the Group's ability to continue as a going
concern. Further, the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The Directors, however, remain confident of the Group's ability
to operate as a going concern given the funding discussions that
have and continue to take place and in light of the significant
recent support from existing shareholders.
Auditors
In accordance with Section 489 of the Companies Act 2006, a
resolution for the reappointment of BDO LLP as auditors of the
Company is to be proposed at the forthcoming Annual General
Meeting.
Approved for issue by the Board of Directors
and signed on its behalf
Clive Carver
Chairman
11 May 2015
Board of Directors
Clive Carver
Non-executive Chairman
Clive Carver has worked in the City since 1986 and focussed
exclusively on the small cap sector since 1994. He is the Executive
Chairman of Roxi Petroleum plc, an AIM listed oil and gas
exploration and production company operating in Kazakhstan, where
he served as Non-executive Chairman from 2006 to May 2012. He is
also a Non-executive Director of Fastjet PLC, a low cost airline
operating in Africa; Non-executive Chairman of Iafyds PLC, an AIM
listed investment company; and also a Non-executive Director of
unlisted Darwin Strategic Limited, a company which funds many AIM
listed businesses. Clive is a Fellow of the Institute of Chartered
Accountants in England and Wales and is a qualified Corporate
Treasurer.
Leonard Reece
Chief Executive Officer
Leonard Reece has over thirty years of E&P sector
experience, of which over twenty years have been at Managing
Director and CEO level. His most recent role was as CEO of Valhalla
Oil and Gas AS, a private Norwegian oil company, where he was
responsible for identifying, acquiring and developing commercially
successful oil and gas assets. He previously held the position of
Managing Director of Spectrum Energy and Information Technology
Ltd, which provided multi-client surveys and high quality seismic
imaging services.
Colin Hutchinson
Finance Director
Colin Hutchinson is a fellow of the Institute of Chartered
Accountants in Ireland and holds an MBA from Warwick Business
School. He has over fifteen years international experience gained
in commercially orientated finance roles. Colin previously served
as the Company's Financial Controller. Prior to joining Ascent, he
was Financial Controller at Lochard Energy plc and Finance Director
at Samba Communications Ltd. He is also a Non-executive Director of
Iafyds plc.
Nigel Moore
Non-executive Director
Chairman of the Audit Committee and member of the Remuneration
Committee
Nigel Moore is a Chartered Accountant and was a former partner
at Ernst & Young for thirty years until 2003. For the last ten
years at Ernst & Young he specialised in the oil and gas
sector, advising a wide range of client companies, providing
significant input to strategic options, new opportunities and
helping to deliver shareholder value. During the last 12 years
Nigel has been a member of a number of Boards focussed on
extractive industries and is currently on the Board and Chairman of
the Audit Committee of Hochschild Mining PLC and Chairman of JKX
Oil & Gas PLC.
Cameron Davies
Non-executive Director
Chairman of the Remuneration Committee and member of the Audit
Committee
Cameron Davies is an international energy sector specialist and
the former Chief Executive of Alkane Energy plc. He has an
excellent track record of exploration success and growing profits
in a quoted energy company. Beginning his career as a geologist, Dr
Davies has over thirty-five years' experience in the oil and gas
sectors. He founded AIM listed Alkane Energy plc in 1994 and
managed the business from original concept, through venture capital
funding and an IPO to become a profitable operator of gas to power
generation plants. He has a PhD from Imperial College, is a Fellow
of the Geological Society of London and a member of the European
Petroleum Negotiators Group and the PESGB.
Directors and Advisers
Directors Clive Carver
Leonard Reece
Nigel Moore
Cameron Davies
Colin Hutchinson
Secretary Colin Hutchinson
Registered Office 5 New Street Square
London EC4A 3TW
Nominated Adviser and finnCap Ltd
Broker 60 New Broad Street
London EC2M 1JJ
Auditors BDO LLP
55 Baker Street
London W1U 7EU
Solicitors Taylor Wessing LLP
5 New Street Square
London EC4A 3TW
Bankers Barclays Corporate Bank
1 Churchill Place
London E14 5HP
Share Registry Computershare Investors
Services Plc
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Company's registered
number 05239285
Summary of Group Net Oil and Gas Reserves
Net Reserves and Resources by country
Net Attributable Net Attributable Net Attributable
----------
Reserves Contingent Prospective
Resources Resources
----------
(Bcfe) (Bcfe) (Bcfe)
--------------------- --------------------- ---------------------
P90 P50 P10 Low Best High Low Best High
---------- ------ ------ ----- ----- ------ ------ ----- ------ ------
Slovenia 41 88 174 42 76 140 - - -
---------- ------ ------ ----- ----- ------ ------ ----- ------ ------
These figures are based on RPS gas-in-place estimates with a
management assumption of a 50% recovery factor and Ascent's 75%
participation.
Tested and/or produced commercial sands are included as reserves
while untested and unproduced sands remain as resources. The
condensate content of gas is not included.
Remaining reserves have been adjusted to take account of
historic field production, which to the end of 2014 was 8.7
Bcfe.
Proven Reserves are those quantities of petroleum which can be
estimated with reasonable certainty to be commercially recoverable,
from known reservoirs and under current economic conditions,
operating methods and government regulations. There is at least a
90% probability that the quantities actually recovered will equal
or exceed the estimate.
Probable Reserves are those unproven reserves which are more
likely than not to be recoverable. There is at least a 50%
probability that the quantities actually recovered will equal or
exceed the sum of estimated proven plus probable reserves.
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations, but the applied project(s) are not yet
considered mature enough for commercial development due to one or
more contingencies. Contingent resources may include, for example,
projects for which there are currently no viable markets or where
commercial recovery is dependent on technology under development or
where evaluation of the accumulation is insufficient to clearly
assess commerciality.
Prospective Resources are those quantities of petroleum which
are estimated to be potentially recoverable from undiscovered
accumulations.
P90 (P50; P10) Reserves: at least a 90% (50%; 10%) probability
that the quantities will equal or exceed the estimate. This is a
measure of uncertainty not geological or commercial risk.
Summary of Ascent Resources plc's Licence Interests as at 31
December 2014
Permit
Working Area
Interest Gross Net
(%) (km(2) (km(2)
Permit Subsidiary ) ) Status
Operations
Slovenia
Petišovci Ascent Slovenia Oil & gas
Concession Limited 75 98 73 exploitation
Back in rights
Switzerland
Seeland-Frienisberg Ascent Resources 364 - Gas appraisal
plc
Linden Ascent Resources 330 - Gas appraisal
plc
Gros de Vaud Ascent Resources 736 - Oil & gas
plc exploration
The Netherlands
Ascent Resources Gas exploration
M10/M11 plc 110 59 and appraisal
Glossary
M Thousand* cf Cubic feet
MM Million* scf Standard cubic
feet
B Billion* scfd Standard cubic
feet per day
km(2) Square kilometres
m(3) Cubic metres
* These are 'oilfield' units, as commonly used in the oil and
gas industry. Other units conform to the Système International
d'unités (SI) convention
Prospect: a potential trap which geologists believe may contain
hydrocarbon resources
Reservoirs: a subsurface body of rock having sufficient porosity
and permeability to store and transmit hydrocarbons
Miocene: a geological epoch of the Neogene Period that extended
from about 13 to 25 million years ago.
Corporate Responsibility
Ascent operates a Management System that embodies Environmental,
Health, Safety ('EHS') and Social Responsibility ('SR') principles.
This system defines objectives to be met by Ascent, its
subsidiaries, affiliates, associates and operated joint ventures
(hereinafter collectively referred to as Ascent) in the management
of EHS and SR.
The policy of the Board of Ascent is to be fully accountable for
the necessary practices, procedures and means being in place so as
to ensure that each EHS and SR objective is demonstrated in full
and that continuous improvement practices are operating to ensure
that the required practices, procedures and means are being
monitored, refined and optimised as necessary. The Board will
accordingly review and report regularly to external stakeholders as
to the achievement of the objectives of this policy.
In accordance with this policy, the Executive Directors of
Ascent are directly and collectively responsible to the Board for
demonstrating that the EHS and SR objectives are attained
throughout Ascent. The Executive Directors have adopted Management
System Guidelines as guidance for demonstrating this.
The objectives of the Environment, Health, Safety and Social
Responsibility Policy are:
-- Ascent shall manage all operations in a manner that protects
the environment and the health and safety of employees, third
parties and the community.
-- The Executive Directors provide the vision, establish the
framework, set the objectives and provide the resources for
responsible management of Ascent's operations.
-- Leadership and visible commitment to continuous improvement
are critical elements of successful operations.
-- A process that measures performance relative to policy aims
and objectives is essential to improving performance. Sharing best
practices and learning from each other promotes improvement.
-- Effective business controls ensure the prevention, control
and mitigation of threats and hazards to business stewardship.
-- Risk identification, assessment and prioritisation can reduce
risk and mitigate hazards to employees, third parties, the
community and the environment. Management of risk is a continuous
process.
-- Safe, environmentally sound operations rely on well-trained,
motivated people. Careful selection, placement, training,
development and assessment of employees and clear communication and
understanding of responsibilities are critical to achieving
operating excellence.
-- The use of internationally recognised standards, procedures
and specifications for design, construction, commissioning,
modifications and decommissioning activities are essential for
achieving operating excellence.
-- Operations within recognised and prudent parameters are
essential to achieving clear operating excellence. This requires
operating, inspection and maintenance procedures and information on
the processes, facilities and materials handled, together with
systems to ensure that such procedures have been properly
communicated and understood.
-- Adhering to established safe work practices, evaluating and
managing change and providing up-to-date procedures to manage
safety and health risks contribute to a safe workplace for
employees and third parties.
-- The minimisation of environmental risks and liabilities are
integral parts of Ascent's operations.
-- Third parties who provide materials and services (personnel
and equipment) or operate facilities on Ascent's behalf have an
impact on EHS and SR excellence. It is essential that third-party
services are provided in a manner consistent with Ascent's EHS and
SR Policy and Management System Guidelines.
-- Compliance with regulatory requirements and company
guidelines must be periodically measured and verified as part of
the continuous improvement process.
-- Preparedness and planning for emergencies are essential to
ensuring that all necessary actions are taken if an incident
occurs, to protect employees, third parties, the public, the
environment, the assets and brand of Ascent.
-- Effective reporting, incident investigation, communication
and lessons learned are essential to attaining and improving
performance.
-- Open and honest communication with the communities,
authorities and stakeholders with which Ascent operates builds
confidence and trust in the integrity of Ascent.
During 2014, the Group was Operator of one exploration project
which was closely managed for maintaining the EHS and SR policy
aims.
There have been no convictions in relation to breaches of any
applicable Acts recorded against the Group during the reporting
period.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report, the Strategic Report and the Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group and Company financial statements
in accordance with International Financial Reporting Standards
('IFRSs') as adopted by the European Union. Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group for that period. The Directors are also required to prepare
financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the AIM
Market.
In preparing these financial statements the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements;
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the Annual Report and
the Financial Statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the Financial Statements contained therein.
Independent Auditors Report to the Members of Ascent Resources
plc
We have audited the financial statements of Ascent Resources plc
for the year ended 31 December 2014 which comprise the consolidated
income statement and consolidated statement of comprehensive
income, the consolidated and company statements of financial
position, the consolidated and company statement of changes in
equity, the consolidated and company statement of cash flows and
the related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Financial Reporting
Council's (FRC's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the FRC's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and the parent company's affairs as at 31
December 2014 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter - Going concern
In forming our opinion of the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in Note 1 to the financial statements concerning the Company's
ability to continue as a going concern. Further funds will be
required to finance the Company's planned work programme and to
service existing debt facilities. While the Directors are confident
of being able to acquire the finance necessary to meet both capital
and administrative obligations and liabilities as they fall due,
the necessary facilities are not currently in place.
These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Company's
ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Company was
unable to continue as a going concern.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the strategic report and
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Scott Knight (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
11 May 2015
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated Income Statement
For the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
Notes GBP '000s GBP '000s
Administrative expenses 3 (1,879) (1,924)
Aborted transaction costs (228) -
Loss from operating activities (2,107) (1,924)
Finance income 5 3 1,423
Finance cost 5 (3,519) (1,266)
------------ ------------
Net finance costs (3,516) 157
Loss before taxation (5,623) (1,767)
------------ ------------
Income tax expense 6 - -
------------ ------------
Loss for the year from continuing
operations (5,623) (1,767)
Loss for the year from discontinued
operations - (1,825)
Loss for the year (5,623) (3,592)
------------ ------------
Loss attributable to:
Owners of the Company (5,623) (3,587)
Non-controlling interests - (5)
------------ ------------
Loss for the year (5,623) (3,592)
Loss per share
Basic & fully diluted loss
per share (Pence) 7 (0.39) (0.32)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Loss for the year (5,623) (3,592)
Other comprehensive income
Foreign currency translation
differences for foreign
operations * (1,248) (1,276)
Recycling of foreign exchange
on disposals * - (1,324)
Total comprehensive loss
for the year (6,871) (6,192)
Total comprehensive loss
attributable to:
Owners of the Company (6,871) (6,187)
Non-controlling interest - (5)
------------- -------------
Total comprehensive loss
for the year (6,871) (6,192)
* Foreign currency translation differences from foreign
operations may be recycled through the income statement in the
future if certain future conditions arise.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2014
Share Share Equity Shares Share Translation Retained Total Non-Controlling Total
capital premium reserve to based reserve earnings interest
be payment
issued reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP
'000s '000s '000s '000s '000s '000s '000s '000s '000s
Balance at 1
January 2013 1,026 52,198 - - 1,901 2,102 (30,684) 26,543 5 26,548
Comprehensive - -
income
Loss for the
year - - - - - - (3,587) (3,587) (5) (3,592)
Other
comprehensive
income
Currency
translation
differences - - - - - (1,276) - (1,276) - (1,276)
FX differences
recycled
on
discontinued
operations - - - - - (1,324) - (1,324) (1,324)
Total
comprehensive
income - - - - - (2,600) (3,587) (6,187) (5) (6,192)
Transactions - - -
with owners
Issue of
convertible
loan
notes - - 518 - - - - 518 - 518
Issue of
shares during
the
year net of
costs 425 3,635 - 84 - - - 4,144 4,144
Share-based
payments - - - - (5) - 100 95 - 95
Balance at 31
December 2013 1,451 55,833 518 84 1,896 (498) (34,171) 25,113 - 25,113
--------------- -------- -------- -------- ------- -------- ------------ --------- -------- ---------------- --------
Balance at 1
January 2014 1,451 55,833 518 84 1,896 (498) (34,171) 25,113 - 25,113
Comprehensive - -
income
Loss for the
year - - - - - - (5,623) (5,623) - (5,623)
Other
comprehensive
income
Currency
translation
differences - - - - - (1,248) - (1,248) - (1,248)
FX differences - - - - - - - - - -
recycled
on
discontinued
operations
Total
comprehensive
income - - - - - (1,248) (5,623) (6,871) - (6,871)
Transactions - -
with owners
Issue of
convertible
loan
notes - - 2,058 - - - - 2,058 - 2,058
Conversion of
loan notes - 2 2 - 2
Issue of
shares during
the
year net of
costs 8 76 - (84) - - - - - -
Share-based
payments and
expiry of
options - - - - (1,035) - 1,181 146 - 146
Balance at 31
December 2014 1,459 55,911 2,576 - 861 (1,746) (38,613) 20,448 - 20,448
--------------- -------- -------- -------- ------- -------- ------------ --------- -------- ---------------- --------
Company Statement of Changes in Equity
For the year ended 31 December 2014
Share Share Equity Shares Share Retained Total
capital premium reserve to be based earnings parent
issued payment equity
reserve
GBP GBP GBP GBP GBP GBP GBP
'000s '000s '000s '000s '000s '000s '000s
Balance at 1 January 2013 1,026 52,198 - - 1,901 (28,599) 26,526
Comprehensive income
Loss and total comprehensive
income for the year - - - - - (6,190) (6,190)
Transactions with owners
Issue of convertible loan
notes - - 518 - - - 518
Issue of shares during the
year net of costs 425 3,635 - 84 - - 4,144
Share-based payments - - - - (5) 100 95
Balance at 31 December 2013 1,451 55,833 518 84 1,896 (34,689) 25,093
------------------------------ --------- --------- --------- -------- --------- ---------- --------
Balance at 1 January 2014 1,451 55,833 518 84 1,896 (34,689) 25,093
Comprehensive income
Loss and total comprehensive
income for the year - - - - - (6,058) (6,058)
Transactions with owners
Issue of convertible loan
notes - - 2,058 - - - 2,058
Conversion of loan notes - 2 - - - - 2
Issue of shares during the
year net of costs 8 76 - (84) - - -
Share-based payments - - - - (1,035) 1,181 146
Balance at 31 December 2014 1,459 55,911 2,576 - 861 (39,566) 21,241
------------------------------ --------- --------- --------- -------- --------- ---------- --------
Consolidated Statement of Financial Position
As at 31 December 2014
31 December 31 December
2014 2013
Assets Notes GBP '000s GBP '000s
Non-current assets
Property, plant and equipment 2 3
Exploration and evaluation
costs 8 33,166 33,628
------------ ------------
Total non-current assets 33,168 33,631
Current assets
Trade and other receivables 10 98 110
Cash and cash equivalents 456 184
------------ ------------
Total current assets 554 294
Total assets 33,722 33,925
============ ============
Equity and liabilities
Attributable to the equity
holders of the Parent Company
Share capital 18 1,459 1,451
Share premium account 55,911 55,833
Equity reserve 2,576 518
Shares to be issued - 84
Share-based payment reserve 861 1,896
Translation reserves (1,746) (498)
Retained earnings (38,613) (34,171)
------------ ------------
Total equity attributable
to the shareholders 20,448 25,113
Non-Controlling interest - -
------------ ------------
Total equity 20,448 25,113
------------ ------------
Non-current liabilities
Borrowings 13 - 4,957
Provisions 14 410 437
Total non-current liabilities 410 5,394
Current liabilities
Trade and other payables 16 647 409
Borrowings 13 9,624 754
Other current liabilities 15 2,593 2,255
------------
Total current liabilities 12,864 3,418
Total liabilities 13,274 8,812
------------ ------------
Total equity and liabilities 33,722 33,925
============ ============
The notes on pages 31 to 51are an integral part of these
consolidated financial statements.
These financial statements were approved and authorised for
issue by the Board of Directors on 11 May 2015 and signed on its
behalf by:
Clive Carver, Chairman
11 May 2015
Company Statement of Financial Position
As at 31 December 2014
31 December 31 December
2014 2013
Notes GBP '000s GBP '000s
Non-current assets
Property, plant and equipment 1 2
Investment in subsidiaries
and joint ventures 14,340 14,340
Intercompany receivables 21 19,045 18,815
------------ ------------
Total non-current assets 33,386 33,157
Current assets
Trade and other receivables 11 62 71
Cash and cash equivalents 439 175
------------ ------------
Total current assets 501 246
Total assets 33,887 33,403
============ ============
Equity
Share capital 18 1,459 1,451
Share premium 55,911 55,833
Equity reserve 2,576 518
Shares to be issued - 84
Share-based payment reserve 861 1,896
Retained loss (39,566) (34,689)
Total equity 21,241 25,093
------------ ------------
Non-Current liabilities
Borrowings 13 - 4,957
------------ ------------
Total non-current liabilities - 4,957
Current liabilities
Trade and other payables 17 429 344
Borrowings 13 9,624 754
Other current liabilities 15 2,593 2,255
------------ ------------
Total current liabilities 12,646 3,353
Total liabilities 12,646 8,310
Total equity and liabilities 33,887 33,403
============ ============
The notes on pages 31 to 51 are an integral part of these
consolidated financial statements.
These financial statements were approved and authorised for
issue by the Board of Directors on 11 May 2015 and signed on its
behalf by:
Clive Carver
Chairman
11 May 2015
Consolidated Cash Flow Statement
For the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Cash flows from operations
Loss after tax for the year (5,623) (3,592)
DD&A charge 2 (2)
Decrease in receivables 12 171
Increase / (Decrease) in
payables 238 (547)
Increase in share based
payments 146 96
Exchange differences (42) (190)
Finance income (3) (1,423)
Finance cost 3,516 1,266
Loss on the sale of discontinued
operations (net of tax) - 1,792
Net cash used in operating
activities (1,754) (2,429)
------------- -------------
Cash flows from investing
activities
Interest received 3 5
Payments for investing in
exploration (773) (1,346)
Disposal of discontinued
operations net of cash disposed
of - (228)
Disposal / (Purchase) of
property, plant and equipment (1) 101
Net cash used in investing
activities (771) (1,468)
------------- -------------
Cash flows from financing
activities
Interest paid and other
finance fees (60) (226)
Proceeds from loans 3,650 2,061
Loans repaid (761) (2,031)
Loan issue costs (32) (20)
Proceeds from issue of shares - 887
Share issue costs - (44)
Net cash generated from
financing activities 2,797 627
------------- -------------
Net increase in cash and
cash equivalents for the
year 272 (3,270)
Effect of foreign exchange
differences - 2
Cash and cash equivalents
at beginning of the year 184 3,452
Cash and cash equivalents
at end of the year 456 184
============= =============
Company Cash Flow Statement
For the year ended 31 December 2014
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Cash flows from in operations
Loss for the year (6,058) (6,190)
Depreciation charge 2 2
Increase in receivables (662) (14)
Increase in payables 85 114
Increase in share based
payments reserve 146 96
Settlement of warranty claim - 3,300
Write off of investment - 79
Foreign exchange 1,533 (73)
Finance income (3) (5)
Finance cost 3,499 1,183
Net cash generated from
/ (used in) operating activities (1,458) (1,508)
============= =============
Cash flows from investing
activities
Interest received 3 (47)
Advances to subsidiaries (1,094) (2,449)
Investment in PPE (1) -
Net cash flows used in investing
activities (1,092) (2,496)
------------- -------------
Cash flows from financing
activities
Interest paid (43) (143)
Proceeds from loans 3,650 2,061
Repayment of loan (761) (1,775)
Loan issue costs (32) (20)
Cash proceeds from issue
of shares - 887
Share issue costs - (44)
Net cash generated from
financing activities 2,814 966
------------- -------------
Net increase in cash and
cash equivalents 264 (3,038)
Cash and cash equivalents
at beginning of the year 175 3,211
Effects of foreign exchange
differences - 2
Cash and cash equivalents
at end of the year 439 175
============= =============
Notes to the accounts
1 Accounting policies
Reporting entity
Ascent Resources plc ('the Company' or 'Ascent') is a company
domiciled and incorporated in England. The address of the Company's
registered office is 5 New Street Square, London EC4A 3TW. The
consolidated financial statements of the Company for the year ended
31 December 2014 comprise the Company and its subsidiaries
(together referred to as the 'Group') and the Group's interest in
associates and joint ventures. The Parent Company financial
statements present information about the Company as a separate
entity and not about its Group.
The Company is admitted to AIM, a market of the London Stock
Exchange.
The consolidated financial statements of the Group for the year
ended 31 December 2014 are available from the Company's website at
www.ascentresources.co.uk.
Statement of compliance
The Group's and Company's financial statements for the year
ended 31 December 2014 were approved and authorised for issue by
the Board of Directors on 11 May 2015 and the Statements of
Financial Position were signed on behalf of the Board by Clive
Carver.
Both the Parent Company financial statements and the Group
financial statements give a true and fair view and have been
prepared and approved by the Directors in accordance with
International Financial Reporting Standards as adopted by the EU
('IFRSs').
Basis of preparation
In publishing the Parent Company financial statements here
together with the Group financial statements, the Company is taking
advantage of the exemption in section 408 of the Companies Act 2006
not to present its individual income statement and related notes
that form a part of these approved financial statements. The
Company loss for the year was GBP6.2 million.
Measurement Convention
The financial statements have been prepared under the historical
cost convention except for available-for-sale financial assets and
financial instruments which are measured at fair value through
profit and loss. The financial statements are presented in sterling
and have been rounded to the nearest thousand (GBP '000s) except
where otherwise indicated.
The principal accounting policies set out below have been
consistently applied to all periods presented.
Going Concern
The Financial Statements of the Group are prepared on a going
concern basis.
The Company has sufficient cash to fund its current trading
obligations but further funding will be required for working
capital through the year and to finance work programmes in
Slovenia. In addition, both the 2013 & 2014 Convertible Loan
notes become due in November 2015 and the GBP3m due to EnQuest
becomes payable in December 2015. Consequently the Directors are
considering a range of funding options, including a strategic
investor.
However, there can be no guarantee over the outcome of these
negotiations and as a consequence there is a material uncertainty
of the Group's ability to raise additional finance, which may cast
significant doubt on the Group's ability to continue as a going
concern. Further, the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The Directors, however, remain confident of the Group's ability
to operate as a going concern given the funding discussions that
have and continue to take place and in light of the significant
recent support from existing shareholders.
New and amended Standards effective for 31 December 2014 year
end adopted by the Group:
i. The following new standards and amendments to standards are
mandatory for the first time for the Group for the financial year
beginning 1 January 2014. The adoption of these standards and
amendments has had no material effect on the Group's accounting
policies.
Standard Effective date Impact
on initial
application
---------- ---------------------------------- -------------
IAS 32 Amendment - Offsetting Financial 1 January
Assets and Financial Liabilities 2014
---------- ---------------------------------- -------------
IFRS 10 Consolidated Financial Statements 1 January
2014
---------- ---------------------------------- -------------
IFRS 11 Joint Arrangements 1 January
2014
---------- ---------------------------------- -------------
IFRS 12 Disclosure of Interests 1 January
in Other Entities 2014
---------- ---------------------------------- -------------
IAS 28 Investments in Associates 1 January
and Joint Ventures 2014
---------- ---------------------------------- -------------
IAS 36 Recoverable amounts disclosures 1 January
for non-financial assets 2014
---------- ---------------------------------- -------------
IFRS 10, Investment Entities 1 January
IFRS 12, 2014
and IAS
27
---------- ---------------------------------- -------------
ii. Standards, amendments and interpretations, which are
effective for reporting periods beginning after the date of these
financial statements which have not been adopted early:
Standard Description Effective
date
----------- --------------------------------- -----------
IFRS 11 Accounting for Acquisitions 1 January
of Interests in Joint Operation 2016
----------- --------------------------------- -----------
IAS 16 and Clarification of Acceptable 1 January
IAS 38 Methods of Depreciation 2016
and Amortisation
----------- --------------------------------- -----------
IAS 1 Amendments to presentation 1 January
of financial statements 2016
----------- --------------------------------- -----------
IAS 19 Defined Benefit Plans: Employee 1 February
Contributions 2015
----------- --------------------------------- -----------
Annual Improvements to IFRSs 1 February
2010-2012 Cycle 2015
----------- --------------------------------- -----------
Annual Improvements to IFRSs 1 January
2011-2013 Cycle 2015
----------- --------------------------------- -----------
Annual Improvements to IFRSs 1 January
2012-2014 Cycle 2016
----------- --------------------------------- -----------
IFRS 9 Financial instruments 1 January
2018
----------- --------------------------------- -----------
The Group has not yet assessed the impact of IFRS 9. The
adoption of IFRS 9 will eventually replace IAS 39 in its entirety
and consequently may have a material effect on the presentation,
classification, measurement and disclosures of the Group's
financial instruments.
Critical accounting estimates and assumptions
The preparation of the consolidated financial statements in
conformity with IFRSs requires management to make estimates and
assumptions that affect the application of policies and reported
amounts of assets, liabilities, income, expenses and related
disclosures. The estimates and underlying assumptions are based on
practical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form
the basis for making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Changes in accounting estimates may be necessary if
there are changes in the circumstances on which the estimate was
based or as a result of new information. Such changes are recorded
in the period in which the estimate is revised.
Critical judgements in applying the Group's accounting
policies
The application of the Group's accounting policies may require
management to make judgements, apart from those involving
estimates, which can have a significant effect on the amounts
amortised in the financial statements. Management judgement is
particularly required when assessing the substance of transactions
that have a complicated structure or legal form.
The key areas where management judgement will need to be applied
will be in the areas of:
(a) Oil and gas assets - exploration and evaluation costs are
initially classified and held as intangible fixed assets rather
than being expensed. The carrying value of intangible exploration
and evaluation assets are then determined. Management considers
these assets for indicators of impairment at least annually based
on an estimation of the recoverability of the cost pool from future
development and production of the related oil and gas reserves (see
Note 8);
(b) Decommissioning provision - the cost of decommissioning is
estimated by reference to operators and internal specialist staff
(see Note 14);
(c) Convertible loan notes - management assessed the fair value
of the liability component at issue and the appropriateness of the
amortisation period (see Note 13);
(d) Basis of consolidation - management consider the Company's
ability to exert financial and operational control, as well as the
level of voting rights and representation on the Board as a basis
of consolidation;
(e) Share-based payments - management assesses the fair value of
each option using an appropriate pricing model based on option and
share prices, volatility and the life of the option (see Note
23).
(f) Commercial reserves - Commercial reserves are proven and
probable oil and gas reserves, calculated on an entitlement basis.
Estimates of commercial reserves underpin the calculation of
depletion and amortisation on a unit of production basis. Estimates
of commercial reserves include estimates of the amount of oil and
gas in place, assumptions about reservoir performance over the life
of the field and assumptions about commercial factors which, in
turn, will be affected by the future oil and gas price.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The results of undertakings acquired or disposed of are
consolidated from or to the date when control passes to or from the
Group. The results of subsidiaries acquired or disposed of during
the period are included in the consolidated income statement from
the date that control commences until the date that control
ceases.
Where necessary, adjustments are made to the results of
subsidiaries to bring the accounting policies they use into line
with those used by the Group.
Business combinations
On acquisition, the assets, liabilities and contingent
liabilities of subsidiaries are measured at their fair values at
the date of acquisition. Any excess of cost of acquisition over net
fair values of the identifiable assets, liabilities and contingent
liabilities acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the net fair values of the
identifiable assets, liabilities and contingent liabilities
acquired (i.e. discount on acquisition) is credited to profit and
loss in the period of acquisition.
Non-current assets held for sale and discontinued operations
Non-current assets are classified as assets held for sale and
stated at the lower of carrying amount and fair value less costs to
sell if their carrying amount is to be recovered principally
through a sale transaction rather than through continuing use.
A discontinued operation is a component of the Group's business
that represents a separate major line of business or geographical
area of operations. Classification as a discontinued operation
occurs upon disposal or when the operation meets the criteria to be
classified as held for sale.
Joint arrangements
The group is party to a joint arrangement when there is a
contractual arrangement that confers joint control over the
relevant activities of the arrangement to the group and at least
one other party. Joint control is assessed under the same
principles as control over subsidiaries.
The group classifies its interests in joint arrangements as
either joint ventures, where the group has rights to only the net
assets of the joint arrangement, or joint operations where the
group has both the rights to assets and obligations for the
liabilities of the joint arrangement.
All of the group's joint arrangements are classified as joint
operations. The Group accounts for its interests in joint
operations by recognising its assets, liabilities, revenues and
expenses in accordance with its contractually conferred rights and
obligations.
Oil and Gas Exploration Assets
All licence/project acquisitions, exploration and appraisal
costs incurred or acquired on the acquisition of a subsidiary, are
accumulated in respect of each identifiable project area. These
costs, which are classified as intangible fixed assets are only
carried forward to the extent that they are expected to be
recovered through the successful development of the area or where
activities in the area have not yet reached a stage which permits
reasonable assessment of the existence of economically recoverable
reserves.
Pre-licence/project costs are written off immediately. Other
costs are also written off unless commercial reserves have been
established or the determination process has not been completed.
Thus accumulated cost in relation to an abandoned area are written
off in full to the statement of comprehensive income in the year in
which the decision to abandon the area is made.
When production commences the accumulated costs for the relevant
area of interest are transferred from intangible fixed assets to
Property, Plant and Equipment as 'Developed oil and gas
assets'.
Impairment of oil and gas exploration assets
Exploration/appraisal assets are reviewed regularly for
indicators of impairment following the guidance in IFRS 6
'Exploration for and Evaluation of Mineral Resources' and tested
for impairment where such indicators exist.
In accordance with IFRS 6 the group considers the following
facts and circumstances in their assessment of whether the group's
oil and gas exploration assets may be impaired:
-- whether the period for which the group has the right to
explore in a specific area has expired during the period or will
expire in the near future, and is not expected to be renewed;
-- whether substantive expenditure on further exploration for
and evaluation of mineral resources in a specific area is neither
budgeted nor planned;
-- whether exploration for and evaluation of oil and gas
reserves in a specific area have not led to the discovery of
commercially viable quantities of oil and gas and the group has
decided to discontinue such activities in the specific area;
and
-- whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying
amount of the exploration and evaluation assets is unlikely to be
recovered in full from successful development or by sale.
If any such facts or circumstances are noted, the group, as a
next step, perform an impairment test in accordance with the
provisions of IAS 36. In such circumstances the aggregate carrying
value of the oil and gas exploration and assets is compared against
the expected recoverable amount of the cash generating unit. The
recoverable amount is the higher of value in use and the fair value
less costs to sell.
The group has identified one cash generating unit, the Petišovci
project in Slovenia. Any impairment arising is recognised in the
Income Statement for the year.
Where there has been a charge for impairment in an earlier
period that charge will be reversed in a later period where there
has been a change in circumstances to the extent that the
discounted future net cash flows are higher than the net book value
at the time. In reversing impairment losses, the carrying amount of
the asset will be increased to the lower of its original carrying
values or the carrying value that would have been determined (net
of depletion) had no impairment loss been recognised in prior
periods.
Decommissioning costs
Where a material liability for the removal of wells and
production facilities and site restoration at the end of the field
life exists, a provision for decommissioning is recognised. The
amount recognised is the net present value of estimated future
expenditure determined in accordance with local conditions and
requirements. An asset of an amount equivalent to the provision is
also added to oil and gas exploration assets and depreciated on a
unit of production basis once production begins. Changes in
estimates are recognised prospectively, with corresponding
adjustments to the provision and the associated asset.
Property, plant and equipment assets other than oil and gas
assets
Property, plant and equipment other than oil and gas assets are
stated at cost, less accumulated depreciation and any provision for
impairment. Depreciation is provided at rates estimated to write
off the cost, less estimated residual value of each asset over its
expected useful life as follows:
Computer and office equipment - 33% straight line.
Foreign currency
The Group's strategy is focussed on developing oil and gas
projects across Europe funded by shareholder equity and other
financial assets which are principally denominated in sterling. The
functional currency of the Company is sterling.
Transactions in foreign currency are translated to the
respective functional currency of the Group entity at the rates of
exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated to the
functional currency at the rates prevailing on the reporting date.
Exchange gains and losses on short-term foreign currency borrowings
and deposits are included with net interest payable.
The assets and liabilities of foreign operations, including fair
value adjustments arising on consolidation, are translated to
sterling at foreign exchange rates ruling at the balance sheet
date. The revenues and expenses of foreign operations are
translated to sterling at the average rate ruling during the
period. Foreign exchange differences arising on retranslation are
recognised directly in a separate component of equity. They are
released into the income statement upon disposal.
On consolidation, the results of overseas operations are
translated into sterling at rates approximating to those ruling
when the transactions took place. All assets and liabilities of
overseas operations, including goodwill arising on the acquisition
of those operations, are translated at the rate ruling at the
reporting date. Exchange differences arising on translating the
opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income and accumulated in the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign exchange reserve relating to
that operation up to the date of disposal are transferred to the
consolidated statement of comprehensive income as part of the
profit or loss on disposal.
Exchange differences on all other transactions, except
intercompany foreign currency loans, are taken to operating
loss.
Taxation
The tax expense represents the sum of the tax currently payable
and any deferred tax.
The tax currently payable is based on the estimated taxable
profit for the period. Taxable profit differs from net profit as
reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using the expected
tax rate applicable to annual earnings.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the corresponding tax bases
used in the computation of taxable profit. It is accounted for
using the balance sheet liability method. Deferred tax liabilities
are recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised. The carrying amount of
deferred tax assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be
recovered.
Equity-settled share-based payments
The cost of providing share-based payments to employees is
charged to the income statement over the vesting period of the
related share options or share allocations. The cost is based on
the fair values of the options and shares allocated determined
using the binomial method. The value of the charge is adjusted to
reflect expected and actual levels of vesting. Charges are not
adjusted for market related conditions which are not achieved.
Where equity instruments are granted to persons other than
directors or employees the consolidated income statement is charged
with the fair value of any goods or services received.
Grants of options in relation to acquiring further shares in
licence areas are treated as additions to Slovenian exploration
costs at Group level and increases in investments at Company
level.
Provisions
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks
specific to the liability.
Convertible loan notes
Upon issue of a convertible loan, where the convertible option
is at a fixed rate, the net proceeds received from the issue of
convertible loan notes are split between a liability element and an
equity component at the date of issue. The fair value of the
liability component is estimated using the prevailing market
interest rate for similar non-convertible debt. The difference
between the proceeds of issue of the convertible loan notes and the
fair value assigned to the liability component, representing the
embedded option to convert the liability into equity of the Group,
is included in equity and is not re-measured.
Subsequent to the initial requisition the liability component is
measured at amortised cost using the effective interest method.
However, where, at inception, the conversion option is such that
the option will not be settled by the Company exchanging a fixed
number of its own equity instruments for a fixed amount of cash,
the convertible loan does not meet the definition of a compound
financial instrument. In such cases, the convertible loan (the host
contract) is a hybrid financial instrument and the option to
convert is an embedded derivative. Attached options (options
entered into in consideration for entering into the host contract)
on similar terms are also embedded derivatives. The embedded
derivatives are separated from the host contract as their risks and
characteristics are not closely related to those of the host
contract and the host contract is not carried at fair value. At
each reporting date, the embedded derivatives are measured at fair
value with changes in fair value recognised in the income statement
as they arise. The method used for revaluation is the Black Scholes
method. The host contract carrying value on initial recognition is
based on the net proceeds of issuance of the convertible loan
reduced by the fair value of the embedded derivatives and is
subsequently carried at each reporting date at amortised cost.
When there are amendments to the contractual loan note terms
these terms are assessed and the estimate of fair value adjusted as
appropriate.
Non-derivative financial instruments
Non-derivative financial instruments comprise of investments in
equity and debt securities, trade and other receivables, cash and
cash equivalents, loans and borrowings and trade and other
payables.
Financial instruments
Financial assets and financial liabilities are recognised on the
statement of financial position when the Group becomes a party to
the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition
at fair value and are subsequently measured at amortised cost using
the effective interest method. A provision is established when
there is objective evidence that the Group will not be able to
collect all amounts due. The amount of any provision is recognised
in the income statement.
Cash and cash equivalents comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less.
Trade and other payables are initially measured at fair value
and are subsequently measured at amortised cost using the effective
interest rate method.
Financial liabilities and equity instruments issued by the Group
are classified in accordance with the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. Equity instruments issued by
the Company are recorded at the proceeds received, net of direct
issue costs.
Interest bearing bank loans, overdrafts and other loans are
recorded at fair value less any directly attributable costs, with
subsequent measurement at amortised cost. Finance costs are
accounted for on an accruals basis in the income statement using
the effective interest method.
Equity
Equity instruments issued by the Company are recorded at the
proceeds received, net of any direct issue costs.
Investments and loans
Shares and loans in subsidiary undertakings are shown at cost.
Provisions are made for any permanent diminution in value when the
fair value of the assets is assessed as less than the carrying
amount of the asset. Intercompany loans are repayable on demand but
are included as non-current as the realisation is not expected in
the short term.
Pension costs
Contributions are made to the individual pension scheme of a
director's choice and are charged to the Income Statement as they
become payable.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the Chief
Executive Officer ('CEO').
2 Segmental Analysis
The Group now has two reportable segments, an operating segment
and a head office segment, as described below. The operations and
day to day running of the business is carried out on a local level
and therefore managed separately. The operating segment reports to
the UK head office which evaluates performance, decide how to
allocate resources and make other operating decisions such as the
purchase of material capital assets and services. Internal reports
are generated and submitted to the Group's CEO for review on a
monthly basis.
The operations of the Group as a whole are the exploration for,
development and production of oil and gas reserves.
The two geographic reporting segments are made up as
follows:
Slovenia - exploration and development
UK - head office
The costs of exploration and development works are carried out
under shared licences with joint ventures and subsidiaries which
are co-ordinated by the UK head office. Transfer prices between
segments are set on an arm's length basis in a manner similar to
transactions with third parties. Segment revenue, segment expense
and segment results include transfers between segments. Those
transfers are eliminated on consolidation.
Information regarding the current and prior year's results for
each reportable segment is included below. Initial performance is
measured by the results that arise from the exploration and
development works carried out. Once producing, other production
performance measures are based on the production revenues achieved.
This is reported to the Group's CEO by the level of capitalised
exploration costs and the results from studies carried out at the
individual locations of the wells. The CEO uses these measures to
evaluate project viability within each operating segment. There is
no revenue in the current year from continuing operations.
2014 UK Slovenia elims Total
GBP GBP GBP GBP
'000s '000s '000s '000s
Intercompany sales 276 - (276) -
Total revenue 276 - (276) -
Administrative expenses (1,039) (1,116) 276 (1,879)
Aborted transaction costs (228) - - (228)
Other Operating Income 10 15 (25) -
Material non-cash items
Net finance costs (3,501) (15) - (3,516)
---------------------------------- --------- --------- --------- ---------
Reportable segment (loss)/profit
before tax (4,482) (1,116) (25) (5,623)
Taxation - - - -
Reportable segment (loss)/profit
after taxation (4,482) (1,116) (25) (5,623)
---------------------------------- --------- --------- --------- ---------
Reportable segment assets
Carrying value of exploration
assets - 33,628 - 33,628
Additions to exploration
assets - 773 - 773
Effects of exchange rate
movements - (1,235) - (1,235)
Total plant and equipment 1 1 - 2
Total non-current assets 1 33,167 - 33,168
Other assets 33,886 420 (33,752) 554
Consolidated total assets 33,887 33,587 (33,752) 33,722
---------------------------------- --------- --------- --------- ---------
Reportable segmental liabilities
Trade payables (429) (217) - (646)
External loan balances (9,624) - - (9,624)
Inter-group borrowings - (19,319) 19,319 -
Other liabilities (2,593) (411) - (3,004)
Consolidated total liabilities (12,646) (19,947) 19,319 (13,274)
2013 Discontinued Operations Continuing Operations Total
Italy Netherlands Hungary Eliminations Sub UK Slovenia Eliminations Sub Eliminations Group
Total Total
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
'000s '000s '000s '000s '000s '000s '000s '000s '000s '000s '000s
Hydrocarbons - - 304 - 304 - - - - (304) -
Intercompany
sales - - - - - 213 23 (236) - - -
---------------- -------- ------------ -------- ------------- -------- -------- --------- ------------- -------- ------------- --------
Total revenue - - 304 - 304 213 23 (236) - (304) -
Cost of sales - - (90) - (90) (263) 102 161 - 90 -
Profit / (Loss)
from
discontinued
operations (1,937) 100 45 - (1,792) - - - - 1,792 -
Administrative
expenses (78) (31) (59) - (168) (1,402) (684) 162 (1,924) 168 (1,924)
Material
non-cash
items - -
Net finance
costs (70) - (9) - (79) 282 (125) - 157 79 157
---------------- -------- ------------ -------- ------------- -------- -------- --------- ------------- -------- ------------- --------
Reportable
segment
(loss)/profit
before tax (2,085) 69 191 - (1,825) (1,170) (684) 87 (1,767) 1,825 (1,767)
Taxation - - - - - - - - - - -
Reportable
segment
(loss)/profit
after taxation (2,085) 69 191 - (1,825) (1,170) (684) 87 (1,767) 1,825 (1,767)
---------------- -------- ------------ -------- ------------- -------- -------- --------- ------------- -------- ------------- --------
Reportable
segment
assets
Carrying value
of exploration
assets - - - - - - 32,285 - 32,285 - 32,285
Additions to
exploration
assets - - - - - - 1,343 - 1,343 - 1,343
Total plant and
equipment - - - - - 1 1 - 2 - 2
Total
non-current
assets - - - - - 1 33,629 - 33,630 - 33,630
Other assets - - - - - 33,401 430 (33,537) 294 - 294
Consolidated
total
assets - - - - - 33,402 34,059 (33,537) 33,924 - 33,924
---------------- -------- ------------ -------- ------------- -------- -------- --------- ------------- -------- ------------- --------
Reportable
segmental
liabilities
Trade payables - - - - - (120) (11) - (131) - (131)
External loan
balances - - - - - (5,711) - - (5,711) - (5,711)
Inter-group
borrowings - - - - - - (18,747) 18,747 - - -
Other
liabilities - - - - - (2,479) (491) - (2,970) - (2,970)
Consolidated
total
liabilities - - - - - (8,310) (19,249) 18,747 (8,812) - (8,812)
3 Operating loss is stated after charging:
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Employee costs (see Note
4) 776 1,114
Share based payment charge 146 96
Foreign Exchange differences 3 -
Included within Admin Expenses
Audit Fees 51 52
Fees payable to the company's
auditor other services 8 7
------------- -------------
59 71
============= =============
4 Employees and directors
a. Employees
The average number of persons employed by the Company and Group,
including Executive Directors, was:
Year ended Year ended
31 December 31 December
2014 2013
Management and technical 9 7
============= =============
GBP '000s GBP '000s
Wages and salaries 653 895
Social security costs 120 123
Pension costs 2 -
Share-based payments 146 96
Taxable benefits 1 -
922 1,114
============= =============
b. Directors and key management remuneration
Year ended Year ended
31 December 31 December
2013 2012
GBP '000s GBP '000s
Fees and emoluments 470 415
Termination payments - 261
Social security costs 52 65
Share-based payments (Note23) 132 81
654 822
============= =============
c. Directors remuneration
2014 Salary/fees Termination 2014
payments Total
GBP GBP GBP
Executive Directors
L Reece 220,000 - 220,000
C Hutchinson (1) 129,551 - 129,551
Non-executive Directors -
C Carver 60,000 - 60,000
C Davies 30,000 - 30,000
N Moore 30,000 - 30,000
------------ ------------ --------
Total 469,551 - 469,551
2013 Salary/fees Termination 2013
Total
GBP GBP GBP
Executive Directors
L Reece 220,000 - 220,000
S Richardson Brown 61,367 148,438 209,805
Non-executive Directors
C Carver 63,750 - 63,750
G Cooper - - -
C Davies 30,000 - 30,000
N Moore 30,000 - 30,000
J Kenny 10,000 15,000 25,000
J Eng - 98,000 98,000
------------ ------------ --------
Total 415,117 261,438 676,555
(1) C Hutchinson was appointed on 20 August 2014, remuneration
includes period as a non-director.
The highest paid Director in the year ended 31 December 2014 was
Leonard Reece earning GBP220,000 (2013: L Reece earning
GBP220,000).
d. Directors incentive share options
2014 As at Granted/ As at Date Share Exercise Exercise Period
Price
01-Jan-14 (Lapsed) 31-Dec-14 Granted at Grant Price Start End
N Moore 500,000 - 500,000 17-Nov-10 5.25p 7.313p 17-Nov-11 17-Nov-15
500,000 - 500,000 17-Nov-10 5.25p 15p 17-Nov-11 17-Nov-15
C Davies 500,000 - 500,000 17-Nov-10 5.25p 7.313p 17-Nov-11 17-Nov-15
1,000,000 - 1,000,000 17-Nov-10 5.25p 15p 17-Nov-11 17-Nov-15
L Reece 69,079,066 - 69,079,066 30-Apr-13 0.82p 1p 30-Apr-16 30-Apr-23
C Carver 26,568,871 - 26,568,871 30-Apr-13 0.82p 1p 30-Apr-16 30-Apr-23
C Hutchinson 5,313,774 - 5,313,774 23-May-13 0.65p 1p 23-May-16 23-May-23
2013 As at Granted/ As at Date Share Exercise Exercise Period
Price
01-Jan-13 (Lapsed) 31-Dec-13 Granted at Grant Price Start End
N Moore 500,000 - 500,000 17-Nov-10 5.25p 7.313p 17-Nov-11 17-Nov-15
500,000 - 500,000 17-Nov-10 5.25p 15p 17-Nov-11 17-Nov-15
C Davies 500,000 - 500,000 17-Nov-10 5.25p 7.313p 17-Nov-11 17-Nov-15
1,000,000 - 1,000,000 17-Nov-10 5.25p 15p 17-Nov-11 17-Nov-15
L Reece - 69,079,066 69,079,066 30-Apr-13 0.82p 1p 30-Apr-16 30-Apr-23
C Carver - 26,568,871 26,568,871 30-Apr-13 0.82p 1p 30-Apr-16 30-Apr-23
S Richardson-Brown 1,000,000 - 1,000,000 01-Nov-10 4.875p 4.875p 01-Nov-11 01-Nov-15
1,000,000 - 1,000,000 01-Nov-10 4.875p 7.313p 01-Nov-12 01-Nov-15
2,500,000 - 2,500,000 07-Sep-11 3.16p 5p 30-Jun-12 07-Sep-16
2,500,000 - 2,500,000 07-Sep-11 3.16p 12p 30-Jun-12 07-Sep-16
J Kenny 500,000 - 500,000 17-Nov-10 5.25p 7.313p 17-Nov-11 17-Nov-15
500,000 - 500,000 17-Nov-10 5.25p 15p 17-Nov-11 17-Nov-15
5 Finance income and costs recognised in the year
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Finance income
Income on bank deposits 3 5
Foreign exchange movements
realised - 1,366
Adjustment to EnQuest Provision
due to change in estimate - 52
3 1,423
============= =============
Finance cost
Interest payable on borrowings (1,211) (1,036)
Bank Charges (17) (230)
Unwinding of EnQuest liability (338) -
Foreign exchange movements (3) -
realised
Adjustment to equity reserve (1,950) -
on loan note variation
(3,519) (1,266)
============= =============
During the year the convertible loan note terms were varied such
that the conversion price was reduced from 0.5p to 0.2p. As a
consequence the number of shares to be issued on conversion rises
from 400m to 1 bn. In accordance with IAS 32, a charge of
GBP1,950,000 has been recognised to reflect the value of the
additional shares.
6 Income tax expense
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Current tax expense - -
Deferred tax expense - -
Total tax expense for the - -
year
============= =============
The difference between the total tax expense shown above and the
amount calculated by applying the standard rate of UK corporation
tax to the loss before tax is as follows:
Year ended Year ended
31 December 31 December
2014 2013
GBP '000s GBP '000s
Loss for the year (5,623) (1,765)
Income tax using the Company's
domestic tax rate at 21.5%
(2013: 23.25%) (1,208) (410)
Effects of:
Net increase in unrecognised
losses c/f 936 915
Change in unrecognised temporary
differences - (12)
Effect of tax rates in foreign
jurisdictions 50 22
Other non-taxable items (321) (531)
Other non-deductible expenses 543 63
Utilisation of losses brought
forward - (47)
Total tax expense for the - -
year
============= =============
7 Loss per share
31 December 31 December
2014 2013
GBP '000s GBP '000s
Result for the year
Loss from continuing operations (5,623) (1,767)
(Loss) / profit from discontinued
operations - (1,825)
Total loss for the year
attributable to equity shareholders (5,623) (3,592)
Weighted average number Number Number
of ordinary shares (000s)
For basic earnings per share 1,454,945 1,132,820
Loss per share (Pence)
Loss per share from continuing
operations (0.39) (0.16)
Loss per share from discontinued
operations - (0.16)
Total loss per share (0.43) (0.32)
------------ ------------
As the result for the year was a loss no dilutive EPS is
disclosed. At 31 December 2014 potentially dilutive instruments in
issue were 3,009,736,472 (2013: 1,079,918,586). Dilutive shares
arise from share options and convertible loan notes issued by the
Company.
8 Exploration and evaluation costs - Group
Exploration Costs Italy Hungary Slovenia Netherlands Total
- Group
Cost
At 1 January 2013 12,525 5,587 31,918 410 50,440
Additions - - 1,343 3 1,346
Disposal of discontinued
operations (12,525) (5,587) - (413) (18,525)
Effects of exchange
rate movements - - 367 - 367
At 31 December 2013 - - 33,628 - 33,628
--------- -------- --------- ------------ ---------
At 1 January 2014 - - 33,628 - 33,628
Additions - - 773 - 773
Effects of exchange
rate movements - - (1,235) - (1,235)
At 31 December 2014 - - 33,166 - 33,166
--------- -------- --------- ------------ ---------
Impairment
At 1 January 2013 12,525 5,495 - 217 18,237
Charge for the year - - - - -
Discontinued Operations (12,525) (5,495) - (217) (18,237)
Effects of exchange - - - - -
rate movements
At 31 December 2013 - - - - -
--------- -------- --------- ------------ ---------
At 1 January 2014 - - - - -
Charge for the year - - - - -
Discontinued Operations - - - - -
Effects of exchange - - - - -
rate movements
At 31 December 2014 - - - - -
--------- -------- --------- ------------ ---------
Carrying value
At 31 December 2014 - - 33,166 - 33,166
--------- -------- --------- ------------ ---------
At 31 December 2013 - - 33,628 - 33,628
--------- -------- --------- ------------ ---------
At 1 January 2013 - 92 31,918 193 32,203
--------- -------- --------- ------------ ---------
For the purposes of impairment testing the intangible oil and
gas assets are allocated to the Group's cash-generating unit, which
represent the lowest level within the Group at which the intangible
oil and gas assets are measured for internal management purposes,
which is not higher than the Group's operating segments as reported
in Note 2.
The amounts for intangible exploration assets represent costs
incurred on active exploration projects. These amounts are written
off to the income statement as impairment expense unless commercial
reserves are established or the determination process is not
completed and there are no indications of impairment. The outcome
of ongoing exploration, and therefore whether the carrying value of
intangible exploration assets will ultimately be recovered, is
inherently uncertain.
9 Investment in subsidiaries- Company
GBP000s
At 1 January 2013 14,419
Disposals (79)
At 31 December 2013 14,340
--------
At 1 January & 31 December
2014 14,340
========
Name of company Principal Country % of % of
activity of incorporation share share
capital capital
held held
2014 2013
British
Ascent Slovenia Oil and Gas Virgin
Limited exploration Islands 100% 100%
Ascent Resources Oil and Gas
doo exploration Slovenia 100% 100%
Ascent Hungary
Ltd Holding company England - 100%
Ascent Hungary Oil and Gas
kft exploration Hungary - 100%
Ascent Netherlands Oil and Gas
BV exploration Netherlands 100% 100%
All subsidiary companies are held directly by Ascent Resources
plc.
10 Trade and other receivables - Group
2014 2013
GBP GBP
'000s '000s
VAT recoverable 39 43
Other receivables 30 43
Prepayments & accrued income 29 24
98 110
======= =======
11 Trade and other receivables - Company
2014 2013
GBP GBP
'000s '000s
VAT recoverable 18 5
Other receivables 29 42
Prepayments & accrued income 15 24
62 71
======= =======
12 Deferred tax - Group & Company
2014 2013
GBP GBP
'000s '000s
Group
Total tax losses (26,071) (23,907)
Unrecorded deferred tax
asset at 20% (2013: 24%) 5,214 5,738
--------- ---------
Company
Total tax losses (8,822) (8,460)
Unrecorded deferred tax
asset at 20% (2013: 24%) 1,764 2,030
--------- ---------
No deferred tax asset has been recognised in respect of the tax
losses carried forward as the recoverability of this benefit is
dependent on the future profitability of the Company, the timing of
which cannot reasonably be foreseen.
13 Borrowings - Group & Company
2014 2013
Group GBP GBP
'000s '000s
Current
Loan with financial institution - 150
Convertible loan note 9,624 604
9,624 754
------- -------
Non-current
Convertible loan note - 4,957
- 4,957
------- -------
Company
Current
Loan with financial institution - 150
Convertible loan note 9,624 604
9,624 754
------- -------
Non-current
Convertible loan note - 4,957
- 4,957
------- -------
Non-current borrowings are
repayable within:
One to two years - 4,957
Convertible Loan Note 2014 2013
GBP GBP
'000s '000s
Fair value of consideration
received 3,500 1,954
Equity component (107) (204)
Liability component on initial
recognition 3,393 1,750
------- -------
Liability brought forward 5,561 3,217
Liability on initial recognition 3,393 1,750
Equity component of GBP3m received
in Dec '12 and approved April
'13 - (315)
Loan repaid (463) -
Converted notes (2) -
Interest expense 1,168 916
Exchange movements (1) 14
Deferral of set up costs (32) (21)
Liability at 31 December 9,624 5,561
------- -------
The Directors consider that the carrying amount of the bank and
other loans approximates to their fair value. The weighted average
interest rate of the convertible loan is 9% (2013: 9%).
On 1 January 2014 the Group had drawn GBP150,000 of a GBP500,000
short term borrowing facility with Darwin Strategic Limited. A
further GBP150,000 was drawn in January 2014. In September 2014 the
balance with accrued interest was repaid in full.
14 Provisions - Group
GBP000s
At 1 January 2013 540
Disposal (103)
Provisions made during the -
year
At 31 December 2013 437
--------
At 1 January 2014 437
Foreign exchange movement (27)
At 31 December 2014 410
--------
The amount provided for decommissioning costs represents the
Group's share of site restoration costs for the Petišovci field in
Slovenia. The most recent estimate is that the year-end provision
will become payable after 2022.
15 Other current liabilities - Group & Company
The other non-current liability of GBP2,593,000 (2013:
GBP2,225,000) relates to the grant in 2011 of a nil cost option
over 29,686,000 new Ordinary Shares of 0.1p each in the Company to
EnQuest. The options are convertible at a price of 10p each; given
the current share price the Company considers it to be likely that
the option will be settled in cash rather than through the issue of
equity. As a result this was reclassified in 2012 from equity to
non-current liabilities. This is held at a discounted rate and
repayment is due in December 2015.
The discount rate used for the purposes of calculating accretion
interest was revised to 15% (2013: 15%). The interest accreted for
the period was GBP338,074 (2013: interest of GBP154,008 and a
credit of GBP205,982 was recognised due to the change in
estimate).
16 Trade and other payables - Group
2014 2013
GBP GBP
'000s '000s
Trade payables 475 131
Tax and social security
payable - 19
Other payables 20 -
Accruals and deferred income 152 259
647 409
======= =======
17 Trade and other payables - Company
2014 2013
GBP GBP
'000s '000s
Trade payables 257 116
Tax and social security
payable 20 19
Accruals and deferred income 152 209
429 344
======= =======
18 Called up share capital
2014 2013
GBP '000s GBP '000s
Authorised
10,000,000,000 ordinary
shares of 0.10p each 10,000 10,000
Allotted, called up and
fully paid
1,458,507,909 (2013: 1,451,114,395)
ordinary shares of 0.10p
each 1,459 1,451
Reconciliation of share capital 2014 2013
movement
Number Number
At 1 January 1,451,114,395 1,025,509,722
-------------- --------------
Open Offer - 125,477,880
Sale of Ascent Resources
Italia - 32,126,793
Warranty settlement to GPS 7,000,000 268,000,000
Loan Note Conversion 393,514 -
At 31 December 1,458,507,909 1,451,114,395
============== ==============
Shares issued during the year
Warranty settlement to GPS
On 18 December 2014 the Company announced that it had reached a
settlement with GPS in respect of a number of matters related to
ARI which had the potential to result in Warranty claims under the
SPA. In return for a full waiver of any and all claims or potential
claims Ascent agreed to issue GPS with 275 million shares. 268
million were issued immediately with the balance of 7 million
issued in June 2014 following shareholder approval at General
Meeting of the Company.
Loan note conversion
On 26 March 2014 the Company received a notice of exercise to
convert 1,848 convertible loan notes of GBP1 each which were issued
in May 2013 as part of an open offer to all shareholders. The Loan
Notes, including rolled up interest at the rate of 9% per annum,
are convertible into new ordinary shares of 0.1 pence each in the
capital of the Company ("Ordinary Shares") at a price of 0.5 pence
per Ordinary Share. Consequently a total of 393,514 new Ordinary
Shares were issued.
Equity instruments issued during the year
Convertible Loan Note
On 5 February 2014 the Group agreed with Henderson to create a
new GBP5 million class of 9 per cent. convertible loan notes,
convertible at any time at the discretion of the holder, into
Ordinary Shares at 100 Ordinary Shares per GBP1 principal of loan
note, an effective conversion price of between 1p and 0.5pence per
Ordinary share depending on whether the balance could be sold to
independent third party investors. The first GBP2 million available
under these 2014 CLNs was drawn immediately with the balance
intended for sale to independent third party investors, with the
intention that the pricing of all the 2014 CLNs would be reset to
the lowest price paid by these new investors.
On 8 September 2014, by when it had become clear that it would
not be possible to secure investment from new third party
subscribers for the GBP3 million balance outstanding under the 2014
CLNs, the Company agreed with Henderson a variation to the terms of
the 2014 Convertible Loan Note Instrument whereby Henderson agreed
to subscribe for a further GBP2 million in principal of 2014 CLNs
convertible into Ordinary Shares at 500 Ordinary Shares per GBP1
principal of loan note, an effective conversion price of 0.2p.
Additionally, Henderson was granted security in the form of a
charge over the Company's assets. The variation to the loan note
terms has resulted in a one-off charge to the P&L of
GBP2,520,000.
The loan notes issued in February and September 2014 fell due
for repayment on 23 December 2014. At that time the Company was in
discussions with Henderson about restructuring the 2014 notes and
the 2013 notes which were to fall due on 31 January 2015. Given the
advanced stage of negotiations no additional interest was charged
between the 23 December 2014 and the 2 February 2015 when the
restructuring was finalised.
On 2 February 2015 the Company agreed a variation in the terms
of all of the 2013 & 2014 Loan Notes whereby the redemption
date was extended to 19 November 2015, interest ceased to accrue
and the pricing changed to 1,000 Ordinary Shares per GBP1 principal
of loan note.
Other matters
The Equity Financing facility
On 12 February 2013 the Company entered into an agreement with
Darwin Strategic Limited (Darwin) to provide a GBP10 million Equity
Financing Facility (EFF). The purpose of the agreement is to
provide additional working capital for the Company and the Group.
The Company has not drawn on this facility since it was put in
place.
Ascent is under no obligation to make a draw down and may make
drawdowns at its discretion, up to the total value of the EFF, by
way of issuing subscription notices to Darwin. However, there will
be an additional fee payable to Darwin in the event that less than
GBP500,000 is drawn down within the first 24 months. Following
delivery of a subscription notice, Darwin will subscribe and the
Company will allot to Darwin new ordinary shares in Ascent
('Ordinary Shares').
The subscription price for any Ordinary Shares to be subscribed
by Darwin under a subscription notice will be the average of the
eight lowest Volume Weighted Average Prices of the Ordinary Shares
over the 15 trading days following the subscription notice. To be
reduced pro-rata for shorter pricing periods.
Reserve description and purpose
The following describes the nature and purpose of each reserve
within owners' equity:
-- Shares to be issued: Warranty settlement shares to be issued
to Global Power Sources srl please refer to note 3.
-- Share capital: Amount subscribed for share capital at nominal value.
-- Equity reserve: Amount of proceeds on issue of convertible
debt relating to the equity component, i.e. option to convert the
debt into share capital.
-- Share premium: Amounts subscribed for share capital in excess
of nominal value less costs of shares associated with share
issues.
-- Share-based payment reserve: Value of share options granted
and calculated with reference to a binomial pricing model. When
options lapse or are exercised, amounts are transferred from this
account to retained earnings.
-- Translation reserve: Exchange movements arising on the
retranslation of net assets of operation into the presentation
currency.
-- Retained earnings: Cumulative net gains and losses recognised in consolidated income.
19 Operating lease arrangements
At the balance sheet date, the Group had no outstanding
commitments under non-cancellable operating leases (2013:
GBPnil).
20 Exploration expenditure commitments
In order to maintain an interest in the oil and gas permits in
which the Group is involved, the Group is committed to meet the
conditions under which the permits were granted and the obligations
of any joint operating agreements. The timing and the amount of
exploration expenditure commitments and obligations of the Group
are subject to the work programmes required as per the permit
commitments. This may vary significantly from the forecast
programmes based upon the results of the work performed. Drilling
results in any of the projects may also cause variations to the
forecast programmes and consequent expenditure. Such activity may
lead to accelerated or decreased expenditure. It is the Group's
policy to seek joint operating partners at an early stage to reduce
its commitments.
At 31 December 2014 the Group had exploration and expenditure
commitments of GBPNil (2013 - Nil).
21 Related party transactions
a. Group companies - transactions
2014 2014 2013 2013
Cash Services Cash Services
Ascent Slovenia Limited 627 27 743 296
Ascent Resources doo 467 644 1,183 418
1,094 671 1,926 714
------ --------- ------ ---------
b. Group companies - balances
2014 2014 2013 2013
Cash Services Cash Services
Ascent Slovenia Limited 13,705 2,761 14,319 2,895
Ascent Resources doo 1,563 1,016 1,183 418
15,268 3,777 15,502 3,313
------- --------- ------- ---------
c. Directors
Key management are those persons having authority and
responsibility for planning, controlling and directing the
activities of the Group. In the opinion of the Board, the Group's
key management are the Directors of Ascent Resources plc.
Information regarding their compensation is given in Note 4.
2014
Clive Carver is a director of Darwin Strategic Limited, with
whom the company agreed a GBP500,000 short term facility during
2013. At the beginning of 2014 this had been drawn to GBP150,000
and a further GBP150,000 was drawn in February 2014. The balance
including accrued interest of GBP326,807 was repaid in full in
September 2014.
Aside from Darwin there were no related party transactions
related to Directors other than their remuneration in 2014.
The Loan notes purchased by Len Reece in 2013 are being paid for
through salary; at the year-end GBP34,429 had been recovered from
salary (2013: GBP21,015) (Note 4) and the balance of GBP29,215
(2013: GBP42,430) is included within other receivables (note
10).
2013
On 30 April 2013 Clive Carver, Chairman, and Len Reece, CEO,
purchased 17,500 and 63,644 Incentive Loan Notes respectively, as
described in the circular sent to shareholders dated 12 April 2014.
The Incentive Loan Notes are convertible loan notes of GBP1 each,
convertible into 200 Ordinary Shares, each repayable on 31 January
2015, with a coupon of 9%.
d. Henderson Global Investors
Henderson Global Investors, who are a substantial shareholder in
the Company, issued GBP8.5m of convertible loan notes to Ascent in
2013 and 2014. For further details see Note 13.
Subsequent to the year end the Company raised GBP550,000 through
PrimaryBid.com. PrimaryBid is a trading name of Darwin Strategic
Limited ("Darwin") which is regulated and authorised by the
Financial Conduct Authority (FCA). Darwin is an investment held by
funds managed by Henderson. Further details are included in note 22
below.
Also subsequent to the year end and outlined in note 22 below,
the Company agreed a GBP7million loan facility with Henderson.
22 Events subsequent to the reporting period
On 2 February 2015 the Company announced the variation of the
terms of the 2013 and 2014 Loan notes. To date GBP4.95 million has
been drawn under the 2013 CLNs and GBP4 million has been drawn
under the 2014 CLNs. In total, including accrued interest, some
GBP10 million in aggregate was due for repayment under the 2013 and
2014 CLNs, in part on 23 December 2014 and in part on 31 January
2015.
In return for extending the maturity date of the Loan Notes and
terminating the accrual of further interest, the board of Ascent
has agreed to adjust the conversion price in respect of both the
2013 and 2014 Convertible Loan Notes from 0.5p and 0.2p
respectively to 0.1p for all Loan Notes. On a fully diluted basis
and assuming only Henderson convert this would take them to 88.6
per cent of the Company and accordingly the consent of the
Company's shareholders was required.
On 20 February 2015 at a General Meeting of the Company, the
shareholders approved the Whitewash and associated resolutions.
On 9 March 2015, the Company joined PrimaryBid.com, the online
platform dedicated to equity crowdfunding for AIM-listed companies.
On 1 May 2015 the Company has raised GBP550,000 via the placing of
275,000,000 ordinary shares in the capital of the Company at a
price of 0.2p per Ordinary Share with investors using the
Primarybid.com platform. The Company received GBP525,250 net of
costs which will provide the Company with additional working
capital to be used over as it concludes advanced negotiations with
potential sources of additional financing. The Directors are
confident that they will receive significant further funds as a
result of such negotiations that will allow the Company to develop
the project for the foreseeable future, towards cash flow.
On 1 May 2015 the Company announced that it had received a
notice of exercise to convert 420 convertible loan notes of GBP1
each which were issued in May 2013 as part of an open offer to all
shareholders (the "Loan Notes") and the terms of which were amended
in February 2015. The Loan Notes, including rolled up interest, are
convertible into new ordinary shares of 0.1 pence each in the
capital of the Company ("Ordinary Shares") at a price of 0.1 pence
per Ordinary Share. Consequently a total of 473,030 new Ordinary
Shares ("the Conversion Shares") were issued pursuant to the
Notice.
In May 2015 the Company agreed terms on a GBP7million loan
facility with Henderson Global Investors Limited. The loan can be
drawn at any time from signing to the 30 June 2016 at the
discretion of the lender. The loan accrues interest at the rate of
7.5% per annum on the amount drawn and this is added to the amount
of the loan. The loan is subject to a drawdown fee of 1.75% per
draw down which is deducted from the funds advanced. The loan is
also subject to a repayment fee of 1.25% on any amounts repaid by
the Company. The balance outstanding is repayable on demand at any
time.
23 Share based payments
The Company has provided the Directors, certain employees and
institutional investors with share options and warrants
('options'). Options are exercisable at a price equal to the
closing market price of the Company's shares on the date of grant.
The exercisable period varies and can be up to four years after
which time the option lapses.
Details of the share options outstanding during the year are as
follows:
Shares Weighted
Average
price
(pence)
Outstanding at 1 January
2014 152,414,768 3.18
Granted during the year - -
Expired during the year (18,200,000) 9.49
Exercised during the year - -
Outstanding at 31 December
2014 134,214,768 1.98
Exercisable at 31 December
2014 20,500,000 9.92
Outstanding at 1 January
2013 40,475,000 9.69
Granted during the year 113,714,768 1.00
Expired during the year (1,775,000) 9.11
Outstanding at 31 December
2013 152,414,768 3.18
Exercisable at 31 December
2013 38,700,000 3.29
The value of the options is measured by the use of a binomial
pricing model. The inputs into the binomial model were as
follows:
Share price at grant 0.8p -
date 8.12p
Exercise price 1p - 15p
Volatility 50%
Expected life 3-5 years
Risk free rate 0.5%
Expected dividend
yield 0%
Expected volatility was determined by calculating the historical
volatility of the Group's share price over the previous 5 years.
The expected life is the expiry period of the options from the date
of issue.
Options outstanding at 31 December 2014 have an exercise price
in the range of 1p and 15p (31 December 2013: 1p and 15p) and a
weighted average contractual life of 7.2 years (31 December 2013:
7.3 years).
24 Financial risk management
Group and Company
The Group's financial liabilities comprise bank loans,
convertible loan notes, other loans and trade payables. All
liabilities are measured at amortised costwith the exception of the
derivative financial liability which is measured at fair value
through the profit and loss. These are detailed in Notes 16 and
18.
The Group has various financial assets, being trade receivables
and cash, which arise directly from its operations. All are
classified as loans and receivables. These are detailed in Note
13.
The main risks arising from the Group's financial instruments
are credit risk, liquidity risk and interest risk. The risk
management policies employed by the Group to manage these risks are
discussed below:
a. Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group.
The Group does not have any significant credit risk
exposure.
The Group makes allowances for impairment of receivables where
there is an identified event which, based on previous experience,
is evidence of a reduction in the recoverability of cash flows.
The credit risk on liquid funds (cash) is considered to be
limited because the counterparties are financial institutions with
high and good credit ratings assigned by international credit
rating agencies in the UK.
The carrying amount of financial assets recorded in the
financial statements represents the fair value of the Group's
exposure to credit risk.
At Company level, there is the risk of impairment of
intercompany receivables if the full amount is not deemed as
recoverable from the relevant subsidiary company. These amounts are
written down when their deemed recoverable amount is deemed less
than the current carrying value.
b. Currency risk
The Group's operations are predominantly in Slovenia. Foreign
exchange risk arises from translating the Euro earnings, assets and
liabilities of the Ascent Resources doo and Ascent Slovenia Limited
into sterling. The Group manages exposures that arise from receipt
of monies in a non-functional currency by matching receipts and
payments in the same currency.
The Company often raises funds for future development through
the issue of new shares in sterling. These funds are predominantly
to pay for the Company's exploration costs abroad in Euros. As such
any sterling balances held are at risk of currency fluctuations and
may prove to be insufficient to meet the Company's planned Euro
requirements if there is devaluation.
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of the European
Union (the Euro).
The Group operates internationally and is exposed to currency
risk on sales, purchases, borrowings and cash and cash equivalents
that are denominated in a currency other than sterling. The
currencies giving rise to this are the Euro and the United States
Dollar.
Foreign exchange risk arises from transactions and recognised
assets and liabilities.
The Group does not use foreign exchange contracts to hedge its
currency risk.
Sensitivity analysis
The following table details the Group's sensitivity to a 10%
increase and decrease in sterling against the stated currencies.
10% is the sensitivity rate used when reporting foreign currency
risk internally to key management personnel and represents the
management's assessment of the reasonably possible change in
foreign exchange rates. The sensitivity analysis comprises cash and
cash equivalents held at the balance sheet date. A positive number
below indicates an increase in profit and other equity where
sterling weakens 10% against the relevant currency.
Euro currency US$ Currency
change change
Year Year Year Year
ended ended ended ended
31 December 31 December 31 December 31 December
2014 2013 2014 2013
Group
Profit or loss
10% strengthening of
Sterling 103 (1) 2 (13)
10% weakening of Sterling (125) 1 (2) 16
Equity
10% strengthening of
Sterling (1,696) (1,750) 51 19
10% weakening of Sterling 2,073 2,139 (62) (24)
Company
Profit or loss
10% strengthening of
Sterling (20) (45) 2 (13)
10% weakening of Sterling 24 55 (2) 16
Equity
10% strengthening of
Sterling (2,455) (2,462) 51 19
10% weakening of Sterling 3,001 3,009 (62) (24)
c. Interest rate risk
The Group and Company's exposure to interest rate risk arises
from cash and cash equivalents and borrowings.
At 31 December 2014 the Group and Company has GBP loans valued
at GBP9,624,000 rates of 9% per annum.
At 31 December 2013 the Group and Company has GBP loans valued
at GBP5,260,000 rates of 9% per annum and a Euro loan at sterling
equivalent of GBP451,000.
d. Liquidity risk
The Group and Company manages its liquidity requirements by
using both short and long-term cash flow projections, supplemented
by maintaining debt financing plans and active portfolio
management. Ultimate responsibility for liquidity risk management
rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the
Group's short, medium and long-term funding and liquidity
management requirements.
The Group closely monitors and manages its liquidity risk. Cash
forecasts are regularly produced and sensitivities run for
different scenarios (see Note 1).
For further details on the Group's liquidity position, please
refer to the going concern paragraph in Note 1 of these
accounts.
Maturity analysis of financial 2014 2013
liabilities
GBP GBP
'000s '000s
Less than six months - loans
and borrowings - 389
Less than six months - trade
and other payables 647 409
Between six months and a
year 12,217 2,158
Over one year - 8,860
e. Capital management
The Directors recognise that this is an area in which they may
need to develop specific policies should the Group become exposed
to wider financial risks as the business develops.
Set in the foregoing is a comparison of carrying amounts and
fair values of the Group's and the Company's financial
instruments:
Carrying Fair Value Carrying Fair Value
amount
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2014 2014 2013 2013
Group
Financial assets
Cash and cash equivalents 457 457 184 184
Trade receivables - - - -
Financial liabilities
Trade Creditors 475 475 128 128
Convertible loans
at fixed rate 9,624 9,624 5,560 5,560
Company
Financial assets
Cash and cash equivalents 439 439 175 175
Trade receivables 24,529 24,529 19,225 19,225
Financial liabilities
Trade Creditors 257 257 116 116
Convertible loans
at fixed rate 9,624 9,624 5,560 5,560
Convertible loan at fixed rate
Fair value of convertible loans has been determined based on
tier 3 measurement techniques. The fair value is estimated at the
present value of future cash flows, discounted at estimated market
rates. Fair value is not significantly different from carrying
value.
Trade and other receivables/payables & intercompany
receivables
All trade and other receivables and payables have a remaining
life of less than one year. The ageing profile of the Group and
Company receivable and payables are shown in Notes 10, 11, 16 and
17.
Cash and cash equivalents
Cash and cash equivalents are all readily available and
therefore carrying value represents a close approximation to fair
value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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