REG - Ascent Resources PLC - Final results for the year ended 31 December 2014 <Origin Href="QuoteRef">ASCR.L</Origin> - Part 3
15/07/2015 17:05
- Part 3: For the preceding part double click ID:nRSL8421Mb
- - - - - 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 ended31 December 2014 Year ended31 December 2013
£ '000s £ '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 ended31 December 2014 Year ended31 December 2013
Management and technical 9 7
£ '000s £ '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 ended31 December 2013 Year ended31 December 2012
£ '000s £ '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 payments 2014 Total
£ £ £
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
£ £ £
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 £220,000 (2013: L Reece earning £220,000).
d. Directors incentive share options
2014 As at Granted/ As at Date Share Price Exercise Exercise Period
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 Price Exercise Exercise Period
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 ended31 December 2014 Year ended31 December 2013
£ '000s £ '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 realised (3) -
Adjustment to equity reserve on loan note variation (1,950) -
(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 £1,950,000 has been recognised to reflect the value of the
additional shares.
6 Income tax expense
Year ended31 December 2014 Year ended31 December 2013
£ '000s £ '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 ended31 December 2014 Year ended31 December 2013
£ '000s £ '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 2014 31 December 2013
£ '000s £ '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 of ordinary shares (000s) Number Number
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 - Group Italy Hungary Slovenia Netherlands Total
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
£000s
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 activity Country of incorporation % of share capital held 2014 % of share capital held 2013
Ascent Slovenia Limited Oil and Gas exploration British Virgin Islands 100% 100%
Ascent Resources doo Oil and Gas exploration Slovenia 100% 100%
Ascent Hungary Ltd Holding company England - 100%
Ascent Hungary kft Oil and Gas exploration Hungary - 100%
Ascent Netherlands BV Oil and Gas exploration Netherlands 100% 100%
All subsidiary companies are held directly by Ascent Resources plc.
10 Trade and other receivables - Group
2014 2013
£ '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
£ '000s £ '000s
VAT recoverable 18 5
Other receivables 29 42
Prepayments & accrued income 15 24
62 71
12 Deferred tax - Group & Company
2014 2013
£ '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 £ '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
£ '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 £3m 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 £150,000 of a £500,000 short term
borrowing facility with Darwin Strategic Limited. A further £150,000 was
drawn in January 2014. In September 2014 the balance with accrued interest
was repaid in full.
14 Provisions - Group
£000s
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 £2,593,000 (2013: £2,225,000) 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 £338,074
(2013: interest of £154,008 and a credit of £205,982 was recognised due to the
change in estimate).
16 Trade and other payables - Group
2014 2013
£ '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
£ '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
£ '000s £ '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 movement 2014 2013
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 £1 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 £5 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 £1
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 £2 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 £3 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 £2 million in principal of 2014
CLNs convertible into Ordinary Shares at 500 Ordinary Shares per £1 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 £2,520,000.
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 £1 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 £10 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 £500,000 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: £nil).
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
£Nil (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 £500,000 short term facility during 2013. At the beginning of 2014
this had been drawn to £150,000 and a further £150,000 was drawn in February
2014. The balance including accrued interest of £326,807 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 £34,429 had been recovered from salary (2013: £21,015)
(Note 4) and the balance of £29,215 (2013: £42,430) 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 £1 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 £8.5m of convertible loan notes to Ascent in 2013 and 2014. For
further details see Note 13.
Subsequent to the year end the Company raised £550,000 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 £7million 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 £4.95 million has been drawn under the 2013
CLNs and £4 million has been drawn under the 2014 CLNs. In total, including
accrued interest, some £10 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 £550,000 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 £525,250
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 £1 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 £7million 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 date 0.8p - 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 change US$ Currency change
Year ended31 December 2014 Year ended 31 December 2013 Year ended 31 December 2014 Year ended 31 December 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 £9,624,000
rates of 9% per annum.
At 31 December 2013 the Group and Company has GBP loans valued at £5,260,000
rates of 9% per annum and a Euro loan at sterling equivalent of £451,000.
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 liabilities 2014 2013
£ '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 amount Fair Value Carrying Fair Value
Year ended31 December 2014 Year ended31 December 2014 Year ended31 December 2013 Year ended31 December 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
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