REG - Ascent Resources PLC - Final Results <Origin Href="QuoteRef">ASCR.L</Origin> - Part 2
04/05/2016 07:07
- Part 2: For the preceding part double click ID:nRSD1432Xa
Gain on EnQuest liability restructuring 741 -
745 3
Finance cost
Interest payable on borrowings (1,451) (1,211)
Bank Charges (5) (17)
Unwinding of EnQuest liability (186) (338)
Foreign exchange movements realised (3) (3)
Adjustment to equity reserve on loan note variation - (1,950)
Loss on extinguishment of convertible loan notes (856) -
(2,501) (3,519)
Borrowings - Group & Company
2015 2014
Group £ '000s £ '000s
Current
Short term loan facility 461 -
Convertible loan notes 10,778 9,624
11,239 9,624
Company
Current
Short term loan facility 461 -
Convertible loan notes 10,778 9,624
11,239 9,624
Convertible Loan Note 2015 2014
£ '000s £ '000s
Liability brought forward 9,624 5,561
Loan repaid - (463)
Interest expense 1,534 1,168
Deferral of set up costs - (32)
Liability on initial recognition - 3,393
Convertible notes drawn in the period (ii) 500 -
Modification to convertible loan notes - de recognition (February) (iii) (9,983) -
Modification to convertible loan notes - recognition of amended loan note (February) (iii) 8,930 -
EnQuest Debt liability restructured to convertible loan note (iv) 2,038 -
Modification to convertible loan notes - derecognition (November) (v) (12,021) -
Modification to convertible loan notes - recognition of amended loan note (November) (v) 10,449 -
Converted notes (vii) (4) (3)
Liability at 31 December 10,778 9,624
There were several transactions during 2014 & 2015 in relation to CLNs:
(i) Issuance of convertible loan notes
The Group issued £5 million of 9 per cent 2013 CLNs during 2012 and 2013,
convertible at any time at the discretion of the holder, into Ordinary Shares
at 200 Ordinary Shares per £1 principal of loan note, an effective conversion
price of between 0.1p and 0.5p per Ordinary share depending on whether the
balance could be sold to independent third party investors. The CLNs were due
to mature in January 2015.
The Group issued £5 million of 9 per cent 2013 CLNs during 2012 and 2013,
convertible at any time at the discretion of the holder, into Ordinary Shares
at 200 Ordinary Shares per £1 principal of loan note, an effective conversion
price of between 1.0p and 0.5p per Ordinary share depending on whether the
balance could be sold to independent third party investors. The CLNs were due
to mature in January 2015.
On 5 February 2014 the Group agreed with Henderson to create a new £5 million
class of 9 per cent CLNs with a maturity date of December 2014, 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 1 pence
per Ordinary share. 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.
(ii) Variation of terms in 2014
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 to
vary the terms of the 2014 CLNs 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 was
considered to be an inducement to convert and resulted in a one-off charge to
the income statement of £2,520,000 in 2014. The Company drew £1.5million
between September and December 2014. At 31 December 2014 the carrying value
of the loan notes stood at £9,624,000. On 5 February 2015 the Company drew the
final £500,000 available under the loan notes.
(iii) First variation of terms in 2015
On 19 February 2015 the shareholders and note holders approved the variation
of the terms on the 2013 and 2014 CLNs. In total £5 million had been drawn
under the 2013 CLNs and £4 million had been drawn under the 2014 CLNs;
including accrued interest some £10million was due for repayment, in part on
23 December 2014 and in part on 31 January 2015. In return for extending the
maturity date of the CLNs to 19 November 2015 and terminating the accrual of
further interest, the Board of Ascent agreed to adjust the conversion price in
respect of both the 2013 and 2014 CLNs from 0.5p and 0.2p respectively to 0.1p
(pre-share consolidation) for all loan notes. The 2013 and 2014 CLNs were
extinguished and replaced with the amended convertible loan. On initial
recognition the liability and equity element of the CLNs have been fair
valued. As part of this transaction, a loss on extinguishment of £856,000 was
recognised as a finance cost as the loan note holder was considered to be
acting in its capacity as a debt holder. The loan was recognised at a
discount rate of 15% and the interest charge accretes over the loan period.
(iv) EnQuest convertible loan note
On 9 July 2015 the Company agreed to restructure other payables due to EnQuest
as deferred consideration on the acquisition of their 48.75% interest in the
Petišovci project in 2010. In total £3,024,000 was due to be payable to
EnQuest on 19 December 2015. As at July 2015, the liability stood at
£2,779,000 and would have accreted this up to the full amount payable during
the year had this restructuring not occurred. The entire debt payable was
restructured into a £2,038,000 convertible loan note. The terms of these CLNs
are identical to the £4 million of notes issued in 2014 to Henderson and
benefit from security over the Company's shareholding in Ascent Slovenia
Limited which owns an interest in the Petišovci concession. On initial
recognition the liability and equity element of the CLNs have been fair
valued. The loan was recognised at a discount rate of 15% and the interest
charge accretes over the loan period. The extinguishment of the previous
liability gave rise to a £741,000 gain recorded in finance income as EnQuest
was considered to be acting in its capacity as a debt holder.
(v) Second variation of loan note terms in 2015
In November 2015, prior to the notes falling due for repayment, the holders of
the CLNs agreed to extend the maturity to 19 November 2016 in exchange for the
conversion price being rebased from 0.1 pence to 0.05 pence. The carrying
value of the CLN liabilities at 19 November 2015 was £12,021,000. The CLNs
were extinguished and replaced with amended convertible loans. On initial
recognition the liability and equity element of the CLNs have been fair
valued. The loans have been recognised at a discount rate of 15% (equating to
£10,449,000) and the interest charge will accrete over the loan period with
£192,000 having been charged for the period to 31 December 2015.
The fair value attributable to the equity portion has been recorded in equity
(£1,572,000), representing the fair value of the conversion option and the
difference between the previous and new liability which represented a capital
contribution by shareholders as the loan note holders were considered to be
acting in their capacity as shareholders. The loan amount is convertible at
any time into ordinary shares of the Company.
Unlike the previous position in relation to the 2013 and 2014 CLN's the notes
are no longer subject to a waiver of the provisions of Rule 9 of the City Code
on Takeovers and Mergers. Accordingly, if Henderson or any other holder of
the 2013 and 2014 CLN's exercise their right of conversion and the hold equal
to or more than 30 per cent of the total voting rights of the Company, such
holder will be required to make a mandatory bid for the remaining ordinary
shares in the capital of the Company not held by them.
(vi) Capital reorganisation
On 30 November 2015 shareholders approved a placing, amendment to convertible
loan note terms and a capital reorganisation. The capital reorganisation
reduced the nominal share price from 0.1 pence to 0.01 pence and subsequently
to consolidate ordinary shares by a factor of 20 thereby increasing the
nominal share price to 0.2pence. The conversion price on the loan notes was
similarly adjusted by a factor of 20 to 1 pence.
(vii) Conversions
On 26 March 2015 the Company processed a conversion request from holders of
123 CLNs which resulted in the issuance of 138,520 new Ordinary shares. On 30
April 2015 the Company processed a conversion request from holders of 420 CLNs
which resulted in the issuance of 473,030 new Ordinary shares.
On 27 July 2015 the Company processed a conversion request from holders of 217
CLNs which resulted in the issuance of 244,392 new Ordinary shares.
On 29 September 2015 the Company processed a conversion request from holders
of 2,439 CLNs which resulted in the issuance of 2,746,912 new Ordinary shares.
On 10 December 2015 the Company processed a conversion request from holders
of 900 CLNs which resulted in the issuance of 101,362 new Ordinary shares.
The Directors consider that the carrying amount of the bank and other loans
approximates to their fair value. The weighted average coupon interest rate
of the convertible loan is 0% as interest ceased to accrue on the convertible
notes in January 2015 (2014: 9%).
(viii) £7 million short term funding facility
On 12 May 2015 the Company announced that it had agreed a £7million loan
facility (the 'Loan') for general corporate purposes with Henderson. The Loan
can be drawn at any time from signing to 30 June 2016 at the discretion of
Henderson. 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 tranche 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.
As at 31 December 2015 the Company had drawn £450,000 from a £7 million
facility provided by Henderson Global Investors on which £11,000 of interest
had accrued at year end at 7.5% per annum; a further £250,000 was drawn from
this facility during January 2016 and another £100,000 during March 2016.
Called up share capital
2015 2014
£ '000s £ '000s
Authorised
5,000,000,000 ordinary shares of 0.20 pence (10,000,000,000 ordinary shares of 0.10p each) 10,000 10,000
Allotted, called up and fully paid
157,306,900 (2014: 1,458,507,909) ordinary shares of 0.20 pence each (2014: 0.10p each) 1,878 1,459
Reconciliation of share capital movement 2015 2014
Number Number
At 1 January 1,458,507,909 1,451,114,395
March 2015 Conversion 138,520 -
April 2015 Conversion 473,030 -
May 2015 Placing 275,000,000 -
July 2015 Conversion 244,392 -
September 2015 Conversion 2,746,912 -
Capital Reorganisation (1,650,255,225) -
November 2015 Placing 70,350,000 -
December 2015 Conversion 101,362 -
Warranty shares issued - 7,000,000
2014 Loan Note Conversion - 393,514
At 31 December 157,306,900 1,458,507,909
Shares issued during the year
· On 26 March 2015 the Company processed a conversion request from
holders of 123 CLNs which resulted in the issuance of 138,520 new Ordinary
shares.
· On 30 April 2015 the Company processed a conversion request from
holders of 420 CLNs which resulted in the issuance of 473,030 new Ordinary
shares.
· On 1 May 2015 the Company raised £550,000 (£525,250 net of costs) via
the Placing of 275,000,000 Ordinary Shares with investors using the
PrimaryBid.com platform.
· On 27 July 2015 the Company processed a conversion request from holders
of 217 CLNs which resulted in the issuance of 244,392 new Ordinary shares.
· On 29 September 2015 the Company processed a conversion request from
holders of 2,439 CLNs which resulted in the issuance of 2,746,912 new Ordinary
shares.
· On 30 November 2015 the Company raised £703,000 (£671,843 net of costs)
via the Placing of 70,350,000 Ordinary Shares with investors using the
PrimaryBid.com platform.
· On 10 December 2015 the Company processed a conversion request from
holders of 900 CLNs which resulted in the issuance of 101,362 new Ordinary
shares.
Shares issued during the prior year
· On 18 December 2013 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.
· On 26 March 2014 the Company received a notice of exercise to convert
1,848 CLNs 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.
Reserve description and purpose
The following describes the nature and purpose of each reserve within owners'
equity:
· 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.
· Accumulated losses: Cumulative net gains and losses recognised in
consolidated income.
Related party transactions
Group companies - transactions
2015 2015 2014 2014
Cash Services Cash Services
Ascent Slovenia Limited 840 - 627 27
Ascent Resources doo 318 344 467 644
1,158 344 1,094 671
Group companies - balances
2015 2015 2014 2014
Cash Services Cash Services
Ascent Slovenia Limited 13,445 2,572 13,705 2,761
Ascent Resources doo 1,790 1,301 1,563 1,016
15,235 3,873 15,268 3,777
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.
2015
Clive Carver is a director of Darwin Strategic Limited, which is the owner of
PrimaryBid through which the Company raised £1.2million in equity during
2015.
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 2015.
The Loan notes purchased by Len Reece in 2013 were being paid for through
salary and are now receivables following his resignation; at the year-end
£48,366 had been recovered from salary (2014: £34,429) and the balance of
£15,078 (2014: £29,215) is included within other receivables .
Henderson Global Investors
Henderson Global Investors, who are a substantial shareholder in the Company,
issued £10m of CLNs to Ascent in 2013 and 2014 and £450,000 of short term
working capital funding in 2015.
Events subsequent to the reporting period
In January and March, the Company drew a further £350,000 in total under the
Henderson Facility.
On 7 April 2016 the Company raised £500,000 gross (£477,500 net to the
Company) via the placing of 35,714,285 new ordinary shares of 0.2p each in the
Company at a price of 1.4p per Placing Share with investors using the
Primarybid.com platform.
The Company received the several notices to convert CLNs of £1 each which were
issued in May 2013 as part of an open offer to all shareholders and the terms
of which were amended in February 2015. The Loan Notes, including rolled up
interest, are convertible into new ordinary shares of 0.2 pence each in the
Company at a rate of 100 new Ordinary Shares per £1 loan note.
· On 7 April 2016: 81,681 convertible notes were converted into
9,199,293 shares
· On 14 April 2016: 542,566 convertible notes were converted into
61,106,308 shares
· On 25 April 2016: 342,140 convertible notes were converted into
38,533,398 shares
This information is provided by RNS
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