TIDMFAST
RNS Number : 0564Y
Fastnet Equity PLC
04 September 2015
04 September 2015
Fastnet Equity plc
("Fastnet" or the "Company")
Final Results for the year ended 31 March 2015
Fastnet (AIM: FAST, ESM: FOI), is pleased to present the
financial statement of the Company covering the year ended 31 March
2015.
Highlights:
-- Detailed asset review of the Company's oil and gas portfolio
undertaken in light of the rapidly changing economic conditions in
the oil and gas sector during the last year
-- Review concluded that economic conditions in the oil and gas
sector fostered an environment which, despite the Company's
comprehensive efforts in conducting detailed due diligence on a
broad range of merger and acquisition opportunities in the oil and
gas industry and implementing an extensive marketing process around
its Celtic Sea and Moroccan assets, made it not possible for
Fastnet to find partners to carry some or all of the Company's
exploration costs on its oil and gas assets going forward under
acceptable terms and conditions
-- With regards to the Company's existing assets, the Board has decided to:
o Withdraw from its partnership and surrender its 12.5 percent
paying interest in the Foum Assaka Licence, Offshore Morocco
o Incur no further substantial expenditure on the Company's
Celtic Sea portfolio of licensing options and the Board will
continue to examine all options to secure value for shareholders.
Options under consideration include spinning the Celtic Sea Assets
into a stand-alone entity. This would enable any value creating
opportunities from the Celtic Sea Assets to benefit existing
shareholders who would become shareholders of the new entity
-- Transition from an Oil & Gas business to an investment
vehicle with the adoption of an Investing Policy to acquire
companies or businesses in the healthcare sector approved by
shareholders on 28 August 2015
-- Cash reserves of US$15.9m at 31 July 2015
-- G&A costs down by over 40% since December 2014 to US$1.9
million on an annualised basis, targeting below US$0.6 million per
annum.
Cathal Friel, Non-executive Chairman commented
"The Board believes that the healthcare industry, particularly
the biopharma sector, is experiencing strong momentum and there
exist significant M&A and value creation opportunities for both
small cap and large cap companies. Furthermore, the Board believes
that it has access to an international pipeline of such
opportunities that could lead to value creation for Fastnet's
shareholders.
Our near-term focus includes a comprehensive search process to
identify and secure Board members with both the appropriate
knowledge and expertise base to assess and make investments in the
healthcare sector and value accretive deals. We look forward to
updating shareholders in due course."
For further information please contact:
Fastnet Oil & Gas plc +353 (1) 644 0007
Cathal Friel, Non-Executive Chairman
Shore Capital +44 (0) 20 7408 4090
Nomad
Bidhi Bhoma, Edward Mansfield
Corporate Broking
Jerry Keen
Davy +353 (1) 679 6363
(ESM Adviser & Joint Broker)
John Frain, Anthony Farrell
Camarco +44 (0) 20 3757 4980
Billy Clegg, Georgia Mann
Chairman's Statement
Introduction
I am pleased to present the financial statement of Fastnet
Equity covering the year ended 31 March 2015.
Fundamental change of business and adoption of Investing
Policy
The Board undertook a detailed asset review of its oil and gas
exploration portfolio in Q4 2014 in light of the rapidly changing
economic conditions in the oil and gas sector. This continued into
2015 with the Company conducting detailed due diligence on a broad
range of merger and acquisition opportunities in the oil and gas
sector. The purpose of these actions were to ensure that Fastnet's
corporate strategy to create shareholder value by growing the
Company's business and monetise its assets remained on track.
However, the underlying economic conditions in the oil and gas
sector over the past 24 months has created an environment in which
it was not possible for Fastnet to find partners to carry, with
acceptable terms and conditions, some or all of the Company's
exploration costs on its oil and gas exploration assets. During the
review period the Board also received certain unsolicited
approaches with respect to opportunities outside the oil and gas
sector. These included opportunities in the healthcare sector,
which were not pursued at the time.
In light of the current economic climate within the oil and gas
sector the Board determined that it was not in the best interests
of shareholders to either pursue M&A opportunities within the
oil and gas sector or to expend further resources on the Company's
existing oil and gas assets. Consequently on 11 August 2015,
Fastnet announced its intention to undertake a fundamental change
in its business. At a General Meeting of the Company held on 28
August 2015, Fastnet shareholders voted to adopt an investing
policy focussed on acquiring companies or businesses in the
healthcare sector particularly those in the biopharma sector. On
the same date the company name was changed from Fastnet Oil &
Gas plc to Fastnet Equity plc.
Corporate and Financial
Strong financial stewardship and capital maintenance is a key
consideration for the Company. Since December 2014, the Company has
undergone a comprehensive review of general and administrative
costs, which have been reduced in the period from December 2014 to
March 2015 by more than 40% to US$1.9 million per year on an
annualised basis. These costs have been reduced further in recent
weeks and following the approval of the investing policy the
Company intends to make further reductions to such costs to reduce
them to below US$0.6 million per annum on an annualised basis.
As at 31 March 2015, the Company had US$16.7m cash reserves and
going forward the Company will continue to keep costs down while it
seeks to identify a suitable use of the Company's available cash
reserves to drive shareholder value creation.
During the current financial year Paul Griffiths and Will
Holland left the Board and subsequent to year end Carol Law
resigned from the Board following the change of focus of the
Company from the oil and gas sector to the healthcare sector. It is
expected that further changes will be made to the Board with the
appointment of parties with the appropriate knowledge and expertise
base to make investments in the healthcare sector.
Outlook
The Board believes that the healthcare industry, particularly
the biopharma sector, is experiencing strong momentum and there
exist significant M&A and value creation opportunities for both
small cap and large cap companies. Furthermore the Board believes
that it has access to an international pipeline of such
opportunities that could lead to value creation for shareholders.
The sector is experiencing high activity levels in the UK and also
in Ireland, a country where the Company has an existing operating
base, with the required management, commercial, fiscal, operational
and technical expertise all located in the Irish market.
Cathal Friel
Non-executive Chairman
3 September 2015
Strategic Report: Investing Policy
On 11 August 2015 Fastnet announced its intention to undertake a
fundamental change in its business. At a general meeting of the
Company held on 28 August 2015, Fastnet shareholders voted to adopt
the Investing Policy set out below and to change the company name
from Fastnet Oil & Gas plc to Fastnet Equity plc.
Investing Policy
The Company's investing policy is to acquire companies or
businesses in the healthcare sector, particularly those in the
biopharma sector. The businesses will typically have attributed to
them some or all of the following characteristics:
-- Strong management team with attractive track records;
-- An established entity with existing intellectual property;
-- Markets and products / services with significant commercial opportunities; and
-- Revenue generating or near to medium term revenue generation capabilities.
The Company will initially focus on opportunities located in
Europe but will also consider businesses in other geographical
regions. The Directors believe that they have a broad collective
range of sources of potential opportunities but also intend to
appoint one or more additional directors with the relevant industry
experience. The Directors will identify and assess potential
investment targets and, where they believe further investigation is
required, intend to appoint appropriately qualified external
professionals to assist. The initial objective of the Directors is
to create incremental capital appreciation and any revenue
generated by the Company will be applied to further the Investing
Policy or will be used in the day to day management of the Company.
Dividends may be declared at some future date depending on the
financial position of the Company and the availability of
distributable accounting profits.
The Directors intend that the Company takes an equity interest
in a proposed investment which is likely to be a majority position
up to 100% ownership. The Company's financial resources are likely
to be invested in potentially one or more investments in a single
transaction which will be deemed to be a reverse takeover pursuant
to Rule 14 of the AIM Rules and ESM Rules, in which case the
approval of the shareholders will be required. Proposed investments
may be made in quoted or unquoted securities in companies or
partnerships at any stage of development.
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The Company will be required to make an acquisition or
acquisitions which will constitute a reverse takeover under the AIM
Rules or otherwise implement its Investing Policy within 12 months
of the general meeting which was held on 28 August 2015, failing
which, the Company's ordinary shares would then be suspended from
trading on AIM and ESM. If the Investing Policy has not been
implemented within 18 months of the general meeting, the admission
to trading on AIM and ESM of the ordinary shares would be cancelled
and the Directors will convene a general meeting of the
shareholders to consider whether to continue seeking investment
opportunities or to wind up the Company and distribute any surplus
cash back to shareholders.
Risks and Uncertainties
In the current reporting period the Group was subject to various
business risks derived from oil and gas exploration which is
inherently costly and risky. The success of the Group in that
industry was dependent on its ability to engage in appropriate
exploration projects and to attract sufficient funding and/or
farm-outs to successfully develop the projects. Following the
approval of the Investing Policy the Company is subject to
additional risk factors relating to the business and operations of
the Company.
These risk factors include:
-- Implementation risk - the success of the Investment Policy is
dependent on the ability of the Company to identify and acquire
suitable acquisitions. These opportunities may not always be
readily available additionally cash resources may be expended on
examining acquisition opportunities that are then not
completed.
-- Financial risk - the identification of suitable acquisitions
may lead to the need for the Company to raise additional finance to
facilitate the acquisition and subsequent development of the
acquisition. There is no guarantee that the Company will be able to
raise additional capital.
-- Technical and due diligence risk - during the screening of
potential investments the Company will be required to undertake
technical, legal, financial and commercial due diligence. Any due
diligence process may involve subjective analysis and there can be
no assurance that all material circumstances will be
identified.
To mitigate these risks the Company has identified four key
characteristics of acquisition targets, set our above, as part of
its Investing Policy. The Company is also initially focussing on
targets based in Europe were there are stable jurisdictions with
established healthcare legislation and government regulation. It is
expected that further changes will be made to the Board of
Directors in the coming months, with the appointment of parties
with the appropriate knowledge and expertise base to make
investments in the healthcare sector.
Operational - Celtic Sea
Licence Region Area Interest Partner Operator Expiry
Name
------------ -------- ----------- --------- -------------- --------- ------------
Mizzen Celtic 31 May
Basin Sea 787km(2) 100% N/a Fastnet 2015
Mizzen Celtic 31 April
East Sea 1,155km(2) 100% N/a Fastnet 2016
Deep Celtic 31 December
Kinsale Sea 285km(2) 60%(A) Petronas Fastnet 2015
Adriatic
Celtic Oil, Carob, 30 November
Shanagarry Sea 881km(2) 82.35% Petro Celtex Fastnet 2015
Molly Celtic 31 May
Malone Sea 647km(2) 100% N/a Fastnet 2015
Block Celtic Carob, 14 November
49/13 Sea 272km(2) 85% Petro Celtex Fastnet 2015
Celtic 31 August
Ventry Sea 996km(2) 100% N/a Fastnet 2016
Total
Area 5,023km(2)
---------------------- ----------- --------- -------------- --------- ------------
(A) Fastnet has an exclusive option to farm-in, exercisable
before 31 December 2015, by commencing a well on or before 31
December 2016 to test the Purbecko-Wealden reservoirs. Upon
completion and, if warranted, testing of the well, Fastnet will
earn a 60% working interest in the Deep Kinsale Prospect by funding
100% of all drilling and testing costs.
In April 2014, Fastnet hosted a one-day workshop on the Celtic
Sea highlighting the hydrocarbon potential and the favourable
business, infrastructure and regulatory environment for the oil and
gas industry in Ireland. The workshop was very well attended by
over twenty of the world's largest oil and gas companies who heard
presentations on, amongst other things, the licensing and fiscal
regime in the Celtic Sea, exploration and production-history,
planned exploration and appraisal opportunities, regional
infrastructure and shore based facilities. The workshop generated
significant interest at the time and Fastnet began a two-stage
farm-out process that was planned to conclude over the course of
2014.
In August 2014 the Company secured improved commercial terms on
Deep Kinsale designed to enhance the prospects of securing a
partner on the project. In addition, the Company continued with
focussed technical work (US$902,000 of expenditure during the year)
to enhance the opportunity of concluding a farm-out of the Celtic
Sea assets.
However, as the year progressed it became clear that the overall
worldwide decline in oil prices, which commenced in Q3 2014, has
had a materially adverse impact on economic conditions within the
oil and gas sector. In particular, it has resulted in a strategic
shift in the forward planning of many large oil and gas companies
which, the Company believes, has resulted in the delay of decisions
and/or changes in strategy regarding farm-in opportunities for
exploration assets. As a consequence of the decline in oil prices
and despite implementing an extensive marketing process, the
Company was unable to successfully conclude a farm-out of its
Celtic Sea Assets.
On 31 May 2015, Fastnet's licensing options in the Celtic Sea
relating to the Molly Malone and Mizzen licences expired. In June
2015, Fastnet applied, as part of an open tender process, for
licensing options over portions of the original licensing option
areas. The award of these licence options remains subject to grant
by Minister of State at the Department of Communications, Energy
and Natural Resources and it is at the Company's sole discretion to
accept the award of these options within 28 days of the award
notification. Fastnet will seek to secure a possible disposal or
similar transaction for the Group's remaining Celtic Sea assets,
however no further substantial expenditure will be incurred on the
assets in the meantime.
Operational - Morocco
Licence Region Area Gross Net Partner Operator Expiry
Name Interest Interest
--------- ---------- ----------- ---------- ---------- -------- --------- --------
Current
Kosmos, phase
BP, 30
Foum Offshore SK, June
Assaka Morocco 6,478km(2) 12.5% 9.375% ONHYM Kosmos 2016
--------- ---------- ----------- ---------- ---------- -------- --------- --------
Total
Area 6,478km(2)
--------------------- ----------- ---------- ---------- -------- --------- --------
(A) Fastnet's option agreement with OGIF expired on 31 December
2014.
Morocco Offshore
Fastnet concluded the farm-out of half of our interest in Foum
Assaka to Korean-listed SK Innovation in April 2014. As part of the
agreement with SK Innovation the Company received a two-well carry
comprising of a carry in the first exploration well (FA-1) and
first appraisal well or, at SK Innovation's sole discretion, a
carry in a second exploration well. The carry for each well is
capped at US$100 million gross. In addition, SK Innovation
reimbursed back costs to Fastnet of US$20.4 million which the
Company received during April 2014. As a result the total cost to
Fastnet from acquisition of the Foum Assaka Licence to completion
of the FA-1 exploration well, in April 2014, was restricted to
US$2.75 million. The FA-1 exploration well drilled was not a
commercial success and, accordingly, a subsequent appraisal well
was not warranted. Therefore the future carry for Fastnet on the
Foum Assaka licence is subject to SK Innovation's election to
participate in a second exploration well, which the Board considers
is unlikely.
Subsequent to year end, following the approval of the Investing
Policy, the Company intends to notify the participants in the Foum
Assaka partnership of its decision to withdraw from the partnership
and surrender its 12.5% paying interest.
Morocco Onshore, Tendrara Lakbir option agreement
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In July 2014 Fastnet secured improved commercial terms from
those previously announced during May 2013. The Tendrara Lakbir
option agreement was extended to 31 December 2014 and Fastnet's net
equity interest increased from 37.5% to 50%. In addition the
drilling commitment was reduced from carrying OGIF for three wells
to carrying them for two wells, the second of which was to be at
Fastnet's election. The deadline to drill the first well was also
extended to 21 April 2015. These revised terms significantly
reduced Fastnet's financial exposure and provided improved project
economics. Despite the improved terms and an extensive marketing
process that began in the middle of 2014, the Company was unable to
successfully conclude a farm-out of the Tendrara Lakbir licence
onshore Morocco, prior to the expiry of the option on 31 December
2014.
Impairment of Exploration and Evaluation Assets
In the current reporting year an impairment charge of US$36.6
million has been made in relation to the Company's exploration and
evaluation assets. The Company believes that sufficient information
was available at the reporting date (low oil prices, inability to
farm out assets, significantly depressed share price below cash
value, expiring or expired licensing options, disappointing
exploration results in the Company's areas of interest) which
suggested that the recovery of expenditure on the Moroccan and
Celtic Sea areas of interest was unlikely, therefore the amounts
which were capitalised in respect of these assets were written off
to the statement of comprehensive income.
The Strategic Report was approved by the board on 3 September
2015 and signed on its behalf by:
______________________
Cathal Friel
Director
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2015
For the For the
year ended year ended
31 March 31 March
2015 2014
US$'000 US$'000
------------------------------------ ------------ ------------
Continuing operations
Revenue - -
Operational costs - -
------------------------------------ ------------ ------------
Gross loss - -
General and administrative
costs (3,196) (2,469)
Impairment of exploration and (36,593) -
evaluation assets
Other operating expenses (12) -
Share based payments (129) (464)
Operating loss (39,930) (2,933)
Finance income 185 201
Net foreign exchange gain 4 175
------------------------------------ ------------ ------------
Loss on ordinary activities
before taxation (39,741) (2,557)
Tax on loss on ordinary activities - -
------------------------------------ ------------ ------------
Loss and total comprehensive
loss for the year attributable
to the equity holders of the
parent (39,741) (2,557)
------------------------------------ ------------ ------------
Loss per share
Loss per share - basic and
diluted, attributable to ordinary
equity holders of the parent
(cent) (11.51) (0.87)
------------------------------------ ------------ ------------
Consolidated Statement of Financial Position
As at 31 March 2015
31 March 31 March
2015 2014
US$'000 US$'000
------------------------------------ --------- ---------
Assets
Non-current assets
Property, plant and equipment 8 14
Exploration and evaluation
assets - 51,644
------------------------------------ --------- ---------
Total non-current assets 8 51,658
------------------------------------ --------- ---------
Current assets
Trade and other receivables 173 76
Cash and cash equivalents 16,790 17,428
Total current assets 16,963 17,504
------------------------------------ --------- ---------
Total assets 16,971 69,162
------------------------------------ --------- ---------
Equity and liabilities
Equity attributable to owners
of the parent
Share capital 20,261 20,261
Share premium 38,918 38,918
Other reserves 2,080 1,815
Retained deficit (44,792) (5,051)
------------------------------------ --------- ---------
Total equity 16,467 55,943
------------------------------------ --------- ---------
Non-current liabilities
Liability for share based payments - 79
------------------------------------ --------- ---------
Total non-current liabilities - 79
------------------------------------ --------- ---------
Current liabilities
Trade and other payables 504 13,140
------------------------------------ --------- ---------
Total current liabilities 504 13,140
------------------------------------ --------- ---------
Total liabilities 504 13,219
------------------------------------ --------- ---------
Total equity and liabilities 16,971 69,162
------------------------------------ --------- ---------
Consolidated Statement of Cash Flows
For the year ended 31 March 2015
31 March 31 March
2015 2014
US$'000 US$'000
-------------------------------------- --------- ---------
Cash flows from operating activities
Group operating loss for the
year (39,930) (2,933)
Depreciation 6 6
Share based payment expense 129 464
Impairment of exploration and 36,593 -
evaluation assets
Movement in working capital:
(Increase)/decrease in trade
and other receivables (97) 36
(Decrease)/increase in trade
and other payables (496) 359
Net cash flow (used in)/from
operating activities (3,795) (2,068)
-------------------------------------- --------- ---------
Cash flow from investing activities
Payments for property, plant
and equipment - (7)
Expenditure on exploration
and evaluation assets (17,442) (27,382)
Farm-in proceeds 20,410 -
Bank interest received 185 201
Net cash flow from/(used in)
investing activities 3,153 (27,188)
-------------------------------------- --------- ---------
Cash flow from financing activities
Net proceeds from issue of
equity instruments - 14,971
Net cash flow from financing
activities - 14,971
-------------------------------------- --------- ---------
Exchange and other movements 4 175
Net change in cash and cash
equivalents (638) (14,110)
Cash and cash equivalents at
beginning of year 17,428 31,538
-------------------------------------- --------- ---------
Cash and cash equivalents at
end of year 16,790 17,428
-------------------------------------- --------- ---------
Statement of Changes in Equity
For the year ended 31 March 2015
Share Share Share Reverse Retained Total
capital premium based asset deficit
payment Merger acquisition Capital
reserve reserve reserve reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---------- ---------- --------- --------- ------------- --------- ---------- ---------
Balance at 1 April
2013 15,832 28,595 695 11,478 (11,256) 9 (2,494) 42,859
Loss and total
comprehensive loss
for the year - - - - - - (2,557) (2,557)
Share based payments - - 889 - - - - 889
Issue of share
capital 4,429 10,323 - - - - - 14,752
Balance at 31 March
2014 20,261 38,918 1,584 11,478 (11,256) 9 (5,051) 55,943
---------------------- ---------- ---------- --------- --------- ------------- --------- ---------- ---------
Balance at 1 April
2014 20,261 38,918 1,584 11,478 (11,256) 9 (5,051) 55,943
Loss and total
comprehensive loss
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for the year - - - - - - (39,741) (39,741)
Share based payments - - 265 - - - - 265
Balance at 31 March
2015 20,261 38,918 1,849 11,478 (11,256) 9 (44,792) 16,467
---------------------- ---------- ---------- --------- --------- ------------- --------- ---------- ---------
Notes
1a General information
Fastnet Equity plc (formerly Fastnet Oil & Gas plc)
("Fastnet" or the "Company") is a company incorporated in England
and Wales. The Company's offices are in Dublin and London. The
Company is listed on the AIM market of the London Stock Exchange
(ticker: FAST.L) and the Enterprise Securities Market of the Irish
Stock Exchange (ticker: FOI). The principal activity of the Company
during the year was oil and gas exploration. At a general meeting
of the Company on 28 August 2015, a fundamental change of business
and Investing Policy was approved by the shareholders of the
Company. The investing policy is to acquire companies or businesses
in the healthcare sector particularly those in the biopharma
sector.
1b Basis of preparation
The Group's financial statements have been prepared and approved
by the Directors in accordance with International Financial
Reporting Standards ("IFRS") and International Financial Reporting
Interpretations Committee ("IFRIC") interpretations, issued by the
International Accounting Standards Board ("IASB") as endorsed for
use in the EU and those parts of the Companies Act 2006 that are
applicable to companies that prepare their financial statements
under IFRS.
The financial information for the years ended 31 March 2015 and
31 March 2014 does not constitute statutory accounts as defined by
section 435 of the Companies Act 2006 but is extracted from the
audited accounts for those years. The 31 March 2014 accounts have
been delivered to the Registrar of Companies. The 31 March 2015
accounts will be delivered to Companies House within the statutory
filing deadline. The auditors have reported on those accounts.
Their report was unqualified and did not contain statements under
Section 498 (2) of (3) of the Companies Act 2006.
2 Segmental information
In the opinion of the Directors the Group had one class of
business during the year, being oil and gas exploration.
The Group's primary reporting format is determined by the
geographical segment according to the location of the exploration
asset. The two geographic reporting segments are: UK & Ireland,
and Morocco. The geographical segment UK & Ireland includes the
costs of the Company head office.
Segment information of the business is presented below:
12 months to 31 March 12 months to 31
2015 March 2014
------------------------------ -------------------- ---------
UK & Morocco Total UK & Morocco Total
Ireland Ireland
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- --------- -------- --------- --------- --------- ---------
Income Statement
Revenue - - - - - -
General and
administrative
costs (2,747) (449) (3,196) (2,145) (324) (2,469)
Impairment
charges (31,041) (5,552) (36,593) - - -
Other operating
expenses (11) (1) (12) - - -
Share based
payments (129) - (129) (464) - (464)
Operating loss (33,928) (6,002) (39,930) (2,609) (324) (2,933)
Finance revenue 185 - 185 201 - 201
Net foreign
exchange gain 4 - 4 176 (1) 175
--------------------- --------- -------- --------- --------- --------- ---------
Loss before
taxation (33,739) (6,002) (39,741) (2,232) (325) (2,557)
--------------------- --------- -------- --------- --------- --------- ---------
Assets and
Liabilities
Current assets 16,915 48 16,963 17,188 316 17,504
Non-current
assets 8 - 8 21,865 29,793 51,658
--------------------- --------- -------- --------- --------- --------- ---------
Total Segment
Assets 16,923 48 16,971 39,053 30,109 69,162
--------------------- --------- -------- --------- --------- --------- ---------
Current liabilities (358) (146) (504) (745) (12,395) (13,140)
Non-current
liabilities - - - (79) - (7 9)
--------------------- --------- -------- --------- --------- --------- ---------
Total Segment
Liabilities (358) (146) (504) (824) (12,395) (13,219)
--------------------- --------- -------- --------- --------- --------- ---------
16,565 (98) 16,467 47,684 8,259 55,943
--------------------- --------- -------- --------- --------- --------- ---------
3 Loss per share - basic and diluted
The Group presents basic and diluted loss per share ("LPS") data
for its Ordinary Shares. Basic LPS is calculated by dividing the
loss attributable to Ordinary Shareholders of the Company by the
weighted average number of Ordinary Shares outstanding during the
year. Diluted LPS is determined by adjusting the loss attributable
to Ordinary Shareholders and the weighted average number of
Ordinary Shares outstanding for the effects of all dilutive
potential Ordinary Shares, which comprise warrants and share
options granted by the Company.
The calculation of loss per share is based on the following:
31 March 31 March
2015 2014
------------------------------------------ ------------ ------------
Loss after tax attributable to equity
holders of the parent (US$'000) (39,741) (2,557)
Weighted average number of Ordinary
Shares in issue 345,369,071 294,292,745
Fully diluted average number of Ordinary
Shares in issue 345,369,071 294,292,745
------------------------------------------ ------------ ------------
Basic and diluted loss per share (cent) (11.51) (0.87)
------------------------------------------ ------------ ------------
Where a loss has occurred, basic and diluted LPS are the same
because the outstanding share options and warrants are
anti-dilutive. Accordingly, diluted LPS equals the basic LPS. The
share options and warrants outstanding as at 31 March 2015 totalled
20,397,423 (31 March 2014: 17,647,423) and are potentially
dilutive.
4 Exploration and evaluation assets
Offshore Onshore Offshore
Morocco Morocco Ireland Total
US$'000 US$'000 US$'000 US$'000
------------------- --------- --------- --------- ---------
Cost
At 1 April 2013 9,496 - 2,545 12,041
Additions 19,319 978 19,306 39,603
------------------- --------- --------- --------- ---------
At 31 March 2014 28,815 978 21,851 51,644
------------------- --------- --------- --------- ---------
At 1 April 2014 28,815 978 21,851 51,644
Additions 3,471 986 902 5,359
Farm-in proceeds (20,410) - - (20,410)
At 31 March 2015 11,876 1,964 22,753 36,593
Impairment
At 1 April 2013 - - - -
At 31 March 2014 - - - -
------------------- --------- --------- --------- ---------
At 1 April 2014 - - - -
Impairment charge (11,876) (1,964) (22,753) (36,593)
------------------- --------- --------- --------- ---------
At 31 March 2015 (11,876) (1,964) (22,753) (36,593)
------------------- --------- --------- --------- ---------
Carrying value
------------------- --------- --------- --------- ---------
At 31 March 2013 9,496 - 2,545 12,041
------------------- --------- --------- --------- ---------
At 31 March 2014 28,815 978 21,851 51,644
------------------- --------- --------- --------- ---------
At 31 March 2015 - - - -
------------------- --------- --------- --------- ---------
Completion of farm-out to SK Innovation Co. Ltd.
On 18 December 2013 Fastnet entered into a farm-out agreement
with SK Innovation Co. Ltd. ("SK"). Under the terms of the
agreement, Fastnet received up to a two well carry comprised of a
carry in one exploration well and first appraisal well (capped at
US$100 million per well) or at SK's sole discretion a carry in a
second exploration well (capped at US$100 million) for a 9.375%
participating interest (12.5% paying interest) in the Foum Assaka
Licence Area. All completion conditions in relation to the farm-out
were finalised in April 2014 with Fastnet receiving US$20.4 million
in back costs from SK on completion.
Annual Impairment Review
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As part of the annual impairment review of asset carrying values
an impairment charge of US$36,593,000 has been made in relation to
the Company's exploration and evaluation assets. The Group's policy
in relation to exploration and evaluation expenditure is to
capitalise the expenditure when the rights to an area of interest
are current, the expenditures are expected to be recouped through
successful development and exploitation activities, the Company is
forecasting future substantive spend on the assets and have not
reached such a stage that a reasonable assessment of recoverable
reserves indicates that a potential commercial development of the
assets is unlikely. The Company believes that sufficient
information was available at the reporting date (low oil prices,
inability to farm out assets, significantly depressed share price
below cash value, expiring or expired licensing options,
disappointing exploration results in the Company's areas of
interest) which suggested that the recovery of expenditure on the
Moroccan and Celtic Sea areas of interest was unlikely, therefore
the amounts which were capitalised in respect of these assets were
written off to the statement of comprehensive income.
A summary of the key factors which were considered by the
Directors as part of the year end annual impairment review are set
out below:
-- Overall worldwide decline in oil prices, which commenced in
Q3 2014, has had a materially adverse impact on economic conditions
within the oil and gas sector.
-- A strategic shift in the forward planning of many large oil
and gas companies (including the Group's partners on the Foum
Assaka asset) which has resulted in the delay/or changes in
strategy regarding farm-in opportunities for exploration
assets.
-- Unsuccessful farm out campaigns in relation to the Companies
exploration assets despite implementing extensive marketing
processes.
-- Exploration activities from operators in the last 24 months
including the post year end announcement that the Pura Vida Energy
MZ-1 exploration well offshore Morocco and Lansdowne Oil & Gas
plc Middleton exploration well in the Celtic Sea were considered to
be unsuccessful
-- The Tendrara Lakbir licence option expired on the 31 December
2014 therefore the Company's rights to that area of interest are no
longer current.
-- Expired (Molly Malone and Mizzen on 31 May 2015) or expiring
licensing options (Shanagarry expires on 30 November 2015, Block
49/13 expires on 14 November 2015 and Deep Kinsale Option expires
on 31 December 2015).
-- The Group's determination that no significant spend on the
assets would be committed to in such uncertain market
conditions.
As a result of the above the Directors determined that there
were facts and circumstances which indicated at year end that the
Group's assets were impaired and accordingly the assets were
written off.
Subsequent to the year end and as a consequence of the
uncertainty in the oil and gas sector the Directors concluded their
review of the future strategy of the Group and recommended to the
shareholders that the Company exit from the oil and gas sector
completely and adopt a new Investing Policy. On the 28 August 2015,
following the approval of the Investing Policy, the Group has
publically stated that it now intends to terminate all future
expenditure Offshore Ireland. In addition, pending formal
notification by the Company to the partners on the Foum Assaka
licence, the Company intends to withdraw from the partnership and
relinquish the Company's 12.5% paying interest. Therefore
confirming the Group will not commit to future substantive
expenditure on the assets and relinquish its interest in the
asset.
The actions undertaken by the Company since the year end reflect
the resulting impact of the issues (summarised above) which had
begun to affect the Group prior to the year end.
5 Share capital - Company
Details of ordinary shares of GBP0.038 each issued are in the
table below:
Date Issue
Number Price
of shares GBP
-------------- -------------------------------- ------------ -------
At 31 March
2013 273,940,493
-------------- -------------------------------- ------------ -------
27 November
2013 Share placing - GBP10,000,000 71,428,578 0.14
-------------- -------------------------------- ------------ -------
At 31 March
2014 &
31 March
2015 345,369,071
-------------- -------------------------------- ------------ -------
6 Share-based payments
The Company has issued share options as an incentive to certain
senior management and staff. In addition the Company has issued
warrants to key consultants, advisers and suppliers in payment or
part payment for services or supplies provided to the Group. Apart
from the Share Appreciation Rights described below, each share
option and warrant converts into one Ordinary Share of Fastnet
Equity plc on exercise and are accounted for as equity-settled
share-based payments. No amounts are paid or payable by the
recipient and the options and warrants may be exercised at any time
from the date of vesting to the date of their expiry. The equity
instruments granted carry neither rights to dividends nor voting
rights.
Share options and warrants in issue:
Share Options Warrants
----------------------- ----------------------
Weighted Weighted
average average
exercise exercise
Units price Units price
---------------- ----------- ---------- ---------- ----------
Balance at 1
April 2013 10,355,327 17.6p 4,990,301 16.4p
Granted during
the year - - 2,301,795 14.0p
Balance at 31
March 2014 10,355,327 17.6p 7,292,096 15.6p
---------------- ----------- ---------- ---------- ----------
Exercisable at
31 March 2014 5,855,327 11.2p 7,292,096 15.6p
---------------- ----------- ---------- ---------- ----------
Balance at 1
April 2014 10,355,327 17.6p 7,292,096 15.6p
Granted during
the year 7,750,000 9.0p - -
Lapsed during
the year 5,000,000 14.0p - -
Balance at 31
March 2015 13,105,327 15.1p 7,292,096 15.6p
---------------- ----------- ---------- ---------- ----------
Exercisable at
31 March 2015 8,605,327 9.5p 7,292,096 15.6p
---------------- ----------- ---------- ---------- ----------
The fair value is estimated at the date of grant using the
Black-Scholes pricing model, taking into account the terms and
conditions attached to the grant. The following are the inputs to
the model for the equity instruments granted during the current and
previous year:
2015 Options 2014 Warrants
Ranges Ranges
---------------------- ------------- --------------
Expected life in
days 1,461-1,825 1,095
Volatility 49%-56% 51%
Risk free interest
rate 1.80%-1.84% 1.59%
Share price at grant 5.7p-10.75p 15.02p
---------------------- ------------- --------------
During the year a total of 7,750,000 share options exercisable
at a weighted average price of GBP0.09 were granted. The fair value
of share options granted during the year was US$103,000. The share
options outstanding as at 31 March 2015 have a weighted remaining
contractual life of 1.7 years with exercise prices ranging from
GBP0.038 to GBP0.26.
During the prior year a total of 2,301,795 warrants exercisable
at a weighted average price of GBP0.14 were granted. The fair value
of warrants granted during the prior year was US$219,000. The
warrants outstanding as at 31 March 2015 have a weighted remaining
contractual life of 1.2 years with exercise prices ranging from
GBP0.11 to GBP0.22.
The value of share options and warrants charged to the Statement
of Comprehensive Income during the year is as follows:
31 March 31 March
2015 2014
US$'000 US$'000
--------------------------- --------- ---------
Share options 208 554
Warrants - -
Share appreciation rights (79) (90)
--------------------------- --------- ---------
Total 129 464
--------------------------- --------- ---------
In addition to the above charges, share-based payments of
US$219,000, related to warrants, were charged to share premium in
the prior year. A further US$57,000 (2014: US$116,000) was
capitalised to intangible assets during the year.
Share Appreciation Rights
The Company issued Share Appreciation Rights ("SAR") to a
non-executive Director that require the Company to pay the
intrinsic value of the SAR to the Director at the date of exercise.
To vest, the Fastnet Equity plc share price must show at least a
25% compound annual growth from the award price (GBP0.052) over the
three years from the grant date. The SAR is accounted for as a
cash-settled share based payment and the fair value is estimated by
using a Monte-Carlo simulation model, which is rerun at each
Statement of Financial Position date. The fair value of the SAR at
31 March 2015 is US$ nil (31 March 2014: US$149,000).
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