Earnings Release • Apr 19, 2018
Earnings Release
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RNS Number : 4023L
Energean Oil & Gas PLC
19 April 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE IT WOULD BE UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT.
For immediate release
19 April 2018
Energean Oil & Gas plc
("Energean" or the "Group")
Unaudited Preliminary Results for the year ended 31 December 2017
Energean, an independent oil and gas exploration and production company focused on the Eastern Mediterranean, today announces its unaudited Preliminary Results for the year ended 31 December 2017.
Financial Highlights
Operational Highlights
Production
Development
o Drilling up to 24 new wells (eight wells already drilled since December 2015)
o The construction of an unmanned platform to develop the Epsilon field adjacent to Prinos
· Received approval for the FDP of the Kataloko field in Western Greece from Hellenic Hydrocarbons Resources Management
Exploration
Reserves and Resources
o 2P Reserves3 of 51 mmboe (2016: 41 mmboe)
o 2C Resources3 of 250 mmboe (2016: 195.6 mmboe)
1Adjusted EBITDAX is calculated as profit or loss for the period adjusted for profit or (loss) for the period from discontinued operations, taxation (expense) / income, total depreciation, amortisation of intangible assets, other income, other expenses, finance income, finance costs, gain on derivative, net foreign exchange (loss) / gain and exploration and evaluation expenses.
2 Cost of oil production is defined as cost of sales, less cost of services and depreciation and change in inventory (defined as the difference between opening inventory and closing inventory), divided by total production for the period.
3 2P reserves and 2C resource figures as per NSAI CPR 31 October 2017 and include gas and liquids volumes with gas volumes converted from Bcf at the rate of 5.8. Includes 50% of volumes set out in the Karish and Tanin CPR, of total 449 mmboe. Energean Israel Limited’s working interest in the Karish and Tanin assets was 50% as of 31 December 2017 and rose to 70% in March 2018 reflecting an increase in 2C resources to 340 mmboe.
Post Period Events
Since the reporting period, the Group has continued to deliver on key strategic milestones:
· Proceeded with Final Investment Decision ("FID") on the Karish and Tanin project on schedule
· Signed the US$1.275 billion senior credit facility for the Karish and Tanin project
· Successful Premium Listing on the London Stock Exchange, raising US$460 million through the Global Offer - the first significant European oil and gas E&P listing since 2014 and the largest ever primary raise for a Premium-Listed E&P company on the London Stock Exchange
· Signed a US$180 million RBL facility with the European Bank for Reconstruction and Development ("EBRD") and other international institutions to fund the development programme for the Prinos, Prinos North and Epsilon oil fields.
· In March 2018 the Group completed the subscription of additional shares in Energean Israel for the amount of US$266.7 million resulting in the Group increasing its holding in Energean Israel to 70%.
· Awarded TechnipFMC an integrated Engineering, Procurement, Construction and Installation Contract for the Karish full field development, covering the design and installation of the complete subsea system, Floating Production Storage and Offloading unit (FPSO), which has been designed to allow the subsequent tie back of Tanin field, the pipeline system, and the onshore pipeline and valve station at the receiving station
· Appointed Stena Drilling to commence a three development well drilling programme in 2019
· Signed extension to the BP Offtake Agreement from July 2021 to November 2025
· Successfully completed the c4km extended reach well in Prinos North field ahead of schedule in late March. The well is currently producing approximately 1,000bpd on a 41% choke
· Production averaged 3,673 bopd in Q1 2018, an increase of 31.6% year-on-year (Q1 2017: 2,790 bopd) and 7.9% quarter-on-quarter (Q4 2017: 3,405 bopd)
· Progressed plans for a secondary listing on the Tel Aviv Stock Exchange in Israel, on which the Group will be filing an application in the near future
Outlook
Energean's priority for the remainder of 2018 is project delivery across its development portfolio:
· The Group expects to complete several project milestones on the Karish and Tanin project for the remainder of this year, most importantly:
o Submission of the Karish Lease Environmental Document to Israeli regulator which the Group expects to be approved in the second half of the year
o Completion of the detailed design for topsides and hull Issue report, with TechnipFMC to commence fabrication of FPSO hull and topsides in the final quarter of the year
· The Group expects to achieve average production rate of between 4,000-4,500 bopd from the Prinos license
· During 2018, Energean plans to drill five development wells in the Prinos license
· The Group is well positioned to capitalise on further growth opportunities in the Eastern Mediterranean
Mathios Rigas, Chief Executive of Energean, said:
"Our performance in 2017 has provided us with the platform to deliver on our exciting development plans in the Eastern Mediterranean. Energean's Premium Listing on the London Stock Exchange in March 2018, raising US$460 million, was a landmark accomplishment for the Group and the largest ever primary raise for an E&P company on the Premium Segment of the London Stock Exchange. Our investment proposition, characterised by the quality of our asset portfolio, our strategic position in the Eastern Mediterranean, our offshore experience and our management's track record of value creation, was well received by London and international institutions.
The development of the Karish Field will materially increase the scale of the Group's operations and support Energean's strategy to become a major player in the Eastern Mediterranean gas market. These assets are highly strategic for the development of the Israeli energy market and can help to meet increasing Israeli demand, increase market competition and improve security of supply.
As we progress through 2018, our priority will be to deliver significant growth in our first year as a listed business. We are well placed to capitalise on our growth plans with the infrastructure, local relationships and capability to move swiftly on future value-accretive opportunities for all our stakeholders."
Further information about Energean is available on its website at www.energean.com
Enquiries
| Energean | |
| Sotiris Chiotakis (Media Relations) | +30 210 8174 242 |
| Instinctif (PR/IR adviser to Energean): | +44 (0) 20 7547 2020 |
| David Simonson | |
| Laura Syrett | |
| George Yeomans |
IMPORTANT NOTICE - FORWARD-LOOKING STATEMENTS
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. In addition, even if results or developments are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Any forward-looking statements reflect the Group's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.
FINANCIAL REVIEW
The Directors consider the following metrics to be the key financial and operation performance indicators ("KPIs") used by the Group to help evaluate growth trends, establish budgets and assess operational performance and efficiencies. In addition to the Group's results determined in accordance with IFRS, the Directors believe the KPIs are useful in evaluating the Group's operating performance.
| For the year ended 31 December | For the ten month period ended 31 October | ||||
| 2017 | 2016 | 2017 | |||
| Adjusted EBITDAX (US$ 000)* (1) | 20,676 | 16,202 | 12,341 | ||
| Cash Flow from Operating activities (US$ 000) | 29,097 | 15,235 | 23,440 | ||
| Cash capex (US$ 000)*(2) | (53,822) | (110,680) | (44,013) | ||
| Cost of oil production (US$ 000)*(3) | 25,262 | 24,303 | 21,118 | ||
| Cost of oil production per boe (US$)(3) | 24.7 | 19.1 | 26.1 | ||
| Gearing ratio (net debt/capital)(4) | 21.85% | 24.39% | 24.93% | ||
| Realised sales price per boe (US$) | 46.7 | 34.3 | 43.0 | ||
| Total production for the period (boe) (5) | 1,023,072 | 1,273,751 | 808,377 | ||
| Average production per day (bopd) (5) | 2,803 | 3,490 | 2,659 | ||
| 2P reserves (mboe) (6) | 51 | 41 | 51 | ||
| 2C resources (mboe) (6) | 250 | 196 | 250 |
*Denotes a Non-IFRS Measure
| (1) Adjusted EBITDAX is calculated as profit or loss for the period adjusted for profit or (loss) for the period from discontinued operations, taxation (expense) / income, total depreciation, amortisation of intangible assets, other income, other expenses, finance income, finance costs, gain on derivative, net foreign exchange gain/(loss) and exploration and evaluation expenses |
| (2) Cash capex is defined as net cash payment for purchase of property, plant and equipment and payment for intangible assets. |
| (3) Cost of oil production is defined as cost of oil sales, less depreciation and change in inventory (defined as the difference between opening inventory and closing inventory) divided by total production for the period. |
| (4) Net debt is defined as the Group's total borrowings (including current and non-current borrowings), less shareholders' subordinated debt, cash and cash equivalents and bank deposits. Capital is defined as the Group's total equity, plus shareholders' subordinated debt. The gearing ratio is calculated as net debt divided by capital. |
| (5) Production levels refer to total oil production for the periods. Oil volumes are STOB and include natural gas liquids. Average production per day for the year ending 31 December 2017 would be 2,948 bopd if excluding 18 days of scheduled maintenance during which the plant was shut down |
| (6) 2P reserves and 2C resource figures as per NSAI CPR 31 October 2017 and include gas and liquids volumes with gas volumes converted from Bcf at the rate of 5.8. Includes 50% of volumes set out in the Karish and Tanin CPR, of total 449 mboe. Energean Israel Limited's working interest was 50% as of the year ended 31 December 2017 and rose to 70% in March 2018 reflecting an increase in 2C resources to 340 mboe. |
Results of operations for the years ended 31 December 2017 and 2016
The table below sets forth the line items of the Group's unaudited consolidated statement of comprehensive income for the years ended 31 December 2017 and 2016 in US Dollars and as a percentage of revenue.
| For the year ended 31 December (US$ 000) |
For the ten months ended 31 October (US$ 000) |
||||||
| 2017 | % of revenue | 2016 | % of revenue | 2017 | % of revenue | ||
| Revenue | 57,752 | 100.0% | 39,724 | 100.0% | 38,425 | 100.0% | |
| Cost of Sales | (48,648) | 84.2% | (40,551) | 102.1% | (36,363) | 94.6% | |
| Gross profit / (loss) | 9,104 | 15.8% | (827) | 2.1% | 2,062 | 5.4% | |
| Administration expenses | (5,991) | 10.4% | (4,134) | 10.4% | (4,339) | 11.3% | |
| Selling and distribution expenses | (445) | 0.8% | (336) | 0.8% | (313) | 0.8% | |
| Exploration and evaluation expenses | (9,966) | 17.3% | (1,133) | 2.9% | (7,050) | 18.3% | |
| Other income | 1,789 | 3.1% | 248 | 0.6% | 2,169 | 5.6% | |
| Other expenses | (8,187) | 14.2% | (4,688) | 11.8% | (9,770) | 25.4% | |
| Finance Income | 14 | 0.0% | 327 | 0.8% | 14 | 0.0% | |
| Finance Costs | (22,940) | 39.7% | (29,311) | 73.8% | (21,132) | 55.0% | |
| Gain on derivative | 24,109 | 41.7% | - | 0.0% | 24,109 | 62.7% | |
| Net foreign exchange (loss) / gain | 36,244 | 62.8% | (10,043) | 25.3% | 27,621 | 71.9% | |
| Profit / (loss) from continuing operations before tax | 23,731 | 41.1% | (49,897) | 125.6% | 13,371 | 34.8% | |
| Taxation (expense) / income | (14,061) | 24.3% | 11,517 | 29.0% | (8,776) | 22.8% | |
| Income / (loss) from continuing operations | 9,670 | 16.7% | (38,380) | 96.6% | 4,595 | 12.0% | |
| Loss from discontinued operations | (1,404) | 2.4% | (229) | 0.6% | (1,403) | 3.7% | |
| Income / (loss) for the period | 8,266 | 14.3% | (38,609) | 97.2% | 3,192 | 8.3% | |
| Profit / (loss) per ordinary share from continuing activities (cents per share) | |||||||
| From continuing operations | $0.14 | n/a | ($0.54) | n/a | $0.07 | n/a | |
| From total earnings | $0.12 | n/a | ($0.54) | n/a | $0.05 | n/a |
General note
For the year ended 31 December 2017 (the "reporting period") total income for the period increased by US$46.9 million to US$8.3 million (FY 2016: loss of US$38.6 million). This increase is mainly driven by an increase in revenue amount US$18.0 million and gain on derivative amount US$24.1 million
Revenue
The Group's revenue increased by 45.4% to US$57.8 million for the reporting period (31 October 2017: US$38.4 million, 31 December 2016: US$39.7 million). This is mainly explained by the increase in the average realised crude oil price from US$34.25/bbl during 2016 to US$46.73/bbl during the reporting period (as of 31 October 2017 US$43.02/bbl).
For the year ended 31 December 2017, average production was 2,803 bopd (2,948 bopd if excluding 18 days of scheduled maintenance during which the plant was shut down). This figure reflected asphaltene and drilling difficulties in the first half of 2017, which impacted production for the period. Remedial action taken resulted in production recovering to an average 3,405 bopd in Q4 2017.
Gain on Derivative
The gain on derivative of US$24.1 million was driven by the valuation of a derivative financial instrument, measured at fair value at the end of each reporting date, which related to the EISL Class B Shares the Group had a contingent commitment to acquire. Pursuant to the Reorganisation Agreement, the Group had committed to acquire in an exit event 50% of the EISL Class B Shares of Energean Israel Limited held by the Founders. The valuation technique used to value this asset multiplies the estimated likelihood of an exit (being an IPO or a sale) by the estimated difference between the consideration payable under the commitment and the estimated value of the B shares to be acquired under the commitment. The change in fair value of US$24.1 million due to changes in measurement assumptions between 30 June 2017 and 31 October 2017 is included in gain on derivative in the consolidated statement of profit or loss.
Pursuant to the Reorganisation Agreement, the Group acquired the Founders' 50% economic interest in Energean Israel on 16 March 2018 in exchange for US$10 million, leaving the Group with a 50% economic interest and 50.0001% voting rights in Energean Israel. Pursuant to Second Subscription Agreement with Kerogen and after taking a final investment decision in respect of the Karish and Tanin assets the Group's interest in Energean Israel was further increased to 70% on 29 March 2018.
Exploration and evaluation expenses
Exploration and evaluation expense increased to US$10.0 million in the year ended 31 December 2017 from US$1.1 million in the year ended 31 December 2016. This is largely due to the impairment of US$9.3 million of exploration expenditure in the West Kom Ombo asset, in Egypt.
Other expenses
Other expenses increased to US$8.2 million, in the year ended 31 December 2017 from US$4.7 million in the year ended 31 December 2016, largely due to an increase in provisions for litigation expenses of US$6.9 million relating to the tax appeal of the Group's subsidiary in Greece.
Net foreign exchange (loss)/gain
The Group's revenue and most of its working capital outside of Greece are in U.S. dollars. The Group does not currently engage in any foreign exchange hedging activity. The Group converts funds to foreign currencies as its payment obligations in jurisdictions where the U.S. dollar is not an accepted currency become due. Certain of the Group's costs are incurred in currencies other than U.S. dollars, including euros and pounds sterling. In particular a substantial portion of the Group's operating costs in Greece are in euros. Significant amounts of foreign exchange income/(loss) related to unrealised foreign exchange arise due to retranslation of U.S. dollar denominated debt, in the subsidiary company Energean Oil & Gas SA (whose functional currency is the Euro) at each period end. Realised exchange differences reflect the impact of movements in exchange rates for foreign currency transactions between the date of transaction and the date of settlement.
The Group's gain from foreign exchange transactions increased significantly to US$36.2 million in the reporting period from loss US$10.0 million in the year ended 31 December 2016. This was attributable primarily to an increase in the euro/dollar exchange rate.
Cost of oil sales
| For the year ended 31 December (US$ 000) |
|||||
| 2017 | 2016 | variance | variance % | ||
| Inventory change | 5,003 | (4,970) | 9,973 | 200.7% | |
| Direct costs | |||||
| Depreciation | 17,640 | 21,218 | -3,578 | -16.9% | |
| Staff costs | 12,598 | 11,609 | 989 | 8.5% | |
| Electricity and fuel | 5,767 | 6,014 | -247 | -4.1% | |
| Operational and production costs | 6,721 | 6,350 | 371 | 5.8% | |
| Royalties | 176 | 330 | -154 | -46.7% | |
| Total cost of production | 42,902 | 45,521 | -2,619 | -5.8% | |
| Total Cost of Oil Sales | 47,905 | 40,551 | 7,354 | 18.1% |
Cost of oil sales was affected by the increase in U.S. dollar/Euro exchange rate by 2.1% as most of the Group's staffing and certain other operating costs are denominated in Euro. Total cost of oil sales increased by 18.1% principally due to the decreased closing balance of oil inventory in the period. Subcontracted work and machinery repairs and maintenance increased in the year ended 31 December 2017 reflecting shut down expenses.
Liquidity and capital resources
The following table sets forth a summary of the unaudited Group's consolidated cash flow statement data for the reporting period and FY 2016
| For the year ended 31 December (US$ 000) |
For the ten months ended 31 October (US$ 000) |
|||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | ||
| --- | --- | --- | --- | --- |
| Cash and cash equivalents at the beginning of the period | 17,586 | 8,238 | 17,586 | |
| Net cash flow from operating activities | 29,097 | 15,235 | 23,440 | |
| Net cash used in investing activities | (58,418) | (108,844) | (48,655) | |
| Net cash from financing activities | 28,421 | 103,056 | 17,202 | |
| Effects of exchange rate changes on cash and cash equivalents | (994) | (99) | (910) | |
| Cash and cash equivalents at the end of the period | 15,692 | 17,586 | 8,663 |
Net cash flows from operating activities was increased to US$29.1 million for the reporting period (2016: US$15.2 million) and was primarily attributable to increase in revenue by 45.4% and decrease in inventory balance.
Net cash flows used in investing activities decreased to US$58.4 million in the year ended 31 December 2017 from US$108.8 million in the year ended 31 December 2016. This decrease reflected a reduction in drilling capital expenditure in Prinos. Also in the year ended 31 December 2016 the net cash used in investing activities included amount of US$40.0 million for acquisition cost of Karish and Tanin licenses.
Net cash from financing activities decreased by US$74.7 million, to US$28.4 million in the reporting period from US$103.1 million in the year ended 31 December 2016. In the reporting period the Group drew US$28.9 million from the available amount under the EBRD facilities.
| As at 31 December (US$ 000) |
As at 31 October (US$ 000) |
||||||
|---|---|---|---|---|---|---|---|
| Notes | 2017 | 2016 | 2017 | ||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| ASSETS | |||||||
| Non-current assets | ͮ | ||||||
| Property plant and equipment | 6 | 309,976 | 230,180 | 290,318 | |||
| Intangible assets | 7 | 4,001 | 8,278 | 3,616 | |||
| Other non-current assets | 13 | 591 | 382 | 575 | |||
| Deferred tax asset | 18 | 13,473 | 20,678 | 16,761 | |||
| Bank deposits | 15 | 1,899 | 1,116 | 1,828 | |||
| 329,940 | 260,634 | 313,098 | |||||
| Current assets | |||||||
| Inventories | 11 | 9,528 | 12,757 | 14,276 | |||
| Trade and other receivables | 12 | 24,684 | 13,739 | 11,716 | |||
| Current tax assets | 14 | - | 92 | - | |||
| Cash and cash equivalents | 15 | 13,793 | 11,861 | 6,835 | |||
| Derivative asset | 36 | 93,292 | 91,615 | ||||
| Assets classified as held for sale | 9 | - | 45,203 | - | |||
| 141,297 | 83,652 | 124,442 | |||||
| Total assets | 471,237 | 344,286 | 437,540 | ||||
| EQUITY AND LIABILITIES | |||||||
| Equity attributable to owners of the parent | |||||||
| Share capital | 16 | 917 | 14,904 | 917 | |||
| Equity reserves | 16 | 64,000 | 117,080 | 62,981 | |||
| Merger reserves | 16 | 139,903 | - | 139,903 | |||
| Retained earnings | (140,132) | (148,407) | (145,206) | ||||
| Equity attributable to equity holders of the parent | 64,688 | (16,423) | 58,595 | ||||
| Non-controlling interests | 10 | 224,294 | 303 | 224,294 | |||
| Total Equity | 288,982 | (16,120) | 282,889 | ||||
| Non-Current Liabilities | |||||||
| Borrowings | 17 | 78,831 | 255,118 | 79,186 | |||
| Deferred tax liabilities | 18 | 3,570 | 2,989 | 3,732 | |||
| Retirement benefit liability | 20 | 3,288 | 2,425 | ||||
| Provisions for liabilities | 19 | 5,688 | 2,240 | 6,749 | |||
| Other long term liabilities | 21 | 2,544 | 2,737 | 2,555 | |||
| 93,921 | 265,509 | 92,222 | |||||
| Current Liabilities | |||||||
| Trade and other payables | 21 | 66,528 | 29,082 | 54,607 | |||
| Borrowings | 9, 17 | 12,500 | 21,130 | - | |||
| Provisions for liabilities | 19 | 9,306 | - | 7,822 | |||
| Liabilities directly associated with assets classified as held for sale | 9 | - | 44,685 | - | |||
| 88,334 | 94,897 | 62,429 | |||||
| Total Liabilities | 182,255 | 360,406 | 154,651 | ||||
| Total Equity and Liabilities | 471,237 | 344,286 | 437,540 |
Oil and Gas Assets
| US$ 000 | |
| Opening oil and gas assets at 1 January 2017 | 187,137 |
| Development additions | |
| Greece | 66,364 |
| Exploration and appraisal additions | |
| Greece | 2,264 |
| Egypt | 1,994 |
| Montenegro | 107 |
| Write-off of exploration and evaluation costs | (6,774) |
| Disposal of Exploration and evaluation cost | (2,383) |
| Depletion and amortisation | (17,021) |
| Foreign exchange impact | 20,605 |
| Closing oil and gas assets at 31 December 2017 | 252,293 |
Exploration assets
1. In March 2017, the Group agreed to farm out a 60% working interest and operatorship of the Ioannina licence to Repsol. The Group retains a 40% working interest as of 31 December 2017. According to Farm out agreement Repsol will conduct the exploration of the Ioannina block, providing 90% of the committed investment up to US$25 million and 60% thereafter in exchange for a 60% interest. The Group does not record any expenditure made by the farminee on its account. It also does not recognise any gain or loss on its exploration and evaluation farm-out arrangements, but re-designates any costs previously capitalised in relation to the whole interest as relating to the partial interest retained. Any cash consideration received directly from the farminee is credited against costs previously capitalised in relation to the whole interest with any excess accounted for by the farminor as a gain on disposal.
2. The Group recognised US$6,774 million impairment losses in exploration and evaluation expenses in the period ended 31 December 2017, relating to exploration expenditure for West Kom Ombo in Egypt. West Kom Ombo is an exploration block in Upper Egypt, the licence for which expired on 2 October 2017. There are no recoverable costs associated with West Kom Ombo and the asset has been fully written off. in 2017.
Development assets
· In Greece, work continued using our drilling rig: the Energean Force. throughout the year on the in-fill development campaign of our main producing field: Prinos. Three new wells were completed - PA-33, PA-37 and PA-38 - and wells PA-40 and PA-19 were worked over. Well PN-H4 - the first extended reach well to be drilled by our own rig was being drilled at year end.
Group Reorganisation
On 30 June 2017, Energean reorganised the business and became the parent company of the Group through the acquisition of the full share capital of Energean E&P Holdings Limited in exchange for 65,643,120 £0.01 shares in Energean. The previously recognised share capital of US$14,904 thousand and share premium of US$125,851 thousand was eliminated with a corresponding positive merger reserve recognised of US$139,903 thousand.
Pursuant to the to the Reorganisation Agreement the senior secured loan from Third Point and certain other parties was discharged in exchange for $224 million preference shares in Energean International Limited.
Under the same agreement the Group had committed to acquire in an exit event 50% of the Energean Israel Limited Class B Shares held by the founder shareholders. The valuation technique used to value this asset multiplies the estimated likelihood of an exit (being an IPO or a sale). by the estimated difference between the consideration payable under the commitment and the estimated value of the B shares to be acquired under the commitment. The change in fair value of US$24.1 million due to changes in measurement assumptions between 30 June 2017 and 31 October 2017 is included in gain on derivative in the consolidated statement of profit or loss.
Also on 31 October 2017, under the Supplementary Agreement the consideration payable to acquire the B shares in the event of an IPO was reduced from $150m to $10m. The resulting increase in the value of the derivative asset of US$69,183 (after applying the 50% IPO likelihood assumption and other discounting effects) is recorded in the consolidated statement of changes in equity as the Supplementary Agreement is a transaction with owners, giving the derivative asset a closing value of $93,262.
Dividend Policy
The Group currently pays no dividend. This will be reviewed annually by the Board.
END
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