Energy SpA — Audit Report / Information 2017

Apr 20, 2017

JOINT ADMINISTRATORS' FINAL REPORT FOR THE PERIOD 6 DECEMBER 2016 TO 18 APRIL 2017

IONA ENERGY COMPANY (UK) LIMITED (FORMERLY "PLC") (REGISTERED IN SCOTLAND, COMPANY NUMBER SC335305) ("IONA") ("THE COMPANY")

18 APRIL 2017

EXPERTS WITH IMPACT

Table of Contents

1. Introduction 3
2. Conduct of the Administration 4
3. Estimated Outcomes 4
4. Summary of Proposals and Exit Route 5
Appendix A – Statutory information 6
Appendix B – Administrators' receipts and payments 7
Appendix C – Detail of Administrators' receipts and payments 8
Appendix D – Administrators' time costs and expenses 9
Appendix E – Time cost analysis 11
Appendix F – Additional Information in relation to Administrators' fees pursuant to SIP9 13
Appendix G – Extracts from the Insolvency (Scotland) Rules 1986 15

Glossary

The Act	Insolvency Act 1986	Purchaser	Decipher Energy Limited
Administrators	Chad Griffin and Lisa Rickelton of FTI Consulting LLP	The Rules	Insolvency (Scotland) Rules 1986
CVA	Company Voluntary Arrangement	Security Trustee	Nordic Trustee ASA
FDP	Field Development Plan	the Company	Iona Energy Company (UK) Limited
FTI	FTI Consulting LLP	the Companies	Iona Energy Company (UK) Limited and Iona UK Huntington Limited
HMRC	HM Revenue and Customs	SIP 2	Statement of Insolvency Practice 2
M&A	Merger and Acquisition	SIP 9	Statement of Insolvency Practice 9
Period	6 December 2016 to 18 April 2017	SIP 16	Statement of Insolvency Practice 16

1. Introduction

• 1.1 Chad Griffin and Lisa Rickelton ("the Administrators") were appointed as Joint Administrators of the Company on 6 January 2016.
• 1.2 Pursuant to Rule 2.38 of the Insolvency (Scotland) Rules 1986 ("the Rules") we are required to send creditors a report setting out what has happened in the administrations during the period since our last report, from 6 December 2016 to 18 April 2017 ("the Period"). This is our final report in this matter.
• 1.3 Statutory information pertaining to the Company is set out in Appendix A. On 27 May 2016, the Company re-registered as a private limited company.
• 1.4 As insolvency practitioners we are bound by the Insolvency Code of Ethics. Prior to our appointment we considered potential ethical threats in undertaking the administration in accordance with the Code, and we did not consider that there were any matters preventing us taking this appointment.
• 1.5 Following meetings of the Company's creditors and member on 17 June 2016, the Joint Administrators were also appointed as Joint Supervisors of a CVA in relation to the Company.
• 1.6 No creditors committee has been formed in the Administration or the CVA.
• 1.7 This report together with the appendices contains information in relation to the activities undertaken in the Period, as well as some information relating to the full period since our appointment on 6 January 2016. This includes receipts and payments into the insolvency estate (Appendices B and C) and the Administrators' time costs in accordance with Statement of Insolvency Practice 9 ("SIP9") (Appendices D, E and F).
• 1.8 Our Proposals were deemed to have been approved on 23 February 2016. A summary of our Proposals is included in section 4 of this report.

Administrators' remuneration

• 1.9 In our Statement of Proposals dated 9 February 2016 ("the Proposals"), we proposed that we be remunerated on the basis of time costs incurred by us and our staff properly spent in carrying out the Administration. Details of the rules in relation to Administrators' remuneration together with details of our time costs to date are set out in Appendices C and D.
• 1.10 Time costs and disbursements incurred since our appointment amount to £1,700,006 (plus VAT). Of this amount £1,266,864 (plus VAT) has been billed. For the avoidance of doubt, fees incurred by the Joint Supervisors in relation to implementing the CVA of the Company are not included within these figures.
• 1.11 Administrators' fees and disbursements are subject to creditor approval. A creditors' guide to administrators' fees setting out creditors' rights to further information and how fees are approved can be found here:

http://www.fticonsulting-emea.com/~/media/Files/emea--files/creditors-portal/cip-emea-forms-info/creditors-guide-toadministrators-remuneration-scotland.pdf

• 1.12 If creditors wish to be supplied with a hard copy of this guidance they should contact us using the details set out in Section 4 below.
• 1.13 Additional information in relation to our staffing policies can be found in Appendix F.

Creditors' Right to Challenge Remuneration and/or Expenses

1.14 By virtue of Rule 2.39(9) of the Scottish Rules, our fees were determined by the secured creditors. The Creditors' Guide referred to in clause 1.11 provides more information in relation to the Administrators' remuneration.

Creditors' Right to Request Information

• 1.15 Should creditors require further information, please mark any such requests for the attention of William Marsden and post to FTI Consulting LLP, 200 Aldersgate Street, London, EC1A 4HD.
• 1.16 Further information in respect of insolvency generally can be found at the following website:

http://www.creditorinsolvencyguide.co.uk/

1.17 I enclose further information in relation to creditors' rights to information at Appendix G.

2. Conduct of the Administration

Purpose of the Administration

2.1 Pursuant to Paragraph 3 of the Schedule B1 of the Act, the purpose of the administration was to rescue the Company as a going concern.

Shares in Iona/Orlando and Kells Licenses

2.2 We are pleased to confirm that on 13 April 2017 the sale of the shares in the Company to Decipher Energy Limited was completed.

West Wick

2.3 The deferred and contingent transaction proceeds from the sale of the Company's interest in West Wick have been assigned to the Security Trustee, effective on Completion of the sale of the Company.

Receipts and payments during the Period

2.4 Please find at Appendix B the receipts and payments accounts. Narrative in relation to the receipts and payments is included at Appendix C.

Taxation

2.5 Appropriate filings have been made to support the Company's corporation tax and VAT positions at the date of the administrations. The Company has received a VAT refund of £1.9m for the pre-administration period and a total of £634k to date for the post administration period.

Statutory Investigations

2.6 As reported previously, we have concluded our statutory investigation work in accordance with SIP2, and complied with our statutory duties pursuant to the Companies Directors Disqualification Act 1986.

3. Estimated Outcomes

Secured creditors

• 3.1 At the date of the appointment the secured creditors were owed \$263m by the Companies. The secured creditors held a number of securities which were listed in the SIP 16 letter to creditors and included as Appendix G in the Administrators' proposals dated 9 February 2016.
• 3.2 The amount due to the secured creditors was net of \$57.1m restricted cash which had been distributed to the Security Trustee prior to the date of appointment. Of this amount \$56m has been distributed by the Security Trustee to bondholders with the remaining \$1m held as contingency. In addition a further £355k was paid to the Security Trustee in relation to cash on appointment held by Bank of America, which was realised in April 2017.
• 3.3 Following the completion of the sale of the shares of the Company \$1.5m was paid by the buyer to the Security Trustee as repayment of Senior Debt.
• 3.4 In addition to the above and as part of the sale a deferred debt repayment \$3.5m is payable on receipt of an agreement or letter of extension by the OGA of the Orlando Licence to a date no earlier than 30 June 2018, to allow completion of the existing, or any modified secretary approved, FDP; or payable on the granting of a new licence to the Company in respect of the same area and having equivalent effect to the above.
• 3.5 Conditional upon the approval of the FDP, West Wick would result in additional realisations to the Security Trustee of \$1.76m.

Preferential creditors

3.6 The Company has no preferential creditors.

Unsecured creditors

• 3.7 Unsecured creditors rank behind both secured and preferential creditors.

• 3.8 Under Section 176A of the Act where after 15 September 2003 the company has granted a creditor a floating charge, a proportion of the net property of the company achieved from floating charge asset realisations must be made available for the unsecured creditors ("the Prescribed Part").

• 3.9 The Prescribed Part applies where there are net floating charge realisations (i.e. after costs of realisation) available to unsecured creditors and is calculated as follows:

• 50% of net property up to £10k
• Plus 20% of net property in excess of £10k
• Subject to a maximum of £600k
• 3.10 As previously advised the CVA expressly disapplies the obligation under s176A(2) of the Act for the Administrators to set aside the prescribed part. A distribution of \$2m will be made shortly to unsecured creditors from the CVA of the Company.

4. Summary of Proposals and Exit Route

• 4.1 The administrators' proposals are included below as required by Rule 2.42 of the Rules. There have been no amendments or deviations from these proposals.
• We will continue to manage the affairs of the Company in order to achieve the purpose of the Administration.
• To do all such other things and generally exercise all of our powers as contained in Schedules B1 and 1 of the Act, as we consider desirable or expedient to achieve the statutory purpose of the Administration.
• To consider whether a CVA proposal should be issued and if so formulate a CVA for creditors.
• To investigate and as appropriate pursue any claims the Company may have.
• We shall be authorised to agree the claims of the secured, preferential and unsecured creditors against each of the Company unless we conclude, in our reasonable opinion, that a company will have no assets available for distribution.
• We shall be authorised to distribute funds to the secured and preferential creditors (if applicable) as and when claims are agreed and funds permit.
• In relation to potential distributions to unsecured creditors by virtue of a Prescribed Part, we are authorised to do so in accordance with S128(2) of the Small Business, Enterprise and Employment Act 2015 ("SBEEA") and its amendment to Paragraph 65(3) of Schedule B1 of the Act.
• 4.2 We consider that the Proposals have been achieved and that the purpose of the Administration has been met.
• 4.3 Accordingly this report will be filed with the Registrar of Companies and Court in accordance to Rules 2.43 and 2.45 of the Rules. There will be no further reports to creditors in respect of the administration of the Company.
• 4.4 The Administrators will be discharged from liability in accordance with Paragraph 98(1) of Schedule B1 of the Act immediately upon their appointment as Administrators ceasing to have effect.

Should you have any queries in the meantime please do not hesitate to contact us on william.marsden@fticonsulting.com or +44(0)203 727 1342.

For and on behalf of the Company

Lisa Rickelton Joint Administrator

The affairs, business and property of Iona Energy Company (UK) Limited ("the Company") are being managed by the Joint Administrators. The Joint Administrators act as agents of the Company and without personal liability.

Chad Griffin and Lisa Rickelton are licensed in the United Kingdom to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales, under section 390(2)(a) of the Insolvency Act 1986.

Appendix A – Statutory information

Company and Appointment Information

	Iona Energy Company (UK) Limited
Trading names	Iona Energy Company (UK) Limited
Registered number	SC335305
Registered office	C/O Insolvency Support Services Limited, H5 Newark Business Park, Newark Road South, Glenrothes, KY7 4NS
Director(s)	Mr Iain Charles McKendrick Mr Thomas Hamilton Reynolds
Company secretary	None. The previous secretary was Burness Paull, 50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ. Their appointment was terminated on 14 February 2017.
Directors' shareholdings	Iona Energy Inc (Share pledge held as security by Nordic Trustee ASA as bond trustee)
Court reference	P10/16
Court	Court of Session, Edinburgh
Appointment date	6 January 2016
Appointer	Company Directors c/o Queens Road, Aberdeen, AB15 4ZT

Administrators' Information

	Administrator 1	Administrator 2
Name	Chad Griffin	Lisa Rickelton
Address	200 Aldersgate Street, London, EC1A 4HD	200 Aldersgate Street, London, EC1A 4HD
Authorising body	The Institute of Chartered Accountants of England and Wales	The Institute of Chartered Accountants of England and Wales

The appointment of the Administrators was made by the directors of the Company pursuant to Paragraph 22 of Schedule B1 of the Act.

The company is subject to fixed and floating charge security dated 30 September 2013. Full details of the security were provided in Appendix IV of our proposals. The validity of the security and the appointment has been confirmed by the Administrators' legal advisors CMS Cameron McKenna LLP.

Pursuant to Paragraph 100 of Schedule B1 of the Act, any function of the Administrators may be exercised by any or all of the Administrators named above.

The centre of main interest of the Company is the United Kingdom. Therefore, the EC Regulations on Insolvency Proceedings 2000 apply to the Administration. The proceedings are main proceedings as defined by Article 3 of those regulations

Appendix B – Administrators' receipts and payments

Iona Energy Company (UK) Limited Administrators' account of receipts and payments

		6 January 2016		6 July 2016 06 December 2016
£	Statement of Affairs[1]	to 5 July 2016	to 5 December 2016	to 18 April 2017	Total
Floating charge receipts Bank Interest		165	259	9	433
Cash at bank	1,516,198	1,468,407	-	354,608	1,823,015
Cross Funding[2]		1,399,640	900,000	1,351,714	3,651,353
Furniture & Equipment		22,697	-	-	22,697
Insurance Refund		291	-	-	291
Pre-appointment VAT Refund		1,869,762	-	-	1,869,762
Prepayment recoveries	5,918	40,944	-	114	41,058
Plant & Machinery		-	40,000	-	40,000
OPEX Cover		-	447,392	136,000	583,392
Joint Venture income		26,390	82,339	56,981	165,710
Trade debtors[3]	1,946,135	-	-	-	-
Book debts		-	-	441	441
CVA Deposit - Bridge		-	-	173,867	173,867
Exclusivity Payment		-	-	250,000	250,000
Subtotal	3,468,251	4,828,297	1,469,990	2,323,733	8,622,020
Floating charge payments
Professional Fees		(26,462)	(80,555)	(95,165)	(202,181)
Bank Charges		(45)	(75)	(145)	(265)
Repairs & Maintenance		(8,935)	-	-	(8,935)
Utilities		(4,989)	-	-	(4,989)
CVA meeting Costs		(235)	-	-	(235)
Specific Bond		(528)	(388)	-	(916)
Pre-Administration Fees		(332,844)	-	-	(332,844)
PAYE & NI Arrears		(87,179)	-	-	(87,179)
Joint Administrators' Fees		(147,955)	(828,757)	(290,152)	(1,266,864)
Joint Administrators' Expenses		(926)	(11,976)	(4,722)	(17,624)
Joint Supervisors' Fees		-	-	(50,000)	(50,000)
IT Services		(36,669)	(24,403)	(26,640)	(87,712)
IT Services Arrears		(1,955)	(711)	-	(2,666)
Suppliers		(18,261)	(20,868)	-	(39,129)
Agents/Valuers Fees		-	(7,995)	-	(7,995)
Pre-Administration Expenses		(17,975)	-	-	(17,975)
Pre-Appointment Legal Fees		(341,107)	-	-	(341,107)
Legal fees		(478,825)	(785,353)	(650,106)	(1,914,284)
Licence Renewal		(75,450)	(26,297)	(37,725)	(139,472)
Employee Expenses Payroll Services Arrears		(2,913) (480)	- -	(2,188) -	(5,101) (480)
Payroll Services		(780)	(1,400)	(650)	(2,830)
Stationery & Postage		(444)	-	-	(444)
Contractors		(168,643)	(176,775)	(32,573)	(377,990)
Storage Costs		(523)	(298)	(298)	(1,119)
Re-Direction of Mail		(240)	-	-	(240)
Statutory Advertising		(99)	(42)	14	(127)
Rents Payable		(44,597)	-	-	(44,597)
Employee Schemes		(13,385)	(6,136)	-	(19,522)
Insurance		(61,055)	(151,737)	(38,608)	(251,399)
Wages & Salaries		(689,561)	(261,737)	(489,064)	(1,440,362)
PAYE & NI		(716,036)	(210,596)	(409,476)	(1,336,109)
Bank Charges		(791)	(204)	(202)	(1,198)
Storage Cost Arrears		(399)	(149)	-	(548)
OGA Levy Fee		(2,774)	(33,106)	(35,880)	(71,761)
Pension Schemes		(60,875)	-	-	(60,875)
Subtotal		(3,343,936)	(2,629,558)	(2,163,578)	(8,137,072)

Distributions

Floating Charge Distribution - - (354,593) (354,593) Subtotal - - (354,593) (354,593)

Current Surplus/(Deficit)	1,484,361	(1,159,568)	(194,437)	130,355
Represented by
VAT Receivable	296,384	(67,395)	(228,803)	186
Cash at Bank	1,192,486	(1,088,683)	(103,803)	-
VAT Payable	(4,509)	(3,491)	8,000	-
VAT Control Account	-	-	130,169	130,169
Total Surplus/(Deficit)	1,484,361	(1,159,568)	(194,438)	130,355

[1] Conversion rate of 1.4628 USD to 1 GBP used as rate at date of appointment. Statement of affairs figures

were submitted in USD.

[2] Funding from Huntington as permitted under the bond summons dated 14 December 2015. [3] Amount largely relates to pre-appointment VAT refund.

7 · FTI Consulting, LLP. EXPERTS WITH IMPACT

Appendix C – Detail of Administrators' receipts and payments

Receipts and payments during the Period

• 1.1 Details of the material receipts and payments during the Period in respect of the Company are summarised below.
• 1.2 A receipts and payments account for the Company during the Period is provided at Appendix B.

Receipts

• 1.3 Transfer of funds from CVA to administration bank account pending greater certainty over feasibility of the CVA.
• 1.4 £355k from Bank of America in relation to pre-appointment cash.
• 1.5 £250k exclusivity receipt from the Purchaser.
• 1.6 £136k of OPEX cover from the Purchaser.
• 1.7 Further cross funding of £1.4m.

Payments

• 1.8 All employees and project critical contractors were retained during the initial stage of the administrations to support the M&A process. The Administrators appraised the staffing levels throughout the administration and by 29 February 2016 had reduced staffing levels to 5 core employees. The remaining employees will be made redundant on completion of the sale of the Company. Employee and contractor costs to during the Period were £931k.
• 1.9 Payments in relation to licence renewal (£38k), insurance (£39k) and OGA levy fees (£36k) were made during the Period.
• 1.10 Legal fees paid in relation to the sale totaled £650k during the Period.
• 1.11 Joint Administrators' fees of £290k were paid during the period.
• 1.12 Distribution of £355k received from Bank of America to Security Trustee.

VAT

1.13 c.£130k remains outstanding. We expect this to be recovered from HMRC by the Company and utilised as repayment of cross funding for the benefit of Secured Creditors.

Appendix D – Administrators' time costs and expenses

Pre-Administration fees

Our fees incurred in relation to pre-administration advisory services totaled £1.4m. Please refer to previous reports for further disclosure on these fees.

Administrators' fee basis

Pursuant to Rules 2.39(4) of the Rules, the basis for fixing the amount of the remuneration payable to the administrator may be a commission calculated by reference to the value of the company's assets which have been realised by the administrator, but there shall in any event be taken into account–

• a. the work which, having regard to that value, was reasonably undertaken by him; and
• b. the extent of his responsibilities in administering the company's assets.

The basis of the Administrators' remuneration was by reference to time properly given by the Administrators and their staff attending to matters in the administration.

Fee approval

We have been given approval from the Secured Creditors to draw administrators fees.

A copy of the 'Creditors' Guide to Administrators' Fees' is available at:

http://www.fticonsulting-emea.com/~/media/Files/emea--files/creditors-portal/cip-emea-forms-info/creditors-guide-toadministrators-remuneration-scotland.pdf

Creditors can alternatively request a copy from us and we will provide a paper copy by post.

Post-appointment time costs and expenses

Summaries of the time costs incurred during the Period and for whole of the administration are shown below.

Summary of time and expenses in total (£)
	Time Costs	Billed	Billed in	Cat 1	Billed	Billed in	Cat 2 Billed	Billed in
Company	Incurred	Previously	Period	Expenses	Previously	Period	Expenses Previously	Period		Written off
Iona	1,700,006	(976,712)	(290,152)	20,898	(12,902)	(4,722)	0	0	0	436,417
	1,700,006	(976,712)	(290,152)	20,898	(12,902)	(4,722)	0	0	0	436,417

Summary of time and expenses in period (£)
	Time Costs	Billed in	Cat 1	Billed in	Cat 2 Billed in
Company	Incurred	Period	Expenses	Period	Expenses Period		Written off
Iona	419,616	(290,152)	2,627	(2,543)	0	0	129,548
	419,616	(290,152)	2,627	(2,543)	0	0	129,548

An analysis of the Administrators' time in accordance with the provisions of SIP9, which provides details of the activity costs incurred by staff grade to date is enclosed overleaf.

The main areas of our work have been as follows

Administration and planning

• Formalities in respect of the Administration together with the planning, and execution of, an appropriate Administration exit route.
• Other Administrative duties including accounting for receipts and payments, completing checklists and reviews relating to both the Administration and any subsequent liquidation, cashiering and reconciliations, and internal case management and maintenance.
• Complying with statutory formalities including relevant filings and statutory communications.

Realisation of assets

• Updating and delivering a CVA of the Company.
• Continuation of activities relating to the sale of the Company.

• Liaising with OGA / DECC in respect of the above and the business generally.

• Liaising with licence partner in relation to licence interests.

• Dealing with necessary legal documentation SPA's, releases and consents.
• Achieving the exchange and subsequent completion of an SPA with Decipher

Creditors

• Continued communication with the Company's creditors.
• Agreeing creditor claims including unsecured creditors for voting purposes in the CVA

Tax

• Communications with relevant tax authorities including the filing of post appointment tax and VAT returns.
• Filing pre appointment tax returns.
• Tax support for disposal transactions.

Reporting

Preparing statutory communication with creditors.

In addition the Administrators have incurred Category 1 (out of pocket) expenses of £2,627 and no Category 2 expenses during the Period.

Category 1 expenses are not subject to creditor approval. Category 2 disbursements do require approval from creditors and relate to services provided to the office holder by associated company and costs which are apportioned overheads such as mileage and data storage. Further details in relation to this can be found at Appendix F together with additional information in relation to our policy on staffing, the use of subcontractors, and details of our current charge out rates by staff grade.

Administrators' fee estimate

Fee estimates of £665,048 were included in the Administrators proposals.

The time costs incurred to date are £1,700,006. Of this amount £1,266,864 has been billed, with the remainder being written off.

During the Period fees of £290,152 have been billed.

Time costs have exceeded the estimate due to the protracted timeframe and complexity of the transaction.

As Administrators' Fee estimates are not a requirement in accordance with the Scottish Rules, further approval is not required in relation to the Company's fees that exceed the estimate provided in the proposals.

Appendix E – Time cost analysis

Iona Energy Company (UK) Limited - Analysis of Administrators' Time Costs In Accordance with SIP9 for the period 6 January 2016 to 18 April 2017

		Senior Managing		Sr Director /	Senior Consultant /
Task		Director	Managing Director	Director	Consultant	Associate	Total Time	Total Cost	Average Cost
Administration and Planning
Strategy and planning	A1	3.0	66.1	0.2	20.1	1.0	90.4	45,378.4	502.0
Initial actions	A2	1.0	3.6	4.0	-	-	8.6	4,253.6	494.6
Appointment and related formalities	A3	0.5	1.3	-	8.3	3.0	13.1	2,939.2	224.4
Receipts and payments accounts	A4	-	-	-	89.7	56.0	145.7	34,362.8	235.8
Checklist / Reviews / Filing	A5	-	8.8	-	96.6	28.9	134.3	37,730.0	280.9
Cashiering and reconciliations	A6	-	21.8	25.2	31.8	48.8	127.6	38,433.6	301.2
Bonding and IPS maintenance	A7	-	-	-	9.7	-	9.7	1,629.6	168.0
Case Admin	A8	10.0	-	66.6	12.7	4.0	93.3	38,306.0	410.6
Subtotal		14.5	101.6	96.0	268.9	141.7	622.7	203,033.2
Investigations
Directors questionnaire/checklists	B2	-	1.5	-	-	-	1.5	834.0	556.0
Statement of affairs	B3	-	0.5	-	-	-	0.5	278.0	556.0
Reports of Directors' conduct	B4	-	-	-	4.0	-	4.0	1,408.0	352.0
Books and records	B5	6.0	-	-	-	-	6.0	3,816.0	636.0
Electronic records	B6	-	-	15.2	-	-	15.2	6,140.8	404.0
Other investigations	B7	7.0	5.4	-	-	-	12.4	7,454.4	601.2
Subtotal		13.0	7.4	15.2	4.0	0.0	39.6	19,931.2
Realisation of assets
Cash and investments	C 1	-	6.4	-	-	0.6	7.0	3,661.6	523.1
Sale of business	C 2	303.5	807.9	209.2	203.9	0.8	1,525.3	812,518.4	532.7
Book debts	C 4	3.0	4.6	-	-	-	7.6	4,465.6	587.6
Stock and WIP	C 5	-	0.8	-	-	-	0.8	444.8	556.0
Property, plant and vehicles	C 6	1.0	-	17.7	5.1	1.2	25.0	9,489.2	379.6
Other assets, incl. licences	C 7	-	69.7	42.1	7.9	-	119.7	57,159.6	477.5
Health & Safety / Insurance / Regulatory	C 8	1.5	26.1	-	0.3	-	27.9	15,644.4	560.7
Legal issues/litigation	C 9	2.0	3.9	-	-	-	5.9	3,440.4	583.1
Fixed charge property	C10	5.0	-	-	-	-	5.0	3,180.0	636.0
Subtotal		316.0	919.4	269.0	217.2	2.6	1,724.2	910,004.0
Trading
Ongoing trading / monitoring	D2	6.0	58.7	1.2	7.2	0.4	73.5	40,330.0	548.7
Closure of trading	D3	-	1.3	-	24.0	-	25.3	6,558.0	259.2
Employees	D4	4.0	5.1	-	8.5	-	17.6	7,646.8	434.5
Subtotal		10.0	65.1	1.2	39.7	0.4	116.4	54,534.8
Creditors (correspondence and claims)
Unsecured creditors	E1	26.0	11.5	24.0	61.2	0.6	123.3	52,931.6	429.3
Secured creditors	E2	4.0	34.2	10.0	2.4	-	50.6	26,632.8	526.3
Employees	E4	-	25.1	-	7.0	-	32.1	15,515.6	483.4
Lease creditors	E7	-	0.5	-	-	-	0.5	278.0	556.0
Subtotal		30.0	71.3	34.0	70.6	0.6	206.5	95,358.0
Tax
Initial reviews CT and VAT	F 1	-	1.5	-	-	-	1.5	900.0	600.0
Pre-appointment CT	F 2	-	30.5	-	58.0	7.5	96.0	33,640.0	350.4
Pre-appointment VAT	F 3	1.0	3.7	18.5	3.1	-	26.3	13,267.2	504.5
Post appointment CT	F 4	-	11.4	-	46.7	2.6	60.7	17,822.8	293.6
Post appointment VAT	F 5	1.0	8.7	8.5	10.3	22.5	51.0	17,408.8	341.3
Tax advice on transactions	F 6	1.0	296.3	18.1	-	1.6	317.0	189,075.2	596.5
Other post appointment tax	F 7	-	3.0	-	-	0.4	3.4	1,876.8	552.0
Subtotal		3.0	355.1	45.1	118.1	34.6	555.9	273,990.8
Reporting
SIP16	G1	1.0	15.2	-	0.3	-	16.5	9,137.6	553.8
Proposals	G2	3.0	3.0	23.0	17.9	-	46.9	15,875.2	338.5
Other statutory reports/meetings	G3	-	10.8	122.3	106.3	4.3	243.7	95,662.4	392.5
Secured creditor reports	G4	2.0	13.4	-	38.7	-	54.1	22,479.2	415.5
Subtotal		6.0	42.4	145.3	163.2	4.3	361.2	143,154.4
Total Time by Grade		392.5	1,562.3	605.8	881.7	184.2	3,626.5
Total Cost by Grade		250,558.0	885,931.6	253,708.8	278,620.4	31,187.6	1,700,006.4
Average by Grade		638.4	567.1	418.8	316.0	169.3	468.8
		Time Costs	Category 1	Category 2	Total
Total Costs to Date		1,700,006.4	20,898.0	0.0	1,720,904.4
Amount Billed		(1,266,864.2)	(17,623.6)	0.0	(1,284,487.8)
Written off		433,142.3	3,274.4	0.0	436,416.6

Appendix E – Time cost analysis

Iona Energy Company (UK) Limited - Analysis of Administrators' Time Costs In Accordance with SIP9 for the period 6 December 2016 to 18 April 2017

		Senior Managing		Sr Director /	Senior Consultant /
Task		Director	Managing Director	Director	Consultant	Associate	Total Time	Total Cost	Average Cost
Administration and Planning
Strategy and planning	A1	-	25.1	-	-	-	25.1	13,721.2	546.7
Receipts and payments accounts	A4	-	-	-	25.2	16.2	41.4	11,816.0	285.4
Checklist / Reviews / Filing	A5	-	-	-	24.3	13.8	38.1	11,090.8	291.1
Cashiering and reconciliations	A6	-	-	-	0.6	15.0	15.6	2,786.4	178.6
Case Admin	A8	-	-	-	11.6	-	11.6	4,176.0	360.0
Subtotal		0.0	25.1	0.0	61.7	45.0	131.8	43,590.4
Realisation of assets
Cash and investments	C 1	-	-	-	-	0.6	0.6	103.2	172.0
Sale of business	C 2	44.0	220.3	181.7	115.9	0.8	562.7	277,904.8	493.9
Health & Safety / Insurance / Regulatory	C 8	-	4.4	-	-	-	4.4	2,504.0	569.1
Legal issues/litigation	C 9	-	0.5	-	-	-	0.5	278.0	556.0
Subtotal		44.0	225.2	181.7	115.9	1.4	568.2	280,790.0
Trading
Ongoing trading / monitoring	D2	-	31.2	1.2	-	0.4	32.8	18,315.2	558.4
Employees	D4	4.0	5.1	-	-	-	9.1	5,390.8	592.4
Subtotal		4.0	36.3	1.2	0.0	0.4	41.9	23,706.0
Creditors (correspondence and claims)
Unsecured creditors	E1	-	-	-	1.0	0.2	1.2	454.4	378.7
Secured creditors Employees	E2 E4	- -	9.3 -	- -	- 2.0	- -	9.3 2.0	5,234.8 720.0	562.9 360.0
Subtotal		0.0	9.3	0.0	3.0	0.2	12.5	6,409.2
Tax
Pre-appointment CT	F 2	-	-	-	1.5	-	1.5	276.0	184.0
Pre-appointment VAT	F 3	-	-	-	3.1	-	3.1	1,116.0	360.0
Post appointment CT	F 4	-	6.5	-	14.7	-	21.2	6,708.8	316.5
Post appointment VAT	F 5	-	-	3.5	7.5	11.9	22.9	6,874.8	300.2
Tax advice on transactions	F 6	-	47.5	6.3	-	-	53.8	32,599.6	605.9
Other post appointment tax	F 7	-	0.5	-	-	0.4	0.9	376.8	418.7
Subtotal		0.0	54.5	9.8	26.8	12.3	103.4	47,952.0
Reporting
Other statutory reports/meetings	G3	-	3.0	-	27.5	4.3	34.8	12,298.0	353.4
Secured creditor reports	G4	2.0	4.9	-	2.1	-	9.0	4,870.0	541.1
Subtotal		2.0	7.9	0.0	29.6	4.3	43.8	17,168.0
Total Time by Grade		50.0	358.3	192.7	237.0	63.6	901.6
Total Cost by Grade		32,752.0	205,756.0	82,367.6	87,704.0	11,036.0	419,615.6
Average by Grade		655.0	574.3	427.4	370.1	173.5	465.4
		Time Costs	Category 1	Category 2	Total
Total Costs During Period		419,615.6	2,626.6	0.0	422,242.2
Amount Billed During Period		(290,151.8)	(2,542.6)	0.0	(292,694.3)
Written off		129,463.9	84.0	0.0	129,547.9

Appendix F – Additional Information in relation to Administrators' fees pursuant to SIP9

Detailed below is FTI's policy in relation to:

• staff allocation and the use of sub-contractors;
• professional advisors; and
• disbursements.

Staff allocation and the use of subcontractors

Our general approach to resourcing our assignments is to allocate staff with the skills and experience to meet the specific requirements of the case.

The constitution of the case team will usually consist of a Senior Managing Director, Managing Director, Director, Senior Consultant and Consultant. The exact constitution of the case team will depend on the anticipated size and complexity of the assignment.

With regard to support staff, we would advise that time spent by cashiers in relation to specific tasks on an assignment is charged. Only if there is a large block of time incurred by a member of the secretarial team, e.g., report compilation and distribution, do we seek to charge and recover our time in this regard.

Professional advisors

On this assignment we have used the professional advisors listed below. We have also indicated alongside, the basis of our fee arrangement with them, which is subject to review on a regular basis.

Name of professional advisor	Basis of fee arrangement	Fees paid to date (£'000)
CMS Cameron McKenna LLP and Thomessen (legal advice)	Hourly rate and disbursements	857
Akin Gump LLP (legal advice – bondholder & administrators)	Hourly rate and disbursements	1,390
HBJ Gateley (Huntington license matters)	Hourly rate and disbursements	43
Appleby (Cayman law advice)	Hourly rate and disbursements	21
Insolvency Support Services Limited	Hourly rate and disbursements	3
RSM (payroll services)	Fixed fee per payroll	3
Sweeney Kincaid (asset realisations)	Percentage of realisations	8

Our choice was based on our view of their experience and ability to perform this type of work, the complexity and nature of the assignment and the basis of our fee arrangement with them.

We have utilized the services of other teams within FTI Consulting LLP to assist with the Administration processes. The fees of our tax, technology and strategic communication teams have been included in our SIP9 analysis provided to creditors of the Company and allocated to the work streams and entities to which their work related.

We consider that the rates chargeable for these services are in line with general market practice and that the service is comparable to similar firms of professional advisors. In addition, by working closely with our internal teams, we believe a more coordinated and cost-effective approach to the Administration work streams has been possible.

Disbursements

Category 1 disbursements do not require approval by creditors. The type of disbursements that may be charged as a Category 1 disbursement to a case generally comprise of external supplies of incidental services specifically identifiable to the case, such as postage, case advertising, invoiced travel and external printing, room hire and document storage. Also chargeable will be any properly reimbursed expenses incurred by personnel in connection with the case.

Category 2 disbursements do require approval from creditors. These disbursements can include costs incurred which relate to payments due to associated companies for the provision of services to the office holder.

On this assignment we have incurred category 2 disbursements in the following classes. We have also indicated alongside, the basis of calculation of these costs.

Type of expense	Basis of incurring cost
Postage and fulfilment by Williams Lea	Costs incurred based on numbers of letters printed
Mileage	40 pence per mile
IT equipment ordered internally	Cost price
Subsistence for meetings	Charge based on number of attendees per meeting
Data Management (10 Units)	£25 per unit per month

No category 2 expenses have been billed to date

Charge-out rates

A schedule of FTI's charge-out rates, as agreed with the Secured Creditor for this assignment is as follows. We note that this represents a discount against FTI's standard charge-out rates effective 1 January 2016 / 2017. Charge-out rates are reviewed annually. Please note our minimum time charging unit is 6 minutes.

Grade	Insolvency £ (Per hour) 2016/2017	Tax £ (Per hour) 2016/2017
Senior Managing Director	636/664	716/736
Managing Director	556/572	600/616
Senior Director	516/528	556/572
Director	476/476	540/556
Senior Consultant	404/420	460/472
Consultant	352/360	328/340
Analyst (experienced)	228/236	244/256
Analyst (junior)	168/172	180/184

Appendix G – Extracts from the Insolvency (Scotland) Rules 1986

1.1 Rule 7.35 - Information about time spent on a case — administration and company voluntary arrangements

(1) Subject as set out in this Rule, a person ("the relevant person") who has acted or is acting as—

• (a) a nominee in respect of a proposed voluntary arrangements;
• (b) a supervisor in respect of a voluntary arrangement; or

(c) an administrator,

must, on request in writing by any person mentioned in paragraph (2), supply free of charge to that person a statement of the kind described in paragraph (3).

(2) The persons referred to in paragraph (1) are—

(a) any director of the company, or

(b) where the proposed voluntary arrangement has been approved, or where the company is in administration, any creditor or member of the company.

(3) The statement referred to in paragraph (1)—

(a) must comprise the following details—

(i) the total number of hours spent on all or any of the proposal, the voluntary arrangement and administration by the relevant person, and any staff assigned to the case during that period;

(ii) for each grade of individual so engaged, the average hourly rate at which any work carried out by individuals in that grade is charged; and

(iii) the number of hours spent by each grade of staff during the period covered by the statement; and

(b) must cover the period beginning with the date of the appointment of the relevant person as nominee, supervisor or administrator (whichever is the earlier), as the case may be, and ending—

(i) with the date next before the date of making the request on which the relevant person has completed any period as nominee, supervisor or administrator, which is a multiple of 6 months, or (ii) where the relevant person has ceased to act in any capacity in relation to the proposal, the voluntary arrangement or administration, the date upon which the person so ceased.

(4) No request pursuant to this Rule may be made where more than 2 years has elapsed since the relevant person ceased to act in any capacity in relation to the proposal, any voluntary arrangement arising out of the approval of the proposal or administration.

(5) Any statement required to be provided to any person under this Rule must be supplied within 28 days of the date of the receipt of the request by the person required to supply it.

Rule 2.39A - Appeal against fixing of remuneration

(6) If the administrator's remuneration [and outlays have] been fixed by the creditors' committee or by the creditors, any creditor or creditors of the company representing in value at least 25 percent of the creditors may apply to the court not later than 8 weeks after the end of an accounting period for an order that the administrator's remuneration [or outlays be reduced on the grounds that they are, in all the circumstances, excessive].

(7) If the court considers the application to be well-founded, it shall make an order fixing the remuneration at a reduced amount or rate.

(8) The court may, if it appears to be a proper case, order the expenses of the creditor making the application to be paid as an expense of the administration.

Joint Administrators' Final Report

CRITICAL THINKING AT THE CRITICAL TIME™

About FTI Consulting

FTI Consulting, LLP. is a global business advisory firm dedicated to helping organisations protect and enhance enterprise value in an increasingly complex legal, regulatory and economic environment. FTI Consulting professionals, who are located in all major business centers throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges in areas such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and restructuring.

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William Marsden 020 3727 1342 william.marsden@fticonsulting.com