Aim Admission

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. You must read the following disclaimer before continuing. This disclaimer
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document you agree to be bound by the terms and conditions set out in this disclaimer, including any modifications to them from time to time.
Prospective investors should read the whole text of this document and should be aware that an investment in Rame Energy plc (the “Company”) is speculative and
involves a higher than normal degree of risk. The attention of prospective investors is drawn in particular to the section entitled ‘‘Risk Factors’’ set out in Part III of
this document. All statements regarding the Company’s business, financial position and prospects should be viewed in light of these risk factors.
If you are in any doubt about the contents of this document, you should consult an independent professional adviser authorised under the Financial Services and
Markets Act 2000 (as amended) (“FSMA”) if you are taking advice in the United Kingdom, under the Financial Services (Jersey) Law 1998 (as amended) if you are
taking advice in Jersey or if you are taking advice in any other jurisdiction from another appropriately authorised and qualified independent financial adviser who
specialises in advising on the acquisition of shares and other securities before taking any action.
A copy of this document has been delivered to the Registrar of Companies in Jersey in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002
and he has given, and has not withdrawn, his consent to its circulation. The Jersey Financial Services Commission (“Commission”) has given, and has not withdrawn, its consent
under Article 2 of the Control of Borrowing (Jersey) Order 1958 to the issue of securities in the Company. It must be distinctly understood that, in giving these consents, neither
the Registrar of Companies in Jersey nor the Commission takes any responsibility for the financial soundness of the Company or for the correctness of any statements made, or
opinions expressed, with regard to it. If you are in any doubt about the contents of this document you should consult your stockbroker, bank manager, solicitor, accountant or
other financial adviser. The Directors of the Company have taken all reasonable care to ensure that the facts stated in this document are true and accurate in all material respects,
and that there are no other facts the omission of which would make misleading any statement in the document, whether of facts or of opinion. All the Directors accept responsibility
accordingly. It should be remembered that the price of securities and the income from them can go down as well as up.
Application will be made for the entire issued and to be issued ordinary share capital of the Company (the “Enlarged Issued Share Capital”) to be admitted to trading on AIM.
It is expected that dealings in the Ordinary Shares will commence on AIM on or around 4 April 2014. It is emphasised that no application has been made or is being made for
the admission of these securities to the Official List. The Ordinary Shares are not dealt in on any market and, apart from the application for admission to trading on AIM, no
application has been or is intended to be made for the Ordinary Shares to be admitted to trading on any such other market.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established
companies. AIM securities are not admitted to the Official List of the UK Listing Authority. A prospective investor should be aware of the risks of investing in such
companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Each AIM
company is required pursuant to the AIM Rules for Companies to have a nominated adviser. The nominated adviser is required to make a declaration to the London
Stock Exchange on admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. The London Stock Exchange has not itself examined or
approved the contents of this document.
This document is an admission document prepared in accordance with the AIM Rules for Companies in connection with, amongst other matters, the Placing and the
admission of the Enlarged Issued Share Capital to trading on AIM. This document does not contain an offer or constitute any part of an offer to the public within the meaning
of Sections 85 and 102B of FSMA. This document does not constitute a prospectus for the purposes of the Prospectus Rules of the Financial Conduct Authority (“FCA”) and has
not been approved by or filed with the FCA. This document is, however, a prospectus for the purposes of the Companies (Jersey) Law 1991 (as amended) and the Companies (General
Provisions) (Jersey) Order 2002.
The Directors, whose names appear on page 4 of this document, and the Company accept responsibility for the information contained in this document. All the Directors accept
individual and collective responsibility for compliance with the AIM Rules for Companies. To the best of the knowledge and belief of the Company and the Directors (who
have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to
affect the import of such information. In connection with this document, no person is authorised to give any information or make any representation other than as contained
in this document.
RAME
ENERGY PLC
(incorporated in Jersey with registration number 112494)
Placing of 7,222,223 Ordinary Shares at 18p per share
and
Admission to trading on AIM
Nominated Adviser and Broker
Northland Capital Partners Limited (“Northland”), which is authorised and regulated in the United Kingdom by the FCA, is acting as Nominated Adviser and Broker to the
Company in connection with the Placing and the proposed admission of the Enlarged Issued Share Capital to trading on AIM. Its responsibilities as the Company’s Nominated
Adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any other person
in respect of his decision to acquire Ordinary Shares in the Company in reliance on any part of this document. No representation or warranty, express or implied, is made by
Northland as to any of the contents of this document (without limiting the statutory rights of any person to whom this document is issued). No liability whatsoever is accepted by
Northland for the accuracy of any information or opinions contained in this document for which the Directors are solely responsible, or for the omission of any information from
this document for which it is not responsible. Northland will not be offering advice and will not otherwise be responsible to any person other than the Company for providing the
protections afforded to customers of Northland or for providing advice in relation to the contents of this document or any other matter. In particular the information contained in
this document has been prepared solely for the purpose of the Placing and Admission and is not intended to inform or be relied upon by any subsequent purchasers of Ordinary
Shares (whether on or off exchange) and accordingly no duty of care is accepted in relation to them.
This document is only directed at persons in the United Kingdom: (i) who are of a kind described in Article 19(1), 19(5) (investment professionals) or 49(2) (high net worth companies,
unincorporated associations, etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005; or (ii) who are otherwise permitted by law to receive it.
The information contained in this document does not constitute any legal, business, financial or tax advice, and no representation is made to any person regarding the legality
of an investment in the Ordinary Shares under any laws or regulations. Each potential acquirer of the Ordinary Shares should determine for itself the relevance of the information
contained in this document and its acquisition of the Ordinary Shares should be based upon such independent investigations and consultations with its own tax, legal, business
and other advisers as it deems necessary.
This document does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy shares to any person in any jurisdiction to whom or in which such offer
or solicitation is unlawful. The Ordinary Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or under the securities
legislation of any state of the United States. The relevant clearances have not been, and will not be, obtained from the Securities Commission of any province or territory of Canada;
this document has not been, nor will it be, lodged with, or registered by, the Australian Securities and Investments Commission; and no registration statement has been, or will
be, filed with the Japanese Ministry of Finance in relation to the Ordinary Shares. Subject to certain exceptions, the Ordinary Shares may not, directly or indirectly, be offered
or sold within Australia, Canada, Japan, Republic of Ireland, Republic of South Africa or the United States or offered or sold to a person within Australia, Canada, Japan,
Republic of Ireland, Republic of South Africa or the United States.
No person has been authorised to give any information or make any representation in the context of any offer of Ordinary Shares (including the Placing Shares) other than as
contained in this document, and if any such information or representation is given or made in the context of any offer of Ordinary Shares, any such information or representation
must not be relied upon as having been authorised.
Copies of this document will be available free of charge during normal business hours on any weekday (except Saturdays and public holidays) at the offices of Northland Capital
Partners Limited 131 Finsbury Pavement, London EC2A 1NT, United Kingdom from the date of this document and shall remain available for a period of one month from
Admission, and will be also available on the Company’s website: www.rame-energy.com.
FORWARD-LOOKING STATEMENTS
This document includes “forward-looking statements” which includes all statements other than statements of historical facts, including, without limitation, those regarding the
Group’s financial position, business strategy, plans and objectives of management for future operations and any statements preceded by, followed by or that include forward-looking
terminology such as the words “targets”, “believes”, “estimates” “expects”, “aims”, “intends”, “can”, “may”, “anticipates”, “would”, “should”, “could” or similar expressions
or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group’s control that could cause
the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment
in which the Group will operate in the future. Among the important factors that could cause the Company’s actual results, performance or achievements to differ materially from
those in forward-looking statements include those factors in Part III entitled “Risk Factors” and elsewhere in this document. These forward-looking statements speak only as at
the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As
a result of these factors, the events described in the forward-looking statements in this document may not occur.
CONTENTS
Admission Statistics and Expected Timetable of Principal Events
3
Directors and Advisers
4
Definitions
5
Part I
Information on Rame
9
1.
Introduction
9
2.
Background
9
3.
Group Structure
12
4.
Business Overview
13
5.
Summary Financial Information
16
6.
Market and Competition
17
7.
Strategy
17
8.
Current Trading and Prospects
18
9.
The Placing
18
10.
Directors and Senior Management
19
11.
Reasons for Admission
20
12
Admission and Dealings
21
13.
CREST and Settlement
21
14.
Lock-ins and Orderly Market Undertakings
21
15.
Corporate Governance
21
16.
Dividend Policy
22
17.
Share Option Scheme
22
18.
Taxation
22
19.
Takeover Code
22
20.
Additional Information
23
Part II
Chilean Energy Market
24
Part III
Risk Factors
27
Part IV
Financial Information
33
(a)
Accountants’ Report on the Company
33
(b)
Accountants’ Report on the Operating Group
40
(c)
Unaudited Interim Financial Information on the Operating Group
67
(d)
Unaudited Pro Forma Statement of Aggregated Net Assets
73
Part V
Additional Information
76
2
ADMISSION STATISTICS
Placing Price per Placing Share
18p
Number of Ordinary Shares in issue at the date of this document
82,480,500
Number of Ordinary Shares to be issued pursuant to the Placing
7,222,223
Number of Admission Shares
5,566,728
Number of Ordinary Shares in issue following Admission
95,269,451
Gross proceeds of the Placing and the Amati Convertible Loan Notes
£2,100,000
Estimated net proceeds of the Placing and the Amati Convertible Loan Notes
to be received by the Company
£1,700,000
Number of Warrants in issue immediately following Admission
1,077,695
Number of Ordinary Shares convertible pursuant to the Amati Convertible
Loan Notes (assuming conversion of principal only)
up to 4,444,445
Percentage of the Enlarged Issued Share Capital subject to the Placing
7.6 per cent.
AIM symbol
RAME
ISIN number
JE00BBD8GG53
SEDOL number
BBD8GG5
Market capitalisation of the Company at the Placing Price following Admission
£17,148,501
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of this document
31 March 2014
Admission to trading on AIM effective and commencement of dealings in the
Ordinary Shares
4 April 2014
CREST stock accounts credited in respect of the Placing Shares in uncertificated form
4 April 2014
Definitive share certificates in respect of the Placing Shares in certificated form
despatched by
11 April 2014
Each of the times and dates in the above timetable are subject to change. All times in this document are
London times, unless otherwise stated.
EXCHANGE RATES
Save as otherwise disclosed, as at 28 March 2014, being the date immediately prior to the publication of
this document, the exchange rate of British Pound Sterling to United States Dollars used throughout this
document is:
£1 : US$1.66
3
DIRECTORS AND ADVISERS
Directors
Andrew Richard Haig Cameron (Non-Executive Chairman)
Timothy (Tim) Peter Giles Adams (Chief Executive Officer)
Jan James Alexander Anthony Gawel (Chief Financial Officer)
Pieter Louis Denise D’haen (Chief Operating Officer)
Fernando Patricio Cubillos (Non-Executive Director)
William (Bill) James Fisher (Non-Executive Director)
Company Secretary
Appleby Secretaries (Jersey) Limited
Registered Office
13-14 Esplanade
St Helier
Jersey JE1 1BD
Channel Islands
Telephone Number
+44(0)1752 565 638
Principal Place of Business
Seawind House
98-99 Hotham Place
Millbridge
Plymouth PL1 5NE
United Kingdom
Company website
www.rame-energy.com
Nominated Adviser and Broker
Northland Capital Partners Limited
131 Finsbury Pavement
London EC2A 1NT
United Kingdom
Auditors and Reporting Accountants
Crowe Clark Whitehill LLP
St. Brides House
10 Salisbury Square
London EC4Y 1HB
United Kingdom
(Member firm of the Institute of Chartered
Accountants in England and Wales)
Solicitors to the Company as to English and Singaporean law
Watson, Farley & Williams LLP
15 Appold Street
London EC2A 2HB
United Kingdom
Watson, Farley & Williams Asia Practice LLP
6 Battery Road #28-00
Singapore 049909
Solicitors to the Company as to Jersey law
Appleby
13-14 Esplanade
St Helier
Jersey JE1 1BD
Channel Islands
Solicitors to the Company as to Chilean law
Cruz & Cia Abogados S.A.
Agustinas 640, piso 15
Santiago
Chile
Solicitors to the Nominated Adviser and Broker
Chadbourne & Parke (London) LLP
Regis House
45 King William Street
London EC4R 9AN
United Kingdom
Registrars
Capita Registrars (Jersey) Limited
12 Castle Street
St Helier
Jersey JE2 3RT
Channel Islands
Financial PR
St Brides Media & Finance
Chaucer House
38 Bow Lane London EC4M 9AY
United Kingdom
4
DEFINITIONS
The following definitions apply throughout this document, unless the context requires otherwise:
“Act”
the Companies Act 2006 (as amended)
“Admission”
the admission of the Enlarged Issued Share Capital to trading on
AIM becoming effective in accordance with Rule 6 of the AIM
Rules for Companies
“Admission Shares”
the 5,566,728 Ordinary Shares to be issued by the Company to
certain investors at Admission as described in paragraphs 12.8,
12.12 to 12.15 and 13.6 of Part V of this document
“AIM”
the market of that name operated by the London Stock Exchange
“AIM Rules for Companies”
the rules for AIM companies published by the London Stock
Exchange
“AIM Rules for Nominated
Advisers”
the rules for nominated advisers to AIM companies published by
the London Stock Exchange
“Amati”
Amati Global Investors Limited acting as manager on behalf of
Amati VCT plc and Amati VCT2 plc
“Amati Convertible Loan Notes” the convertible loan notes to be subscribed by Amati as further
described at paragraph 12.16 of Part V of this document
“Articles” or “Articles of
Association”
the articles of association of the Company from time to time
“Board” or “Directors”
the directors of the Company comprising the directors whose names
are set out on page 4 of this document, including any duly
authorised committee of the Board
“British Islands”
the UK, the Channel Islands and the Isle of Man
“Companies Law”
the Companies (Jersey) Law 1991 (as amended)
“Company” or “Rame”
Rame Energy plc (including, where relevant, its Subsidiaries)
“Convertible Loan Notes”
£410,000 10 per cent. convertible loan notes 2017, details of which
are set out in paragraph 12.8 of Part V of this document.
“CREST”
the electronic settlement system to facilitate the holding and
transfer of title to shares in uncertificated form operated by
Euroclear UK & Ireland Limited
“CREST Regulations”
the UK Uncertificated Securities Regulations 2001 (SI 2001
No. 3755) and the Companies (Uncertificated Securities) (Jersey)
Order 1999 (as amended)
“Disclosure Rules”
Chapter 5 of the Disclosure Rules and Transparency Rules (as
amended from time to time) of the FCA Handbook
“Enlarged Issued Share Capital” 95,269,451 Ordinary Shares, being the Existing Issued Share
Capital, the Admission Shares and the Placing Shares
“Existing Issued Share Capital”
the 82,480,500 Ordinary Shares in issue at the date of this document
“FCA”
the UK Financial Conduct Authority
“FCA Handbook”
the rules and guidance published by the FCA from time to time
under the powers given to it by FSMA
5
“FSMA”
the UK Financial Services and Markets Act 2000 (as amended)
“GDP”
Gross Domestic Product
“Group”
the Company and the Subsidiaries, further details of which are set
out in paragraph 2 of Part V of this document
“IFRS”
International Financial Reporting Standards
“ISIN”
International Security Identification Number
“London Stock Exchange”
London Stock Exchange plc
“Memorandum”
the memorandum of association of the Company from time to time
“Northland”, “Northland
Capital”, “Nominated Adviser”
or “Broker”
Northland Capital Partners Limited, Nominated Adviser and Broker
to the Company on Admission
“Official List”
the Official List of the United Kingdom Listing Authority
“Operating Group”
Rame Energy Pte Ltd and its Subsidiaries
“Ordinary Shares”
ordinary shares of no par value in the capital of the Company
“Panel”
the panel on takeovers and mergers in the United Kingdom
“Pires”
Pires Investments PLC
“Placees”
the subscribers for Placing Shares pursuant to the Placing
“Placing”
the conditional placing by Northland, as agent for the Company, of
7,222,223 Placing Shares pursuant to the terms of the Placing
Agreement at the Placing Price
“Placing Agreement”
the conditional placing agreement dated 31 March 2014 between
the Company, the Directors and Northland in relation to the placing
arrangements, details of which are set out in paragraph 12.1 of
Part V of this document
“Placing Price”
18p per Placing Share
“Placing Shares”
the 7,222,223 Ordinary Shares to be issued pursuant to the Placing
“Project Companies”
Proyecto Raki SpA and Proyecto Huajache SpA
“Prospectus Rules”
rules made by the FCA pursuant to sections 73A(1) and (3) of
FSMA, for the purposes of Part VI of FSMA, as amended from
time to time
“QCA Guidelines”
the Guidelines of the Quoted Companies Alliance
“Rame Energy”
Rame Energy Pte Ltd, a wholly owned subsidiary of the Company
registered in Singapore
“Registrar” or “Capita”
Capita Registrars (Jersey) Limited
“Regulatory Information
Service Provider” or “RIS”
a regulatory information service provider that is approved by
the FCA
“Santander”
Santander Investment Chile Limitada
“Santander Shareholders’
Agreement”
the shareholders’ agreement between Eólicos del Sur SpA and
Santander dated 20 December 2013, as amended, details of which
are set out in paragraph 12.11 of Part V of this document.
6
“Santander SPA”
the share purchase agreement between Eólicos del Sur SpA and
Santander dated 20 December 2013, as amended, details of which
are set out in paragraph 12.10 of Part V of this document.
“Seawind Holding”
Seawind Holding SpA, a wholly owned subsidiary of Rame Energy
registered in Chile
“Seawind International”
Sea Wind International Limited, a wholly owned subsidiary of
Rame Power, registered in England & Wales
“Seawind Services Limited”
an entity previously owned by Tim Adams and James Wilson and
managed by the Group’s personnel which was sold in May 2011 to
3 Power Inc. and does not form part of the Group
“Shareholders”
holders of Ordinary Shares from time to time
“SPV”
special purpose vehicle, a legal entity created to serve a
particular function
“Subsidiaries”
Rame Energy Pte. Ltd., Sea Wind International Limited, Seawind
Marine Services Limited, Seawind Marine Limited, Seawind Holding
SpA, Ingenieria Seawind Sudamerica SpA, Seawind Service SpA,
Inversiones Pelicano SpA, Vientos Andinos SpA, Eolicos Del Sur
SpA, Proyecto Chome SpA, Proyecto Raki SpA, Proyecto Huajache
SpA, Proyecto Calbuco SpA, Proyecto Calama SpA and Proyecto
Bellavista SpA, further details of all of which can be found at
paragraph 2.7 of Part V of this document
“Takeover Code”
the City Code on Takeovers and Mergers, administered by the Panel
“UK” or “United Kingdom”
the United Kingdom of Great Britain and Northern Ireland
“UK Corporate Governance Code” the UK Corporate Governance Code on the principles of good
corporate governance and code of best practice published by the
Financial Reporting Council in September 2012
“UK Listing Authority”
a division of the FCA acting as a competent authority for the
purposes of Part VI of FSMA
“uncertificated” or “in
uncertificated form”
an Ordinary Share recorded on the Company’s register as being
held in uncertificated form in CREST and title to which, by virtue
of the CREST Regulations, may be transferred by means of CREST
“US$”
US dollar
“VCT”
Venture Capital Trust
“Warrants”
the warrants to subscribe for a total of 1,077,695 Ordinary Shares,
in issue as at the date of this document, details of which are set out
in paragraphs 12.6 and 12.9 of Part V of this document
“£”, “GBP” or “Sterling”
British pound sterling
7
GLOSSARY OF TECHNICAL TERMS
The following definitions apply throughout this document, unless the context requires otherwise:
“CDM”
Clean Development Mechanism
“CDEC”
Centro de Despacho Economico de Carga, the organisation responsible for the
Chilean electricity grid
“CGED”
a Chilean utility company
“EPC”
engineering, procurement and construction
“GW”
gigawatt, a unit of power equal to 1,000 MW
“GWh”
gigawatt hour, a unit of energy equivalent to one GW of power expended for
one hour of time
“ICC”
connection criteria report
“IEC 61400”
a class of international standards regarding wind turbines set by the
International Electrotechnical Commission
“IPP”
independent power producer, non-public entity which owns facilities to
generate electric power for sale to utilities and end-users
“kW”
kilowatt, a unit of power equal to 1,000 Watts
“kV”
kilovolt, a unit of charge
“MW”
megawatt, a unit of power equal to one million watts
“MWh”
megawatt hour, a unit of energy equivalent to one MW of power expended for
one hour of time
“NCRE”
non-conventional renewable energy
“NTCO DS 244”
technical standard for connection and operation for small distributed generators
at medium voltage
“OECD”
the Organisation for Economic Co-operation and Development
“PMGD”
small distributed generator
“PPA”
power purchase agreement for a long-term energy supply
“SCR”
network connection application
“SEC”
Superintendencia de Electricidat y Combustibles, the Superintendency of
Electricity and Fuels in Chile
“SIC”
Sistema Interconectado Central, the electricity grid that serves the central part
of Chile
“SING”
System Interconectado del Norte Grande, the electricity grid that serves the
northern part of Chile
“SODAR”
Sonic Detection and Ranging, a meteorological instrument used as a wind
profiler to measure the scattering of sound waves by atmospheric turbulence
“Turnkey”
an agreement in which a contractor designs, constructs and manages a
project until it is ready to be handed over to the client and operation can
begin immediately
“Watt”
unit of power
8
PART I
INFORMATION ON RAME
1.
Introduction
Rame is an international energy consultant, engineer and power project developer with expertise in a
number of energy sources such as wind, diesel and solar. Rame now intends to operate its own power
projects with a focus on providing energy directly to large industrial consumers.
From the Group’s head office in Plymouth, members of the Group have provided project management and
EPC services to the energy related market globally since early 2005. Since establishing an office in
Chile’s capital Santiago in 2006 under the trading name of Seawind, the Group has been at the forefront
of wind power development in the country, developing and implementing power solutions for many of
Chile’s major mining and industrial corporations, including, among others, Barrick Gold, Anglo
American, Antofagasta Minerals and Codelco.
In Central and Southeast Asia, the Group has provided proposals and consultancy services for the potential
development of wind energy projects in countries including Pakistan, Myanmar, and Thailand. The
Company has recently established Rame Energy in Singapore to further pursue opportunities in the region.
Rame is now capitalising on its experience and expertise in the energy sector to own and operate power
generation projects, with its initial focus being in Chile and thereafter globally as dictated by the needs
of its clients. Rame plans to become a niche IPP taking full advantage of opportunities created by
increasing energy costs and demands in power intensive industrial activities such as mining.
To facilitate this strategy, the Company has entered into binding agreements with Santander for the
co-financing of 15MW of wind farms across two project sites in Chile. The Project Companies entered into
conditional loan agreements for the debt package with Chilean bank Banco BICE on 25 March 2014.
Furthermore, the Company has agreed indicative terms with Santander, as well as another bank for the cofinancing of another 9 MW wind farm project in Chile. Further details are included in paragraph 4 of this
Part I below.
The Directors believe that the Group’s key strengths are:
•
Proven expertise to develop, engineer, implement and maintain generating plants
•
Strong links with the supply chain and a proven track record as a service provider to the mining and
industrial sector
•
A long established presence in the Group’s initial key market of Chile
•
An internally developed pipeline of energy projects at different stages of development supporting
the provision of additional generating capacity to meet with clients’ needs
•
Well-positioned to take advantage of the outsourcing of power requirements by large mining and
other industrial companies
•
An experienced board of directors with particular strengths in EPC, mining, project finance and
energy trading
2.
Background
The business of the Group was established in 2002 by Tim Adams and James Wilson and combined their
backgrounds in energy, marine and subsea engineering, production and shipbuilding to explore emerging
opportunities in the European offshore wind industry. This led to the concept and design by Rame of a
self-elevating offshore wind turbine installation vessel, tailored towards the efficient and economic installation
of foundations and erection of offshore wind turbines. Rame was invited to provide proposals for foundation
and turbine installation of several UK offshore wind farms, such as the Robin Rigg project, where the
Company provided construction solutions to the two joint ventures competing for the project, Kellogg Brown
Root / Vestas and CB&I John Brown / GE Wind. The Group was also involved in early stage engineering such
as proposals for the Beatrice offshore demonstrator wind farm (led by Talisman Energy Inc.).
9
In addition, Rame carried out design, supply and installation services for a number of offshore wind and
climate monitoring stations, including the Humber Gateway project (owned by E.O.N) and Moray Firth
(owned by RDP Renewables).
In 2004, Rame was contracted by Green Oak Renewable Energy to conduct a detailed evaluation of
‘Sandbank 24’, an 80 turbine offshore project in Germany. This confirmed the Group’s ability to fully
analyse all critical elements of wind power projects which would subsequently underpin the Group’s
internal development activities. In mid-2005, Rame’s long standing relationship with Barrick Gold started
with a project feasibility study to add a wind power component to the isolated diesel-powered grid system
of their Veladero mine operations in Argentina. This was followed by a wind monitoring and turbine
technology assessment at the site which commenced in December 2005. In February 2006, an agreement
was signed with Seawind Services Limited (no longer a Group company) for the Turnkey delivery of a
2 MW wind turbine high altitude prototype project to be integrated in the Veladero isolated grid system.
In January 2007, the Company reported to Barrick Gold on the potential for a wind farm based on 2 MW
wind turbines at Punta Colorada. This was followed by a turbine supply agreement mid-2007 via an
associated company for the supply of ten 2 MW wind turbines. Rame continues to offer maintenance
services for both projects.
In addition to its work in South America, Rame and/or other entities under common ownership and
management, such as Seawind Services Ltd, have worked in conjunction with Barrick Gold on potential
power projects at properties including Donlin Creek in Alaska, Golden Sunlight in Montana, and
Reko Diq in Pakistan.
In March 2006, Rame established an office in Santiago, Chile, to develop its South American business
operation and commenced work on its own portfolio of wind projects as well as seeking out further
business opportunities providing consultancy and construction services.
Rame started realising its internal project portfolio in September 2006, when a first phase of mast
monitoring equipment was installed at a dozen sites in Chile.
Rame and its management have been directly involved in the development and/or construction of
approximately 23 per cent. of the installed wind power capacity in Chile (December 2013) representing
69.5 MW, and have been instrumental in the development of potential installed capacity of close to 250
MW of wind farm projects as summarised in the table below.
Project
Size
Year
Particulars of transaction and project
Veladero*
2 MW
2007
The development, design, supply and installation of the
world’s highest altitude utility scale wind turbine,
providing power to Barrick Gold’s Veladero gold mine
was completed by Rame through an associated company.
Monte Redondo/Camarico 74 MW
2007
Rame developed the wind farm, of which 48 MW is
now operational and owned by GDF Suez.
Punta Colorada*
20 MW
2007
Rame and its management developed the project and
then supplied ten 2 MW Dewind wind turbines for
Barrick Gold. The project is now operational and the
Company provides on-going maintenance support.
El Toqui
1.5 MW
2010
Rame developed, built and commissioned this wind
farm, comprising of six 250 kW tilt down turbines,
connected to an isolated grid system for the
El Toqui mine.
Quillagua
100 MW 2009
Rame developed the wind farm project.
Hacienda Quijote
50 MW
Rame developed the wind farm and it is under contract
with Nordex.
2013
* Whilst the Group was contracted directly on, amongst other things, the project development and management, other aspects of the
project such as the equipment supply and construction supervision was formally contracted with Seawind Services Limited (no longer
a Group company)
10
Rame’s experience, expertise and track record is demonstrated by a more detailed description of key
projects as follows:
Veladero 2 MW Prototype Wind Project – client Barrick Exploraciones Argentina S.A.
In 2005 Rame engaged with Barrick Gold to investigate the application of wind energy to provide an
alternative power source for its mining operations at their Veladero gold mine, located at 13,000 ft above
sea level in the Andes mountain range in the San Juan Province of Argentina.
Rame carried out a pre-feasibility site visit and analysis, which looked at the key aspects of integrating
wind power into Barrick’s remote and weak power grid including:
•
Evaluation and analysis of the isolated, diesel generator supplied, electric grid system and how a
variable wind power plant could be integrated without compromising power quality and security
•
The variability of demand and load peaks
•
Logistics of transport to the mine and at the site
•
Preliminary assessment of the wind resource and climate parameters, with a particular focus on
blade icing and turbulent conditions in the complex terrain
•
Design of a climate monitoring campaign
Rame carried out an extensive wind monitoring campaign at the site to obtain the characteristics necessary
for the turbine evaluation. Rame installed specialist monitoring equipment able to withstand the harsh
winter conditions, consisting of a state-of-the-art SODAR (sonic detection and ranging) system to
accurately characterise the vertical wind profile, with a meteorological mast with two levels of heated
anemometers and wind vanes.
The altitude of the site meant that no standard wind turbine would be suitable to operate at the site. After
an in-depth review of the multi megawatt turbine market, Rame, through Seawind Services Limited (no
longer a Group company), worked with a turbine supplier to develop a high altitude prototype.
Construction at the site required significant road improvement works to be carried out to deliver the
turbine components, as well as innovative hydraulic devices to negotiate the blades up the 160km long
private mine access road.
The project started generating clean energy in 2008 and now contributes energy to the mine’s energy mix
as part of a hybrid wind diesel system. This is the highest altitude that a utility scale multi-megawatt
wind turbine has been successfully deployed.
Punta Colorada 20 MW Wind Farm Project – client Compañía Barrick Chile Generación Ltda.
The Punta Colorada site is a level valley area situated approximately 30km inland. The entire site was
secured from the land owner by Rame and taken on a lease for the development of a wind farm project.
Rame developed this wind farm project for Barrick Gold, to be integrated with a heavy fuel oil generating
facility. Rame conducted a wind monitoring campaign from mid-2006, using mast monitoring equipment,
satellite data and SODAR equipment to analyse the wind climate variations in the complex topography
of the site, and designed a wind farm layout using 2 MW nominal capacity wind turbines.
Rame completed all the environmental studies and permitting, preliminary substation design, construction
feasibility and operations and maintenance planning for the wind plant.
Rame submitted full EPC proposals for construction of the project, which culminated in the award of a
contract to Seawind Services Limited (no longer a Group company) for equipment supply,
construction/installation supervision and commissioning of the 20 MW project.
Phase I – 20 MW of the project has been commissioned and was inaugurated by Chile’s president
Sebastián Piñera in 2011.
11
El Toqui Wind Farm Project – client Sociedad Minera Minera El Toqui S.A.
In 2008, Rame analysed the option to diversify the El Toqui zinc and gold mine in Patagonia, southern
Chile (now owned by Nyrstar) power generating base of diesel and hydro generators with a wind farm.
Rame carried out a pre-feasibility study to analyse the available wind resource and the options to locate
a project. Of particular concern was the remote location of the mine and the severe weight restrictions
on the access road network. This excluded the installation of larger turbines as the individual component
weights, as well as the requirement for large cranes, would exceed the capacity of the access roads.
Following the conceptual design of the wind farm, which specified the possible turbine types, project
locations, outline development and construction schedules, and target pricing, Rame designed and carried
out a wind monitoring campaign. After a short measurement period, from a small existing wind
monitoring system, the wind climate was determined and project Turnkey proposals submitted to
Breakwater Resources.
Rame proceeded with the design and integration in the existing isolated electric grid system of six Vergnet
250kW wind turbines, and built the project, including a 4 km power export line through mountainous terrain.
Carbon Credit Trading
The Company’s Chilean subsidiary, Ingenieria Seawind Sudamerica has recently been accredited by the
United Nations in Chile under the Clean Development Mechanism (“CDM”) to have all of its renewable
projects qualifying for carbon credits. As outlined in paragraph 7 on Strategy below, as the Group’s
projects start producing electricity the Directors believe the Group will benefit from the trading of
carbon credits.
3.
Group Structure and Investments
Set out below is a group structure chart. All companies within the Group are wholly owned unless
stated otherwise.
Rame Energy plc
(Channel Islands)
Rame Energy Pte
Ltd. (Singapore)
Sea Wind
Interna!onal Ltd
(UK)
Seawind Marine
Services Ltd (UK)
Seawind Holding
SpA (Chile)
Ingenieria Seawind
Sudamerica SpA
Seawind Service SpA
Inversiones Pelicano
SpA
Eolicos Del Sur SpA
Seawind Marine Ltd
(UK)
Vientos Andinos SpA
Proyecto Calbuco
SpA (50%)*
Projecto Calama SpA
(50%)*
Proyecto Bellavista
SpA (50%)*
Proyecto Chome
SpA***
Proyecto Raki SpA
(20%)**
Proyecto Huajache
SpA (20%)**
*
Proposed to be dissolved
**
80 per cent. owned by Santander Investment Chile Limitada
***
This may reduce to 20 per cent. pursuant to financing options under discussion – see paragraph 4 of this Part 1 below under
“Development of internal power portfolio”.
The Company was formed in Jersey in 2013 as the holding company of all the interests within the
Group. Seawind International is based in Plymouth and represents the Group’s operational headquarters.
Seawind Holding, based in Santiago, Chile, coordinates the various wind projects in the country, and is
also the holding company for several subsidiaries and special purpose vehicles in Chile, each of which
hold certain of the Group’s wind farm projects. Details for the first 14 projects in Tier 1 of the wind
portfolio are included in the table on page 13 below.
12
4.
Business Overview
The Group’s operations can currently be divided into two distinct areas; the development of its own power
generation portfolio with an initial focus on wind, solar, biomass and diesel and services covering
engineering, procurement, construction and maintenance.
Development of internal power portfolio
Rame has developed a portfolio of onshore wind energy assets in Chile, representing, based on the
Company’s estimations using wind data and industry standard software, a potential installed capacity in
excess of 1.4 GW comprising 28 projects. The portfolio has been split into three tiers by the Company
relating to the readiness and commerciality of the projects. The first tier of 14 projects, comprising a
potential power output of 549 MW, are considered the most commercial because:
i)
there is either clarity of the land control, (through a land lease or purchase agreement or a
development lease) or potential ability (through understandings with the land owners) to control the
project site in respect of wind farm development;
ii)
the wind resource has been confirmed by Rame using monitoring equipment to IEC61400
standards and testing is ongoing; and
iii)
the feasibility of the electrical connection has been, or is in the process of being, established.
Tier 2 currently comprises eleven projects representing a potential installed capacity of 588.5 MW. The
wind data for these projects is closely monitored and regularly reviewed internally by Rame. However
either the land use rights are not yet clearly established (or not yet subject of understandings with
landowners) or the project economics are not currently as favourable as the Tier 1 projects.
Tier 3 currently comprises three projects with a potential installed capacity of 275 MW, based on Rame’s
desk top studies using the data available to it to date. Tier 3 projects are subject to negotiation with land
owners for sites where wind monitoring has been completed or is on-going, or which have been identified
by management and where negotiations with land owners are expected to be completed shortly prior to
the deployment of monitoring data.
Rame intends, subject to financing, to install approximately 300 MW of wind, solar, biomass and diesel
projects over the next three years. Brief details of the Tier 1 wind projects are shown in the table below
(see next section for diesel projects).
Project
Location in
Chile
Raki
Huajache
Punta Chome
Albatros Sub-Transmission
Pampa Blanca
Puente Roto
Frente al Puente
Nuevo Crucero
Los Broncos
Eucalyptus
Mantos Blancos
Albatros Transmission
Vuelve Piedras
Monte del Viento
Region VIII
Region VIII
Region VIII
Region X
Region II
Region IX
Region VIII
Region X
Metropolitan Region
Region IV
Region II
Region X
Region VIII
Region IV
*
Target
capacity
(MW)*
Target
power-out
date
9
6
9
45
39
36
9
72
60
24
39
138
12
51
Q4 2014 (finance agreed)
Q4 2014 (finance agreed)
Q4 2014
Q2 2015
Q4 2015
Q1 2016
Q1 2016
Q2 2016
Q3 2016
Q4 2016
2017
2017
2017
2017
Target capacity is derived from wind and other project data from IEC61400 monitoring equipment and calculated using industry
standard software licenced from independent wind consultancy GL Garrad Hassan.
13
Location of Tier 1 wind projects
Pampa Blanca
Mantos Blancos
Region II
Region II
Monte del Viento
Region IV
Los Broncos
Metropolitan Region
Eucalyptus
Region IV
Frente al Puente
Region VIII
Punta Chome
Region VIII
Puente Roto
Region VIII
Santiago
Raki
Region VIII
Vuelve Piedras
Huajache
Region VIII
Region VIII
Nuevo Crucero
1. Albatros Sub-Transmission
2. Albatros Transmission
Region X
Region X
The initial 15 MW will consist of the Raki and Huajache wind farm projects (see below), based on
co-financing with Santander through the Santander SPA and Santander Shareholders' Agreement, details
of which are set out in paragraphs 12.10 and 12.11 of Part V of this document. Rame has a 20 per cent.
interest in each Project Company and will, alongside Santander, fund its share of the total equity for the
projects. On 25 March 2014 the Project Companies entered into conditional agreements with Banco
BICE for a debt package totalling $26.7m over a sixteen and a half year term. The Company has the first
right of refusal to buy Santander's shares in the Project Companies and is considering an offer made by
Santander that will give the Company the exclusive option until December 2014 to acquire the projects
outright. Rame and Santander have also entered into a supervision and management contract whereby
Rame will act as supervision manager to oversee the construction of the projects.
A further 9 MW wind farm project (Punta Chome, see below) is based on a proposed co-financing with
Santander, where Rame is anticipated to have a 20 per cent. interest in the project company, with an
option to acquire the project company outright. Alternatively, Rame has the potential option to finance
the Punta Chome project through proposed terms with another bank. Following the development of these
three projects the Directors have identified Mantos Blancos and Albatros Sub-Transmission as the next
two projects to be developed (also described below).
Raki / Huajache 15MW Project
The Raki project, also comprising Huajache, is located in Region VIII, approximately 340 miles South
of Santiago. Rame installed monitoring equipment in June 2009 and measurements are on-going.
Rame executed an agreement with the land owner for the long term lease of the land for the project, with
the choice of either option at the sole discretion of Rame (the purchase option expires on 31 March 2014).
The project has been split into a 9 MW project (Raki) and 6 MW project (Huajache) to comply with the
Chilean “PMGD” regulations, a legal framework that provides certain benefits to renewable energy
projects of 9 MW or less.
The project is expected to connect to a substation 22 km from the site via an export line designed and
engineered by the distribution company SAESA.
14
Wind measurements have been reviewed and energy yields were calculated for the Vestas turbine model
V112 (3 MW) by independent consultancy GL Garrad Hassan. An environmental permit for the
installation of the wind farm has been obtained and other required permits are in the process of application
or under review.
The two project companies for Raki and Huajache, namely Proyecto Raki SpA and Proyecto Huajache SpA,
are currently owned 80 per cent. by Santander and 20 per cent. by Rame pursuant to the Santander SPA and
Santander Shareholders’ Agreement, further details of which are set out in paragraphs 12.10 and 12.11 of
Part V of this document.
Each of the Project Companies have executed an EPC (turnkey) contract with Vestas Chile Turbinas Eolicas
Limitada, for the supply, installation and construction of the wind farms, including foundations, electrical
infrastructure, roads and laydown areas. The Project Companies entered into conditional loan agreements
for the debt package with Chilean bank Banco BICE on 25 March 2014.
On 14 June 2013 the Raki and Huajache project companies signed a PPA with EKA Chile S.A., whereby
the latter will purchase all the energy produced by the Raki and Huajache projects for a period of 10 years.
EKA Chile S.A. is a joint venture between AkzoNobel and Celulosa Arauco y Constitución S.A.
(“Celulosa”). AkzoNobel is a leading global paints and coatings company and a major producer of
specialty chemicals. Celulosa is a Chilean company and a leader in sustainable forest products.
Punta Chome 9 MW Project
The project is located in Region VIII approximately 270 miles south of Santiago, Chile, on a peninsula
adjacent to the coastal town of Concepción. Rame installed monitoring equipment in September 2006 and
has been recording wind data ever since.
Rame executed a promise purchase agreement with the land owner for the purchase of the land for the
project, which has been extended to the end of July 2014.
On 19 December 2013 Rame (through Proyecto Chome SpA, the Punta Chome project company)
executed a term sheet with Empresa Electrica ERNC-1 SpA (“Empresa”), whereby the latter will
purchase all the energy produced from the Punta Chome project for a period of 10 years. This PPA is
subject to Metro S.A. assigning to Empresa the bidding process initiated by Metro S.A. for energy
provision, in which case a PPA must be signed within 30 days of such assignment. Empresa is advised
by Antuko Commercializacion SpA, a company in which Fernando Cubillos, a Director, is Chief
Executive and a shareholder.
The project is expected to be connected to the grid by the Chilean distribution company, CGED, who will
carry out the necessary works to export the power.
Wind measurements have been reviewed and energy yields were calculated for the Vestas turbine model
V100 (1.8 MW) by independent consultancy GL Garrad Hassan. An environmental permit for six turbine
locations of the wind farm has been obtained. Other required permits are in process of application or
under review.
Mantos Blancos 39 MW Project
Pampa Blanca is a wind farm project with a potential capacity of 39 MW. It is expected to be built
alongside the Mantos Blancos mining project owned by Anglo American, located to the north-east of the
Antofagasta region in the Atacama Desert. In 2010, Rame entered into a memorandum of understanding
with Anglo American covering the use of their land and connection to their substation, as well as the key
terms of a PPA for the energy produced by the project. Rame installed three meteorological masts onsite
to determine the wind climate and is currently evaluating turbine supply options.
Albatros Sub-Transmission 45 MW Project
The Albatros Sub-Transmission wind farm project is located in Region X of Chile and is expected to be
connected to existing grid infrastructure located on land controlled by Rame. The Company has been
monitoring the wind climate onsite since 2010 and has completed preliminary energy yield analysis. The
permitting process has begun and the technical development is on-going.
15
Diesel power opportunities
In mid-2012 the Company became involved in the development of “peak shaving” diesel engine power
plants. This horizontal integration into diesel operations has the following two key benefits:
•
Medium and large scale diesel projects allow Rame to offer customers protection from volatility
and peak prices in the energy market; and
•
Peak shaving diesel projects provide attractive returns for easily and quickly installed additional
capacity either as part of a power sales agreement or as a project operating in the spot energy
market, without fuel price risk.
The Company has identified a number of opportunities in Chile for 3 MW diesel projects, and is
targeting the implementation of various projects in the central electricity grid system of Chile (SIC)
online during 2014.
Solar power opportunities
Solar energy generation shares the same principles as wind energy power plants, with a variable, natural
resource resulting in an electrical generating capacity which varies according to the availability of
sunlight. Using its experience in designing and modelling variable output generating capacity based on
wind power, in 2013 the Company started to model solar projects and develop proposals for MW sized
solar power plants.
Biomass opportunities
Biomass energy generation in Chile falls under the non-conventional renewable energy regulation and
projects therefore qualify for certificates which can be traded. One of the key advantages of biomass
energy projects is the ability to provide “firm” power, which would allow the Company to enter into firm
delivery power purchase agreements with customers with higher prices than compared with variable
supply power purchase agreements.
Biomass power plants already provide a considerable contribution to the Chilean energy supply, with
more than 180MW in operation. Rame is exploring two different development projects at the moment,
one of 11MW scheduled to come online by October 2015, and one of 40MW in two phases of 20MW
each, with phase one construction in 2015 and phase two in 2019.
Consultancy and EPC services
The Group’s power consultancy services are aimed at a wide spectrum of clients, ranging from large
multinational companies to private landowners and other small businesses with a requirement for
sustainable, reliable and cost effective power solutions. Examples of the type of services provided are
summarised in paragraph 2 above of this Part I and the Directors believe Rame’s key competences are:
•
Evaluation of existing power plants and energy needs
•
Design, engineering and permitting
•
Provision of optimised proposals for efficient additional capacity
•
Integration of new power components and control systems
•
Detailed understanding of power and project implementation issues in a mining environment
•
Provision of full Turnkey solutions, as well as operating and maintenance capabilities
The consultancy business is primarily based at the Group’s head office in Plymouth, Devon. From this
location, staff provide support to its Latin American operations, but also directly offer third party
services globally.
5.
Summary Financial Information
A summary of the historical results of the Operating Group for each of the three years ended 31 December
2012 is set out below and has been extracted from the accountant’s report at Part IV (b), and the unaudited
interim financial information at Part IV (c), of this document.
16
Years ended 31 December
2010
2011
US$
US$
Audited
Audited
Revenues
Gross profit
Operating (loss)/profit
Profit/(loss) before taxation
5,588,741
1,316,951
(1,073,558)
(1,111,222)
5,952,234
3,904,537
1,324,202
1,287,264
2012
US$
Audited
6,579,127
3,441,445
1,044,837
1,026,327
6 months ended
30 June 2013
US$
Unaudited
1,467,347
794,145
(466,459)
(498,587)
For further details on Current Trading please see paragraph 8 below.
6.
Market and Competition
Rame has developed power generation projects globally, however the majority of the Group’s current
opportunities are in Chile. The Chilean market, which is key to the Group, is discussed below and in Part II
of this document.
Competition in the Chilean electricity industry
Approximately 70 companies operate in the Chilean electricity industry, of which 28 are generators.
There is a high level of concentration, with four companies (Endesa, Gener, Colbun and Suez) owning
the majority of generating assets.
Competition in the wind energy sector is mainly driven by the ability to access and control suitable sites
through memorandums of understanding, lease or purchase agreements. Suitable sites require the right
topography, energetic wind climate and the ability to connect economically to the grid system. Rame has
a portfolio of sites with a potential installed capacity in excess of 1.4 GW, and is therefore able to avoid
competition for sites in the short and medium term.
Price competition does not exist directly in the spot market as spot prices are set by the system controller
and could only be influenced by a generator through the installation of large scale low cost generating plants.
The Group may seek to secure PPAs with private customers as opposed to selling energy in the spot
market. This will stabilise revenue and provide predictable income streams. There is also the option to
participate in tender processes where the lowest price offer will be selected, however it is more likely
that Rame will initiate negotiations directly with customers (such as mining companies) and leverage
existing relationships and partnerships to obtain exclusive PPAs.
7.
Strategy
Building on its proven development, engineering and execution capabilities in the provision and operation
of multi-technology power plants, Rame has access to a substantial portfolio of power development
projects. Subject to third party funding, the Company’s objective is to become a niche IPP primarily
supplying its target market of industrial consumers with cost effective, technically optimised and reliable
power solutions.
To achieve this goal, Rame will rely on the following key elements:
•
an ability to provide immediate additional generating capacity from the implementation of power
plants in Chile through SPVs co-funded by appropriate third parties such as Santander
•
the potential for the acquisition and operation of existing independent power plants from the target
market to facilitate their key strategy of disposing of non-core assets
•
on-going investment in the project development process to ensure high performing projects using
various technologies can be selected from the portfolio to meet the needs of Rame’s customers
•
the sale of project assets from the Group’s portfolio not ultimately needed or suited to the provision
of power to the target market or the subordination of development interests for equity in third party
built projects
•
the early stage involvement in capital projects to provide power solutions as part of customers’
pre-feasibility or project evaluation activities providing consultancy revenue and positioning the
Company to take advantage of power generation opportunities
17
•
the direct control and management of projects for clients during the critical implementation phase
•
an intention to broaden Rame’s access to capital through a measured, incremental approach to
corporate debt providing less reliance on equity and a gradual leveraging of the business’s
underlying asset value
•
utilising a diverse range of power sources (wind, diesel, biomass and solar) and energy technologies
By implementing its strategy Rame seeks to quickly access strong and stable cashflows from its power
sales activities to customers with a high energy dependency and therefore a higher price threshold. This
underpins an asset based and yield driven business model.
In relation to general expansion and growth of the business outside of Chile, the Group has already
undertaken work for its key mining clients in other countries within Latin America and Asia and the
global nature of the mining industry means that the Rame business model is completely transferable.
The Directors believe that in meeting the energy needs of the Group’s target market by acquiring and
operating non-core power assets, there exists the opportunity to create a global IPP with a customer base
that provides the potential for secure offtake, higher margins and managed risk.
The Directors of Rame view the Group’s objective of becoming a niche IPP as a natural evolution from
its history as an engineering and consultancy business and latterly a developer of power projects.
8.
Current Trading And Prospects
The second half of 2013 and first two months of 2014 saw the Group trade in line with management’s
expectations. During this time the Group’s resources were focused on driving forward the development
of the project portfolio as well as securing the equity funding for its participation in the Raki and Huajache
wind projects (15MW combined). This resulted in a fall in EPC revenues and as a consequence further
losses were incurred in the second half of 2013 which will see a full year loss for the Group.
Approximately $3.6m of funding was secured by the Group by February 2014 and Rame is now in a
position to finance its 20 per cent. equity participation in the Raki and Huajache projects. The Project
Companies have recently signed EPC contracts with Vestas Chile Turbinas Eolicas Limitada and the
project debt totalling $26.7m is being provided by Banco BICE under the terms of conditional loan
agreements signed on 25 March 2014.
The Group is now focused on bringing the 9MW Punta Chome project to “construction ready” stage and
is finalising contracts and negotiating project debt terms in conjunction with the Admission process. In
addition, Rame is also progressing the development of its pipeline of wind projects and evaluating other
power plant opportunities. As outlined in paragraph 7 (Strategy) above, the Directors believe that, subject
to the Placing and subsequent development of its wind portfolio, the move towards being an IPP means
that prospects for the Group are promising.
9.
The Placing and the Amati Convertible Loan Notes
The Company proposes to raise up to £2.1 million before expenses, by issuing the Amati Convertible Loan
Notes and the Placing Shares at the Placing Price through a conditional placing by Northland as agent
for the Company. The estimated net proceeds of the Placing and the Amati Convertible Loan Notes are
approximately £1.7 million, which will be used to supplement the Group’s existing cash resources and
primarily as follows:
Equity participation in Punta Chome project
Diesel generation investment
Completion of technical work for Albatros and Pampa Blanca
Working Capital
Total
£600,000
£600,000
£300,000
£200,000
£1,700,000
Pursuant to the terms of the Placing Agreement, further details of which are set out in paragraph 12.1 of
Part V of this document, Northland has agreed to use its reasonable endeavours to conditionally place the
Placing Shares with institutional and other investors. Northland is not underwriting the Placing. The
18
Placing Shares will represent approximately 7.6 per cent. of the Enlarged Issued Share Capital
immediately following Admission. The Placing Shares will be fully paid upon issue and will rank pari
passu in all respects with the Existing Issued Share Capital from the date of Admission.
The Placing is conditional upon, among other things, the Placing Agreement becoming effective in
accordance with its terms and Admission occurring no later than 8.00 a.m. on 4 April 2014 (or such later
date as the Company and Northland may agree but in any event no later than 8.00 a.m. on 11 April 2014).
It is intended that, where applicable, definitive share certificates in respect of the Placing Shares will be
posted by first class post on 11 April 2014, or as soon thereafter as is practicable.
On 31 March 2014 the Company entered into agreements with Amati whereby it will invest £800,000 by
way of the Amati Convertible Loan Notes and £300,000 for Placing Shares. Further details are set out in
paragraph 12.16 of Part V of this document.
10. Directors and Senior Management
Directors
The Board of the Group is comprised of six members:
Andrew Cameron, aged 55, Non-Executive Chairman
Andrew Cameron has been involved in the asset finance industry for over 30 years, starting his career with
Hambros Bank before heading up the UK leasing arm of Manufacturers Hanover. In 1987 he established,
in conjunction with Nordic Bank, a dedicated structured finance operation covering a variety of asset
types and tax jurisdictions. In 1991, the Nordic structured finance operation was acquired and today the
company is one of the leading independent arrangers of and advisers on shipping and aviation finance.
Andrew has been responsible for a wide range of deals utilising specifically developed tax products and
technology in many cases representing industry firsts.
Timothy (Tim) Adams, aged 48, Chief Executive
Tim graduated in Civil Engineering from Imperial College, London in 1987 and joined Foster Wheeler
where for ten years he undertook a range of senior construction management roles on petrochemical and
power projects in the UK and the Far East. During this time he also gained an MBA from Henley
Management College after which he was responsible for corporate planning and strategic business
development for the UK group. After leaving Foster Wheeler he became Managing Director of a specialist
marine subsea contractor engaged in diving and heavy marine construction works in Europe. Through
involvement in the emerging offshore wind industry, this led to him co-founding the Group in 2001. In
addition to being a Chartered Civil Engineer, Tim is an associate of various other professional and industry
bodies including the Chartered Institute of Arbitrators, the City & Guilds Institute and he is a Fellow of
the Engineering Construction Industry Training Board.
Jan Gawel, aged 36, Chief Financial Officer
Jan has a degree in Economics from Queen’s University in Canada and is the CFO of Rame. Jan has over
12 years of experience in corporate finance, investment and in mergers and acquisitions in North America
and the United Kingdom advising on transactions globally. Prior to joining Rame Energy he was a Vice
President at Bryan Garnier & Co in their London office, a Vice President at Compass Advisers Limited and
Access Capital Limited. Jan started his career at CIBC in Toronto as part of their mezzanine finance group.
Pieter D’haen, aged 43, Chief Operating Officer
Pieter originally graduated in naval architecture from Ghent University in Belgium and worked as chief
engineer aboard a number of large luxury vessels before entering the marine civil engineering industry.
He undertook a number of complex maritime projects including sea-defences in increasingly senior
management roles before joining the Group in 2004 to lead the offshore wind technical proposals team.
During this time he also gained an MBA.
Today, Pieter is responsible for all engineering activities within the Group including the technical
development and design of on and offshore wind energy projects and the design and development of new
high performance wind turbines controlling a core department of 20 multidisciplinary technical staff and
the coordination of numerous sub-consultants and certification bodies operating in multiple locations.
19
William (Bill) Fisher, aged 56, Non-Executive Director
Bill graduated as a geologist in 1979 and has extensive mining industry experience including a number
of residential posts in Africa, Australia, Europe and Canada in both exploration and mining positions.
Under his leadership, Karmin Exploration discovered the Aripuanã base metal massive sulphide deposits
in Brazil. From 1997 to 2001 Bill was Vice President of Exploration for Boliden AB, a major European
mining and smelting company where he was responsible for thirty five projects in nine countries. From
2001 to 2008 he led GlobeStar Mining Corp. from an exploration company to an emerging base metal
producer in the Dominican Republic which developed and operates the Cerro de Maimon mine. Bill was
also Chairman of Aurelian Resources which was acquired by Kinross in 2008 for $1.2 billion after the
discovery of the Fruta del Norte gold deposit in Ecuador. Bill currently serves as an independent director
of PC Gold (TSX: PKL), Horizonte Minerals (AIM: HZM), Treasury Metals (TSX: TML) and GoldQuest
Mining Corp. (TSX-V: GQC). Bill brings a wealth of public company experience, a powerful link to the
mining industry and Canadian natural resource equity markets and relevant energy experience having
invested in one of the very first UK onshore wind farms.
Fernando Cubillos, aged 44, Non-Executive Director
Fernando graduated in Industrial Civil Engineering with a minor in electricity from Pontificia Universidad
Catolica de Chile and also holds an MBA from University of Maryland, USA. He is a co-founder and
managing partner of Antuko Energy S.A., an energy consultancy specialising in the Chilean power
market, advising investors, financial institutions and industrial customers in their energy related needs.
He is also Chief Executive of Antuko Commercialization SpA which is an adviser to Empresa, the
proposed off taker for the Punta Chome project. Previously he was Head of the Latin American region
of the Environmental Markets unit of JP Morgan. He has also held positions in the Carbon Finance unit
of the World Bank and at Hidroelectrica Guardia Vieja S.A.
Senior Management
Marcelo Banto, aged 50, General Manager, South and Latin America Operations
Marcelo is a Swiss / Chilean national who qualified as a Mechanical Engineer at the University of
Santiago. He worked in Europe for six years for large multinationals such as Alcatel where he became a
senior quality control manager. Upon his return to Chile he joined the Corporación de Bienes de Capital
investment promotion agency as the director for business development, establishing several regional
offices for regional investment. In 2005 he moved to TECSA, one of the largest Chilean construction
companies, as sub-director of business development. His knowledge of the Chilean business environment
and extensive network of contacts in Latin America was recognised by Rame and in 2006 he was invited
to lead the South and Latin American operations as the general manager.
Lilian Nunez, aged 48, Commercial Director, Americas
Lilian graduated as a civil engineer with a major in industrial and chemical engineering from the
Universidad Católica de Chile. She worked as a consultant for several Chilean companies, and became
a senior manager in the Corporación de Bienes de Capital, specialising in assessing investments and
creating strategic development programs in association with state agency Corfo, the Central Bank, the
Ministry of Public Works and others. With the National Institute of Statistics and the Central Bank, she
created the National System for Forecasting Investment Impacts and created a portfolio of 800 projects
with a value of over US$5million. In 2007 she joined the Group as commercial director for the Americas.
11. Reasons for Admission
Rame has developed its project portfolio to a point where the Directors consider that AIM is an
appropriate platform to support the continued growth and the vertical integration of the Group into owning
and operating power generating assets. The Directors are of the opinion that the Admission will provide
the following tangible benefits to the Group:
•
enhance the Group’s profile and standing in the international marketplace
•
enable access to capital markets to support and accelerate the Group’s strategic objectives, in
particular to fund its participation in power projects
•
diversify the investor base and provide liquidity
20
12. Admission and Dealings
Application has been made to the London Stock Exchange for the Enlarged Issued Share Capital to be
admitted to trading on AIM. It is expected that Admission will be effective and that dealings in the
Ordinary Shares will commence at 8.00 a.m. on 4 April 2014.
13. CREST and Settlement
CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a certificate
and transferred otherwise than by written instrument. The Articles contain provisions concerning the
transfer of shares which are consistent with the transfer of shares in dematerialised form under the CREST
Regulations. Accordingly, settlement of transactions in the Ordinary Shares following Admission may take
place within the CREST system if Shareholders so wish. CREST is a voluntary system and holders of
Ordinary Shares who wish to receive and retain share certificates will be able to do so.
14. Lock-ins and Orderly Market Undertakings
At Admission, the Directors will hold or be interested in, directly and indirectly, an aggregate of
16,026,115 Ordinary Shares, representing approximately 16.8 per cent. of the Enlarged Issued
Share Capital.
Each of the Directors who own Ordinary Shares (together in each case with their related parties, as
applicable) and certain other Shareholders have undertaken to the Company and to Northland that they will
not dispose of their Ordinary Shares for a period of 12 months following Admission and, other than through
the Company’s broker so as to ensure an orderly market, they will not sell any Ordinary Shares for the
period of 12 months thereafter. These arrangements will apply in respect of 55,845,330 Ordinary Shares,
representing, in aggregate, 58.6 per cent. of the Enlarged Issued Share Capital.
The undertakings outlined above do not apply in certain specified circumstances, including acceptance of
an offer for all of the Ordinary Shares that (if accepted) would result in the offeror obtaining or
consolidating control of the Company or the execution of an irrevocable commitment to accept such offer.
Further details of these arrangements are set out in paragraph 12.5 of Part V of this document.
15. Corporate Governance
The Company is not required to comply with the provisions of the UK Corporate Governance Code or
any Jersey corporate governance regime.
However, the Directors recognise the importance of sound corporate governance and intend that the
Company following Admission will comply with the provisions of the UK Corporate Governance Code
and the QCA Guidelines insofar as they are appropriate given the Company’s size and stage of development.
The Board is responsible for formulating, reviewing and approving the Company’s strategy, budgets and
corporate actions. Following Admission, the Company intends to hold Board meetings at least six times
each financial year and at other times as and when required.
The Company has established properly constituted audit, remuneration and compliance committees of the
Board with formally delegated duties and responsibilities.
The audit committee has primary responsibility for monitoring the quality of internal controls and ensuring
that the financial performance of the Company is properly measured and reported on. It will receive and
review reports from the Company’s management and auditors relating to the interim and annual accounts
and the accounting and internal control systems in use throughout the Company. The audit committee will
meet not less than three times in each financial year, with Jan Gawel, the Company’s Chief Financial
Officer, in attendance and will have unrestricted access to the Company’s auditors. The members of the
audit committee will be Andrew Cameron, who will chair the committee, and Bill Fisher.
The remuneration committee will review the performance of the executive directors and make
recommendations to the Board on matters relating to their remuneration and terms of employment. The
committee will also make recommendations to the Board on proposals for the granting of share options and
21
other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from
time to time. The committee will meet as and when necessary to assess the suitability of candidates proposed
for appointment by the Board. In exercising this role, the Directors shall have regard to the recommendations
put forward in the UK Corporate Governance Code. The members of the remuneration committee will be
Andrew Cameron, who will act as chairman of the committee, and Bill Fisher.
The compliance committee will have the primary responsibility for ensuring compliance with the AIM
Rules for Companies concerning the disclosure of information, in particular Rules 11, 17, 18 and 19. The
compliance committee will work closely with the Board to ensure that the Company’s nominated adviser
is provided with any information it reasonably requests or requires in order for it to carry out its
responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisers. The
members of the compliance committee will be Jan Gawel, who will act as chairman of the committee,
Tim Adams and Andrew Cameron.
The Company has adopted a share dealing code for dealings in securities of the Company which is appropriate
for a company admitted to AIM. Conditional on Admission, Directors will comply with Rule 21 of the AIM
Rules for Companies relating to directors’ dealings and will take all reasonable steps to ensure compliance
by the Company’s “applicable employees” (as defined in the AIM Rules for Companies) with such code.
16. Dividend Policy
The Directors’ immediate intention is to reinvest surplus funds in the further development of the Group.
However once the Company’s revenues from its interests in the power generation projects are established,
the Directors intend to pursue a dividend policy which, subject to satisfactory trading and having regard
to prevailing circumstances and opportunities, will provide for the distribution of a proportion of the
consolidated profit after tax of the Company, whilst continuing to retain the balance of the Company’s
earnings in order to facilitate the Board’s strategy for the continued growth of the Group.
17. Share Option Scheme
The Group intends to provide senior management team members and employees with an equity incentive
in the Group. To this end the Company will look to establish a share option scheme following Admission.
Options awarded under the scheme will be made subject to approval by the remuneration committee and
linked to performance criteria. It is the intention of the Board that options granted under the proposed
share option scheme will not exceed 10 per cent. of the total share capital in issue at the date of grant.
18. Taxation
General information relating to UK and Jersey taxation with regard to Admission is summarised in
paragraph 11 of Part V of this document. This document does not address the tax consequences for a
prospective investor in any taxing jurisdiction other than the UK and Jersey. Any person who is in any
doubt as to his or her tax position, or is subject to tax in a jurisdiction other than that of the UK
or Jersey, should consult his or her independent tax adviser and/or other professional advisers
immediately before considering an investment in the Company’s Ordinary Shares.
19. Takeover Code
The Takeover Code is issued and administered by the Panel. The Takeover Code applies to offers for all
AIM-quoted companies which have their registered offices in the United Kingdom, the Channel Islands
and the Isle of Man. The Takeover Code will, therefore, apply to the Company at Admission and
Shareholders will be entitled to the protections afforded by the Takeover Code. Under Rule 9 of the
Takeover Code, where (i) any person acquires, whether by a series of transactions over a period of time
or not, an interest in shares which (taken together with shares in which persons acting in concert with him
are interested) carry 30 per cent. or more of the voting rights of a company subject to the Takeover Code,
or (ii) any person who, together with persons acting in concert with him, is interested in shares which in
the aggregate carry not less than 30 per cent., but holds shares in the aggregate which carry not more than
50 per cent. of the voting rights of such a company, and such person, or any person acting in concert
with him, acquires an interest in any other shares which increases the percentage of shares carrying voting
rights in which he is interested, then, except with the consent of the Panel, he, and any person acting in
22
concert with him, must make a general offer in cash to the holders of any class of equity share capital
whether voting or non-voting and also to the holders of any other class of transferable securities carrying
voting rights to acquire the balance of the shares not held by him and his concert parties.
Save where the Panel permits otherwise, an offer under Rule 9 of the Takeover Code must be in cash
and at not less than the highest price paid within the 12 months prior to the announcement of the offer
for any shares in the company by the person required to make the offer or any person acting in concert
with him. Offers for different classes of equity share capital must be comparable. The Panel should be
consulted in advance in such cases.
20. Additional Information
Your attention is drawn to the information included in the rest of this document. In particular, you
are advised to carefully consider the risk factors contained in Part III of this document.
23
PART II
CHILEAN ENERGY MARKET
Chilean Economy
Chile is one of South America’s most stable and prosperous nations, with a market-oriented economy
characterised by a high level of foreign trade and a reputation for strong financial institutions and sound
policy that have given it the strongest sovereign bond rating in South America. Exports account for more
than one-third of GDP, with commodities making up some three-quarters of total exports. Copper alone
provides one-third of government revenue. During the early 1990s, Chile’s reputation as a role model for
economic reform was strengthened when the democratic government of Patricio Aylwin, which took over
from the military in 1990, deepened the economic reform initiated by the military government. Since
1999, growth has averaged 4 per cent. per year.
As the country’s economy grows, its energy needs expand and Chile’s challenge today is matching energy
resources to economic growth. Between now and 2020, growth rates of 6 to 7 per cent. are projected for
electricity consumption, which means demand will reach 100,000 GWh by 2020 and a minimum of 8,000
MW of new generation projects will need to come online by that year to satisfy demand.
Government energy strategy
Chile’s authorities recognise that the country is predominantly an importer of energy resources and that
in recent years it has been largely dependent on fossil fuels, the prices of which have increased generating
costs and electricity prices. Electricity costs in Chile are now amongst the highest in Latin America and
above the OECD average. The Chilean government has set its energy objectives in developing clean
renewable energy sources but acknowledges the importance of security of supply of fossil fuels. For
thermoelectric generation the country is now adopting emission standards similar to those applied in the
European Union, as it realises that fossil fuel generation cannot be discounted as an important source of
energy generation. Laws have also been implemented to promote the contribution to the energy mix of
power plants from non-conventional renewable energy sources such as wind.
In February 2012, the Chilean energy ministry published its National Energy Strategy document,
presenting its vision for the electricity sector until 2030 based on the following fundamental principles:
commit to energy efficiency; increase non-conventional renewable energy sources; strengthen traditional
renewable energy sources and limit increase in greenhouse gas emissions; strengthen the transmission
system; promote electricity market stability with greater levels of competition, security and reliability;
regional electricity integration.
Over the past 20 years additional regulations and rules have refined the operation of the Chilean market.
In particular, certain laws made in March 2004 introduced new elements to be considered by all generators
especially applicable to non-conventional renewable energy (NCRE). Further legislation in April 2008
specified that all electricity companies were to provide a certain percentage from NCRE (10 per cent. by
2024), or pay fines for the shortfall.
These laws provide a framework that enables wind power projects to more easily connect to the grid
system, with a guaranteed right to despatch electricity, as well as financial incentives based on a penalty
system of renewable energy certificates which are freely tradeable and which can be sold to other
generators with a shortfall of NCRE.
24
Mining sector power usage
The mining industry, which represents a large proportion of the Company’s EPC customer base and
potential customers once it is an IPP, accounted for 33 per cent. of Chile’s electricity market in 2012 with
the Chilean Copper Commission forecasting a continued growth in electricity demand for Chile’s copper
industry through to 2020.
Source: Instituto Nacional de Estadisticas
Chilean grid system
The Chilean electricity system consists of two large separated systems, the central SIC system (total installed
capacity 12.5 GW, production in 2011 of 46,095 GWh) and the northern SING system (total installed
capacity (4.3 GW, production in 2011 15,878 GWh), and two smaller systems in the South (136 MW).
The Chilean energy mix, and in particular the SIC system, relies heavily on hydro power. The persistent
droughts in recent years, leading to record lows in dam water levels, have proven challenging in terms of
energy security and have driven prices to consistently high levels. The controversial nature of building
new large scale hydro dam projects, such as the Hidro Aysen project in southern Chile, has caused
significant delays in the development of such projects, coupled with the sustained growth in demand,
has further exacerbated the energy crisis currently occurring in the country.
Regulations regarding connection to the Chilean electricity grid
The Company needs to obtain certain key permits specific to the Chilean grid system and follow
procedures set by the authorities to connect to and operate in the system.
•
Environmental Permit: either a DIA (declaration of environmental impact) or EIA (environmental
impact study); the project size and environmental considerations of the site and surroundings
determine which permit is required, both are granted by Chile’s Environmental Assessment Service.
•
Connection to the system at distribution voltage level: applicable standard is NTCO DS 244:
•
•
Step 1: notify the distribution company of the intention to connect, the distribution company
will then provide relevant technical details
•
Step 2: submit SCR to the distribution company, as well as the SEC and CDEC, with
technical details and electrical studies of the project
•
Step 3: receive ICC from the distribution company and connection costs
•
Step 4: submit commissioning protocol to the distribution company for approval of technical
tests needed to approve the commissioning of the installations
•
Step 5: complete commissioning protocol and submit to the distribution company, with copy
to the SEC and CDEC
Operation in the system: Coordination with and reporting to the system controlling authority.
25
Solar sector
There is a major opportunity for the development of solar energy projects in Chile. In particular, the
climate in the Atacama Desert, which stretches 600 kilometers from southern Peru through northern
Chile, has ideal conditions for solar energy potential. It receives an annual 0.6 mm of rainfall, which
makes it one of the driest places on earth. Some regions in the Atacama Desert have no recorded rainfall.
Some of the highest solar radiation in the world is received by the Atacama Desert, which can receive up
to 9.28 kilowatt hours of sun, per square metre per day. Its minimal cloud cover and high solar radiation
are supreme conditions to harvest solar energy.
Peak shaving
The consistent growth in demand and energy shortages provide opportunities for peak shaving power
plants. These are mainly diesel engine plants with a high cost of generation and which are called upon
when energy demand is very high (peak demand) and cannot be fulfilled with more economical hydro,
coal power and gas power plants. Such peak shaving plants (approximately 400 MW already exists) obtain
base revenues from the capacity payment, based on the installed capacity, and additional revenue when
they are called to despatch energy. Price setting for energy production is an audited process for each
individual power plant and takes into consideration operating costs, including maintenance and fuel costs,
thereby providing the generating company with a guaranteed cover of such costs plus a possible profit
margin when the marginal cost exceeds the plant’s operating expenses.
Revenue options for a generator
The Chilean energy market provides a number of revenue options for a generator:
•
sale of energy in the spot price market – marginal cost system, where tariffs are set by the system
controller and are dependent on the generating mix and cost of generation
•
contracts with distribution companies such as CGED or Conafe, where tariffs are dependent on cost
factors such as copper price, inflation, fuel costs etc
•
through a tender process called for by energy distribution companies and open to all generators
•
projects of less than 9 MW in capacity can opt for sale of energy in the spot price market at
stabilised prices set by the authorities, providing more stability and linked to long term energy
prices
•
direct sales to private client through a PPA
In addition to the revenue from energy sales, generators also receive a “capacity payment”, based on
their installed capacity and with a unit price set by the authorities.
Finally, non-conventional renewable energy projects are able to trade their renewable energy certificates
and the Group will also be able to qualify its renewable energy projects under its CDM Programme
of Activities.
26
PART III
RISK FACTORS
In addition to all other information set out in this document, the following specific risk factors
should be considered carefully by potential investors in evaluating whether to make an investment
in the Company. An investment in the Company described in this document may not be suitable
for all of its recipients.
Prospective investors should be aware that an investment in the Ordinary Shares is speculative and
involves a high degree of risk. In addition to the other information contained in this document, the
Directors believe that the following risk factors are the most significant for potential investors and
should be considered carefully in evaluating whether to make an investment in the Company. If any
of the risks described in this document actually occur, the Group may not be able to conduct its
business as currently planned and its financial condition, operating results and cash flows could be
seriously harmed. In that case, the market price of the Ordinary Shares could decline and all or part
of an investment in the Ordinary Shares could be lost. However, the risks listed do not necessarily
comprise all those associated with an investment in the Ordinary Shares. Additional risks and
uncertainties not presently known to the Directors, or which the Directors currently deem immaterial,
may also have an adverse effect on the Group. In particular, the Group’s performance may be affected
by changes in market or economic conditions and in legal, regulatory and tax requirements. The risks
listed below are not set out in any particular order of priority, magnitude or probability.
Before making a final decision potential investors, in any doubt are advised to consult a person
authorised under FSMA who specialises in advising on the acquisition of shares and other securities
in the UK. A prospective investor should carefully consider whether an investment in the Company
is suitable in light of his personal circumstances and the financial resources available to him.
Prospective investors should also consider carefully all of the information set out in this document
and the risks attaching to the investment in the Company, including, in particular, the risks
described below, before making any investment decision.
Risks associated with the Group
The ability of the Company to develop further projects will be dependent on it securing financing,
both equity and debt, on commercially viable terms
As at the date of this document the Company has agreed (subject to final conditions precedent) financing
terms for the first 15MW of wind power with Banco BICE. Such financing may not be completed.
Further, any failure to complete such financing by 30 April 2014 (unless otherwise extended) may cause
Santander’s investment in the Raki/Huajache projects to be unwound and other agreements on the project
to lapse and compensation may be payable by the Group if such failure is due to a breach by the Group.
The proceeds of the Placing will allow the Company to participate on similar terms to Raki/Huajache in
the next 9MW of power production at Punta Chome, however, the viability of this project is still subject
to securing appropriate third party financing. There can be no guarantee that such financing for either
Chome or any of the Company’s other pipeline projects will be secured.
The Group intends to own a significant if not 100 per cent. interest in its operational projects, requiring
substantial expenditures for the implementation of such projects. If the Group’s revenues from generating
assets decline, or if the Company is unable to attract investors to increase the Company’s equity, or if debt
arrangements are not accessible (or only on unattractive commercial terms), the Group may be limited
in its ability to meet its strategic objective of becoming a power producer of a certain size and thereby
restricted in its level of ownership in its operational projects.
The Group’s success is dependent on its ability to correctly appraise, find, acquire, develop and
implement power generation projects and capacity estimations of the current portfolio which may
turn out to be inaccurate or incorrect
The Group’s long-term commercial success is dependent on its ability to find and convert green-field sites
into operational power projects. Significant expenditure is required to establish the technical and
commercial viability of a project through onsite measurements (for wind farm projects), design,
27
engineering and commercial studies. Such expenditure is inherently speculative and only upon completion
of all studies will it be visible whether a power project is achievable and what its capacity will be. Although
the Directors believe that significant work has already been carried out and has developed robust
operational processes to logically evaluate its portfolio, the projects are still at an early stage of development
and there are a significant number of legal, operational, strategic and financial risks remaining.
Even when a wind farm project is deemed technically completed and ready for construction, the inherent
variability of the wind resource can cause wind or wind speeds in a particular period to be lower than
predicted, causing the financial performance of such project to be below expected levels.
Land rights are not yet fully secured for all projects of the Group
The Group has entered into land lease, purchase agreements or development leases for certain of its
Tier 1 projects. However, the Group only has a memorandum of understanding for certain Tier 1 projects
and does not yet have land rights for certain Tier 1, Tier 2 or Tier 3 projects. Some land right arrangements
are currently only verbal and therefore not legally enforceable. Some other land right arrangements,
including for Tier 1 projects, require land rights to be registered to be enforceable in priority to rights of
third parties. In addition, some proposed sites are currently subject to illegal land occupation. There can
be no assurance that the Group will obtain any or all of the land rights or registrations it needs to pursue
any or all of its projects or that land owners will meet their obligations to the Group.
The Group is at an early stage of development as an IPP
Although the Group and its team can point to a proven track record and success in the activities associated
with wind power project development and implementation and the Directors believe that this skill set is
easily transferable to other power technologies, the Group is currently not yet an IPP and will need to
secure the capabilities to market its product, electricity. It will need to expand and improve operational,
financial and management information, quality control systems and commercialisation functions on a
timely basis, whilst maintaining effective cost controls. Failure to do so could adversely affect the Group’s
business, financial condition and results of operations.
Due to the relatively small size of the Company on Admission, the anticipated number of investments in
projects is initially not likely to be greater than between two and four. Accordingly, each investment will
likely represent a significant proportion of the Company’s total assets. As a result, the impact on the
Group’s performance and the potential returns to investors will initially be more adversely affected if any
one of the investments performs badly than would be the case if the Company’s portfolio of investments
was more diversified.
Risk associated with exchange rate fluctuations
The Group has operations which involve cash flows in a variety of currencies. Although the Group may
undertake limited hedging activities in an attempt to reduce certain currency fluctuation risks, these
activities provide only limited protection against currency.
The Group’s tax liability could increase substantially as a result of changes in, or new
interpretations of, tax laws in the countries where the Group is operating
The Group is subject to taxation in the countries where it is operating and the amount of tax the Group
pays could increase substantially as a result of changes in, or new interpretations of applicable laws,
which could have a material adverse effect on its liquidity and results of operations.
Possible adverse economic conditions
The financial operations of the Group may be adversely affected by general economic conditions or by
conditions within various countries’ markets. In particular any downturn in the Chilean mining sector may
have a material adverse effect on the Group’s financial performance.
Impact of law in governmental regulation
The Group will need to comply with regulations relating to environmental, health and safety, land use and
development standards. The institution and enforcement of such regulations could have the effect of
increasing the expenditure relating to, in lowering the income or rate of return from, as well as adversely
affecting the value of, the Company’s assets. Changes in law relating to ownership of land could have an
adverse effect on the value of the Ordinary Shares. New laws may be introduced which may be
retrospective and affect existing environmental planning, land use and development regulations.
28
Counterparty risk
In the event that the Group structures the sale of the energy under a PPA with a customer, and although
the Company will attempt to ensure that these customers have acceptable credit ratings, if for any reason
such customers are unable or unwilling to fulfil their contractual obligations under the relevant PPAs or
standard offer contracts, the returns to the Group could decline. The Group has entered, and may enter,
into joint venture arrangements in order to pursue its projects. Any failure by the Group’s counterparties
to perform their obligations may lead to a delay in the development of the Group’s projects or may have
other adverse consequences for the Group. It is also possible that disputes with such counterparties may
arise or that the interests of the Group and its joint venture partners may not be aligned. There can be no
guarantee that such issues will not have adverse consequences for the Group.
Regulatory regime and permits
The profitability of renewable energy facilities will be in part dependent upon the continuation of a
favourable regulatory climate with respect to the continuing operations and the future growth and
development of the independent power industry and environmentally preferred energy sources.
Changes in the legislative and fiscal framework governing the activities of power producing companies,
such as the Group, may have a material impact on development and implementation activity or directly
affect the Group’s operations. In particular, changes in political regimes will constitute a material risk
factor for the Group’s operations in foreign countries. In order to conduct its operations in compliance
with applicable laws and regulations, the Group must obtain licences and permits from various
governmental authorities. The Group has not yet obtained all permits required for Raki/Huajache and
Punta Chome and is only at an early stage of application for permits for certain other projects. Some of
these permitting processes will require consultation with local communities. There can be no assurance
that the Group will be able to obtain all necessary licences and permits for Raki/Huajache and Punta
Chome or any subsequent projects. Furthermore, the Group may incur substantial costs in order to
maintain its compliance with existing laws and regulations and significant additional costs if these laws
and regulations are revised, or if new laws affecting the Group’s operations are passed.
In addition, PPAs or standard offer contracts in certain jurisdictions are subject to approval by local, state,
provincial or national utilities commissions or other regulatory authorities. Should the regulatory regime
in an applicable jurisdiction be modified in a manner which adversely affects renewable energy facilities
or projects, including increases in taxes and permit fees, the returns to the Company may be
adversely affected.
Operating risks
Renewable energy facilities encompass operations which are subject to environmental and safety
standards and regulations imposed by relevant national regulatory bodies. Failure to operate facilities in
strict compliance with applicable regulations and standards may expose owners or operators of facilities
to claims and clean-up costs and possible enforcement actions. Any new law or regulation could require
significant additional expenditure to achieve or maintain compliance.
Chile has made regulations to promote the generation of electricity from renewable sources to require
licenced electricity suppliers to source specified percentages of supplied electricity from renewable
sources. Should the current governmental regulations or incentive programs be modified, wind power
facilities and other renewable energy facilities may be adversely affected, which may have a material
adverse effect on the returns to the Company.
Failure to maintain or comply with necessary licences, consents or exemptions could result in a breach
of regulatory requirements that may lead to the owner being precluded from operating the licensed power
plant or at least constrained in undertaking such operations and could adversely affect the returns to
the Company.
Mining rights
The Group has applied for mining concessions for certain of its Tier 1 projects to prevent a third party
from gaining any mining rights over the proposed project land. There can be no assurance that the Group
will obtain any mining concessions for any or all of its projects.
29
Equipment failure
With respect to each power plant, there is a risk of equipment failure due to wear and tear, design error
or operator error, among other things, which could adversely affect the returns to the Company.
Power output estimations
The Company has estimated the MW potential of its projects using wind data and other data available to
it at that time. These estimations have not been independently validated by third parties and some may
be subject to adjustment prior to development. There can be no certainty, nor is it likely, that the Company
will fully develop as an IPP its current portfolio’s potential.
Electricity prices
Although the Directors intend to sell large amounts of electricity generated by Rame’s power plants
pursuant to PPAs or standard offer contracts, excess power capacity of certain facilities may be sold in
the open market. As a result, returns will, in part, depend upon prices paid for energy sold in the open
market. Such commodity pricing will vary over time. Over the long term, fluctuations in market prices
may impact adversely the returns to the Company.
Carbon trading credit risk
It is not anticipated that the Group will derive a significant proportion of its revenue from the sale or trade
of carbon credits although it is expected that the sale of such credits will be a source of income for the
Group and their price is governed by market forces, which may lead to fluctuations in the price.
The Group is dependent on its ability to attract and retain personnel
The Group’s success depends, to a large extent, on certain of its key personnel. The loss of the services
of any key personnel could have a material adverse effect on the Group. The competition for qualified
personnel in the power generation industry is intense, in particular in the wind energy sector in Chile.
There can be no assurance that the Group will be able to continue to attract and retain all personnel
necessary for the development and operation of its business. The Group does not have any key
person insurance.
UK Bribery Act 2010
The Group is subject to a number of anti-bribery laws, including, potentially, the UK Bribery Act 2010,
and will need to take care as it builds its business to ensure compliance with all such laws. While the
Group is fully committed to such compliance, it cannot be guaranteed.
Corruption
Corruption is perceived as a problem in certain jurisdictions in which the Group operates. Corrupt
practices may have an adverse impact on the companies in which the Company invests. Corruption may
also affect the ability of the Group to enforce legal rights.
General Risks
Financing
Implementation of the Group’s strategy will require significant capital investment. The Group’s ability
to raise further funds will depend on the success of existing and acquired projects. The Group may not
be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if
such funding is unavailable, the Company may be required to reduce the scope of its operations or
anticipated expansion.
Political and economic risks
It is anticipated that all or the majority of the Group’s activities will be outside the UK, and there are a
number of risks over which it will have little or no control. Whilst the Company will make every effort
to ensure it has robust commercial agreements covering its activities, there is a risk that the Group’s
activities will be adversely impacted by economic and political factors such as the imposition of additional
taxes and charges, cancellation or suspension of planning or other licences, war, terrorism, insurrection
and changes to laws governing the Group’s operations.
30
Currency risk and credit
The Company will report its results in US dollars, whilst a majority of its costs and revenues may be
denominated in other currencies. This may result in additions to the Company’s reported costs or
reductions in the Company’s reported revenues through currency fluctuations.
The Group may enter into transactions in relation to the development of projects, including financing
transactions, which would expose the Group to credit and currency risk. In the event of a bankruptcy or
insolvency of such a counterparty, the Group could experience significant losses, declines in the value
of its investment during the period in which the Group seeks to enforce its rights, inability to realize any
gains on its investment during such period and fees and expense incurred in enforcing its rights.
Legal systems
Some of the countries in which the Group may operate could have legal systems that are less well developed
than the UK. This could result in risks such as: (i) potential difficulties in obtaining effective legal redress
in the courts of such jurisdictions, whether in respect of a breach of law or regulation, or in an ownership
dispute; (ii) a higher degree of discretion on the part of governmental authorities; (iii) the lack of judicial
or administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or conflicts
between and within various laws, regulations, decrees, orders and resolutions; and (v) relative inexperience
of the judiciary and courts in such matters. In certain jurisdictions, the commitment of local business
people, government officials and agencies and the judicial system to abide by legal requirements and
negotiated agreements may be more uncertain, creating particular concerns with respect to licences and
agreements for business. These may be susceptible to revision or cancellation and legal redress may be
uncertain or delayed. There can be no assurance that joint ventures, planning applications, licences, licence
applications or other legal arrangements will not be adversely affected by the actions of government
authorities or others and the effectiveness of and enforcement of such arrangements in these jurisdictions
cannot be assured.
Health and Safety
The Group’s activities will be subject to health and safety standards and regulations. Failure to comply
with such requirements may result in fines and or penalties being imposed against the Group.
Litigation
Legal proceedings, with or without merit, may arise from time to time in the course of the Group’s
business. The Directors cannot preclude litigation being brought against any member of the Group
and any litigation brought against the Group could have a material adverse effect on the financial
condition, results or operations of the Group. The Company’s business may be materially adversely
affected if the Group and/or its employees or agents are found not to have met the appropriate standard
of care or exercised their discretion or authority in a prudent or appropriate manner in accordance with
accepted standards.
Taxation
The attention of investors is drawn to paragraph 11 of Part V of this document headed “Taxation”. Any
change in the Group’s tax status or in taxation legislation or its interpretation could affect the value of the
investments held by the Group, affect the Group’s ability to provide returns to Shareholders and/or alter
the post-tax returns to Shareholders. Representations in this document concerning the taxation of the
Group and its investors are based upon current tax law and practice which is subject to change.
Recent developments in global financial markets
There can be no assurances that financial conditions in the global financial markets will not worsen or
adversely affect the Group’s then prevailing financial position and performance.
Force Majeure events, civil unrest and terrorist attacks or war and conflicts involving Chile
The Group’s proposed projects now or in the future may be adversely affected by risks outside the control
of the Company, including labour unrest, strikes, civil disorder, war, subversive activities or sabotage,
fires, floods, explosions or other catastrophes, epidemics or quarantine restrictions. Any major hostilities
involving acts of violence including civil unrest or terrorist attacks, or events that are beyond human
control, could have an adverse effect on the Company’s business. Such acts could negatively affect
31
business sentiment as well as trade between countries, which could adversely affect business and the
profitability of companies. One of the countries in which the Company operates may enter into armed
conflict or war with other countries. The consequences of armed conflicts are unpredictable, and may
result in unforeseeable events that could have an adverse effect on business. Military activity or terrorist
attacks could adversely affect the economies of countries in which the Company operates by disrupting
communications and making travel more difficult. Such events could also create a perception that
investments in companies involved in these countries involve a higher degree of risk.
AIM Market Risks
Trading on AIM
An investment in shares traded on AIM is generally perceived to involve a higher degree of risk and be
less liquid than an investment in shares listed on the Official List. Consequently, it may be more difficult
for an investor to sell his or her Ordinary Shares than it would be if the Ordinary Shares were listed on
the Official List, and he or she may receive less than the amount paid. It is also possible that an active
trading market may not develop and continue upon completion of the Admission. Even if an active trading
market develops, the market price for the Ordinary Shares may fall below the initial price on Admission.
If an active trading market is not developed or maintained, the liquidity and trading price of the Ordinary
Shares could be adversely affected.
Ordinary Shares pricing risks
The market price of the Ordinary Shares may not reflect the underlying value of the Group’s net assets.
The price at which the Ordinary Shares are quoted and the price which investors may realise for their
Ordinary Shares will be influenced by a large number of factors, some specific to the Group and its
operations and some which may affect the quoted investment sector or investment or quoted companies
generally and which are outside the Group’s control. These factors could include the performance of the
Group, large purchases or sales of the Ordinary Shares, legislative changes, general economic, political
or regulatory conditions, or changes in market sentiment towards the Ordinary Shares. Any of these
events could result in a material decline in the market price of the Ordinary Shares.
Limited regulatory control
Shareholders will not enjoy protections or rights other than those reflected in the Articles and those rights
conferred by law. Although the Directors recognise the importance of good corporate governance, neither
the Listing Rules of the United Kingdom Listing Authority nor the UK Corporate Governance Code will
apply to the Group.
Lack of liquidity of the Group’s Ordinary Shares
Although the Group has applied for the Ordinary Shares to be admitted to trading on AIM, no assurance
can be given that at any time after Admission a liquid market for the Ordinary Shares will develop.
Shareholders who need to dispose of their Ordinary Shares may be forced to do so at prices that do not
fully reflect the net asset value per share.
Share dilution
The Company may require further funds to be raised, which may include funds raised by way of further
equity offerings, and future equity offerings by the Company will dilute the percentage ownership of the
Company by existing Shareholders unless they participate in any future equity offerings. In certain
circumstances, securities issued by the Company in the future may have rights, preferences or privileges
attached to them that are senior to or otherwise adversely affect those attached to the Ordinary Shares in
issue from time to time.
Investors should therefore consider carefully whether investment in the Company is suitable for
them, in light of the risk factors outlined above, their personal circumstances and the financial
resources available to them.
The risk factors listed above do not necessarily comprise all those associated with an investment in
the Company.
32
PART IV (a)
ACCOUNTANTS’ REPORT ON THE COMPANY
Crowe Clark Whitehill LLP
Chartered Accountants
Member of Crowe Horwath International
St Bride's House
10 Salisbury Square
London EC4Y 8EH, UK
+44 (0)20 7842 7100
+44 (0)20 7583 1720
DX: 0014 London Chancery Lane
www.croweclarkwhitehill.co.uk
31 March 2014
The Directors
Rame Energy Plc
PO Box 207,
13 – 14 Esplanade
St Helier
Jersey JE11 1BD
The Directors
Northland Capital Partners Limited
131 Finsbury Pavement
London EC2A 1NT
Dear Sirs
Introduction
We report on the financial information of Rame Energy Plc (the “Company”). This financial information has
been prepared for inclusion in Part IV (a) of the Company’s AIM Admission Document dated 31 March 2014
(“the Document”), on the basis of the accounting policies set out in note 2 to the financial information. This
report is required by paragraph (a) of Schedule Two to the AIM Rules for Companies (the “AIM Rules”) and
is given for the purposes of complying with the AIM Rules and for no other purpose.
Responsibilities
The Directors are responsible for preparing the financial information on the basis of preparation set out
in Note 2 to the financial information and in accordance with International Financial Reporting Standards
as endorsed by the European Commission (“IFRS”).
It is our responsibility to form an opinion on the financial information as to whether the financial
information gives a true and fair view, for the purposes of the Document and to report our opinion to you.
Save for any responsibility arising under Paragraph (a) of Schedule Two of the AIM Rules for Companies
to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any person other than the addressees of this letter
for any loss suffered by any such person as a result of, arising out of, or in connection with this report or
our statement, required by and given solely for the purposes of complying with Paragraph (a) of Schedule
Two of the AIM Rules for Companies, consenting to its inclusion in the Document.
Basis of Opinion
We conducted our work in accordance with Standards of Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the
amounts and disclosures in the financial information. It also included an assessment of significant
33
estimates and judgments made by those responsible for the preparation of the underlying financial
information and whether the accounting policies are appropriate to the entity’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial information is free from material misstatement, whether caused by fraud or other irregularity
or error.
Opinion
In our opinion, the financial information gives, for the purposes of the Document, a true and fair view
of the state of affairs of the Company as at the dates stated and of the results, cash flows and changes in
equity for the periods then ended in accordance with the basis of preparation set out in Note 2 to the
financial information and has been prepared in accordance with IFRS and has been prepared in a form
that is consistent with the accounting policies adopted by the Company.
Declaration
For the purposes of paragraph (a) of Schedule Two of the AIM Rules for Companies, we are responsible
for this report as part of the Document and declare that we have taken all reasonable care to ensure that
the information contained in this report is, to the best of our knowledge, in accordance with the facts and
contains no omission likely to affect its import. This declaration is included in the Document in
compliance with Paragraph (a) of Schedule Two of the AIM Rules.
Yours faithfully
Crowe Clark Whitehill LLP
34
STATEMENT OF FINANCIAL POSITION
The statement of financial position of the Company as at 30 June 2013 is stated below:
Note
USD
Assets
Current assets
Cash and cash equivalents
—
Total assets
—
Equity and liabilities
Capital and reserves
Share capital
—
Total equity attributable to equity holders
—
Total liabilities
—
Total equity and liabilities
—
STATEMENT OF COMPREHENSIVE INCOME
The statement of comprehensive income of the Company for the period from incorporation on
26 February 2013 to 30 June 2013 is stated below:
Total comprehensive income attributable to equity owner
—
Earnings per share
Basic and diluted (USD $ per share)
—
35
STATEMENT OF CHANGES IN EQUITY
The statement of change in equity of the Company for period from incorporation on 26 February 2013
to 30 June 2013 are set out below:
Share capital
USD
On incorporation
Result for the period
—
—
As at 30 June 2013
—
The share capital comprises the ordinary issued share capital of the Company.
STATEMENT OF CASH FLOWS
The statement of cash flows of the Company for the period from incorporation on 26 February 2013 to
30 June 2013 is as follows;
USD
Financing activities
Proceeds from issue of share capital
—
Net cash from financing activities
—
Net increase in cash and cash equivalents
—
Cash and cash equivalents at end of period
—
36
NOTES TO THE FINANCIAL INFORMATION
1.
General Information
The Company was incorporated on the 26 February 2013. The Company did not trade during the period
under review and its registered office is at PO Box 207, 13-14 Esplanade, St Helier, Jersey, JEI 1BD. The
nature of the Company’s operations is to act as a holding company of operating subsidiaries engaged
principally in providing technical consultancy, construction services and development, implementation
and operation of wind energy projects.
2.
Accounting Policies
Basis of preparation
This financial information of the Company has been prepared on a historical basis as varied by the use of
fair value in accordance with IFRS, International Accounting Standards (IASs) and International Financial
Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union.
The financial information of the Company is presented in United States Dollar (“USD”).
Standards and interpretations issued but not yet applied
At the date of authorisation of this financial information, the International Accounting Standards Board
(“IASB”) and IFRIC have not issued any standards or interpretations which are effective for annual
accounting periods beginning on or after the stated effective date.
Comparative figures
No comparative figures have been presented as the financial information covers the period from
incorporation to 30 June 2013.
Cash and cash equivalents
The Company considers any cash on short-term deposits and other short term investments to be
cash equivalents.
3.
Share capital
On 26 February 2013, the Company was incorporated and issued 2 Ordinary Shares at no par value. On
31 January 2014 the Company issued 66,933,508 Ordinary Shares in connection with a Shareholder
Subscription and Restructuring Agreement. On 11 February 2014 the Company issued 9,116,666 Ordinary
Shares for cash consideration of US$ 2,187,993 and on 19 February 2014 the Company issued 6,430,325
Ordinary Shares for cash consideration of US$1,543,278.
4.
Subsequent Events
On 21 November 2013 the Company entered into an agreement with Asty Capital AG (the “Consultant”).
The Consultant is to, inter alia, introduce new investors to the Company. In consideration for carrying
out the services the Company shall pay the Consultant CAD 200,000. In addition the Consultant shall be
issued 300,000 Ordinary Shares.
In December 2013, Rame Energy Plc entered into the Santander Shareholders’ agreement and Santander
SPA with Santander Group Limited, which led to the sale of 80 per cent. of the shares of each of Proyecto
Raki SpA and Proyecto Huahache SpA (the “Project Companies”) to Santander for a sum of USD 1,160,000.
On 31 January 2014 the Company entered into a Shareholder Subscription and Restructuring Agreement
pursuant to which the parties agreed to formally document their shareholdings and allotment of and
subscription for shares in the Company, including to provide for:
•
the transfer of the Ordinary Shares held by Central One Limited and Central Two Limited;
37
•
the subscription of a total of 3,102,321 Ordinary Shares by various parties to the agreement and
various third parties for a total of £3.10 at a price of 0.000001 per Ordinary Share;
•
the transfer of all the Shares in Rame Energy Pte. Ltd.(“Rame Energy”) to the Company for US$1;
•
the transfer of all the Shares in Seawind Holding SP.A (“Seawind Holding”) to the Company (or
Rame Energy as its nominee) for one Ordinary Share;
•
the transfer of all the Shares in Seawind International Limited to the Company (or Rame Energy
as its nominee) by Tim Adams in consideration for a total of one Ordinary Share;
•
the transfer of all the Shares in Seawind International to the Company (or Rame Energy as its
nominee) by James Wilson and Tim Adams in consideration for a total of two Ordinary Shares; and
•
the subscription of a total of 63,831,174 Ordinary Shares by various parties to the agreement and
various third parties for a total of £63.83 at a price of 0.000001 per Ordinary Share.
On 31 March 2014 it was agreed that the Company would issue to Northland Capital Partners Limited
(“Northland”) warrants entitling Northland, conditional on Admission, to subscribe for such number of
Ordinary Shares in the Company equivalent to one per cent. of the Enlarged Issued Share Capital. In
order to satisfy this obligation, the Company has executed an instrument dated 31 March 2014 creating
such warrants and issued such warrants to Northland. Such warrants give Northland the right, conditional
on Admission, to subscribe (“Subscription Right”) for shares in the Company at the Placing Price. The
number of warrants issued to Northland on Admission will be 952,695.
On 7 February 2014 Pires Investments Plc, the Company, Rame Energy and Seawind Holding Sp.A
entered into an Investment Agreement pursuant to which Pires subscribed for the Convertible Loan Notes
totaling £410,000. The Convertible Loan Notes shall be issued in amounts and multiples of £1,000 and
the principal amount is limited to £410,000 plus capitalised interest. Interest is payable on the Convertible
Loan Notes at the rate of 10 per cent. (in case of default,10.5 per cent.) per annum, with an interest
holiday for the nine month period from issue (save that interest is payable on 31 October 2014 for that
period on any Convertible Loan Notes then remaining in issue and not converted and thereafter accrued
interest is payable on conversion of such notes).
The Convertible Loan Notes are redeemable on 7 February 2017 or if Admission is not achieved in certain
circumstances more than six months after their issue or upon occurrence of usual events of default.
The Convertible Loan Notes are convertible:
(a)
by noteholders at any time prior to 7 February 2017 by notice to the Company;
(b)
by the Company by notice to noteholders subject to either (i) Admission and a minimum of
£1,000,000 being raised from investors as part of Admission or (ii) Admission within six months
of issue and the Company raising £2,500,000 from investors as part of Admission or before or after
Admission but within nine months of Admission.
In case of Admission within 12 months of issue, the number of Ordinary Shares to be issued on conversion
is determined by dividing the principal amount of the Convertible Loan Notes to be converted by a price
per share equal to a price which is at a 25 per cent. discount to the price at which new monies are raised
on Admission (i.e. a 25 per cent. discount to the Placing Price) provided that, if the market capitalisation
of the Company pre-new money raised on Admission is more than US$33,000,000 then the price per
share shall be determined on the basis of the value per share obtained by dividing the sum of
US$25,000,000 by the number of shares in issue, ignoring any shares issued in connection with the
raising of new money on Admission.
On 31 March 2014 the Company entered into an agreement with Timothy Adams pursuant to which
Timothy Adams agreed to convert a loan of £158,762 to the Company into 882,011 Ordinary Shares on
Admission at the Placing Price.
38
On 31 March 2014 the Company entered into an agreement with Splendid Suns Holdings Limited
pursuant to which Splendid Suns Holdings Limited agreed to convert a loan of £118,727 to the Company
into 659,594 Ordinary Shares on Admission at the Placing Price.
On 11 February 2014 the Company raised USD 2.2 million from the issue of 9,116,666 Ordinary Shares.
On 19 February 2014 the Company raised USD 1.5 million from the issue of 6,430,325 Ordinary Shares.
On 31 March 2014 the Company entered into agreements with Amati Global Investors Limited where by
it will invest £800,000 (USD 1.3 million) by way of a 5 year term convertible loan note.
5.
Nature of financial Information
The financial information presented above does not constitute statutory accounts for the period under review.
39
PART IV(b)
ACCOUNTANTS’ REPORT ON THE OPERATING GROUP
Crowe Clark Whitehill LLP
Chartered Accountants
Member of Crowe Horwath International
St Bride's House
10 Salisbury Square
London EC4Y 8EH, UK
+44 (0)20 7842 7100
+44 (0)20 7583 1720
DX: 0014 London Chancery Lane
www.croweclarkwhitehill.co.uk
31 March 2014
Rame Energy Plc
PO Box 207,
13-14 Esplanade
St Helier
JerseyJE1 1BD
The Directors
Northland Capital Partners Limited
131 Finsbury Pavement,
London, EC2A 1NT
Dear Sirs
Introduction
We report on the pro forma aggregated financial information of the companies set out in note 1(a) below
(together, the “Operating Group”) which has been prepared for inclusion in Part IV (b) of the AIM
Admission Document dated 31 March 2014 of Rame Energy Plc (the “Company”) (“the Document”), on
the basis of the accounting policies set out in Note 2 to the financial information. This report is required
by paragraph (a) of Schedule Two to the AIM Rules for Companies (the “AIM Rules”) and is given for
the purposes of complying with the AIM Rules and for no other purpose.
Responsibilities
The Directors are responsible for preparing the pro forma aggregated financial information on the basis
of preparation set out in Note 1(c) below and in accordance with International Financial Reporting
Standards as endorsed by the European Commission (“IFRS”).
It is our responsibility to form an opinion on the pro forma aggregated financial information as to whether
the pro forma aggregated financial information gives a true and fair view, for the purposes of the
Document and to report our opinion to you.
Save for any responsibility arising under Paragraph (a) of Schedule Two of the AIM Rules for Companies
to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume
any responsibility and will not accept any liability to any person other than the addressees of this letter
for any loss suffered by any such person as a result of, arising out of, or in connection with this report or
our statement, required by and given solely for the purposes of complying with Paragraph (a) of Schedule
Two of the AIM Rules for Companies, consenting to its inclusion in the Document.
Basis of Opinion
We conducted our work in accordance with Standards of Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the
amounts and disclosures in the pro forma aggregated financial information. It also included an
40
assessment of significant estimates and judgments made by those responsible for the preparation of the
underlying pro forma aggregated financial information and whether the accounting policies are
appropriate to the entity’s circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
pro forma aggregated financial information is free from material misstatement, whether caused by fraud
or other irregularity or error.
Opinion
In our opinion, the pro forma aggregated financial information gives, for the purposes of the Document, a
true and fair view of the state of affairs of the Operating Group as at the dates stated and of the results, cash
flows and changes in equity for the periods then ended in accordance with the basis of preparation set out
in Note 2 to the pro forma aggregated financial information and has been prepared in accordance with IFRS
and has been prepared in a form that is consistent with the accounting policies adopted by the Company.
Declaration
For the purposes of paragraph (a) of Schedule Two of the AIM Rules for Companies, we are responsible
for this report as part of the Document and declare that we have taken all reasonable care to ensure that
the information contained in this report is, to the best of our knowledge, in accordance with the facts and
contains no omission likely to affect its import. This declaration is included in the Document in
compliance with Paragraph (a) of Schedule Two of the AIM Rules for Companies.
Yours faithfully
Crowe Clark Whitehill LLP
41
PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The pro forma consolidated statement of financial position of the Operating Group at 31 December 2010,
2011 and 2012 are set out below:
2010
USD
2011
USD
2012
USD
286,217
494,017
11,182
—
23,407
159,678
880,422
11,171
1,020
20,294
131,666
1,830,564
11,677
—
—
814,823
1,072,585
1,973,907
582,860
670,651
684,370
67,869
574,888
2,580,638
3,395,461
193,450
834,648
818,406
125,816
499,687
2,472,007
3,544,592
85,566
966,547
188,807
86,068
1,154,242
2,481,230
4,455,137
2,042
362,974
44,554
(918,573)
2,042
146,021
60,168
368,691
2,042
102,965
201,601
1,320,688
Total equity attributable to the owners
of the Operating Group
(509,003)
576,922
1,627,296
Total equity
(509,003)
576,922
1,627,296
14,032
3,998
30,699
3,995
26,662
4,174
18,030
34,694
30,836
Total liabilities
1,240,952
2,322,090
—
323,392
3,886,434
3,904,464
2,113,380
700,496
99,022
20,079
2,932,977
2,967,671
2,499,728
152,663
119,631
24,983
2,797,005
2,827,841
Total equity and liabilities
3,395,461
3,544,592
4,455,137
Note
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Investment in other Company
Other non current asset
Current assets
Trade receivables
Other receivables
Amount owing by related parties
Tax recoverable
Cash and cash equivalents
3
4
5
6
7
16
8
Total assets
Equity and liabilities
Share capital
Foreign exchange translation reserve
Revaluation reserve
Retained profits
9
10
Non current liabilities
Leased obligations
Deferred tax liabilities
Current liabiliities
Trade and other payables and accruals
Amount owing to related parties
Short-term borrowings
Provision for taxation
11
16
42
PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
The pro forma consolidated statement of comprehensive income of the Operating Group for each of the
three years ended 31 December 2010, 2011 and 2012 are set out below:
Note
2010
USD
2011
USD
2012
USD
Revenue
Cost of sales
5,588,741
(4,271,790)
5,952,234
(2,047,687)
6,579,127
(3,137,682)
Gross profit
Other income
1,316,951
32,820
3,904,547
23,000
3,441,445
71,308
Administrative expenses
1,349,771
(2,423,329)
3,927,547
(2,603,345)
3,512,753
(2,467,916)
Operating (loss)/profit
Interest receivable
Interest payable
(1,073,558)
3,802
(41,466)
1,324,202
1,000
(37,938)
1,044,837
7,576
(26,086)
(1,111,222)
(23,169)
1,287,264
—
1,026,327
(74,330)
(1,134,391)
1,287,264
951,997
(Loss)/profit before taxation
Income tax expense
12
14
(Loss)/profit after taxation attributable to
owners of the Operating Group
Other comprehensive (expense)/income
(currency translation differences)
Revaluation reserve
362,974
44,554
Total comprehensive income/(loss) for the
financial year attributable to owners of
the Operating Group
Earnings/(loss) per share attributable to
owners of the Operating Group
Basic and diluted
15
43
(216,953)
15,614
(43,056)
141,433
(726,863)
1,085,925
1,050,374
(0.009)
0.013
0.011
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
The pro forma consolidated statement of changes in equity of the Operating Group for each of the three
years ended 31 December 2010, 2011 and 2012 are set out below:
Non distributable
Distributable
Foreign
exchange
Share translation Revaluation
capital
reserve
Reserve
USD
USD
USD
Note
Retained
profits
USD
Total
equity
USD
Balance at 1st January 2010
Profit after taxation
Other comprehensive income
(currency translation differences)
Total comprehensive income for the
financial year
2,042
—
—
—
—
215,818 217,860
— (1,134,391)(1,134,391)
—
362,974
44,554
—
362,974
44,554 (1,134,391) (726,863)
Balance at 31 December 2010
Profit after taxation
Other comprehensive expense
(currency translation differences)
Total comprehensive income/(loss) for the
financial year
2,042
—
362,974
—
44,554 (918,573) (509,003)
— 1,287,264 1,287,264
Balance at 31 December 2011
Profit after taxation
Other comprehensive income
(currency translation differences)
Total comprehensive income for the
financial year
2,042
—
Balance at 31 December 2012
2,042
—
—
407,528
—
(216,953)
15,614
(201,339)
—
(216,953)
15,614 1,287,264 1,085,925
146,021
—
60,168
—
368,691
951,997
576,922
951,997
—
(43,056)
141,433
—
98,377
—
(43,056)
141,433
102,965
201,601 1,320,688 1,627,296
951,997 1,050,374
Foreign exchange translation reserve is a non distributable reserve of the exchange differences arising
from revenues and expenses of foreign operations translated at exchange rates ruling at the dates of the
transactions. All exchange differences arising from translation are taken directly to other comprehensive
income and accumulated in equity under the translation reserve.
Retained profits represent the cumulative value of the profits not distributed to shareholders, but retained
to finance the future capital requriements of the Operating Group.
44
PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS
The pro forma consolidated statement of changes in cash flows of the Operating Group for each of the
three years ended 31 December 2010, 2011 and 2012 are set out below:
2010
USD
2011
USD
2012
USD
1,287,264
1,026,327
186
60,368
5,426
35,429
(1,004,668)
1,347,818
1,067,182
Movements in working capital:
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
1,451,302
(380,894)
(33,129)
(1,057,138)
645,334
(161,376)
Cash generated from operations
Income tax paid
1,070,408
(13,940)
(1,090,267)
—
483,958
74,330
Cash flows from operating activities
(Loss)/profit for year before tax
Adjustments for:
Amortisation
Depreciation of non-current assets
(1,111,222)
301
106,253
Net cash generated by operating activities
51,800
257,551
Cash flows from investing activities
Interest received
Purchases of property, plant and equipment
Investment in wind energy projects
3,802
(126,698)
(494,017)
1,000
(45,907)
(386,405)
7,575
(50,553)
(950,142)
(616,913)
(431,312)
(993,120)
(12,815)
—
—
99,022
—
20,609
(12,815)
(577,938)
1,158,169
(5,343)
99,022
(74,739)
574,888
(462)
20,609
652,959
499,687
1,596
574,888
499,687
Net cash used in investing activities
Cash flows from financing activities
Repayment of loan
Loan
Net (cash used) generated from in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Forex
Cash and cash equivalents at the end of the year
45
1,625,470
1,154,242
NOTES TO THE FINANCIAL INFORMATION
1
(a)
General information
The Operating Group
The Operating Group consists of two operating sub groups, which are the Seawind UK Group and
the Seawind Chile Group.
The principal operating companies within the Seawind UK Group are Seawind International Ltd,
Seawind Marine Ltd, and Seawind Marine Services Ltd, and under the Seawind Chile Group are
Seawind Holdings, Ingeneria Seawind Sudamerica and Seawind Services SPA all of which are private
companies limited by shares and incorporated under the UK Companies Act for the Seawind UK
Group and under the Chilean Law for the Seawind Chile Group. In addition, there are a number of
special vehicle companies set up within the Seawind Chile Group as listed in note 1 (b).
The companies within the Seawind UK Group are domiciled in the UK and the companies in the
Seawind Chile Group are domiciled in Chile. The UK registered office and principal place of
business for the Operating Group is as follows:
Seawind House
98-99 Hotham Place
Millbridge
Plymouth
Devon PL1 5NE
(b)
Principal activities
The principal activity of the companies included in the pro forma aggregated financial information
for each of the three financial years ended 31 December 2012 are as follows:
Name
Place of
incorporation
Principal
activities
Seawind Marine Limited
UK
Consultancy services
Ordinary
(Marine engineering)
Shares
Consultancy services
Ordinary
(Building and repair of ships) Shares
Consultancy services
Ordinary Shares
Consultancy services
Ordinary Shares
Consultancy services
Ordinary Shares
Consultancy services
Ordinary Shares
(Development of engineering
projects and design of system
for generating electricity
or wind)
Consultancy services
Ordinary Shares
(Involved in development
and generating renewable
energy)
Consultancy services
Ordinary Shares
(Development, construction
and investment throughout
the country, projects for
renewable energy generation)
Consultancy services
Ordinary Shares
Seawind Marine
Services Limited
Seawind International Ltd
Seawind Holding SA
Seawind Services S.A
Ingeneria Seawind
Sudamerica Limitada
UK
UK
Chile
Chile
Chile
Vientos Andinos SpA
Chile
Eolicos del sur SpA
Chile
Inversions Pelicano SpA
Chile
46
Issued share
capital
Effective
interests
100%
100%
100%
100%
100%
100%
100%
100%
100%
Place of
incorporation
Name
Proyecto Eolico Chrome SpA Chile
Proyecto Eolico Raki SpA
Chile
Proyecto Eolico
Huajache SpA
Chile
(c)
Principal
activities
Issued share
capital
Effective
interests
Consultancy services
(Development and invest in
wind project)
Consultancy services
(Development and invest in
wind project)
Consultancy services
(Development and invest in
wind project)
Ordinary Shares
100%
Ordinary Shares
100%
Ordinary Shares
100%
Basis of preparation
The pro forma consolidated financial statements of the Operating Group have been prepared in
accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”) issued
by the International Accounting Standards Board (“IASB”), including related interpretations issued
by the International Financial Reporting Interpretations Committee (“IFRIC”).
The individual financial information of each group entity is measured and presented in the currency
of the primary economic environment in which the entity operates (its functional currency). The
for forma aggregated financial information of the Operating Group is presented in US Dollars,
which is the presentational currency for the pro-forma aggregated financial information. The
functional currency of each of the group entities is the local currency of each individual entity.
(d)
Standards, amendments and interpretations to published standards not yet effective
At the date of authorisation of this consolidated financial information, the IASB and IFRIC have
issued the following standards and interpretations which are not yet effective, have not been early
adopted and have been adopted by the E.U. They are not expected to have a material impact on
reported results.
–
IAS 1 Amendment – Presentation of items of other comprehensive income
–
IAS 19 Amendment – Employee Benefits
–
IAS 27 Separate Financial Statements
–
IAS 28 Investments in Associates and Joint Ventures
–
IAS 32 (amended) – Offsetting of financial assets and financial liabilities
–
IAS 39 (amendments) – Navation of derivatives and continuation of hedge accounting
–
IFRS 1 Amendments - Government Loans
–
IFRS 7 and IAS 32 Offsetting financial assets and financial liabilities
–
IFRS 10 Consolidated Financial Statements
–
IFRS 11 Joint Arrangements
–
IFRS 12 Disclosure of Interests in Other Entities
–
IFRS 13 Fair Value Measurement
–
IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine
47
2)
Summary of significant accounting policies
The consolidated financial information has been prepared on the historical cost basis as varied by the use
of fair values when required by accounting standards, as explained in the accounting policies set out below,
which has been prepared in accordance with IFRS. The principal accounting policies are set out below.
(a)
Basis of consolidation
The pro-forma aggregate financial information includes the financial information of the Seawind
UK Group and Seawind Chile Group as defined in note 1 for each of the three financial year ended
31 December 2010, 2011 and 2012.
(b)
Functional and foreign currencies
The pro forma aggregated financial information is presented in US Dollars, which is the Operating
Group’s presentation currency for the purposes of this pro-forma consolidation.
(c)
(i)
Transactions and balances
Transactions in foreign currencies are converted into the respective functional currencies on
initial recognition, using the exchange rates approximating those ruling at the transaction
dates. Monetary assets and liabilities at the end of the reporting period are translated at the
rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange
rates that existed when the values were determined. All exchange differences are recognised
in profit or loss.
(ii)
Foreign operations
Assets and liabilities of foreign operations are translated to USD at the rates of exchange
ruling at the end of the reporting period. Revenues and expenses of foreign operations are
translated at exchange rates ruling at the dates of the transactions. All exchange differences
arising from translation are taken directly to other comprehensive income and accumulated
in equity under the translation reserve. On the disposal of a foreign operation, the cumulative
amount recognised in other comprehensive income relating to that particular foreign
operation is reclassified from equity to profit or loss.
Financial instruments
Financial instruments are recognised in the statements of financial position when the Operating
Group have become a party to the contractual provisions of the instruments.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument
classified as a liability are reported as an expense or income. Distributions to holders of financial
instruments classified as equity are charged directly to equity.
Financial instruments are offset when the Operating Group have a legally enforceable right to offset
and intend to settle either on a net basis or to realise the asset and settle the liability simultaneously.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial
instrument not at fair value through profit or loss, transaction costs that are directly attributable to
the acquisition or issue of the financial instrument. Financial instruments recognised in the
statements of financial position are disclosed in the individual policy statement associated with
each item.
(i)
Financial assets
On initial recognition, financial assets are classified as either financial assets at fair value
through profit or loss, held-to-maturity investments, loans and receivables financial assets,
or available-for-sale financial assets, as appropriate.
•
Financial assets at fair value through profit or loss
As at the end of the reporting period, there were no financial assets classified under
this category.
48
(ii)
•
Held-to-maturity investments
As at the end of the reporting period, there were no financial assets classified under
this category.
•
Loans and receivables financial assets
Trade receivables and other receivables that have fixed or determinable payments that
are not quoted in an active market are classified as loans and receivables financial
assets. Loans and receivables financial assets are measured at amortised cost using
the effective interest method, less any impairment loss. Interest income is recognised
by applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
•
Available-for-sale financial assets
As at the end of the reporting period, there were no financial assets classified under
this category.
Financial liabilities
All financial liabilities are initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method other than those
categorised as fair value through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are either held
for trading or are designated to eliminate or significantly reduce a measurement or
recognition inconsistency that would otherwise arise. Derivatives are also classified as held
for trading unless they are designated as hedges.
(iii)
Equity instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a deduction, net of tax, from proceeds.
Dividends on ordinary shares are recognised as liabilities when approved for appropriation.
(d)
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses, if any.
Depreciation is calculated under the straight-line method to write off the depreciable amount of the
assets over their estimated useful lives. Depreciation of an asset does not cease when the asset
becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual
rates used for this purpose are:Plant and machinery
Computer equipment
Furniture and fittings
Motor vehicles
25 – 50% straight line
33% straight line
10% straight line
25% straight line
The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate,
at the end of each reporting period to ensure that the amounts, method and periods of depreciation
are consistent with previous estimates and the expected pattern of consumption of the future
economic benefits embodied in the items of the property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when the cost is incurred and it is probable that the future economic benefits
associated with the asset will flow to the Operating Group and the cost of the asset can be measured
reliably. The carrying amount of parts that are replaced is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also
comprises the initial estimate of dismantling and removing the asset and restoring the site on which it
is located for which the Operating Group are obligated to incur when the asset is acquired, if applicable.
49
Asset in the course of construction are stated at cost and are recognised only when it is probable
that the asset under development will be constructed, based on a management judgement of when
the project meets key criteria required for its successful development, including grid access or the
completion of commercial heads of terms.
An item of property and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use. Any gain or loss arising from derecognition of the asset is
recognised in profit or loss. The revaluation reserve included in equity is transferred directly to
retained profits on retirement or disposal of the asset.
(e)
Development costs
Costs capitalised as development wind intangibles represent the costs incurred in bringing
individual wind farm projects to consented stage. Cost associated with reaching the consent stage
include options over land rights, planning application costs and environment impact studies and
related internal staff costs. These may be costs incurred directly or acquisition of a controlling
interest in a project.
The point of capitalisation occurs following a site review by the Board, ensuring the key planning,
construction and financing risks have been mitigated to a level where the Board considers it
probable that the site will deliver future economic benefits. This includes demonstration of technical
feasibility, intention to complete, availability of resources, how the asset will generate future
economic benefits and the ability to reliably measure expenditure.
Development wind assets are not amortised until the asset is substantially complete and ready for
its intended use. The asset is subjected to impairment testing on an annual basis until this time.
At the point at which it is probable that the project under development will be constructed by the
Operating Group based on management judgment when the project meets key criteria required for
its successful development, including planning permission and grid access, the project is transferred
to Assets in the course of construction.
Amortisation is over the expected useful life of the related operating asset. The asset is derecognised
on disposal, or when no future economic benefits are expected from their use. The carrying value
of development costs is reviewed for impairment annually when the asset is not yet in use or more
frequently when an indication of impairment arises during the reporting year.
(f)
Impairment
(i)
Impairment of financial assets
All financial assets (other than those categorised at fair value through profit or loss), are
assessed at the end of each reporting period whether there is any objective evidence of
impairment as a result of one or more events having an impact on the estimated future cash
flows of the asset.
An impairment loss in respect of loans and receivables financial assets is recognised in profit
or loss and is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the financial asset’s original effective
interest rate.
In a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
(ii)
Impairment of non-financial assets
The carrying values of assets, other than those to which IAS 36 Impairment of Assets does
not apply, are reviewed at the end of each reporting period for impairment when there is an
indication that the assets might be impaired. Impairment is measured by comparing the
50
carrying values of the assets with their recoverable amounts. The recoverable amount of the
assets is the higher of the assets' fair value less costs to sell and their value in use, which is
measured by reference to discounted future cash flow.
An impairment loss is recognised in profit or loss immediately.
In respect of assets other than goodwill, and when there is a change in the estimates used to
determine the recoverable amount, a subsequent increase in the recoverable amount of an
asset is treated as a reversal of the previous impairment loss and is recognised to the extent
of the carrying amount of the asset that would have been determined (net of amortisation and
depreciation) had no impairment loss been recognised. The reversal is recognised in profit
or loss immediately.
(g)
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the
use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right
is not explicitly specified in an arrangement.
Finance leases which transfer to the Operating Group substantially all the risks and benefits
incidental to ownership of the leased item, are capitalised at the commencement of the lease at the
fair value of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between finance charges and reduction of the lease liability so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised in finance costs in the income statement.
A leased asset is deprecated over the useful life of the asset. However, if there is no reasonably
certainty that the Operating Group will obtain ownership by the end of the lease term, the asset is
deprecated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised an operating expense in the income statement on a
straight-line basis over the lease term.
(h)
Taxes
Current income tax
Income tax comprises current and deferred tax.
Current tax is the expected amount of income taxes payable in respect of the taxable profit for the
year and is measured using the tax rates that have been enacted or substantively enacted at the end
of the reporting period.
Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax liabilities are recognised for all taxable temporary differences other than those that
arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over the business combination costs or from
the initial recognition of an asset or liability in a transaction which is not a business combination
and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unused tax credits to the extent that it is probable that future taxable profits will be available against
which the deductible temporary differences, unused tax losses and unused tax credits can be
utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient future taxable profits
will be available to allow all or part of the deferred tax assets to be utilised.
51
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
period when the asset is realised or the liability is settled, based on the tax rates that have been
enacted or substantively enacted at the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when the deferred income taxes relate to the
same taxation authority.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss.
Deferred tax items are recognised in correlation to the underlying transactions either in other
comprehensive income or directly in equity and deferred tax arising from a business combination is
included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the
acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs.
Sales Tax
Revenues, expenses and assets are recognised net of the amount of sales tax, except:
•
Receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as
part of the receivables or payables in the statement of financial position.
(i)
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, deposits with financial institutions
and short-term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
(j)
Employee benefits
(i)
Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are
accrued in the period in which the associated services are rendered by employees of the
Operating Group.
(ii)
(k)
Defined contribution plans
The Operating Group’s contributions to defined contribution plans are recognised in profit
or loss in the period to which they relate. Once the contributions have been paid, the Group
has no further liability in respect of the defined contribution plans.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Operating Group has a present or constructive obligation as a
result of past events, when it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, and when a reliable estimate of the amount can be made.
Provisions are reviewed at the end of each financial reporting period and adjusted to reflect the
current best estimate. Where effect of the time value of money is material, the provision is the
present value of the estimated expenditure required to settle the obligation.
A contingent liability is a possible obligation that arises from past events and whose existence will
only be confirmed by the occurrence of one or more uncertain future events not wholly within the
control of the Operating Group. It can also be a present obligation arising from past events that is
not recognised because it is not probable that outflow of economic resources will be required or the
amount of obligation cannot be measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the financial statements.
When a change in the probability of an outflow occurs so that the outflow is probable, it will then
be recognised as a provision.
52
A contingent asset is a probable asset that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly
within the control of the Operating Group. The Operating Group does not recognise contingent assets
but discloses its existence where inflows of economic benefits are probable, but not virtually certain.
(l)
Borrowing costs
Borrowing costs, directly attributable to the acquisition and construction of plant and equipment
are capitalised as part of the cost of those assets, until such time as the assets are ready for their
intended use or sale. Capitalisation of borrowing costs is suspended during extended periods in
which active development is interrupted.
All borrowing costs are recognised in profit or loss as expenses in the period in which they incurred.
(m)
Revenue and other income
(i)
Sale of goods
Revenue is recognised upon delivery of goods and customers’ acceptance and where
applicable, net of returns and trade discounts.
(ii)
Services
A significant part of the Operating Group’s turnover represents revenue recognised on long
term service contracts. When the outcome of such a contract can be estimated reliably,
revenue and costs are recognised by reference to the stage of completion of the contract
activity at the end of the reporting period, measured based on the proportion of contract
costs incurred for work performed to date relative to the estimated total contract costs, except
where this would not be representative of the stage of completion. Variations in contract
work, claims and incentive payments are included to the extent that the amount can be
measured reliably and its receipt is considered probable.
When the outcome of a contract cannot be estimated reliably, contract revenue is recognised
to the extent of contract costs incurred that it is probable will be recoverable. Contract costs
are recognised as expenses in the period in which they are incurred. When it is probable that
total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
When contract costs incurred to date plus recognised profits less recognised losses exceed
progress billings, the surplus is shown as amounts due from customers for contract work. For
contract where progress billings exceed contract costs incurred to date plus recogised profits
less recognised losses, the surplus is shown as the amounts due to customers for contract
work. Amounts received before related work is performed are included in the consolidated
statement of financial position, as a liability, as advances received. Amount billed for work
performed but not yet paid by the customer are included in the consolidated statement of
financial position under trade and other receivables.
(iii)
(n)
Interest income
Interest income is recognised as other income on an accrual basis based on the effective
yield on the investment.
Operating segments
An operating segment is a component of the Operating Group that engages in business activities
from which it may earn revenues and incur expenses, including revenues and expenses that relate
to transactions with any of the Operating Group’s other components. An operating segment’s
operating results are reviewed regularly by the chief operating decision maker to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available. The Operating Group operates as two geographical segments.
53
(o)
Critical accounting estimates and judgments
In the application of the Operating Group’s accounting policies, management made judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that were not readily
apparent from other sources. The estimates and associated assumptions were based on historical
experience and other factors that were considered to be reasonable under the circumstances. Actual
results may differ from these estimates.
These estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if the revision affects both
current and future periods.
There are no key assumptions concerning the future and other key sources of estimation uncertainty
at the end of the financial year, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
3.
Property, plant and equipment
Leased
assets
USD
Cost
At 1 January 2010
Additions
Disposals
Translation effect
—
—
—
—
Plant and
machinery
USD
Motor
vehicles
USD
Fixtures
and
fittings
USD
95,486
35,576
(35,576)
—
179,509
46,124
(20,310)
9,300
58,127
1,575
(1,428)
626
Computer
equipment
USD
Total
USD
317,908
651,030
43,423
126,698
(98,563) (155,877)
12,713
22,639
At 31 December 2010
Additions
Disposals
Translation effect
—
30,619
—
(2,115)
95,486
—
—
—
214,623
—
(26,596)
(10,068)
58,900
275,481
644,490
3,024
12,264
45,907
— (116,430) (143,026)
(827)
(9,469) (22,479)
At 31 December 2011
Additions
Disposals
Translation effect
28,504
—
—
3,087
95,486
45,342
—
—
177,959
—
(81,450)
6,292
61,097
2,094
—
648
161,846
3,117
—
4,433
524,892
50,553
(81,450)
14,460
At 31 December 2012
Accumulated Depreciation
At 1 January 2010
Charge for year
On disposals
Translation effect
31,591
140,828
102,801
63,839
169,396
508,455
—
—
—
—
89,626
12,690
(8,894)
—
59,873
49,449
(8,463)
2,053
17,479
6,185
(710)
185
124,254
37,929
(26,099)
2,716
291,232
106,253
(44,166)
4,954
At 31 December 2010
Charge for year
Translation effect
On disposals
—
3,285
(276)
—
93,422
2,060
—
—
102,912
26,774
(4,706)
(7,119)
23,139
6,300
(466)
—
138,800
21,949
(2,935)
(37,925)
358,273
60,368
(8,383)
(45,044)
At 31 December 2011
Charge for year
Translation effect
On disposals
3,009
4,542
597
—
95,482
—
—
—
117,861
9,138
2,552
(30,736)
28,973
6,341
527
—
119,889
15,228
3,386
—
365,214
35,249
7,062
(30,736)
At 31 December 2012
Net Book Value
At 31 December 2010
8,148
95,482
98,815
35,841
138,503
376,789
—
2,064
111,711
35,761
136,681
286,217
At 31 December 2011
25,495
4
60,098
32,124
41,957
159,678
At 31 December 2012
23,443
45,346
3,986
27,998
30,893
131,666
54
4.
Intangible assets
2010
USD
As at 31 December
2011
USD
2012
USD
Development expenditure
At cost:
At 1 January – brought forward
Addition during the financial years
—
494,017
494,017
386,405
880,422
950,142
At 31 December – carried forward
494,017
880,422
1,830,564
5.
Deferred tax balances
The following is the analysis of deferred tax assets presented in the consolidated statement of financial
position:
2010
USD
Deferred tax assets
Deferred tax liabilities
As at 31 December
2011
USD
2012
USD
11,677
(4,174)
11,171
(3,995)
11,182
(3,998)
7,503
7,176
7,184
The above deferred tax assets are recognised to the extent that it is probable that the future taxable profits will
allow the deferred tax assets to be recovered.
6.
Trade receivables
2010
USD
Trade receivables
Allowance for impairment losses
As at 31 December
2011
USD
2012
USD
613,776
(30,916)
582,860
1,179,549
(986,099)
193,450
843,705
(758,139)
85,566
Allowance account:
At 1 January
Addition during the financial years
—
30,916
30,916
986,099
1,017,015
758,139
At 31 December
30,916
1,017,015
1,775,154
The Operating Group’s normal trade credit term is 30 to 60 days. Other credit terms are assessed and
approved on a case by case basis.
7.
Other receivables, deposits and prepayments
2010
USD
Other receivables
Other current assets
55
As at 31 December
2011
USD
2012
USD
670,651
—
833,629
1,019
966,547
—
670,651
834,648
966,547
8.
Cash and cash equivalents
2010
USD
Cash at banks
9.
Ordinary shares of £1 each
CLP 1,000 each
574,888
499,687
1,154,242
574,888
499,687
1,154,242
1,100
2011
2012
Number of Shares
1,100
1,100
2010
USD
2011
USD
2012
USD
2,042
2,042
2,042
As at 31 December
2011
USD
2012
USD
Foreign currency translation reserve
2010
USD
Balance at beginning of year
Exchange differences arising on translating
foreign operations
Balance at year end
11.
2012
USD
Share Capital
2010
10.
As at 31 December
2011
USD
—
362,974
146,021
362,974
(216,953)
(43,056)
362,974
146,021
102,965
Trade and other payables, including accruals and deferred income
2010
USD
Trade payables
Advances from clients
Other current financial liabilities
Accruals
As at 31 December
2011
USD
2012
USD
742,312
52,829
272,870
172,941
528,602
1,174,768
254,001
156,009
266,808
1,711,671
299,255
219,932
1,240,952
2,113,380
2,497,666
The deferred income mainly relates to contractual revenue billed in advance and the income to be
recognised upon delivery of goods and completion of services. Maturity analysis for financial liabilities
are not presented as it is not considered as a significant risk.
12.
Profit before taxation
2010
USD
Auditor’s remuneration – audit of Operating Group
– services relating to taxation
Staff costs:
Salaries, allowances and bonuses
Depreciation of property, plant and equipment
Loss/(gain) on foreign exchange:
– Realised
56
Years ended 31 December
2011
USD
2012
USD
26,681
1,422
17,020
24,620
18,224
1,184
2,317,931
88,386
2,291,473
60,368
1,998,205
28,250
(75,638)
(102,568)
(10,192)
13.
Staff costs and directors’ emoluments
2010
USD
Staff costs
Wages and salaries
Social security costs
Other staff costs
Years ended 31 December
2011
USD
2012
USD
1,757,643
464,953
95,335
1,761,833
448,106
81,534
1,593,350
321,302
83,553
2,317,931
2,291,473
1,998,205
Directors’ emoluments – salaries and other short term
employment benefits
Marcelo Banto
Tim Adams
James Wilson
Lilian Nunez
Maria Teresa
165,444
115,935
115,935
—
—
165,444
115,935
115,935
73,840
43,960
165,444
115,935
115,935
88,608
65,940
Total Directors’ emoluments
397,314
515,114
551,862
The average monthly number of employees during the year was made up as follows:
Directors
Operation and construction
Development
Administration and finance
2010
Number
2011
Number
2012
Number
3
29
8
6
5
13
6
5
5
12
6
4
46
29
27
14. Income tax expenses
A reconciliation of the current tax expense applicable to the profit before taxation at the statutory tax rate
to the income tax expenses at the effective tax rate of the Operating Group are as follows:
2010
USD
(Loss)/Profit before Tax
Tax at the applicable statutory rate
Tax effects of:
Utilisation of losses brought forward
Non-deductible expenses
Capital allowances
Income tax losses carried forward
(1,111,222)
(320,237)
—
3,724
(22,710)
362,392
Income tax expenses for the financial year
23,169
Years ended 31 December
2011
USD
1,287,264
368,877
(454,225)
144,225
(93,406)
34,529
—
2012
USD
1,026,326
199,935
—
25,544
(160,576)
9,427
74,330
The average tax rate is based on the following tax rates for UK: UK 24.5% (2011: 26.5%, 2010: 28%);
and Chile is as follows: 18.5% (2011: 20%, 2010: 17%).
57
15. Earnings per share
The calculation for basic earnings per share for the relevant period is based on the profit after income tax
attributable to equity holder for each of the years ended 31 December 2010, 2011, and 2012 are as follows:
2010
USD
Profit attributable to equity holders
Weighted average number of shares
Earnings per share (basic and diluted)
Years ended 31 December
2011
USD
2012
USD
(771,417)
82,480,500
1,070,311
82,480,500
908,940
82,480,500
(0.009)
0.013
0.011
As set out in note 2a, the financial information has been prepared on a consolidated basis. It is of limited
significance to calculate earnings per share on the historical consolidated equity. Accordingly, a pro
forma earnings per share has been included based on the relevant number of shares in the Company
following the Operating Group reorganization but prior to the issues of shares to raise new funds.
The calculation of earnings per share is based on the following earnings and number of shares.
16. Significant related party transactions
Certain of the Operating Group’s transactions and arrangements are with related parties and the effect of
these on the basis determined between the parties is reflected in this consolidation financial information.
The balances are unsecured, interest-free and repayable on demand unless otherwise stated.
During the period under review, in addition to those disclosed elsewhere in this consolidated financial
information, the following significant transactions took place at terms agreed between the parties:
a)
Key management
Key management are regarded as the directors, whose emoluments are shown in note 13.
b)
Amounts owing by/(to) related parties
Amounts owed by related parties
2010
2011
2012
USD
USD
USD
Inversiones Pelicano
Proyecto Calbuco SpA
Proyecto Calama SPA
Proyecto Chome SpA
Eólicos del Sur SpA
Proyecto Raki SpA
3Power Project
Services Limited
3Power Energy Limited
Enerserve Limited
Ecoserve Limited
American Seawind
Seawind Sudamerica
Watercooled Limited
T Adams (director)
P Adams
J Wilson (director)
234
—
—
—
—
—
211
—
—
—
—
—
—
102,930
454,739
—
—
—
—
44,611
23,141
58,715
684,370
310
210
84
83
83
83
Amounts owed to related parties
2010
2011
2012
USD
USD
USD
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
142,636
460,562
—
—
—
93,060
102,760
5,708
13,469
— 1,587,602
— 351,511
— 334,725
—
—
—
—
—
—
—
21,618
21,172
26,634
—
—
166,782
—
52,861
—
412,503
118,215
23,843
—
21,810
69,344
1,920
—
39,639
—
—
—
24,923
—
88,101
—
—
—
818,406
188,807 2,322,090
700,496
152,663
The amounts outstanding are unsecured, interest free and repayable on demand and will be settled
in cash. No guarantees have been given or received. In February 2006, an agreement was signed
with Seawind Services Limited and Seawind Energy Limited, an entity then wholly owned by
58
Tim Adams and James Wilson and managed by the Operating Group’s personnel but subsequently
sold in May 2011 to 3 Power Inc and subsequently renamed as 3 Power Project Services Limited
and 3 Power Energy Limited. During 2012 balances with 3Power Energy Limited and 3Power
Project Services Limited were written off/(written back) by the Operating Group.
Trading transactions
2010
USD
Sale of goods
2011
USD
Purchase of goods
2010
2011
USD
USD
2012
USD
2012
USD
3Power Project Services Limited 2,416,064 3,340,185
47,541
Enerserve Limited
— 1,169,645 1,811,313
Watercooled Limited
75
—
—
Seawind Asia Pte Ltd
— 150,000
—
—
157,981
—
—
—
—
—
—
841,423
—
—
—
2,416,139 4,659,830 1,858,854
157,981
—
841,423
Sales of goods to related parties were made on an arm’s length basis.
17. Segment analysis
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of
the Operating Group that are regularly reviewed by the chief operating decision maker (“CODM”) as
defined in IFRS 8, in order to allocate resources to the segment and to assess its performance.
For management purposes, the Operating Group is organised into business units based on their
geographical location and are reviewed by the CODM. The CODM reviews the revenue based on the
services provided (consultancy services).
The Geographical split of the Operating Group is included in the following table.
Seawind UK Seawind Chile
Group (UK) Group (Chile)
USD
USD
At 31 December 2010
Revenue (consultancy services)
Result
Segment result before
financing result and tax
2,404,677
(1,304,544)
Interest receivable
Finance costs
Income tax
Profit/(Loss) for the year
Assets and liabilities
Reportable segmental assets
Reportable segmental liabilities
Non-allocated liabilities
Other segmental reporting
Capital expenditure:
–tangible assets
–intangible assets
Depreciation
—
(27,046)
—
(1,331,590)
3,184,064
Elimination
USD
Total
USD
—
5,588,741
230,986
— (1,073,558)
3,802
(14,420)
(23,169)
—
—
—
197,199
3,802
(41,466)
(23,169)
(1,134,391)
1,480,448
1,952,012
(36,999) 3,395,461
3,316,008
625,455
(36,999) 3,904,464
84,594
—
29,722
—
494,017
58,628
59
—
—
—
84,594
494,017
88,350
Seawind UK Seawind Chile
Group (UK) Group (Chile)
USD
USD
At 31 December 2011
Revenue (consultancy services)
Result
Segment result before
financing result and tax
Interest receivable
Finance costs
Income tax
Profit/(Loss) for the year
Assets and liabilities
Segment assets
Segment liabilities
Other segmental reporting
Capital expenditure:
–tangible assets
–intangible assets
Depreciation
4,629,551
2,142,000
(819,317) 5,952,234
(402,000)
1,000
(26,000)
—
—
—
—
—
1,324,202
1,000
(37,938)
—
1,714,264
(427,000)
—
1,287,264
2,810,877
2,976,765
1,209,150
466,341
12,281
—
31,860
33,626
386,405
28,508
5,212,470
2,302,284
(475,435) 3,544,592
(475,435) 2,967,671
—
—
—
45,907
386,405
60,368
Elimination
USD
Total
USD
(935,627) 6,579,127
191,448
—
(23,701)
(58,480)
853,390
7,575
(2,385)
(15,850)
—
—
—
—
1,044,838
7,575
(26,086)
(74,330)
109,267
842,730
—
951,997
3,223,206
468,144
2,167,572
3,295,340
46,412
—
13,477
4,141
950,122
21,772
Profit for the year
Assets and liabilities
Segment assets
Segment liabilities
Other segmental reporting
Capital expenditure:
–tangible assets
–intangible assets
Depreciation
Total
USD
1,726,202
—
(11,938)
—
Seawind UK Seawind Chile
Group (UK) Group (Chile)
USD
USD
At 31 December 2012
Revenue (consultancy services)
Result
Segment result before
financing result and tax
Interest receivable
Finance costs
Income tax
Elimination
USD
60
(935,641) 4,455,137
(935,641) 2,827,843
—
—
—
50,553
950,122
35,249
18. Financial instruments
The Operating Group’s activities are exposed to a variety of market risk (including foreign currency risk,
interest rate risk and equity price risk), credit risk and liquidity risk. The Operating Group’s overall
financial risk management policy focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Operating Group’s financial performance.
(a)
Financial risk management policies
The Operating Group’s policies in respect of the major areas of treasury activity are as follows:(i)
Market risk
(i)
Foreign currency risk
The Operating Group is exposed to foreign currency risk on transactions and balances
that are denominated in currencies other than its functional currency. Foreign currency
risk is monitored closely on an on-going basis to ensure that the net exposure is at an
acceptable level.
The Operating Group’s exposure to foreign currency risk is minimal as it trades in
predominately US Dollars, Chilean Pesos and GB Pound Sterling. Exposure to
currency risk is negated by the Operating Group holding adequate reserves in these
three currencies to meet trading and provisioned obligation as the need arises.
The Operating Group’s exposure to foreign currency is as follows:-
2010
Financial assets
Trade receivables
Other receivables and deposits
Related party receivable
Cash and bank balances
Financial liabilities
Trade payables
Other payables and accruals
Related party payable
Net financial liabilities
Less: Net financial assets denominated in the respective
entities’ functional currencies
Currency exposure
Great
British
Pound
USD
Chilean
Pesos
USD
Total
USD
66,742
615,825
684,136
—
516,118
54,826
234
574,888
582,860
670,651
684,370
574,888
1,366,703
1,146,066
2,512,769
661,204
276,868
2,018,660
81,108
529,199
—
742,312
806,067
2,018,660
2,956,732
610,307
3,567,039
(1,054,270)
1,054,270
—
61
2011
Financial assets
Trade receivables
Other receivables and Deposits
Related party receivables
Cash and bank balances
Financial liabilities
Trade payables
Other payables and accruals
Related party payables
Great
British
Pound
USD
Chilean
Pesos
USD
Total
USD
144,657
808,930
1,293,630
388,488
48,793
25,718
211
111,199
193,450
834,648
1,293,841
499,687
2,635,705
185,921
2,821,626
406,912
1,904,204
729,436
121,690
156,009
52,861
528,602
2,060,213
700,496
3,040,552
330,560
3,289,311
Net financial liabilities
Less: Net financial assets denominated in the respective
entities’ functional currencies
1,769,770
Currency exposure
1,302,085
2012
Financial assets
Trade receivables
Other receivables and deposits
Related party receivables
Cash and bank balances
Financial liabilities
Trade payables
Other payables and accruals
Amount due to related parties
(467,685)
Great
British
Pound
USD
Chilean
Pesos
Dollar
USD
Total
USD
3,469
843,280
1,123,595
1,088,304
82,097
123,267
853
95,908
85,566
966,547
1,124,448
1,154,242
3,058,648
302,125
3,330,803
173,198
2,988,248
113,024
93,610
179,282
39,639
266,808
3,167,530
152,663
3,274,470
312,531
3,587,001
Net financial liabilities
Less: Net financial assets denominated
in the respective entities’ functional currencies
(256,198)
1,308,180
Currency exposure
1,051,982
62
Foreign currency risk sensitivity analysis
The following table details the sensitivity analysis to a reasonably possible change in the
foreign currencies as at the end of the reporting period, with all other variables held constant:-
Effects on profit after taxation/equity
if there is a 10% change in:
Great British Pound:
Chilean Pesos:
United States Dollar:
(ii)
2010
Increase/
(decrease)
USD
2011
Increase
/(decrease)
USD
2012
Increase/
(decrease)
USD
133,159
22,905
156,064
171,426
41,139
212,565
10,927
84,273
95,200
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Operating
Group’s exposure to interest rate risk arises mainly from interest-bearing financial
assets and liabilities. The Operating Group’s policy is to obtain the most favourable
interest rates available.
Interest rate risk sensitivity analysis
A 100 basis points strengthening/weakening of the interest rate as at the end of the reporting
period would have immaterial impact on profit after taxation and/or equity. This assumes
that all other variables remain constant.
(iii) Equity price risk
The Operating Group does not have any quoted investments and hence is not exposed
to equity price risk.
(ii)
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations
resulting in a loss to the Operating Group. The Operating Group has adopted a policy of only
dealing with creditworthy counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Operating
Group performs ongoing credit evaluation of its counterparties’ financial condition and does
not hold any collateral as security over its customers. The Operating Group’s major classes
of financial assets are cash and cash equivalents, and other receivables and payables.
As the Operating Group does not hold any collateral, the maximum exposure to credit risk is
represented by the carrying amount of the financial assets as at the end of the reporting period.
Quantitative analysis of other receivables is not presented since it mostly comprises accrued
income and prepayments. The amounts due from related parties have largely been settled
after the end of the year.
The exposure of credit risk for trade receivables by geographical region is as follows:
UK
Chile
63
2010
USD
2011
USD
2012
USD
66,742
516,118
144,657
48,793
3,469
82,097
582,860
193,450
85,566
Ageing analysis
The ageing analysis of the Operating Group’s trade receivables as at each of the three years
ended 31 December 2012 is as follows:
Gross
amount
USD
2012
Not past due
Past due:
Less than 3 months
More than 3 months
2010
Not past due
Past due:
– less than 3 months
– More than 3 months
Carrying
value
USD
84,356
(2,259)
82,097
—
759,349
—
(755,880)
—
3,469
843,705
(758,139)
85,566
Gross
amount
USD
2011
Not past due
Past due:
– less than 3 months
– More than 3 months
Individual
impariment
USD
Individual
impariment
USD
Carrying
value
USD
65,454
(26,500)
38,954
128,902
985,193
—
(959,599)
128,902
25,594
1,179,549
(986,099)
193,450
516,335
—
516,335
13,704
83,737
—
(30,916)
13,704
52,821
613,776
(30,916)
582,860
At the end of each reporting period, trade receivables that are individually impaired were
those in significant financial difficulties and have defaulted on payments. These receivables
are not secured by any collateral or credit enhancement.
The collective impairment allowance is determined based on estimated irrecoverable
amounts from the sale of goods, determined by reference to past default experience.
(iii)
Liquidity risk
Liquidity risk is the risk that the Operating Group will not be able to meet its financial
obligations as they fall due. The Operating Group exposure to liquidity risk arises primarily
from mismatches of the maturities of financial assets and liabilities.
The Operating Group maintains a level of cash and cash equivalents and bank facilities
deemed adequate by the management to ensure as far as possible, that it will have sufficient
liquidity to meet its liabilities when they fall due. Trade and other payables and tax are all
payable within 12 months.
The Board reviews cash flow projections on a regular basis as well as information on
cash balances.
(b)
Capital risk management
The Operating Group defines capital as the total equity of the Operating Group. The Operating
Group’s objectives when managing capital are to safeguard the Operating Group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other
64
stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the Operating Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Operating Group manages its capital based on debt-to-equity ratio. The Operating Group’s
strategies were unchanged from the previous financial year. The debt-to-equity ratio is calculated
as net debt divided by total equity. Net debt is calculated as borrowings plus trade and other
payables less cash and cash equivalents.
The debt-to-equity ratio of the Operating Group as at the end of the reporting period was as follows:
2010
USD
2011
USD
2012
USD
Loans
Other payables and accruals
Amount owing to related parties
—
1,568,342
2,322,090
99,022
2,137,454
700,496
119,631
2,527,856
152,663
Less: cash and bank balances
3,890,432
(574,888)
2,936,972
(499,687)
2,800,150
(1,154,242)
Net debt
3,315,544
2,437,285
1,645,908
(509,003)
576,922
1,627,296
(6.5)
4.2
1.0
2010
USD
2011
USD
2012
USD
582,860
670,651
684,370
574,888
193,450
834,648
818,406
499,687
85,566
966,547
188,807
1,154,242
2,512,769
2,346,191
2,395,162
—
1,244,949
2,322,090
99,022
2,113,380
700,496
119,631
2,498,697
152,663
3,567,039
2,912,898
2,770,991
Total (deficit)/equity
Debt-to-equity ratio
(c)
Classification of financial instruments
Financial assets
Loans and receivables financial assets
Trade receivables
Other receivables
Amount owing by related parties
Cash and bank balances
Financial liabilities
Other financial liabilities
Overdraft
Trade and Other payables and accruals
Amount owing to related parties
19. Subsequent events
On 31 January 2014 the Company entered into a Shareholder Subscription and Restructuring Agreement
pursuant to which the parties agreed to formally document their shareholdings and allotment of and
subscription for shares in the Company, including to provide for:
•
the transfer of all the Shares in Rame Energy Pte. Ltd.(“Rame Energy”) to the Company for US$1;
•
the transfer of all the Shares in Seawind Holding SP.A (“Seawind Holding”) to the Company (or
Rame Energy as its nominee) for one Ordinary Share;
•
the transfer of all the Shares in Seawind International Limited to the Company (or Rame Energy
as its nominee) by in consideration for a total of one Ordinary Share; and
•
the transfer of all the Shares in Seawind International to the Company (or Rame Energy as its
nominee) by James Wilson and Tim Adams in consideration for a total of two Ordinary Shares.
65
On 7 February 2014 Pires Investments Plc, the Company, Rame Energy and Seawind Holding Sp.A
entered into an Investment Agreement pursuant to which Pires subscribed for the Convertible Loan Notes
totaling £410,000. The Convertible Loan Notes shall be issued in amounts and multiples of £1,000 and
the principal amount is limited to £410,000 plus capitalised interest. Interest is payable on the Convertible
Loan Notes at the rate of 10 per cent. (in case of default,10.5 per cent.) per annum, with an interest
holiday for the nine month period from issue (save that interest is payable on 31 October 2014 for that
period on any Convertible Loan Notes then remaining in issue and not converted and thereafter accrued
interest is payable on conversion of such notes).
The Convertible Loan Notes are redeemable on 7 February 2017 or if Admission is not achieved in certain
circumstances more than six months after their issue or upon occurrence of usual events of default.
The Convertible Loan Notes are convertible:
(a)
by noteholders at any time prior to 7 February 2017 by notice to the Company;
(b)
by the Company by notice to noteholders subject to either (i) Admission and a minimum of
£1,000,000 being raised from investors as part of Admission or (ii) Admission within six months
of issue and the Company raising £2,500,000 from investors as part of Admission or before or after
Admission but within nine months of Admission.
In case of Admission within 12 months of issue, the number of Ordinary Shares to be issued on conversion
is determined by dividing the principal amount of the Convertible Loan Notes to be converted by a price
per share equal to a price which is at a 25 per cent. discount to the price at which new monies are raised
on Admission (i.e. a 25 per cent. discount to the Placing Price) provided that, if the market capitalisation
of the Company pre-new money raised on Admission is more than US$33,000,000 then the price per
share shall be determined on the basis of the value per share obtained by dividing the sum of
US$25,000,000 by the number of shares in issue, ignoring any shares issued in connection with the
raising of new money on Admission.
By notice dated 31 March 2014, Pires as holder of all the Convertible Loan Notes, has given notice to
convert all the Convertible Notes into 3,037,037 Ordinary Shares (forming part of the Admission Shares)
subject to Admission taking place within 14 days of the date of the notice and effective upon Admission.
20. Ultimate parent company
At the date of this report the ultimate controlling party is considered to be the Company, which is
incorporated in Jersey.
21. Nature of financial information
The financial information presented above does not constitute statutory financial statements of the
Operating Group for the period under review.
66
PART IV (c)
UNAUDITED INTERIM FINANCIAL INFORMATION OF THE OPERATING GROUP
FOR THE SIX MONTHS ENDED 30 JUNE 2013
Set out below are the unaudited results of the Operating Group for the six months ended 30 June 2013,
together with the unaudited results for the comparative six month period ended 30 June 2012.
Statements of Consolidated Comprehensive Income
The statements of consolidated comprehensive income of the Operating Group for the six months ended
30 June 2013 and the six months ended 30 June 2012 are set out below:
Note
Revenue
Cost of sales
Six months
ended
30 June 2013
USD
(Unaudited)
Six months
ended
30 June 2012
USD
(Unaudited)
1,467,347
(673,202)
1,958,084
(595,631)
794,145
(1,260,604)
1,362,453
(2,163,700)
Operating loss
Finance costs
(466,459)
(32,128)
(801,247)
(9,604)
Loss on ordinary activities before taxation
Income tax expense
(498,587)
—
(810,851)
—
(498,587)
—
(810,851)
3,636
27,274
189,642
(471,313)
(617,573)
(0.006)
(0.007)
Gross profit
Administrative expenses
Loss after taxation attributable to owners
of the Operating Group
Revaluation Reserve
Other comprehensive (expense)/income
(currency translation differences)
Total comprehensive loss attributable to owners
of the Operating Group
Loss per share:
Basic and diluted
67
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
The statements of consolidated financial position of the Operating Group as at 30 June 2013 and at
30 June 2012 are set out below:
Note
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Other non-current assets
Deferred Tax
Current assets
Trade receivables
Other receivables
Amount owing by related parties
Tax recoverable
Cash and cash equivalents
Total assets
Equity and liabilities
Share capital
Foreign exchange translation reserve
Revaluation Reserve
Retained profits
Total equity
Non-current liabilities
Leased obligations
As at
30 June 2013
USD
(Unaudited)
As at
30 June 2012
USD
(Unaudited)
134,747
1,806,948
19
10,994
125,312
896,778
21,642
11,399
1,952,708
1,055,131
306,263
261,085
59,695
72,549
52,989
1,415,057
1,365,262
645,590
53,749
1,964,263
752,581
5,443,921
2,705,289
6,499,052
2,042
130,239
201,601
822,101
2,042
335,663
63,804
(442,159)
1,155,983
(40,650)
34,372
34,163
1,177,767
119,367
67,432
150,368
5,754,692
679,669
—
71,178
1,514,934
6,505,539
Total liabilities
1,549,306
6,539,702
Total equity and liabilities
2,705,289
6,499,052
Current liabilities
Trade and other payables and accruals
Amount owing to related parties
Short-term borrowings
Provision for taxation
68
STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY
Share
capital
USD
Balance at 1st January 2012
Non distributable
Foreign
exchange
translation
Revaluation
reserve
Reserve
USD
USD
Distributable
Retained
profits
USD
Total
Equity
USD
368,691
576,922
(810,851)
(810,851)
2,042
146,021
60,168
Profit after taxation
Other comprehensive
income (currency
translation differences)
Total comprehensive
income for the
financial year
—
—
—
—
189,642
3,636
—
189,642
3,636
(810,851)
(617,573)
Balance at 30 June 2012
2,042
335,663
63,804
(442,160)
(40,651)
Balance at
1st January 2013
2,042
102,965
201,601
—
—
—
—
1,320,688
Profit after taxation
Other comprehensive
income (currency
translation differences)
Total comprehensive
income for the
financial year
(498,587)
—
27,274
—
2,042
27,274
201,601
(498,587)
Balance at 30 June 2013
2,042
130,239
201,601
822,101
—
193,278
1,627,296
(498,587)
27,274
(471,313)
1,155,983
Foreign exchange translation reserve is a non-distributable reserve of the exchange differences arising
from revenues and expenses of foreign operations translated at exchange rates ruling at the dates of the
transactions. All exchange differences arising from translation are taken directly to other comprehensive
income and accumulated in equity under the translation reserve.
Retained profits represent the cumulative value of the profits not distributed to shareholders, but retained
to finance the future capital requirements of the Operating Group.
69
STATEMENTS OF CONSOLIDATED CASH FLOWS
The statements of consolidated cash flows for the Operating Group for the six months ended 30 June 2013
and 30 June 2012 are set out below:
Six months
ended
30 June 2013
USD
Cash flows from operating activities
Loss for year before tax
Adjustments for:
Depreciation of non-current assets
Movements in working capital:
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
Income tax paid
Net cash (used in) generated from operating activities
Six months
ended
30 June 2012
USD
(498,587)
(810,851)
15,882
16,262
(482,705)
(794,589)
628,059
(1,194,385)
(1,457,864)
3,828,394
(566,326)
—
2,370,530
—
(1,049,031)
1,575,941
Cash flows from investing activities
Purchases of property, plant and equipment
Investment in wind energy projects
3,081
—
—
(16,356)
Net cash generated from (used in) by investing activities
3,081
(16,356)
(52,199)
(99,022)
(52,199)
(1,098,149)
(3,104)
1,154,242
(99,022)
1,460,563
4,013
499,687
Cash flows from financing activities
Repayments by loans
Net cash (used in) financing activities
Net (decreased)/increase in cash and cash equivalents
Effects of foreign exchange rate changes
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
70
52,989
1,964,263
NOTES TO THE INTERIM FINANCIAL INFORMATION
1.
Presentation currency
The interim financial information has been presented in United States Dollar (“USD”).
2.
Summary of significant accounting policies
Basis of preparation
The interim financial information is unaudited, has been prepared in accordance with International
Financial Reporting Standards (“IFRS”) and on the historical cost convention, unless otherwise indicated
in this summary of significant accounting policies.
3.
Income tax expense
The tax charge on profits assessable has been calculated at the rates of tax prevailing in the countries in which
the Operating Group operates, based on existing legislation, interpretation and practices in respect thereof.
4.
Share capital
Authorised, issued and fully paid:
£1 each
CLP 1,000 each
As at
30 June 2013
USD
As at
30 June 2012
USD
2,042
2,042
5.
Subsequent events
On 31 January 2014 the Company entered into a Shareholder Subscription and Restructuring Agreement
pursuant to which the parties agreed to formally document their shareholdings and allotment of and
subscription for shares in the Company, including to provide for:
•
the transfer of the Ordinary Shares held by Central One Limited and Central Two Limited;
•
the subscription of a total of 3,102,321 Ordinary Shares by various parties to the agreement and
various third parties for a total of £3.10 at a price of 0.000001 per Ordinary Share;
•
the transfer of all the Shares in Rame Energy Pte. Ltd.(“Rame Energy”) to the Company for US$1;
•
the transfer of all the Shares in Seawind Holding SP.A (“Seawind Holding”) to the Company (or
Rame Energy as its nominee) for one Ordinary Share;
•
the transfer of all the Shares in Seawind International Limited to the Company (or Rame Energy
as its nominee) by Tim Adams in consideration for a total of one Ordinary Shares;
•
the transfer of all the Shares in Seawind International to the Company (or Rame Energy as its
nominee) by James Wilson and Tim Adams in consideration for a total of two Ordinary Shares; and
•
the subscription of a total of 63,831,174 Ordinary Shares by various parties to the agreement and
various third parties for a total of £63.83 at a price of 0.000001 per Ordinary Share.
On 7 February 2014 Pires Investments Plc, the Company, Rame Energy and Seawind Holding Sp.A
entered into an Investment Agreement pursuant to which Pires subscribed for the Convertible Loan Notes
totaling £410,000. The Convertible Loan Notes shall be issued in amounts and multiples of £1,000 and
the principal amount is limited to £410,000 plus capitalised interest. Interest is payable on the Convertible
Loan Notes at the rate of 10 per cent. (in case of default,10.5 per cent.) per annum, with an interest
holiday for the nine month period from issue (save that interest is payable on 31 October 2014 for that
period on any Convertible Loan Notes then remaining in issue and not converted and thereafter accrued
interest is payable on conversion of such notes).
The Convertible Loan Notes are redeemable on 7 February 2017 or if Admission is not achieved in certain
circumstances more than six months after their issue or upon occurrence of usual events of default.
71
The Convertible Loan Notes are convertible:
(a)
by noteholders at any time prior to 7 February 2017 by notice to the Company;
(b)
by the Company by notice to noteholders subject to either (i) Admission and a minimum of
£1,000,000 being raised from investors as part of Admission or (ii) Admission within six months
of issue and the Company raising £2,500,000 from investors as part of Admission or before or after
Admission but within nine months of Admission.
In case of Admission within 12 months of issue, the number of Ordinary Shares to be issued on conversion
is determined by dividing the principal amount of the Convertible Loan Notes to be converted by a price
per share equal to a price which is at a 25 per cent. discount to the price at which new monies are raised
on Admission (i.e. a 25 per cent. discount to the Placing Price) provided that, if the market capitalisation
of the Company pre-new money raised on Admission is more than US$33,000,000 then the price per
share shall be determined on the basis of the value per share obtained by dividing the sum of
US$25,000,000 by the number of shares in issue, ignoring any shares issued in connection with the
raising of new money on Admission.
By notice dated 31 March 2014, Pires as holder of all the Convertible Loan Notes, has given notice to
convert all the Convertible Notes into 3,037,037 Ordinary Shares (forming part of the Admission Shares)
subject to Admission taking place within 14 days of the date of the notice and effective upon Admission.
6.
Significant related party transactions
Amounts owing (to) related parties
Amounts owed to related parties
June 2013
June 2012
$
$
3Power Project Services Limited
3Power Energy Limited
Enerserve Limited
Ecoserve Limited
American Seawind
Seawind Sudamerica
Watercooled Limited
T Adams (director)
P Adams
J Wilson (director)
—
—
—
—
23,465
—
83,536
12,245
121
—
11,723
—
420,911
196,312
24,329
—
14,203
3,942
8,249
—
119,367
679,669
Amounts owing by related parties
Amounts owed by related parties
June 2013
June 2012
$
$
3Power Energy Limited
Enerserve Limited
Ecoserve Limited
American Seawind
Seawind Sudamerica
Watercooled Limited
T Adams (director)
P Adams
J Wilson (director)
—
—
—
—
—
—
41,960
—
17,735
—
489,485
—
—
—
42,586
80,862
—
32,657
59,695
645,590
7.
Nature of financial information
The financial information does not constitute Statutory Accounts for the period under review.
72
PART IV (D)
UNAUDITED PRO FORMA STATEMENT OF AGGREGATED NET ASSETS
Crowe Clark Whitehill LLP
Chartered Accountants
Member of Crowe Horwath International
St Bride's House
10 Salisbury Square
London EC4Y 8EH, UK
+44 (0)20 7842 7100
+44 (0)20 7583 1720
DX: 0014 London Chancery Lane
www.croweclarkwhitehill.co.uk
31 March 2014
The Directors
Rame Energy Plc
PO Box 207,
13-14 Esplanade
St Helier
Jersey JE1 1BD
The Directors
Northland Capital Partners Limited
131 Finsbury Pavement
London EC2A 1NT
Dear Sirs
Introduction
We report on the unaudited pro forma financial information of Rame Energy Plc (the “Company”) and
its subsidiaries (together, the “Group”) set out in Part IV (d) of the AIM Admission Document (the
“Document”) dated 31 March 2014, which has been prepared on the basis described, for illustrative
purposes only, to provide information about how the Placing and Admission might have affected the net
assets presented on the basis of the accounting policies adopted by the Company in preparing the audited
financial information for the period ended 30 June 2013 for the Company and the pro forma aggregated
unaudited interim financial information for the period ended 30 June 2013 for the Operating Group. This
report is required by Schedule Two of the AIM Rules and is given for the purpose of complying with that
scheduled and for no other purpose.
Responsibilities
It is the responsibility of the directors of the Company (the “Directors”) to prepare the unaudited pro forma
financial information in accordance with Schedule Two of the AIM Rules.
It is our responsibility to form an opinion on the financial information as to the proper compilation of
the unaudited pro forma financial information and to report that opinion to you.
In providing this opinion we are not updating or refreshing any reports or opinions previously made by
us on any financial information used in the compilation of the unaudited pro forma financial information,
nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those
reports or opinions were addressed by us at the dates of their issue.
Basis of opinion
We conducted our work in accordance with Standards of Investment Reporting issued by the Auditing
Practices Board in the United Kingdom. The work that we performed for the purpose of making this
report, which involved no independent examination of any of the underlying financial information,
73
consisted primarily of comparing the unadjusted financial information with the source documents,
considering the evidence supporting the adjustments and discussing the unaudited pro forma financial
information with the Directors.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with reasonable assurance that the unaudited pro forma
financial information has been properly compiled on the basis stated and that such basis is consistent with
the accounting policies of the Operating Group.
Our work has not been carried out in accordance with auditing or other standards and practices generally
accepted in jurisdictions outside the United Kingdom and accordingly should not be relied upon as if it
had been carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a)
the unaudited pro forma financial information has been properly complied on the basis stated; and
(b)
such basis is consistent with the accounting policies of the Company.
Declaration
For the purpose of Paragraph a of Schedule Two of the AIM Rules, we are responsible for this report as
part of the Document and declare that we have taken all reasonable care to ensure that the information
contained in this report is, to the best of our knowledge, in accordance with the facts and contains no
omission likely to affect its import. This declaration is included in the Document in compliance with
Schedule Two of the AIM Rules.
Yours faithfully
Crowe Clark Whitehill LLP
74
Set out below is an unaudited pro forma statement of aggregated net assets of the Group, which has been
prepared on the basis of the Company’s financial information at 30 June 2013 and the pro forma
aggregated unaudited interim financial information of the Operating Group at 30 June 2013, as adjusted
for the IPO net placing proceeds, as set out in the notes below. The unaudited pro forma statement has
been prepared for illustrative purposes only and, because of its nature, will not represent the actual
consolidated financial position of the Company at the date of Admission.
Unaudited pro forma statement of aggregated net assets
Non-current asset
Property, plant
and equipment
Intangible assets
Other non-current assets
Deferred tax assets
Current assets
Trade receivables
Other receivables
Amount owing by
related parties
Tax recoverable
Cash and cash equivalents
Non-current liabilities
Leased obligations
Current liabilities
Trade and other payables
Amounts owing
to related parties
Short term borrowings
Income tax payable
Convertible loan debt
Net assets
The
Company
(Note 1)
USD
Audited
Operating
Group
(Note 2)
USD
Unaudited
Pre-IPO
proceeds
(Note 3)
USD
Unaudited
Placing
proceeds
(Note 4)
USD
Unaudited
Convertible
loan instrument
(Note 5)
USD
Unaudited
Loan notes
converted to
equity (Note 6)
USD
Unaudited
Pro forma
net assets of
the Group
USD
Unaudited
—
—
—
—
134,747
1,806,948
19
10,994
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
134,747
1,806,948
19
10,994
—
1,952,708
—
—
—
1,952,708
—
—
306,263
261,085
—
—
—
—
—
—
—
—
306,263
261,085
—
—
—
59,695
72,549
52,989
—
—
3,731,271
—
—
1,510,000
—
—
1,300,000
—
—
681,230
59,695
72,549
7,275,490
—
752,581
3,731,271
1,510,000
1,300,000
681,230
7,975,082
—
34,372
—
—
—
—
34,372
—
34,372
—
—
—
—
34,372
—
1,177,767
—
—
—
—
1,177,767
—
—
—
—
119,367
67,432
150,368
—
—
—
—
—
—
—
—
—
—
—
—
1,300,000
—
—
—
—
119,367
67,432
150,368
1,300,000
—
1,514,934
—
—
1,300,000
—
2,814,934
—
1,155,983
3,731,271
1,510,000
—
681,230
7,078,484
Notes:
1.
The financial information relating to the Company has been extracted without adjustment from the Company’s financial
information set out in Part IV (a) of this document. No account has been taken of the activities of the Company subsequent to
30 June 2013.
2.
The unaudited statement of financial position of the Operating Group as at 30 June 2013 has been extracted without adjustment
from the unaudited interim financial information set out in Part IV (c) of the Admission Document. No account has been taken
of the activities of the Operating Group subsequent to 30 June 2013.
3.
On 31 January 2014, the Company acquired the companies comprising the Operating Group pursuant to a Shareholder Subscription
and Restructuring Agreement. On 11 February 2014 the Company raised US$ 2,187,993 (gross) from the issue of 9,116,666
Ordinary Shares. On 19 February 2014 the Company raised US$ 1,543,278 (gross) from the issue of 6,430,325 Ordinary Shares.
4.
On 31 March 2014 the Company raised £1.3 million (USD 2.16 million) (gross) from the Placing of 7,222,223 Ordinary Shares.
Associated costs of the Placing were approximately USD 0.65 million.
5.
On 31 March 2014 the Company also raised USD 1.3 million by way of an institutional convertible loan instrument by Amati
Global Investors Limited. The convertible instrument shall be for a 5 year term.
6.
Pursuant to the Investment Agreement dated 7 February 2014 entered into with Pires Investments Plc, convertible notes totalling
£410,000 (USD 681,230) was converted to equity and 3,037,037 ordinary shares were issued on Admission.
75
PART V
ADDITIONAL INFORMATION
1.
1.1
Responsibility
The Directors, whose names appear on page 4 of this document, and the Company accept
responsibility, both individually and collectively, for the information contained in this document.
To the best of the knowledge and belief of the Directors (who have taken all reasonable care to
ensure that such is the case), the information contained in this document is in accordance with the
facts and does not omit anything likely to affect the import of such information.
2.
2.1
The Company
The Company was incorporated in Jersey under the Companies Law as a private no par value
company limited by shares with registration number 112494 under the name Rame Energy Limited
on 26 February 2013. The Company changed its name to Rame Energy plc and its status to a public
company with effect from 24 July 2013.
2.2
The liability of the members of the Company is limited. The life of the Company is unlimited.
2.3
The registered office of the Company is 13-14 Esplanade, St Helier, Jersey, JE1 1BD. The principal
place of business of the Group is Seawind House, 98-99 Hotham Place, Millbridge, Plymouth
PL1 5NE, United Kingdom. The telephone number of the Group at its principal place of business
is 01752565638.
2.4
The Company and its activities and operations are principally regulated by the Companies Law
and the regulations made thereunder.
2.5
The principal activity of the Company is to act as the holding company of a group of companies
whose main activities are the development and ownership of power production projects.
2.6
The ISIN number of the Ordinary Shares is JE00BBD8GG53.
2.7
The Company is a holding company and currently has 16 subsidiary and investment undertakings,
the details of which are set out below:
Name
Country of
incorporation
Ownership
interest
(per cent.)
Rame Energy Pte. Ltd.
Singapore
100 owned by the Company
Sea Wind International
Limited
United
Kingdom
100 owned by Rame
Energy Pte. Ltd.
Holding
company
Operating
company
Seawind Marine Services
Limited
United
Kingdom
100 owned by Sea Wind
International Limited
Consultancy
services
Seawind Marine
Limited
United
Kingdom
100 owned by Sea Wind
International Limited
Consultancy
services
Seawind Holding SpA
Chile
100 owned by Rame Energy Pte. Ltd
Ingenieria Seawind
Sudamerica SpA
Chile
100 owned by Seawind
Holding SpA
Seawind Service SpA
Chile
100 owned by Seawind Holding SpA
Inversiones Pelicano SpA
Chile
100 owned by Seawind Holding SpA
Holding
company
Project
company/
operating
company
Operating
company
Operating
company
76
Principal
activity
Name
Country of
incorporation
Ownership
interest
(per cent.)
Vientos Andinos SpA
Chile
100 owned by Seawind Holding SpA
Eolicos Del Sur SpA
Chile
100 owned by Seawind Holding SpA
Proyecto Chome SpA
Chile
100 owned by Eolicos Del Sur SpA
Proyecto Raki SpA
Chile
20 owned by Eolicos Del Sur SpA
Proyecto Huajache SpA
Chile
20 owned by Eolicos Del Sur SpA
Proyecto Calbuco SpA
Chile
50 owned by Seawind Holding SpA
50 owned by China Tianyuan
New Energy Technology Co Ltd
Agencia
Proyecto Calama SpA
Chile
50 owned by Seawind Holding SpA
50 owned by China Tianyuan
New Energy Technology Co Ltd
Agencia
Proposed to
be dissolved
Proyecto Bellavista SpA
Chile
50 owned by Seawind Holding SpA
50 owned by China Tianyuan
New Energy Technology Co Ltd
Agencia
Proposed to
be dissolved
Principal
activity
Project
company
Holding
company
Project
company
Project
company
Project
company
Proposed to
be dissolved
3.
Employees
As at the date of this document, the Group has 24 full-time employees. The breakdown of the full-time
employees by geographical location as at the end of each of the last three financial years ended
31 December 2012 is as follows:
Financial Year
2010
Financial Year
2011
Financial Year
2012
No of employees in UK
No of employees in Chile
17
29
15
14
15
12
Total
46
29
27
4.
4.1
Share Capital
Since the date of incorporation up to the date of this document, there have been the following
changes in the issued and paid up share capital of the Company:
Date of allotment
28 March 2013
28 March 2013
31 January 2014
11 February 2014
19 February 2014
No. of Ordinary
Shares allotted
1
1
66,933,508
9,116,666
6,430,324
Name of allottee
Central One Limited
Central Two Limited
Various*
Various**
Various***
*
(see paragraph 12.4 below)
**
issues of shares to various subscribers at US$0.24 per share for a total of US$2,187,992.84
***
issues of shares to various subscribers at US$0.24 per share for a total of US$1,543,278
77
4.2
Save as disclosed in this document, no share or loan capital of the Company is under option or has
been agreed, conditionally or unconditionally, to be put under option, and there are in issue no
warrants or convertible securities.
4.3
There are no shares not representing share capital and there are no shares in the Company held by
or on behalf of the Company or by any of the subsidiary undertakings.
4.4
The Company has unlimited share capital. As at the date of this document the Existing Issued Share
Capital comprises 82,480,500 Ordinary Shares and at Admission the Enlarged Issued Share Capital
will comprise 95,269,451 Ordinary Shares.
4.5
Save as disclosed in this document, there are no acquisition rights and/or obligations over the
authorised but unissued shares of the Company and the Company has made no undertaking to
increase the maximum number of shares it is authorised to issue.
4.6
There is no class of shares in issue other than Ordinary Shares.
4.7
No Ordinary Shares are issued other than as fully paid.
4.8
The Ordinary Shares are in registered form and may be held in either certificated or
uncertificated form.
4.9
Jersey law does not include statutory pre-emption rights. The Company has therefore voluntarily
adopted pre-emption provisions in the Articles which are designed to mirror those available under
English law, details of which are set out at paragraph 9.5 of this Part V. These provisions have been
disapplied by resolution of Shareholders dated 28 March 2014 as follows:
(a)
The board of Directors was given the power pursuant to and in accordance with Articles 2.3
and 2.10 of the Articles of Association to allot the Placing Shares and any other shares,
warrants, convertible loans or other securities in connection with Admission as set out in
this document.
(b)
Subject to and conditional upon Admission the board of Directors was given the power
pursuant to and in accordance with Articles 2.3 and 2.10 of the Articles of Association to allot
further ordinary shares up to a maximum amount equal to 10 per cent. of the Company’s
issued ordinary share capital at the time of Admission for cash at any time from Admission
until the first annual general meeting of the Company thereafter as if Articles 2.4 to 2.8 of
the Articles of Association did not apply.
(c)
Subject to and conditional upon Admission the board of Directors was given the power
pursuant to and in accordance with Articles 2.3 and 2.10 of the Articles of Association to allot
further ordinary shares up to a maximum amount equal to 10 per cent. of the Company’s
issued ordinary share capital at the time of Admission pursuant to the exercise of options
granted under the terms of any share option scheme adopted or operated by the Company
from time to time as if Articles 2.4 to 2.8 of the Articles of Association did not apply.
4.10 The Placing Shares will rank pari passu for all dividends or other distributions hereafter declared,
paid or made on existing Ordinary Shares. All Placing Shares shall form one class with the existing
Ordinary Shares and shall rank pari passu in respect of payment of dividends, voting rights,
entitlement to liquidation proceeds and otherwise.
78
5.
5.1
Directors
Other than their directorships of the Group, the Directors are or have been directors, members of
the administrative management or supervisory bodies or partners of the following companies or
partnerships within the five years prior to the publication of this document:
Director
Current Directorships/Partnerships
Previous Directorships/Partnerships
Andrew Cameron
Aldus Aviation Limited
Aldus Leasing (UK) Limited
Chorleywood Golf Club Limited
Syncap Limited
Syncap Holdings Limited
Syncap Transportation &
Infrastructure Limited
Synergy Finance Limited
Syncap Marine Limited
Willhire Services Limited
Timothy Adams
3Power Project Services Limited
(in members voluntary liquidation)
3Power Energy Limited
(in members voluntary liquidation)
Watercooled Limited
Financial Card Solution Ltd
Seastructures Ltd
Jan Gawel
Bamma Limited
Wisley Limited
4334 Limited
Pieter D’haen
None
Seawind Services Limited
Fernando Cubillos
Antuko Comercializacion SpA
TFL Ltda.
Triferlu Ltda.
Autuko Energy S.A.
William Fisher
Andiamo Exploration Ltd
GoldQuest Mining Corporation
Horizonte Minerals Plc
Treasury Metals Inc.
Aurelian Resources Inc.
GlobeStar Mining Corporation
Karmin Exploration Inc.
PC Gold Inc.
Rockwell Diamonds Inc.
RX Exploration Inc.
5.2
The business address of each of the Directors is Seawind House, 98-99 Hotham Place, Millbridge,
Plymouth, PL1 5NE United Kingdom.
5.3
As at the date of this document and save as noted in paragraph 5.1, none of the Directors has:
5.3.1 any unspent convictions in relation to indictable offences; or
5.3.2 been declared bankrupt or made any individual voluntary arrangement; or
5.3.3 been a director of a company at the time of or within the twelve months preceding any
receivership, compulsory liquidation, creditors’ voluntary liquidation, administration,
voluntary arrangement or any composition or arrangement with creditors generally or any
class of creditors; or
5.3.4 been a partner or in a partnership at the time of or within the twelve months preceding the
partnership being subject to a compulsory liquidation, administration or partnership
voluntary arrangement; or
5.3.5 had any asset subject to receivership or been a partner of any partnership at the time of or
within the twelve months preceding any asset of such partnership being subject to a
receivership; or
5.3.6 been subject to any public criticism by statutory or regulatory authorities (including
recognised professional bodies), nor disqualified by a court from acting as a director of a
company or from acting in the management or conduct of the affairs of any company.
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6.
6.1
Directors’ and Other Interests
The interests of the Directors (all of which are beneficial, unless otherwise stated), and (so far as
is known to the Directors, or could with reasonable diligence be ascertained by them) the interests
of persons connected with them (within the meaning of section 252-255 and 820-825 of the Act)
in the Existing Issued Share Capital of the Company as at 28 March 2014 (being the latest
practicable date prior to publication of this document) and in the Enlarged Issued Share Capital as
at Admission are as follows:
Directors
Tim Adams*
William Fisher
Pieter D’Haen
Jan Gawel
Fernando Cubillos
Andrew Cameron
As at the date of this document
Percentage of
Number of
Existing Issued
Ordinary Shares
Share Capital
13,251,853**
612,900
393,600
303,400
412,917
102,500
16.1
0.7
0.5
0.4
0.5
0.1
On Admission
Percentage of
Number of
Enlarged Issued
Ordinary Shares
Share Capital
14,133,864
679,834
393,600
303,400
412,917
102,500
14.8
0.7
0.4
0.3
0.4
0.1
*
As at the date of Admission, Tim Adams will be the legal owner of 13,017,241** Ordinary Shares. His wife (a connected
person) will also own 1,116,623 Ordinary Shares, bringing his total interest (including the interest of connected persons)
to 14,133,864 Ordinary Shares.
**
Prior to the conversion of Tim Adams’ loan to the Company as set out in paragraph 12.13 of Part V of this document.
6.2
Save as disclosed in paragraph 6.1 of this Part V, the Company is not aware of any person who as
at 28 March 2014 (being the latest practicable date prior to publication of this document) is, directly
or indirectly, interested in three per cent. or more of the voting rights of the Company or who,
directly or indirectly, jointly or severally exercise or could exercise control over the Company.
6.3
Save as disclosed in paragraph 6.1 of this Part V, the following persons will immediately following
Admission be interested in three per cent. or more of the Enlarged Issued Share Capital:
Number of
Ordinary Shares
Splendid Suns Holdings Ltd
James Wilson
Mafatsana Overseas Ltd
Tuda SPRL
Pires Investment, PLC
TNJ Limited
*
Percentage of Enlarged
Issued Share Capital
20,518,296
10,638,668*
6,317,560
7,362,083
3,345,270
4,166,666
22.2
11.2
6.6
7.7
3.5
4.4
Includes holdings of James Wilson’s wife; Alexandra Wilson, Active Capital Management Pte Ltd, Power Capital (BVI)
and his pension fund.
6.4
None of the Company’s major holders of Ordinary Shares listed above have different voting rights
from the other holders of Ordinary Shares.
6.5
Save as disclosed above, the Directors are not aware of any interests of persons connected
with them.
6.6
The Directors are not required to hold any Ordinary Shares under the Articles.
6.7
Other than the protections afforded to Shareholders in the Articles, there are no controls in
place to ensure that any shareholder having a controlling interest in the Company does not
abuse that interest.
6.8
Neither the Directors nor the Company are aware of any arrangements in place which may result
in a change in control of the Company.
6.9
Save as disclosed in this document, none of the Directors has any interest, beneficial or
non-beneficial, in the share or loan capital of the Company.
80
6.10 Save as disclosed in this document, no Director has any interest, direct or indirect, in any assets
which have been or are proposed to be acquired or disposed of by, or leased to, the Group and no
contract or arrangement exists in which any Director is materially interested and which is
significant in relation to the business of the Group.
6.11 Save as disclosed in this document, there are no outstanding loans granted by the Company to any
Director, nor are there any guarantees provided by the Company for their benefit.
6.12 No Director or any member of a Director’s family has a related financial product referenced to the
Ordinary Shares.
7.
7.1
Directors’ Service Agreements and Letters of Appointment
Executive Directors
The following service agreements have been entered into between the Company and its executive
directors, in each case conditional on and commencing from Admission:
7.1.1 Timothy Adams has entered into a service agreement dated 27 March 2014 with the Company
under which he agreed to act as Chief Executive from the date of the service agreement, until
it is terminated by either party giving to the other not less than six months’ written notice such
notice to expire on or after the first anniversary of the date of Admission. The service agreement
provides for a salary of £150,000 per annum, a car allowance of £12,000 per annum, as well
as private medical, permanent health, life, travel and directors’ and officers’ insurance, and the
reimbursement by the Company for expenses reasonably incurred in the proper performance
by Timothy Adams of the Company’s or Group’s business.
7.1.2 Pieter D’haen has entered into a service agreement dated 31 March 2014 with the Company
under which he agreed to act as Chief Operating Officer from the date of the service
agreement, until it is terminated by either party giving to the other not less than six months’
written notice such notice to expire on or after the first anniversary of the date of Admission.
The service agreement provides for a salary of £100,000 per annum, as well as private
medical, permanent health, life, travel and directors’ and officers’ insurance, and the
reimbursement by the Company for expenses reasonably incurred in the proper performance
by Pieter D’haen of the Company’s or Group’s business.
7.1.3 Jan Gawel has entered into a service agreement dated 25 March 2014 with the Company
under which he agreed to act as Chief Financial Officer from the date of the service
agreement, until it is terminated by either party giving to the other not less than six months’
written notice such notice to expire on or after the first anniversary of the date of Admission.
The service agreement provides for a salary of £100,000 per annum, as well as private
medical, permanent health, life, travel and directors’ and officers’ insurance, and the
reimbursement by the Company for expenses reasonably incurred in the proper performance
by Jan Gawel of the Company’s or Group’s business.
7.2
Non-Executive Directors
The following letters of appointment have been entered into between the Company and its
non-executive directors, in each case conditional on and commencing from Admission:
7.2.1 a letter of appointment dated 31 March 2014 pursuant to which Andrew Cameron has been
appointed as non-executive chairman of the Company, the appointment commences on the
date of Admission and is terminable by either party on three months’ written notice such
notice to expire on or after the first anniversary of the date of Admission, at an annual fee
of £25,000;
7.2.2 a letter of appointment dated 17 March 2014 pursuant to which Fernando Cubillos has been
appointed as a non-executive director of the Company, the appointment commences on the
date of Admission and is terminable by either party on three months’ written notice such
notice to expire on or after the first anniversary of the date of Admission, at an annual fee of
£25,000; and
81
7.2.3 a letter of appointment dated 31 March 2014 pursuant to which William Fisher has been
appointed as a non-executive director of the Company, the appointment commences on the
date of Admission and is terminable by either party on three months’ written notice such
notice to expire on or after the first anniversary of the date of Admission, at an annual fee
of £25,000.
The Company’s non-executive directors each benefit from directors’ and officers’ insurance
7.3
Save as set out above, there are no existing or proposed service contracts between any of the
Directors and the Company or any other member of the Group and there are no existing or proposed
service contracts between any of the Directors and the Company or any other member of the Group
which provide for benefits upon termination.
8.
8.1
Accounting
The Company’s accounting reference date is 31 December in each year. The Company’s last
accounting period ended on 31 December 2013 and its next accounting reference period will end
on 31 December 2014.
9.
Memorandum and Articles of Association
For the purpose of this paragraph 9, the following definitions shall apply:
“DTR” means the United Kingdom Disclosure and Transparency Rules as amended from time to time
relating to the disclosure of information in respect of financial instruments which have been admitted to
trading on a regulated market or for which a request for admission to trading on such a market has been
made, as published by the Financial Services Authority of the United Kingdom;
“Exempt Transfer” in relation to any share is a transfer pursuant to:
(a)
a sale of the share on AIM or a regulated market in the United Kingdom on which shares of that
class are listed or normally traded; and/or
(b)
a sale of the whole beneficial interest in the share to a person whom the Board is satisfied is
unconnected with the existing holder or with any other person appearing to be interested in the
share; or
(c)
acceptance of a takeover offer;
“Operator” has the same meaning as “authorised operator” as provided for in the CREST Regulations;
“participating class” a class of shares title to which is permitted by an Operator to be transferred by a
relevant system;
“relevant securities” means:
(a)
shares in the Company other than shares allotted pursuant to:
(i)
an employee share scheme;
(ii)
a right to subscribe for shares in the Company where the grant of the right itself constituted
a relevant security; or
(iii) a right to convert securities into shares in the Company where the grant of the right itself
constituted a relevant security; and
(b)
any right to subscribe for, or to convert any security into, shares in the Company other than rights
to subscribe for or convert any security into shares allotted pursuant to an employee share scheme,
and a reference to the allotment of relevant securities includes the grant of such a right; and
“special resolution” means a resolution of the Company passed as a special resolution in accordance with
Companies Law by a majority of three-fourths of the votes cast on that resolution.
82
The Articles were adopted by the Company by a special resolution passed on 28 March 2014 and include,
inter alia, provisions to the following effect. Persons seeking a detailed explanation of any provisions of
Companies Law or the difference between it and the laws of England and Wales, or any other jurisdiction
with which they may be more familiar, should seek specific legal advice.
9.1
Stated capital account
The Company shall maintain a stated capital account in accordance with Companies Law for each
class of issued shares. A stated capital account may be expressed in any currency.
9.2
Alteration of share capital
The Company may by special resolution alter its share capital in any manner permitted by Article 38
of Companies Law. In accordance with (and subject to) the provisions of Article 61 of Companies
Law, the Company may by special resolution reduce its stated capital account and capital
redemption reserve in any way.
9.3
Purchase of own shares
Subject to and in accordance with Companies Law and without prejudice to any special rights
attached to any class of shares, the Company may purchase any of its own shares of any class
(including, without limitation, redeemable shares) in any way and at any price and may hold such
shares as treasury shares.
9.4
Share rights
Subject to Companies Law and without prejudice to any rights attached to any existing shares, any
share in the Company may be issued with or have attached to it such rights and restrictions as the
Company may by ordinary resolution decide or, if no such resolution has been passed or so far as
the resolution does not make specific provision, as the Board may decide. No share issued by the
Company shall have a nominal value. Subject to Companies Law and to any rights attached to any
existing shares, the Company may issue shares which are to be redeemed, or at the option of the
Company or the holder are liable to be redeemed.
9.5
Allotment of securities and pre-emption rights
Subject to the provisions of Companies Law, the Articles and any resolution of the Company passed
by the Company conferring authority on the Directors to allot shares, as referred to below and
without prejudice to any rights attached to existing shares, all unissued shares are at the disposal
of the Board which may reclassify, allot, grant options over or otherwise dispose of them to persons
at such times and on such terms and conditions as the Board may decide.
The Board has the power to allot relevant securities subject to authority granted by the Company
by ordinary resolution which shall provide for: (i) the number of relevant securities which may be
issued by the Board generally and unconditionally; and (ii) may specify the issue price of such
relevant securities.
Although Companies Law does not provide any statutory pre-emption rights, the Articles provide
that equity securities allotted by the Company must first be offered to existing Shareholders in
proportion to their respective holdings of Ordinary Shares except that such pre-emption rights shall
not apply where they are dis-applied by way of special resolution of the holders of shares of the class
who (being entitled to do so) vote in person or by proxy at a separate general meeting of such holders
or in relation to the allotment of: (i) bonus shares; (ii) equity securities wholly or partly paid up
otherwise than in cash; (iii) equity securities issued in connection with an employee share scheme;
or (iv) shares pursuant to the exercise or conversion of any Warrants or convertible loan note issued
by the Company prior to Admission.
9.6
Share certificates
Every member on becoming the holder of any certificated share (except a recognised person in
respect of whom the Company is not by law required to issue a certificate) whose name is entered
on the Company’s register of members as a holder of any certificated shares is entitled, without
payment, to one certificate in respect of all shares of any class held by him. In the case of joint
holders, delivery of a certificate to one of the joint holders shall be sufficient delivery to all.
83
The Company’s board may permit title to some or all of the shares of any class to be evidenced
otherwise than by a certificate and title to such shares to be transferred in accordance with the
rules of a relevant system pursuant to which title to units of a security can be evidenced and
transferred in accordance with the CREST Regulations, without a written instrument. The Articles
are consistent with CREST membership.
9.7
Call, forfeiture and lien
The Board may from time to time make calls upon the members in respect of any moneys unpaid
on their shares. Each member shall (subject to being given at least 14 clear days’ notice specifying
where and when payment is to be made) pay to the Company the specified amount called on his
shares. If any call or instalment of a call remains unpaid on or after the due date for payment, the
person from whom it is due and payable shall pay interest on the amount unpaid from the day it
became due and payable until it is paid. Interest shall be paid at a fixed rate, fixed by the terms of
the allotment of the share or in the notice of call or if no rate is fixed, the rate determined by the
Board not exceeding five per cent. per annum, or, if higher, the appropriate rate (as determined by
the UK Secretary of State and defined in the Act). The Board may also (on giving not less than
14 clear days’ notice requiring payment of the amount unpaid together with interest and costs
incurred) forfeit the shares by resolution of the Board. The forfeiture shall include all dividends or
monies payable in respect of the forfeited share. The forfeited shares may be sold, re-allotted or
otherwise disposed of by the Board in such manner as it determines.
The Company shall have a first and paramount lien on every share (not being a fully paid share)
for all monies payable to the Company (whether presently or not) in respect of that share. The
Board may at any time (generally or in a particular case) waive any lien or declare any share to be
wholly or in part exempt from the relevant provisions of the Articles. The Company’s lien on a
share shall extend to any amount (including without limitation dividends) payable in respect of it.
9.8
Variation of rights
Subject to the provisions of Companies Law and to any rights attached to existing shares (and
except in the case where there is only one holder of the issued shares in which case all rights
attached to an existing class of shares may be varied only with the consent in writing of that holder),
all or any of the rights attached to any class of shares may be varied either with the written consent
of the holders of not less than three-fourths in number of the issued shares of the class or the
sanction of a special resolution passed at a separate general meeting of the holders of shares of the
class duly convened and held.
9.9
Transfer of shares
Without prejudice to any power of the Company to register as a shareholder a person to whom the
right to any share has been transmitted by operation of law, the instrument of transfer of a
certificated share may be in the usual form or in any other form approved by the Board and shall
be signed by or on behalf of the transferor and, unless the share is fully paid, by or on behalf of
the transferee.
Any member may transfer all or any of his shares which are in uncertificated form, subject to the
CREST Regulations, by means of a relevant system provided that legal title to such shares shall not
pass until the transfer is entered in the register.
The Board may refuse to register the transfer of a share in certificated form unless the instrument
of transfer:
(a)
(b)
is lodged, duly stamped (if stampable), at the office or at another place appointed by the
Board accompanied by the certificate for the share to which it relates and such other
evidence as the Board may reasonably require to show the right of the transferor to make
the transfer;
is in respect of only one class of shares; and
(c)
is in favour of not more than four transferees.
84
If the Board refuses to register a transfer of a share in certificated form it shall send the transferee
notice of its refusal within two months after the date on which the instrument of transfer was lodged
with the Company.
No fee shall be charged for the registration of any instrument of transfer or other document relating
to or affecting the title to a share, or for making any other entry in the register.
Any member may transfer all or any of his shares which are in uncertificated form, subject to the
rules and regulations of the relevant system, provided that legal title to such shares shall not pass
until the transfer is entered in the Company’s register of members. Subject to Companies Law, the
AIM Rules for Companies and any applicable laws, rules and regulations relating to a relevant
system, no provision of the Articles shall apply or have effect to the extent that it is inconsistent in
any respect with:
(a)
the holding of shares of that class in uncertificated form;
(b)
the transfer of title to shares of that class by means of a relevant system;
(c)
the exercise of any powers or functions by the Company or the effecting by the Company of
any actions by means of a relevant system; and
(d)
any provision of the CREST Regulations.
The Directors may lay down regulations not included in the Articles which (in addition to, or in
substitution for, any provisions in the Articles):
(a)
apply to the issue, holding or transfer of shares in uncertificated form;
(b)
set out (where appropriate) the procedures for conversion and/or redemption of shares in
uncertificated form; and/or
(c)
the Directors consider necessary or appropriate to ensure that these Articles are consistent
with the CREST Regulations and/or the Operator’s rules and practices.
The Articles provide that the Board may suspend the registration of transfers of shares or of
transfers of any class of shares at such times and for such periods (not exceeding 30 days in any
year) as the Board may determine, except that the Board may not suspend the registration of
transfers of any participating class without the consent of the Operator of the relevant system.
9.10 Disclosure of interests in shares
The provisions of DTR 5 shall be deemed to apply to the Company, so that members are required
under the Articles to notify the Company of the percentage of their voting rights if the percentage
of voting rights which they hold as a shareholder or through their direct or indirect holding of
financial instruments falling within paragraph 5.1.3R of DTR 5 (or a combination of such holdings)
reaches, exceeds or falls below three per cent., four per cent., five per cent., six per cent.,
seven per cent., eight per cent., nine per cent., 10 per cent., and each one per cent. threshold
thereafter up to 100 per cent., or reaches or exceeds or falls below any of these thresholds as a
result of events changing the breakdown of voting rights and on the basis of information disclosed
by the Company in accordance with paragraph 5.6.1R of DTR 5. Paragraph 5.8 of DTR 5 notes that
a shareholder must make the notification required under paragraph 5.1 of DTR 5 as soon as possible
and in any event not later than two trading days after the date on which the person: (i) learns of the
acquisition or disposal or of the possibility of exercising voting rights or having regard to the
circumstances should have learned of it regardless of the date on which the acquisition, disposal
or possibility of exercising voting rights takes effect; or (ii) is informed on the basis of information
disclosed by the Company of events changing the breakdown of voting rights which results in the
person reaching, exceeding or falling below a relevant threshold.
If any member fails to comply with these requirements, the Directors may, by notice to the holder
of the shares, suspend their rights as to voting, dividends and transfer (except pursuant to an Exempt
Transfer). Such suspension shall have effect from the date on which the default notice is delivered
85
to the shareholder until a date that is not more than seven days after the Board has determined that
the holder of the shares has cured the non-compliance. During the period of such suspension any
dividend or other amount payable in respect of the shares shall be retained by the Company without
any obligation to pay interest thereon.
The Directors have the power, by giving notice, to require any member to disclose to the Company
the identity of any person other than the member who is interested in the shares held by the member
or who has been at any time during the preceding three years been so interested, in both cases
together with details of the nature of such interest. If any member has been duly served with such a
notice and is in default of the prescribed period in supplying the information required, certain
restrictions shall apply. A disclosure notice may direct that the member shall not be entitled to vote
at a general meeting or meeting of the holders of any class of shares of the Company or exercise any
other right conferred by membership in relation to the meetings of the Company or holders of any
class of shares. Where the default shares represent at least 0.25 per cent. of the issued shares of that
class, any dividend or other money which would otherwise be payable may also be retained by the
Company and transfers of default shares will be restricted until the restrictions cease to apply.
9.11 General meetings
The Board shall convene and the Company shall hold general meetings as annual general meetings
in accordance with Companies Law. The Board may convene general meetings whenever it thinks
fit. At least 14 clear days’ notice shall be given of every annual general meeting and of all other
general meetings, including without limitation, every general meeting called for the passing of a
special resolution. The Company may determine that the members entitled to receive a notice of a
general meeting of the Company are the members on the register at the close of business on a day
determined by the Company, which day may not be more than 21 days before the day that notices
of the meeting are sent.
The notice shall specify the place, day and time of the meeting and the general nature of the
business to be transacted at the meeting. In the case of an annual general meeting, the notice shall
specify the meeting as such. In the case of a meeting to pass a special resolution the notice shall
specify the intention to propose the resolution as a special resolution.
For the purpose of determining whether a person is entitled as a member to attend or vote at a
meeting and how many votes such person may cast, the Company may specify in the notice of the
meeting a time not more than 48 hours before the time fixed for the meeting, by which a person
who holds shares in registered form must be entered on the register in order to have the right to
attend or vote at the meeting or to appoint a proxy to do so.
The Board may resolve to enable persons entitled to attend a general meeting to do so by
simultaneous attendance and participation at a satellite meeting place anywhere in the world and
any members in attendance in person or by proxy at any such meeting place shall be counted in the
quorum and entitled to vote at the general meeting.
Members representing at least five per cent. of the total voting rights of all members who are
entitled to vote on the resolution at the annual general meeting to which the request relates
(excluding any voting rights attached to any shares in the Company held as treasury shares), or not
less than 100 members who have a relevant right to vote on such resolution and who hold shares
in the Company on which there has been paid up an average sum, per member, of at least £100, may
require the Company to circulate notice of a resolution which may be, and is intended to be, moved
at that annual general meeting to members and if so required, the Company shall, unless the
resolution would if passed be ineffective, is defamatory of any person or is frivolous or vexatious,
give such notice in the same manner as notice of the meeting and at the same time as, or as soon
as reasonably practicable after it gives notice of the meeting.
Members representing at least five per cent. of the total voting rights of all members who, in relation
to a proposed resolution, are entitled to vote on that resolution at the meeting to which the request
relates, or in relation to any other matter, are entitled to vote at the meeting to which the request
relates (a “relevant right to vote”) (excluding any voting rights attached to any shares in the
86
Company held as treasury shares) or, not less than 100 members who have a relevant right to vote
and on which there has been paid up an average sum, per member, of at least £100, may require
the Company to circulate to members an explanatory statement of not more than 1,000 words with
respect to a matter referred to in the proposed resolution to be dealt with at the meeting to which
the request relates, or to any other business to be dealt with at that meeting. However, the Company
has the right to apply to the Royal Court of Jersey to seek a ruling that it is not required to circulate
a members’ statement on the basis that the rights in the Articles are being abused.
Members representing at least five per cent. of the total voting rights of all members who are
entitled to vote on the matter to which a poll relates (excluding any voting rights attributed to any
shares in the Company held as treasury shares) or not less than 100 members who have a relevant
right to vote and on which there has been paid up an average sum per member of at least £100 may
require the Directors to obtain an independent report on any poll taken or to be taken at a general
meeting of the Company.
A member of the Company may nominate a person, on whose behalf he holds shares, to enjoy
rights to receive a copy of all communications that the Company sends to its members.
All resolutions put to the vote of a general meeting shall be decided upon by a show of hands unless
a poll is validly demanded. Subject to any rights and restrictions attached to any shares, members
and their duly appointed proxies shall have the right to attend and speak at general meetings and
to vote, and to demand, or join in demanding, a poll.
On a show of hands every member who is present in person shall have one vote and every proxy
present who has been duly appointed by a member entitled to vote on the resolution has one vote. On
a poll every member present or by proxy shall have one vote for every share of which he is the holder.
No member shall be entitled to vote at a general meeting or at a separate meeting of the holders
of any class of shares unless all monies presently payable by him or in respect of his shares have
been paid.
A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any
general meeting and at any separate meeting of the holders of any class of shares in the capital of
the Company.
The chairman may with the consent of a meeting at which a quorum is present, adjourn the meeting.
9.12 Power to require website publication of audit concerns
Where so requested by members representing at least five per cent. of the total voting rights of all
the members who have a right to vote at the general meeting at which the accounts of the Company
are laid, or by at least 100 members who have such right to vote and hold shares in the Company
on which there has been paid up an average sum, per member, of at least £100, the Company shall
publish on its website a statement setting out any matter relating to the audit of the Company’s
accounts or any circumstances connected with an auditor of the Company ceasing to hold office
except where the Board believes in good faith that the rights so conferred are being abused.
9.13 Voting rights
Subject to any special terms as to voting attached to any shares and to the Articles, on a show of
hands every member who is present in person or by proxy shall have one vote and on a poll every
member who is present in person or by proxy shall have one vote for every share of which he is
the holder. On a poll, a member entitled to more than one vote need not use all his votes or cast all
the votes he uses in the same way. A member may appoint more than one proxy.
No member shall be entitled to vote at any general meeting unless all monies presently payable by
him in respect of shares in the Company have been paid.
In the case of joint shareholders only, the vote of the senior joint holder shall be accepted. In the
case of an equality of votes, the chairman of the meeting shall be entitled to a casting vote in
addition to any other vote he may have.
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9.14 Directors
9.14.1 Appointment of Directors
Unless otherwise determined by ordinary resolution, the number of Directors shall be not less
than two or more than 10. Directors may be appointed by ordinary resolution or by the Board.
At every annual general meeting one-third of the Directors or, if their number is not three or
a multiple of three, the number nearest to and exceeding one-third shall retire from office;
but if any Director has at the start of the annual general meeting been in office for three
years or more since his last appointment or re-appointment, he shall retire at that annual
general meeting.
Any Director may appoint any other Director or other person approved by resolution of the
Board and willing to act, to be an alternate Director.
Subject to the provisions of Companies Law, the Board may appoint one or more of its body
to be the holder of any executive office (except that of auditor) in the Company and may enter
into an agreement or arrangement with any Director for his employment by the Company or
for the provision by him of any services outside the scope of the ordinary duties of a Director.
Any such appointment, agreement or arrangement may be made on such terms, including
without limitation terms as to remuneration, as the Board determines. The Board may revoke
or vary any such appointment but without prejudice to any rights or claims which the person
whose appointment is revoked or varied may have against the Company because of the
revocation or variation.
9.14.2 No share qualification
A Director shall not be required to hold any shares in the capital of the Company by way of
qualification.
9.14.3 Retirement of Directors by rotation
The Directors to retire by rotation shall be first, those who wish to retire and not be
re-appointed to office, and second, those who have been in office longest since their last
appointment or reappointment. As between persons who became or were last re-appointed
Directors on the same day those to retire shall (unless they otherwise agree among
themselves) be determined by lot. No Director shall be required to retire or be relieved from
retiring or to be retired by reason of any change in the number or identity of the Directors
after the date of the notice but before the close of the meeting.
9.14.4 Remuneration of Directors
The emoluments of any executive Director shall be determined by the Board. The ordinary
remuneration of the Directors who do not hold executive office for their services (excluding
amounts payable under any other provision of the Articles) shall not exceed in aggregate
such amount as the Company may from time to time by ordinary resolution determine.
Subject thereto, each such Director shall be paid a fee for his services (which shall be deemed
to accrue from day to day) at such rate as may from time to time be determined by the Board.
Any Director who does not hold executive office and who performs special services which,
in the opinion of the Board, go beyond the ordinary duties of a Director, may be paid such
extra remuneration as the Board may determine. The Directors may be paid all travelling,
hotel, and other expenses properly incurred by them in connection with their attendance at
meetings of the Board or committees of the Board, general meetings or separate meetings
of the holders of any class of shares or of debentures of the Company or otherwise in
connection with the discharge of their duties.
The Board may (by establishment of, or maintenance of, schemes or otherwise) provide
benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for
any past or present Director or employee of the Company or any of its subsidiary
undertakings or any body corporate associated with, or any business acquired by, any of
them, and for any member of his family (including a spouse, a civil partner, a former spouse
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and a former civil partner) or any person who is or was dependent on him, and may (as well
before as after he ceases to hold such office or employment) contribute to any fund and pay
premiums for the purchase or provision of any such benefit.
9.14.5 Compensation for loss of office
The provisions contained in sections 215 to 221 of the Act in relation to payments made to
Directors (or a person connected to such Directors) for loss of office and the circumstances
in which such payments would require the approval of members apply to the Company such
that the Company may not make payment for loss of office to a director unless approved by
a resolution of the members of the Company. Such resolution must not be passed unless a
memorandum setting out the particulars of the proposed payment (including its amount) is
made available to the members of the Company.
9.14.6 Permitted interests of Directors
Subject to the provisions of Companies Law and provided that where a Director, to his
knowledge, is in any way directly or indirectly interested in a contract, transaction or
arrangement with the Company and such interest conflicts or may conflict to a material
extent with the interests of the Company, has disclosed to the Board (at the meeting of the
Board at which the question of entering into the contract, arrangement, transaction or
proposal is first considered, if he knows his interest then exists or, in any other case as soon
as practical after that meeting, by notice in writing delivered to the secretary, at the first
meeting of the Board after he knows that he is or has become so interested) the nature and
extent of his interest, a Director, notwithstanding his office:
9.14.6.1
may enter into or otherwise be interested in any contract, arrangement,
transaction or proposal with the Company (including in relation to any insurance
proposal which the Company proposes to maintain or purchase for the benefit
of the Directors) or in which the Company is otherwise interested;
9.14.6.2
may hold any other office or place of profit under the Company (except that of
auditor or of auditor of a subsidiary of the Company) in conjunction with the
office of Director and may act by himself or through his firm in a professional
capacity for the Company, and in any such case on such terms as the Board may
arrange, either in addition to or in lieu of any remuneration provided for by any
other provision of the Articles;
9.14.6.3
may be a Director or other officer of, or employed by, or a party to any
transaction or arrangement with, or otherwise interested in, any body corporate
promoted by the Company or in which the Company is otherwise interested or
as regards which the Company has any powers of appointment; and
9.14.6.4
shall not be liable to account to the Company for any profit, remuneration or
other benefit realised by any such office, employment, contract, arrangement,
transaction or proposal, and no such contract, arrangement, transaction or
proposal shall be avoided on the grounds of any such interest or benefit.
9.14.7 Powers of Directors
Subject to the provisions of Companies Law and the Articles and any direction given by
special resolution, the business of the Company shall be managed by the Board which may
exercise all powers of the Company. The Board may delegate any of its powers to any
committee consisting of one or more Directors. The Board may also delegate any of its
powers to any Director holding any executive office.
9.14.8 Proceedings of Directors
A Director may, and the secretary at the request of a Director shall, call a meeting of the
Board by giving notice of the meeting to each Director.
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Questions arising at a meeting shall be decided by a majority of votes. In the case of an
equality of votes, the chairman shall have a second or casting vote, provided that the
chairman may not exercise any such second or casting vote at any meeting at which only two
of the Directors who are present are entitled to vote. Any Director may waive notice of a
meeting and any such waiver may be retrospective.
The quorum for the transaction of the business of the Board may be fixed by the Board and
unless so fixed at any other number shall be two. A person who holds office only as an
alternate Director may, if his appointor is not present, be counted in the quorum.
A resolution in writing agreed by all the Directors entitled to receive notice of and vote at a
meeting of the Board or of a committee of the Board (not being less than the number of
Directors required to form a quorum of the Board) shall be as valid and effectual as if it had
been passed at a meeting of the Board or (as the case may be) a committee of the Board duly
convened and held.
A person entitled to be present at a meeting of the Board or of a committee of the Board shall
be deemed to be present for all purposes if he is able (directly or by electronic
communication) to speak to and be heard by all those present or deemed to be present
simultaneously. A Director so deemed to be present shall be entitled to vote and be counted
in a quorum accordingly.
9.14.9 Restrictions on voting
Except as otherwise provided in the Articles, a Director shall not vote on (but shall still be
counted in the quorum in relation to) any resolution of the Board or a committee of the Board
concerning a contract, transaction or arrangement in which he has an interest which (taken
together with any interests of any person connected with him) is, to his knowledge, a material
interest, otherwise than by virtue of his interests in shares or debentures or other securities
of or otherwise in or through the Company, unless the resolution concerns any of the
following matters:
9.14.9.1
the giving of any guarantee, security or indemnity in respect of money lent or
obligations incurred by him or any other person at the request of or for the
benefit of the Company or any of its subsidiary undertakings;
9.14.9.2
the giving of any guarantee, security or indemnity in respect of a debt or
obligation of the Company or any of its subsidiary undertakings for which he
himself has assumed responsibility in whole or in part under a guarantee or
indemnity or by the giving of security;
9.14.9.3
any proposal concerning an offer of shares or debentures or other securities of
or by the Company or any of its subsidiary undertakings in which offer he is or
may be entitled to participate as a holder of securities or in the underwriting or
sub-underwriting of which he is to participate;
9.14.9.4
any proposal concerning any other body corporate in which he (together with
persons connected with him within the meaning of sections 252, 253 and 254
of the Act) does not to his knowledge have an interest in 1 per cent. or more of
the issued equity share capital of any class of such body corporate or of the
voting rights available to members of such body corporate;
9.14.9.5
any proposal relating to an arrangement for the benefit of the employees of the
Company or any of its subsidiary undertakings which does not award him any
privilege or benefit not generally awarded to the employees to whom such
arrangement relates; or
9.14.9.6
any proposal concerning insurance which the Company proposes to maintain
or purchase for the benefit of Directors or for the benefit of persons who include
Directors.
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Subject to Companies Law, the Company may by ordinary resolution suspend
or relax the above provisions to any extent or ratify any transaction not duly
authorised by reason of a contravention of such provisions.
A Director shall not vote (but shall be counted in the quorum) on any resolution
of the Board or committee of the Board concerning his own appointment
(including fixing or varying the terms of his appointment or its termination) as
the holder of any office or place of profit with the Company or any body
corporate in which the Company is interested. Where proposals are under
consideration concerning the appointment of two or more Directors to offices
or places of profit with the Company or any body corporate in which the
Company is interested, such proposals may be divided and a separate resolution
considered in relation to each Director. In such case, each of the Directors
concerned (if not otherwise debarred from voting under these Articles) shall be
entitled to vote in respect of each resolution except that concerning his own
appointment and for the avoidance of doubt shall be still be counted in the
quorum for any resolution concerning his own appointment.
An interest of a person who is for the purposes of the Act connected with a
Director shall be treated as an interest of the Director, provided that the Director
is aware of such interest.
9.15 Indemnity of officers
The Law restricts indemnities or exemptions from liability given by Jersey companies to their
directors and officers. In general, directors and officers of a Jersey company cannot be exempted
from or receive an indemnity in respect of any liability which would otherwise attach to that director
or officer under law by reason of the fact that they are or were a director or officer of the company.
There are exemptions to this restriction, in particular in respect of proceedings where the director
or officer is not held liable or the matter is discontinued, where the director or officer acted in good
faith in the best interests of the company and in respect of any liability for which the company
normally maintains insurance. The Articles provide that a Director, alternate Director, secretary or
other officer may be indemnified out of the assets of the Company to the extent this is legally
permissible under Companies Law and subject to the rules made by London Stock Exchange plc
in connection with AIM (or by the competent authority of any other regulated market or other stock
exchange on which the shares of the Company may be listed).
9.16 Dividends and other distributions
Subject to the provisions of Companies Law, the Company may by ordinary resolution declare
dividends but no such dividend shall exceed the amount recommended by the Board. Subject to the
provisions of Companies Law, the Board may pay interim dividends if it appears to the Board to
be justified by the cash flow position of the Company. A general meeting declaring a dividend
may, on the recommendation of the Board, by ordinary resolution direct that it shall be satisfied
wholly or partly by the distribution of assets, including without limitation paid up shares or
debentures of another body corporate. The Board may make any arrangements it thinks fit to settle
any difficulty arising in connection with the distribution, including without limitation: (i) the fixing
of the value for distribution of any assets; (ii) the payment of cash to any member on the basis of
that value in order to adjust the rights of members; and (iii) the vesting of any asset in a trustee.
The Board may, if authorised by an ordinary resolution of the Company, offer any holder of shares
the right to elect to receive shares, credited as fully paid, instead of cash in respect of the whole (or
some part, to be determined by the Board) of all or any dividend specified by such
ordinary resolution.
Except as otherwise provided by the rights attaching to or terms of issue of any shares, all dividends
shall be apportioned and paid pro rata according to the amounts paid on the shares during any
portion or portions of the period in respect of which the dividend is paid.
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No dividend or other monies payable in respect of a share shall bear interest against the Company,
unless otherwise provided by the rights attached to the share.
The Board may deduct from any dividend or other monies payable to any member in respect of a
share any monies presently payable by him to the Company in respect of that share. Where a person
is entitled by transmission to a share, the Board may retain any dividend payable in respect of that
share until that person (or that person’s transferee) becomes the holder of that share.
Any dividend or other monies payable in respect of a share may be paid by, any direct debit, bank
or other funds transfer system to the holder or person entitled to payment or, if practicable, to a
person designated by notice to the Company by the holder or person entitled to payment; or by any
other method approved by the Board and agreed by the holder or person entitled to payment
including without limitation in respect of an uncertificated share by means of the relevant system
(subject to the facilities and requirements of the relevant system).
Subject to applicable laws, any dividend or other monies unclaimed after a period of 12 years from
the date on which it became payable shall, if the Board so resolves, be forfeited and cease to remain
owing by the Company.
9.17 Capitalisation of profits and reserves
The Board may with the authority of an ordinary resolution of the Company (or a special resolution
if required under Companies Law) resolve to capitalise any undistributed profits of the Company
not required for paying any preferential dividend or any sum standing to the credit of any reserve
or other fund of the Company.
9.18 Winding-up
Under Companies Law, except as provided by the rights and restrictions attached to any class of
shares, the holders of Ordinary Shares will be entitled to participate in any surplus assets in a
winding-up in proportion to their shareholdings. Pursuant to the Articles, the Company may, with
the sanction of a special resolution and any other sanction required by Companies Law, divide
among the members in kind the whole or any part of the assets of the Company and may, for that
purpose, value any assets and determine how the division shall be carried out as between the
members or different classes of members.
9.19 Disclosure of beneficial ownership
Although Companies Law does not contain equivalent provisions to section 793 of the Act, the
Articles provide that, if at any time any holder of shares, or any other person (as appropriate) has
been served with a disclosure notice from the Company and has not complied with such notice or
supplied the information required to the Company within the relevant period, then certain
restrictions will apply as follows:
9.19.1 if the default shares in which any one person is interested or appears to the Company to be
interested represent less than 0.25 per cent. of the issued shares of the class, the holders of
the default shares shall not be entitled, in respect of those shares, to attend or to vote, either
personally or by proxy, at any general meeting or at any separate general meeting of the
holders of any class of shares in the Company, or to exercise any other right conferred by
membership in relation to meetings of the Company; or
9.19.2 if the default shares in which any one person is interested or appears to the Company to be
interested represent at least 0.25 per cent. of the issued shares of the class, the holders of the
default shares shall not be entitled unless otherwise determined by the board from time to
time, in respect of those shares:
9.19.2.1 to attend or to vote, either personally or by proxy, at any general meeting or at any
separate general meeting of the holders of any class of shares in the Company, or
to exercise any other right conferred by membership in relation to meetings of the
Company; or
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9.19.2.2 to receive any payment by way of dividend and no share shall be allotted in lieu of
payment of a dividend; or
9.19.2.3 to transfer or agree to transfer any of those shares or any rights in them.
9.20 Distribution of assets in a liquidation
Pursuant to Companies Law, subject to any enactment as to the order of payment of debts, the
Company’s property on a winding up will be applied in satisfaction of the Company’s liabilities
pari passu and any remaining property of the Company will be distributed among the members
according to their rights and interests in the Company.
If the Company is wound up, the Directors or the liquidator (as the case may be) may, with the
sanction of a special resolution of the Company and any other sanction required by Companies Law,
divide among the members in specie the whole or any part of the assets of the Company and may,
for that purpose, value any assets and determine how the division shall be carried out as between
the members or different classes of members. Any such division may be otherwise than in
accordance with the existing rights of the members, but if any division is resolved otherwise than
in accordance with such rights, the members shall have the right to dissent in writing within
seven days of the passing of the resolution, requiring the liquidator either to abstain from carrying
the resolution into effect or to purchase his interest at a price to be determined by agreement
or arbitration.
The Directors or the liquidator may, with the like sanction, vest the whole or any part of the assets
in trustees on such trusts for the benefit of the members as they/he with the like sanction shall
determine, but no member shall be compelled to accept any assets on which there is a liability.
10. Comparison of Jersey law and UK law
There are a number of differences between company law in England and company law in Jersey, which
may impact upon the holders of Ordinary Shares. However, where permitted by the Companies Law and
considered to be appropriate, rights and protections similar to those provided to shareholders under
English law have been conferred on holders of Ordinary Shares by the Articles, including as described
in the summary of certain provisions of the Articles set out in paragraph 9 of this Part V.
Key differences between company law in England and company law in Jersey include (without limitation)
the following:
(a)
the Companies Law does not confer statutory pre-emption rights on shareholders relating to new
share issues; however, pre-emption rights broadly based on the provisions of the Act have been
enshrined in the Articles;
(b)
under the Companies Law, the directors of a company do not need the sanction of the shareholders
to issue and allot shares; however, the requirement to obtain such sanction has been enshrined in
the Articles;
(c)
Jersey law allows for partly paid shares to be allotted even if they are not paid up to at least
one quarter of its nominal value;
(d)
under the Companies Law a special resolution is required to be passed by two-thirds of shareholders
present (in person or by proxy) at the relevant meeting, compared with a three-quarters majority
required under English law. Thus, for example, a buy-back of shares requiring the sanction of a
special resolution will only require a two-thirds majority instead of a three-quarters majority;
(e)
the circumstances in which the Companies Law permits a Jersey company to indemnify its directors
in respect of liabilities incurred by its directors in carrying out their duties are limited, and differ
slightly to the analogous rules under English law. There is, however, no general prohibition on the
granting of loans by a company to its directors (but directors remain subject to fiduciary duties
when considering the grant of any such loans) and any costs incurred in defending any proceedings
which relate to anything done or omitted to be done by that director in carrying out his duties may
be funded by way of loans;
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(f)
Jersey law does not require that shareholders approve compensation payments made to directors
for loss of office, whereas under English law a payment by a company for loss of office to a director
of a company or its holding company must be approved by a resolution of shareholders;
(g)
unless the articles of association of a public company provide otherwise, proxies are not entitled
to speak or vote on a show of hands under Jersey law. Jersey law does not permit the appointment
of more than one corporate representative by a member in respect of the same shareholding;
(h)
any general meeting of a Jersey company may be convened on 14 days’ notice (rather than 21 days’
notice required under English law in certain circumstances, including for the passing of a special
resolution);
(i)
the Companies Law does not require the directors of a Jersey company to disclose to the company
their beneficial ownership of any shares in the company (although they must disclose to the
company the nature and extent of any direct or indirect interest which conflicts, or may conflict to
a material extent with, a transaction into which the company or any of its subsidiaries is proposing
to enter). However, by virtue of the AIM Rules, the Company and all shareholders in the Company
will be required to comply with the Disclosure Rules and Transparency Rules issued by the FCA
which contain such requirements (Chapter 3 of the Disclosure Rules and Transparency Rules
require the disclosure of such interests by the directors);
(j)
the Companies Law does not grant the directors of a Jersey company a statutory power to request
information concerning the beneficial ownership of shares, but powers based on section 793 of
the Act have been incorporated into the Articles entitling the Directors to request information to
establish details of interests in shares in the Company;
(k)
under the Companies Law, shareholders holding not less than one-tenth of the total voting rights
of the shareholders of the Company may requisition a meeting of shareholders (whereas under the
Act, this right may be exercised by shareholders representing at least 10 per cent. of the paid up
voting capital of a company);
(l)
the Companies Law does not confer on members the right to an independent scrutiny of a poll
taken, or to be taken, at a general meeting, nor does it confer rights on members to require a
company to circulate resolutions proposed to be moved by members at the next annual general
meeting, or to circulate explanatory statements relating to any matter relating to a proposed
resolution at a general meeting, or rights for a nominee holder of shares to have information rights
granted to the underlying beneficial owner of the share;
(m)
there is no restriction on donations by a company to political organisations under Jersey law;
(n)
under the Companies Law, at a meeting of shareholders a poll may be demanded in respect of any
question by:
(o)
no fewer than five shareholders having the right to vote on the question; or (ii) a shareholder or
shareholders representing not less than one tenth of the total voting rights of all shareholders having
the right to vote on the question (whereas, under the Act, a shareholder or shareholders representing
10 per cent. of the total sum paid up on all shares giving the right to vote may also demand a poll);
(p)
Jersey companies are permitted to make distributions to shareholders without reference to
distributable reserves. Instead, distributions may be made out of a company’s assets (other than its
nominal capital account or any capital redemption reserve), provided the directors approving the
distribution give the appropriate solvency statement required by the Companies Law (to the effect
that the company will be able to continue its business and meet its liabilities as they fall due for
the next 12 months);
(q)
a Jersey company’s redeemable shares may be redeemed out of any capital source which, in
particular, allows shares to be redeemed in whole or in part out of share capital accounts without
the need for capital redemption reserves, provided such shares are fully paid;
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(r)
a Jersey company may, by special resolution, apply a capital redemption reserve in issuing shares
to be allotted as fully paid bonus shares;
(s)
under Jersey law, it is harder for shareholders to bring a derivative claim against a company than
is the case under the Act. However, Jersey law includes an equivalent provision relating to protection
of shareholders against unfair prejudice (which, in English law, has not changed substantially
between the UK Companies Act 1985 and the Act) and Jersey has (subject to certain exceptions)
a broadly similar position under customary law to the common law position under English law; and
(t)
under Jersey law, the two procedures for dissolving a Jersey company are winding up and desastre.
Concepts such as receivership, administration and voluntary arrangements do not exist under Jersey
law. The concept of a winding up is broadly similar to that under English law, except that under
Jersey law, a winding up may only be commenced by the Jersey company and not by one of its
creditors. If the company is solvent the winding up will be a summary winding up. If the company
is insolvent, the winding up will be a creditors’ winding up. A creditor wishing to dissolve a Jersey
company would seek to have the company’s property declared en desastre (literally meaning “in
disaster”). If the company’s property is declared en desastre, all of the powers and property of the
company (whether present or future or situated in Jersey or elsewhere) are vested in the Viscount
(an officer of the court). The role of the Viscount is similar to that of a liquidator. The Viscount’s
principal duty is to act for the benefit of the company’s creditors. He is not under an obligation to
call any creditors’ meetings, although he may do so.
This list is intended to be illustrative only and does not purport to be exhaustive or to constitute legal
advice. Any shareholder wishing to obtain further information regarding his rights as a holder of Ordinary
Shares under Jersey law should consult his Jersey legal advisers.
Following and subject to Admission, the Company will be required to comply with the AIM Rules for
Companies (including rules relating to related party transactions, and significant transactions) and the
Disclosure Rules and Transparency Rules. In certain of the instances where the AIM Rules for Companies
and the Disclosure Rules and Transparency Rules apply differently to an overseas company, provision has
been made in the Articles to apply the rules as if the Company was a company incorporated in the UK.
The Company has adopted those elements of the Model Code which the Directors consider appropriate
to a Company of its size whose shares are traded on AIM.
It should be noted that insider dealing legislation set out in the UK Criminal Justice Act 1993, as well as
provisions relating to market abuse, will apply to the Company and dealings with Ordinary Shares,
alongside the relevant provisions of Jersey law.
11. Taxation
11.1 Taxation in the United Kingdom
(a) Tax treatment of the Company
The following information is based on the law and practice currently in force in the UK.
Provided that the Company is not resident in the UK for taxation purposes and does not
carry out any trade in the UK (whether or not through a permanent establishment situated
there), the Company should not be liable for UK taxation on its income and gains, other than
in respect of interest and other income received by the Company from a UK source (to the
extent that it is subject to the withholding of basic rate income tax in the UK).
It is the intention of the Directors to conduct the affairs of the Company so that the central
management and control of the Company is not exercised in the UK in order that the
Company does not become resident in the UK for taxation purposes. The Directors intend,
insofar as this is within their control, that the affairs of the Company are conducted so the
Company is not treated as carrying on a trade in the UK through a permanent establishment.
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(b)
Tax treatment of UK investors
The following information, which relates only to UK taxation, is applicable to persons who
are resident in the UK and who beneficially own Ordinary Shares as investments and not
as securities to be realised in the course of a trade. It is based on the law and practice
currently in force in the UK. The information is not exhaustive and does not apply to
potential investors:
•
who intend to acquire, or may acquire (either on their own or together with persons
with whom they are connected or associated for tax purposes), more than 10 per cent.,
of any of the classes of shares in the Company; or
•
who intend to acquire Ordinary Shares as part of tax avoidance arrangements; or
•
who are in any doubt as to their taxation position.
Shareholders should consult their professional advisers. Shareholders should note that tax
law and interpretation can change and that, in particular, the levels, basis of and reliefs from
taxation may change. Such changes may alter the consequences of investment in the Company.
Shareholders who are neither resident nor temporarily non-resident in the UK and who do
not carry on a trade, profession or vocation through a branch, agency or permanent
establishment in the UK with which the Ordinary Shares are connected will not normally be
liable to UK taxation on dividends paid by the Company or on capital gains arising on the
sale or other disposal of Ordinary Shares. Such Shareholders should consult their own tax
advisers concerning their tax liabilities.
Dividends
Any income distributions from the Company may be paid without deduction of UK
withholding tax.
Where the Company pays dividends, Shareholders who are resident in the UK for tax
purposes will, depending on their circumstances, be liable to UK income tax or, subject to
exemptions, corporation tax on those dividends.
Shareholders who are individuals, depending on their circumstances, should be entitled to a
UK tax credit in respect of any dividend paid. The tax credit will equal one ninth of the
amount of dividend paid (including any withholding tax imposed). The income tax payable
in respect of the dividend will be based on the amount of dividend paid (including any
withholding tax imposed) plus the UK tax credit multiplied by the relevant income tax rate.
The individual should be entitled to deduct from the income tax payable the UK tax credit
and any withholding tax imposed. However, if the income tax payable is less than the UK
tax credit plus any withholding tax, the excess is not repayable, nor can it be used against any
other income tax liability.
The effective rate of UK income tax on the gross dividend (the aggregate of the dividend
received and the tax credit) is zero per cent. for individuals taxable at the dividend ordinary
rate, 25 per cent. for individuals taxable at the dividend upper rate and approximately
30.6 per cent. for individuals taxable at the dividend additional rate.
A Shareholder who is an individual resident in the UK and who is not domiciled in the UK
who receives dividends on Ordinary Shares which are not remitted to the UK may benefit
from the remittance basis of UK taxation. Such individuals should consult their own tax
advisers concerning their UK tax liability.
Shareholders who are subject to corporation tax should generally, and subject to certain
anti-avoidance provisions, be able to claim exemption from UK corporation tax in respect
of any dividend received but will not be entitled to claim relief in respect of any underlying
tax or withholding tax imposed.
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Disposals of Ordinary Shares
Any gain arising on the sale, redemption or other disposal of Ordinary Shares will be taxed
at the time of such sale, redemption or disposal as a capital gain.
For Shareholders within the charge to UK corporation tax, indexation allowance may reduce
any chargeable gain arising on disposal of Ordinary Shares but will not create or increase an
allowable loss.
Individual shareholders who are UK resident or only temporarily non-UK resident may be
subject to capital gains tax on any gain made on disposal of shares, without any indexation
allowance, subject to the availability of any annual exemption or allowable losses. The rate
of tax will be 18 per cent. for taxpayers taxable at the basic rate and 28 per cent. for taxpayers
subject to taxation at the upper or additional rate.
A shareholder who is an individual resident in the UK and who is not domiciled in the UK
who makes gains on the disposal of Ordinary Shares where the proceeds are not remitted to
the UK may benefit from the remittance basis of UK taxation. Such individuals should
consult their own tax advisers concerning their UK tax liability.
Further information for Shareholders subject to UK income tax and capital gains tax
The attention of individuals resident in the UK is drawn to the provisions of Chapter 2
(Transfer of Assets Abroad) of Part 13 of the Income Tax Act 2007, which seek to prevent
the avoidance of income tax in circumstances where an individual who is resident in the UK
makes a transfer of assets abroad but retains the ability to enjoy the income arising from
those assets. This could include the acquisition of shares in a non-UK incorporated company
and any undistributed income of the company such that the income could be attributed to,
and be taxed in the hands of, the shareholder. This legislation should not apply where it can
be demonstrated that there are bona fide commercial reasons for the arrangement.
There are also other anti-avoidance provisions in the UK tax legislation which may
potentially affect shareholders in non-UK resident companies, and Shareholders should
consult their professional advisers regarding the effect of UK tax anti-avoidance legislation
in general.
Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)
The statements below are intended as a general guide to the current position. They do not
apply to certain intermediaries who are not liable to stamp duty or SDRT or (except where
stated otherwise) to persons connected with depositary arrangements or clearance services
who may be liable at a higher rate.
Ordinary Shares held in Certificated Form
No stamp duty or SDRT should be payable on the issue of Placing Shares.
No charge to stamp duty will arise on relation to the transfer of Ordinary Shares held in
certificated form, provided that all instruments relating to the transfer are executed and
retained outside the UK. However any instrument effecting or evidencing a transfer of
Ordinary Shares held in certificated form, whether executed in the UK or offshore, may not
(except in criminal proceedings) be given in evidence or be available for any purpose
whatsoever in the UK unless duly stamped. The rate of stamp duty is 0.5 per cent. on the
value of the consideration for the relevant transfer, rounded up to the next multiple of £5.
Interest on the stamp duty will accrue from 30 days after the date the instrument was executed.
However the chancellor has announced that from April 2014 the 0.5 per cent. stamp duty on
the conveyance on transfer or sale of shares, listed on certain exchanges, will be abolished.
No charge to SDRT will arise in respect of an agreement to transfer Ordinary Shares held
in certificated form, provided such shares are not registered in any register kept in the UK
by or on behalf of the Company.
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11.2 Taxation in Jersey
The Directors intend to conduct the Company’s affairs such that, based on current law and practice
of the relevant tax authorities, the Company will not become resident for tax purposes in any other
territory other than Jersey. It is assumed that the Company does not become resident in a territory
other than Jersey.
(a)
General
Under current Jersey law, there are no capital gains, capital transfer, gift, wealth or
inheritance taxes or any death or estate duties. No stamp duty is levied in Jersey on the issue,
conversion, redemption or transfer of Ordinary Shares. On the death of an individual holder
of Ordinary Shares (whether or not such individual was domiciled in Jersey), duty at rates
of up to 0.75 per cent. of the value of the relevant Ordinary Shares may be payable on the
registration of any Jersey probate or letters of administration which may be required in order
to transfer, convert, redeem or make payments in respect of, Ordinary Shares held by a
deceased individual sole shareholder.
(b)
Income Tax – The Company
Under the Income Tax (Jersey) Law 1961 (as amended) (“Tax Law”), from 1 January 2009,
the standard rate of income tax on the profits of companies regarded as resident in Jersey or
having a permanent establishment in Jersey will be 0 per cent. (“zero tax rating”). Certain
exceptions from zero tax rating apply, namely:
(i)
companies which are regulated by the Jersey Financial Services Commission under
certain sections of the Financial Services (Jersey) Law 1998, the Banking Business
(Jersey) Law 1991 or the Collective Investment Funds (Jersey) Law 1988, shall be
subject to income tax at a rate of 10 per cent. (these companies are defined as
“financial services companies” in the Tax Law);
(ii)
specifically identified utility companies shall be subject to income tax at a rate of
20 per cent. (these companies are defined as “utility companies” in the Tax Law); and
(iii) any income derived from the ownership or disposal of land in Jersey shall be subject
to income tax at a rate of 20 per cent.
It is anticipated that the Company will be subject to a zero tax rating.
(c)
Income Tax – Shareholders
Persons holding Ordinary Shares in the Company who are not resident for income tax
purposes in Jersey are not subject to taxation in Jersey in respect of any income or gains
arising in respect of Ordinary Shares held by them.
Shareholders who are resident for income tax purposes in Jersey will be subject to income
tax in Jersey at the standard rate of 20 per cent. on any dividends paid on Ordinary Shares
held by them or on their behalf and income tax will be deducted by the Company on payment
of any such dividends.
The provisions of Article 134A of the Tax Law may, in certain circumstances, render
investors who are resident in Jersey liable to income tax on the undistributed income of
the Company.
(d)
Withholding Tax – the Company
For so long as the Company holds zero tax rating, no withholding in respect of Jersey taxation
will be required on payments in respect of the Ordinary Shares to any holder of the Ordinary
Shares not resident in Jersey.
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(e)
Goods and Services Tax
Pursuant to the Goods and Services Tax (Jersey) Law 2007 (“2007 Law”), tax at a rate which
is currently 5 per cent. applies to the supply of retail goods and services, unless the relevant
supplier or recipient of such goods and services is registered as an “international
services entity”.
The Company is an “international services entity” within the meaning of the 2007 Law,
having satisfied the requirements of the Goods and Services Tax (International Services
Entities) (Jersey) Regulations 2008, as amended and, as long as it continues to be such an
entity, a supply of goods or of a service made by or to the Company shall not be a taxable
supply for the purposes of the 2007 Law.
(f)
European Union Saving Tax Directive
Jersey is not subject to the European Union, or EU, Council Directive (2003/48) on the
Taxation of Savings Income, or the EU Savings Tax Directive. However, in keeping with
Jersey’s policy of constructive international engagement and in line with steps taken by other
relevant third countries, the States of Jersey introduced with effect from 1 July 2005 a
retention tax system in respect of payments of interest, or other similar income, made to an
individual beneficial owner resident in an EU Member State by a paying agent established
in Jersey (the terms “beneficial owner” and “paying agent” are defined in the EU Savings
Tax Directive). The retention tax system will apply for a transitional period prior to the
implementation of a system of automatic communication to EU Member States of
information regarding such payments. The transitional period will end only after all EU
Member States and other relevant third countries and territories apply automatic exchange
of information and the EU Member States unanimously agree that the United States of
America has committed to exchange of information upon request as defined in the 2002
OECD Model Agreement on Exchange of Information on Tax Matters.
During this transitional period, such an individual beneficial owner resident in an EU
Member State is entitled to request a paying agent not to retain tax from such payments but
instead to apply a system by which the details of such payments are communicated to the tax
authorities of the EU Member State in which the beneficial owner is resident.
The retention tax system and the disclosure arrangements are implemented in Jersey by
means of bilateral agreements with each of the EU Member States, the Taxation (Agreements
with European Union Member States) (Jersey) Regulations 2005 and Guidance Notes issued
by the Policy & Resources Committee of the States of Jersey.
The effect of the Jersey provisions is that where an person is not willing to agree to an
information exchange between the Jersey tax authorities and the tax authorities of the EU
Member State in which he resides in respect of an interest payment, the Jersey based paying
agent will be required to retain, out of any interest payment to that individual, tax at a rate,
at the date of this document, of 20 per cent., and which will increase in later years to a
maximum of 35 per cent. The individual will therefore be able to choose between information
exchange or the retention tax, though the paying agent can choose not to offer the exchange
of information option.
Based on these provisions and the current practice of the Jersey tax authorities, distributions
to Shareholders in respect of Ordinary Shares in the Company and income realised by
Shareholders upon the sale, or redemption of Ordinary Shares in the Company do not
constitute interest payments for the purposes of the retention tax system and therefore neither
the Company nor any paying agent appointed by it in Jersey is obliged to levy retention tax
in Jersey under these provisions in respect of such payments.
However, the retention tax system could apply in the event that an individual resident in an
EU Member State, otherwise receives an interest payment in respect of a debt claim (if any)
owed by the Company to that individual. Accordingly, in so far as is reasonably possible, the
Company will act in such a way as not to incur debt claims from such individuals that would
require the making of interest payments to them.
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(g)
Identification of Shareholders
The Company can be required to make a return to the Comptroller of Income Tax in Jersey,
on request, of the names, addresses and shareholdings of Jersey resident shareholders (in
practice this return is not required at more frequent intervals than once a year).
This summary of Jersey taxation issues can only provide a general overview of this area
and it is not a description of all the tax considerations that may be relevant to a decision
to invest in the Company. The summary of certain Jersey tax issues is based on the laws
and regulations in force as of the date of this document and may be subject to any
changes in Jersey law occurring after such date. Legal advice should be taken with
regard to individual circumstances. Any person who is in any doubt as to his tax position
or where he is resident, or otherwise subject to taxation, in a jurisdiction other than
Jersey, should consult his professional adviser.
12. Material Contracts
Other than as set out below there are no contracts (not being in the ordinary course of business) entered
into by the Company or any subsidiary undertaking (including the companies controlled by the Company
through contractual arrangements) in the two years immediately preceding the date of this document
which are or may be material or which contain any provision under which the Company or any subsidiary
undertaking has any obligation or entitlement which is material to the Group as at the date of this
document, save for Directors’ service contracts (as described in paragraphs 7.1 and 7.2 of this Part V).
12.1 Placing Agreement
The Company, the Directors, Northland and James Wilson have entered into the Placing Agreement
dated 31 March 2014 pursuant to which Northland has been appointed as the agent of the Company
for the purpose of managing the Placing and has agreed to use reasonable endeavours to procure
Placees to subscribe for the Placing Shares at the Placing Price.
Pursuant to the Placing Agreement, the Company, the Directors and James Wilson have given
customary warranties and undertakings as to the accuracy of the information contained in this
document and other matters relating to the Ordinary Shares, the Group and its business. In addition,
the Company has given an indemnity to Northland in respect of certain customary matters.
In consideration of the respective services to be provided by Northland in connection with
Admission and the Placing, the Company agreed upon Admission to:
(a)
pay to Northland a broking commission of five per cent of the amount of the
Placing proceeds and the Amati Convertible Loan Notes;
(b)
pay to Northland, to the extent not already paid, a transaction fee; and
(c)
issue to Northland warrants over 952,695 Ordinary Shares pursuant to the warrant instrument
further details of which are set out in paragraph 12.6 below.
The Placing Agreement is conditional, inter alia, on Admission occurring not later than 8.00 a.m.
on 4 April 2014 (or such later date as may be agreed between the Company and Northland being
no later than 11 April 2014), and the Company and the Directors complying with certain obligations
under the Placing Agreement. The Placing Agreement may be terminated by Northland prior to
Admission in certain circumstances, including if any statement included in this document is
discovered to be untrue, incorrect or misleading, there has been a breach of any of the warranties
or if, before Admission, there shall have occurred certain specified events. The Placing Agreement
is governed by English law and the parties submit to the exclusive jurisdiction of the English courts.
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12.2 Nominated Adviser and Broker Agreement
The Company and Northland have entered into a nominated adviser and broker agreement dated
31 March 2014 pursuant to which the Company, conditional on admission, agreed to appoint
Northland to act as nominated adviser and broker to the Company for the purposes of the AIM
Rules following Admission. The agreement contains certain indemnities and undertakings given by
the Company in favour of Northland.
The agreement may be terminated by either party forthwith in the event of a material breach of the
agreement by the other party. In addition, either party may terminate the agreement by giving the
other party three months’ written notice, such notice if given to expire on or after the initial period
of one year from the date of the agreement.
The agreement is governed by English law and the parties irrevocably submit to the exclusive
jurisdiction of the English courts.
12.3 Registrar’s Agreement
By an agreement dated 24 July 2013 between (i) the Company and (ii) Capita, Capita has agreed
to provide registrar services to the Company. The Company has agreed to indemnify Capita for any
loss which it suffers as a result of the proper performance of its duties under this agreement. Both
parties have termination rights under the terms of this agreement.
The agreement is governed by the laws of the Island of Jersey and the parties submit to the exclusive
jurisdiction of the courts of the Island of Jersey.
12.4 Shareholder Subscription and Restructuring Agreement
Tim Adams, James Wilson, Knut Unger, Jan Gawel, Vincent Trapenard, Central One Limited,
Central Two Limited, Splendid Suns Holdings Limited, Rebvon International Ltd, Tuda SPRL,
Mafatsana Overseas Ltd, the Company, Seawind Holding, Eolicos del Sur SpA and Seawind
International have entered into a shareholder subscription and restructuring agreement dated
31 January 2014 pursuant to which the parties agreed to formally document their shareholdings in
the Group both pre and post re-organisation and allotment of and subscription for shares in the
Company, prior to Admission, including to provide for:
12.4.1 the transfer of the Ordinary Shares held by Central One Limited and Central Two Limited;
12.4.2 the subscription of a total of 3,102,321 Ordinary Shares by various parties to the agreement
and various third parties for a total of £3.10 at a price of 0.000001 pence per Ordinary Share;
12.4.3 the transfer of all the Shares in Rame Energy to the Company for US$1;
12.4.4 the transfer of all the Shares in Seawind Holding to the Company (or Rame Energy as its
nominee) by Tim Adams in consideration for one Ordinary Share;
12.4.5 the transfer of all the Shares in Seawind International to the Company (or Rame Energy as
its nominee) by James Wilson and Tim Adams in consideration for a total of two Ordinary
Shares; and
12.4.6 the subscription of a total of 63,831,174 Ordinary Shares by various parties to the
agreement and various third parties for a total of £63.83 at a price of 0.000001 pence per
Ordinary Share.
This agreement is governed by English law and the parties irrevocably submit to the exclusive
jurisdiction of the English courts.
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12.5 Lock-ins and Orderly Market Agreements
The Company, Northland, the Directors and their related parties and several of the existing
shareholders (the “Locked-In Persons”) have entered into a lock-in and orderly market deed dated
31 March 2014 pursuant to which the Locked-In Persons have undertaken to Northland and the
Company:
12.5.1not to sell or otherwise dispose of, or agree to sell or dispose of, any of their interests in the
Ordinary Shares or any options to subscribe for Ordinary Shares for a minimum period of
twelve months following Admission (“Lock-In Period”) except in limited circumstances; and
12.5.2 not to dispose of any interest in Ordinary Shares for a period of twelve months after the end
of the Lock-In Period other than through Northland (or such other firm from time to time
acting as the Company’s broker) and in such manner as Northland (or such other firm from
time to time acting as the Company’s broker) may reasonably require.
The Lock-In Agreement shall terminate immediately if Admission has not become effective on or
before 30 June 2014.
This agreement is governed by English law and the parties irrevocably submit to the exclusive
jurisdiction of the English courts.
12.6 Warrant Instrument
It was agreed that the Company would issue to Northland warrants entitling Northland, conditional
on Admission, to subscribe for such number of Ordinary Shares in the Company equivalent to
one per cent. of the Enlarged Issued Share Capital (being 952,695 Ordinary Shares). In order to
satisfy this obligation, the Company has executed an instrument dated 31 March 2014 creating
such warrants and issued such warrants to Northland. Such warrants give Northland the right,
conditional on Admission, to subscribe (“Subscription Right”) for shares in the Company at the
Placing Price. Northland may exercise its Subscription Right at any time and from time to time
during the period commencing on the date of Admission (save in certain specific circumstances
where the right may be exercised earlier) and ending at 5.00 p.m. on the fifth anniversary of the
date of Admission.
This agreement is governed by English law and the parties irrevocably submit to the exclusive
jurisdiction of the English courts.
12.7 Investment Agreement
Pires, the Company, Rame Energy and Seawind Holding have entered into an Investment
Agreement dated 7 February 2014 pursuant to which Pires subscribed for the Convertible Loan
Notes. This agreement contains warranties from the Company, Rame Energy and Seawind Holding
to Pires, subject to limitations on liability, as well as guarantees of the Company’s obligations given
by Rame Energy and Seawind Holding. The agreement includes certain tag along rights for Pires
while the Convertible Loan Notes remain outstanding (or while Pires holds Ordinary Shares) and
Admission has not yet taken place. The agreement also grants Pires the right to appoint one
non-executive director of the Company if Admission does not take place within six months. This
agreement is governed by English law and the parties irrevocably submit to the jurisdiction of the
English courts.
12.8 Convertible Loan Notes
The Company, Rame Energy and Seawind Holding have entered into a loan note instrument dated
7 February 2014 pursuant to which the Company created the Convertible Loan Notes. The
Convertible Loan Notes shall be issued in amounts and multiples of £1,000 and the principal
amount is limited to £410,000 plus capitalised interest.
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Interest is payable on the Convertible Loan Notes at a rate of 10 per cent. (in case of default,
10.5 per cent.) per annum, with an interest holiday for the nine month period from issue (save that
interest is payable on 31 October 2014 for that period on any Convertible Loan Notes then
remaining in issue and not converted and thereafter accrued interest is payable on conversion of
such notes).
The Convertible Loan Notes are redeemable on 7 February 2017 or if the Admission is not achieved
in certain circumstances six months after their issue (i.e. by 7 August 2014) or upon the occurrence
of certain standard events of default.
The Convertible Loan Notes are convertible:
(a)
by noteholders at any time prior to 7 February 2017 by notice to the Company; and
(b)
by the Company by notice to noteholders conditional or either (i) Admission and a minimum of
£1,000,000 being raised from investors as part of Admission or (ii) Admission within six months
of issue of the Convertible Loan Notes and the Company raising £2,500,000 from investors as
part of Admission or within nine months of Admission.
If Admission occurs within 12 months of issue of the Convertible Loan Notes, the number of Ordinary
Shares to be issued on conversion is determined by dividing the principal amount of the Convertible
Loan Notes to be converted by a price per share equal to a price which is at a 25 per cent. discount
to the price at which new monies are raised on Admission (i.e. a 25 per cent. discount to the Placing
Price). This is subject to adjustments in case of capital reorganisations and rights issues.
The loan note instrument contains usual warranties from the Company, Rame Energy and Seawind
Holding to the noteholders, as well as guarantees of the Company’s obligations given by Rame
Energy and Seawind Holding. The instrument also contains usual covenants by the Company to
protect the conversion rights, including prohibitions on modifying rights of Ordinary Shares,
creating other share classes, distributing capital profits or reserves, capitalising profits or reserves,
various information covenants, restrictions on borrowing outside any limit in the Articles, procuring
that no Group Company will issue shares except to its immediate or ultimate parent company (save
as envisaged in the Santander SPA or Santander Shareholders' Agreement) and covenants regarding
carrying on of business, compliance with law, repairs, insurances, guarantees, no change of
business, transactions on arm's length terms and availability of share capital.
The Convertible Loan Notes require comparable offers to be made to noteholders in case of
takeover offers or share buybacks and include usual protections for noteholders in case
of liquidation.
The loan note instrument is governed by English law and the parties irrevocably submit to the
exclusive jurisdiction of the English courts.
By notice dated 31 March 2014, Pires as holder of all the Convertible Loan Notes, has given
notice to convert all the Convertible Notes into 3,037,037 Ordinary Shares (forming part of the
Admission Shares) subject to Admission taking place within 14 days of the date of the notice and
effective upon Admission.
12.9 Warrant Instrument
The Company has entered into a warrant instrument dated 7 February 2014 pursuant to which it
has issued to Pires such number of warrants to subscribe for Ordinary Shares as equals £22,500
divided by the Placing Price (being 125,000 Ordinary Shares). These warrants are exercisable at
such price at any time until and including 7 February 2017. The warrant instrument contains
substantially similar covenants, protections and adjustment provisions as the instrument creating
the Convertible Loan Notes. The warrant instrument is governed by English law and the parties
irrevocably submit to the exclusive jurisdiction of the English courts.
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12.10 Santander SPA
Pursuant to the Santander SPA, Eolicos Del Sur SpA sold 80 per cent. of the shares of each of
Proyecto Raki SpA and Proyecto Huajache SpA to Santander for a sum of US$1,160,000 (subject
to upward adjustment if Santander sells shares in these companies to a third party). This agreement
contains various representations, warranties and indemnities regarding these companies and their
projects, subject to certain limitations. This agreement lapses if certain conditions precedent,
primarily as to funding under the Santander Shareholders’ Agreement, are not met by 30 April
2014, in which case Santander may retransfer its acquired Shares. This agreement is governed by
the laws of the Republic of Chile and any disputes are to be resolved by arbitration in Santiago,
Republic of Chile, under the Rules of Arbitration Procedure of the Santiago Arbitration and
Mediation Center.
12.11 Santander Shareholders’ Agreement
Pursuant to the Santander Shareholders’ Agreement, Eolicos Del Sur SpA (“Eolicos”) and Santander
have agreed in relation to each of Proyecto Raki SpA and Proyecto Huajache SpA:
(a)
the board of each company shall consist of three directors, two nominated by Santander, one
by Eolicos, with the right of Eolicos terminating if (i) it no longer controls 20 per cent. of
the total outstanding shares (unless Santander agrees otherwise) or (ii) an arbitrator rules it
breached the Santander Shareholders’ Agreement or Santander SPA:
(b)
the quorum for board meetings is two directors and voting is by simple majority with no
casting vote, save that agreements between the companies and Santander or its affiliates
require the vote of two directors including the Eolicos director unless one of the events in
paragraphs (a)(i) or (ii) has occurred or such director fails to attend the meeting and the first
adjournment thereof;
(c)
Eolicos is entitled to appoint the general manager of the Raki/Huajache projects (unless one
of the events in paragraphs (a)(i) or (ii) has occurred);
(d)
total equity funding to be contributed by the shareholders is expected to be not more than
US$10,000,000 (“Additional Equity”) and the shareholders agree to meet and approve
increases in capital required to meet the agreed plan. The equity required by the relevant
lender (being Banco BICE) must be provided by 30 April 2014;
(e)
the shareholders are entitled and obliged to subscribe for Additional Equity in proportion to
their shareholdings – if one of them fails to do so, the other may (i) subscribe for the
Additional Equity in whole or in part (in which case the defaulter's holding is diluted and it
has no right to elect directors or take part in corporate decisions except through voting at
shareholder meetings) or (ii) lend the required funds on market terms to the defaulting
shareholder (in either case without prejudice to any claims for the breach);
(f)
liabilities under guarantees given by shareholders will be shared pro rata;
(g)
a minimum of 60 per cent. of profits are to be distributed to shareholders;
(h)
neither shareholder may sell shares except pursuant to (i) a right of first refusal in favour of
the non-selling shareholder to buy the shares to be sold on the terms offered by a third party,
(ii) if Santander is the seller (A) a right for Eolicos to tag along on the same terms as those
offered by the third party, (B) if Eolicos does not exercise its tag along right, a right for
Santander to drag Eolicos along on the same terms as those offered by the third party or
(iii) if Eolicos is the seller, with the consent of Santander.
This agreement is governed by the laws of the Republic of Chile and any disputes are to be resolved
by arbitration in Santiago, Republic of Chile, under the Rules of Arbitration Procedure of the
Santiago Arbitration and Mediation Center.
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12.12 Advisory Agreement
On 21 November 2013 Rame entered into an agreement with Asty Capital AG (the “Consultant”).
The Consultant is to, inter alia, introduce new investors to the Company, review the Company’s
corporate literature and identify investor relations firms to sponsor road shows for the Company.
The term of this agreement is one year. In consideration for carrying out there services the
Company agreed to pay the Consultant 200,000 Canadian dollars. In addition the Consultant shall
be issued 300,000 Ordinary Shares upon Admission and forming part of the Admission Shares. This
agreement is governed by Swiss law.
12.13 On 31 March 2014 Rame entered into an agreement with Timothy Adams pursuant to which
Timothy Adams agreed to convert a loan of £158,762 to Rame into 882,011 Ordinary Shares on
Admission at the Placing Price.
12.14 On 31 March 2014 Rame entered into an agreement with Splendid Suns Holdings Limited pursuant
to which Splendid Suns Holdings Limited agreed to convert a loan of £118,727 to Rame into
659,594 Ordinary Shares on Admission at the Placing Price.
12.15 On 31 March 2014 Rame entered into an agreement with St. Brides Media & Finance pursuant to
which the latter provides certain public relations services for a fee of £10,000 which is to be settled
on Admission by the issue of 55,556 Ordinary Shares at the Placing Price.
12.16 On 31 March 2014 the Company entered into agreements with Amati whereby it will invest
£800,000 by way of the Amati Convertible Loan Notes and £300,000 for Placing Shares. Pursuant
to a loan agreement dated 31 March 2014 made between them, the Company and Amati agreed that
the amount of £800,000 will be lent and borrowed as soon as practicable after Admission pursuant
to the Amati Convertible Loan Notes and that the Company shall pay £10,000 plus VAT to Amati
in respect of its costs incurred, which shall be payable within seven days of the completion of the
Amati Convertible Loan Notes investment. Pursuant to an instrument dated 31 March 2014 creating
the Amati Convertible Loan Notes, it is agreed that:
(a)
the amount to be invested by Amati by way of the Amati Convertible Loan Notes will be
£800,000, to be split in a proportion to be determined by Amati between the Amati VCT plc
and Amati VCT2 plc.
(b)
For the first 36 months the interest rate will be 8 per cent. per annum, payable quarterly in arrears,
during which time the Amati Convertible Loan Notes will not be redeemable by the Company.
(c)
After 36 months the interest rate will rise to 25 per cent. per annum, and the Company shall
have the right to pre-pay the Amati Convertible Loan Notes at par by giving notice of its
intention to do so.
(d)
the Amati Convertible Loan Notes shall be for a 5 year term, the redemption date being
5 years after drawdown.
(e)
any noteholder shall have the ability to convert its Amati Convertible Loan Notes into
Ordinary Shares at any time up to redemption, after serving the appropriate notice, at a
conversion price of 18p per share.
(f)
holders of a majority of the Amati Convertible Loan Notes shall, for so long as at least
£200,000 principal remains outstanding on such notes, be entitled to nominate one
non-executive Director to the board of the Company, who will be remunerated in line with
the other non-executive Directors, provided that such right shall only be exercised if such
majority reasonably considers that either (i) the Company’s business plan is not being met
or (ii) the corporate governance of the Company has specific shortcomings.
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(g)
The Company will not, without Amati’s consent:
i)
use the proceeds of the Amati Convertible Loan Notes and Amati's Placing Shares
other than for uses which do not compromise the VCT qualifying status of Amati's
investment, and other than for purposes as set out in this document;
ii)
enter into any transaction which is not arms’ length;
iii)
extend credit to any director, employee or shareholder;
iv)
distribute dividends within the first 36 months following the investment;
v)
enter into any voluntary liquidation or restructuring of the business;
vi)
change the purpose of the business;
vii)
take on additional debt, other than debt from regulated banks; and
viii) issue further convertible debt securities.
(h)
Amati and/or a holders of a majority of the Amati Convertible Loan Notes shall have the
right to receive management accounts and detailed operational information from the
Company if requested.
(i)
The Amati Convertible Loan Notes shall be fully transferrable in multiples of £1,000.
(j)
In the event of a change of control of the Company (defined as any one party gaining control
over more than 50 per cent. of the fully diluted equity of the company), where the holders of
the Amati Convertible Loan Notes give the Company written notice that they wish this
condition to take effect, the interest rate on any outstanding loan will rise to 25 per cent. per
annum from the date of the change of control, until the Amati Convertible Loan Notes are
redeemed, and following this notification the Company shall have the option to repay the
Amati Convertible Loan Notes at any time at par.
(k)
The agreement includes standard events of default, including such that the Amati Convertible
Loan Notes are eligible for VCT qualifying status.
(l)
If the Amati Convertible Loan Notes loses VCT qualifying status due to the actions of the
Company, and where the holders of the Amati Convertible Loan Notes give the Company
written notice that they wish this condition to take effect, the interest rate on any outstanding
Amati Convertible Loan Notes will rise to 25 per cent. per annum from the date of the change
of control, until the loan notes are redeemed, and the Company shall have the option to repay
the loan notes at any time thereafter at par.
(m)
the instrument contains usual provisions for adjustment in case of share capital
reorganisation, including if the Company issues options, warrants or other rights to subscribe
for Ordinary Shares exceeding 5 per cent. of the Enlarged Issued Share Capital.
The agreement and the instrument are governed by English Law and subject to the exclusive
jurisdiction of the English courts.
13. Related Party Transactions
Save as set out in paragraphs 7.1, 7.2, 12.4, 12.13, 12.14 and this paragraph 13 of this Part V, or as
otherwise referred to in this document, the Company has not entered into any related party transaction
(being those set out in the standards adopted according to Regulation (EC) No. 1606/2002) in the last three
financial years preceding the date of this document and up to the date of this document.
13.1 Agreement entered into between Seawind Asia Pte Ltd (“Seawind Asia”), a company incorporated
in Singapore and under common control, as the client and Seawind International as the contractor
dated 28 February 2011 (the “Asia Agreement”) as varied by an undated agreement variation notice
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(the “Notice”), pursuant to which Seawind International provides expert consultancy services for
the evaluation of renewable energy projects. Pursuant to the Notice, the parties agree to treat the
US$75,000 already paid as full and final settlement payment and to terminate the Asia Agreement.
13.2 Agreement entered into between Seawind Asia, a company incorporated in Singapore and under
common control, as the client and Seawind International as the contractor dated 28 February 2011
(the “Thailand Agreement”), pursuant to which Seawind International provides expert consultancy
services for the evaluation of renewable energy projects. Pursuant to an undated termination notice
both parties agree that the US$75,000 already paid by Seawind Asia shall be full and final
settlement payment to terminate the Thailand Agreement.
13.3 Agreement entered into between Enerserve Limited, a company incorporated in the Turks and
Caicos Islands and under common control, as the client and Seawind International as the consultant
dated 28 February 2011 (the “Ecuador Agreement”), pursuant to which Seawind International
provides various services relating to a number of hydro and wind farm projects in Ecuador. The
Ecuador Agreement has been terminated. The total amount invoiced and paid to Seawind
International pursuant to this agreement is US$490,000.
13.4 Agreement entered into between Enerserve Limited, a company incorporated in the Turks and
Caicos Islands and under common control, as the client and Seawind International as the consultant
dated 1 March 2011 (“Chile Agreement”), pursuant to which Seawind International provides
various services in connection with potential wind farm projects in Chile. The Chile Agreement has
been terminated. The total amount invoiced and paid to Seawind International pursuant to this
agreement is US$1,500,000.
13.5 An undated agreement entered into between Ingenieria Seawind Sudamerica SpA and Antuko
Energy S.A., a company in which Mr Fernando Cubillos, non-executive director of the Company,
has an interest. Pursuant to this agreement, Antuko Energy S.A. provides consultancy services for
a mixture of fixed fees and variable fees based on energy revenues and financing services for a
mixture of fixed fees and variable fees based on the pricing of the financing obtained.
13.6 An agreement dated 10 October 2013, and amended on 31 January 2014, between Antuko Energy
S.A. and Seawind International relating to services regarding the Raki and Huajache projects.
Pursuant to this agreement Antuko Energy S.A. is to be paid US$378,000, satisfied by US$114,500
in cash, US$74,500 in Ordinary Shares at US$0.24 per share and US$189,000 in Ordinary Shares
at the Placing Price, subject to certain conditions.
14. Share Dealing Code
14.1 The Directors intend to comply with Rule 21 of the AIM Rules for Companies relating to Directors’
and applicable employees’ dealings in Ordinary Shares and to this end, the Company has adopted
an appropriate share dealing code, the details of which are set out below.
14.2 The Share Dealing Code provides that, in accordance with the AIM Rules for Companies, a Director
cannot deal in the Company’s Ordinary Shares in the following circumstances:
(a)
during the two month period prior to notification of the Company’s annual results and
half-yearly results; during the one month period prior to the notification of its quarterly
results or, if shorter, the period from the relevant financial period end up to and including
the time of notification;
(b)
whilst the Company is in possession of unpublished price-sensitive information; or
(c)
at any other time when it has become reasonably probable that such information will be
required to be notified to a regulatory information service under the AIM Rules
for Companies.
14.3 The Company will also be subject to UK legislation prohibiting market abuse and insider dealing
under the FSMA. Guidance notes on the market abuse regime are set out in full in the Share
Dealing Code.
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15. Litigation
There are no governmental, legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the Group is aware) in which the Company or any subsidiary undertaking
is involved by or against any Group company which may have or have had in the 12 months preceding
the date of this document a significant effect on the Group’s financial position or profitability.
16. Intellectual Property Rights
As at the date of this document, the Group owns (or has licences as detailed below in respect of) the
following registered intellectual property:
Trademarks
The trademark ‘Seawind’ is held by Ingenieria Seawind Sudamerica SpA
Domain Names
The domain name ‘Seawind.cl’ is registered under the name of Ingenieria Seawind Sudamerica SpA.
17. Investments
Save as set out in this document, there are no:
17.1 investments in progress which are significant; or
17.2 future investments upon which the Company or its management bodies have already made firm
commitments.
18. Working Capital
The Directors are of the opinion that, having made due and careful enquiry (and having regard to the net
proceeds receivable from the Placing and the issue of the Amati Loan Notes), the working capital available
to the Group will, from Admission, be sufficient for its present requirements, that is for at least 12 months
from the date of Admission.
19. Environmental Issues
Save as disclosed in this document, neither the Company nor the Directors are aware of any environmental
issues or risks affecting the utilisation of the property, plant or machinery of the Group.
20. General Information
20.1 The estimated amount of the expenses of the Placing and Admission, which are all payable by the
Company, is approximately £400,000.
20.2 Crowe Clark Whitehill LLP of St. Brides House, 10 Salisbury Square, London EC4Y 1HB, United
Kingdom has given and not withdrawn its written consent to the inclusion in this document of
references to its report, letter and name in the form and context in which they appear.
20.3 Northland Capital Partners Limited of 131 Finsbury Pavement, London EC2A 1NT, United
Kingdom has given and not withdrawn its written consent to the inclusion in this document of
references to its name in the form and context in which they appear.
20.4 The financial information contained in this document does not constitute full statutory accounts as
referred to in section 434 of the Act.
20.5 Save as disclosed in this document, there are not, either in respect of the Company or any of the
subsidiary undertakings, any significant recent trends in production, sales and inventory, and costs
and selling prices since the end of the last financial year to the date of this document.
108
20.6 Save as disclosed in this document, there are not, either in respect of the Company or any of the
subsidiary undertakings, any known trends, uncertainties, demands, commitments or events that are
reasonably likely to have a material effect on the Company’s prospects for at least the current
financial year of the Company.
20.7 Save as disclosed in this document, there has been no significant change in the financial or trading
position of the Group since 30 June 2013, being the date to which the historical financial
information contained in this document was prepared.
20.8 The Ordinary Shares are in registered form. No temporary documents of title will be issued.
20.9 The Company is not aware of the existence of any takeover bid, or any circumstances which may
give rise to any takeover bid and the Company is not aware of any public takeover bid by third
parties for the Ordinary Shares. There have been no takeover bids made either in the last year or
the current financial year of the Company.
20.10 Save as disclosed in this document, and save for payment of a fee of US$72,000 (6 per cent.) to
Zuri-Invest AG in connection with introducing certain of the investors for the share issues between
11 and 19 February 2014 referred to in paragraph 4.1 of this Part V, no person, either directly or
indirectly, has in the last twelve months received or is contractually entitled to receive either directly
or indirectly, from the Company on or after Admission (excluding in either case persons who are
professional advisers otherwise disclosed in this document and trade suppliers) (i) fees totalling
£10,000 or more; (ii) its securities, where these have a value of £10,000 or more; or (iii) any other
payment or benefit from the Company to the value of £10,000 or more as at the date of Admission.
20.11 To the extent information has been sourced from a third party, this information has been accurately
reproduced and, as far as the Directors and the Company are aware and able to ascertain from
information published by that third party, no facts have been omitted which may render the
reproduced information inaccurate or misleading.
20.12 Save for the information set out in Part IV of this document, no other audited information is
included in this document.
20.13 Insofar as the Directors are aware, the percentage of Ordinary Shares not in public hands (as that
expression is defined in the AIM Rules) on Admission is expected to be, approximately
41.4 per cent..
21. Documents Available for Inspection
Copies of this document shall be available free of charge during normal business hours on any day (except
Saturdays, Sundays and public holidays) from Northland Capital Partners Limited at 131 Finsbury
Pavement, London EC2A 1NT, United Kingdom and shall remain available for a period of one month
from the date of Admission.
Date: 31 March 2014
109
Millnet Limited
(9058-01)