Losses
14 months
ended Year ended
31 December 31 October
2011 2010
$'000 $'000
Earnings for the purposes of basic and
diluted earnings per share being net loss
attributable to the owners of the Company (41,439) (6,037)
Weighted average number of Ordinary shares
for the purpose of basic and diluted earnings
per share(1) (number of shares) 58,391,446 40,514,700
Loss per Ordinary share
Basic and diluted loss per share (cents) (70.97) (14.90)
------------ -----------
(1) Share options and Founder shares are considered
anti-dilutive in the periods ended 31 December 2011 and 31 October
2010 as the inclusion of these securities would reduce the loss per
share. Potentially dilutive Ordinary shares for the year ended 31
December 2011 were nil (2010 - nil). The share options and Founder
shares are not considered to be potentially dilutive as the
associated performance conditions had not been met at 31 December
2011.
Note 6 Goodwill
$'000
Cost:
At Incorporation and 31 October 2010 -
Recognised on acquisition of subsidiary 541,046
------------------------------------
At 31 December 2011 541,046
------------------------------------
Accumulated impairment losses:
At Incorporation, 31 October 2010 and 31 December
2011 -
Net book value:
At 31 December 2011 541,046
====================================
At 31 October 2010 -
====================================
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units (CGU's) that are expected
to benefit from that business combination. The directors have
determined the business to have one operating segment therefore one
CGU and the goodwill is allocated to this unit.
The Company tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired.
The recoverable amounts of the CGUs are determined from value in
use calculations. The key assumptions for the value in use
calculations are those regarding the discount rates, growth rates
and expected changes to contract price and costs during the period.
Management estimates discount rates using pre-tax rates that
reflect current market assessments of the time value of money and
the risks specific to the CGUs. The assumed discount rate used for
business valuations was 14.6% before tax based on the estimated
weighted average cost of capital (WACC) of the Company. The growth
rates are based on industry growth forecasts. A terminal cash flow
was calculated using a long-term growth rate of 3.0%. Changes in
contract price and direct costs are based on past practices and
expectations of future changes in the market.
The Company has conducted a sensitivity analysis on the
impairment test of each CGUs carrying value. A cut in growth rate
by 0.5% would reduce the recoverable amount but would not trigger
an impairment.
The Directors consider that there is no reasonably possible
change in the key assumptions made in the impairment calculations
that would give rise to an impairment.
Note 7 Other intangibles
The intangible assets shown in the table below have arisen
through fair value accounting for the business combination.
Customer Brand Total
contracts
$'000 $'000 $'000
Cost:
At Incorporation and 31 October
2010 - - -
Acquired on acquisition of a subsidiary 106,100 38,100 144,200
---------- -------- --------
At 31 December 2011 106,100 38,100 144,200
---------- -------- --------
Accumulated amortisation:
At Incorporation and 31 October
2010 - - -
Charge for the year 45,723 825 46,548
---------- -------- --------
At 31 December 2011 45,723 825 46,548
---------- -------- --------
Net book value:
At 31 December 2011 60,377 37,275 97,652
========== ======== ========
At 31 October 2010 - - -
========== ======== ========
Customer contracts are amortised over the contract term. The
brand is amortised over its estimated useful economic life of 25
years.
Note 8 Property, plant and equipment
Property, plant and equipment relates solely to assets acquired
when the Company acquired and obtained control of the APR Group.
Further details of the acquisition are outlined in note 10.
Machinery Mobilisation
& Equipment & Installation Other Equipment Total
------------- ---------------- ---------------- ---------
Cost:
At Incorporation
and 31 October 2010 - - - -
Additions on acquisition
of subsidiaries 228,316 19,720 1,006 249,042
Additions 161,789 35,684 429 197,902
Disposals (2,130) (782) - (2,912)
At 31 December 2011 424,432 86,133 2,232 512,797
------------- ---------------- ---------------- ---------
Accumulated depreciation:
At Incorporation
and 31 October 2010 - - - -
Charge for the year 16,678 22,175 180 39,033
Disposals (1,118) (782) - (1,900)
At 31 December 2011 52,017 52,904 977 105,898
------------- ---------------- ---------------- ---------
Net book value:
At 31 December 2011 372,415 33,229 1,255 406,899
============= ================ ================ =========
At 31 October 2010 - - - -
============= ================ ================ =========
Depreciation is presented within the cost of sales in the
statement of comprehensive income.
Note 9 Decommissioning provisions
$'000
Balance at Incorporation and 1 November 2010 -
Decommissioning provision arising on acquisition of
subsidiary 8,874
Liabilities incurred 9,416
Amounts settled (837)
Unwinding of discount (finance costs) 366
Revisions in estimated cash flows 244
-------
Balance at 31 December 2011 18,063
-------
The Company records a decommissioning provision when there is a legal
or constructive obligation whereby, as a result of a past event, it
is probable that an outflow of economic benefits will be required to
settle the obligation associated with the retirement of a tangible
long-lived asset and the liability can be reasonably estimated. If
the effect is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
Obligations associated with the retirement of these assets require
recognition in certain circumstances:
(1) the present value of a liability and offsetting asset for a decommissioning
provision;
(2) the subsequent accretion of that liability and depreciation of
the asset; and
(3) the periodic review of the decommissioning liability estimates
and discount rates.
The decommissioning provision has been calculated using a
discount rate of Libor + 2.25%. The costs are generally expected to
be incurred approximately 1-5 years in the future.
Note 10 Acquisition accounting
On 13 June 2011, the Company acquired 100% of the issued share
capital and obtained control of the following companies (comprising
the "APR Group"):
-- APR Energy Cayman Limited, and its subsidiaries and branches;
o APR International LLC,
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