Afren PLC Interim Management Statement -3-

 spare parts and materials                                       8.8         (13.4) 
Investment inflow                                                  -            0.2 
=====================================================  =============  ============= 
Net cash used in investing activities                        (203.2)        (139.3) 
=====================================================  =============  ============= 
 
Issue of ordinary share capital - share-based 
 plan exercises                                                    -            1.4 
Purchase of own shares                                             -          (3.1) 
Proceeds from borrowings - net of issue costs                      -           98.5 
Repayment of borrowings and finance leases                    (13.5)         (86.6) 
Interest and financing fees paid                               (3.3)         (16.9) 
=====================================================  =============  ============= 
Net cash used in financing activities                         (16.8)          (6.7) 
=====================================================  =============  ============= 
 
Net decrease in cash and cash equivalents                    (136.0)         (31.8) 
Cash and cash equivalents at beginning of the 
 period                                                        236.5          389.9 
Effect of foreign exchange rate changes                            -            2.6 
=====================================================  =============  ============= 
Cash and cash equivalents at end of period                     100.5          360.7 
=====================================================  =============  ============= 
 
 
 

Unaudited condensed consolidated statement of changes in equity

Three months ended 31 March 2015

 
 
                                                                                Attributable 
                                       Share                                       to equity 
                             Share   premium    Merger      Other  Accumulated       holders  Non-controlling    Total 
                           capital   account   reserve   reserves       losses     of parent         Interest   equity 
                              US$m      US$m      US$m       US$m         US$m          US$m             US$m     US$m 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
At 1 January 2014             19.1     926.8     179.4       27.5        642.0       1,794.8             10.7  1,805.5 
Issue of share capital           -       1.4         -          -            -           1.4                -      1.4 
Share based payments 
 for services                    -         -         -        4.0            -           4.0                -      4.0 
Exercise and lapse 
 of warrants designated 
 as financial 
 liabilities                     -         -         -        0.1        (0.1)             -                -        - 
Purchase of own shares           -         -         -      (3.1)            -         (3.1)                -    (3.1) 
Profit/(loss) after 
 tax for the period              -         -         -          -         74.3          74.3            (1.8)     72.5 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
Other comprehensive 
 loss for the period             -         -         -      (0.1)            -         (0.1)                -    (0.1) 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
Balance at 31 March 
 2014                         19.1     928.2     179.4       28.4        716.2       1,871.3              8.9  1,880.2 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
 
 
At 1 January 2015             19.2     929.3         -      118.0      (800.1)         266.4           (17.2)    249.2 
Share based payments 
 for services                    -         -         -        3.2            -           3.2                -      3.2 
Loss after tax for 
 the period                      -         -         -          -       (52.0)        (52.0)            (1.1)   (53.1) 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
Other comprehensive 
 loss for the period             -         -         -     (32.2)            -        (32.2)                -   (32.2) 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
Balance at 31 March 
 2015                         19.2     929.3         -       89.0      (852.1)         185.4           (18.3)    167.1 
========================  ========  ========  ========  =========  ===========  ============  ===============  ======= 
 

Notes to the condensed consolidated financial statements

Three months ended 31 March 2015

1. Basis of accounting and presentation of financial information

The condensed Group interim financial statements, comprised of Afren plc ("Afren") and its subsidiaries (together, "the Group"), have been prepared in accordance with the same accounting policies, presentation and methods of computation as applied in the audited financial statements for the year ended 31 December 2014, with the exception of taxes, which have been calculated using the estimated full year effective tax rate. The Group policies are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. Certain information and note disclosures normally included in annual financial statements prepared in accordance with IFRS, as adopted by the EU, have been omitted or condensed as is normal practice for interim reporting periods. The condensed Group interim financial statements are unaudited, and do not constitute statutory accounts as defined in sections 435(1) and (2) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2014 are published on the Group's website, www.afren.com. The report of the auditor on those accounts was unqualified, however it included an emphasis of matter regarding a material uncertainty in respect of going concern. The report of the auditor did not contain any statement under sections 498(2) or (3) of the Companies Act 2006.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Operations review of the Annual Report for the year ended 31 December 2014, which is available at www.afren.com. The financial position of the Group at the period end, its cash flows, liquidity position and net debt are described in the Financial review.

Events following the dismissal of the Group's former CEO and COO have placed significant pressure on the Group's liquidity position, resulting in the Group having net current liabilities of US$1,068 million as at 31 March 2015.

The Company's inability to execute the planned refinancing in the middle of 2014, followed by the sharp decline in market oil prices, led the Directors to initiate an urgent review of the Group's capital structure, liquidity and funding requirements as announced on 20 January 2015. On 30 January 2015, the Group announced it had obtained from the lenders of the US$300 million Ebok debt facility a deferral of the US$50 million amortisation payment due on 31 January 2015. On 4 March 2015, the Group announced that the Board had decided at the expiration of a 30 day grace period not to pay US$15 million of interest which was due on 1 February 2015 under its 2016 Senior Notes.

On 13 March 2015, the Group announced a preliminary agreement for the receipt of Interim Funding and the Recapitalisation of the business. The agreement entered into by Afren together with certain noteholders under its 2016 Notes, 2019 Notes and 2020 Notes (Noteholders) and a majority of the lenders under the Group's existing US$300 million Ebok credit facility, wasintended to result in the provision of US$255-US$305 million of net total funding before the end of July 2015. On 30 April 2015, the Company entered into definitive agreements with certain Noteholders and issued US$212 million of private placement notes (PPN), providing US$200 million in net cash to the Group. In conjunction with such agreement, the lenders under the Group's existing US$300 million Ebok credit facility agreed to the deferral of the US$50 million amortisation payments due on 31 January 2015 and 30 April 2015 until the completion of the implementation of the Recapitalisation (at which point it is expected that the amortisation payments will be further deferred until after the repayment of the New High Yield Notes - see below).

In connection with the Recapitalisation, on 30 April 2015 the Group also entered into a conditional agreement to raise US$55 million in additional net proceeds (after the repayment of the PPN) from the issuance of new High Yield Notes due in 2017 (New HY Notes). On 29 May 2015 the Group announced that the Noteholders have agreed to subscribe for further New HY Notes up to the maximum level permitted of US$369 million increasing the additional net cash proceeds by a further $93 million. In addition, as part of the Recapitalisation (i) 25% of the 2016 Notes, 2019 Notes and 2020 Notes (Existing Notes) will be converted to new equity in the Company; (ii) the remaining 75% of the Existing Notes will be extended to mature as to US$350 million in each of December 2019 and December 2020; (iii) the existing Ebok credit facility will be extended to 2019; (iv) new shares will be issued to subscribers to the New HY Notes and the PPN; and (v) the Company will undertake an equity offering of up to US$75 million to shareholders. The Group has also reached agreement with the lender of its Okwok/OML 113 facility to restructure and defer this facility until 2018.