Dana Gas Sukuk Limited ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS. For the year ended 31 December 2013

Transcription

1 Dana Gas Sukuk Limited ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS For the year ended 31 December 2013

2 Report of the Directors The directors present the audited financial statements for Dana Gas Sukuk Limited (the `Company') for the year ended 31 December Incorporation The Company was incorporated as public limited liability company in Jersey, Channel Islands on 16 July Activities The Company was formed as a special purpose vehicle for the purpose of parricipating in a financing transacrion (the 'Transacrion') arranged by JP Morgan Securities Ltd., Citigroup Global Markets Limited and Barclays Bank plc (the'joint Lead Managers. Pursuant to a declaration of trust dated 31 October 2007 the Company issued USD 1 billion trust certificates (the 'Certificates' or `Sukuk') converrible into shares of Dana Gas PJSC (the 'Mudarib' or 'Dana). The Certificates are backed by a portfolio of assets (the 'Mudarabah~, which is constituted pursuant to an agreement between the Company and. the Mudarib setting out the terms pursuant to which the Mudarib can invest. the issue proceeds from the Certificates in accordance with the investrnent plan (the'mudarabah Agreement. The Company. raised monies pursuant to the issuance of the Certificates. The Certificates were inirially issued to the Joint Lead Managers and were listed on the London Stock Exchange. The total principal amount of the Certificates was USD 1,000,000,000. The proceeds of the issue of the Certificates were applied by the Company as the capital of the Mudarabah assets to be invested by the Mudarib in accordance with an investment plan and the terms of the Mudarabah Agreement. Dana announced on 10 December 2012 that a standstill and lockup agreement had been reached with an "Ad-Hoc committee" of Sukuk holders for a refinancing transaction (the "Refinancing Transaction") in relation to the Sukuk. The standstill and lockup agreement also includes a detailed set of terms, condirions and implementarion schedule. Dana launched the consent solicitation on 26 March 2013 to seek Sukuk holders' consent in a meeting of Sukuk holders ("Sukuk holders EGM") held on 23 April Also, Dana issued an invitation to its Shareholders to attend the Extra Ordinary General Assembly ("Shareholders EGM") to consider and approve the Refinancing transaction. On 23 April 2013, both Sukuk holders EGM and Shareholders EGM approved the Refinancing Transaction. On 8 May 2013, the refinancing of Sukuk was completed and Dana made a cash pay-down of USD 69.9 million and paid the accrued profit from 31 October 2012 to 7 May 2013 amounting to USD 38.4 million. Following this, Dana also perfected the securities and issued a compliance certificate dated 10 July The salient features of the Refinancing Transaction were a reducrion in the Company's outstanding Sukuk amount from USD 1 billion to USD 850 million via USD 69.9 million. of cash pay-down and cancellation of another USD 80 million of the e~usting Sukuk already owned by Dana. The remaining USD 850 million was split into two tranches being a USD 425 million Ordinary Sukuk and USD 425 million Convertible Sukuk (together the "New Sukuks"), each with 5-year maturity to ensure long term financing. These sukuks were used to refinance and replace the original London stock exchange listed sukuk. The Ordinary Sukuk and Convertible Sukuk have a profit rate of 9% and 7% per annum, respecrively and are listed on the Global Exchange Market, a component of the Irish Stock Exchange. The Ordinary and Convertible Sukuk are secured against the shares of Dana LNG Ventures Limited (BV~, Sajaa Gas Company Limited (Sharjah) and United Gas Transmission Company L,itnited (Sharjah). In addition to the above, the security.package available to holders of the New Sukuks was enhanced by an additional USD 300 million of value comprising security over receivables of Dana's Egyprian assets, Dana's interest in Danagaz W.L.L. and Sajaa Gas land.

3 Report of the Directors (continued) The New Sukuk of US$ 850 million (US$425 million of Converrible Sukuk and US$425 million of Ordinary Sukuk) are listed on the Global Exchange Market of the Irish Stock Exchange with Deutsche Trustee Company Limited as Delegate. The above transactions of the Company are part of pass through arrangements and accordingly, the Company does not generate any income from the Mudarabah assets and does not incur any cost with respect to the Certificates' liabilities. Dana Gas PJSC Dana. was incorporated in the Emirate of Sharjah, United Arab Emirates as a Public Joint Stock Company on 20 November 2005 pursuant to incorporation decree number 429/2005 issued by the Ministry of Economy. Dana shares are listed on the Abu Dhabi Securities Exchange (AD~ and its annual audited and quarterly financial statements are published on ADX. Going concern The Company has been formed with the sole objective of participating in the Transaction, subsequently, the Restructuring Transaction, involving the issuance of the Certificates which are now due for redemprion in October The future activities of the Company following maturity on 31 October 2017 have yet. to be determined. The Directors have received written confirmation of financial support for working capital needs from Dana Gas PJSC and therefore believe that the Company shall have adequate resources to conrinue in operational e~stence for the foreseeable future. Accordingly, the financial statements continue to be prepared on a going concern basis. Result and dividend The results of the Company's acrivities are reported in the Company's Statement of Comprehensive Income. A dividend in the sum of USD was paid during 2013 (2012: USD 833). At the end of the year, the directors recommend the payment of a dividend in the sum of USD 508 (2012: i.tsd ). Directors The directors who served during the year and subsequently are: Shane Michael Hollywood Alasdair James Hunter resigned 26 February 2014 Ariel Pinel appointed 26 February 2014 Auditors Ernst &Young LLP have expressed willingness to continue in office. Secretary Bedell Secretaries Limited. Registered office 26 New Street St Helier Jersey JE2 3R.A 2

4 Statements of director's responsibilities The directors are responsible for preparing the Annual report and financial statements in accordance with applicable law and regularions. Jersey Company Law requires the directors to prepare financial statements for each financial period in accordance with any generally accepted accounting principles. The financial statements of the Company are required by law to give a true and fair view of the state of affairs of the Company at the period end and of the profit or loss of the Company for the period then ended. In preparing these financial statements, the directors should: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and appropriate; specify which generally accepted accounting principles have been adopted in their preparation; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will conrinue in business. The directors are responsible for keeping accounting records which are sufficient. to show and explain the Company's transactions and are such as to disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements prepared by the Company comply with the requirements of the Companies (Jersey) Law They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. By order of the Board Duly Authorised Bedell Secretaries Limited Secretary Date:,`~(~.~1 ~ Q.~VI~aP~" ~~ ~ 4" 3

5 EY Building a better working world INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DANA GAS SUKUK LIMITED We have audited the financial statements of Dana Gas Sukuk Limited (the "Company") for the year ended 31 December 2013 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes 1 to 12. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards. This report is made solely to the company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed, Respective responsibilities of directors and auditors As explained more fully in the Directors' Responsibilities Statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the company's affairs as at 31 December 2013 and of its profit for the year then ended; have been properly prepared in accordance with International Financial Reporting Standards; and have been prepared in accordance with the requirements of the Companies (Jersey) Law Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion: proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or we have not received all the information and explanations we require for our audit. Christopher James Matthews, FCA for and on behalf of Ernst &Young LLP Jersey, Channel Islands 2q September

6 STATEMENT OF COMPREHENSIVE INCOME Income Note 31 December 2013 USD 37 December 2072 USD Fee Income PROFIT FOR THE YEAR Other comprehensive Income TOTAL COMPREHENSIVE INCOME FOR THE YEAR The attached explanatory notes 1 to 12 form part of these financial statements 5

7 STATEMENT OF FINANCIAL POSITION At 31 December December 37 December Note USD USD ASSETS Current assets Cash and cash equivalents Other receivable TOTAL ASSETS EQUITY Share capital Retained earnings 508 TOTAL EQUITY The financial statements on pages 5 to 14 were approved by the board of directors and authorized for issue on ot.(~ ~ +~'LMbQ,,r a.c~ l~{-~ and signed on behalf of the board by: Director L.---~~ Director The attached explanatory notes 1 to 12 form part of these financial statements 6

8 STATEMENT OF CASHFLOWS 31 December 37 December USD USD OPERATING ACTIVITIES Profit for the year Changes in working capital: Increase in Other receivable (508) Cash generated from operating activities - FINANCING ACTIVITIES Dividend paid () (833) Cash used in financing activities () (833) (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS () 2 Cash and cash equivalents at 1 January 837 CASH AND CASH EQUIVALENTS AT 31 DECEMBER 2 g3~ The attached explanatory notes 1 to 12 form part of these financial statements 7

9 STATEMENT OT CIIANGES IN EQUITY Balance at 1 January 2012 Share Capital USD 2 Retained earnings USD 833 Total USD Profit for the year. Total comprehensive income for the year Dividend paid (833) (833) Balance at 31 December Balance at 1 January Profit for the year Total comprehensive income for the year - Dividend paid 508 () 508 () Balance at 31 December g 510 The attached explanatory notes 1 to 12 form part of these financial statements 8

10 NOTES TO THE FINANCIAL STATEMENTS GENERAL The Company is a public limited company incorporated in Jersey, Channel Islands. The registered number of the company is The principal activities of the Company are described in the report of the directors. The Company is a special purpose company established for the purpose of the issuance of USD 1 billion trust Cerrificates. The Company issued the Certificates on 31 October 2007, the Certificates matured on 31 October 2012 and were refinanced with a revised amount of USD 850 million with maturity on 31 October 2017, as disclosed in note 4. The Company's assets, liabilities and derecognized transactions are consolidated at Dana Gas PJSC group level and are published on an annual basis. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial statements have been prepared in accordance with accounting principles generally accepted in Jersey, incorporating International Financial Reporting Standards (IFRS) as issued by the IASB and have been prepared under the historical cost convention. The financial statements are presented in.united States Dollars (USD), being the functional currency of the Company. Going Concern The Company has been formed with the sole objective of parricipating in the Transaction, subsequently, the Restructuring Transacrion, involving the issuance of the Cerrificates which are now due for redemption in October The future activities of the Company following maturity on 31 October 2017 have yet to be determined. ThP Directors have received written confirmation of financial support for working capital needs from Dana Gas PJSC and therefore believe that the Company shall have adequate resources to continue in operarional existence for the foreseeable future. Accordingly, the financial statements conrinue to be prepared on a going concern basis. Statement of compliance The financial statements for the year ended 31 December 2013 have been prepared in accordance with IFRS and are in conformity with Companies Qersey) Law 1991, as amended. Adoption of new and revised standards The directors have reviewed and considered all standards in issue but not yet effective as at the date the financial statements are authorized for issue. In the directors opinion these standards are either not relevant to the Company or will have no impact on the financial statements of the Company. Critical judgements and accounring estimates The preparation of these financial statements requires the directors to make estimates and assumprions that affect the reported amounts of revenues, assets and liabiliries as at the statement of financial position date. In the event such estimates and assumptions which are based on the best judgement of the directors, as at the balance sheet date deviate from the actual circumstances in the future, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. The directors have reviewed the Company's accounring policy concerning the derecognirion of certificates liability. In the opinion of the directors the Company is still required by the International Accounting Standard 39 Financial Instruments: Recognition and Measurement (`IAS 39') to not recognise the certificates. The certificates are not recognisable as financial liability under IAS 39 as the Company has transferred the rights to the cash flows generated from the corresponding assets under a pass through arrangement. The company is required to transfer the cash flows arising from the transaction either to Dana or the Certificate holders without material delay. 9

11 NOTES TO THE FINANCIAL STATEMENTS 2 SIGNIFICANT ACCOUNTING POLICIES (Conrinued) Sources of estimation uncertainty There are no significant assumptions made concerning the future or other sources of estimation uncertainty that have been identified as giving rise to a significant risk of causing a material adjustment to the Compan~s financial statements within the next financial year. Financial Instruments A financial asset or a financial liability is recognized in the statement of financial position when and only when, the Company becomes a party to the contractual provisions of the instruments. The only financial instruments carried on the statement of financial position are cash and cash equivalents and other receivable. Recognirion & Derecognition A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: i. The right to receive cash flow from the asset have expired; or u. The Company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a `pass through' arrangement; and either (a) the Company has transferred substanrially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substanrially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company's continuing involvement in the asset. A financial liability is derecognised when the obligarion specified in the contract is discharged, cancelled or expired. Other receivables Other receivables after inirial measurement are subsequently measured at amorrised cost. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three month or less, net of outstanding bank overdrafts. Revenue recognition The transacrions of the Company are pass through. arrangements and accordingly, the Company does not generate any income from the Mudarabah assets. and does not incur any.costs with respect to the Certificate liabilities. The annual transaction fee receivable is recognised on an accruals basis and is due to the Company in accordance with the Transaction documentarion. 10

12 NOTES TO THE FINANCIAL STATEMENTS 2 SIGNIFICANT ACCOUNTING. POLICIES (continued) Foreign Currencies Transactions in foreign currencies are recorded at the funcrional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the funcrional currenry rate of exchange ruling at the balance sheet date. Foreign exchange gain or losses are taken to the statement of comprehensive income. Dividends Dividend distribution to the Company's shareholders is recognised as a liability in the financial statements in the period in which the dividends are approved by the Company's shareholders. TAXATION The Company is registered in Jersey, Channel Islands as an income tax paying company. The general rate of corporation tax for companies resident in Jersey (such as the Company) is 0% for the current year of assessment (2012: 0%). 4 ISSUANCE OF TRUST CERTIFICATES The Certificates were constituted by a declararion of trust (the 'Declararion of Trust') dated 31 October 2007 (the'closing Date among the Company, Dana and HSBC Trustee (C.I.) Lunited (the'delegate~. Pursuant to the Declaration of Trust, the Company declared that it will hold certain assets, primarily consisting of all of its rights, tide and interest in the outstanding assets of the Mudarabah consrituted by the Mudarabah Agreement dated the Closing Date and entered into between the Company (as rab al-maal) and the Mudarib, the purchase undertaking (the 'Purchase Undertakings granted by Dana in its capacity as obligor (the 'Obligor, the other Transaction documents and all proceeds of the foregoing, upon trust absolutely for the Certificateholders pro rata according to the principal amount of Certificates held by each Cerrificate holder. On the Closing Date, the Company contributed USD 1,000,000,000 to the capital of the Mudarabah created pursuant to the terms of the Mudarabah Agreement which has been used to purchase the assets as mentioned above. On 31 January 2008 and on each 31 January, 30 April, 31 July and 31 Dctober thereafter (each, a 'Periodic Distribution Date, the Company has paid periodic distribution amounts to Certificate holders calculated on the. basis of 7.50 per cent. per annum of the outstanding principal amount of the Certificates. The Company is required to pay periodic distribution amounts solely from the proceeds received in respect of the trust assets. In accordance with the requirements of the Sukuk, the Company issued an exercise notice on Dana on 29 October 2012 requiring Dana to settle the relevant exercise price in accordance with the terms and conditions of Sukuk. Though the Sukuk matured on 31 October 2012, following non-payment, Dana entered into a Standstill Agreement on 6 November 2012 with an Ad-Hoc committee of Sukuk certificate holders holding a majority of outstanding Sukuk with a view to restructure the same. Following this, Dana also entered into a Standstill and Lock up Agreement with the said Ad-Hoc Con~unittee on 10 December 2012 with a detailed set of terms and conditions. 11

13 NOTES TO THE FINANCIAL STATEMENTS 4 ISSUANCE OF TRUST CERTIFICATES (continued) The salient features of the restructtiring were a reduction in the Company's outstanding Sukuk amount from USD 1 billion to USD 850 million via USD 70 million of cash pay-down and cancellarion of another USD 80 mi]lion of the e~sting Sukuk already owned by Dana. The remaining USD 850 million were split into two tranches being a USD 425 million Ordinary Sukuk and USD 425 million Convertible Sukuk (together the "New Sukuks"), each with 5-year maturity to ensure long term financing. The Ordinary Sukuk and Convertible Sukuk have a profit rate of 9% and 7 io per annum, respectively which is matched by the periodic distribution amount of profit rate on the Mudarabah Asset. The Ordinary and Converrible Sukuk are secured against the shares of Dana LNG Ventures Limited (BV~, Sajaa Gas Company Lunited (Sharjah) and United Gas Transrnission Company Limited (Sharjah). In addition to the above, the security package available to holders of the New Sukuks was enhanced by USD 300 million of value comprising security over receivables of Dana's Egyptian assets, Dana's interest in Danagaz W.L.L. and Sajaa Gas land. As per the agreement, the conversion rate for the Converrible sukuk was set at a 50% premium to the 75 calendar day volume-weighted average price, measured over a period commencing on 1 December 2012 (with a floor of AED 0.75 and cap of AED 1.00). The initial effective exchange price for the convertible sukuk was determined on 13 February 2013 and has been fined at AED 0.75 per share (floor price). Dana has the option to pay down the outstanding principal amount of the New Sukuks prior to the new maturity date of 31 October 2017, subject to the applicable call premium on the Ordinary Sukuk and the soft call provisions on the Convertible Sukuk. The convertible sukuk at the option of the certificate holders can be exchanged into ordinary shares of Dana on or after 31 October 2013 until 25 trading days prior to the Scheduled?Redemption Date. The New Sukuk of US$ 850 million (US$425 million of Convertible Sukuk and US$425 million of Ordinary Sukuk) are listed on the Global Exchange Market of the Irish Stock Exchange with Deutsche Trustee Company Lunited as Delegate. The Company has deteiinined that as the cash flows arising from the above transacrions are required to be paid on either to Dana or the Cerrificate holders without material delay and with limited recourse, hence the above arrangement complies with the requirements of IAS 39 Financial Instnunents: Recognition and Measurement to be treated as pass through arrangements and accordingly the investment in Mudarabah and the associated Certificate liabilities and the cash flows arising thereon are not required to be incorporated in these financial statements. 5 REVENUE The Company was eligible to receive a sum of GBP 500 as annual transacrion fees as per the transaction agreement entered in 2007 which expired on 7 May Based on the revised agreement the Company is now entitled to a transacrion fee of GBP 200 per annum from 8 May SHARE CAPITAL 31 December 37 December USD USD Authorised. 2 Orr3inary shares of USD 1 each 2 2 Issued and fully~iaid up: 2 Ordinary shares of USD 1 each Z 2 12

14 NOTES TO THE FINANCIAL STATEMENTS SHARE CAPITAL (continued) There are no other share classes which would dilute the rights of the ordinary members. Amongst other rights as prescribed in the articles of associarion of the Company, the rights of the ordinary members include: the right to attend meetings of members. On a show of hands every member present in person or by pro~ry shall have one vote and on a poll every member shall have one vote for each share of which the member is a shareholder; and the right to receive dividends recommended by the directors and declared in a general meeting. RELATED PARTY TRANSACTIONS The directors of the Company are the Company's only key management personnel. The directors of the company are also directors of Bedell Trustees Limited, Bedell Secretaries Limited and partners of Bedell Group. Shane Michael Hollywood is a director of Bedell Trust Company Lunited. Alasdair James Hunter is a partner of Bedell Cristin. Ariel Samantha Pinel is a director of Bedell Trustees Limited and Bedell Secretaries T"imited with effect from 19 February The directors' fees are met directly by Dana. Total fees paid to Bedell Trust Company Limited during the period amounted to GBP 28,781 (USD 44,460) (2012: GBP 14,315 (USD 23,931) and total fees paid to Bedell Cristin during the period amounted to GBP 25,407 (USD 39,229) (2012: nil) and there were no fees payable as at 31 December 2013 (2012: Nil). RISK MANAGEMENT Due to the pass through nature of the transacrions and the limited recourse nature of the Company's obligations, its exposure to credit risk, liquidity risk, market risk, currency risk and profit rate risk is considered to be minimal As the Company was established only for the purpose of issuing the Cerrificates and participating in the related transactions, the Company's capital requirement is limited to its current share capital. DIVIDENDS PER SHARE The dividend paid in 2013 was USD (LJSD per share). A dividend in respect of the year ended 31 December 2013 of USD 508 (LJSD 254 per share) will be proposed by the Directors on approving these financial statements and put to the shareholders at the AGM for approval. 10 FAIR VALUE ESTIMATION Due to the pass through nature of the transacrion and lirruted recourse nature of the Company's obligation, the certificates are not disclosed in the financial statements of the Company. The following informarion is provided in the financial statements for the better understanding of the reader. The fair value (Level 3 in Fair value hierarchy) of the ordinary and convertible sukuk as of 31 December 2013 was US$ 415 million and US$ 402 million respectively against face value of US$ 425 million, each. The fair value of the sukuk traded in market is based on prices obtained through Bloomberg Generic Price which is the market-consensus price calculated by using prices contributed to Bloomberg from different dealer/brokers at the balance sheet date. 11 ULTIMATE CONTROLLING PARTY The Company is owned by Bedell Trustees Limited on trust for charitable purposes. The accounts of the Company are consolidated into the accounts. of Dana and can be obtained from Abu Dhabi Securities Exchange (AD~ website. In accordance with IAS 24 (Related Parties) Dana Gas is considered by the directors to be the ultimate controlling party on the basis of variable economic benefit and control. 13

15 NOTES TO THE FINANCIAL STATEMENTS 12 SUBSEQUENT EVENT Subsequent to year end, during the period from 1 January 2014 to 15 September 2014, Dana received conversion norices for the convertible sukuk amounting to USD 73 million. Accordingly ordinary shares calculated at the conversion price were/will be issued by Dana to satisfy the nonce. 14