Final Results

RNS Number : 7154H

Ascent Resources PLC

02 June 2011

Ascent Resources plc / Epic: AST / Index: AIM / Sector: Oil and Gas

2 June 2011

Ascent Resources plc ('Ascent' or 'the Company')

Final Results

Ascent Resources plc, the AIM-traded oil and gas production and exploration company, announces its final results for the year ended 31 December 2010.

Overview

· Progressed and refined portfolio of low cost, onshore oil and gas assets with near-term upside potential across Europe - Hungary, Slovenia, Switzerland, Italy, and the Netherlands

· Advanced the Petišovci/Lovászi/Ujfalu tight gas project in Slovenia/Hungary towards production - P50 gas in place estimates of 412 Bcf. (11.7 Bm3; 68.7 MMboe)

· Confirmed gas in all of the six Middle Miocene Badenian reservoirs and flow tested gas from the Lower Miocene Karpatian reservoir at Petišovci project - potential to increase gas in place estimate by in excess of 100 Bcf, with preliminary results of Pg-11A expected to be released shortly

· Established active development programme at Frosinone/Strangolagalli project in Italy

· Sold 90% interest in Hermrigen/Essertines/Linden project in Switzerland to eCORP Europe International Ltd. for €8 million cash - retained various back-in options on specific potentially successful discoveries

· Strengthened balance sheet post year end with a £17 million placing to institutional investors at 5 pence per share

· Continued production at 48.8% held Penészlek project in Hungary, currently generating gross gas sales of approximately €300,000 per month

· Made changes on a corporate level including appointment of new Nominated Adviser and Broker and strengthened Board

CHAIRMAN'S STATEMENT

I am pleased to report that 2010 was a year of solid progress for Ascent both operationally and in terms of positioning the Company for steady near- and long-term growth in shareholder value.

Our strategy remains to combine lower risk field redevelopment projects in areas with existing infrastructure with selected higher risk exploration projects all designed to provide a balanced risk/reward profile with good potential upside. To this end, we have a diversified portfolio of principally onshore, hydrocarbon exploration, redevelopment and appraisal interests across five European countries: Hungary, Slovenia, Switzerland, Italy, and the Netherlands. We are initiating relatively simple development models to advance these projects, utilising the latest technology and working with local organisations in each jurisdiction to increase efficiency. As a result of the work undertaken during 2010 and 2011, we anticipate ramping up production towards the end of 2011 and beyond.

Our primary near-term objective is to advance the Petišovci/Lovászi/Ujfalu tight gas project in Slovenia/Hungary. We now hold a 75% interest in the Petišovci asset, having acquired a further 48.75% from EnQuest PLC post year end in return for a 22.5% equity stake in Ascent and a nil cost option of 150,903,958 additional shares, and a 50% interest in the Lovászi and Ujfalu assets. During the year we had independently verified P50 gas in place estimates for the entire project of 412 Bcf. (11.7 Bm3; 68.7 MMboe) and for that reason we consider it relatively low-risk. The challenge for us in 2011 is not so much finding the gas, which we know is there, but how to unlock this gas in a commercial manner given it is largely a tight gas asset.

Phase 1 of the project's development programme included the drilling of Pg-11 well in December 2010 to define the main project parameters. On completion of drilling in February 2011, we were able to confirm gas in all of the six Middle Miocene Badenian reservoirs as well as, most excitingly and unexpectedly, the Lower Miocene Karpatian reservoir, which we hope will increase the gas in place estimate by in excess of 100 Bcf.. The data collected, in conjunction with the full 3-D seismic which we acquired during the year across the whole project area, has led us to believe that we can extract the gas using modern drilling techniques, either by drilling horizontally or by fraccing. In order to determine the right method to use, Phase 2 of the programme is currently underway with a deeper horizontal sidetrack to enable us to fully delineate the Lower Miocene Karpatian reservoir and depending on these results we may follow this up with a sidetrack well in the Middle Miocene. Subsequently, in the late summer of 2011, we plan to drill another well, Pg-10. Following this, if successful, it is hoped that production can commence before the end of the year. To achieve this target, a simple pipeline connection and a carbon dioxide ('CO₂') reduction plant is required to connect any producing wells in the project to the national pipeline network.

Going forward, our development plan envisages 10-15 more wells being drilled over a three- to four-year period. It is estimated that if production from the wells is in line with current projections, that net operating cash flow from the first well brought on stream during 2011 could be €3 million in 2011 rising to €10 million in 2012 and €24 million for the period 2013-2015, based on €7 Mscf. gas pricing. The project's net CapEx however is not inconsiderable requiring in excess of €150m to develop the entire field.

We are also focussed on two other core projects: Hermrigen/Essertines/Linden in Switzerland and Frosinone/Strangolagalli in Italy. The Swiss project is another known oil and gas discovery, which was unexploited due to the low price of gas in 1982 and lack of pipeline infrastructure at that time. We consider that this is also a low risk project as Ascent sold its 90% interest to eCORP European International Ltd ('eCORP') in April 2010 for €8 million, whilst retaining a 45% back-in right on any success for three conventional appraisal prospects and a 22.5% back-in right for a further three secondary conventional prospects for apportioned cost. eCORP anticipates drilling the Hermrigen well early in the summer of 2011 once the permit is received.

Finally, the Frosinone/Strangolagalli oil exploration and redevelopment project in Italy has also been making headway. New seismic was shot last year in the Strangolagalli Concession and this year a latest generation satellite reconnaissance survey was commissioned, enabling us to plan a new three-well drilling programme for 2011/2012. Further seismic has been commissioned at the Frosinone Exploration Licence to identify drilling locations. We are currently exploring our options in terms of financing an exploration programme but as all the drilling would be targeting reservoirs about 1,000 metres deep, costs should be relatively low, yet the upside could be significant for a Company of our size.

Also on the theme of finance, production continues at our 48.8% held Penészlek project in Hungary, where we are currently generating gross gas sales of approximately €300,000 per month. The strong European gas market conditions have been working in our favour; with over 50% of European gas imported and forecast to rise to circa 75% in line with the declining North Sea production, we anticipate these favourable pricing conditions to continue. Production at Penészlek is expected to continue for about another 12 months with another sidetrack well, PEN-105, targeted for the summer of 2011 prior to the field being fully depleted.

The self-financing Penészlek project is useful as it provides the Company with cashflow for overheads, however post the year end in March 2011, it was necessary to raise additional funds by way of a placing in order to progress our core Petišovci/Lovászi/Ujfalu project. We were therefore very pleased to raise £17 million, before expenses, primarily with high quality institutional investors. This has provided the capital to significantly advance our Petišovci/Lovászi/Ujfalu project and we believe that if successful the money could be enough to get us to production/cash flow generation before the year end.

On a corporate level, we have made a number of changes. In September 2010 we appointed finnCap Ltd as the Company's Nominated Adviser and Broker to strengthen our profile within the fund and wealth management arena. Earlier in the same month we also made changes to our Board with the appointment of Dr. Cameron Davies as a Non-executive Director. Cameron is an international energy sector specialist and the former Chief Executive of Alkane Energy plc. He has an excellent track record of exploration success and growing profits in a quoted energy company. He brings with him the technical skills and broad network of international energy industry contacts which will be invaluable in progressing Ascent's extensive portfolio of European oil and gas development and exploration assets.

At the same time, both Legal Director Malcolm Groom and Non-executive Director Jonathan Legg, who had been with the Company since 2005, stepped down from the Board to focus on other commitments. At the end of 2010, Simon Cunningham, our Finance Director, also stepped down from the Board to re-locate to Australia. I would like to take this opportunity to thank them all for their work during their long association with Ascent.

Simon was replaced by Scott Richardson Brown as Executive Finance Director, who had been appointed in November 2010 as a Non-executive Director. Scott is a qualified Chartered Accountant and subsequent to his experience as an auditor, he spent over 10 years working with AIM, FTSE 250 and FTSE 100 companies, both in a corporate finance advisory role and, recently, as Corporate Finance and Investor Relations Director of CSR plc.

Additionally, post the year end, as part of the agreement with EnQuest PLC, Graham Cooper was nominated to join our Board as a Non-executive Director in February 2011. Graham brings with him a wealth of experience which will be very valuable to the Company. EnQuest will also provide technical support to Ascent for the Petišovci Project, as well as for the evaluation of future European business development opportunities.

With a strong team in place as well as a solid investor base, a healthy balance sheet and an exciting portfolio of diversified assets, the outlook for 2011 and beyond is highly encouraging. Having proved up our core portfolio we are now focussed on extracting value from it and in line with this, aggressive work programmes are underway. The Petišovci/Lovászi/Ujfalu tight gas project is particularly promising, which in tandem with our other projects, will, I am confident, create real and lasting value for our shareholders.

John Kenny

Chairman

2 June 2011

OPERATIONS REVIEW

Ascent Resources plc is a multi-project oil and gas exploration company, with interests in five European countries: Hungary, Slovenia, Switzerland, Italy and the Netherlands. The Company focuses primarily on low cost, onshore oil and gas assets with high upside potential. Modern exploration and development techniques are utilised to maximise profitability, whilst operating through local entities with local employees provides substantial advantages leading to greater efficiency and know-how.

Ascent's balanced portfolio targets projects which are in areas with a proven hydrocarbon system and largely in areas with existing or nearby infrastructure, either pipelines for gas or refineries for oil. The Company has three core projects and a large portfolio of other assets to be matured for inclusion in the core portfolio after the completion of early stage, geological and geophysical work programmes and by following an asset-management (farm-out/farm-down) strategy.

Core Projects

Petišovci/Lovászi/Ujfalu - Slovenia/Hungary

(Petišovci - 75% interest / Lovászi/Ujfalu - 50% interest)

A phased exploration and development programme at the Petišovci-Lovászi tight gas project, which straddles the Slovenian/Hungarian border, commenced during 2009 with the acquisition of 3-D seismic. The conclusion of Phase 1 in the coming months, will provide the project with two fully evaluated modern wells, from which the overall redevelopment of the Petišovci Globocki reservoir can be planned, and a third state-of-the-art well in the Hungarian part of the project area.

The first well is the 3,050m Pg-11 well, the drilling and evaluation of which was completed post year end in February 2011. This was the first well to be drilled in 22 years on the project area, which has an independent P50 estimate of gas-in-place estimate of 412 Bcf. (11.7 Bm3; 68.7 MMboe).

The primary objectives of the Pg-11 appraisal well were satisfied with gas confirmed by logs in all of the six Middle Miocene Badenian reservoirs. In addition, and unexpectedly, gas and condensate were sampled from the Lower Miocene Karpatian reservoir, which it is hoped will contribute to an increase in the gas-in-place estimates. Gas also flowed for the first time from the shallowest 'A' sands. These results substantially de-risk the project and underpin its commercial potential.

In April 2011 we commenced phase two of the Pg-11 well by drilling the sidetrack Pg-11A. The purpose was to fully delineate the Karpatian reservoir, which was unexpectedly encountered whilst drilling Pg-11, and to log and test part of the well to gather more data to determine any exploitation strategy.

Whilst Pg-11 was drilled in the eastern part of the field, the second appraisal well, Pg-10, is planned for the western part of the field and the drilling location is under construction so that the rig can move there immediately from the Pg-11 location.

It is intended to complete both of these wells so that production can commence later in 2011. As CO₂ is present, a CO₂ scrubber might be necessary so that the gas can be sold in to the Geoplin national pipeline network that has a maximum CO₂ concentration limit of 1.5%

Phase 2 of the project will commence in 2012 after the data from Phase 1 is fully integrated into the geological model and the redevelopment of the field has been fully planned. At the present time, we think between 10 and 15 wells will be required to develop the reserves in the Slovenian half of the project.

Outside of the Petišovci field but within the project area a number of exploration targets are present and plans for these wells are also being considered for the 2012 drilling campaign. Additional wells, depending on the outcome of the Ujfalu III exploration and appraisal well will also be considered in the Hungarian half of the project area.

Hermrigen/Essertines/Linden - Switzerland

(45% back-in right on any success for three conventional appraisal prospects and a 22% back-in right for a further three conventional secondary prospects for apportioned cost of drilling)

In April 2010 Ascent sold its 100% owned Swiss subsidiary, PEOS AG ('PEOS'), to eCORP Europe International Ltd. ('eCORP'), for a cash consideration of €8 million, but retained various back-in options on specific potentially successful discoveries. The projects held within PEOS are estimated by Tracs International to contain gross contingent conventional resources in excess of 600Bcf. of gas.

As part of the Transaction, eCORP has irrevocably committed to drill the Hermrigen-2 appraisal well prior to October 2011, however, as the site construction permit has not yet been issued, the drilling rig contract is not yet in place.

Management estimate gross contingent reserves of potentially 150Bcf. in the Muschelkalk and Bunter layers of the Hermrigen prospect. eCORP will fund the entire cost of the Hermrigen-2 well and, if successful, Ascent has the retrospective right to participate by paying 45% of the conventional well cost to earn a 45% interest in the conventional discovery. Ascent has no rights to any unconventional gas development or gas storage project should it be undertaken by eCorp. Ascent retains the equivalent rights for the appraisal of the Essertines 1 and Linden 1 appraisal wells should eCORP elect to drill these prospects. Should eCorp elect not to drill these wells Ascent retains the option, subject to certain conditions, to fund their development in its own right.

Additionally, Ascent and eCORP have identified a further three prospects in the licence areas held by PEOS. Should eCORP elect to drill these additional prospects, Ascent has the right to 22.5% of any successful conventional discovery by paying 22.5% of the drilling costs post discovery. Again, should eCORP elect not to drill these wells Ascent retains the option, subject to certain conditions, to fund their development in its own right.

Frosinone/Strangolagalli - Italy

(80% interest in Frosinone and 50% interest in Strangolagalli)

At the Frosinone Exploration Licence, two wells, Anagni-1 and Fontana 1, were historically drilled with good oil shows. During the period, a satellite reconnaissance survey was commissioned and the results not only show potential in the existing prospects but have also revealed new targets which are substantially larger. New 2-D seismic is planned for these new prospects and acquisition is scheduled for Q3 2011.

Work has been ongoing at the Strangolagalli Concession. Seismic has been acquired over the Ripi oilfield, a proven oil producing area, and permitting is on-going for four redevelopment wells based on this new seismic data. Subject to permitting and financing, a suitable rig is available to drill two wells in later in 2011.

Other Projects

Penészlek project -Eastern Hungary

(48.8% interest)

Production commenced at the Penészlek project from the PEN-105 well in March 2010 and later from the PEN-101 well in May 2010. Both wells are still producing over 1.5 MMscfd of gas, currently generating gross revenue of approximately €300,000 per month. A fully automated production facility is being used, located close to PEN-101, to keep overheads low and profitability high. Production is anticipated to continue for approximately 12 months with PEN-105 sidetrack targeted this summer as one segment of the field becomes fully depleted.

The long-standing PEN-9 project in the northern part of the newly issued Mining Plot (Production Concession) is still under consideration. PEN-9 tested gas when it was originally drilled in 1985 but certain restrictions have so far prevented re-entry and testing of this well; hopefully these restrictions will be surpassed in the near future.

Cento-Bastiglia - Po Valley, Italy

(100% interest)

The same satellite reconnaissance as used for Frosinone was commissioned over this area and over the Fiume Arrone project (Ascent 70%). In Cento-Bastiglia, a number of leads have been identified and seismic will be required to confirm the depth and prospectivity of these leads.

M10/M11 - the Netherlands

(54% interest)

Ascent continues to strengthen its portfolio of non-core, longer term projects. In July 2010, Ascent, through its subsidiary Ascent Resources (Netherlands) BV ('ARN'), increased its interest in the M10/11 block in the southern North Sea off the Netherlands' coast, to 54%. The M10/11 appraisal project is in the shallow waters off the north coast of the Netherlands. The discovery well, M11-1 was drilled by Nederlandse Aardolie Maatschappij ('NAM') in 1985. The area benefits from good quality 3-D seismic coverage and in addition to the discovery in the Rotligendes sandstones, a number of other prospects and leads have been identified. Ascent and the other project partners are considering the drilling of an appraisal well for the Terschelling Noord discovery which was also drilled by NAM in 1992. This structure lies partly within the M10/11 licence area and partly in the area to the south.

The Ministry of Economic Affairs is considering ARN's request for an extension to the expiration date of these licences.

Acquisitions

In September 2010, Ascent acquired a 60% interest in the 1,990 sq. km. Igal-II exploration permit in Central Hungary through its 60% equity interest in Hungarian company Pelsolaj kft ('Pelsolaj'). The exploration permit, to the south east of Lake Balaton, was acquired from Winstar Resources Limited in exchange for a 4% net profit interest derived from future production from the permit area.

Initial exploration will concentrate on a 300 sq. km. area known for pre-Pannonian sediments, which are highly prospective for oil and where a number of shallow leads, circa 1,000 metres, have already been identified. 40km of new 2-D seismic was acquired in September 2010 and drilling locations are under consideration which will be located between three old wells in which the prospective formations have been shown to be present. Importantly, a number of discoveries in similar geological structures nearby produce good quality oil at rates typically in excess of 100 Bopd per well.

Consolidated Income Statement

for the year ended 31 December 2010

		Year ended 31 December 2010	Year ended 31 December 2009
	Notes	£ 000's	£ 000's

Revenue		1,821	898
Cost of sales	3	(1,379)	(1,117)

Gross profit/(loss)		442	(219)

Administrative expenses	4	(2,389)	(1,477)
Impairment write down of exploration costs	13	(3,099)	(8,528)

Loss from operating activities		(5,046)	(10,224)


Other operating income		165	-

Finance income	6	21	53
Finance cost	6	(1,127)	(510)
Profit on sale of investments	7	5	127

Net finance costs		(1,101)	(330)

Loss before taxation from continuing operations		(5,982)	(10,554)

Income tax expense	8	(46)	-

Loss for the year from continuing operations		(6,028)	(10,854)

Discontinued operations
Profit for the year from discontinued operations	9	5,899	68

Loss for the year		(129)	(10,622)

Loss attributable to:

Owners of the Company		(129)	(10,756)
Non-controlling interests		-	134

Loss for the year		(129)	(10,622)

Loss per share

Continuing operations
Basic and diluted loss per share	10	(1.18p)	(3.09p)

Discontinued operations
Basic profit/(loss) per share	10	1.15p	(0.02p)
Diluted profit/(loss) per share		1.12p	(0.02p)

Total operations
Basic and diluted Loss per share	10	(0.03p)	(3.11p)

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2010

		Year ended 31 December 2010	Year ended 31 December 2009 (restated)
	Notes	£ 000's	£ 000's

Loss for the year		(129)	(10,622)

Other comprehensive income

Foreign currency translation differences for foreign operations		201	(1,055)
Transferred to gain on disposal		(146)	-

Other comprehensive income for the year		55	(1,055)

Total comprehensive income for the year		(74)	(11,677)

Total comprehensive income attributable to:
Owners of the Company		(74)	(11,811)
Non-controlling interest		-	134

Total comprehensive income for the year		(74)	(11,677)

Consolidated Statement of Changes in Equity

for the year ended 31 December 2010

	Share capital	Equity reserve	Share premium	Share based payment reserve	Translation reserve	Retained earnings	Total	Non-controlling interest	Total equity
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s

Balance at 1 January 2009	305	84	13,067	1,042	3,928	(7,816)	10,610	40	10,650
Comprehensive income
Loss for the year	-	-	-	-	-	(10,756)	(10,756)	134	(10,622)
Other comprehensive income:
Currency translation differences	-	-	-	-	(1,055)	-	(1,055)	-	(1,055)
Transactions with owners
Issue of shares during the year	195	-	9,872	-	-	-	10,067	-	10,067
Share issue costs	-	-	(399)	-	-	(1,281)	(1,680)	-	(1,680)
Share based payments	-	-	-	1,454	-	-	1,454	-	1,454
Balance at 31 December 2009	500	84	22,540	2,496	2,873	(19,853)	8,640	174	8,814

Balance at 1 January 2010	500	84	22,540	2,496	2,873	(19,853)	8,640	174	8,814
Comprehensive income
Loss for the year	-	-	-	-	-	(129)	(129)	-	(129)
Other comprehensive income:
Currency translation differences	-	-	-	-	55	-	55	-	55
Transactions with owners
Convertible Loan	-	(34)	-	-	-	84	50		50
Purchase of non-controlling interest						174	174	(174)	-
Issue of shares during the year	20	-	1,023	-	-	-	1,043		1,043
Share based payments	-	-	-	140	-		140	-	140
Reserve transfer	-	-	-	(724)	-	724	-	-	-
Balance at 31 December 2010	520	50	23,563	1,912	2,928	(19,000)	9,973	-	9,973

Company Statement of Changes in Equity

for the year ended 31 December 2010

	Share capital	Equity reserve	Share premium	Share based payment reserve	Retained earnings	Total parent equity
	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's

Balance at 1 January 2009	305	84	13,067	1,042	(710)	13,788
Comprehensive income
Loss for the year	-	-	-	-	(2,546)	(2,546)
Transactions with owners
Issue of shares during the year	195	-	9,872	-	-	10,067
Share issue costs	-	-	(399)	-	(1,281)	(1,680)
Share based payments	-	-	-	1,454	-	1,454
Balance at 31 December 2009	500	84	22,540	2,496	(4,537)	21,083

Balance at 1 January 2010	500	84	22,540	2,496	(4,537)	21,083
Comprehensive income
Profit for the year	-	-	-	-	2,336	2,336
Transactions with owners
Convertible loan	-	(34)	-	-	84	50
Issue of shares during the year	20	-	1,023	-	-	1,043
Share issue costs	-	-	-	-	-
Share based payments	-	-	-	140		140
Reserve transfers				(724)	724	-
Balance at 31 December 2010	520	50	23,563	1,912	(1,393)	24,652

Consolidated Statement of Financial Position

As at 31 December 2010

		31 December 2010	31 December 2009*
	Notes	£ 000's	£ 000's
Assets

Non-current assets
Property, plant and equipment	11	2,045	158
Exploration and decommissioning costs	13	9,536	10,417
Investments in equity-accounted investees	18	-	1,191

Total non-current assets		11,581	11,766

Current assets
Inventories	17	341	431
Trading investments	19	-	46
Other financial assets	15	-	888
Trade and other receivables	20	1,664	2,248
Cash and cash equivalents	16	2,048	4,630

		4,053	8,243


Total assets		15,634	20,009

Equity and liabilities
Attributable to the equity holders of the parent company
Share capital	27	520	500
Equity reserve		50	84
Share premium account		23,563	22,540
Share based payment reserve		1,912	2,496
Translation reserves		2,928	2,873
Retained earnings		(19,000)	(19,853)

Total equity attributable to the shareholders of the Company		9,973	8,640

Non-Controlling interest		-	174

Total equity		9,973	8,814

Non-current liabilities
Borrowings	23	-	851
Provisions	24	594	152

Total non-current liabilities		594	1,003

Consolidated Statement of Financial Position (continued)

As at 31 December 2010

Current liabilities
Trade and other payables	25	2,314	6,601
Borrowings	23	2,753	3,591

Total current liabilities		5,067	10,192


Total liabilities		5,661	11,195


Total equity and liabilities		15,634	20,009



* Certain balance sheet items have been reclassified, see note 35 for detail

Company Statement of Financial Position

As at 31 December 2010

		31 December 2010	31 December 2009
	Notes	£ 000's	£ 000's
Non-current assets
Property, plant and equipment	12	2	3
Investment in subsidiaries and joint ventures	14	1,970	1,842
Intercompany receivables	32	24,088	18,663

Total non-current assets		26,060	20,508

Current assets
Trade and other receivables	21	23	17
Cash and cash equivalents		1,815	3,677

Total current assets		1,838	3,694


Total assets		27,898	24,202

Equity
Share capital	27	520	500
Equity reserve		50	84
Share premium		23,563	22,540
Share based payment reserve		1,912	2,496
Retained loss		(1,393)	(4,537)

Total equity		24,652	21,083

Current liabilities
Trade and other payables	26	504	638
Borrowings	23	2,742	2,481

Total current liabilities		3,246	3,119


Total liabilities		3,246	3,119

Total equity and liabilities		27,898	24,202

Consolidated Cash Flow Statement

for the year ended 31 December 2010

	Year ended 31 December 2010	Year ended 31 December 2009
Cash used in operations	£ 000’s	£ 000’s
Loss for the year	(129)	(10,756)
Depreciation charge	953	125
Decrease in receivables	1,359	378
(Decrease)/Increase in payables	(25)	2,089
Decrease in inventories	90	178
Impairment in associate	-	300
Profit on sale of subsidiary	(5,899)	-
Profit on sale of current asset investments	(5)	(127)
Revaluation of quoted securities	-	(18)
Impairment of exploration expenditure	3,099	8,528
Increase in decommissioning provision	409	-
Share-based payment charge	140	173
Exchange differences	-	(66)
Share of profit of associate undertakings	-	(140)

	(8)	664
Finance income	(26)	(53)
Finance cost	1,127	510

Net cash generated in operating activities	1,093	1,121

Cash flows from investing activities
Interest received	26	36
Payments for investing in exploration	(9,091)	(6,710)
Purchase of property, plant and equipment	(529)	(30)
Proceeds from disposal of subsidiary	7,032	-
Costs of disposal of subsidiary	(601)	-
Proceeds from disposal of current asset investment	51	247
Proceeds from disposal of equity accounted investee	1,191	-

Net cash flows used in investing activities	(1,921)	(6,457)

Cash flows from financing activities
Interest paid	(512)	(328)
Proceeds from loan notes	2,100	-
Loans repaid	(3,110)	(524)
Proceeds from issue of shares	50	10,067
Share issue costs	-	(399)

Net cash flows (used by)/from financing activities	(1,472)	8,816

Net (decrease)/increase in cash and cash equivalents for the year	(2,300)	3,480

Net foreign exchange differences	(282)	(85)
Cash and cash equivalents at beginning of the year	4,630	1,235

Cash and cash equivalents at end of the year	2,048	4,630

Company Cash Flow Statement

for the year ended 31 December 2010

	Year ended 31 December 2010	Year ended 31 December 2009
Cash used in operations	£ 000's	£ 000's
Profit/(loss) before tax	2,336	(2,546)
Depreciation charge	1	3
(Increase)/Decrease in receivables	(719)	189
Decrease/(increase) in payables	519	(199)
(Profit)/Loss on sale of subsidiary	(5,899)	106
Share based payment	140	173

	(3,622)	(2,274)

Finance income	(4)	-
Finance cost	1,218	276

Net cash used in operating activities	(2,408)	(1,998)

Cash flows from investing activities
Interest received	4	-
Advances to subsidiaries	(5,560)	(4,686)
Proceeds from disposal of subsidiary	7,032	-
Costs of disposal of subsidiary	(601)	-

Net cash flows generated/(used) in investing activities	875	(4,686)

Cash flows from financing activities
Interest paid	(514)	(211)
Repayment of loan	(1,728)	-
Receipt of loan	2,100	-
Cash proceeds from issue of shares	50	10,067
Share issue costs	-	(399)

Net cash (used by)/from financing activities	(92)	9,457

Net (decrease)/increase in cash and cash equivalents	(1,625)	2,773
Cash and cash equivalents at beginning of the year	3,677	904
Foreign exchange	(237)	-

Cash and cash equivalents at end of the year	1,815	3,677

Notes to the Financial Statements

1 Accounting policies

Reporting entity

Ascent Resources plc ('the Company') is a company domiciled and incorporated in England. The address of the Company's registered office is One America Square, Crosswall, London, EC3N 2SG. The consolidated financial statements of the Company for the year ended 31 December 2010 comprises the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates and joint ventures. The parent company financial statements present information about the Company as a separate entity and not about its Group.

The Company is admitted to AIM, a market of the London Stock Exchange.

The consolidated financial statements of the Group for the year ended 31 December 2010 are available from the Company's website at www.ascentresources.co.uk.

Statement of compliance

The Group's and Company's financial statements for the year ended 31 December 2010 were approved and authorised for issue by the Board of Directors on 2 June 2011 and the Statements of Financial Position were signed on behalf of the Board by Jeremy Eng.

Both the Parent Company financial statements and the Group financial statements give a true and fair view and have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ('Adopted IFRSs').

Basis of preparation

In publishing the Parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements.

Measurement Convention

The financial information has been prepared under the historical cost convention except for available-for-sale financial assets and financial instruments which are measured at fair value through profit and loss. The financial statements are presented in sterling and have been rounded to the nearest thousand (£'000s) except where otherwise indicated.

The principal accounting policies set out below have been consistently applied to all periods presented.

Going Concern

The financial statements of the Group are prepared on a going concern basis.

In common with many similar companies, the Group raises finance for its exploration and appraisal activities in discrete tranches. Ultimately, the Group must either raise additional tranches of funding and/or generate sufficient net cash flows from operations.

The Directors are of the opinion that the Group will have sufficient cash to fund its activities based on forecast cash flow information for a period in excess of twelve months from the date of approval of these financial statements. Management continues to monitor all working capital commitments and balances on a weekly basis and believe that they have secured appropriate levels of financing for the Group to continue to meet their liabilities and commitments as they fall due for at least the next twelve months.

In preparing base and sensitised cash flow forecasts the Directors have identified a number of cash receipts and cash payments where they have had to use their best judgement to make certain estimates.

The base case forecasts are prepared using estimates of planned production from producing fields, future gas prices and estimates of costs for planned exploration activities. On a number of projects certain assumptions have also been made with regard to working capital management and matching cash inflows from cash calls to cash outflows.

Accordingly, the Directors have also prepared sensitised forecasts to reflect the risk that production volumes and gas prices may be lower than estimated and exploration costs may be higher. These forecasts indicate that the Group can continue to operate within existing facilities for the foreseeable future. If the amount or timing of forecast inflows and outflows were to change adversely the Group may be required to reconsider discretionary exploration activity and/or seek additional bridging finance to meet any shortfall.

New and amended Standards effective for 31 December 2010 year-end adopted by the Group:

i) The following new standards and amendments to standards are mandatory for the first time for the Group for financial year beginning 1 January 2010. Except as noted, the implementation of these standards is not expected to have a material effect on the Group.

Standard	Effective date		Impact on initial application
IAS 27 - Amendment - Consolidated and Separate Financial Statements	1 Jul 2009		The amendment affects the acquisition of subsidiaries achieved in stages and disposals of interests. Amendment does not require the restatement of previous transactions.
IFRS 3 - Revised - Business Combinations	1 Jul 2009		The revision to IFRS 3 introduced a number of changes in accounting for acquisition costs and recognition of intangible assets in business combinations. The revised standard does not require the restatement of previous business combinations.
IAS 39 - Amendment - Financial Instruments: Recognition and Measurement: Eligible Hedged Items	1 Jul 2009		The amendment clarifies the principles for determining eligibility of hedged items.
IFRS 2 - Amendment - Group Cash-settled Share-based Payment Transactions	1 Jan 2010		The amendment clarifies that where a parent (or another group entity) has an obligation to make a cash-settled share-based payment to another group entity's employees or suppliers, the entity receiving the goods or services should account for the transaction as equity -settled.
Improvements to IFRSs (2009)		Generally 1 January 2010	The improvements in this Amendment clarify the requirements of IFRSs and eliminate inconsistencies within and between Standards. The improvements did not have any impact on the current or prior years' financial statements.

IFRIC 17 - Distributions of Non-cash Assets to Owners	1 Jan 2010	The interpretation provides guidance on how to measure distribution of assets other than cash.
IFRIC 18 - Transfer of Assets from Customers	1 Jan 2010	The interpretation clarifies the treatment of agreements in which an entity receives from a customer an item of property that it must use to provide the customer with on-going access to goods or services.
IFRIC 9/ IAS 39 - Amendment - Embedded Derivative	1 Jan 2010	The amendment clarifies the treatment of embedded derivatives in host contracts that are classified out of fair value through profit or loss.
IFRIC 16 - Hedges of a Net Investment in a Foreign Operation	1 Jan 2010	The interpretation provides guidance for application of hedge accounting in foreign operations.

No other IFRS issued and adopted but not yet effective are expected to have an impact on the Group's financial statements.

(ii) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements which have not been adopted early:

Standard	Description	Effective date
IAS 32	Amendment - Classification of Right Issues	1 Feb 2010
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments	1 Jul 2010
IFRS 1	Amendment - First Time Adoption of IFRS	1 Jul 2010
IAS 24	Revised - Related Party Disclosures	1 Jan 2011
IFRIC 14	Amendment - IAS 19 Limit on a defined benefit asset	1 Jan 2011
IFRS 7 *	Amendment - Transfer of financial assets	1 Jul 2011
IFRS 1 *	Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters	1 Jul 2011
	Improvements to IFRSs (2010) *	1 Jan 2011
IAS 12 *	Deferred Tax: Recovery of Underlying Assets	1 Jan 2012
IFRS 9 *	Financial instruments	1 Jan 2013
IFRS 10*	Consolidated Financial Statements	1 Jan 2013
IFRS 11*	Joint Arrangements	1 Jan 2013
IFRS 12*	Disclosure of Interests in Other Entities	1 Jan 2013
IFRS 13*	Fair Value Measurement	1 Jan 2013

The Group has not yet assessed the impact of IFRS 9. Except for the amended disclosure requirements of IAS 24 (the above revised standards), amendments and interpretations are not expected to materially affect the Group's reporting or reported numbers.

* Not yet endorsed by European Union.

Except for the adoption of IFRS 3 Revised, which would materially affect the presentation and financial impact of a business combination, the above standards, interpretations and amendments will not significantly affect the Group's results or financial position. The adoption of IFRS 9 will eventually replace IAS 39 in its entirety and consequently may have a material affect the presentation, classification, measurement and disclosures of the Group's financial instruments.

Items marked * had not yet been endorsed by the European Union at the date that these financial statements were approved and authorised for issue by the Board.

Critical accounting estimates and assumptions

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. The estimates and underlying assumptions are based on practical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary, if there are changes in the circumstances on which the estimate was based or as a result of new information. Such changes are recorded in the period in which the estimate is revised.

Critical judgements in applying the Group's accounting policies

The application of the Group's accounting policies may require management to make judgements, apart from those involving estimates, which can have a significant effect on the amounts amortised in the financial statements. Management judgement is particularly required when assessing the substance of transactions that have a complicated structure or legal form.

The key area where management judgement will need to be applied will be in the areas of:

(a) Oil and gas assets - exploration and evaluation costs are initially classified and held as intangible fixed assets rather than being expensed. The carrying value of intangible exploration and evaluation assets are then determined. Management considers these assets for impairment at least annually based on an estimation of the recoverability of the cost pool from future revenues of the related oil and gas reserves (see Note 13);

(b) Decommissioning provision - the cost of decommissioning is estimated by reference to operators and internal specialist staff (see Note 24);

(c) Convertible loan notes - management assessed the fair value of the liability component at issue and continue to review the appropriateness of the amortisation period annually (see Note 23);

(d) Basis of consolidation - management consider the Company's ability to exert financial and operational control, as well as the level of voting rights and representation on the Board as a basis of consolidation;

(e) Business combinations - management assess the fair value of the assets and liabilities acquired based on the assessment of operations and internal specialist staff.);

(f) Share-based payments - management assesses the fair value of each option using an appropriate pricing model based on option and share prices, volatility and the life of the option (see Note 34).

(g) Commercial reserves - Commercial reserves are proven and probable oil and gas reserves, calculated on an entitlement basis. Estimates of commercial reserves underpin the calculation of depletion and amortisation on a unit of e basis. Estimates of commercial reserves include estimates of the amount of oil and gas in place, assumptions about reservoir performance over the life of the field and assumptions about commercial factors which, in turn, will be affected by the future oil and gas price.

Basis of consolidation

The financial statements comprise the consolidation of the accounts of the Company and its subsidiary undertakings and incorporate the results of its share of jointly controlled entities using the proportional consolidation method of accounting. Consistent accounting policies have been used to prepare the consolidated financial statements.

Control is achieved where the Group has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The results of undertakings acquired or disposed of are consolidated from or to the date when control passes to or from the Group. For the Company's financial statements only, investments in subsidiary undertakings are stated at cost less provision for impairment.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from date that control commences until the date that control ceases.

Where necessary, adjustments are made to the results of subsidiaries to bring their accounting policies used into line with those used by the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests. Before this date, unfunded losses in such subsidiaries were attributed entirely to the Group. In accordance with the transitional requirements of IAS 27 (2008), the carrying value of non-controlling interests at the effective date of the amendment has not been restated.

Where the Group acquires an equity interest from non-controlling parties, the excess/(shortfall) between the consideration paid and the element of the reserve for non-controlling interest that has been acquired is taken directly to retained earnings. No gain or loss is recognised through profit or loss.

Business combinations

On acquisition, the assets, liabilities and contingent liabilities of subsidiaries are measured at their fair values at the date of acquisition. Any excess of cost of acquisition over net fair values of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the net fair values of the identifiable assets, liabilities and contingent liabilities acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition.

Non-current assets held for sale and disposal groups

Non-current assets are classified as held for sale when:

• they are available for immediate sale;

• management is committed to a plan to sell;

• it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;

• an active programme to locate a buyer has been initiated;

• the asset is being marketed at a reasonable price in relation to its fair value; and

• a sale is expected to complete within 12 months from date of classification.

Non-current assets are held for sale are measured at the lower of:

• their carrying amount immediately prior to being classified as held for sale in accordance with the Group's accounting policy; and

• fair value less costs to sell.

Following their classification as held for sale, non-current assets are not depreciated.

The results of operations during the year are included in the consolidated income statement up to the date of disposal.

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.

Discontinued operations are presented in the consolidated income statement (including the comparative period) as a single line which comprises the post tax loss of the discontinued operation. Operations are classified as discontinued when the decision is made to dispose of the operation by the Directors and the operations are actively marketed.

Interest in jointly controlled entities

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control.

Where a company undertakes its activities under a joint venture arrangement directly, the Group's share of jointly controlled assets and any liabilities incurred jointly with the other ventures are recognised in the financial statements of the relevant Group Company and classified according to their nature.

Similarly, income from the sale and use of the Group's share of the output of jointly controlled assets and its share of joint venture expenses, are recognised in the financial statements of the relevant Group Company and classified according to their nature.

Interests in Associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Associates are accounted for using the equity method (equity accounted investees) and are initially recognised at cost.

The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the income and expenses and other comprehensive income of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Increase in interests in jointly controlled entities

When an entity acquires an additional interest in jointly controlled entities the entity's portion of identifiable net assets of the jointly controlled entity acquired is measured at cost at the date of additional investment with any surplus accounted for as goodwill.

Oil and Gas Exploration Assets

The Group follows the 'successful efforts' method of accounting for exploration and evaluation costs. All licence/project acquisitions, exploration and appraisal costs incurred or acquired on the acquisition of a subsidiary, are accumulated in respect of each identifiable project area. These costs, which are classified as intangible fixed assets are only carried forward to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

Pre-licence/project costs are written off immediately. Other costs are also written off unless commercial reserves have been established or the determination process has not been completed. Thus accumulated cost in relation to an abandoned area are written off in full to the statement of comprehensive income in the year in which the decision to abandon the area is made.

When production commences the accumulated costs for the relevant area of interest are transferred from intangible fixed assets to tangible fixed assets as 'Developed oil and gas assets'.

Impairment of oil and gas exploration assets

Exploration/appraisal assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6 'Exploration for and Evaluation of Mineral Resources' and tested for impairment where such indicators exist. Any impairment arising is recognised in the Income Statement for the year.

Impairment reviews on development/producing assets are carried out on each cash-generating unit identified in accordance with IAS 36 'Impairment of Assets'. Ascent's cash generating units are those assets which generate largely independent cash flows and are normally, but not always, single development areas.

At each reporting date where there are indicators of impairment the net book value of the cash generating unit is compared with the measurable recoverable amount, which is defined as the higher of fair value less costs to sell or value in use. If the net book value is higher, then the difference is written off to the Income Statement as impairment. Forecast production profiles are determined on an asset-by-asset basis using appropriate petroleum engineering techniques.

Where there has been a charge for impairment in an earlier period, that charge will be reversed in a later period where there has been a change in circumstances to the extent that the discounted future net cash flows are higher than the net book value at the time. In reversing impairment losses, the carrying amount of the asset will be increased to the lower of its original carrying value or the carrying value that would have been determined (net of depletion) had no impairment loss been recognised in prior periods.

Impairment of developed oil and gas assets

When events or changes in circumstances indicate that the carrying amount of expenditure attributable to a successful well may not be recoverable from future net revenues from oil and gas reserves attributable to that well, a comparison between the net book value of the cost attributable to that well and the discounted future cash flows from that well is undertaken. To the extent that the carrying amount exceeds the recoverable amount, the cost attributable to that well is written down to its recoverable amount and charged as an impairment.

Depletion of developed oil and gas assets

Costs carried in each well are depreciated on a unit of production basis using the ratio of oil and gas production in the period to the estimated quantity of commercial proven and probable oil and gas reserves at the end of the period plus production in the period. Costs in the unit of production calculation include the net book value of capitalised costs plus estimated future development costs.

Changes in estimates of commercial proven and probable oil and gas reserves or future development costs are dealt with prospectively.

Decommissioning costs

Where a material liability for the removal of production facilities and site restoration at the end of the field life exists, a provision for decommissioning is recognised. The amount recognised is the net present value of estimated future expenditure determined in accordance with local conditions and requirements. An asset of an amount equivalent to the provision is also added to oil and gas exploration assets and depreciated on a unit of production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated asset.

Property, plant and equipment assets other than oil and gas assets

Property, plant and equipment other than oil and gas assets are stated at cost, less accumulated depreciation, and any provision for impairment. Depreciation is provided at rates estimated to write off the cost, less estimated residual value of each asset over its expected useful life as follows:

Computer and office equipment - 33% straight line.

Revenue recognition

Oil and gas sales revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for the Group's share of oil and gas supplied in the period.

Inventories

Inventories, including materials, equipment and inventories of gas and oil held for sale in the ordinary course of business, are stated at weighted average historical costs, less provision for deterioration and obsolescence or, if lower, net realisable value.

Foreign currency

The Group's strategy is focused on developing oil and gas projects across Europe funded by shareholder equity and other financial assets which are principally denominated in Sterling. The functional currency of the Company is Sterling.

Transactions in foreign currency are translated to the respective functional currency of the Group entity at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated to the functional currency at the rates prevailing on the balance sheet date. Exchange gains and losses on short-term foreign currency borrowings and deposits are included with net interest payable.

The assets and liabilities of foreign operations, including fair value adjustments arising on consolidation, are translated to Sterling at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Sterling at the average rate ruling during the period. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity. They are released into the income statement upon disposal.

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.

Exchange differences on all other transactions, except relevant foreign currency loans, are taken to operating loss.

Taxation

The tax expense represents the sum of the tax currently payable and any deferred tax.

The tax currently payable is based on the estimated taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using the expected tax rate applicable to annual earnings.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Equity-settled share-based payments

The cost of providing share-based payments to employees is charged to the income statement over the vesting period of the related share options or share allocations. The cost is based on the fair values of the options and shares allocated determined using the Binomial method. The value of the charge is adjusted to reflect expected and actual levels of vesting. Charges are not adjusted for market related conditions which are not achieved. Where equity instruments are granted to persons other than directors or employees, the consolidated income statement is charged with the fair value of any goods or services received.

Impairment of oil and gas exploration assets

Impairment of developed oil and gas assets

Depletion of developed oil and gas assets

Changes in estimates of commercial proven and probable oil and gas reserves or future development costs are dealt with prospectively.

Decommissioning costs

Property, plant and equipment assets other than oil and gas assets

Computer and office equipment - 33% straight line.

Revenue recognition

Oil and gas sales revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for the Group's share of oil and gas supplied in the period.

Inventories

Foreign currency

Exchange differences on all other transactions, except relevant foreign currency loans, are taken to operating loss.

Taxation

The tax expense represents the sum of the tax currently payable and any deferred tax.

Equity-settled share-based payments

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. 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 the risks specific to the liability.

Convertible loan notes

Upon issue of a convertible loan where the convertible option is at a fixed rate, the net proceeds received from the issue of convertible loan notes are split between a liability element and an equity component at the date of issue. The fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity and is not re-measured.

Subsequent to the initial requisition the liability component is measured at amortised cost using the effective interest method.

Non-derivative financial instruments

Non-derivative financial instruments comprise of investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Investments classified as held-for-trading are revalued at each balance sheet date. Trading investments are initially measured at fair value, including transaction costs. At subsequent reporting dates trading investments are measured at fair value or at cost where fair value is not readily ascertainable. Gains and losses arising from changes in fair value are recognised directly to the income statement.

Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due. The amount of any provision is recognised in the income statement.

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less.

Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.

Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Interest bearing bank loans, overdrafts and other loans are recorded at fair value less any directly attributable costs, with subsequent measurement at amortised cost. Finance costs are accounted for on an accruals basis in the income statement using the effective interest method.

Equity

Equity instruments issued by the Company are recorded at the proceeds received, net of any direct issue costs.

Investments and loans

Shares and loans in subsidiary undertakings are shown at cost. Provisions are made for any permanent diminution in value when the fair value of the assets is assessed as less than the carrying amount of the asset.

Pension costs

Contributions are made to the individual pension scheme of a director's choice and are charged to the Income Statement as they become payable.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Managing Director ("MD") and the Finance Director.

2	Segmental Analysis

The Group has five reportable segments, as described below, which are based on the geographical area that the Group activities are carried out. Each area is then subdivided into a number of different sites based on the locations of the wells. The operations and day to day running of the business is carried out on a local level and therefore managed separately. In addition, each site has different technological requirements based on their stage of development which are coordinated based on their geographical location. Each operating segment reports to the UK head office who evaluate the segments performance, decide how to allocate resources and make other operating decisions such as the purchase of material capital assets and services. Internal reports are generated and submitted to the Group's Managing Director for review on a monthly basis.

The operations of the Group as a whole are the exploration for, development and production of oil and gas reserves.

The five geographic reporting segments are made up as follows:

Italy - exploration and development

Hungary - production and exploration

Slovenia - exploration and development

Other Europe - exploration and development

(2010 the Netherlands, 2009 the Netherlands and Switzerland)

UK - head office

The cost of exploration and development works are carried out under shared licences with joint ventures and associated companies which are co-ordinated by the UK head office. Transfer prices between segments are set on an arm's length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and segment results include transfers between segments. Those transfers are eliminated on consolidation.

Information regarding the results of each reportable segment is included below. Initial performance is measured by the results that arise from the exploration and development works carried out. Once producing, other production performance measures are based on the production revenues achieved. This is reported to the Group's MD by the level of capitalised exploration costs and the results from studies carried out at the individual locations of the wells. The MD uses these measures to evaluate project viability within each operating segment.

2	Segmental Analysis
	2010	Italy	Hungary	Slovenia	Other Europe	UK	Inter-segment eliminations	Total
	External Revenue	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
	Revenue by location of asset:
	Hydrocarbons	-	1,821	-	-	-	-	1,821
	Management fees	-				205	(205)	-
	Operating costs:
	Cost of sales	-	(1,134)	-	-	(245)	-	(1,379)
	Administrative expenses	(536)	(24)	(88)	(56)	(1,890)	205	(2,389)
	Other income	165				=		165
	Material non-cash items:
	Impairment of exploration assets	(14)	(1,231)	(1,854)	-	-		(3,099)
	Impairment of investments	-	-	-	-	-	-	-
	Net finance costs	(52)	(187)	(4)	(1)	(857)	-	(1,101)
	Reportable segment (loss)/profit before tax from continuing operations	(437)	(755)	(1,946)	(57)	(2,787)	-	(5,982)
	Profit from discontinued operations	-	-	-	5,899	-	-	5,899
	Reportable segment (loss)/profit before taxation	(437)	(755)	(1,946)	5,842	(2,787)	-	(83)
	Taxation	-	(46)	-	-	-	-	(46)
	Reportable segment (loss)/profit after taxation	(437)	(801)	(1,946)	5,842	(2,787)	-	(129)
	Reportable segment assets
	Carrying value of exploration assets	3,251	1,965	4,069	251	-	-	9,536
	Additions to exploration assets	393	2,820	1,908	200	-	-	5,321
	Additions to decommissioning asset	208	22	201	-	-	-	431
	Total plant and equipment	-	2,042	-	-	3		2,045
	Total non-current assets	3,251	4,007	4,069	251	3		11,581
	Other assets	5,192	2,181	635	1,022	29,900	(34,877)	4,053
	Consolidated total assets	8,443	6,188	4,704	1,273	29,903	(34,877)	15,634
	Reportable segmental liabilities
	Trade payables	(1,003)	(24)	(278)	-	(350)	-	(1,655)
	External loan balances	(11)	-	-	-	(2,742)	-	(2,753)
	Inter-group borrowings	(15,478)	(8,707)	(6,356)	(1,586)	(2,729)	34,856	-
	Other liabilities	(363)	(328)	(372)	(61)	(129)	-	(1,253)
	Consolidated total liabilities	(16,855)	(9,059)	(7,006)	(1,647)	(5,950)	34,856	(5,661)

2	Segmental Analysis
	2009	Italy	Hungary	Slovenia	Other Europe	UK	Inter-segment eliminations	Total
	External Revenue	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's	£ 000's
	Revenue by location of asset:
	Hydrocarbons	-	898	-	-	-	-	898
	Management fees	-	-	-	-	299	(299)	-
	Operating costs:
	Cost of sales	(287)	(284)	(226)	(15)	(305)	-	(1,117)
	Administrative expenses	-	(141)	(28)	(5)	(1,602)	299	(1,477)
	Material non-cash items:
	Impairment of exploration assets	(7,810)	(622)	-	(96)	-	-	(8,528)
	Net finance costs	(106)	(141)	(145)	(1)	63	-	(330)
	Reportable segment loss before tax from continuing operations	(8,203)	(290)	(399)	(117)	(1,545)		(10,554)
	Loss from discontinued operations	(26)			(42)			(68)
	Reportable segment loss before and after taxation	(8,229)	(290)	(399)	(159)	(1,545)	-	(10,622)
	Reportable segment assets
	Carrying value of exploration assets	2,730	3,142	3,954	591	-	-	10,417
	Additions to exploration	5,400	1,681	3,709	27	-	-	10,817
	Externally funded	(4,584)	-	-	-	-	-	(4,584)
	Funded by Group	816	1,681	3,709	27	-	-	6,233
	Additions to decommissioning asset	-	120		-	-	-	120
	Total plant and equipment	-	109	-	-	49	-	158
	Total non-current assets	2,730	3,251	3,954	591	49	-	10,575
	Investment in associates	1,191	-	-	-	-	-	1,191
	Other assets	3,286	(80)	1,331	12	22,357	(18,663)	8,243
	Consolidated total assets	7,207	3,171	5,285	603	22,406	(18,663)	20,009
	Reportable segmental liabilities
	Trade payables	(2,522)	(523)	(2,807)	(378)	-	-	(6,230)
	External loan balances	(1,405)	-	-	-	(3,037)	-	(4,442)
	Inter-group borrowings	(9,137)	(3,571)	(2,829)	(916)	(2,210)	18,663	-
	Other liabilities	(124)	(95)	-	-	(304)	-	(523)
	Consolidated total liabilities	(13,188)	(4,189)	(5,636)	(1,294)	(5,551)	18,663	(11,195)

3	Cost of sales	Year ended 31 December 2010	Year ended 31 December 2009
		£ 000's	£ 000's

	Operating Costs relating directly to producing assets	402	173
	Depletion Depreciation and amortisation of producing assets	732	122
	Other directly incurred costs	245	822

		1,379	1,117

4	Administrative Expenses	Year ended 31 December 2010	Year ended 31 December 2009
		£ 000's	£ 000's

	Depreciation of plant and equipment	-	3
	Employee Costs (see note 5)	1,183	801
	Consulting charges	128	178
	Revaluation of quoted securities	-	(18)
	Other office costs	1,078	513

		2,389	1,477

The following is Included within Administrative Expenses:	Year ended 31 December 2010	Year ended 31 December 2009
	£ 000's	£ 000's
Auditors' remuneration

Current year audit of financial statements	53	-
Audit of subsidiaries pursuant to legislation	5
Amounts paid to previous auditor:
Prior year audit of financial statements	-	100
Audit of subsidiaries pursuant to legislation	-	15

	58	115

5	Employees and Directors

	(a) Employees
	The average number of persons employed by the Company and Group, including Executive Directors, was:
		Year ended 31 December 2010	Year ended 31 December 2009
		Number	Number

	Management and technical	11	9


		£ 000's	£ 000's

	Wages and salaries	903	625
	Social security costs	107	91
	Pension costs	49	78
	Share based payments (note 34)	123	30

		1,182	824

During the year two employees were awarded 250,000 options each, to subscribe for ordinary shares in the Company, at a price of 7.313p per share. Details of Directors' share option grants are detailed below. The Company offers all staff the opportunity to enter into a stakeholder pension scheme.

(b) Directors' and key management remuneration	Year ended 31 December 2010	Year ended 31 December 2009
	£ 000's	£ 000's

Fees and emoluments	562	449
Social security costs	50	35
Pension costs	49	78
Share based payments (note 34)	121	28

	782	590

Pension costs relate to payments made to a director's own personal pension plan.

2010

Director	Salary/fees	Bonus	Pension	Taxable Benefits	2010 Total
	£	£	£	£	£
Executive Directors
J Eng	175,511	-	49,880	18,738	244,129
S Cunningham⁴	175,000	30,000	-	-	205,000
Non-executive Directors
J Kenny	30,000	-	-	-	30,000
C Davies¹	9,115	-	-	-	9,115
M D J Groom²	61,930	-	-	-	61,930
J V L Legg²	49,578	-	-	-	49,578
N S J Moore	30,000	-	-	-	30,000
S Richardson Brown³	-	-	-	-	-
Total	531,134	30,000	49,880	18,738	629,752

2009

Director	Salary/fees	Bonus	Pension	Taxable Benefits	2010 Total
	£	£	£	£	£
Executive Directors
J Eng	160,324	-	78,000	18,738	257,062
S Cunningham⁴	183,750	-	-	-	183,750
Non-executive Directors
J Kenny	13,000	-	-	-	13,000
M D J Groom²	65,550	-	-	-	65,550
J V L Legg²	12,000	-	-	-	12,000
N S J Moore	14,000	-	-	-	14,000
Total	448,624	-	78,000	18,738	545,362

(d) Directors' Incentive Share Options

2010

Director	As at 1 January 2010	Granted/ (Lapsed)	As at 31 December 2010	Date Granted	Share Price at Grant	Exercise Price	Exercise Period

S Cunningham	1,000,000	-	1,000,000	21.09.08	4.75p	4.75p	21.09.09 - 21.09.13
	1,000,000	-	1,000,000	01.10.09	7.70p	7.63p	01.10.10 - 01.10.14
J V L Legg²	500,000	(500,000)	-	28.06.05	5.5p	5p	28.06.06 - 28.06.10
	500,000	(500,000)	-	28.12.05	10.5p	10.5p	28.12.06 - 28.12.10
N S J Moore	500,000	-	500,000	28.06.06	9p	9.5p	28.06.07 - 28.06.11
	-	500,000	500,000	17.11.10	5.25p	7.313p	17.11.10 - 17.11.15
	-	500,000	500,000	17.11.10	5.25p	15p	17.11.10 - 17.11.15
M D J Groom²	1,000,000	(1,000,000)	-	28.06.05	5.5p	5p	28.06.06 - 28.06.10
J Eng	10,000,000	(10,000,000)	-	10.04.05	5p	5p	10.04.06 - 10.04.10
	-	5,000,000	5,000,000	17.11.10	5.25p	7.313p	17.11.10 - 17.11.15
	-	5,000,000	5,000,000	17.11.10	5.25p	15p	17.11.10 - 17.11.15
C Davies¹	-	500,000	500,000	17.11.10	5.25p	7.313p	17.11.10 - 17.11.15
	-	500,000	500,000	17.11.10	5.25p	15p	17.11.10 - 17.11.15
S Richardson Brown³	-	1,000,000	1,000,000	1.11.10	4.875p	4.875p	01.11.11 - 01.11.15
	-	1,000,000	1,000,000	1.11.10	4.875p	7.313p	01.11.12 - 01.11.15

2009

Director	As at 1 January 2009	Granted/ (Lapsed)	As at 31 December 2009	Date Granted	Share Price at Grant	Exercise Price	Exercise Period

S Cunningham⁴	1,000,000	-	1,000,000	21.09.08	4.75p	4.75p	21.09.09 - 21.09.13
	-	1,000,000	1,000,000	01.10.09	7.70p	7.63p	01.10.10 - 01.10.14
J V L Legg	1,000,000	(1,000,000)	-	23.09.05	13.5p	40p	23.09.06 - 23.09.09
	500,000	-	500,000	28.06.05	5.5p	5p	28.06.06 - 28.06.10
	500,000	-	500,000	28.12.05	10.5p	10.5p	28.12.06 - 28.12.10
N S J Moore	500,000	-	500,000	28.06.06	9p	9.5p	28.06.07 - 28.06.11
M D J Groom	1,000,000	-	1,000,000	28.06.05	5.5p	5p	28.06.06 - 28.06.10
	1,000,000	(1,000,000)	-	23.09.05	13.5p	40p	23.09.06 - 23.09.09
J Eng	10,000,000	-	10,000,000	10.04.05	5p	5p	10.04.06 - 10.04.10
	2,500,000	(2,500,000)	-	23.09.05	13.5p	40p	23.09.06 - 23.09.09

^Notes

¹Dr Davies appointed on 14^th September 2010

²Mr Groom and Mr Legg resigned on the 14^th September 2010

³Mr Richardson Brown appointed on 1^st November 2010

⁴Mr Cunningham resigned on 4^th January 2011

6	Finance income and costs recognised in loss	Year ended 31 December 2010	Year ended 31 December 2009
		£ 000's	£ 000's
	Financial income

	Income on bank deposits	13	36
	Foreign exchange movements realised	8	17

		21	53


	Financial cost

	Interest payable on borrowings	(375)	(393)
	Foreign exchange movements realised	(752)	(117)

		(1,127)	(510)

7	Profit on sale of investments	Year ended 31 December 2010	Year ended 31 December 2009
		£ 000's	£ 000's
	Sale of current asset investments
	Shares held in Leni Gas and Oil plc	5	127


		5	127

8	Income tax expense	Year ended 31 December 2010	Year ended 31 December 2009
		£ 000's	£ 000's

	Current tax expense	46	-

	Total tax expense for the year	46	-

The difference between the total tax expense shown above and the amount calculated by applying the standard rate of UK corporation tax to the loss before tax is as follows:

Reconciliation of effective tax rate:	Year ended 31 December 2010	Year ended 31 December 2009
	£ 000's	£ 000's

Loss for the year	(83)	(10,622)


Income tax using the Company's domestic tax rate at 28% (2009: 28%)	(2351)	(2,976)

Effects of:
Current tax	-	-

Current year losses for which no asset recognised	1,564	713
Change in unrecognised temporary differences	37	2,023
Effect of tax rates in foreign jurisdictions	250	390
Other non-taxable items	2	(74)
Other non-deductible expenses	(1,747)	(22)
Utilisation of losses brought forward	-	(8)
Capital(losses)/gains	(37)	(46)

Total tax expense for the year	46	-

Discontinued operations

The profit on sale of investments relates to the sale of Ascent's 100% owned Swiss subsidiaries, PEOS AG, SEAG and Borona holdings Limited to eCORP Europe International Ltd., for a cash consideration of €8 million, together with various farm-in options on certain potentially successful discoveries. The cash consideration consists of €5 million payable immediately, with €3 million payable on completion of agreed commercial conditions which were met during the year.

The loss on sale of equity accounted investees relates to the sale of Ascent's 45% interest in Italian drilling contractor Perazzoli Drilling srl for a consideration of £1.19 million in addition to the return of a £441,000 deposit. The Company's original interest was purchased to provide priority access, and ensure optimal contract terms for drilling services. These advantages will be retained through a five year service alliance with Perazzoli, which provides for a 30% discount on €10 million of drilling services to Ascent and first call on uncommitted drilling units.

	Profit on sale of subsidiary	£ 000's

	Sale proceeds	7,032

	Less pre-disposal carrying values
	Exploration costs	(539)
	Liabilities	7
	Less costs of disposal	(601)

	Total gain on disposal of discontinued operations	5,899

	Loss on sale of equity accounted investees	31 December 2010
		£ 000's

	Sale proceeds	1,191

	Less carrying value of investment	(1,191)

	Loss on disposal	-

Result of discontinued operations	31 December 2010	31 December 2009
	£ 000's	£000's

Switzerland
Loss for the year	-	(42)
Gain from selling discontinued operations after tax	5,899
Perazzoli Drilling
Share of profit of equity accounted investees	-	274
Impairment of equity accounted investee	-	(300)

Gain from discontinued operations	5,899	232

The cash flow statement includes the following amounts relating to discontinued operations

Result of discontinued operations	31 December 2010	31 December 2009
	£ 000's	£000's

Operating activities	-	232
Investing activities	6,431	(281)

Net cash (used in) discontinued operations	6,431	(49)

10	Loss per share	31 December 2010	31 December 2009
	Loss	£ 000's	£ 000's
	(Loss)/profit for the purposes of basic earnings per share being net loss attributable to equity shareholders
	From continuing operations	(6,028)	(10,554)
	From discontinued operations	5,899	(68)
	From total operations	(129)	(10,622)

	Profit/(Loss) for the purposes of diluted earnings per share being adjusted net loss attributable to equity shareholders
	From continuing operations	(6,013)	(10,554)
	From discontinued operations	5,899	(68)
	From total operations	(114)	(10,622)


	Number of shares
		Number	Number
	Weighted average number of ordinary shares for the purposes of basic earnings per share	513,383,470	341,433,823

	Weighted average number of ordinary shares for the purposes of diluted earnings per share	518,634,913	341,433,823


The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares. Dilutive shares arise from share options and the convertible loan notes held by the Company. A calculation is done to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to outstanding share options, warrants and convertible bonds. Further details of the dilutive effect of potentially issuable shares are details in the notes 5 and 34.

11	Property, Plant and Equipment - Group
		Computer and equipment	Developed oil and gas assets	Total
		£ 000's	£'000's	£ 000's
	Cost
	At 1 January 2009	67	786	853
	Additions	-	263	263
	Effects of movements in exchange rates	(3)	(83)	(86)
		______	______	______

	At 31 December 2009	64	966	1,030
		______	______	______

	At 1 January 2010	64	966	1,030
	Transfer from exploration assets		2,437	2,437
	Additions	-	296	296
	Effects of movements in exchange rates	(2)	(111)	(113)
		______	______	______

	At 31 December 2010	62	3,588	3,650
		______	______	______

	At 1 January 2009	12	575	587
	Depreciation for the year	3	122	125
	Effects of movements in exchange rates	-	(73)	(73)
		______	______	______

	At 31 December 2009	15	624	639
		______	______	______

	Depreciation
	At 1 January 2010	15	624	639
	Depreciation for the year	1	952	953
	Effects of movements in exchange rates	-	13	13
		______	______	______

	At 31 December 2010	16	1,589	1,605
		______	______	______

	Carrying amounts
	At 31 December 2010	46	1,999	2,045
		______	______	______

	At 31 December 2009	49	109	158
		______	______	______

12 Property, Plant and Equipment - Company
			Plant and equipment
Cost			£ 000's

At 1 January 2009 and 31 December 2009			11
Additions			1
			______

At 31 December 2010			12
			______
Depreciation

At 1 January 2009			5
Depreciation for the year			3
			______
At 31 December 2009			8
			______
At 1 January 2010			8
Depreciation for the year			2
			______
At 31 December 2010			10
			______
Carrying amounts

At 31 December 2010			2
			______
At 31 December 2009			3
			______

13		Exploration and decommissioning costs - Group
		Group	Italy		Hungary	Slovenia		Other Europe	Total
			£ 000's		£ 000's	£ 000's		£ 000's	£ 000's

		Cost
		At 1 January 2009 (as restated)	12,469		4,507	274		693	17,943
		Additions	816		1,681	3,709		27	6,233
		Additions to decommissioning asset	-		120	-		-	120
		Effects of movements in exchange rates	(856)		(136)	(29)		(33)	(1,054)
		At 31 December 2009*	12,429		6,172	3,954		687	23,242

		At 1 January 2010	12,429		6,172	3,954		687	23,242
		Additions	393		2,798	1,908		200	5,299
		Disposals			(261)				(261)
		Assets disposed of with subsidiaries	-		-	-		(539)	(539)
		Transfer to property, plant and equipment	-		(2,437)	-		-	(2,437)
		Impairment	-		-	(1,853)		-	(1,853)
		Additions to decommissioning asset	208		22	201		-	431
		Effects of movements in exchange rates	(411)		(290)	(141)		11	(831)
		At 31 December 2010	12,619		6,004	4,069		342	23,051
	Impairment
	At 1 January 2009 (as restated)		1,889	2,376		-	-			4,265
	Charge for the year		7,810	700		-	96			8,606
	Effects of movements in exchange rates		-	(46)		-	-			(46)
	At 31 December 2009*		9,699	3,030		-	96			12,825

	At 1 January 2010		9,699	3,030		-	96			12,825
	Charge for the year		14	1,231		-	-			1,245
	Disposal		-	(74)		-	-			(74)
	Effects of movements in exchange rates		(345)	(132)		-	(4)			(481)
	At 31 December 2010		9,368	4,055		-	92			13,515

	Carrying value

	At 31 December 2010	3,251	1,949	4,069	267	9,536

	At 31 December 2009*	2,730	3,142	3,954	591	10,417

*Certain balances have been reclassified, see note 35 for further detail

'Other Europe' includes the Netherlands and Switzerland.

For the purposes of impairment testing the intangible oil and gas assets are allocated to the Groups cash generating units, which represent the lowest level within the Group at which the intangible oil and gas assets are measured for internal management purposes, which is not higher than the Group's operating segments as reported in note 2.

The amounts for intangible exploration assets represent costs incurred on active exploration projects. These amounts are written off to the income statement as an impairment expense unless commercial reserves are established or the determination process is not completed and there are no indications of impairment. The outcome of ongoing exploration, and therefore whether the carrying value of intangible exploration assets will ultimately be recovered, is inherently uncertain.

The impairment charge for the year in Hungary of £1,231,000 relates to the abandonment of the Bajcsa Gasfield redevelopment (£342,000) and the plugging and abandonment of the PEN-106 well at the Penészlek development (£889,000). Both impairments were due to no recoverable oil and gas reserves being found. Impairment reviews were performed on the other Hungarian well sites with all costs deemed fully recoverable and therefore no impairment charge has been recognised in relation to these assets.

The impairment charge in the year in Slovenia relates to the abandonment of our East Slovenian exploration project. No recoverable and oil gas reserves were found, so the carrying value of the asset was written off in full.

The impairment charge in the year in Italy of £14,000 relates to the impairment of historic costs related to general seismic activity in Italy. These costs related to interests on which work is no longer being undertaken and were therefore written off.

The transfer in the year to tangible assets relates to the PEN-101 and PEN-105 wells in Hungary. Both wells went on production in the year and have therefore been transferred in accordance with Ascent's accounting policies.

14	Investment in subsidiaries and jointly controlled entities - Company	Shares in subsidiary undertakings
		£ 000's

	At 1 January 2010	1,842
	Additions	245
	Impairment in year	(58)
	Sold in year	(59)

	At 31 December 2010	1,970

During 2010 the Company divested its interests in PEOS AG, SEAG and Borona Holdings Limited as part of the Swiss disposal. This is explained in more detail in note 9 discontinued operations.


Name of company	Principal activity	Country of incorporation	% of share capital held 2010	% of share capital held 2009

Nemmoco Slovenia Corporation	Oil and Gas exploration	British Virgin Islands	100%	100%
Borona Holdings Ltd	Oil and Gas exploration	Cyprus	0%	100%
Ascent Production Ltd	Holding company	England	100%	100%
Ascent Drilling Ltd	Holding company	England	100%	50%
Ascent Hungary Ltd	Holding company	England	100%	100%
PetroHungaria kft (Joint Venture)	Oil and Gas exploration	Hungary	48.8%	45.23%
Pelsolaj kft (joint venture)	Oil and Gas exploration	Hungary	60%	0%
ZalaGasCo kft (joint venture)	Oil and Gas exploration	Hungary	77.45%	77.45%
Ascent Resources Italia srl	Oil and Gas exploration	Italy	100%	100%
Ascent Netherlands BV	Oil and Gas exploration	Netherlands	100%	100%
PEOS AG	Oil and Gas exploration	Switzerland	0%	100%
SEAG (Joint Venture)	Oil and Gas exploration	Switzerland	0%	90%

PEOS AG, SEAG and Borona Holdings Limited were disposed in the year as part of Ascent's disposal of its Swiss operations. See note 9 for further details.

Ascent's holding in Petrohungaria increased from 45.23% to 48.8% following Leni Gas' exit from the project. Their interest in the project was apportioned between the remaining partners in the project.

Ascent's holding in Ascent Drilling Ltd increased from 50% to 100% in the year following the acquisition of Malcolm Groom's holding in the company for the issue of 15,529,981 shares. For more details see Note 32, related party transactions.

60% of the share capital in Pelsolaj kft was acquired in the year as part of the set up procedure for Ascent's new joint venture in Hungary.

The legal form of PetroHungaria kft, Pelsolaj kft and ZalaGasCo kft are limited liability companies of what is in substance joint venture agreements between the Group and its partners.

15	Other financial assets - Group and Company
		2010 £ 000's	2009 £ 000's

	Held to maturity financial assets	-	888

The 2009 balance of £888,000 relates to an interest bearing deposit account held in Italy used as collateral for an external loan balance held with Cassa Di Risparmio de Cen to Bank. This deposit was used to pay off a large proportion of the loan balance in 2010.

16	Cash and cash equivalents - Group	2010	2009
		£ 000's	£ 000's

	Cash and cash equivalents	1,247	4,630
	Restricted cash	801	-

	Total cash and cash equivalents	2,048	4,630


	Cash and cash equivalents - Company	2010	2009
		£ 000's	£ 000's

	Cash and cash equivalents	1,014	3,677
	Restricted cash	801	-

	Total cash and cash equivalents	1,815	3,677

The 2010 balance of £801,000 held in Ascent's Group and Company financial statements relates to a letter of credit deposited by Ascent in relation to our drilling of the Pg-11 well in Slovenia. This cash was held in escrow to guarantee payment of our drilling contractor's invoices.

17	Inventories - Group	2010	2009
		£ 000's	£ 000's

	Equipment and spares	341	431

18		Interest in equity-accounted investee
		The Company had disposed of its holding in Perazzoli Drilling srl ('Perazzoli') during the year, which it acquired through a subsidiary company Ascent Drilling Limited, in December 2007. For further details see Note 9. Details of the investment as at 31 December 2010 were as follows:
	Name of company		Principal activity	Country of incorporation	% of share capital held (2010)	% of share capital held (2009)

	Perazzoli Drilling srl		Drilling rig owner and contractor	Italy	0%	45%

	2010	2009
	£'000	£'000
At 1 January	1,191	1,300
Share of profit for the year	-	274
Impairment provision	-	(300)
Net exchange differences	-	(83)
Disposal (see note 9 for further details)	(1,191)	-

At 31 December	-	1,191

As at 31 December 2009 the Group held its indirect interest in Perazzoli drilling via its 50% owned interest in Ascent Drilling Limited. The Group had historically controlled the interest in Perazzoli via this 50% interest, therefore Ascent Drillings entire stake in Perazolli was consolidated within the 2009 Group financial statements, with a non-controlling interest being recognised in respect of the 50% interest in Ascent Drilling held by then Director Mr Malcolm Groom.

During 2010 to facilitate the disposal of Perazolli Driling srl, the Group acquired Mr Malcolm Groom's stake in the company and also settled the debt owed to Mr Groom by Ascent Drilling Limited in exchange for share consideration of 15,529,981 Ascent shares at 5.105p (market value at the date of the transaction). The acquisition of the non-controlling interest has been treated as a transaction within equity in accordance with the Groups accounting policy.

Thereafter, the 45% interest in Perazzoli held by the Group was sold for a consideration of €1.35 million (approximately £1.2million) to a major shareholder of Perazzoli. The Company's original stake in Perazolli was purchased to provide priority access, and to ensure optimal contract terms for drilling services. These advantages will be retained through a five year service alliance with Perazzoli, which provides for a 30% discount on €10 million of drilling services to Ascent and first call on uncommitted drilling units. This transaction was approved at an Extraordinary General Meeting of the Company on 12 March 2010.

19	Trading investments - Group	2010	2009*
		£ 000's	£ 000's

	At 1 January	46	145
	Revaluation of fixed asset investment	-	18
	Disposals	(46)	(117)

	At 31 December	-	46

	The Group has not designated any financial assets as financial assets at fair value through profit and loss other than those classified as held for trading. The above trading investments represents shares in listed equity securities that present the Group with opportunity for return through dividend income and trading gains. The fair values of all equity securities are based on quoted market prices.

* Certain balances have been reclassified, see Note 35 for details.

20	Trade and other receivables - Group	2010	2009*
		£ 000's	£ 000's

	Trade receivables	471	39
	VAT recoverable	867	1,277
	Other receivables	203	451
	Prepayments & accrued income	123	481

		1,664	2,248


	*Certain balances have been reclassified, see note 35 for detail
	Trade and other receivables, cash and trading investments represent the maximum credit exposure to the Group and Company. The aging of unimpaired trade receivables were:

	2010	2009
	£ 000's	£ 000's

Not past due	471	-
Past due 1-30 days	-	-
Past due 31-120 days	-	39

Total	471	39

There was no bad debt provision as at 31 December 2010 (2009: £nil)

21	Trade and other receivables - Company
		2010	2009
		£ 000's	£ 000's

	VAT recoverable	7	8
	Prepayments	16	9

		23	17

22	Deferred tax
There is deferred tax charge of £37,000 recognised in the accounts for the Group, but none for company in the year (2009: £nil for group and company). Details of net deferred tax assets not recognised are set out below.

	2010	2009
	£ 000's	£ 000's
Group

Total tax losses	(16,457)	(11,744)

Unrecorded deferred tax asset	4,937	3,523

Company

Total tax losses	(4,830)	(3,376)

Unrecorded deferred tax asset	1,449	1,012

Deferred tax assets have not been recognised in respect of unprovided deferred tax items until it is probable that future taxable profits will be available to utilise these temporary differences.

23	Borrowings	2010	2009
	Group	£ 000's	£ 000's
	Current
	Convertible loan note	2,742	2,481
	Bank loan	11	554
	Other loans (see note 32)	-	556

		2,753	3,591


	Non-current
	Convertible loan note	-	-
	Bank loan	-	851
	Other loans (see note 32)	-	-

		-	851

	Group non-current borrowings are repayable as follows:
	In the first year	-	-
	In the second year	-	554
	In the third to fifth year	-	297

		-	851

	Company

	Convertible loan note	2,742	2,481

The Directors consider that the carrying amount of the bank and other loans approximates to their fair value. The weighted average interest rate of the bank loan is 5.2% (2009 and 2008: 5.2%).

Bank loan

The Group has a loan outstanding with Cassa Di Risparmio de Cento Bank. The Loan expires on 5 June 2012. Interest is calculated by reference to the three month Euribor rate plus a margin of 1%.

Convertible loan note

	Group and Company	Group and Company
	2010	2009
	£'000	£'000
Fair value of consideration received	2,100	2,500
Equity component	(50)	(84)
Liability component on initial recognition	2,050	2,416

Liability brought forward	2,481	-
Liability on initial recognition	2,050	2,416
Interest expense	43	65
Repayment	(1,748)	-
Deferral of set up costs	(84)	-
Liability at 31 December	2,742	2,481

a) On 14 November 2007 the Company issued 2,500,000 £1 loan notes at par to finance further working capital requirements of the Group. The loan note was extinguished on 13 November 2010 and the amount partially repaid.

b) On 19 November 2010, the Company secured a one year loan facility of £2.1m with YA Global Master SPV Ltd to contribute to the financing of the Pg-11 evaluation well on the Petišovci-Lovászi project area. The one year loan facility was drawn down following completion of certain conditions precedent, including (inter alia) provision of security over Ascent's interest in its Hungarian subsidiary. The loan carries an interest rate of 6%. per annum, payment of which will be covered from cashflow from Ascent's existing production. During the term of the facility, Yorkville has the right to convert the outstanding loan balance into shares in Ascent at prices ranging from 8.4p-10.5p. The loan is secured by a charge over Ascent's assets.

24	Provisions - Group Decommissioning
		£ 000's

	At 1 January 2009	32
	Provisions made during the year	120

	At 31 December 2009	152


	At 1 January 2010	152
	Provisions made during the year	442


	At 31 December 2010	594

	The amount provided for decommissioning costs represents the Group's share of site restoration costs for the Frosinone and Fiume Arrone projects in Italy, the Penēzlek field in Hungary and the Petišovci field in Slovenia. The most recent estimate is that the year-end provision will become payable between 2011 and 2012.

25	Trade and other payables - Group	2010	2009
		£ 000's	£ 000's

	Trade payables	1,655	6,230
	Tax and social security payable	92	17
	Other creditors	148	115
	Accruals and deferred income	419	239

		2,314	6,601

Trade and other receivables, cash and trading investments represent the maximum credit exposure to the Group and Company. The aging of unimpaired trade receivables were:
		2010	2009
		£ 000's	£ 000's

Not past due		743	5,274
Past due greater than 120 days		912	946

Total		1,655	6,230

26	Trade and other payables - Company	2010	2009
		£ 000's	£ 000's

	Trade payables	350	377
	Tax and social security payable	15	16
	Accruals and deferred income	139	245

		504	638

At 31 December 2010 and 31 December 2009, all Company trade payables were classed as not past due.

The Directors consider that the carrying amount of trade and other payables approximates to their fair value. As at 31 December 2010, there was tax and social security payable on share based payments of £Nil (2009: £8,000).

27	Called up share capital	2010	2009
		£ 000's	£ 000's

	Authorised

	10,000,000,000 ordinary shares of 0.10p each	10,000	10,000


	Allotted, called up and fully paid

	519,780,299 (2009: 500,132,042 ) ordinary shares of 0.10p each	520	500

Reserve description and purpose

The following describes the nature and purpose of each reserve within owners' equity:

· Share capital: Amount subscribed for share capital at nominal value.

· Equity reserve: Amount of proceeds on issue of convertible debt relating to the equity component i.e. option to convert the debt into share capital.

· Share premium: Amounts subscribed for share capital in excess of nominal value less costs of shares associated with share issues.

· Share based payment reserve: Value of share options granted and calculated with reference to a binomial pricing model (see note 34). When options lapse or are exercised, amounts are transferred from this account to retained earnings.

· Translation reserve: Exchange movements arising on the retranslation of net assets of operation into the presentation currency.

· Retained earnings: Cumulative net gains and losses recognised in consolidated income.

Shares issued during the year

The GEM Facility

On 13 May 2009 the Company entered into an agreement with GEM Global Yield Fund ('GEM') whereby GEM made available to the Company an equity line of credit of up to £ 5 million ('the Facility'). This was amended to £10 million in October 2009. The purpose of the facility is to provide additional working capital for the Company and the Group.

Under the terms of the facility, the Company can make draw downs of cash, at times of its choosing, by issuing new ordinary shares to GEM. The facility is available for three years from 13 May 2009. The Company may issue a subscription notice requesting GEM to subscribe for a number of shares up to a maximum of 5 times the average daily trading volume in the 15 trading days immediately preceding the date of the subscription notice. GEM has the right to buy between 50% and 130% of the subscribed shares and can buy up to 200% with Company consent. The shares are priced at a 9% discount to the average closing mid price of the shares over the 15 trading days immediately following the issue of the subscription notice.

No shares were issued in the year in relation to this facility.

Convertible loan note

On 19 November 2010, the Company secured a one year loan facility of £2.1m with YA Global Master SPV Ltd to contribute to the financing of the Pg-11 evaluation well on the Petišovci- Lovászi project area. A finance fee for setting up the loan note was settled via the issue of 3,118,276 Ascent shares.

Sale of Perazzoli Drilling

During the year, the group disposed its interest in Perazzoli. The Company issued 15,529,981 Ascent shares at 5.105p in return for the 50% interest in Ascent Drilling Limited held by then Director Mr Malcolm Groom and the settlement of the debt owed to Mr Groom by Ascent Drilling Limited.

Conversion of options

During the year, Jeremy Eng, Managing Director of Ascent, exercised options over 1,000,000 ordinary shares of 0.1p each in the Company at a price of 5.0p per share.

Other matters

The SEDA facility

On 19 November 2010 the Company entered into an agreement with YA Global Master SPV Ltd ('Yorkville'), an investment fund managed by Yorkville Advisors LLC. The purpose of the agreement is to provide additional working capital for the Company and the Group.

Under the terms of the agreement, Ascent may draw down on funds over a period of up to three years in exchange for the issue of new shares in the Company. The shares issued by the Company will be at a 5% discount to the prevailing market price during the ten day pricing period of a draw down. The Company may also set a minimum price for each draw down. The maximum advance that may be requested is 200% of the average daily trading volume of Ascent shares multiplied by the volume weighted average price of such shares for each of the ten trading days prior to the draw down request.

3,118,276 shares were issued in the year under this facility to cover initial financing fees in relation to setting up the convertible loan note.

28		Operating lease arrangements
		At the balance sheet date, the Group had no outstanding commitments under non-cancellable operating leases (2009: £nil).

29	Exploration expenditure commitments
	In order to maintain an interest in the oil and gas permits in which the Group is involved, the Group is committed to meet the conditions under which the permits were granted and the obligations of any joint operating agreements. The timing and the amount of exploration expenditure commitments and obligations of the Group are subject to the work programmes required as per the permit commitments. This may vary significantly from the forecast programmes based upon the results of the work performed. Drilling results in any of the projects may also result in variation of the forecast programmes and resultant expenditure. Such activity may lead to accelerated or decreased expenditure. It is the Group's policy to seek joint operating partners at an early stage to reduce its commitments. At 31 December 2010 the Group had exploration and expenditure commitments of £0.5 million (2009 - £1.1m).
30	Contingent liabilities

	At the balance sheet date there were no contingent liabilities (2009: £nil) in respect of litigation, overseas taxes and guarantees.

31	Related party transactions

	(a) Group Companies
	Transactions and inter-company balances between the Company and its subsidiaries have been eliminated on consolidation. Intercompany balances are unsecured, have no fixed term and are interest free. A summary of transactions in the year and the year end balances follows.

32 Related party transactions (continued)

(a) Group Companies (continued) Transactions in the year	Cash advances 2010	Services provided by Ascent Resources plc 2010	Cash advances 2009	Services provided by Ascent Resources plc 2009
	£ 000's	£ 000's	£ 000's	£ 000's
Subsidiaries
Ascent Production Ltd	422	(453)	(244)	53
PetroHungaria kft	622	83	547	28
Ascent Italia srl	886	113	1,622	187
SEAG Borona JV	-	(150)	-	15
Ascent Drilling Ltd	529	4	(3)	6
PEOS AG	(47)	(327)	(2)	309
Ascent Gabon Ltd	-	-	66	(70)
Ascent Netherlands BV	28	83	(18)	69
Ascent Resources Slovenia	2,768	341	2,071	134
Ascent Hungary Limited	-	913	-	182
ZalaGasCo kft	(573)	(4)	290	(160)
Pelsolaj kft	-	187	-	-


	4,635	790	4,329	753

(b) Group Companies (continued) Balances at the year end	Cash advances 2010	Trading balance 2010	Cash advances 2009	Trading balance 2009
	£ 000's	£ 000's	£ 000's	£ 000's
Subsidiaries
Ascent Production Ltd	178	192	(244)	646
PetroHungaria kft	3,157	1,119	2,535	1,036
Ascent Italia srl	9,591	1,007	8,705	894
SEAG Borona JV			-	150
Ascent Drilling Ltd	1,085	35	556	31
PEOS AG			47	327
Ascent Netherlands BV	(530)	1,033	(558)	950
Ascent Resources Slovenia	5,087	852	2,318	511
Ascent Hungary Ltd		1,095	-	182
ZalaGasCo kft	-	-	573	4
Pelsolaj kft	-	187

	18,568	5,520	13,932	4,731


	(c) Directors
	Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the Group. In the opinion of the Board, the Group's key management are the Directors of Ascent Resources plc. Information regarding their compensation is given in Note 5.

	MDJ Groom
	2010 During the year, the group disposed its interest in Perazzoli. The Company issued 15,529,981 Ascent shares at 5.105p in return for the 50% interest in Ascent Drilling Limited held by then Director Mr Malcolm Groom and the settlement of the debt owed to Mr Groom by the Ascent Drilling Limited. Thereafter, the 45% interest in Perazzoli held by the Group was sold for a consideration of €1.35 million (approximately £1.2million) to a major shareholder of Perazzoli. The Company's original interest was purchased to provide priority access, and ensure optimal contract terms for drilling services. These advantages will be retained through a five year service alliance with Perazzoli, which provides for a 30% discount on €10 million of drilling services to Ascent and first call on uncommitted drilling units. This transaction was approved at an Extraordinary General Meeting of the Company on 12 March 2010. 2009 Malcolm Groom owned a 50% shareholding in Ascent Drilling Limited and at the year-end date had an outstanding loan balance of £556,000 (2008 - £597,000) (€625,000) due from Ascent Drilling Limited. The loan was unsecured with no fixed term and is interest free, which was reported in the consolidated financial statements within borrowings. Ascent Drilling Limited is treated as a subsidiary company. At 31 December 2009, the Company held an investment in Perazzoli Drilling srl, representing 22.5% of the share capital. Ascent Drilling Limited made a profit of £268,000 in the year to 31 December 2009 (2008:£88,000).
	(d) Other related party transactions
	Perazzoli Drilling srl
	During the prior year Ascent Resources Italia srl purchased drilling rig services totalling approximately £1 million (2008: £nil) from the Group associate company Perazzoli Drilling srl ('Perazzoli'). At the year end there was an outstanding balance payable by Ascent Resources Italia srl to Perazzoli of approximately £1 million (2008: £nil). During the year ended 31 December 2009, Ascent Resources Italia srl made prepayments valued at £478,000 towards the purchase costs of a drilling rig.

33	Post balance sheet events
	Petišovci Project Since the year end, the Company completed the transaction announced with EnQuest PLC on the 21^st December 2010 to acquire an additional 48.75% interest in the Petišovci Project in Slovenia. As compensation, EnQuest was issued on 11^th February 2011 with 159,903,958 new Ordinary Shares of 0.1p each as well as a nil cost option over 29,686,000 new Ordinary Shares of 0.1p each, exercisable subject to certain criteria related to the successful development of the project having been met. Additionally following the year end, the Company also completed the first phase of its operations of Pg-11, its initial appraisal well in the Project that spudded on the 22^nd December 2010. The primary objectives of the well were satisfied with gas confirmed by logs in all of the six Middle Miocene Badenian reservoirs. In addition, gas and condensate were sampled from the Lower Miocene Karpatian reservoir and gas flowed for the first time from the shallowest 'A' sands. The Company spudded the second phase of drilling of Pg-11A on 11^th April 2011 and at the time of writing was part way through the drilling and testing process. Fund Raising It was announced on 17^th March 2011 that the Company had raised £17 million before expenses by way of a placing of 340,000,000 new Ordinary Shares of 0.1p each at a price of 5 pence per share. The Directors were pleased with the support received from high quality UK institutional investors who took up the vast majority of the funds raised. The funds will primarily be used to advance the Company's flagship Petišovci/Lovási/Ujfalu project, through the drilling and completion of the Pg-11A sidetrack, the Pg-10 and Ujfalu-III wells, and capitalise on the areas P50 estimated gas in place of 412 Bcf. The balance of the proceeds was raised in order to pay off existing debt and other working capital requirements as they become due.
34	Share based payments

	The Company has provided the Directors, certain employees and institutional investors with share options and warrants ('options'). Options are exercisable at a price equal to the closing market price of the Company's shares on the date of grant. The exercisable period varies and can be up to four years after which time the option lapses.
	Details of the share options outstanding during the year are as follows:
		2010	2010
		Number of share options	Weighted average exercise price

	Outstanding at 1 January 2010	45,975,000	9.93p
	Granted during the year	15,500,000	10.38p
	Expired during the year	(15,975,000)	12.22p
	Exercised during the year	(1,000,000)	5p


	Outstanding at 31 December 2010	44,500,000	9.38p


	Exercisable at 31 December 2010	28,500,000	8.88p


	2009	2009
	Number of share options	Weighted average exercise price

Outstanding at 1 January 2009	25,875,000	16.38p
Granted during the year	24,600,000	8.65p
Expired during the year	(4,500,000)	40.0p


Outstanding at 31 December 2009	45,975,000	9.93p


Exercisable at 31 December 2009	43,275,000	10.17p

The fair value of share options issued in the year was 3.4p (2009: 6.2p)

The charge for the year was £140,000 (2009: £1,534,000)


The value of the options is measured by the use of a binomial pricing model. The inputs into the binomial model were as follows:
	2010	2009

Share price at grant date	4.875p - 19p	4 - 11p
Exercise price	4.875p - 30p	4.75 - 30p
Volatility	78.7% - 167.6%	78.7% - 167.6%
Expected life	3 - 5 years	3 - 5 years
Risk free rate	0.5% - 5.75%	1 - 4.3%
Expected dividend yield	0%	0%

Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous 3 years. The expected life is the expiry period of the options from the date of issue. Options outstanding at 31 December 2010 have an exercise price in the range of 4.75p and 15p and a weighted average contractual life of 3.46 years.

35	Prior year reclassification
	An amount of £679,000 has been reclassified in the prior year statement of financial position between other receivables and exploration costs. The £679,000 related to oil and gas costs which were treated as prepayments as at 31 December 2009. In order to make the balances more comparable with the current year the reclassification was required. There is no impact on the results of the prior year or the net assets at 31 December 2009.
		1 January 2009 as previously reported	Movement for the year as previously reported	Prior year reclassification	31 December 2009 as reclassified
		£000	£000	£000	£000
	Exploration and decommissioning costs	13,146	(3,408)	679	10,417
	Trade and other receivables	2,627	300	(679)	2,248

36	Financial risk management

	Group and Company
	The Group's financial liabilities comprise bank loans, convertible loan notes, other loans and trade payables. The Group has various financial assets being trade receivables, investments held for trading and cash, which arise directly from its operations. The main risks arising from the Group's financial instruments are credit risk, liquidity risk, and interest risk. The risk management policies employed by the Group to manage these risks are discussed below:
a)	Credit risk
	Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group does not have any significant credit risk exposure. The Group's sole customer is the Hungarian state oil and gas company. The Group makes allowances for impairment of receivables where there is an identified event which, based on previous experience, is evidence of a reduction in the recoverability of cash flows. Included in the Group receivables is VAT recoverable from the state authority in Italy of £0.9 million (2009; £1.3million). The Company considers the residual balance will be fully recovered in 2011. The credit risk on liquid funds (cash) is considered to be limited because the counterparties are financial institutions with high and good credit ratings assigned by international credit-rating agencies in the UK. The carrying amount of financial assets recorded in the financial statements represents the fair value of the Group's exposure to credit risk.
b)	Currency risk

The Group's operations are predominantly in Italy, Slovenia and Hungary. Foreign exchange risk arises from translating the Euro earnings, assets and liabilities of the Ascent Resources Italia SpA subsidiary and PetroHungaria kft joint venture into sterling.The Group manages exposures that arise from receipt of monies in a non-functional currency by matching receipts and payments in the same currency.

We often raise funds for future development through the issue of new shares in Sterling. These funds are predominantly to pay for our exploration costs abroad in Euros. As such any Sterling balances held are at risk of currency fluctuations and may prove to be insufficient to meet our planned Euro requirements if there is a devaluation.

Foreign currency sensitivity analysis

The Group is mainly exposed to the currency of the European Union (Euro) and the currency of Hungary (Forint).

The Group operates internationally and is exposed to currency risk on sales, purchases, borrowings and cash and cash equivalents that are denominated in a currency other than Pounds Sterling. The currencies giving rise to this are the Euro, the United States Dollar and the Hungarian Forint.

Foreign exchange risk arises from transactions and recognised assets and liabilities.

The Group does not use foreign exchange contracts to hedge its currency risk.

Sensitivity analysis

The following table details the Group's sensitivity to a 10% increase and decrease in the sterling against the stated currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis comprises cash and cash equivalents held at the balance sheet date. A positive number below indicates an increase in profit and other equity where the sterling weakens 10% against the relevant currency.

Foreign currency sensitivity analysis

The Group is mainly exposed to the currency of the European Union (Euro) and the currency of Hungary (Forint).

Foreign exchange risk arises from transactions and recognised assets and liabilities.

The Group does not use foreign exchange contracts to hedge its currency risk.

Sensitivity analysis

Group	Euro currency change		Forint Currency change		US Dollar Currency change
	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2010	Year ended 31 December 2009
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Profit or loss
10% strengthening of Sterling	996	58	38	24	-	-
10% weakening of Sterling	(1,217)	(58)	(46)	(24)	-	-
Equity
10% strengthening of Sterling	(599)	(51)	205	120	(21)	-
10% weakening of Sterling	732	51	(251)	(120)	21	-

Company	Euro currency change		Forint Currency change		US Dollar Currency change
	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2010	Year ended 31 December 2009
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Profit or loss
10% strengthening of Sterling	-	-	-	-	-	-
10% weakening of Sterling	-	-	-	-	-	-
Equity
10% strengthening of Sterling	(1,595)	(1,321)	-	(385)	(21)	-
10% weakening of Sterling	1,949	1,321	-	385	21	-

Fair values

All financial assets and liabilities are shown in the balance sheet at their amortised costs, which approximates to underlying fair value. Financial instruments listed above valued at fair value are assessed as tier 3. Tier 3 means inputs for the asset or liability that are not based on observable market data.

Interest bearing loans and borrowings

The fair value is estimated at the present value of future cash flows, discounted at market rates. Fair value is not significantly different from carrying value.

Trade and other receivables/payables

All trade and other receivables and payables have a remaining life of less than one year. The ageing profile of the Group and Company receivable and payables are shown in notes 20, 21, 25 and 26.

c)	Price risk
	The Group does not operate a price-risk policy in relation to its investment in liquid securities, given that it only holds one such investment.


d)	Interest rate risk
	The Group's exposure to interest rate risk arises from cash and cash equivalents and borrowings. The impact of rate sensitivity analyses is immaterial to the Group's results. At 31 December 2010 the Group had a restricted Euro bond deposit at a sterling equivalent of: £Nil (2009: £888,000). At 31 December 2010, the Group had a loan of £753,000 (2009: £2,500,000) at a fixed rate of 8.5%, another loan of £2,100,000 at a fixed rate of 6% and a Euro loan at sterling equivalent of £11,000 (2009: £1.4million) at variable rate of EURIBOR plus one per cent (2009: EURIBOR + 1%).

					2010		2009
			Weighted Average Floating Interest Rate		Amount		Amount
	Financial assets (sterling equivalent)		%		£		£
	Cash in Euro		0.10%		1,864,000		869,000
	Cash in United States Dollar		0.00%		158,000		-
	Cash in Sterling		0.05%		7,000		3,646,000
	Cash in Hungarian Forints		0.15%		19,000		115,000


e)	Liquidity risk
	The Group manages the liquidity requirements by use of both short and long-term cash flow projections, supplemented by maintaining debt financing plans and active portfolio management. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group closely monitors and manages its liquidity risk. Cash forecasts are regularly produced and sensitivities run for different scenarios (see note 1). The availability of £6.4 million of credit under the SEDA facility with YA Global Master SPV Ltd and the finalisation of the placing in March 2011, together with the results in the Group's forecasts and projections show significant capacity and financial flexibility for the 12 months from the date of this Annual Report and Accounts.
				Weighted Average Floating Interest Rate		Amount
		Financial assets (sterling equivalent)		%		£
		Cash in Euro		0.10%		1,864,000
		Cash in United States Dollar		0.00%		158,000
		Cash in Sterling		0.05%		7,000
		Cash in Hungarian Forints		0.15%		19,000


e)		Liquidity risk
		The Group manages the liquidity requirements by use of both short and long-term cash flow projections, supplemented by maintaining debt financing plans and active portfolio management. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group closely monitors and manages its liquidity risk. Cash forecasts are regularly produced and sensitivities run for different scenarios (see note 1). The availability of £6.4 million of credit under the SEDA facility with YA Global Master SPV Ltd and the finalisation of the placing in March 2011, together with the results in the Group's forecasts and projections show significant capacity and financial flexibility for the 12 months from the date of this Annual Report and Accounts.

Capital management

The Directors recognise that this is an area in which they may need to develop specific policies should the Group become exposed to wider financial risks as the business develops.

Set in the foregoing is a comparison of carrying amounts and fair values of the Group's and the Company's financial instruments:

Group	Carrying amount	Fair value	Carrying amount	Fair value
	Year ended 31 December 2010	Year ended 31 December 2010	Year ended 31 December 2009	Year ended 31 December 2009
	£'000s	£'000s	£'000s	£'000s
Financial assets
Cash and cash equivalents	2,048	2,048	4,630	4,630
Restricted cash	-	-	888	888
Trading investments	-	-	46	46
Trade receivables	471	471	39	39
Financial liabilities
Trade Creditors	1,655	1,655	6,230	6,230
Convertible loans at fixed rate	2,742	2,853	2,481	2,500
Bank loan at variable rate	-	-	1,405	1,405
Other non-interest bearing loans	-	-	556	556

Company	Carrying amount	Fair value	Carrying amount	Fair value
	£'000s	£'000s	£'000s	£'000s
Financial assets
Cash and cash equivalent	1,815	1,815	3,677	3,677
Financial liabilities
Trade Creditors	350	350	377	377
Convertible loan at fixed rate	2,742	2,853	2,481	2,500

At 31 December 2010, the Group and the Company had a loan of £0.75 million (2009: £2.50 million) at a fixed rate of 8.5%, another pound denominated loan of £2.10m (2009: Nil) at a fixed rate of 6% and a third Euro loan at sterling equivalent of £0.01 million (2009: £1.4 million) at variable rate of EURIBOR plus one per cent (2009: EURIBOR + 1%).

At 31 December 2010 the Group also had restricted cash comprising Euro deposits at a sterling equivalent of: Nil (2009: £888,000).

** ENDS * *

For further information visit www.ascentresources.co.uk or contact:

Jeremy Eng	Ascent Resources plc	Tel: 020 7251 4905
Scott Richardson Brown
Sarah Wharry	finnCap Ltd (NOMAD & Broker)	Tel: 020 7600 1658
Henrik Persson
Hugo de Salis	St Brides Media & Finance Ltd	Tel: 020 7236 1177

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR SSSFUFFFSESM

Companies

Ascent Resources (AST)

Friday, 20th December 2024

COMPANIES COVERED:

SRP NMT RPI

Serco extends Thursday’s gains as upbeat mood prevails and Raspberry Pi also advances off the back of stake building news, but Neometals under pressure as it plans cancellation of AIM listing to focus on ASX.

Full Archive

UK 100

Latest directors dealings

2 days ago The Renewables Infrastructure Group Limited
2 days ago The Renewables Infrastructure Group Limited
2 days ago Smurfit Westrock (DI)
2 days ago Menhaden Resource Efficiency
2 days ago BP

All directors dealings today