ALO.L Regulatory News (ALO)

29 May 2007 10:12

Cue Energy Plc29 May 2007 29 May 2007 Cue Energy plc ("Cue" or "the Company") Final Results For the year ended 31 December 2006 Chairman's Statement Cue's ordinary shares were admitted to trading on AIM on 3 August 2006,following a successful placing which raised £3 million before expenses. TheCompany was established for the purpose of making investments in the energysector, which may include exploration, development or production projects in oiland gas, coal, uranium and renewable energy. Since listing, the Directors have actively pursued the Company strategy byreviewing a number of investment opportunities, which is ongoing. The Directorsbelieve that the current market conditions provide good opportunities forinvestment in situations which are, in their opinion, undervalued or capable ofshowing an above average return. During this process the Directors have taken the advice of industry specificconsultants in reviewing and concluding the validity of the investmentopportunities, their current and future usefulness, market potential andpotential revenue streams. On 3 January 2007, the Company entered into an agreement with Oreion AustraliaEnergy Pty Ltd ("Oreion") to provide funding for the evaluation and exploitationof Polymer Electrolyte Membrane (PEM) Technology for fuel cells andelectrolysers, as contemplated under Oreion's commercialisation agreement withthe Commonwealth Scientific and Industrial Research Organisation of Australia("CSIRO"). Up to £500,000 sterling has been made available to Oreion as part ofthe working capital facility. To date Oreion had drawn down £200,000 sterling. Under the terms of the facility agreement, funds provided will be used toadvance PEM Technology, file patent applications to protect the intellectualproperty and commence the commercialisation planning of various applications. Operational and Financial Review During the course of the period the Company received investment income of£27,678 and incurred administrative expenses of £253,360 resulting in a loss forthe period of £225,682. Martin Thomas Chairman 29 May 2007 INCOME STATEMENTfor the year ended 31 December 2006 Year Ended Year Ended Note 31 Dec 2006 31 Dec 2005 £ £ Administrative expenses (253,360) - Operating loss 2 (253,360) - Finance Revenue 3 27,678 - Loss on ordinary activities before taxation (225,682) - Income tax expense 4 - - Loss for the financial year & retained loss (225,682) -attributable to members of the Company Loss per share expressed in pence per share - Basic 7 (0.22)p - There are no recognised gains or losses other than the loss for the year asshown above BALANCE SHEETfor the year ended 31 December 2006 Year Ended Year Ended Note 31 Dec 2006 31 Dec 2005 £ £AssetsNon current assetsTangible assets 8 3,341 -Total non current assets 3,341 - Current assetsTrade and other receivables 9 43,643 -Cash and cash equivalents 14 2,831,452 -Total current assets 2,875,095 - Total assets 2,878,436 - LiabilitiesCurrent liabilitiesTrade and other payables 10 12,095 -Total liabilities 12,095 - Net Assets 2,866,341 Shareholders EquityShare Capital 11 161,146 -Share premium 2,755,170 -Share Based Payment Reserve 175,707 -Retained Losses (225,682) -Total equity 2,866,341 - These financial statements were approved by the board of Directors on 29 May 2007. STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2006 Called up Share Share based Retained Total equity share premium payment earnings capital reserve reserve £ £ £ £ £As at 1 January 2006 - - - - -Share capital issued 161,146 3,044,624 - - 3,205,770Share issue costs - (161,996) - - (161,996)Share based payments - - 48,249 - 48,249Share based expenses - (127,458) 127,458 - -Loss for the year - - - (225,682) (225,682)As at 31 December 2006 161,146 2,755,170 175,707 (225,682) 2,866,341 CASH FLOW STATEMENTfor the year ended 31 December 2006 Year Ended Year Ended Note 31 Dec 2006 31 Dec 2005 £ £ Cash flows from operating activities Operating loss (225,682) - Depreciation 276 - Share options expensed 48,249 - Increase in VAT due (22,609) - Increase in prepayments (20,601) - Increase in other receivables (433) Increase in operating creditors 4,095 - Increase in accruals 8,000 - Net cash used in operating activities (208,705) - Cash flows from investing activitiesPayments to acquire tangible assets (3,617) -Net cash used in investing activities (3,617) - Cash inflows from financing activitiesProceeds from issue of shares 3,205,770 -Shares issue costs (289,454) -Share based payments 127,458Net cash flow from financing activities 3,043,774 - Net increase in cash and cash equivalents 2,831,452 - Cash and cash equivalents at 1 January - - Cash and cash equivalents at 31 December 14 2,831,452 - STATEMENT OF ACCOUNTING POLICIESfor the year ended 31 December 2006 1. Principal accounting policies a) Authorisation of financial statements and statement of compliance with IFRS The financial statements of Cue Energy plc for the year ended 31 December 2006were authorised for issue by the board on 29 May 2007 and the balance sheetssigned on the board's behalf by Ms Jade Styants and Mr Toby Howell. Cue Energyplc is a public limited Company incorporated and domiciled in England and Wales.The Company's ordinary shares are traded on the Alternative Investment Marketoperated by the London Stock Exchange. The Company's financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS). The principal accountingpolicies adopted by the group are set out below. b) Basis of preparation The financial statements have been prepared on the historical cost basis, exceptfor the measurement to fair value of assets and financial instruments asdescribed in the accounting policies below, and on a going concern basis. The financial report is presented in Sterling and all values are in pounds (£)unless otherwise stated. c) Revenue The Company had no revenue during the year ended 31 December 2006. d) Finance revenue Finance revenue is recognised as interest accrues. e) Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and inhand and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consistof cash and cash equivalents as defined above, net of outstanding bankoverdrafts. f) Income tax and deferred taxation Current tax assets and liabilities for the current and prior periods aremeasured at the amount expected to be recovered from or paid to the taxationauthorities. The tax rates and tax laws used to compute the amount are thosethat are enacted or substantially enacted by the balance sheet date. No deferred tax asset has been recognised because there is insufficient evidenceof the timing of suitable future profits against which they can be recovered. g) Foreign currencies Both the functional and presentational currency of Cue Energy plc is sterling(£). Transactions in foreign currencies are recorded at the rate ruling at thedate of the transaction. Monetary assets and liabilities denominated in foreigncurrencies are translated at the rate of exchange ruling at the balance sheetdate. All differences are taken to the income statement. h) Significant accounting judgements, estimates and assumptions Share based payment transactionThe Company measures the cost of equity-settled transactions with employees byreference to the fair value of the equity instruments at the date at which theywere granted. The fair value is determined using a Black-Scholes model. i) Tangible assets - Plant and equipment Plant and equipment is stated at cost less accumulated depreciation and anyaccumulated impairment losses. Depreciation is provided on all tangible assets to write off the cost lessestimated residual value of each asset over its expected useful economic life ona straight line basis at the following annual rates: Computer equipment - 40% All assets are subject to annual impairment reviews. j) Trade and other receivables Trade receivables, which generally have 30 day terms, are recognised and carriedat original invoice amount less any allowance for any uncollectible amounts. k) Trade and other payables Trade payables and other payables are carried at amortised cost and representliabilities for goods and services provided to the Company prior to the end ofthe financial year that are unpaid and arise when the Company becomes obliged tomake future payments in respect of the purchase of these goods and services. l) Financial Instruments The Company's financial instruments comprise cash and items arising directlyfrom its operation such as trade debtors and trade creditors. There is no material difference between the book value and fair value of theCompany's cash. m) Share-based payment transactions (i) Equity settled transactions The Company provides benefits to employees (including senior executives) of theCompany in the form of share-based payments, whereby employees render servicesin exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured byreference to the fair value of the equity instruments at the date at which theyare granted. The fair value is determined using a Black-Scholes model. In valuing equity-settled transactions, no account is taken of any performanceconditions, other than conditions linked to the price of the shares of CueEnergy Plc (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with acorresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevantemployees become fully entitled to the award (the vesting period). The cumulative expense recognised for equity-settled transactions at eachreporting date until vesting date reflects (i) the extent to which the vestingperiod has expired and (ii) the Company's best estimate of the number of equityinstruments that will ultimately vest. No adjustment is made for the likelihoodof market performance conditions being met as the effect of these conditions isincluded in the determination of fair value at grant date. The Income Statementcharge or credit for a period represents the movement in cumulative expenserecognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except forawards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense isrecognised as if the terms had not been modified. In addition, an expense isrecognised for any modification that increases the total fair value of theshare-based payment arrangement, or is otherwise beneficial to the employee, asmeasured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested onthe date of cancellation, and any expense not yet recognised for the award isrecognised immediately. However, if a new award is substituted for the cancelledaward and designated as a replacement award on the date that it is granted, thecancelled and new award are treated as if they were a modification of theoriginal award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additionalshare dilution in the computation of earnings per share (see Note 7). n) Earnings per share Basic earnings per share is calculated as net profit attributable to members ofthe Company, adjusted to exclude any costs of servicing equity (other thandividends) and preference share dividends, divided by the weighted averagenumber of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to membersof the Company, adjusted for: • costs of servicing equity (other than dividends) and preference share dividends; • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2006 1. Turnover & Segmental analysis The Company had no turnover during the year. All of the Company's losses, and net assets arose in the United Kingdom. 2. Operating loss The operating loss is stated after charging: Year Ended Year Ended 31 Dec 2006 31 Dec 2005 £ £ Auditors' remuneration - audit services 8,000 -Directors' emoluments 33,992 -Depreciation 276 -Share options expenses 48,249 - Auditors' remuneration for non-audit services provided during the periodamounting to £5,875 relates to the provision of an accountant's report for thepurpose of the Company's AIM admission document and was charged to the sharepremium reserve, as part of share issue expenses 3. Finance Revenue Year Ended Year Ended 31 Dec 2006 31 Dec 2005 £ £ Bank interest receivable 27,678 - 4. Taxation Year Ended Year Ended 31 Dec 2006 31 Dec 2005 £ £Current year taxationUK corporation tax at 30% on profits for the period - - Factors affecting the tax charge for the periodLoss on ordinary activities before tax (225,682) - Loss on ordinary activities at the UK standard rate of 30% (67,705) - Effect of tax benefit of loss carried forward 67,705 - Current period taxation - - 5. Staff Costs The Company had no full time employees during the year. The directors providedprofessional services as required on a part-time basis. 6. Directors' remuneration Year Ended Year Ended 31 Dec 2006 31 Dec 2005 £ £Non Executive Directors:Chris Lambert 7,405 -Malcolm James 7,405 -Jade Styants 5,905 -Toby Howell 13,277 - Total 33,992 - No pension benefits are provided for any Director. Directors' share options On Admission to AIM, the Company granted Directors options to subscribe for thefollowing numbers of new ordinary shares, exercisable at 2p per share in theperiod 3 August 2006 to 2 August 2011. The fair value of these options has beenfully expensed during the year, based on a Black-Scholes model, assuming a riskfree rate of 4.6 % and expected volatility of 70% for the period of trading.There are no performance measures attached to the options. Number of optionsChristopher Lambert 1,151,040Malcolm James 1,151,040Jade Styants 1,151,040Toby Howell 2,302,079 7. Loss per share Loss for the period £225,682Weighted average number of ordinary shares of 0.07p in issue 104,645,967Loss per share - basic (0.22) p Weighted average number of ordinary shares of 0.07p in issue inclusive of 113,316,557outstanding options 8. Tangible assets Computer Equipment £CostAt 1 January 2006 -Additions 3,617At 31 December 2006 3,617 DepreciationAt 1 January 2006 -Charge for the year 276At 31 December 2006 276 Net Book ValueAt 31 December 2006 3,341 9. Trade and other receivables Year Ended Year EndedCurrent trade and other receivables 31 Dec 2006 31 Dec 2005 £ £Prepayments 20,601 -Other receiveables 433Vat due 22,609 - 43,643 - 10. Trade and other payables Year Ended Year EndedCurrent trade and other payables 31 Dec 2006 31 Dec 2005 £ £Trade Creditors 4,095 -Accruals 8,000 - 12,095 - 11. Share Capital Year Ended 31 Dec 2006 £Authorised20,000,000,000 ordinary shares of 0.07 p each 14,000,000 Issued and fully paid230,207,901 ordinary shares of 0.07 p each 161,146 The Company was incorporated on 17 December 2004 with an authorised sharecapital of £2,000,000 divided into 200,000,000 ordinary shares of 0.1p each, ofwhich 2 shares were issued fully paid to the subscribers to the Memorandum ofAssociation of the Company. On 6 April 2006, 12 ordinary shares of 1p each were issued at par. At the Company's first annual general meeting on 7 April 2006 the authorisedshare capital of the Company was increased from £2,000,000 to £14,000,000 bycreation of 1,200,000,000 new ordinary shares of 1p each ranking equally withexisting shareholders of 1p each. The authorised share capital was sub-dividedfrom 1,400,000,000 ordinary shares of 1p each into 140,000,000,000 ordinaryshares of 0.01p each and further consolidated from 140,000,000,000 ordinaryshares of 0.01p each into 20,000,000,000 ordinary shares of 0.07p each. Following the re-organisation, 200 ordinary shares were transferred by theinitial subscribers to Black Ivory Limited on 18 May 2006. On 21 June 2006, the Company issued and allotted 65,681,065 ordinary shares tocertain founder subscribers, fully paid, at par value. On 22 June 2006, 14,526,636 ordinary shares were issued and fully paid at 1.1peach On 3 August 2006, 150,000,000 ordinary shares were placed at a price of 2p pershare. Share options and warrantsUnder IFRS 2 'Share Based Payments', the Company determines the fair value ofoptions issued to Directors and Employees as remuneration and recognises theamount as an expense in the income statement with a corresponding increase inequity. Name Date Granted/ Vested Number Exercise Price Expiry Date Fair Value at Grant Date (pence) (pence)Chris Lambert 3 August 2006 1,151,040 2 2 August 2011 0.0084Malcolm James 3 August 2006 1,151,040 2 2 August 2011 0.0084Jade Styants 3 August 2006 1,151,040 2 2 August 2011 0.0084Toby Howell 3 August 2006 2,302,079 2 2 August 2011 0.0084Totals 5,755,199 The fair value of the employee options vested during the year was £48,249. Theassessed fair value at grant date is determined using the Black-Scholes Modelthat takes into account the exercise price, the term of the option, the shareprice at grant date, the expected price volatility of the underlying share, theexpected dividend yield and the risk-free interest rate for the term of theoption. The following table lists the inputs to the model used for the year ended 31 December 2006: Dividend Yield (%) -Expected Volatility (%) 70Risk-free interest rate (%) 4.60Share price at grant date (£) 0.02 The expected volatility reflects the assumption that the historical volatility is indicativeof future trends, which may, not necessarily be the actual outcome. 12. Commitments As at 31 December 2006, the Company had no material capital commitments. 13. Related party transactions Claridge House Services Limited (CHS) was a company set up for the purpose ofadministering the serviced office for a number of companies, including CueEnergy Plc. The directors of CHS are Jade Styants, Toby Howell and MalcolmJames, with Greg Kuenzel being the beneficial owner. The Company has enteredinto an agreement with CHS for the provision of services and accommodation inrelation to Suite 4, 32 Davies Street, London W1K 4ND, for a monthly fee of£5,000 plus VAT payable 3 months in advance. During the year CHS invoiced theCompany £35,200 in respect of serviced office costs. 14. Analysis of changes in net funds £Balance at 1 January 2006 -Increase in the year 2,831,452 Balance at 31 December 2006 2,831,452 15. Financial instruments The Company uses financial instruments comprising cash, liquid resources anddebtors/ creditors that arise from its operations. The Company's exposure to currency and liquidity risk is not consideredsignificant. The Company's cash balances are held in pound sterling. To date the Company hasrelied upon equity funding to finance operations. The Directors are confidentthat adequate cash resources exist to finance operations to commercialexploitation but controls over expenditure are carefully managed. 16. Post balance sheet events Cue Energy plc has entered into an agreement with Oreion Australia Energy PtyLtd (formerly GTL Corporation Pty Ltd) ("Oreion") whereby up to a maximum of£500,000 sterling has been made available to Oreion as part of a working capitalfacility. Interest is payable @ 9.1% on the outstanding balances. To date Oreionhad drawn down £200,000 sterling. The loan is repayable to Cue Energy Plc by 31July 2007 or will be converted into shares in Oreion on the repayment date. **ENDS** For further information please visit www.cueenergy.com or contact the following: Jade Styants/Toby Howell Cue Energy plc Tel: +44 (0)20 7932 2427 Edward Hutton HB Corporate Tel: +44 (0) 20 7510 8600 Rachel Kane HB Corporate Tel: +44 (0) 20 7510 8600 Hugo de Salis St Brides Media & Finance Tel: +44 (0) 20 7242 4477 This information is provided by RNS The company news service from the London Stock Exchange