SEA.L Regulatory News (SEA)

27 Jun 2007 07:01

Ramco Energy PLC27 June 2007 Ramco Energy plc Preliminary Results for the year ended 31 December 2006 Operations: • Creation and AIM listing of Lansdowne Oil & Gas plc ("Lansdowne"), incorporating the Company's Irish portfolio; Ramco retained an 86% interest • Lansdowne Celtic Sea projects remain robust following updated RPS report • Sale of Bulgarian assets for $1.45million in cash and ongoing 0.1% royalty on all future production Financials: • Loss of £5.7million • Full provision made over Ulcinj, Montenegro, resulting in a write down of £4.0million • Sale of property for £1.5million • At 31 December 2006 cash of £2million Post Balance Sheet Highlights • Conclusion of Tenge Lawsuit in Ramco's favour • Raised £2.6million through divestiture of 25% of Lansdowne. Ramco now holds 61% of Lansdowne's issued share capital. Steve Remp, Chairman of Ramco, said: "2006 has been a frustrating yet pivotal year for the company and post the yearend we finally reached the successful conclusion in the long running Tenge case;the red tape surrounding which has hampered our attempts to move forward. With Tenge over, we can now begin to accelerate our turnaround strategy. Wehave the funding in place and a highly experienced team who have worked togetherfor many years. Our strategy is to return to what Ramco does best: frontierexploration and deal making. We are evaluating a number of exciting projects currently and are confident thatthese will provide Ramco the impetus to move forwards again and create value forour shareholders." 27 June 2007 ENQUIRIES: Ramco Energy plcChris Moar Finance Director 01224 748480 John East & Partners LimitedDavid Worlidge 020 7628 2200 College HillNick Elwes 020 7457 2020Paddy Blewer Chairman's Statement Although we obtained a decisive result from the Texas Court of Appeals in theTenge lawsuit over a year ago, the case remained alive until April 2007. Theability of the plaintiffs to string out the case severely hampered our abilityto access new opportunities through the issue of new shares, either to raise newcapital or as consideration for acquisitions, and reduced our cash reserves. We were pleased to announce earlier this week, that we had raised £2.6 millionthrough the sale of a proportion of our holding in our AIM listed subsidiaryLansdowne Oil & Gas plc (" Lansdowne"). This funding will enable us to progressour strategy and to take advantage of the opportunities that we have identifiedand are currently evaluating. Financial Highlights Consolidated Group turnover for 2006 was £1.0 million, down from £13.7 millionin 2005. This reflects the disposal of the Group's Oil Services division inDecember 2005 and the sale of the Oil & Gas division's only producing asset, itsinterest in the Seven Heads gas field, in February 2006. The Group recorded a loss for the financial year, attributable to ordinary shareholders, of £5.7 million in 2006 compared with a profit of £1.7 million in 2005.The loss for 2006 was dominated by the write-off of £4.0 million of explorationcosts in connection with the Ulcinj block in Montenegro. The total profit of£1.7 million in 2005 resulted from the profit of £2.1 million generated by theOil Services division which was sold at the end of that year, the reversal of£4.9 million in the impairment in the carrying value of the Seven Heads gasfield and the effects of operating costs and net interest payable. The Directors do not recommend the payment of a dividend (2005: nil). Net cash outflow from operating activities for 2006 was £2.8 million (2005: netcash inflow of £3.5 million). At the reporting date, the Group had net funds of£2.0 million (2005: net debt of £3.4 million). These movements are a result ofthe loss of income streams from continuing operations and the repayment of alloutstanding recourse bank debt. The Group's former head office building was sold in June 2006 for £1.5 millionin cash, resulting in a modest book gain of £84,000. The move to new offices,occupied under an operating lease, was completed shortly thereafter. The Company's cash resources were increased earlier this week by the sale of a25.1 per cent stake in the Group's subsidiary Lansdowne which raised £2.61million. Ireland Since April 2006, our Irish interests have been held via a majority holding inour AIM listed subsidiary Lansdowne. Lansdowne's interests comprise 100 per cent of the Midleton and East KinsaleLicensing Options, 77 per cent of the Rosscarbery Licensing Option and 74 percent of the Seven Heads Oil Licensing Option and a 19.25 per cent interest inthe Donegal Frontier Exploration Licence. During 2006 Lansdowne successfully completed the work programmes associated withall of its Celtic Sea Licensing Options. This work included reprocessingexisting 2D seismic data, acquiring and integrating further 2D seismic data,conducting geophysical processing studies, reservoir development studies,reservoir engineering studies and conceptual development studies. Comprehensivereports detailing the findings were presented to the Department ofCommunication, Marine and Natural Resources of the Irish Government. Following completion of the additional technical work in 2006, Lansdowne engagedRPS Scott Pickford to review all of its Celtic Sea projects in the light of thesubstantial increase in costs related to exploration and development of its oiland gas projects. The conclusion was that all the Celtic Sea projects outlinedin Lansdowne's AIM Admission document remained robust even at a price of $35 perbarrel for oil and 30p per therm for gas and assuming current fiscal terms. In December 2006, Lansdowne filed applications for Standard Exploration Licencesover parts of the areas held under the Midleton, Rosscarbery and East KinsaleLicensing Options. In addition, an application has been filed to convert theSeven Heads Oil Licensing Option to a Lease Undertaking, to allow Lansdowne andits partners to continue to evaluate development options. The Irish Government's response to Lansdowne's applications has been delayed bya combination of a review of licensing and fiscal terms applicable to theexploration and production of hydrocarbons and the recent general election.Accordingly, the applications submitted by Lansdowne are all conditional on thenew fiscal terms being acceptable to the applicants. Lansdowne's future businessis dependent on these applications and we believe that a response to theapplications will be received shortly. Lansdowne also participated in the Inishbeg exploration well which was drilledin August 2006. This frontier exploration well, operated by Lundin ExplorationB.V., was located offshore Ireland in Block 13/12 of the northwest coast ofCounty Donegal. It was designed to target a large but shallow Triassic gasprospect. Under the terms of a farm-out agreement, Lansdowne was carried throughall the costs associated with the drilling and testing of the well. The well wasplugged and abandoned in August 2006. Although Lansdowne considered that while the results of the 13/12 well did notgive sufficient confidence in the prospectivity to allow a commitment to begiven to drilling a second well, they did indicate the possibility of a viablehydrocarbon play on the acreage. Accordingly Lansdowne has requested anextension to phase one of the licence, to allow further technical work to beundertaken and a response to that request, from the Irish authorities, is alsoawaited. Montenegro In our interim statement last September, we announced that the attempts of ourpartner JugoPetrol Kotor ("JPK") to re-negotiate concession terms with theGovernment of Montenegro had reached an impasse. The Government had alsointimated its unilateral decision to terminate the concession over the Ulcinj(Block 3). Together with JPK and Hellenic, we are continuing to dispute thevalidity of this unilateral decision, but at this time no concrete progress hasbeen made and there is no prospect of a short term resolution. Consequently wehave decided to make full provision against our Ulcinj investment. This resultsin a write-down of £4.0 million in 2006. Since last September, Hellenic and Ramco have agreed to reverse therestructuring arrangement entered into in 2005 which converted Ramco'sparticipation into a 15% back-in option and for Ramco to revert to a 40% workinginterest participant in both the Ulcinj and Prevlaka (Blocks 1 & 2) concessions. Meanwhile the future of the concession with respect to the Prevlaka blocks hasbeen threatened by the Montenegrin Government which delayed the work programmebeyond the expiry date (31 March 2007) of the exploration period. JPK has made aformal application for an extension to the exploration period and action hasbeen taken by JPK in the Montenegrin Court to have certain administrativedecisions of the Government declared invalid. Therefore, we are continuing tocarry past costs of £803,000 relating to Prevlaka on the Group balance sheetuntil the situation is fully resolved. Bulgaria We announced last September that we had sold our interest in the A-Lovech blockonshore Bulgaria to our partner for $1.45m in cash plus a 0.1 per cent royaltyinterest over all future production from that acreage. We understand that thefirst well Deventsi-1, is due to spud before the end of June. Litigation We were delighted to announce in June 2006 that we had been successful inwinning our appeal in the long-running Tenge lawsuit and we believed, at thattime, that we had finally put this damaging process behind us. Unfortunately itwas not to be. The intricacies of the Texas legal system allowed the plaintiffsto drag the case on through not only a re-hearing at the Court of Appeals butalso two later attempts to persuade the Texas Supreme Court to hear the case.While the plaintiffs were unsuccessful in each of these efforts, it neverthelesscaused the process to continue to plague us until April 2007 when the case wasfinally closed by the Texas Supreme Court. During this time, we were very activein identifying and progressing new opportunities as part of our commitment tore-build shareholder value. Regardless of the remote prospect of a success bythe plaintiffs it created sufficient uncertainty to prevent the deals from beingclosed. Outlook With the Tenge lawsuit now behind us, we believe we can entertain newopportunities without the cloud that has been hanging over the Company for sevenyears. Tenge served to drain our cash resources but I am pleased to say that thefunds raised earlier this week should enable the Company to accelerate itsrecovery. Ramco is a founding shareholder (49 per cent) in Mesopotamia Petroleum CompanyLimited ("MPC") together with privately owned UK-based Midmar Energy Limited anda UK private investor. MPC was formed in order to try and secure a position tobid on both service contracts and exploration and production contracts in Iraqas the country seeks to re-establish itself. The political situation there remains highly volatile and uncertain and thiswill not be a short term process. However, for its part, Ramco has extensiveexperience in geographical areas where there has been political uncertaintyahead of stability such as the Caspian and Balkans. This is not a new subjectfor us and this uncertainty can provide windows of opportunity for the smallerplayer. Steve RempChairman27 June 2007 Consolidated Profit and Loss AccountAuditedFor the year ended 31 December 2006 2006 2005 Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations Restated Notes £'000 £'000 £'000 £'000 £'000 £'000Turnover - Group and - 986 986 - 17,212 17,212share of joint ventureand associatesLess share of joint - - - - (3,548) (3,548)venture and associatesGroup turnover 2 - 986 986 - 13,664 13,664Cost of sales before (1,579) (364) (1,943) (475) (22,060) (22,535)exceptional itemsExceptional items 3 (3,950) - (3,950) - 15,681 15,681Cost of sales after (5,529) (364) (5,893) (475) (6,379) (6,854)exceptional itemsGross (loss) / profit (5,529) 622 (4,907) (475) 7,285 6,810Administrative expenses (1,130) - (1,130) (1,098) (445) (1,543)Loss on exchange (67) (6) (73) (2) - (2)Group operating (loss) (6,726) 616 (6,110) (1,575) 6,840 5,265/ profitExceptional items 4 1,345 (923) 422 - (809) (809)Share of operating - - - - 656 656profit in joint ventureand associates(Loss) / profit before (5,381) (307) (5,688) (1,575) 6,687 5,112interest and taxationNet interest receivable 9 (3,290)/(payable)(Loss) / profit on 2 (5,679) 1,822ordinary activitiesbefore taxationTax charge on (loss) / (74) (84)profit on ordinaryactivities(Loss) / profit for the (5,753) 1,738financial year Attributable to:Equity holders of the 9 (5,702) 1,738CompanyMinority interests (51) -(Loss)/profit for the (5,753) 1,738financial year(Loss) / profit perordinary share - basicand fully dilutedOn (loss) / profit for 5 (15.2)p (1.4)p (16.6)p (5.0)p 10.5p 5.5pthe financial year The corresponding amounts for the prior period have been restated due to theadoption of Financial Reporting Standard 20 "Share-based Payments". There is no material difference between the (loss)/profit on ordinary activitiesbefore taxation and the (loss)/profit for the year stated above, and theirhistorical cost equivalents. There are no recognised gains or losses other than the Group loss for the yearand, therefore, no Statement of Total Recognised Gains and Losses has beenpresented. Balance SheetsAuditedAs at 31 December 2006 Group Company 2006 2005 2006 2005 Notes £'000 £'000 £'000 £'000 Fixed assetsIntangible assets 6 1,849 6,278 - -Tangible fixed assets 7 202 11,567 181 1,514 2,051 17,845 181 1,514Current AssetsDebtors: amounts falling due within one year 328 1,648 231 264Cash at bank and in hand 2,027 4,799 1,053 1,311 2,355 6,447 1,284 1,575Creditors: amounts falling due within one year (1,467) (11,618) (1,921) (1,299)Net current assets/(liabilities) 888 (5,171) (637) 276Total assets less current liabilities 2,939 12,674 (456) 1,790Creditors: amounts falling due after one year (608) - (608) -Provisions for liabilities and charges (25) (5,385) (25) (26)Net assets/(liabilities) 2,306 7,289 (1,089) 1,764 Capital and reservesCalled up share capital 3,502 3,314 3,502 3,314Share premium account 69,405 69,294 69,405 69,294Profit and loss account 9 (70,945) (65,319) (73,996) (70,844)Equity shareholders' funds/(deficit) 10 1,962 7,289 (1,089) 1,764Minority interest 11 344 - - -Total equity/(deficit) 2,306 7,289 (1,089) 1,764 Consolidated Cash Flow StatementAuditedFor the year ended 31 December 2006 2006 2005 Notes £'000 £'000Net cash (outflow)/inflow from operating activities 12(a) (2,802) 3,542 Returns on investments and servicing of financeInterest received 70 147Interest paid (33) (785)Net cash inflow/(outflow) from returns on investments and servicing 37 (638)of finance TaxationUnited Kingdom corporation tax received 276 -Overseas corporation tax paid - (27)Taxation received/(paid) 276 (27) Capital expenditure and financial investmentPurchase of tangible fixed assets (128) (216)Sale of tangible fixed assets 1,567 9Oil & gas expenditure - intangible assets (402) (372)Receipt of sale of exploration licence 763 -Receipt of sale of other fixed asset investments - 144Net cash inflow/(outflow) for capital expenditure and financial 1,800 (435)investment DisposalNet proceeds from sale of subsidiary - 11,801Cash on disposal (1,251) -Net cash (outflow)/inflow from disposal 12(d) (1,251) 11,801Net cash (outflow)/inflow before financing (1,940) 14,243 FinancingIssue of share capital in Company 8 298 1,018Issue of share capital in Lansdowne to minority interests 1,739 -Decrease in debt 12(b) (2,869) (13,727)Net cash outflow from financing (832) (12,709) (Decrease)/increase in cash 12(b) (2,772) 1,534 Notes to the Financial StatementsAuditedFor the year ended 31 December 2006 1. Basis of presentation The financial statements have been prepared on the going concern basis whichassumes that the Company and its subsidiaries will continue in operationalexistence for the foreseeable future. As discussed in the Chairman's statement and note 14, the Group raised £2.6million in cash from the sale of 25.1 per cent of the share capital ofLansdowne. The Directors have prepared cash flow forecasts for the Group for theperiod ending 12 months from the date of approval of these financial statements.These indicate that the Group will have adequate cash resources to meet itsobligations, as they fall due and provide seed funding for new projects.However, there remains uncertainty as to whether the Group can be considered agoing concern in that the Group currently has no revenue streams and onlylimited amounts of available funding to invest in revenue generating activities. The projects in Lansdowne are the most developed in the Group and the investmentin the company represents the most readily realisable asset. However, currentlyLansdowne is awaiting the Irish Government to approve their applications forexploration licences and is reliant on securing funding for work programmeobligations through farm-out arrangements or the issue of new shares or acombination of both. Therefore, this represents a further uncertainty in theGroup. Further details of potential future transactions involving Lansdowneshares are discussed in note 14. Although uncertainties exist, the Directors consider that it is appropriate toadopt a going concern assumption in preparing these financial statements as; • they consider that the new funding raised provides sufficient time in whichthe Group will be able to secure future revenue, and • they believe that the Lansdowne licences will be granted imminently and afarm-in partner will be found to fund future exploration activities. If for any reason the uncertainties described above cannot be successfullyresolved, the going concern basis may no longer be applicable and adjustments tothe Group profit and loss account and Group balance sheet would be required torecord additional liabilities and write down assets to their recoverableamounts. The financial information set out in these financial statements does notconstitute the Company's statutory accounts for the year ended 31 December 2006. The 2006 statutory accounts, which received an unqualified auditors' report,contained no statement under section 237(2) or (3) of the Companies Act 1985,have not yet been delivered to the Registrar. AuditedFor the year ended 31 December 2006 2. Segmental Reporting Oil & Gas Oil Services Total 2006 2005 2006 2005 2006 2005 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 986 4,787 - 12,425 986 17,212Less joint venture and associates - - - (3,548) - (3,548)Group turnover 986 4,787 - 8,877 986 13,664 Operating (loss)/profit Group (4,907) 4,148 - 3,318 (4,907) 7,466Less Joint venture and associates - - - (656) - (656)Group gross (loss)/profit (4,907) 4,148 - 2,662 (4,907) 6,810Joint venture and associates - - - 656 - 656 (4,907) 4,148 - 3,318 (4,907) 7,466Administrative expenses (1,130) (1,098) - (445) (1,130) (1,543)Exceptional items 422 - - (809) 422 (809)(Loss)/profit on exchange (73) (38) - 36 (73) (2)(Loss)/profit before interest and taxation (5,688) 3,012 - 2,100 (5,688) 5,112Net interest 9 (3,290) (Loss)/profit before taxation (5,679) 1,822 The Ramco Oil Services sub group was sold in December 2005 and so the Group nowhas only one business segment, being Oil and Gas exploration and appraisal. The turnover for the Oil and Gas division relates to the Seven Heads gas fieldwhich was sold in February 2006. This has been included in discontinuedoperations in the profit and loss account. 3. Exceptional Items 2006 2005 £'000 £'000Impairment provision - Seven Heads - 634Reversal of impairment provision - Seven Heads - (5,485)Impairment borne by finance provider - (10,830)Mezzanine finance written off - (8,600)Reversal of impairment provision borne by finance provider - 8,600Write-off of intangible fixed assets 3,950 - 3,950 (15,681) During the current period the Government of Montenegro terminated the concessionover the Ulcinj block, offshore Montenegro. The costs directly associated withthe Ulcinj concession have been written off. During the prior period there was a net reversal of £4.9 million in theprovision against the Seven Heads asset to reflect its net realisable value ondisposal. Impairment to this asset beyond the recourse element of the relatedproject finance was borne by the finance provider, resulting in a credit of£10.8 million. 4. Exceptional items 2006 2005 £'000 £'000Gain on deemed disposal of subsidiary 1,345 -Loss on sale of subsidiary (923) (809) 422 (809) (a) On 21 April 2006 the Group successfully listed Lansdowne Oil and Gas plc ("ansdowne") on the AIM Market of the London Stock Exchange. The Group's interest in Lansdowne reduced from 100 per cent to 86.25 per cent after the placing of 2,815,951 ordinary shares outwith the Group. This raised a total of £2,350,000 in cash, before cash expenses of £611,000 and share based expenses of £136,000. The reduction in interest in Lansdowne constitutes a "deemed disposal" at Group level and resulted in a gain as calculated below. £'000Group's share of net assets and proceeds after listing (86.25% of Lansdowne) 2,468Group's share of net assets before listing (100% of Lansdowne) (1,123) 1,345 The above gain of £1,345,000 was incorrectly credited to minority interestswithin equity on the unaudited 30 June 2006 Group balance sheet, as reported inthe 2006 Interim Results. This does not affect the Group's net assets positionat that date but equity shareholder's funds should have been disclosed as£7,451,000 rather than £6,106,000 and the loss of £1,482,000 reported for the 6months to 30 June 2006 should have been a loss of £137,000. (b) On 2 February 2006 the Company concluded the sale of its subsidiary RamcoCeltic Sea Limited ("RCSL"), which held its 86.5% interest in the Seven Headsgas field, for £5.3 million, net of expense, to Marathon International PetroleumHibernia Limited. All the proceeds of the sale, after costs, flowed to theCompany's project finance lenders and retired sums due to them. The carryingvalue of the interest in the gas field had been reduced to its net realisablevalue when the asset was first sold from another Group subsidiary to RCSL, earlyin December 2005. From this date until RCSL was sold it generated profits and,therefore, net assets of £923,000. On disposal no proceeds flowed to theCompany, creating a loss of £923,000 (see note 10(d)). As this disposal resultedin a material reduction in turnover for the Group's oil and gas operations, ithas been treated as a discontinued operation in the profit and loss account. (c) On 16 December 2005 the Group sold Ramco Oil Services Limited ("ROSL")together with its subsidiaries for £12.6 million in cash, after costs. Thisgenerated a loss on sale of £809,000. The ROSL sub group provided downholetubular maintenance and pipeline coating services and the disposal of this subgroup ceased the Group's involvement in these activities. As a result of thematerial change in the nature and focus of the Group's operations that thisdisposal represented, it was treated as a discontinued operation in the 2005profit and loss account. 5. (Loss)/Earnings Per Share Basic and fully diluted (loss)/earnings per share The calculation of (loss)/earnings per share is based on the loss attributableto ordinary shareholders of £5.7 million (2005: profit of £1.7 million) and34,317,614 (2005: 31,714,576) ordinary shares, being the weighted average numberof ordinary shares in issue during the year. 2006 2005 Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total £'000 £'000 £'000 £'000 £'000 £'000(Loss)/Profit for period (5,269) (484) (5,753) (1,578) 3,316 1,738Minority interest 51 - 51 - - -Net (Loss)/profit attributable to ordinary shareholders (5,218) (484) (5,702) (1,578) 3,316 1,738(Loss)/profit per ordinary share - basic and fully diluted on (loss)/profit for the financial year (15.2)p (1.4)p (16.6)p (5.0)p 10.5p 5.5p For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Company has three classes of potential ordinary shares; shareoptions, warrants and the Schlumberger debt deferral agreement. As explainedbelow, all three classes are not dilutive for the current period. Share options Only share options that are exercisable at the reporting date are potentialordinary shares. The lowest exercise price of exercisable share options is 675pper share. This is above the average market price of the shares in issue for theperiod. On that basis none of the share options are considered dilutive. Warrants In August 2005 warrants over 3,000,000 ordinary shares were issued to theGroup's lenders, with an exercise price of 34p. This is above the average marketprice of the shares in issue for the period and so the warrants are notdilutive. Debt deferral agreement Based on the number of shares required to settle the debt and the interestexpense accrued in the year, the debt deferral agreement with Schlumberger isanti-dilutive. 6. Intangible Fixed Assets 2006 2005Cost and net book value for Group £'000 £'000At 1 January 6,278 5,906Additions 426 372Disposal (763) -Costs written off (4,092) -At 31 December 1,849 6,278 Oil and gas project expenditures, including geological, geophysical and seismiccosts, are accumulated as intangible fixed assets prior to the determination ofcommercial reserves. At 31 December 2006, intangible fixed assets totalled£1.8million (2005: £6.3 million), all of which relates to Ireland and central andeastern Europe. On 9 September 2006 the Group sold its 20 per cent interest in the A-Lovechblock, onshore Bulgaria, to its partner Direct Petroleum Bulgaria Limited for$1.45 million plus a 0.1 per cent royalty over all future production from theacreage. The Group has retained a carrying value of £39,000 for the royaltyinterest. Since last September JugoPetrol Kotor ("JPK"), a subsidiary of HellenicPetroleum ("Hellenic"), and Ramco have agreed to reverse the restructuringarrangement entered into in 2005 which converted Ramco's participation into a 15per cent back-in option and for Ramco to revert to a 40 per cent workinginterest in both the Ulcinj and Prevlaka (blocks 1 & 2) concessions. JPK and Hellenic have informed the Group that their attempts to re-negotiateconcession terms with the Government of Montenegro reached an impasse and thatthe Government has intimated its unilateral decision to terminate the concessionover the Ulcinj block. The Group, together with JPK and Hellenic, continue todispute the validity of this unilateral decision, but at this time no concreteprogress has been made and there is no prospect of a short term resolution. Inthe absence of any probable reversal of the decision, the Group has written off£3,950,000 of exploration costs directly attributable to the Ulcinj concession.The concessions over the remaining two Prevlaka blocks are unaffected by thedispute and account for £803,000 of the remaining carrying value of intangiblefixed assets. The Prevlaka concession expired on 31 March 2007 so the carryingvalue is dependent on the application for an extension being accepted by theGovernment of Montenegro. 7. Tangible Fixed Assets 2006 2005Cost and net book value for Group £'000 £'000At 1 January 11,567 16,706Additions 181 216Disposals (11,299) (9,074)Depreciation (247) (1,132)Impairment - 4,851At 31 December 202 11,567 8. Share Capital 2006 2005Group and Company £'000 £'000Authorised:40,000,000 (2005: 40,000,000) ordinary shares of 10p each 4,000 4,000Allotted, called up and fully paid:35,017,815 (2005: 33,144,713) ordinary shares of 10p each 3,502 3,314 On 5 April 2006, 520,322 new ordinary shares of 10p each were issued for 28.5per share. The issue raised £148,000. On 1 June 2006, 952,380 new ordinaryshares of 10p each were issued for 10.5p per share and 400,400 new ordinaryshares of 10p each were issued for 12.5p per share. The issue raised £150,000. The principal trading market for the shares in the UK is the London StockExchange's Alternative Investment Market ("AIM") on which the shares have beentraded since 14 November 1996. The following table sets forth, for the calendar quarters indicated, thereported highest and lowest price for the shares on AIM, as reported by theLondon Stock Exchange. 2006 2005 pence per share pence per share High Low High LowFirst quarter 33.0 24.0 56.5 23.5Second quarter 35.0 13.0 42.5 23.5Third quarter 31.0 21.5 37.0 27.5Fourth quarter 25.0 16.5 32.5 25.5 9. Reserves Share Profit premium & loss account account £'000 £'000At 1 January 2006 69,294 (65,319)Loss for the financial year - (5,702)Issue of new shares 111 -Share based payments charge - 76At 31 December 2006 69,405 (70,945) The opening profit and loss account as at 1 January 2006 includes the effect ofshare based payment charges of £109,000 from prior periods, of which £68,000relates to 2005. 10. Movement in Shareholders' Funds 2005 2006 restated £'000 £'000(Loss)/profit for the financial year (5,702) 1,738Issue of ordinary share capital 299 1,018Share based payments charge 76 68Amortisation of deferred gain on asset sold to joint venture - (18)Net change in shareholders' funds (5,327) 2,806Shareholders' funds at 1 January 7,289 4,483Shareholders' funds at 31 December 1,962 7,289 11. Minority Interests 2006 £'000At 31 January 2006 -Created on listing of Lansdowne 393Share of Lansdowne's results since listing (51)Share of Lansdowne's share based payment reserve (included 2within profit and loss account)At 31 December 2006 344 On 21 April 2006 the Group completed an Initial Public Offering of Lansdowne. AtGroup level, this created a minority interest of 13.75 per cent in the netassets and results of Lansdowne. The minority interest carried in the Groupbalance sheet is classified as equity. 12. Notes to Consolidated Cash Flow Statement (a) Reconciliation of operating (loss)/profit to net cash flow from continuing operating activities 2005 Continuing Discontinued 2006 restated £'000 £'000 £'000 £'000Operating (loss)/profit (6,726) 616 (6,110) 5,265Amortisation of goodwill - - - 30Amortisation of deferred gain on asset sold to joint - - - (18)ventureDepreciation of tangible fixed assets 220 27 247 1,133Equity settled share based payment transactions 78 - 78 68Gain on sale of tangible fixed assets (133) - (133) (9)Gain on sale of investments - - - (142)Decrease in stocks - - - 2,109Decrease/(increase) in debtors 62 (218) (156) (248)(Decrease)/increase in creditors (1,263) 575 (688) 357(Decrease)/increase in other provisions (162) 30 (132) (178)Write off of intangible fixed assets 4,092 - 4,092 -Impairment provision - - - (4,851)Unpaid gas price hedges added to loan - - - 10,856Impairment borne by finance provider - - - (10,830)Net cash inflow from continuing operating activities (3,832) 1,030 (2,802) 3,542 (b) Reconciliation of net cash flow to movements in net funds/(debt) 2006 2005 £'000 £'000 (Decrease)/increase in cash in the year (2,772) 1,534Cash outflow from reduction in debt 8,201 13,727Impairment borne by finance provider - 10,830Unpaid gas price hedges and interest on loan - (13,083)Change in debt resulting from cash flows 5,429 13,008New finance lease (38) -Movement in net funds/(debt) in period 5,391 13,008 Net debt at start of the yearCash at bank and in hand 4,799 3,265Debts due within one year (8,201) (19,675) (3,402) (16,410) Net funds/(debt) at end of the year 1,989 (3,402) Represented by:Cash at bank and in hand 2,027 4,799Debts due within one year - (8,201)Finance lease creditor (38) - 1,989 (3,402) The reduction of debt in the year of £8.2 million comprises the £5.3 millionfrom the sale of RCSL that flowed directly to the finance providers and the cashoutflow of £2.9 million, as shown on the Consolidated Cash Flow Statement. (c) Analysis of net funds/(debt) At At 31 1 January Finance December 2006 Repaid Cash lease 2006 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 4,799 - (2,772) - 2,027Debt due within one year (8,201) 8,201 - - -Finance lease creditor - - - (38) (38) (3,402) 8,201 (2,772) (38) 1,989 (d) Disposal of RCSL The Group disposed of Ramco Celtic Sea Limited on 2 February 2006. £'000Tangible fixed assets 9,866Debtors 1,170Creditors (11,364) (328)Loss on disposal (923)Cash outflow from disposal (1,251) RCSL contributed £0.8 million of the 2006 operating cash flows. 13. Tenge Litigation Following a jury verdict in October 2003, the Texas State Court issued a finaljudgement on 1 April 2004 against the Company, Ramco Oil Limited and certainother defendants in a case alleging breach of contract arising fromconfidentiality and non-circumvention obligations. These obligations arose whilethe Group was considering investment in an oilfield development project inKazakhstan, which the Group subsequently decided not to pursue. The Group's appeal and the plaintiff's cross appeal were heard in Houston on 26April 2005. On 6 June 2006, the Fourteenth Texas Court of Appeals delivered itsdecision on the appeals lodged by both parties to the lawsuit. The originaljudgement issued to Anglo Dutch in 2004 was reversed in its entirety. Thedecision concluded by stating "we reverse the trial court's judgement and renderjudgement that the Plaintiffs take nothing against the Ramco Parties." The plaintiffs filed a motion for rehearing the appeal, which was denied by theFourteenth Texas Court of Appeals in October 2006. In early 2007, the plaintiffstwice petitioned the Texas Supreme Court to review the decision of the Court ofAppeals. However, on 20 April 2007 the Texas Supreme Court denied theplaintiffs' petition because it determined that the plaintiffs' petition did notpresent any error which required reversal. The Directors now consider the caseclosed. The provision of £161,000 for legal fees as at 31 December 2005 was fullyutilised in the year. The Directors do not consider that a provision is requiredat the balance sheet date. 14. Post Balance Sheet Events (a) Group restructuring On 15 March 2007, the shareholding of Lansdowne was transferred between Ramcosubsidiaries in order to better align the Group's structure with its ongoingcommercial activities. Prior to this restructuring Ramco Eastern Europe Limited("REEL") owned 27.45 per cent of Lansdowne and Ramco Oil and Gas Limited ("ROGL") owned 58.80 per cent of Lansdowne. Since 1999, REEL has operatedpredominantly as an investment company providing services to its subsidiaries. However, in recent years the structure of this sub-group has changed with all ofits subsidiaries either being liquidated or being transferred outwith the REELsub-group. Consequently, REEL no longer has any meaningful function within theGroup, and it is the Directors intention is to place it into liquidation. ROGLwill continue with its role but for non-Irish assets only. The desire,therefore, was to move the Lansdowne assets out of the REEL and ROGL sub-groups.These companies transferred their shareholdings in Lansdowne to Ramco HiberniaLimited ("RHL") at a fair value consideration of 59.5p per share. RHL is awholly owned subsidiary of Ramco Energy plc and became the holder of 17,953,308ordinary shares, representing 86.25 per cent of the issued share capital ofLansdowne. The ultimate ownership of Lansdowne remained unchanged by these sharetransactions. (b) Lansdowne divestment and appointment of Non-Executive Directors On 26 June 2007 Ramco Hibernia Limited sold 5,225,000 ordinary shares (25.1 percent) in Lansdowne at a price of 50p per share to LC Capital Master Fund,generating a cash consideration of £2,612,000. LC Capital Master Fund iscurrently the holder 4.86 per cent of the share capital of Ramco Energy plc. Linked to this sale and purchase agreement are the following contractualagreements: • The Group has granted LC Capital Master Fund an option to purchase their remaining 12,728,308 Lansdowne shares (61.15 per cent) at an exercise price equivalent to the average of the closing price of a share in Lansdowne for the 20 dealing days prior to the date of exercise. The option can be exercised in whole or part and has a three year life from the date of the sale. • The Group has granted warrants over 5,000,000 ordinary shares in Ramco Energy plc at an exercise price of 14p per share. The warrants have a five year life from the date of the sale. • LC Capital Master Fund has the right to nominate two Non-Executive Directors to the Board of Ramco Energy plc. • The Company will use its reasonable endeavours to procure that, subject to approval by the Directors of Lansdowne, a nominee of LC Capital Master Fund will be elected as a Non-Executive Director of Lansdowne. (c) Sale of Baku office lease The Group sold the lease over its office in Baku in January 2007 for a grosssettlement of $200,000. The gain on sale was £81,000. The rental income from theoffice and directly attributable office overheads during 2006 have been includedin discontinued operations in the profit and loss account. 15. Comparative information The comparative financial information is based on statutory accounts for theyear ended 31 December 2005. Those accounts, upon which the auditors have issuedan unqualified opinion, have been delivered to the Registrar of Companies. 16. Annual Report and Financial Statements The Annual Report and Financial Statements will be mailed to shareholdersshortly and is available from the company's website, www.ramco-plc.com and fromBritannia House, Endeavour Drive, Arnhall Business Park, Westhill, AberdeenshireAB32 6UF. This information is provided by RNS The company news service from the London Stock Exchange