SEA.L Regulatory News (SEA)

29 Jun 2006 07:01

Ramco Energy PLC29 June 2006 Press Information29 June 2006 Ramco Energy plc ("Ramco or the Company") Preliminary Results for the year ending 31 December 2005 2005 Highlights • Turnover of £13.7 million (2004: £41.9 million), reflecting lower gas production from Seven Heads • Profit after tax of £1.8 million (2004: loss of £3.4 million) • Disposal of Oil Services division and repayment of recourse debt Post Balance Sheet events • Sale of interest in Seven Heads gas field • Extension of Irish licensing Options • Creation and listing on AIM of Lansdowne Oil & Gas - Ramco retains an interest of 86.25% • Raised £298,000 through the issue of new equity • Successful appeal in Tenge lawsuit • Sale of office building in Aberdeen concluded raising £1.5 million Turnaround strategy being implemented • Focus on current operations in Ireland, Montenegro and Bulgaria • Initiation of new ventures - potential focus in Middle East and Caspian Sea • Company now almost debt free Steve Remp, Chairman of Ramco, commented: "This has been an immensely challenging period for Ramco. At times our futurewas in doubt, but we have remained resolute and determined. We have an exciting turnaround strategy in place and are returning to ourexploration roots which brought us so much success in the nineties. With theexciting portfolio of assets that we are involved in and with the new venturesthat we are planning to embark upon, Ramco is now able, for the first time intwo years, to look to the future with a renewed confidence." ENQUIRIES: Ramco Energy - Aberdeen 01224 352 200Steve Remp, Executive ChairmanSteven Bertram, Managing Director College Hill - London 020 7457 2020Nick Elwes Preliminary Results for the year ending 31 December 2005 Chairman's Statement This has proved to be an immensely challenging period for the Company. However,both the Board and employees have remained resolute in their commitment toRamco's turnaround and I offer my sincere thanks to them and to the manyshareholders who continued to support the Company during such trying times. Strategy In April 2005, the Ramco Board undertook a thorough review of the Company'sprospects and strategy, following the significant problems we encountered withthe Seven Heads gas development, offshore Ireland, and decided to pursue aturnaround strategy based on the following key objectives: • The sale of our Oil Services division to repay £12 million of secured debt related to the Seven Heads development; this transaction and the associated debt repayment were completed just before the end of 2005. • The sale of our interest in the Seven Heads gas field, which was pledged as security for the remaining project debt. The completion of this transaction in February 2006 also relieved Ramco of related liabilities in the form of parent company guarantees. • The resolution of the long-running Tenge lawsuit in the US; whilst this objective was to a large extent outside our control, we were delighted to announce earlier this month that the Fourteenth Texas Court of Appeals had ruled in our favour and overturned the trial court's judgement in its entirety. The plaintiffs have filed a motion with the Court of Appeals for a re-hearing, but the Directors do not consider it necessary to alter the existing provision in Ramco's accounts which should cover the costs of this anticipated procedure. Financial Results Group turnover for 2005 totalled £13.7 million, down from £41.9 million in 2004,reflecting the lower gas production from the Seven Heads gas field and acontribution from the Oil Services division for the period to 16 December 2005. Despite the lower turnover, Group operating profit increased from £598,000 in2004 to £5.3 million in 2005. This improvement is largely due to exceptionaladjustments to cost of sales, which reflect the impairment borne by the financeprovider on the Seven Heads project, and the reversal of a previous impairmentprovision to bring the year end carrying value of the asset in line with theprice received on its subsequent disposal early in 2006. Administrative expenses rose slightly from £1.4 million in 2004 to £1.5 millionin 2005. Cost savings instigated following the recognition of difficulties withthe Seven Heads gas field were expected to result in a further reduction inadministrative expenses. However, these savings were more than offset byadditional professional fees incurred in the merger talks aborted in April 2005. The overall result, before tax, for the year, after reflecting the net reversalof £4.9 million in the impairment provision against the Seven Heads gas fieldreferred to above, is a profit of £1.9 million. After a tax charge of £84,000,the net result is an after tax profit of £1.8 million, compared with a loss of£3.4 million in 2004. The Directors do not recommend the payment of a dividend (2004 - nil) and £1.8million will be added to the Group's reserves. At 31 December 2005 the Group held cash balances of £4.8 million. Of this sum,£2.9 million was ring fenced and has subsequently been repaid to the Group'slenders. Since the year end, a total of £298,000 has been raised through theissue of 1,873,102 new shares and, following the lifting of arrestments andinhibitions related to the Tenge lawsuit earlier this month, we have concludedthe sale of our office building in Aberdeen for £1.5 million and will shortly berelocating to new premises. A debt of £0.9 million, connected with the Seven Heads development, remains dueto Schlumberger. Under a waiver agreement it signed to allow us to complete theretirement of the bank debt, Schlumberger has the option to request that thedebt be repaid by an issue of new Ramco shares. Exploration While we were pursuing our turnaround objectives, we also succeeded in retainingvaluable exploration rights. We have, over the past two years, had a verylimited amount of cash to devote to our exploration portfolio but have retainedthe following interests: Ireland. We required funds to ensure that we could honour commitments to complete thework programmes necessary to have our four Licensing Options in the Celtic Seaextended. Protective security (arrestments and inhibitions) put in place by theplaintiff in the Tenge lawsuit greatly limited our ability to raise thenecessary funds, but we succeeded, initially in February 2006, through a privateplacing by a newly formed subsidiary Lansdowne Oil & Gas plc ("Lansdowne"), andlater by listing that subsidiary on AIM and raising further funds. Lansdowne nowholds all of our remaining Irish acreage, including our interest in Seven Headsoil. The funds raised by Lansdowne amount to over £2.3 million before expensesand ensure that it has the ability to meet its current obligations to the Irishauthorities. We had already farmed out our interest in the Frontier ExplorationLicence in the Donegal basin, retaining a 19.25 per cent. carried interest, andthis asset was also transferred to Lansdowne. Drilling is scheduled to commencenext month. At the time of its listing Lansdowne achieved a marketcapitalisation of £17.7 million with Ramco retaining an interest of 86.25 percent. Montenegro. We have been successful in converting our 40 per cent. working interest, whichwe could not fund, into a carried option which entitles us to rejoin the projectby acquiring an interest of up to 15 per cent. The option can be exercised aftera successful well has been drilled. The operator, Jugopetrol Kotor, a subsidiaryof Hellenic Petroleum, is negotiating with the newly independent Government ofMontenegro with the objective of agreeing a drilling programme in the nearfuture. Bulgaria. In January 2005 we announced that we had converted our 20 per cent. workinginterest in the A Lovech block, onshore Bulgaria, into an 11 per cent. interestcarried through a planned extensive 3D seismic programme. A change in ultimateownership of the operator in this project, Anschutz Bulgaria Limited, was thecatalyst for a change to the plans for the block, with the objective ofaccelerating a drilling programme. We have in the past few weeks agreed arevised deal, whereby our interest reverts to its former level of 20 per cent.whilst being fully carried through this year's work programme. The workprogramme now includes a smaller seismic survey combined with the use of theoperator's proprietary technology aimed at firming up a well site for drillingin 2007. Outlook We have come a very long way over the past year and now have a new sense ofpurpose and optimism. Following the sale of our interest in the Seven Heads gasfield, the Company is almost debt-free, holds a major asset in the form ofLansdowne shares, where the current market value of our interest is £13 million,and has other exploration interests through which we are largely carried andwhich have the potential to create additional value. Our intention now is to pick up where we left off in 2000. Ramco will aim toserve as a vehicle to initiate new ventures, initially as subsidiaries or jointventures and these may be private or public as in the case of Lansdowne. We arealso looking at potential new ventures in the Middle East and Caspian area,where we were a major player throughout the 90s. Our strategy will be to remain "lean and mean" with a small corporate group thathas achieved significant successes, but also one which has been through the wars- an experience that we believe will serve us well for the future. Stephen E RempChairman Ramco Energy plc Preliminary Results Consolidated Profit and Loss Account Unaudited For the year ended 31 December 2005 2005 2004 Continuing Discontinued Continuing Discontinued Total operations operations Total operations operations Restated Note £'000 £'000 £'000 £'000 £'000 £'000 Turnover - Group and share of joint venture and associates - 17,212 17,212 - 45,568 45,568 Less share of joint venture and associates - (3,548) (3,548) - (3,641) (3,641) Group turnover 2 - 13,664 13,664 - 41,927 41,927 Cost of sales before exceptional item (475) (22,060) (22,535) 1,071 (46,590) (45,519)Exceptional item 3 - 15,681 15,681 - 5,714 5,714 Cost of sales after exceptional item (475) (6,379) (6,854) 1,071 (40,876) (39,805) Gross (loss) / profit (475) 7,285 6,810 1,071 1,051 2,122Administrative expenses (1,030) (445) (1,475) (995) (426) (1,421)(Loss)/profit on exchange (2) (2) (233) 130 (103) -Group operating (loss) / profit (1,507) 6,840 5,333 (157) 755 598Exceptional item 4 - (809) (809) - - - Share of operating profit in joint venture and associates - 656 656 - 681 681 (Loss) / profit before interest (1,507) 6,687 5,180 (157) 1,436 1,279and taxationNet interest payable (3,290) (4,565) Profit /(loss) on ordinary activities before taxation 2 1,890 (3,286)Tax charge on profit/ (loss) on ordinary activities (84) (91) Profit /(loss) for the financial year 11 1,806 (3,377) Profit / (loss) per ordinaryshare - basic and fully dilutedOn profit / (loss) for the financial year 5 5.7p (11.2)p There is no material difference between the profit on ordinary activities beforetaxation and the retained profit for the year stated above, and their historicalcost equivalents. Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 December 2005 2005 2004 £'000 £'000 Profit / (loss) for the financial year 1,806 (3,377)Unrealised translation differences on foreign currency 16net investments - Total recognised profit / (loss) relating to the year 1,806 (3,361) Ramco Energy plc Preliminary Results Balance Sheets Unaudited As at 31 December 2005 Group Company 2005 2004 2005 2004 Note £'000 £'000 £'000 £'000 Fixed assetsIntangible assets 7 6,278 5,906 - -Other tangible fixed assets 8 11,567 16,706 1,514 1,654 Investments Share of joint venture's gross assets - 2,575 - - Share of joint venture's gross liabilities - (1,503) - - Share of joint venture's net assets - 1,072 - - In subsidiaries - - - 3,000 In associated undertakings - 80 - - Other fixed asset investments - 2 - 2 Total investments - 1,154 - 3,002 17,845 23,766 1,514 4,656 Current AssetsStocks - 2,331 - -Debtors: amounts falling due within one year 1,648 5,203 264 2,279Cash at bank and in hand 4,799 3,265 1,311 119 6,447 10,799 1,575 2,398Creditors: amounts falling due within one year (11,618) (24,808) (1,299) (760) Net current (liabilities)/assets (5,171) (14,009) 276 1,638 Total assets less current liabilities 12,674 9,757 1,790 6,294 Provisions for liabilities and charges (5,385) (5,274) (26) (38) Net assets 7,289 4,483 1,764 6,256 Capital and reservesCalled up share capital 3,314 3,014 3,314 3,014Share premium account 69,294 68,576 69,294 68,576 Revaluation reserve - 752 - - Other reserves - (21) - -Profit and loss account 11 (65,319) (67,838) (70,844) (65,334) Equity shareholders' funds 12 7,289 4,483 1,764 6,256 Ramco Energy plc Preliminary Results Consolidated Cash Flow Statement Unaudited For the year ended 31 December 2005 2005 2004 Note £'000 £'000 Net cash inflow from operating activities 13(a) 3,542 6,728 Returns on investments and servicing of financeInterest received 147 376Interest paid (785) (3,994) Net cash outflow from returns on investments and servicing of finance (638) (3,618) TaxationOverseas corporation tax paid (27) (170) Taxation paid (27) (170) Capital expenditure and financial investmentPurchase of tangible fixed assets (216) (86)Sale of tangible fixed assets 9 54Oil & gas expenditure - intangible assets (372) (1,370)Oil & gas expenditure - producing assets - (10,202)Receipt of sale of other fixed asset investments 144 42 Net cash outflow for capital expenditure and financial investment (435) (11,562) DisposalNet proceeds from sale of subsidiary 11,801 - Net cash inflow from disposal 11,801 - Net cash inflow/(outflow) before financing 14,243 (8,622) FinancingIssue of share capital 1,018 -(Decrease)/increase in debt (13,727) 8,600 Net cash (outflow)/inflow from financing (12,709) 8,600 Increase/(decrease) in cash 13(b) 1,534 (22) Ramco Energy plc Preliminary Results Notes to the Financial Statements Unaudited For the year ended 31 December 2005 1. Accounting policies 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. The Group balance sheet as at 31 December 2005 shows net current liabilities of£5.2 million. However, the Director's consider that it is appropriate to adopt agoing concern assumption in preparing these financial statements as thefollowing significant developments occurred after the balance sheet date: (i) The bank loan of £8.2 million shown in Creditors (amounts falling due withinone year) was repaid in February 2006 following the sale of the Group's interestin the Seven Heads gas field. This loan repayment was sufficient to return theGroup balance sheet to positive net current assets. (ii) As described in note 10, the Company has issued new shares raisingadditional funding of £298,000. (iii) The Group successfully completed the listing of their subsidiary LansdowneOil & Gas plc on the Alternative Investment Market (AIM). The Group owns 86.25%of Lansdowne Oil and Gas plc, which has a current market value of £13 million. (iv) In June 2006, the Fourteenth Court of Appeals in Texas reversed the trialcourt's judgement in respect of the Tenge lawsuit. This decision resulted in allarrestments and inhibitions, that had previously been placed on the Group, beinglifted. As a result, missives have now been completed for the sale of theCompany's head office building in Aberdeen. The £1.5m of funds from this saleare expected to be received before the end of June. (v) The Directors are currently reviewing a number of alternative fundingarrangements to allow the Group to exploit its development opportunities. The Directors have prepared cash flow forecasts for the Group for the periodending 12 months from the date of approval of these financial statements. Thesecash flows take into account the proceeds from the sale of the building andindicate that the Group will have adequate cash resources to meet itsobligations as they fall due. For these reasons, the Directors believe that itis appropriate for the financial statements to be prepared on the going concernbasis. If for any reason the cash flow assumptions proved to be invalid, the goingconcern basis may no longer be applicable and adjustments to the Group profitand loss account and Group balance sheet would be required to record additionalliabilities and write down assets to their recoverable amounts. 2. Segmental Reporting Oil & Gas Oil Services Total 2005 2004 2005 2004 2005 2004 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 4,787 32,861 12,425 12,707 17,212 45,568Less joint venture and associates - - (3,548) (3,641) (3,548) (3,641) Group turnover 4,787 32,861 8,877 9,066 13,664 41,927 Profit /(loss) before taxation Group 4,148 729 3,318 2,074 7,466 2,803Less Joint venture and associates - - (656) (681) (656) (681) Group gross profit 4,148 729 2,662 1,393 6,810 2,122Joint venture and associates - - 656 681 656 681 4,148 729 3,318 2,074 7,466 2,803Administrative expenses (1,030) (995) (445) (426) (1,475) (1,421)Exceptional item - - (809) - (809) -(Loss)/profit on exchange (38) (53) 36 (50) (2) (103) Profit / (loss) before interest and taxation 3,080 (319) 2,100 1,598 5,180 1,279Net interest (3,290) (4,565) Profit /(loss) before taxation 1,890 (3,286) The Ramco Oil Services sub group was sold in December 2005 and so this part ofthe business has been classed as discontinued. The turnover for the oil and gas division relates to the Seven Heads gas fieldwhich was sold after the year end. This has been included in discontinuedoperations in the profit and loss account. A proportion of the administrativeexpenses for the oil and gas division are also included in discontinuedoperations. 3. Exceptional Item - Seven Heads 2005 2004 £'000 £'000 Impairment provision - Seven Heads 634 47,698Reversal of impairment provision - Seven Heads (5,485) -Impairment borne by finance provider (10,830) (53,412)Mezzanine finance written off (8,600) -Reversal of impairment provision borne by finance provider 8,600 - (15,681) (5,714) In accordance with the SORP further impairment in the carrying value of SevenHeads is being borne by the non-recourse finance provider, resulting in a creditof £10.8 million (2004: £53.4 million). The impairment provision against the asset was made in 2004 (£47.7 million) andthere was a net reversal in 2005 (£4.9 million) to reflect the net realisablevalue of the asset on disposal. Ramco Energy plcPreliminary ResultsNotes to the Financial StatementsUnauditedFor the year ended 31 December 2005 4. Exceptional Item - Disposal of Subsidiary 2005 2004 £'000 £'000 Loss on sale of subsidiary 809 - On 16 December 2005 the Group sold Ramco Oil Services Limited together with itssubsidiaries for £12.6 million in cash, after costs. The ROSL sub group provideddownhole tubular maintenance and pipeline coating services and the disposal ofROSL sub group ceased the Ramco Group's involvement in these activities. As aresult of the material change in the nature and focus of the Group's operationsthat this disposal represented, it has been treated as a discontinued operationin the profit and loss account (see note 13(d)). 5. Earnings / (Loss) Per Share Basic and fully diluted earnings/(loss) per share The calculation of earnings/(loss) per share is based on the profit for thefinancial year of £1.8 million (2004: loss of £3.4 million) and 31,714,576(2004: 30,144,713) ordinary shares, being the weighted average number ofordinary shares in issue during the year. 2005 2004 Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total £'000 £'000 £'000 £'000 £'000 £'000Profit/(loss) before interestand taxation (1,507) 6,687 5,180 (157) 1,436 1,279Net interest 18 (3,308) (3,290) 301 (4,866) (4,565) Profit/(loss) on ordinaryactivities before taxation (1,489) 3,379 1,890 144 (3,430) (3,286)Tax (charge)/credit on profit/(loss) on ordinary activities (21) (63) (84) 552 (643) (91) Profit/(loss) for the financial year (1,510) 3,316 1,806 696 (4,073) (3,377)Profit/(loss) per ordinaryshare - basicand fully diluted on profit/(loss)for the financial year (4.8)p 10.5p 5.7p 2.3p (13.5)p (11.2)p For dilutive earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. The Group has two classes of dilutive potential ordinary shares, shareoptions and share warrants. The lowest exercise price of the share options is34p per share. In August 2005 warrants over 3,000,000 shares of 10p each, withan exercise price of 34p, each were issued to the Group's lenders. Share optionsand warrants are only considered dilutive if their exercise price is below theaverage market price of the shares for the period. On that basis none of theshare options or warrants are considered dilutive for the current period. 6. Taxation The prior year deferred tax disclosures included a potential deferred taxliability relating to the disposal of the ACG interest in 2000. This liabilitywas held over against expenditure incurred developing the Seven Heads interest.The disposal of the Seven Heads interest from Ramco Seven Heads Limited andNorthern Exploration Limited to Ramco Celtic Sea Limited caused the heldovergain to crystallise, but also caused significant UK tax losses to be generated.The UK tax losses generated have largely been utilised offsetting the heldovergain, such that no tax liability arises on the heldover gain in 2005 and nofurther potential liability exists at 31 December 2005. 7. Intangible Fixed Assets Group Exploration Costs 2005 2004 £'000 £'000 At 1 January 5,906 4,536Additions 372 1,370At 31 December 6,278 5,906 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 2005, intangible fixed assets totalled £6.3million (2004: £5.9 million), all of which relates to Ireland and central andeastern Europe. 8. Other Tangible Fixed Assets 2005 2004Cost and net book value £'000 £'000 At 1 January 16,706 72,782Retranslation - 3Additions 216 1,347Disposals (9,074) (91)Depreciation (1,132) (9,637)Impairment 4,851 (47,698) At 31 December 11,567 16,706 9. Creditors: Amounts Falling Due After More Than One Year 2005 2004 £'000 £'000 Bank Loans - Main & mezzanine 68,415 68,415 - Unpaid gas price hedge 13,199 2,343 - Unpaid interest on loan 4,556 2,329Repaid during the year (13,727) - 72,443 73,087Less: Impairment borne by finance provider (64,242) (53,412) 8,201 19,675Amounts falling due within one year (8,201) (19,675) - - This relates to a £68.6 million project finance facility arranged for the SevenHeads gas field development which was due to be repaid in six monthlyinstalments. The net cash generated from the field was insufficient to meet therepayments. The Company announced on 20 June 2005 that it had reached agreementwith its Bankers regarding these matters. Under the terms of this agreement, theGroup's Bankers granted waivers in respect of arrears of capital and interestand breach of financial covenants until the earlier of (a) 31 December 2005 and(b) the later of (i) the formal conclusion of the sale of the business andassets of ROSL and (ii) the formal conclusion of the sale of the business andassets of, and/or the interest of financial covenants until the earlier of (a)31 December 2005 and (b) the later of (i) the formal conclusion of the sale ofthe business and assets of ROSL and (ii) the formal conclusion of the sale ofthe business and assets of, and/or the interest of Ramco and its subsidiariesin, RSHL and NEL. The Company also issued warrants to the lenders for 3,000,000ordinary shares of 10p at a price of 34p. The amount of £64.2 million (2004: £53.4 million) provided above represents anadjustment to bring the non-recourse element of the loan creditor in line withthe net present value of future cash flows expected from the gas field inaccordance with the Statement of Recommended Practice Accounting for Oil and GasExploration, Development, Production and Decommissioning Activities. The £8.2 million outstanding at 31 December 2005, was repaid in full in February2006 following the sale of the Group's interest in the Seven Heads gas field. 10 . Share Capital In June 2005 the Company completed the placing of 3,000,000 new ordinary shares of 10peach at an issue price of 34p per share. The placing raised £1 million net of expenses. Since 1 January 2006 there have been two placings of shares. On 5 April 2006, 520,322 newordinary shares of 10p each were issued for 28.5 per share. The issue raised £148,000. On 1 June 2006 952,380 new ordinary shares of 10p each were issued for 10.5p per shareand 400,400 new ordinary shares of 10p each were issued for 12.5p per share. The issueraised £150,000. 11. Profit and Loss account 2005 2004 £'000 £'000 At 1 January (67,838) (64,461)Profit / (loss) for the year 1,806 (3,377)Revaluation reserve released on disposal 713 - At 31 December (65,319) (67,838) 12. Movement in Shareholders' Funds 2005 2004 £'000 £'000 Profit / (loss) for the financial year 1,806 (3,377)Other recognised gains and losses relating to the year - 16Issue of ordinary share capital 1,018 -Movement in revaluation - (41)Amortisation of deferred gain on asset sold to joint venture (18) (17) Net change in shareholders' funds 2,806 (3,419)Shareholders' funds at 1 January 4,483 7,902 Shareholders' funds at 31 December 7,289 4,483 13. Notes to Consolidated Cash Flow Statement (a) Reconciliation of operating profit / (loss) to net cash flow from operating activities Continuing Discontinued 2005 2004 £'000 £'000 £'000 £'000 Operating (loss) / profit (1,507) 6,840 5,333 598Amortisation of goodwill - 30 30 30 Gain on sale of investments (142) - (142) - Depreciation of tangible fixed assets 301 832 1,133 9,637(Gain)/loss on sale of tangible fixed assets (9) - (9) 37 Amortisation of deferred gain on asset sold to joint venture - (18) (18) (17)Decrease/(increase) in stocks - 2,109 2,109 (66)(Increase)/decrease in debtors (107) (141) (248) 2,448Increase/(decrease) in creditors 685 (328) 357 (2,446)(Decrease)/increase in other provisions (178) - (178) 100Impairment provision - (4,851) (4,851) 47,698Unpaid gas price hedges added to loan - 10,856 10,856 2,343 Impairment borne by finance provider - (10,830) (10,830) (53,412)Exchange difference on retranslation - - - (222) Net cash inflow from operating activities (957) 4,499 3,542 6,728 (b) Reconciliation of net cash flow to movements in net debt 2005 2004 £'000 £'000 Increase/(decrease) in cash in the year 1,534 (22)Cash outflow/(inflow) from reduction/(increase) in debt 13,727 (8,600)Revaluation of bank loan - exchange difference - 240Impairment borne by finance provider 10,830 53,412Unpaid gas price hedges and interest on loan (13,083) (4,672) Change in net debt resulting from cash flows 13,008 40,358 Net (debt) / funds at start of the yearCash at bank and in hand 3,265 3,297Debts due within one year (19,675) (10,000)Debts due after one year - (50,055) (16,410) (56,758) Net debt at the end of the year (3,402) (16,400) Represented by:Cash at bank and in hand 4,799 3,265Debts due within one year (8,201) (19,675) (3,402) (16,410) Liquid resources represent short term deposits not qualifying as cash 13. Notes to Consolidated Cash Flow Statement continued Unpaid Unpaid Impairment(c) Analysis of net (debt) / funds At 1 gas interest borne At 31 January price On by finance December 2005 hedges loan provider Repaid Cash 2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 3,265 - - - - 1,534 4,799 Debt due within one year (19,675) (10,856) (2,227) 10,830 13,727 - (8,201) (16,410) (10,856) (2,227) 10,830 13,727 1,534 (3,402) (d) Disposal of ROSL The Group disposed of its Oil Services division on 16 December 2005. (see note 3) £'000 Tangible fixed assets 9,073Stocks 222Investments 1,586Debtors 4,034Creditors (2,305) 12,610Loss on disposal (809) Cash inflow from disposal 11,801 The ROSL group contributed £0.7 million to the net operating cash flows. 14. Litigation Following a jury verdict in October 2003, the Texas State Court issued aPreliminary judgement on 1 April 2004 against Ramco Energy plc, Ramco OilLimited and certain other defendants in a case alleging breach of contractarising from confidentiality and non-circumvention obligations. Theseobligations arose while Ramco was considering investment in an oilfielddevelopment project in Kazakhstan which Ramco subsequently decided not topursue. Ramco's appeal, and the plaintiff's cross appeal, were heard in Houstonon 26 April 2005. On 6 June 2006, the Fourteenth Texas Court of Appealsdelivered its decision on the appeals lodged by both parties to the lawsuit. Theoriginal judgment issued to Anglo Dutch in 2004 was reversed in its entirety.The decision concluded by stating "we reverse the trial court's judgement andrender judgement that the Plaintiffs take nothing against the Ramco Parties." The arrestments and inhibitions which had been obtained by the plaintiffs fromthe Court of Session, which had been hampering the Group's ability to carry outits business, have now been lifted. The plaintiffs have filed a motion with the Court of Appeals for a re-hearing,but the Directors do not consider that is necessary to alter the existingprovision in Ramco's accounts which should cover the costs of this anticipatedprocedure. Because of the uncertainty surrounding the range of possible outcomes, theDirectors considered it was not possible to make a reliable estimate of thelikely outcome of the appeal process beyond providing an estimate of the legalcosts of pursuing the appeals, and accordingly a provision of $1,000,000(£559,000) was made in 2003. £181,000 was utilised during 2005 (2004: 217,000)leaving a remaining provision of £161,000 (2004: £342,000). When Preliminarylegal fees have been quantified and recovery of costs resolved, any balanceremaining of the accounts provision will be released to the profit and lossaccount. 15. Contingent Liabilities a) Ramco Energy plc granted a parent company guarantee in respect of its whollyowned subsidiary Medusa Oil and Gas Limited (Medusa) to Jugopetrol A.D. Kotor(JPK) on 11 February 2003. The guarantee covers the obligations of Medusaarising from an agreement with JPK to carry out a specified work programme inconnection with their interests in Montenegro. In February 2005 Ramco andHellenic, JPK's parent company, restructured their relationship in Montenegro.This guarantee expired on 15 February 2006. b) Ramco Energy plc, on behalf of the Seven Heads co-venturers, has entered intoan agreement with Bord Gais Eireann("BGE") to underwrite a proportion of thecosts incurred by BGE in relation to the upgrade and refurbishment of theMidleton gas compressor station. The maximum liability under this agreement is€6 million but is reduced annually each October according to the amount oftariff revenue received by BGE from shippers of Seven Heads gas. Ramco haveassessed their worst case liability at €5.0 million. The net present value ofthis liability is €2.8 million. In light of the expectation that the Seven Headsgas field will continue to produce gas for several more years no provision iscurrently considered necessary. Following the sale of Ramco Celtic Sea Limited in February 2006 any and allexposure of Ramco to this contingent liability is covered by a back to backundertaking with Marathon Seven Heads Limited and guaranteed by Marathon OilCorporation. 16. Post Balance Sheet Events (a) Sale of Ramco Celtic Sea Limited On 2 February 2006 the Company concluded the sale of its subsidiary, RamcoCeltic Sea Limited, which held its 86.5% interest in the Seven Heads gas fieldfor £5.3 million in cash, net of expenses, to Marathon International PetroleumHibernia Limited. All of 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 the realisable amountat 31 December 2005 and consequently no gain or loss on disposal arose. (b) Flotation of Lansdowne Oil and Gas plc On 22 February 2006 the Company announced that it had placed its Irishexploration assets under the control of a recently established subsidiary,Lansdowne Oil and Gas plc ("Lansdowne"), which had completed a £750,000 privateplacing to provide working capital for the exploration assets. On 21 April 2006 the issued share capital of Lansdowne was admitted to tradingon the AIM market in conjunction with a placing of 1,882,353 shares at an issueprice of 85p which raised £1.6 million before expenses. At the placing price,Lansdowne had a market capitalisation of £17.7 million. The Company, through itssubsidiaries, retained an 86.25% interest in Lansdowne following the issue ofthe new capital. (c) Litigation On 6 June 2006, the Fourteenth Texas Court of Appeals delivered its decision onthe appeals lodged by both parties to the Tenge lawsuit. The original judgementissued to Anglo Dutch in 2004 was reversed in its entirety. The decisionconcluded by stating "we reverse the trial court's judgement and renderjudgement that the Plaintiffs take nothing against the Ramco Parties" (see note14) (d) Placing of shares On 5 April 2006 the Company issued 520,322 new ordinary shares of 10p each at aprice of 28.5p to the pension fund of Stephen Remp, Chairman. The placing raised£148,000 to supplement working capital. On 1 June 2006 the company issued 400,400 ordinary shares of 10p each to thepension fund of Stephen Remp at a price of 12.5p per share and also 952,380ordinary shares of 10p each to an institutional investor at a price of 10.5peach. The placing raised £150,000. (e) Office building Following the disposal of our Oil Services division and our only producingassets the Seven Heads gas field we have considerably reduced our head officestaffing levels and our existing office is now too large for our needs. As aresult we have concluded the sale of the building for £1.5 million and we willshortly be relocating to new offices. (f) Bulgaria In January 2005 we announced that we had converted our 20% working interest inthe A Lovech block onshore Bulgaria into an 11 % interest carried through aplanned extensive 3D seismic programme. A change in ultimate ownership of theoperator in this project Anschutz Bulgaria Limited was the catalyst for a changeto the plan for the block, with the objective of accelerating a drillingprogramme. We have in the past few weeks agreed a revised deal where ourinterest reverts to its former level of 20% but we are fully carried throughthis years work programme. The work programme includes a smaller 16. Post Balance Sheet Events continued seismic survey and use of the operators proprietary technology aimed at firmingup a well site for drilling in 2007. 17. Comparative information Due to the fall in production of the Seven Heads gas field the Directorsconsider that it is more appropriate to show the hedge costs in the cost ofsales rather than turnover. The prior periods have been restated to reflect thiswith no effect on the gross profit or net loss. The comparative financial information is based on statutory accounts for theyear ended 31 December 2004. Those accounts, upon which the auditors have issuedan unqualified opinion, have been delivered to the Registrar of Companies. 18. Annual Report and Financial Statements The auditors have indicated that it is their intention to issue a modifiedopinion on the financial statements to draw attention to the matters discussedin note 1. The Annual Report and Financial Statements will be mailed to shareholders and isavailable from the company's website, www.ramco-plc.com. This information is provided by RNS The company news service from the London Stock Exchange