SEA.L Regulatory News (SEA)

30 Sep 2005 11:31

Ramco Energy PLC30 September 2005 Press Information 30th September 2005 Ramco Energy plc ("Ramco or the Company") Interim Results for the six months ended 30 June 2005 Ramco, the Aberdeen based oil and gas exploration company, announces interimresults for the six months ended 30 June 2005. Financial Highlights • Turnover was £7.3m (2004: £25.5m) • After tax loss of £1.6m (2004: £1.0m) • Both divisions profitable at the operating level • On target to be debt free by the end of 2005 • Placing of 3 million shares at 34p each successfully completed in June Operational Highlights • Seven Heads production maintained at 4mmscfd • 3D seismic survey in Bulgaria to commence in November, Ramco substantially carried • One well anticipated in 2006 in the Donegal Basin, through which Ramco is carried • Interested parties have tabled offers for Seven Heads and the Oil Services Business Steve Remp, Chairman of Ramco, commented: "Having stabilised the business we now have in place a clear turnaroundstrategy. With negotiations for the disposals of Seven Heads and the OilService Business in the final stages, the business is again focussed onexploration: a 3D seismic survey in Bulgaria is due to commence in November andan exploration well on our Irish acreage is targeted for 2006. We are determined to make Ramco a success and re-capture value for shareholders." ENQUIRIES: Ramco Energy - Aberdeen 01224 352 200Steve Remp, Executive ChairmanSteven Bertram, Managing Director College Hill - London 020 7457 2020Nick Elwes / Ben Brewerton Fleishman-Hillard Saunders - Dublin 00 353 1 618 8450Michael Parker Chairman's Statement I am pleased to report that we have taken the first steps in our plannedturnaround and we remain on target to achieve our stated goal of being debt freeby the end of 2005. We have been running in parallel the sales processes for our interest in theSeven Heads gas field and our oil service businesses, and a number of interestedparties have tabled offers. We are currently in the final stages of ournegotiations for their disposal. Completion of this process will provide the platform from which we will launch anew strategy which the Board believes will allow us to re-capture value for allour stakeholders. Financial Results In the first half of 2005 the Group recorded an after tax loss of £1.6 millioncompared with a loss of £1.0 million in the first half of 2004. Group turnover was £7.3 million compared with £25.5 million in the first half of2004. The reduction in turnover is due almost entirely to the lower gas salesunder the Seven Heads Gas Sales Agreement. The Oil and Gas division reported a half year profit of £1.3 million up from£1.2 million in the first six months of 2004. Oil Services recorded a first halfprofit of £0.9 million the same as in the corresponding period last year. Group administrative expenses in the first half were £1.0 million up from £0.7million last year. However, after removing the impact of exceptionaladministrative expenses of £0.6 million relating to the cost of an abortedtransaction announced earlier this year, the trend is strongly downwards £0.4million compared to £0.7 million last year. Net interest payable over the first six months was £2.6 million up from £2.2million in the same period of last year. The Group loss after tax was £1.6 million compared with £1.0 million in thefirst half of 2004. Following the placing of 3 million new shares at 34p each in June 2005, Groupcash balances at 30 June 2005 were £5.3 million, of which £2.4 million is ringfenced within the Seven Heads project finance arrangements. Seven Heads The gas field continues to perform in accordance with current year expectationsand production has been maintained at 4 mmscfd throughout the summer months.Negotiations are in progress with the selected preferred bidder for the Group's86.5% working interest in the field. It is expected that a sale can be completedbefore year-end. Exploration Interests Ireland Lundin Exploration BV, the operator of the Donegal Basin acreage, is finalisingthe detailed planning for the well to be drilled to test the Triassic InishbegProspect. The timing of an exploration well on this block is currently uncertaindue to limited rig availability, but it is anticipated that the well will bedrilled in 2006. Ramco has entered into a farm-out agreement and will be carriedthrough the costs of the first well, whilst retaining a 19.25% interest. In the Celtic Sea the extensions to the four Licensing Options in which we havean interest has enabled further technical studies to be undertaken. The resultsof these studies are scheduled to be available during the last quarter of theyear. Bulgaria The 570 sq km 3D seismic survey, through which we are substantially carried, isscheduled to commence in November 2005. The field work is expected to becomplete during quarter 3 of 2006 and on that basis we would expect interpretedresults to be available before the end of 2006. The interpreted results will form the basis for taking the decision on whetherto retain the acreage beyond March 2007, through committing to drilling anexploration well. Montenegro After government approvals have been received, the restructuring of ourinterests announced earlier in the year will give Ramco an option to re-join theacreage offshore Montenegro once the first exploration well has been completed.At that point we will have the opportunity, with the benefit of well results, toreacquire an interest of up to 15% in the acreage. Oil Services The first half of the year has seen Oil Services produce results similar tothose recorded for the same period last year. Our international operations areahead of budget with our UK operations slightly below. This is as a result of aslower than expected upturn in activity at our Badentoy facility. The upturnstarted to materialise late in the second quarter and should continue and allowus to meet our target for the full year. Our Pipeline joint venture atHartlepool has successfully completed a number of coating contracts and has astrong order book for the balance of the year. Litigation The appeal and related proceedings arising from the judgement awarded to AngloDutch in the Texas State Court continue. As reported in our preliminary resultsissued on 30 June 2005, the appeal and the plaintiff's cross-appeal, to theFourteenth Texas Court of Appeals, were heard in Houston on 26 April 2005 andthe court's decision is still awaited. This process may be followed by a furtherappeal by either party to the Texas Supreme Court. Proceedings raised by Anglo Dutch in the Court of Session, Edinburgh, with aview to enforcing the Texas judgement in Scotland, were suspended pending thereview by the Texas Court of Appeals of an order fixing the amount of a bondwhich, if lodged by Ramco in Houston, would suspend any enforcement in Texas andelsewhere. The court has now fixed that amount at $5.27 million which givesRamco the right, without any obligation, to lodge such a bond. While Ramcoawaits the Texas Court of Appeals' decision on the appeal and cross-appeal, itwill continue to contest the parallel enforcement proceedings in Scotland. Outlook The Board feels that much has been achieved in the first half of 2005 in termsof stabilising the Company and setting the scene for the turnaround of Ramco. Aclear plan of action was adopted and the results are now beginning to comingthrough. This is a team with a history of significant successes and adetermination to succeed once again. Ramco Energy plc Consolidated Profit and Loss Account Restated Restated 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited Note £'000 £'000 £'000 Turnover - Group and share of joint venture and associates 9,146 27,435 45,568Less share of joint venture and associates (1,850) (1,940) (3,641)Group turnover 2 7,296 25,495 41,927Cost of sales before exceptional items (10,767) (23,797) (45,519)Exceptional items 3 5,334 - 5,714 Cost of sales after exceptional items (5,433) (23,797) (39,805)Gross profit 1,863 1,698 2,122Administrative expenses before exceptional items (440) (682) (1,421)Exceptional items 4 (605) - -Administrative expenses after exceptional items (1,045) (682) (1,421)Loss on exchange (33) (58) (103)Group operating profit 785 958 598Share of operating profit in joint venture and associates 335 390 681Profit before interest and taxation 1,120 1,348 1,279Net interest payable (2,571) (2,238) (4,565)Loss on ordinary activities before taxation (1,451) (890) (3,286)Tax on loss on ordinary activities (100) (83) (91)Retained loss for the financial period 9 (1,551) (973) (3,377) Loss per ordinary share - basic and fully dilutedOn loss for the financial period 5 (5.1)p (3.2)p (11.2)p The results relate to continuing operations. There is no material difference between the loss on ordinary activities beforetaxation and the retained loss for the year stated above, and their historicalcost equivalents. Consolidated Statement of Total Recognised Gains and Losses 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Loss for the financial period (1,551) (973) (3,377)Unrealised translation differences on foreign currency net investments - (25) 16 Total recognised losses relating to the period (1,551) (998) (3,361) Ramco Energy plc Consolidated Group Balance Sheet As at As at As at 30/06/05 30/06/04 31/12/04 unaudited unaudited audited Note £'000 £'000 £'000 Fixed assetsIntangible assets 6 6,139 5,193 5,906Producing assets 7 5,254 46,721 5,622Other fixed assets 10,899 11,385 11,084Investments Share of joint venture's gross assets 1,844 2,242 2,575 Share of joint venture's gross liabilities (479) (798) (1,503) Share of joint venture's net assets 1,365 1,444 1,072 In associated undertakings 106 58 80 Other fixed asset investments 2 102 2Total investments 1,473 1,604 1,154 23,765 64,903 23,766 Current AssetsStocks 936 2,337 2,331Debtors : amounts falling due within one year 3,899 6,361 5,203Cash at bank and in hand 5,275 5,337 3,265 10,110 14,035 10,799Creditors : amounts falling due within one year 8 (24,599) (25,764) (24,808)Net current liabilities (14,489) (11,729) (14,009)Total assets less current liabilities 9,276 53,174 9,757Creditors : due after more than one year 8 - (40,710) - Provisions for liabilities and charges (5,335) (5,569) (5,274)Net assets 3,941 6,895 4,483 Capital and reservesCalled up share capital 3,314 3,014 3,014Share premium account 69,294 68,576 68,576Revaluation reserve 743 801 752Other reserves (21) (62) (21)Profit and loss account 9 (69,389) (65,434) (67,838)Equity shareholders' funds 10 3,941 6,895 4,483 Ramco Energy plc Consolidated Cash Flow Statement 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited Note £'000 £'000 £'000 Net cash inflow from continuing operating activities 11(a) 2,354 5,720 6,728Returns on investments and servicing of financeInterest received 68 187 376Interest paid (451) (1,818) (3,994)Net cash outflow from returnson investments and servicing of finance (383) (1,631) (3,618)TaxationOverseas tax paid (159) (163) (170)Taxation paid (159) (163) (170)Capital expenditure and financial investmentPurchase of tangible fixed assets (96) (39) (86)Sale of tangible fixed assets 9 32 54Oil & gas expenditure - intangible assets (233) (657) (1,370)Oil & gas expenditure - producing assets - (9,812) (10,202)Sale of investment - - 42Net cash outflow for capitalexpenditure and financial investment (320) (10,476) (11,562)Net cash inflow / (outflow) before financing 1,492 (6,550) (8,622)Financing(Decrease) / increase in debt (500) 8,600 8,600Issue of share capital (net of issue cost of £1,800) 1,018 - -Net cash inflow from financing 518 8,600 8,600Increase / (decrease) in cash 11(b) 2,010 2,050 (22) Ramco Energy plc Notes to the Financial Statements 1. Basis of presentation The interim financial information for the six months ended 30 June 2004 and 30June 2005 is unaudited, but has been prepared on the basis of accountingpolicies expected to be adopted in the financial statements for the year ended31 December 2005. The accounting policies are consistent with those set out inthe audited accounts for the year ended 31 December 2004. This interim financialinformation does not constitute statutory accounts within the meaning of Section240 of the Companies Act 1985. The financial information for the year ended 31 December 2004 has been extractedfrom the financial statements of the Company which have been delivered to theRegistrar of Companies. The auditors report on those financial statements wasunqualified but modified by reference to Note 1 to the financial statements,Basis of Preparation - Going concern, regarding the Group's current borrowingfacilities and ongoing negotiations with its bankers and certain third partiesand outstanding litigation proceedings in the United States. This report relates to the six month period ending 30 June 2005 and was approvedby a duly appointed and authorised committee of the Board of Directors on 29September 2005. It should be read in conjunction with the financial statementsfor the year ended 31 December 2004. Particular attention is drawn to Note 1 ofthose financial statements - Basis of Preparation - Going concern whichdescribes uncertainties surrounding the Group's ability to continue as a goingconcern, and the Directors conclusion of why they believe it was appropriate forthe financial statements to be prepared on the going concern basis. Comparative Period 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 cost of salesrather than turnover. The prior periods have been restated to reflect this withno effect on the gross profit or net loss. 2. Segmental Oil & Gas Oil Services TotalReporting Restated Restated Restated Restated 6 months 6 months Year 6 months 6 months Year 6 months 6 months Year to 30/06/ to 30/06/ to 31/12 to 30/06/ to 30/06/ to 31/12 to 30/06/ to 30/06/ to 31/12 05 04 /04 05 04 /04 05 04 /04 unaudited unaudited audited unaudited unaudited audited unaudited unaudited audited £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 3,183 21,062 32,861 5,963 6,373 12,707 9,146 27,435 45,568Less joint venture (1,850) (1,940) (3,641) (1,850) (1,940) (3,641)and associates - - -Group turnover 3,183 21,062 32,861 4,113 4,433 9,066 7,296 25,495 41,927 Profit before amountsnot allocated tosegments :Group 1,319 1,155 729 544 543 1,393 1,863 1,698 2,122Joint venture and 335 390 681 335 390 681associates - - - 1,319 1,155 729 879 933 2,074 2,198 2,088 2,803 Administrative (440) (682) (1,421)expensesAdministrative expenses - exceptional (605) - -items - Note 4 Loss on exchange (33) (58) (103)Profit before interest and 1,120 1,348 1,279taxation Net interest (2,571) (2,238) (4,565)Loss on ordinary activities (1,451) (890) (3,286)before taxation Hedge costs associated with the gas price have ben transferred from turnover tocost of sales in the current and comparative periods. There is no net effect onthe gross profit or net loss. 3. Exceptional items - Cost of Sales 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Impairment provision - Seven Heads - 9,832 47,698 Impairment borne by finance provider - capital - (9,832) (48,740) - unpaid gas price hedge (4,744) - (2,343) - unpaid interest on loan (1,963) - (2,329) Inventory written down to net realisable value 1,373 - - (5,334) - (5,714) 4. Exceptional items - Administrative Expenses 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Professional fees 605 - - The exceptional costs relate to professional fees and expenses incurred inrespect of a transaction aborted in April 2005. 5. Loss Per Share Basic and fully diluted loss per share The calculation of basic loss per share is based on the loss for the financialperiod of £1,551,000 (6 months to 30/06/04 loss £973,000, year to 31/12/04 loss£3,377,000) and 30,260,735 ordinary shares (30/06/04 - 30,144,713 and 31/12/04 -30,144,713), being the weighted average number of ordinary shares in issueduring the period. 6. Intangible Fixed Assets 6 months 6 months Year 30/06/05 30/06/04 31/12/04 unaudited unaudited audited £'000 £'000 £'000Cost :Opening balance 5,906 4,536 4,536Additions 233 657 1,370Closing balance 6,139 5,193 5,906 7. Producing Assets 6 months 6 months Year 30/06/05 30/06/04 31/12/04 unaudited unaudited auditedCost £'000 £'000 £'000 Opening balance 155,809 154,548 154,548Decommissioning asset - - 1,261Additions - 741 - 155,809 155,289 155,809 DepreciationOpening balance 150,187 93,478 93,478Provided during the period 368 5,258 9,011Impairment - 9,832 47,698 150,555 108,568 150,187 Net book value 5,254 46,721 5,622 8. Creditors 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited auditedAmounts falling due within one year : £'000 £'000 £'000 Bank loan 19,175 18,000 19,675Other amounts 5,424 7,764 5,133 24,599 25,764 24,808Amounts falling due after one year :Bank loanMain & mezzanine 67,915 68,542 68,415Unpaid gas price hedge 7,087 - 2,343Unpaid interest on loan 4,292 - 2,329 79,294 68,542 73,087Less: Impairment borne by non-recourse finance provider (60,119) (9,832) (53,412) 19,175 58,710 19,675Amounts falling due within one year (19,175) (18,000) (19,675) - 40,710 - 9. Profit and Loss account 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Opening balance (67,838) (64,461) (64,461)Loss for the period (1,551) (973) (3,377)Closing balance (69,389) (65,434) (67,838) 10. Reconciliation of Movement in Shareholders' Funds 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Loss for the period (1,551) (973) (3,377)Other recognised gains and losses relating to the year - (25) 16 Issue of ordinary share capital 1,018 - -Movement in revaluation - - (41) Amortisation of deferred gain on asset sold to joint venture (9) (9) (17)Net change in shareholders' funds (542) (1,007) (3,419)Opening shareholders' funds 4,483 7,902 7,902Closing shareholders' funds 3,941 6,895 4,483 11. Notes to Consolidated Cash Flow Statement (a) Reconciliation of operating profit to net cash flow from continuingoperating activities 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Operating profit 785 958 598Amortisation of goodwill 15 15 30Depreciation on producing assets 368 5,258 9,011Impairment provision - - 47,698 Unpaid gas price hedges added to loan 4,744 - 2,343 Depreciation on tangible fixed assets 281 319 626(Gain) / loss on sale of tangible fixed assets (9) 10 37Impairment borne by finance provider (6,707) - (53,412) Amortisation of deferred gain on asset sold to joint venture (9) (9) (17)Decrease / (increase) in stocks 1,395 (72) (66)Decrease in debtors 1,232 1,032 2,448Increase / (decrease) in creditors 339 (1,761) (2,446)(Decrease) / increase in provisions (80) 103 100Exchange difference on retranslation - (133) (222) Net cash inflow from continuing operating activities 2,354 5,720 6,728 (b) Reconciliation of net cash flow to movements in net debt 6 months 6 months Year to 30/06/05 to 30/06/04 to 31/12/04 unaudited unaudited audited £'000 £'000 £'000 Increase / (decrease) in cash 2,010 2,050 (22)Cash outflow / (inflow) from decrease / (increase) in debt 500 (8,600) (8,600)Revaluation of bank loan - exchange difference - 113 240Bank loan - impairment borne by non-recourse finance provider 6,707 9,832 53,412Unpaid gas price hedge and interest on loan (6,707) - (4,672)Change in net debt resulting from cash flows 2,510 3,395 40,358 Net debt at start of period (16,410) (56,768) (56,768) Net debt at end of period (13,900) (53,373) (16,410) Represented by:Cash at bank and in hand 5,275 5,337 3,265Debt due within one year (19,175) (18,000) (19,675)Debt due after one year - (40,710) - (13,900) (53,373) (16,410) The cash balances of £5.3 million above include £2.4 million which is ringfenced within the Seven Heads project finance arrangements. (c) Analysis of changes in net debt At start Cash flow At end £'000 £'000 £'000 Cash at bank 3,265 2,010 5,275Bank loan (19,675) 500 (19,175) (16,410) 2,510 (13,900) 12. Litigation The appeal and related proceedings arising from the judgement awarded to AngloDutch in the Texas State Court continue. As reported in our preliminaryresults for 2004 issued on 30 June 2005, the appeal and the plaintiff'scross-appeal, to the Fourteenth Texas Court of Appeals were heard in Houston on26 April 2005 and the court's decision is still awaited. This process may befollowed by a further appeal by either party to the Texas Supreme Court.Proceedings raised by Anglo Dutch in the Court of Session, Edinburgh, with aview to enforcing the Texas judgement in Scotland, were suspended pending thereview by the Texas Court of Appeals of an order fixing the amount of a bondwhich, if lodged by Ramco in Houston, would suspend any enforcement in Texas andelsewhere. The court has now fixed that amount at $5.27 million which givesRamco the right, without any obligation, to lodge such a bond. While Ramcoawaits the Texas Court of Appeals' decision on the appeal and cross-appeal, itwill continue to contest the parallel enforcement proceedings in Scotland. Because of the uncertainty surrounding the range of possible outcomes, theDirectors consider it is not possible to make a reliable estimate of the likelyoutcome of the appeal process beyond providing an estimate of the legal costs ofpursuing the appeals, and accordingly a provision of $1 million (£559,000) wasmade in 2003. £109,000 was utilised during the first half of 2005 (year to 31/12/04 - £217,000) leaving a remaining provision of £233,000. This information is provided by RNS The company news service from the London Stock Exchange