SEA.L Regulatory News (SEA)

29 Sep 2006 07:02

Ramco Energy PLC29 September 2006 Press Information 29 September 2006 Ramco Energy plc ("Ramco" or the "Company") Unaudited Interim Results for the six months ending 30 June 2006 Highlights • Sale of interest in Seven Heads gas field • Listing on AIM of Lansdowne Oil & Gas plc - Ramco retains an interest of 86.25% with a current market value £11.3 million • Repayment of all remaining recourse bank debt • Successful appeal in Tenge lawsuit • Sale of office building in Aberdeen concluded raising £1.5 million • Cash balances of £3.3 million as at 30 June 2006 Steve Remp, Chairman of Ramco, commented: "The first half of 2006 has seen Ramco achieve a number of significantmilestones and we have now successfully left our recent troubled past behind us. We are now in a position where can start to identify new opportunities withthe potential for early cash flow from which we can build for the future." ENQUIRIES: Ramco Energy - Aberdeen 01224 352 200Steven Bertram, Managing Director College Hill - London 020 7457 2020Nick Elwes I am pleased to report our unaudited interim results for the six month periodended 30 June 2006. During the period under review, we achieved a series ofcritical milestones, all of which were fundamental in enabling the Company tostart the process of identifying new opportunities for growth. These milestonesincluded the sale of our interest in the Seven Heads gas field, the repayment ofall remaining recourse bank debt, the release of all associated guarantees andsecurities, the retention, through the Lansdowne fund raising, of our remaininglicences in Ireland and the successful appeal in the long running Tenge lawsuit. Financials The Group recorded an after tax loss of £1.5 million in the first half of 2006compared with a loss of £1.6 million in the first half of 2005. Group turnover for the first six months of 2006 was £1.0 million, compared with£7.3 million over the corresponding period of 2005. This sharp reductionreflects both the sale of our oil services business at the end of 2005 and thesale of our interest in the producing Seven Heads gas field in February 2006. Administrative expenses for the first half of 2006 were £0.3 million comparedwith £0.4 million in the first six months of 2005. Net interest receivable over the first six months was £26,000 compared with netinterest payable of £2.6m in the first half of 2005. This reduction reflects therepayment of the recourse bank debt in December 2005. The Group's head office building was sold in June 2006 and we will shortly berelocating to new offices. The sale of the building realised £1.5 million inJune and at 30 June 2006 the Group had cash balances of £3.3 million with allrecourse bank debt having been repaid. The Board is not recommending the payment of an interim dividend. Ireland Earlier this year, even while our freedom of manoeuvre was restricted by theTenge lawsuit, we raised new money for our subsidiary Lansdowne Oil & Gas plc,and applied for its share capital to be admitted to AIM. Lansdowne holds all ourremaining interests in Ireland and Ramco holds 86.25 per cent. of its shares.Lansdowne has a market capitalisation today of £13.1 million on AIM and ourinterest has a value of £11.3 million. Since its admission to AIM, Lansdowne has successfully completed additionaltechnical work on its Celtic Sea assets and is currently focussed on seekingfarm-in partners in order to firm up a drilling programme for 2007. Lansdowne'sinterest in the Donegal basin, off the northwest of Ireland, was drilled inAugust. Unfortunately the Inishbeg prospect was plugged and abandoned as a drywell. Whilst this was a disappointing outcome, Lansdowne was fully carriedthrough this well, and is now working with its partners to integrate the wellresults with all its previous work in the area, to determine the remainingpotential of the Licence. Bulgaria We announced in June that we had reverted to a 20 per cent. interest in the ALovech block, onshore Bulgaria, with our costs carried through 2006. It hassince become clear that our partner in the acreage wishes to progress anaggressive drilling programme, which we do not believe we should support withoutthe benefit of further seismic work. In order to allow our partner to progressits plans without undue delay, we have, this week, agreed to sell our 20 percent. interest to our partner for $1.45 million plus a 0.1 per cent. royaltyover all future production from the acreage. Montenegro Our interest in three blocks, offshore Montenegro (Prevlaka Blocks 1 & 2 andUlcinj Block 3), has, since February 2005, comprised an option to rejoin theconcession holder, JugoPetrol Kotor ("JPK"), a subsidiary of Hellenic Petroleum("Hellenic"), once the first exploration well has been drilled on the acreage.JPK and Hellenic have informed us that their attempts to re-negotiate concessionterms with the Government of Montenegro have reached an impasse and that theGovernment has intimated its unilateral decision to terminate the concessionover the Ulcinj block. JPK and Hellenic are disputing the validity of thisunilateral decision and are attempting to resolve the matter. The concessionover the remaining two Prevlaka blocks is unaffected by this dispute. Litigation Since my last statement in June, shortly after the Fourteenth Texas Court ofAppeals ruled in our favour in the Tenge dispute, little has changed with regardto this case. The plaintiffs filed a motion with the Court of Appeals for areview of its ruling but the Court has yet to consider that motion. Thedirectors, after consultations with the Group's lawyers, do not consider itnecessary to alter the existing provisions in the accounts. Outlook We have cleared the decks of our past problems and are now in a position wherewe can start to actively identify new opportunities for growth. We are alreadyin the early stages of considering a number of new projects and are seeking toidentify opportunities with the potential for early cash flow. Ramco Energy plc Consolidated Profit and Loss Account 6 Months 6 Months Restated to to Year to Continuing Discontinued 30/06/06 Continuing Discontinued 30/06/05 Continuing Discontinued 31/12/05 Operations Operations Total Operations Operations Total Operations Operations Total unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover -Group andshare of jointventure andassociates - 986 986 - 9,146 9,146 - 17,212 17,212 Less share ofjoint ventureand associates - - - - (1,850) (1,850) - (3,548) (3,548) Group turnover 2 - 986 986 - 7,296 7,296 - 13,664 13,664 Cost of salesbeforeexceptionalitems (863) (378) (1,241) (441) (10,326) (10,767) (475) (22,060) (22,535) Exceptionalitems 3 - - - - 5,334 5,334 - 15,681 15,681 Cost of salesafterexceptionalitems (863) (378) (1,241) (441) (4,992) (5,433) (475) (6,379) (6,854) Gross (loss) /profit (863) 608 (255) (441) 2,304 1,863 (475) 7,285 6,810 Administrativeexpensesbeforeexceptionalitems (326) - (326) (308) (132) (440) (425) (445) (870) Exceptionalitems 4 - - - (605) - (605) (605) - (605) Administrativeexpenses afterexceptionalitems (326) - (326) (913) (132) (1,045) (1,030) (445) (1,475) (Loss)/ gainon exchange (9) (6) (15) 2 (35) (33) (2) - (2) Groupoperating(loss) /profit (1,198) 602 (596) (1,352) 2,137 785 (1,507) 6,840 5,333 Exceptionalitem 4 - (923) (923) - - - - (809) (809) Share ofoperatingprofit injoint ventureand associates - - - - 335 335 - 656 656 (Loss) /profit beforeinterest andtaxation (1,198) (321) (1,519) (1,352) 2,472 1,120 (1,507) 6,687 5,180 Net interestreceivable /(payable) 26 (2,571) (3,290) (Loss) /profit onordinaryactivitiesbeforetaxation (1,493) (1,451) 1,890 Tax charge on(loss) /profit onordinaryactivities - (100) (84) (Loss) /profit onordinaryactivitiesafter taxation (1,493) (1,551) 1,806 Minorityinterests 11 11 - - Retained(loss) /profitfor the period 10 (1,482) (1,551) 1,806 (Loss) /profit perordinary share- basic andfully dilutedOn (loss) /profit for thefinancialperiod 5 (4.4)p (5.1)p 5.7p There is no material difference between the loss on ordinary activities beforetaxation and the retained loss for the period stated above, and their historicalcost equivalents. There were no recognised gains and losses other than the lossabove and therefore no separate statement of total recognised gains and losseshas been presented. Ramco Energy plcConsolidated Group Balance Sheet As at As at As at 30/06/06 30/06/05 31/12/05 unaudited unaudited audited Note £'000 £'000 £'000 Fixed assetsIntangible assets 6,463 6,139 6,278Other fixed assets 6 136 16,153 11,567Investments Share of joint venture's gross assets - 1,844 - Share of joint venture's gross liabilities - (479) - Share of joint venture's net assets - 1,365 - In associated undertakings - 106 - Other fixed asset investments - 2 - Total investments - 1,473 - 6,599 23,765 17,845 Current AssetsStocks - 936 - Debtors : amounts falling due within one year 606 3,899 1,648Cash at bank and in hand 3,335 5,275 4,799 3,941 10,110 6,447Creditors : amounts falling due within one year 7 (2,679) (24,599) (11,618)Net current assets / (liabilities) 1,262 (14,489) (5,171)Total assets less current liabilities 7,861 9,276 12,674Provisions for liabilities and charges (26) (5,335) (5,385)Net assets 7,835 3,941 7,289 Capital and reservesCalled up share capital 8 3,502 3,314 3,314Share premium account 69,405 69,294 69,294Revaluation reserve - 743 - Other reserves - (21) - Profit and loss account 9 (66,801) (69,389) (65,319)Equity shareholders' funds 10 6,106 3,941 7,289Minority Interests - equity 11 1,729 - - 7,835 3,941 7,289 Ramco Energy plcConsolidated Cash Flow Statement 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited Note £'000 £'000 £'000 Net cash (outflow) / inflow from operating activities 12(a) (732) 2,354 3,542Net cash inflow / (outflow) from returnson investments and servicing of finance 26 (383) (638) Taxation paid - (159) (27) Net cash inflow / (outflow) for capitalexpenditure and financial investment 1,324 (320) (435)Acquisitions and Disposals 12(d) (1,251) - 11,801 Net cash (outflow) / inflow before financing (633) 1,492 14,243Net cash (outflow) / inflow from financing (831) 518 (12,709)(Decrease) / increase in cash 12(b) (1,464) 2,010 1,534 Ramco Energy plc Notes to the Financial Statements 1. Basis of presentation The interim financial information for the six months ended 30 June 2005 and 30June 2006 is unaudited, but has been prepared on the basis of accountingpolicies expected to be adopted in the financial statements for the year ended31 December 2006. The accounting policies are consistent with those set out inthe audited accounts for the year ended 31 December 2005. 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 2005 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 cash flow assumptions in theGroup's cash flow forecast. This report relates to the six month period ending 30 June 2006 and was approvedby a duly appointed and authorised committee of the Board of Directors on 28September 2006. It should be read in conjunction with the financial statementsfor the year ended 31 December 2005. 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 The exceptional administrative expenses disclosed in the results to 30 June 2005were not separately disclosed in the results to 31 December 2005. The Directorsconsider that it is more appropriate to show these items separately andtherefore the comparative period has been restated to reflect this with noeffect on the group operating profit. 2. Segmental Reporting Oil & Gas Oil Services Total 6 months 6 months Year 6 months 6 months Year 6 months 6 months Year to 30/06 to 30/06 to 31/ to 30/06 to 30/06 to 31/ to 30/06 to 30/06 to 31/ /06 /05 12/05 /06 /05 12/05 /06 /05 12/05 unaudited unaudited audited unaudited unaudited audited unaudited unaudited audited £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 986 3,183 4,787 - 5,963 12,425 986 9,146 17,212 Less joint venture and - - - - (1,850) (3,548) - (1,850) (3,548)associates Group turnover 986 3,183 4,787 - 4,113 8,877 986 7,296 13,664 Profit before amounts notallocated to segments :Group (255) 1,319 4,148 - 544 2,662 (255) 1,863 6,810 Joint venture and - - - 335 656 - 335 656associates (255) 1,319 4,148 - 879 3,318 (255) 2,198 7,466 Administrative expenses (326) (440) (870)Administrative expenses - - (605) (605)exceptional items - Note 4 Loss on exchange (15) (33) (2)Exceptional items (923) - (809) (Loss) / profit before (1,519) 1,120 5,180interest and taxation Net interest 26 (2,571) (3,290)(Loss) / profit on ordinary (1,493) (1,451) 1,890activities before taxation The turnover for the oil and gas division relates to the Seven Heads gas field which was sold in February 2006. Thishas been included in discontinued operations in the profit and loss account. Ramco Energy plcNotes to the Financial Statements continued 3. Exceptional items - Cost of Sales 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000Impairment provision - Seven Heads - - 634 Reversal of impairment provision - Seven Heads - - (5,485) Impairment borne by finance provider - (6,707) (10,830) Mezzanine finance written off - - (8,600) Reversal of impairment borne by finance - - 8,600 provider- mezzanine financeInventory written down to net realisable value - 1,373 - - (5,334) (15,681) 4. Exceptional items - Administrative expenses 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 Loss on sale of Ramco Celtic Sea Limited (a) 923 - -Loss on sale of Ramco Oil Services Limited (b) - - 809 Professional fees - 605 605 Sale of subsidiaries (a) 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 Heads gas field to Marathon International PetroleumHibernia Limited. All of the proceeds of the sale, after costs, flowed to the Company's projectfinance lenders and retired sums due to them. The business of RCSL has beentreated as a discontinued operation in the profit and loss account. (b) On 16 December 2005 the Group sold Ramco Oil Services Limited (ROSL)together with its subsidiaries for £12.6 million in cash after costs. The ROSLsub group provided downhole tubular maintenance and pipeline coating servicesand the disposal of the ROSL sub group ceased the Ramco Group's involvement inthese activities. This disposal resulted in a material change in the nature andfocus of the Group's operations. It has been treated as a discontinued operationin the profit and loss account. (c) Professional Fees The exceptional costs relate to professional fees and expenses incurred inrespect of a transaction aborted in April 2005. 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 for thefinancial period of £1,493,000 (six months to 30/06/05 loss £1,551,000, year to31/12/05 profit £1,806,000 and 33,608,682 (30/06/05 - 30,260,735 and 31/12//05 -31,714,576) ordinary shares, being the weighted average number of ordinaryshares in issue during the period. 6 Months to 30/06/06 6 Months to 30/06/05 Year to 31/12/05 Restated Continuing Discontinued Continuing Discontinued Continuing Discontinued Operations Operations Total Operations Operations Total Operations Operations Total unaudited unaudited unaudited unaudited unaudited unaudited audited audited audited £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (Loss) / profit before (1,198) (321) (1,519) (1,352) 2,472 1,120 (1,507) 6,687 5,180interest and taxation Net interest 49 (23) 26 8 (2,579) (2,571) 18 (3,308) (3,290)(Loss) / profit on (1,149) (344) (1,493) (1,344) (107) (1,451) (1,489) 3,379 1,890ordinary activitiesbefore taxation Tax charge on (loss) / - - - - (100) (100) (21) (63) (84)profit on ordinary activities (Loss)/profit on (1,149) (344) (1,493) (1,344) (207) (1,551) (1,510) 3,316 1,806ordinary activitiesafter taxation Minority interests 11 - 11 - - - - - - (Loss) / profit for the (1,138) (344) (1,482) (1,344) (207) (1,551) (1,510) 3,316 1,806financial period (Loss) / profit perordinary share - basicand fully diluted on(loss)/profit for the (3.4)p (1.0)p (4.4)p (4.4)p (0.7)p (5.1)p (4.8)p 10.5p 5.7pfinancial period 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 warrants. The lowest exercise price of the share options is 34p pershare. In August 2005 warrants over 3,000,000 shares of 10p each, with anexercise of 34p each, were issued to the Group's lenders. Share options andwarrants 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. Other Tangible Fixed Assets The movement in tangible fixed assets during the period amounted to a reductionof £11,431,000 which mainly related to the disposal of the interest in the SevenHeads gas field. 7. Creditors 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 Amounts falling due within one year :Bank loan - 19,175 8,201 Other amounts 2,679 5,424 3,417 2,679 24,599 11,618 Amounts falling due after one year :Bank loanMain & mezzanine 68,415 67,915 68,415Unpaid gas price hedge 13,199 7,087 13,199Unpaid interest on loan 4,556 4,292 4,556Cumulative Repayments (21,928) - (13,727) 64,242 79,294 72,443Less: Impairment borne by non-recourse finance (64,242) (60,119) (64,242)provider - 19,175 8,201 Amounts falling due within one year - (19,175) (8,201) - - - The Bank Loan amounts included in creditors due within one year, as at 31December 2005, of £8.2 million were repaid in February 2006. 8. Share Capital On 5 April 2006, 520,322 new ordinary shares of 10p each were issued for 28.5pper share. The issue raised £149,000. 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. 9. Profit and Loss account 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 Opening balance (65,319) (67,838) (67,838)(Loss) / profit for the period (1,482) (1,551) 1,806Released on disposal - - 713 Closing balance (66,801) (69,389) (65,319) 10. Reconciliation of Movement in Shareholders' Funds 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 (Loss) / profit for the period (1,482) (1,551) 1,806Issue of ordinary share capital 299 1,018 1,018Amortisation of deferred gain on asset sold to joint venture - (9) (18) Net change in shareholders' funds (1,183) (542) 2,806Opening shareholders' funds 7,289 4,483 4,483Closing shareholders' funds 6,106 3,941 7,289 11. Minority Interests 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 At start of period - - - Arising on flotation of subsidiary 1,740 - - Share of results for period (11) - - As at end of period 1,729 - - 12. Notes to Consolidated Cash Flow Statement (a) Reconciliation of operating (loss) / profit to net cash flow fromoperating activities 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 Operating (loss) / profit (596) 785 5,333Amortisation of goodwill - 15 30Gain on sale of investments - - (142)Depreciation of tangible fixed assets 167 649 1,133Gain on sale of tangible fixed assets (111) (9) (9)Amortisation of deferred gain on asset sold - (9) (18)to joint ventureDecrease in stocks - 1,395 2,109Decrease / (increase) in debtors (128) 1,232 (248)(Decrease) / increase in creditors 67 339 357(Decrease) / increase in provisions (131) (80) (178)Impairment provision - - (4,851)Unpaid gas price hedges added to loan - 4,744 10,856Impairment borne by finance provider - (6,707) (10,830) Net cash (outflow) / inflow from continuing (732) 2,354 3,542operating activities (b) Reconciliation of net cash flow to movements in net funds/(debt) 6 Months 6 Months Year to 30/06/06 to 30/06/05 to 31/12/05 unaudited unaudited audited £'000 £'000 £'000 (Decrease) / increase in cash (1,464) 2,010 1,534Cash outflow from decrease in debt 8,201 500 13,727Bank loan - impairment borne by non-recourse finance provider - 6,707 10,830 Unpaid gas price hedge and interest on loan - (6,707) (13,083) Change in net debt resulting from cash flows 6,737 2,510 13,008 Net debt at start of period (3,402) (16,410) (16,410) Net funds / (debt) at end of period 3,335 (13,900) (3,402) Represented by:Cash at bank and in hand 3,335 5,275 4,799Debt due within one year - (19,175) (8,201) 3,335 (13,900) (3,402) (c) Analysis of changes in net (debt) / funds At start Cash flow At end £'000 £'000 £'000 Cash at bank 4,799 (1,464) 3,335Bank loan (8,201) 8,201 - (3,402) 6,737 3,335 (d) Disposal of RCSL The Group disposed of RCSL on 2 February 2006 (see note 4). £'000Other fixed assets 9,866Debtors 1,170Cash 1,251Creditors (6,136)Provisions (5,228) 923Loss on disposal (923)Cash inflow from disposal - RCSL contributed £0.8 million of the 2006 operating cash flows. 13. Litigation Following a jury verdict in October 2003, the Texas State Court issued a finaljudgement on 1 April 2004 against Ramco Energy plc, Ramco Oil Limited andcertain other defendants in a case alleging breach of contract arising fromconfidentiality and non-circumvention obligations. These obligations arose whileRamco was considering investment in an oilfield development project inKazakhstan which Ramco subsequently decided not to pursue. Ramco'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 originaljudgment 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 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 filed a motion with the Court of Appeals for a review of itsruling but the Court has yet to consider that motion. 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. This has now been fully utilised. The Directorsconsider that no further provision is necessary as it is expected that anyadditional U.S. costs will be offset by the recovery of costs associated withthe Scottish action. This information is provided by RNS The company news service from the London Stock Exchange