SEA.L Regulatory News (SEA)

20 Sep 2007 10:37

Ramco Energy PLC20 September 2007 Ramco Energy plc Interim Results for the half year ended 30 June 2007 Operations: O Lansdowne Oil & Gas ("Lansdowne"), awarded two exploration licences in the Celtic Sea. Ramco hold 61% of Lansdowne. O £500,000 of funding secured for Mesopotamia Petroleum Company ("MPC") - formed to secure a position in Iraq, MPC to accelerate its strategy. Ramco retain 32.67% of MPC. Financials: O After tax profit of £127,000 from continuing operations O First results under International Financial Reporting Standards O Raised £2.6million through divestiture of 25% of Lansdowne O At 30 June 2007 cash balances of £3.6 million Corporate: O Steve Lampe of Lampe Conway in New York joins the board as a Non - Executive Director Steve Remp, Chairman of Ramco, said: "The first half of the year has seen sustained progress in our turnaroundstrategy. The end of the Tenge lawsuit in April cleared the way for new activityto begin. Our involvement in MPC is the first new activity and the securing offunding for that venture provides us with some very exciting opportunities,despite the ongoing volatility and uncertainty in Iraq, one of the world's mostprolific hydrocarbon provinces. Lansdowne continues its dialogue with potential farm-in partners and the awardof the new licences allow it to move ahead with the planning of a drillingprogramme in the Celtic Sea." 20 September 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 Dear Shareholder, Since my last statement, less than three months ago, we have continued with ourturnaround strategy and have already confirmed, through our AIM listedsubsidiary Lansdowne Oil & Gas plc ("Lansdowne") the award of two explorationlicences in the Celtic Sea. Following the £2.6 million we raised through a sale of a part of our interest inLansdowne at the end of June, I am pleased to be able to advise you that we havejust secured further funding of £500,000 directly into the joint venture companyMesopotamia Petroleum Company Limited ("MPC") in which we have a significantinterest. Financial Results This is the first financial information presented by the Group that has beenprepared under International Financial Reporting Standards ("IFRS"). Thetransition to IFRS added considerably to the timetable for the preparation ofthese interim results, although the impact is mainly presentational. With thattransition complete and with our recent difficulties behind us, we will now bereverting to our previous reporting timetable. The Group recorded a profit from continuing operations after tax of £127,000 forthe first six months of 2007 compared to a profit of £61,000 for the first sixmonths of 2006. Given the absence of revenue from continuing operations,profitability has been achieved in both periods through material gains createdby the divestment of a part of the Group's interest in Lansdowne. Operating expenses for the current and prior interim periods were £1.3 million.Overhead costs have fallen compared to the prior interim period but this fallhas been offset by increased professional fees incurred through the Group'sendeavours to secure new deals. Net finance income fell from £49,000 in the first six months of 2006 to £32,000in same period of 2007, reflecting the lower cash balances held by the Groupover the period. Group cash balances at 30 June 2007 were £3.6 million compared with £3.3 milliona year earlier. The Board is not recommending the payment of an interim dividend. Lansdowne Shortly after the recent General Election in Ireland, the new governmentannounced the results of the review of oil and gas fiscal terms and in AugustLansdowne was awarded two Standard Exploration Licences over its Rosscarbery,Midleton and East Kinsale assets. The Boards of both Lansdowne and Ramcoconsider the new fiscal terms in Ireland offer a fair balance between continuingto encourage exploration and providing for a greater return to the Irish statein these times of higher oil and gas prices. Lansdowne is already moving ahead to start planning for drilling the keyprospects. Discussions with potential farm-in partners are continuing. Ramcoretains a 61% interest in Lansdowne. Mesopotamia Petroleum Company Over the past three months our focus has been on the review and evaluation ofsome of the numerous opportunities which we had already identified. I referredin my last statement to our participation in MPC which we formed with MidmarEnergy Limited in order to secure a position in Iraq through bidding on both oilservice contracts and exploration and production opportunities. I am pleased toadvise you that we have secured the injection of £500,000 into that jointventure company which has enabled MPC to position a Business DevelopmentExecutive in the region to accelerate the strategy for that venture. Since thatappointment MPC has been successful in advancing high level discussions withofficials at the Iraqi Ministry of Oil. Notwithstanding the continued volatility and uncertainties in Iraq, we believethere are near-term opportunities arising in the provision of oil services tothe Iraqi Ministry of Oil and its operating entities. Both Ramco and Firstdrill,a sister company of Ramco's co-investor Midmar, have extensive experience in theoil services sector in addition to the expertise that both Ramco and Midmar havein exploration and production. The new investment into MPC will see Ramco's holding reduce from 49 per cent. to32.66 per cent. Given my own long involvement in the region, I am pleased to beacting as MPC's first Chairman. Montenegro Since reporting to shareholders in June, there have been no furtherdevelopments. Together with our partners JugoPetrol Kotor ("JPK") and HellenicPetroleum we have disputed the validity of the Montenegrin Government'sunilateral decision to end the concession over Ulcinj (Block 3). We await theGovernment's response to our request to reconsider its refusal to extend thePrevlaka concession (Blocks 1 and 2) which is the subject of an application byJPK to the Montenegrin courts. Board I am delighted to announce that Steve Lampe of Lampe Conway in New York joinsthe Board as a Non-Executive Director with immediate effect. I know that Stevewill make a valuable contribution to the Company's continued recovery. Steve Remp Chairman 20 September 2007 Condensed Consolidated Interim Balance Sheet 30 June 31 December 30 June 2007 2006 2006 restated (unaudited) (unaudited) (unaudited) Note £'000 £'000 £'000AssetsNon-current assetsIntangible exploration/appraisal assets 1,790 1,849 6,463Property, plant & equipment 170 202 136 6 1,960 2,051 6,599Current assetsTrade and other receivables 190 328 606Cash and cash equivalents 3,566 2,027 3,335 3,756 2,355 3,941Total assets 5,716 4,406 10,540 LiabilitiesCurrent liabilitiesTrade and other payables (2,198) (1,467) (2,715)Provisions (25) (25) (19) (2,223) (1,492) (2,734)Non-current liabilitiesLong-term provisions - - (7)Other non-current liabilities (32) (608) - (32) (608) (7) Total liabilities (2,255) (2,100) (2,741) Net assets 3,461 2,306 7,799 EquityShare capital 3,502 3,502 3,502Share premium 69,405 69,405 69,405Retained earnings (70,106) (70,945) (65,492)Total equity attributable to equity holders of the 2,801 7,415parent 1,962Minority interest 660 344 384Total equity 3,461 2,306 7,799 Condensed Consolidated Interim Income Statement Half-year ended 30 June 2007 2006 restated (unaudited) (unaudited) Note £'000 £'000 Continuing operationsCost of sales (5) (9)Write off of intangible exploration assets 6 (135) -Gross loss (140) (9) Operating expenses (1,333) (1,324)Gain on listing of Lansdowne 7 - 1,345Gain on sale of Lansdowne shares 7 1,568 -Operating profit 95 12 Finance income 37 57Finance expense (5) (8) Profit before taxation 127 61Taxation - -Profit from continuing operations 127 61 Discontinued operationLoss from discontinued operation (38) (171)Profit/(loss) for the financial period 89 (110) Attributable to:Equity holders of the group 201 (99)Minority interests (112) (11)Profit/(loss) for the financial period 89 (110) Earnings/(loss) per shareBasic and diluted 8 0.6p (0.3)p Continuing operationsEarnings per shareBasic and diluted 8 0.7p 0.2p Condensed Consolidated Interim Statement of Cash Flows Half-year ended 30 June 2007 2006 (unaudited) (unaudited) Note £'000 £'000Cash flows from operating activities:Continuing operations (1,092) (1,354)Discontinued operation - 599Net cash used in operating activities 9 (1,092) (755) Cash flows from investing activities:Interest received 25 56Proceeds from sale of property, plant and equipment 102 1,510Proceeds from sale of shares in subsidiary 2,612 -Acquisition of intangible exploration assets (90) (185)Acquisition of property, plant and equipment (15) -Discontinued operation - (1,251)Net cash from investing activities 2,634 130 Cash flows from financing activities:Issue of share capital in Company - 298Issue of share capital in Lansdowne to minority interests - 2,350Payment of transaction costs - (611)Payment of finance lease liabilities (2) -Discontinued operation - (2,869)Net cash used in financing activities (2) (832) Net increase/(decrease) in cash and cash equivalents 1,540 (1,457)Cash and cash equivalents at start of period 2,027 4,799Effect of exchange rate fluctuations on cash held (1) (7)Cash and cash equivalents at end of period 3,566 3,335 Notes to the Interim Statement 1. General information This condensed consolidated interim financial information was approved for issueby the Ramco Board on 20 September 2007. It was neither audited nor reviewed bythe Group's external auditors. These interim financial results do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. Statutory accounts for theyear ended 31 December 2006 were approved by the Board of Directors on 26 June2007 and delivered to the Registrar of Companies. The report of the auditors onthose accounts was unqualified and did not contain any statement under section237 of the Companies Act 1985. It did, however, contain an emphasis of matterover the going concern basis of preparation for the Group. Therefore, thisfinancial information should be read with due regard to the uncertaintiesdescribed within note 1 of the financial statements for the year ended 31December 2006. 2. Basis of preparation This condensed consolidated interim financial information for the half-yearended 30 June 2007 has been prepared in accordance with the Listing Rules of theFinancial Services Authority and with IAS 34, 'Interim financial reporting' asadopted by the European Union ("EU"). The interim condensed consolidatedfinancial report should be read in conjunction with the annual financialstatements for the year ended 31 December 2006 which have been prepared inaccordance with UK Generally Accepted Accounting Principles ("UK GAAP") and theStatement of Recommended Practice ("SORP") 'Accounting for Oil and GasExploration, Development, Production and Decommissioning Activities'. 3. Accounting policies The Group now prepares its accounts in accordance with applicable InternationalFinancial Reporting Standards ("IFRS") as adopted by the EU. This is the firstfinancial information on the Group to have been prepared under IFRS and thedisclosures required by IFRS 1 "First time adoption of IFRS" concerning thetransition from UK GAAP to IFRS are given in the full interim results that willbe posted on our website . The IFRS standards and International Financial Reporting InterpretationsCommittee ("IFRIC") interpretations adopted in these interim results are thoseissued by the International Accounting Standards Board ("IASB") up to 31December 2006 that are mandatory for the year end 31 December 2007. Relevantnew standards and interpretations issued by the IASB, but not yet effective andnot applied in this financial information, are as follows: • IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effectivefor annual periods beginning on or after 1 March 2007. Share based paymentawards relating to employees of a subsidiary are already recognised in theequity of that company. Therefore, no change to the current accounting policywill be required. • IFRS 8, 'Operating segments', effective for annual periods beginningon or after 1 January 2009, subject to EU endorsement. The Group intends toearly adopt this standard once it has been endorsed by the EU and is currentlyanalysing the management information required to revise the Group's segmentalreporting in line with this standard. Management do not currently foresee anychanges to the group's business or geographical segments. No other IFRS as issued by the IASB which are not yet effective are expected tohave an impact on the Group's financial statements. The accounting policies in the annual financial statements for the year ended 31December 2006 were those adopted in accordance with UK GAAP. Therefore, theIFRS accounting policies adopted by the Group have been given in full in thisfinancial information. 4. Comparative period The corresponding amounts in the prior interim period have been adjusted for theeffects of changes to accounting policies on transition to IFRS. However, thecorresponding amounts have also been restated for two errors in accordance withInternational Accounting Standard ("IAS) 8 - "Accounting Policies, Changes inAccounting Estimates and Errors". (a) The gain of £1,345,000 on the listing of Lansdowne was incorrectly creditedto minority interests within equity on the unaudited 30 June 2006 consolidatedbalance sheet, as reported in the 2006 Interim Results. The Group have adoptedthe parent company model of consolidation so that gains arising on transactionswith minority interests are reported in the income statement. The gain is,therefore, shown in the restated consolidated interim income statement. (b) The interest on the outstanding debt due to Schlumberger was incorrectlyomitted from the prior interim results. The corresponding amount fordiscontinued operations in the interim income statement has been restated toinclude an additional £36,000 of accrued interest, which is half the totalaccrued for the 2006 full year financial statements. As the debt relates to thediscontinued Seven Heads development, the accrued interest has been classifiedwithin discontinued operations. Trade payables were increased by £36,000 in theconsolidated balance sheet as at 30 June 2006. The combined affect of the restatements is a decrease of £36,000 to the Group'snet assets position as at 30 June 2006 and the loss of £1,493,000 reported forthe six months to 30 June 2006 should have been a loss of £184,000. Equityshareholder's funds should have been disclosed as £7,415,000 rather than£6,106,000. These corrections can be seen in the restated UK GAAP figures andflow through to the corresponding amounts under IFRS. 5. Segment Information Six months ended 30 June 2007 Central and Ireland Total Total Corporate Total Group eastern continuing discontinued unallocated Europe operations operation expenses and gains £'000 £'000 £'000 £'000 £'000 £'000 Revenue - - - - - - Operating (loss) or profit / (405) (423) (828) (38) 923 57segment results Operating loss from discontinued (38)operationOperating profit from continuing 95operations 57 Six months ended 30 June 2006 Revenue - - - 986 - 986 Operating (loss) or profit / (680) (183) (863) (105) 875 (93)segment results Operating loss from discontinued (105)operationOperating profit from continuing 12operations (93) The Group currently has only one reportable business segment, which is theexploration for oil and gas reserves. Segment information is presented inrespect of the Group's geographical segments, which are based on the Group'smanagement and reporting structures. 6. Capital Expenditure and Impairment Tangible and intangible assets £'000Six months ended 30 June 2006Opening net book amount at 1 January 2006 8,094Additions 185Disposals (1,554)Depreciation (126)Closing net book amount at 30 June 2006 6,599 Six months ended 30 June 2007Opening net book amount at 1 January 2007 2,051Additions 76Disposals (20)Depreciation (12)Write off of intangible exploration assets (135)Closing net book amount at 30 June 2007 1,960 Exploration costs of £135,000 capitalised against the Donegal Licence have beenwritten off during the period. Through its Lansdowne subsidiary, the Groupparticipated in the Inishbeg exploration well which was drilled in August 2006.This frontier exploration well, operated by Lundin Exploration B.V., was locatedoffshore Ireland in Block 13/12 off the northwest coast of County Donegal. Itwas designed to target a large but shallow Triassic gas prospect. Under theterms of a farm-out agreement, Lansdowne was carried through all the costsassociated with the drilling and testing of the well. The well was plugged andabandoned in August 2006. In the 2006 financial statements the Group reportedthat an extension to Phase I of the Donegal Licence had been applied for, inreturn for a limited work programme. The response from the Irish PetroleumAffairs Division ("PAD") indicated that to continue with the original Licencewould require a well commitment. The majority of Lansdowne's partners in thejoint venture did not wish to continue with the Licence and Lansdowne and theremaining partner were not prepared to support a well commitment on their own.For these reasons the Licence was relinquished. 7. Listing and Sale of Lansdowne Shares (a) On 21 April 2006 the Group successfully listed Lansdowne Oil and Gas plc ("Lansdowne") on the Alternative Investment Market of the London Stock Exchange.The Group's interest in Lansdowne reduced from 100 per cent to 86.25 per centafter the placing of 2,815,951 ordinary shares outwith the Group to minorityinterests. 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 inLansdowne constitutes a "deemed disposal" at Group level and resulted in a gainas calculated below. £'000 Groups 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)Groups gain on deemed disposal 1,345 The minority interests' share of net assets and proceeds after listing (13.75%of Lansdowne) was £395,000. (b) On 26 June 2007 Ramco Hibernia Limited, a wholly owned subsidiary of theCompany, sold 5,225,000 ordinary shares (25.1 per cent) in Lansdowne at a priceof 50p per share to LC Capital Master Fund, generating a cash consideration of£2,612,000. As part of the sale and purchase agreement, the Group granted LCCapital Master Fund warrants over 5,000,000 ordinary shares in Ramco Energy plc,at an exercise price of 14p. The exercise price was set at a discount of 4p tothe prevailing market price of the shares at the date of sale. Given that noservices were received for the warrants, their fair value has been treated as adiscount to the cash consideration rather than a share based payment. Thisyields a net consideration that is a reasonable approximation to the fair valueof the Lansdowne shares. The sale reduced the Group's ownership of Lansdowne to61.15 per cent and generated a gain on sale as calculated below. £'000Cash Consideration 2,612Discount in the form of warrants (578)Net consideration 2,034Selling costs (40)Increase in minority interest (426)Group gain on sale of shares 1,568 8. Earnings per Share Earnings per share attributable to equity holders of the Company arise fromcontinuing and discontinued operations as follows: Half year ended 30 June (pence per share) 2007 2006Earnings per share for profit from continuing operations attributable to the equityholders of the Company - basic 0.68 0.21- diluted 0.66 0.21 Loss per share for loss from discontinued operation attributable to the equityholders of the Company - basic (0.11) (0.51)- diluted (0.11) (0.51) Earnings/(loss) per share for profit/(loss) from continuing and discontinuedoperations attributable to the equity holders of the Company- basic 0.57 (0.30)- diluted 0.55 (0.30) The calculations were based on the following information. Earnings attributable to equity holders of the Company £'000 £'000 - continuing operations 239 72- discontinued operation (38) (171)- continuing and discontinued operations 201 (99) Weighted average number of shares in issue- basic 35,017,815 33,608,682- diluted 36,428,071 33,608,682 9. Reconciliation of Profit/(Loss) for the Period to Net Cash Used in OperatingActivities Six months ended 30 June 2007 2006 IFRS 2006 UK GAAP Adjustments IFRS £'000 £'000 £'000 £'000 Profit for period from continuing operations 127 203 (142) 61 Adjustments for:Depreciation of property, plant and equipment 12 140 (14) 126Intangible assets written off 135 - - -(Gain)/loss on sale of property, plant and equipment (82) (111) 156 45Gain on sale of shares in subsidiary (1,568) - - -Gain on listing of subsidiary - (1,345) - (1,345)Equity settled share-based payment transactions 62 - - -Net finance (income)/expense (32) (56) 7 (49)Operating cash flows before movements in working capital (1,346) (1,169) 7 (1,162) -Change in trade and other receivables 158 87 - 87Change in trade and other payables 99 (118) - (118)Change in provisions - (161) - (161)Cash outflow generated by operations (1,089) (1,361) 7 (1,354) Interest paid (3) - - -Net cash used in continuing operating activities (1,092) (1,361) 7 (1,354) Loss for period from discontinued operation (38) (387) 216 (171) Adjustments for:Depreciation of property, plant and equipment - 27 (27) -Loss on sale of discontinued operation, net of tax - 923 (189) 734Net finance expense 38 66 - 66Operating cash flows before movements in working capital - 629 - 629 Change in trade and other receivables - (215) - (215)Change in trade and other payables - 185 - 185Change in provisions - 30 - 30Cash outflow generated by operations - 629 - 629 Interest paid - (30) - (30)Net cash from discontinued operating activities - 599 - 599 Total net cash used in operating activities (1,092) (762) 7 (755) The transition to IFRS resulted in the following changes to the adjustmentswithin the 2006 reconciliation from the profit or loss for the period to netcash used in operating activities. Continuing operations; • Depreciation of £14,000 was reversed due to changes in the residual values of property and fixtures. • The reversal of depreciation on property and fixtures of £142,000 in periods prior to the date of transition and £14,000 in the 2006 six-month period meant that there was a total change to the (gain)/loss on sale of £156,000. • Foreign exchange losses of £7,000 on cash and cash equivalents was added to the finance expense and shown separately on the face of the statement of cash flows. Discontinued operation; • Depreciation of £27,000 was reversed on a disposal group for a discontinued operation. • The loss on sale of a disposal group was decreased by £189,000. 10. Related Party Transactions Directors During 2005 and 2006 Executive Directors, SE Remp and SR Bertram, voluntarilywaived contractual salary and pension contributions totalling £357,000. Inaddition Executive Directors deferred, pending re-financing of the Company, atotal of £631,000 of remuneration over the 30 months to 30 June 2007 assummarised below. 2007 2006 £'000 £'000 S E Remp 445 361S R Bertram 170 147C G Moar 16 - 631 508 No guarantees have been given by the Company and no interest is charged on theoutstanding balances. The Directors concerned have agreed to use the net sumsdue to them, after tax and National Insurance, to purchase new shares in theCompany. It is intended that the deferred sums will be settled within twelvemonths of the reporting date. 11. Copies of the Interim Report Copies of this interim report will be posted to all shareholders of the Company.Further copies can be obtained from the Company at Britannia House, EndeavourDrive, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6UF and from theCompany's website www.ramco-plc.com. This information is provided by RNS The company news service from the London Stock Exchange