Sirius Pet Regulatory News (SRSP)

21 Dec 2009 08:59



21 December 2009

SIRIUS PETROLEUM PLC

Final Results

Successful Year of Development

Sirius Petroleum plc (AIM: SRSP, the "Group" or the "Company") has published the final results for the year to 31 July 2009. 

These results cover the year ended 31 July 2009, a period when the Group was developing its strategy, negotiating partnership contracts and reviewing potential marginal field opportunities and during which no trading activities took place.

Summary of developments during the year and post year end to date

Sirius has continued to make progress with the Company's strategy of creating an oil & gas business with a number of steps completed during the year as follows:

o Bolad Energy Company ("Bolad") which will provide invaluable technical expertise and resources in the region.

o RT5 Petroleum Limited ("RT5") to provide Sirius with access to opportunities in the oil and gas sector in Nigeria on an exclusive basis.

o Dajo Oil Limited ("Dajo") to identify and negotiate an economic interest in marginal oil and gas field opportunities currently held by Shell Nigeria using their significant experience and contacts.

o Frontier Oil Limited ("Frontier") to identify and negotiate an economic interest in marginal oil and gas field opportunities currently held by Shell Nigeria using Frontier's significant experience and contacts.

Commenting, Babatunde Agboola, Chairman of Sirius Petroleum plc, said:

"The Board will continue to build on the developments to date and is confident that its strategy will provide significant shareholder value."

A copy of the results will be available shortly on the Company's website www.siriuspetroleum.com.

About Sirius Petroleum Plc:

Sirius Petroleum Plc (AIM: SRSP) is UK registered company whose shares are listed on the AIM market of the London Stock Exchange. Sirius is currently considering a number of opportunities in the oil and gas sector with particular focus on Nigeria. 

Enquiries:

Hansard Group, tel: +44 (0) 7872 061007

John Bick

Canaccord Adams Limited tel: +44 (0) 207 050 6500

Erik Anderson/ David Flin

  CHAIRMAN'S STATEMENT 

Reporting basis

The Group's financial statements for the year ended 31 July 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS).

Introduction

I am pleased to report on a period of steady progress in Sirius's strategy to build a company developing opportunities in the Oil and Gas sector. Although we are at an early stage of the development of our strategy, we remain confident that our vision for the Company's future will start to show concrete results over the coming year.

Results

These results cover the year ended 31 July 2009, a period when the Group was developing its strategy, negotiating partnership contracts and reviewing potential marginal field opportunities and during which no trading activities took place. The Group recorded a loss before tax of £997,000 (2008 : £195,000) of which £509,000 related to sign-on fees for the contracts with Sirius Oil & Gas and Taglient Oil Nigeria, details of which were set out in a circular sent to shareholders in July 2008. There is a loss per share of 0.21p (2008: 0.09p). The Group has had no substantive trading business since April 2008 when it was decided to cease the business of developing and using aggregation software in the gaming industry. Since that date, the Company has been classified as an investing company under the AIM Rules for companies ("AIM Rules").

Loss of capital

Sirius's results show that the Company's net assets are less than half its paid up share capital. In the circumstances the directors of the Company are obliged by section 656 Companies Act 2006 to convene a general meeting for the purpose of considering whether any, and if so what, steps should be taken to deal with the Company's current financial position. We propose to consider this matter at the Company's annual general meeting, details of which are set out below, although no resolution will be put to the meeting on this issue.

Share capital

During the year Sirius issued 204,700,000 ordinary shares, raising £694,000, net of expenses, and repaid the loan to Corvus Capital. Since the year end a further 18,333,335 shares have been issued, making the Company's issued share capital 520,827,720 ordinary shares with a nominal value of 0.25 pence each. Sirius Petroleum does not hold any ordinary shares in Treasury. Therefore, the total number of voting rights in the Company is 520,827,720 and this figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Service Authority's Disclosure and Transparency Rules.

Annual general meeting

A notice convening the Company's annual general meeting (AGM) is set out on page 38 of the financial statements. The AGM will be held at 10.00 a.m. on 15 January 2010 at the offices of Fladgate LLP, 25 North Row, London W1K 6DJ. A form of proxy is enclosed with the financial statements for use at the AGM. Whether or not you intend to be present at the meeting, you are requested to complete, sign and return the form of proxy to the Company's registrars as soon as possible and in any event so as to arrive not later than 10.00 a.m. on 15 January 2010. The completion and return of a form of proxy will not preclude you from attending the AGM and voting in person should you subsequently wish to do so.

Operational update

In addition to the agreement in place with Taglient Oil Nigeria Limited ("Taglient"), Sirius has entered into strategic partnership agreements by letters of intent with Nigerian based businesses Bolad Energy Company ("Bolad"), RT5 Petroleum Limited ("RT5") and Dajo Oil Limited ("Dajo") each of which provide invaluable technical expertise and access to different potential resources in the region.

Since the year end, Sirius has been granted a licence from the Department of Petroleum Resources ("DPR") of the Nigerian Ministry of Petroleum resources to import refined oil products into Nigeria and has commenced trading activities. In addition, Sirius has identified its first potential marginal oil field opportunity and placed 18,333,335 new ordinary shares to raise £1.1 million to provide funding to complete the legal and other due diligence activities relating to this opportunity and has entered into a fourth strategic partnership by letter of intent with Frontier Oil Limited.

The Board is currently actively negotiating the various agreements relating to the first marginal oil field opportunity and is commissioning a Competent Person's Report required for the circular which will be sent to shareholders in relation to this transaction. The Board will continue to build on this year's developments and is confident that its strategy will provide significant shareholder value.

Reporting currency

Historically the Group has reported results in GBP. The Board proposes changing its presentational currency to US dollars for future reporting periods. The reasoning for this is that the vast majority of the Group's future revenues are expected to be generated in US dollars, along with the associated costs. Changing the reporting currency to US dollars will therefore more accurately reflect the trading activities of the Group.

Babatunde Agboola

Chairman

21 December 2009

CONSOLIDATED INCOME STATEMENT

YEAR ENDED 31 July 2009

						2009		2008
		Note				£000		£000
Fees payable in respect of sign-on fees, services agreements and related expenses						(509)		-
Other administrative expenses						(491)		(196)
Total administrative expenses						(1,000)		(196)
Loss from operations						(1,000)		(196)
Finance income						3		1
Loss before taxation						(997)		(195)
Taxation		4				-		-
Loss after taxation and loss attributable to the equity holders of the company						(997)		(195)
Total and continuing loss per ordinary share (pence)
Basic and diluted		5				(0.21)p		(0.09)p

All of the activities of the Group are classed as continuing.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 July 2009

		Share capital		Share premium		Share-based payment reserve		Retained earnings		Total equity
		£000		£000		£000		£000		£000
At 1 August 2007		483		1,364		1,535		(3,545)		(163)
Loss for the year and total and recognised income and expenses for the year		-		-		-		(195)		(195)
Issue of share capital		261		-		-		-		261
Proceeds of issue of share capital in excess of par value less costs		-		169		-		-		169
At 31 July 2008		744		1,533		1,535		(3,740)		72
Loss for the year and total and recognised income and expenses for the year		-		-		-		(997)		(997)
Issue of share capital		512		-		-		-		512
Transfer of share based payment reserve		-		-		(1,535)		1,535		-
Proceeds of issue of share capital in excess of par value less costs		-		561		-		-		561
At 31 July 2009		1,256		2,094		-		(3,202)		148

CONSOLIDATED BALANCE SHEET

AS AT 31 July 2009

						2009		2008
		Note				£000		£000
ASSETS
Non-current assets
Property, plant and equipment						13		-
						13		-
Current assets
Trade and other receivables						92		33
Cash at bank						290		224
Total current assets						382		257
Total assets						395		257
LIABILITIES
Current liabilities
Trade and other payables						247		185
Total current liabilities						247		185
Total liabilities						247		185
EQUITY
Share capital		6				1,256		744
Share premium						2,094		1,533
Share-based payments reserve						-		1,535
Retained earnings						(3,202)		(3,740)
Total equity attributable to equity holders of the Company						148		72
Total equity and liabilities						395		257

CONSOLIDATED CASH FLOW STATEMENT

YEAR ENDED 31 July 2009

						2009		2008
						£000		£000
Cash flows from operating activities
Loss after taxation						(997)		(195)
Depreciation						6		-
Finance income						(3)		(1)
Increase in trade and other receivables						(59)		(10)
Expenses settled in shares						379		-
Increase in trade and other payables						62		75
Net cash outflow from operating activities						(612)		(131)
Cash flows from investing activities
Purchase of property, plant and equipment						(19)		-
Finance income						3		1
Net cash inflow from investing activities						(16)		1
Cash flows from financing activities
Proceeds from issue of share capital						745		250
Share issue costs						(51)		(19)
Proceeds from new borrowings						-		93
Net cash inflow from financing activities						694		324
Net change in cash and cash equivalents						66		194
Cash and cash equivalents at beginning of period						224		30
Cash and cash equivalents at end of period						290		224

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 July 2009

1. GENERAL INFORMATION

 

Sirius Petroleum plc is incorporated and domiciled in the United Kingdom.

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The consolidated balance sheet at 31 July 2009 and the consolidated income statement, the consolidated statement of changes in equity, the consolidated statement of cash flows and the associated notes for the year then ended have been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006. The statutory accounts for the year ended 31 July 2009 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.

2. ACCOUNTING POLICIES

Basis of preparation

The Group financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The Company's shares are listed on the AIM market of the London Stock Exchange.

The principal accounting policies are detailed in the Group's annual report and financial statements.

Going concern

The directors have prepared cashflow forecasts for the period ending 31 January 2011. The forecasts take account of the share placing in December 2009, which raised £1.1 million and assume that costs incurred relate only to the legal and other due diligence activities in investigating the potential oil field opportunity identified and the on-going running costs of the Group. It is assumed that a marginal oil field will only be acquired if the necessary funding is in place. On this basis the cashflow forecasts indicate minimum cash balances of in excess of £600,000 being available through to 31 January 2011. 

On this basis the financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments that would result if the assumptions detailed above are not met.

Overall considerations

The significant accounting policies that have been used in the preparation of these financial statements are set out in the financial statements.

The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the financial statements.

Significant accounting estimates and judgements 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(i)  Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are discussed below:

Going concern

In view of the losses during the year the Directors have carefully considered the appropriateness of preparing the financial statements on a going concern basis. Details of the Directors review and conclusion are detailed under the heading 'Going Concern' above. 

(ii)  Critical judgments in applying the Group's accounting policies

Management in applying the accounting policies, considers that the most significant judgement they have had to make is whether Sirirus Taglient Petrol (STPL) Limited should be consolidated as a subsidiary. The Company owns 50% of STPL's issued share capital but has the right to buying the remaining 50% for £10 and has management and operating control of that company. On this basis the Directors consider it is a subsidiary and, therefore, should be fully consolidated. 

3. SEGMENTAL ANAYLSIS

The Group has not traded during the period and so the Directors consider that the results of the Group's primary and secondary business segments are identical to those set out in the Consolidated Income Statement.

4. TAXATION

There is no tax charge for the year (2008: £nil).

Unrelieved tax losses of approximately £2,085,290 (2008: £2,332,495) remain available to offset against future taxable trading profits. The unprovided deferred tax asset at 31 July 2009 is £583,881 (2008: £353,164) which has not been provided on the grounds that it is uncertain when or in what tax jurisdiction taxable profits will be generated by the Group to utilise those losses.

The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows:

		2009	2009	2008	2008
		£000	%	£000	%
Loss before taxation	`	(997)		(195)
UK loss multiplied by standard rate of corporation tax in the UK		(242)	(28)	(55)	(28)
Effect of:
Expenses not deductible for tax purposes		11	-	20	10
Deferred tax asset not recognised		(231)	28	35	18
Total tax charge for year		-	-	-	-

5. LOSS PER SHARE

The calculation of the basic loss per share is based on the loss after taxation of £997,078 (2008: £194,800) divided by the weighted average number of ordinary shares in issue during the year of 472,993,015 (2008: 207,609,453). There are no dilutive equity instruments in issue. 

6. SHARE CAPITAL

		2009	2008
		£000	£000
Authorised
4,000,000,000 ordinary shares of 0.25p each		10,000	10,000
Allotted, issued and fully paid
502,494,385 (297,794,385) ordinary shares of 0.25p		1,256	744

The movement in share capital is analysed as follows:

		Ordinary shares
		No.	£000
Allotted and issued
At 1 August 2007		193,294,385	483
Issue of shares		104,500,000	261
As at 31 July 2008		297,794,385	744
Issue of shares		204,700,000	512
At 31 July 2009		502,494,385	1,256

The ordinary shares carry one vote each and on winding up of the Company the balance of assets available for distribution will, subject to any relevant restrictions, be divided amongst the members.

On 20 August 2008, 46,000,000 shares were issued to Sirius Oil & Gas for part settlement of an invoice of £275,000 (the remaining balance was recorded within other creditors), 45,700,000 shares were issued to Taglient Oil Nigeria for settlement of an invoice for £114,500. 12,000,000 shares were issued to Bedarra Limited as settlement of an invoice for £30,000. 36,000,000 shares were issued to the directors as settlement of sign on fees of £90,000. 18,000,000 shares were issued at par to three of the directors.

On 9 January 2009 47,000,000 shares were issued of which 35,000,000 were issued for cash at 2 pence per share to raise £700,000 of which £675,000 had been received by the year-end and £25,000 was received in October 2009. The balance of 12,000,000 shares issued were a further part settlement of the invoice from Sirius Oil & Gas referred to above. Of these shares 1,250 remained unpaid at the year end but have subsequently been fully paid.

Since the year end a further 18,333,335 new ordinary shares have been issued to raise £1.1 million in cash.

7. REPORT AND ACCOUNTS

The Group's annual report and financial statements will be, where required, posted to shareholders shortly; alternatively the annual report and financial statements are published on our corporate web site www.siriuspetroleum.com

8. ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 15 January 2010 at 10.00am at the offices of Fladgate LLP, North Row, London W1K 6DJ.

9. RELATED PARTY TRANSACTIONS

Corvus Capital Limited (Corvus) owns 15.9% of the issued share capital of the Company as at the date of these financial statements. During the year Corvus and its subsidiaries charged the Group fees of £158,582 (2008: £119,851) predominantly in respect of serviced office accommodation in London but also in respect of management, accounting and administrative services provided, and expenses recharged. The total amount due to Corvus, including its subsidiaries at 31 July 2009 was £1,834 (2008: £96,045). The total amount has been paid since the year end.

Corvus's ultimate parent Poppy Development Ltd charged the Group consultancy fees of £25,000 (2008: £nil). This amount was outstanding at 31 July 2009 (2008: £nil) but has been paid since the year end.

During the year, Kitwell Consultants Ltd ("Kitwell") which acts as Company Secretary to the Group charged the Group £14,000 for secretarial fees. M Hirschfield, a non-executive director has a beneficial interest in 100% of the issued share capital of Kitwell. The total amount due to Kitwell at 31 July 2009 was £2,335 which has been paid since the year end. 

At 31 July 2009 the Group owed B Agboola, the non executive chairman, £16,752 which has been paid since the year end. At 31 July 2009 O Kuti, an executive director, owed the Group £1,000, which remains outstanding.

10. EVENTS AFTER THE BALANCE SHEET DATE

On 26 August 2009 the Group entered into an agreement with Capital Investment Office (CapInvest) based in London, UK, under which CapInvest has agreed to provide or procure debt funding for the Company's first marginal oil field project. Under the terms of the Funding Agreement, CapInvest has agreed to provide or procure at least US$ 80 million of debt funding for the first marginal field opportunity for which CapInvest will receive a fixed fee of £1.573 million which will be settled through the issue of 65,000,000 new ordinary shares (using a fixed price of 2.42p per share, the closing share price as at 19 August 2009, the latest practical date prior to agreeing the terms of the Funding Agreement). These new shares will only be issued if the Company secures a funded marginal oil field opportunity on or before 31 December 2010 and will represent approximately 9.55% of the enlarged issued share capital. In addition, on such event, CapInvest will be paid a cash fee of 1.5% of the funds raised.

On 5 October 2009, the Company entered into an option agreement with Abba Dasuki, a Nigerian National, who has been appointed as a consultant to the Company.  Mr Dasuki will advise the Group on developing and maintaining its relationships in Nigeria with the Government, emirates and caliphates of Nigeria in consideration for which the Company will issue Abba Dasuki with options over new ordinary shares of 0.25p each in the Company ("Shares"). These options have been granted in two tranches. The first tranche is over 5 million Shares with an exercise price of 5.3 pence (calculated as the average closing price over the five trading days prior to the grant of the option) and the second tranche is over 3 million shares at an exercise price which will be set at the closing price on the day the Company announces that it has secured a marginal field ("Transaction"). In both cases the vesting period commences on the date of the Transaction and lasts until the fifth anniversary of the Transaction. The Agreement contains normal clauses relating to conduct, confidentiality and regulatory requirements and also makes clear that all income taxes, national insurance contributions and expenses relating to the option are to be borne by Mr Dasuki.

On 9 October 2009 the Group was granted a licence from the Department of Petroleum Resources ("DPR") of the Nigerian Ministry of Petroleum Resources to import refined oil products into Nigeria. The Import Licence is granted with effect from 30 September 2009 and permits the Group, through its subsidiary Sirius Taglient Petro Limited, to import up to 10,000 metric tonnes per shipment of petroleum oil product and is renewed on a quarterly basis for a nominal fee.

On 2 December 2009 the Company announced that it had identified its first potential marginal oil field opportunity and had placed 18,333,335 new ordinary shares to raise £1.1 million to fund further investigation work in relation to this opportunity. On the same date, Sirius announced that it has signed its fourth strategic partnership by way of letter of intent with Nigerian based Frontier Oil Limited ("Frontier") under which it is intended that the Company will work with Frontier to identify and negotiate an economic interest in marginal oil and gas field opportunities currently held by Shell Nigeria using Frontier's significant experience and contacts.

ENDFR FEESAFSUSELE