Last checked at 7 Aug 2009 07:30
Thalassa Holdings Ltd (formerly Thalassa Energy Ltd)
Interim Report - Six months to 30 June 2009
Chairman's Statement
Thalassa Holdings Ltd
Let me begin by addressing the name change; On 27 April 2009, the Company changed its name from Thalassa Energy Ltd to Thalassa Holdings Ltd; the purpose of this was to better reflect the Company's function as a Holding Company with various holdings the most significant of which is currently the investment in Thalassa Energy Services Ltd and the PMSSTM initiative with WGP Projects Ltd.
Since making the name change your Board has been busy and I am glad to say productive.
New Subsidiaries
The Company has set up two new subsidiaries, Thalassa Public Investments Ltd and Thalassa Private Investments Ltd, the first to invest in publicly quoted companies and the second to invest in private opportunities.
To date your Board has invested US$1.4 million in publicly quoted companies which are currently showing a 32.9% (US$483,000) gain, the majority of which is as yet unrealised. In order to fund these investments I have, as announced, lent the Company US$1.3 million.
Share Buy Back
A portion of the loan mentioned above was, as announced, also used to fund the repurchase of 2 million of the Company's own shares which have been placed in Treasury.
First Half Results to 30 June 2009
The Company has reduced cash burn to a minimum and I am happy to report that, notwithstanding the difficult economic environment, that the Company recorded a profit for the first half of 2009. Although the Company has not yet deployed the PMSSTM (see my comments below) I am satisfied that the Company is well positioned to survive a protracted downturn in the Energy Services Market.
Cash and cash equivalents at the end of the period were US$451,411.
Neither I nor the Board are in a position to divine when conditions in the oil services industry will recover, and it may well even take further bankruptcies such as the one I refer to below before the market improves. What I can say, however, is that I believe that your Board has reacted quickly and decisively to the crisis and taken steps to protect Shareholder's equity.
In this connection I would also like to announce that the Board has discussed the return of capital to shareholders from any capital gains realised by the Company. I say "discussed" rather than "decided" as capital gains to date are deminimus and until such time as gains in excess of running costs are achieved there is no point in counting chickens!
Thalassa Energy Services Ltd
The collapse in oil from a high of US$140 has resulted in a period of almost complete spending inertia within the oil and gas offshore exploration and production market. Although many seismic contractors remain busy, most are still completing a back-log of work awarded during the boom oil price period of early to mid 2008 and there is great uncertainty still regarding market conditions in the late 2009 - early 2010 period.
Some of the newer more aggressive (too highly leveraged) players are now suffering as witnessed by the recent announcement by SCAN Geo that it was considering filing for bankruptcy protection from its creditors.
Oil companies have reduced existing operating costs wherever possible and adopted a "wait and see" policy that has resulted in negative knock on effects right through the industry supply chain. The situation has been further exacerbated by the lack of loan finance for new, higher risk, opportunistic projects seeking to take advantage of lower exploration prices and that have always "kick-started" recovery after past oil price crashes and economic woes. However, it is not all doom and gloom and money is still finding its way into projects with good prospects vis the recent fund raisings completed by Petroceltic International PLC and Mediterranean Oil & Gas PLC.
Although the Thalassa's PMSSTM initiative is aimed primarily at oil reservoir monitoring and reserve recovery enhancement rather than pure exploration, the current general freeze on new expenditure has caused oil companies (with one or two exceptions) to postpone planned projects in this emerging reservoir technology and push plans at least 12 months into the future. As all the alternative uses of the PMSSTM equipment rely on at least an average amount of exploration activity, the PMSSTM has been the victim of a "double whammy" regarding commercial opportunities and remains to date without immediate work.
The good news is that there are positive signs of recovery. On the reservoir monitoring side (the planned market for the PMSSTM) we can see at least one of the oil majors taking real and immediate steps to plan the deployment and operation of the first truly full scale and long life reservoir monitoring capability over a major oilfield. Thalassa Energy Services Ltd and its Operations Manager (WGP Projects Ltd) are responding to this opportunity and remain hopeful that there is a role for both companies to play.
At the same time, manufacturers of the next generation of reservoir monitoring cables and node systems remain committed to this new area of our industry and have completed successful trials and are actively marketing their products as "tried and proven". The PMSSTM provides air gun shooting support that is a common factor to all methods and modes of reservoir monitoring so this increased market activity by cable and node suppliers can only be helpful to future work.
The secondary market for the PMSSTM equipment is also showing the first positive signs of recovery. WGP is currently responding to a major government enquiry for work that would require all the components of the PMSSTM to be fitted to a "vessel of opportunity" and deployed over a four year period. There are other market possibilities that may see the PMSSTM deployed in a seismic exploration shooting support role that will earn valuable income and spread the knowledge of the system's effectiveness to a wide audience. Given that these are all very recent signs of recovery and activity, it is too soon to name names or to announce contractual certainties but at least we can look forward to a market recovery with some sense now of optimism.
There is no doubt that oil reservoir monitoring and reserve recovery enhancement will become a major activity within the next few years and Thalassa and its investors remain well placed to benefit from the early involvement and faith in this exciting and potentially lucrative market area. Very soon the main challenge may be staying ahead of the game as the major contractors wake up to the fact that reservoir monitoring will form a major part of the market in the coming years.
C. Duncan Soukup
Chairman
6 August 2009
Consolidated Interim Income Statement
| Six months ended | Six months ended | ||
| 30 June 2009 | 30 June 2008 | ||
| Unaudited | Unaudited | ||
| Note | US$ | US$ | |
| Continuing operations | |||
| Revenue | - | - | |
| Cost of sales | - | - | |
| Gross profit / (loss) | - | - | |
| Administrative expenses | (109,948) | (201,490) | |
| Operating expenses | (25,148) | - | |
| Other gains and losses - foreign currency gains / (losses) | 61,910 | - | |
| Operating loss | (73,186) | (201,490) | |
| Interest income | 218 | - | |
| Interest expense | (1,778) | (18,323) | |
| Dividends received | 79,077 | - | |
| Realised gain on the disposal of investments | 6,061 | - | |
| Profit / (loss) before taxation | 10,392 | (219,813) | |
| Tax | - | - | |
| Profit / (loss) for the financial period | 10,392 | (219,813) | |
| Earnings / (loss) per share | |||
| Basic | 3 | 0.00 | (22.0) |
| Diluted | 3 | 0.00 | (22.0) |
The notes below form an integral part of this consolidated interim financial information.
Cnsolidated Interim Balance Sheet
| At | At | ||
| 30 June 2009 | 31 December 2008 | ||
| Unaudited | Audited | ||
| Note | US$ | US$ | |
| ASSETS | |||
| Non-current assets | |||
| Tangible fixed assets | 5,756,948 | 5,756,948 | |
| Available for sale investments | 4 | 1,949,041 | 34,395 |
| 7,705,989 | 5,791,343 | ||
| Current assets | |||
| Trade and other receivables | 249,296 | 87,459 | |
| Cash and cash equivalents | 451,411 | 1,159,536 | |
| Total current assets | 700,707 | 1,246,995 | |
|
| |||
| LIABILITIES | |||
| Current liabilities | |||
| Trade and other payables | 265,198 | 115,889 | |
| Loans | 1,280,617 | - | |
| Total current liabilities | 1,545,815 | 115,889 | |
| Net current assets | (845,108) | 1,131,106 | |
| Net assets | 6,860,881 | 6,922,449 | |
| EQUITY | |||
| Equity attributable to owners of the parent | |||
| Share capital | 85,000 | 85,000 | |
| Share premium | 7,117,374 | 7,116,651 | |
| Treasury shares | 7 | (482,653) | - |
| Other reserves | 4 | 404,327 | (5,643) |
| Retained earnings / (losses) | (263,167) | (273,559) | |
| Total shareholders equity | 6,860,881 | 6,922,449 |
The notes below form an integral part of this consolidated interim financial information.
Consolidated Interim Statement of Cash Flows
| Six months ended | Six months ended | |
| 30 June 2009 | 30 June 2008 | |
| Unaudited | Unaudited | |
| US$ | US$ | |
| Cash flows from operating activities | ||
| Operating loss for the period | (73,186) | (201,490) |
| Increase in trade and other receivables | (161,837) | (7,921) |
| Increase in trade and other payables | 149,309 | 109,008 |
| Depreciation | - | 2,036 |
| Unrealised foreign currency (gain) / loss | (84,969) | - |
| Cash used by operations | (170,683) | (98,367) |
| Interest paid | (1,778) | - |
| Net cash flow from operating activities | (172,461) | (98,367) |
| Cash flows from investing activities | ||
| Acquisition of investments | (1,434,628) | - |
| Disposal of investments | 20,982 | - |
| Dividends received | 79,077 | - |
| Interest received | 218 | - |
| Net cash flow from investing activities | (1,334,351) | - |
| Cash flows from financing activities | ||
| Listing costs | 723 | - |
| Treasury shares | (482,653) | - |
| Increase in shareholder loan | 1,280,617 | - |
| Increase in Founding shareholder loan account re operating activities | - | 98,367 |
| Net cash flow from financing activities | 798,687 | 98,367 |
| Net (decrease) / increase in cash and cash equivalents | (708,125) | - |
| Cash and cash equivalents at the start of the period | 1,159,536 | - |
| Cash and cash equivalents at the end of the period | 451,411 | - |
The notes below form an integral part of this consolidated interim financial information.
Consolidated Interim Statement of Changes in Equity
| Note | Share Capital | Share Premium | Treasury shares | Other reserves | Retained earning / (losses) | Shareholders Loan | Total Equity | |
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||
| Balance as at 1 January 2008 | 100 | - | - | - | (4,383) | 393,537 | 389,254 | |
| Total recognised income and expense for the period | - | - | - | - | (219,813) | - | (219,813) | |
| Shareholder's loan | - | - | - | - | - | 2,042,096 | 2,042,096 | |
| Balance as at 30 June 2008 | 100 | - | - | - | (224,196) | 2,435,633 | 2,211,537 | |
| Balance as at 1 January 2009 | 85,000 | 7,116,651 | - | (5,643) | (273,559) | - | 6,922,449 | |
| Shareholders loan | - | - | - | - | - | - | - | |
| Issue of share capital | - | - | - | - | - | - | - | |
| Deductible costs of share issues | - | 723 | - | - | - | - | 723 | |
| Purchase of treasury shares | 7 | - | - | (482,653) | - | - | - | (482,653) |
| Revaluation of available for sale investments | - | - | - | 409,970 | - | - | 409,970 | |
| Total recognised income and expense for the period | - | - | - | - | 10,392 | - | 10,392 | |
| Balance as at 30 June 2009 | 85,000 | 7,117,374 | (482,653) | 404,327 | (263,167) | - | 6,860,881 | |
The notes below form an integral part of this consolidated interim financial information.
Notes to the Consolidated Interim Financial Information
1. General information
On 27 April 2009 the Company changed its name from Thalassa Energy Ltd to Thalassa Holdings Ltd; the purpose of this was to better reflect the Company's function as a Holding Company with various holdings the most significant of which is currently the investment in Thalassa Energy Services Ltd and the PMSS™ initiative with WGP.
Thalassa Holdings Ltd (the "Company") is a British Virgin Island ("BVI") International business company ("IBC"), incorporated and registered in the BVI on 26 September 2007. The Company was established as a holding company, and currently has one operating subsidiary, Thalassa Energy Services Ltd. ("TESL"), and two investment companies, Thalassa Public Investments Ltd ("TPUIL") and Thalassa Private Investments Ltd ("TPRIL") (together with Thalassa Holdings Ltd, the "Group").
TESL was established to acquire marine seismic equipment, specifically a Portable Modular Source System ("PMSS™"). The PMSS™ has been acquired and is now in storage awaiting deployment. The PMSS™ is equipment which can be installed on a vessel in order to provide the seismic (sound) source to allow exploration and production companies to perform reservoir monitoring.
The Company has set up two new subsidiaries. TPUIL has been formed to invest in publicly quoted companies and TPRIL has been formed to invest in private opportunities.
The consolidated interim financial information was approved for issue by the Company's Board of Directors on 6 August 2009. This financial information is unaudited but has been reviewed by the Company's auditors.
2. Significant Accounting policies
The Group prepares its accounts in accordance with applicable International Financial Reporting Standards ("IFRS") as adopted by the EU.
The accounting policies applied by the Company in these condensed consolidated interim financial statements are the same to those applied by the Company in its consolidated financial statements as at and for the period ended 31 December 2008.
2.1 Basis of preparation
This consolidated interim financial information for the six months ended 30 June 2009 has been prepared in accordance with International Accounting Standard No. 34, 'Interim financial reporting'. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the period ended 31 December 2008.
2.2 Going concern
The financial information has been prepared on the going concern basis as management consider that the Group has sufficient cash to fund its current commitments for the foreseeable future.
3. Earning / (Loss) per share
| Six months ended | Six months ended | ||
| 30 June 2009 | 30 June 2008 | ||
| Note | Unaudited | Unaudited | |
| The calculation of earnings per share is based on the following profit / (loss) and number of shares: | |||
| Profit / (loss) for the period (US$) | 10,392 | (219,813) | |
| Weighted average number of shares of the Company: | |||
| Basic | 8,201,657 | 10,000 | |
| Diluted | 3.1 | 10,581,657 | 10,000 |
| Earnings / (loss) per share: | |||
| Basic (US$) | 0.00 | (22.0) | |
| Diluted (US$) | 0.00 | (22.0) |
3.1 Diluted weighted average number of share of the Company
The basic weighted average number of shares of the Company have been adjusted in order to calculate the diluted weighted average number of shares of the Company for the share options detailed below. Further details of which can be found in the Financial Statements for the period to 31 December 2008.
Founding shareholder options - 2,125,000 shares
Non-Executive Director share options - 255,000 shares
On 4 June 2009, the Company acquired 2,000,000 of its own shares which are held in Treasury.
4. Investments
| US$ | |
| Available for sale investments | |
| At the beginning of the period | 34,395 |
| Acquisitions | 1,434,629 |
| Disposals | (14,922) |
| Revaluation | 409,970 |
| Exchange difference | 84,969 |
| Fair value at 30 June 2009 | 1,949,041 |
During the period, dividends of US$79,077 were received. The revaluation movement is included within other reserves. The acquisitions were partly funded by the loan received from the Chairman, as set out in note 5. The investments held at 30 June 2009 are to be transferred to the new subsidiary, Thalassa Public Investments Ltd.
5. Related party balances and transactions
During the period, the Chairman provided loans totalling US$1,280,617 which have been used for investment in publicly quoted shares and for the repurchase of shares in the Company, now held in Treasury. These loans are secured against the corresponding investments in publicly quoted companies and bear interest at 10%.
Also during the period, the Company was invoiced US$239,093 of administrative fees from a company in which the Chairman has a beneficial interest. At 30 June 2009, the amount owed to this company of US$219,561 was waived by the Chairman.
6. Share options
During the period none of the share options were exercised.
During the period, the share options of up to 350,000 shares in Thalassa Energy Services Ltd granted to Martin Smith (Marketing Consultant) lapsed due to the termination of the consultancy agreement between the Company and Martin Smith.
Of the share options in Thalassa Energy Services Ltd granted to employees of WGP, 4,000 options lapsed, due to a termination of employment, during the six month period to 30 June 2009. A further 2,500 options lapsed post 30 June 2009 due to a further termination of employment.
7. Treasury shares
On 4 June 2009, the Company acquired 2,000,000 of its own shares at a cost of US$482,653. The shares are held in Treasury and are recorded at cost.
8. Copies of the Interim Report
The interim report is available on the Company's website: www.thalassaholdingsltd.com
For further information contact:
Duncan Soukup Thalassa Holdings Ltd T: +44 7703 566 937
Chris Langrick T: +44 7818 400 388
Liam Murray Dowgate Capital Advisers Ltd T: +44 20 7492 4777
Aaron Smyth