25 Oct 2013 07:00
25 October 2013
Victoria Oil & Gas Plc.
("Victoria" or "the Company")
(AIM: VOG)
Results for year ended 31 May 2013
Chairman's Statement & Review of Operations
Dear Shareholders,
I wrote to you on 10 October providing an update on many operational matters and whilst I may be repeating myself here, the update included some key messages that I believe are important enough to state again.
This year has been a challenging one for Victoria and its shareholders. Like you, I am concerned about the low share price, which I believe grossly undervalues our business and does not reflect the Company's achievements to date. In less than four years, our Company, backed only by its shareholders, has succeeded in drilling two complex wells, installing gas processing facilities for 20mmscf/d, laying 22km of pipeline and is selling gas and collecting revenue.
Moving Forward
I would like to take this opportunity to remind you again of the fundamentals of the Company and the reasons why I believe that your ongoing support is justified:
· Our objective is to build our business using the cash flow from our flagship Logbaba gas and condensate field in Cameroon to fund further expansion and acquisitions in Africa;
· Our Cameroon subsidiary, Rodeo Development Limited ("RDL"), a producing natural gas and energy company, is generating revenue and is expected to be cash generative at an operating level by November 2013. We are no longer just an exploration company;
· Logbaba is estimated to hold sufficient proven and probable reserves to supply an average 20mmscf/d to industrial customers until 2043;
· We have been supplying gas on a continuous basis since July 2012 without interruption, demonstrating a reliable gas distribution network and we currently have 19 customers on line;
· We are in the position of not being supply constrained, and as RDL is the sole onshore gas producer in Cameroon, we have no competition in country;
· We have the full support of the Government of Cameroon at all levels and are working actively with our partners and our customers to meet the demand from Cameroon industry for additional energy and power. Ninety five percent of our total workforce of 128 people is Cameroonian; and
· We are at the forefront of an energy revolution, not just in Cameroon, but in the whole Central African region. Customers now have the choice to switch to a lower-cost and cleaner source of fuel for the first time. Being first mover is hard and we still have much to do before the gas market in Cameroon matures, but we are in the unique position of owning and operating not only the supply, but also the transmission network.
We are following some traditional business principles:
1. Quickly convert revenue into profits
We need to convert current revenue streams into substantial profitability. As part of this we will be maximising efficiency and lowering costs by reducing our use of rented equipment and streamlining procurement and reducing administrative personnel.
2. Aggressively build our market
Our internal studies show that the industrial customer base within reach of our planned pipeline could grow rapidly to very large consumption within the next five years. We need to turn this potential into contracted customers.
3. Our hard earned expertise is invaluable
No other independent company in the region has brought a gas project through from drill bit to burner tip. This knowledge base can be replicated across the region and provide us with an immediate advantage in undertaking similar projects. In this respect we are in discussions with several large gas generator set suppliers, who share this vision and are willing to form strategic alliances with us in Cameroon and other African countries.
4. Preserve the highest standards of safety, respect for employees and partners, environmental compliance and corporate governance.
Pursuing economic and operational targets at the cost of lower standards is unsound and wrong. Our internal controls and relevant procedures will be maintained and monitored accordingly.
These pillars will underpin our strategy for the coming year. We will also be improving communications with shareholders to keep you regularly updated with our progress. What we shall not be doing is making production or profit projections too far into the future until our business is steadily making profits.
I believe that by following the four principles shown above we can build Victoria into the company that it deserves to be and in this respect we shall be thinking bigger and more confidently. We have much to be proud of. We are about to become operationally cash positive and when compared to our peers in Cameroon, I believe that we are considerably ahead in actual performance on the ground.
The last four years have been very challenging, but RDL has achieved its goal to become the first onshore gas producing company in Cameroon. We have proved that there is a major gas discovery under the city of Douala and we have commenced delivery of that gas to a market with a rapidly increasing demand for energy.
On a broader scale, one of Africa's most critical problems is provision of reliable energy. We believe that we have established a strategically important solution for the provision of locally sourced energy. We call it "Local Solutions for Local Problems". Furthermore, we believe that this model, and our expertise, can be exported to other countries within Africa, potentially forming a significant part of our future business.
Logbaba Gas Project Cameroon
(95% owned by RDL, a VOG subsidiary)
During the year, RDL continued to build out its gas distribution system in Douala, Cameroon. This is the first gas network in Cameroon and is a huge step forward for the country in meeting the ever increasing energy demands of its growing industrial market. The Company has also made meaningful progress in the supply of electrical power to industrial customers via gas fired on-site generators. However, performance over the last 12 months at RDL has been unsatisfactory in terms of rates of customer hook-ups, actual production growth, sales and costs. We have made significant management and structural changes to correct this. I acknowledge and take responsibility for missing a number of published deadlines and targets.
In seeking improvements for 2014, it is of vital importance that we recognise those factors which we can optimise through operational efficiencies and better management and those which prevail in a new energy market, such as we are creating in Cameroon.
Our pipe laying rate this year has been behind schedule, but it must be remembered that we are operating in an industrial city of 2.5 million people. In the previous financial year we completed 13.2km of 400mm pipe: installed, tested and capable of delivering gas into the primary target market areas of the Magzi estate and Bassa. Activities this year then moved on to the centre of urban Douala and more recently into the port area. An additional 8.8km of pipe has been laid since 31 May 2012 through the most densely populated part of the city, where a complex maze of sub-surface utilities is already in place. Overcoming these conditions is complicated, but to be expected, and our approximate average installation rate of 200m of pipe per week was not adequate.
Our response to this challenge has been to increase our Horizontal Directional Drilling ("HDD") capacity. Initially, this was through the use of our own Ditch Witch, but we have since brought in two other machines of different sizes and so progress has escalated significantly in the last few months. Having three augers provides us with greater flexibility and the capacity to perform longer shot lengths. They have been operating simultaneously and we are now laying an average of 400m of pipe on a weekly basis. This initiative has been reinforced by the purchase of additional welding machines and scanners.
At current productivity levels, an additional 5.6km of pipeline is expected to be laid before the end of 2013. This will bring the RDL gas pipeline network in Cameroon to 27.6km in total. Overseeing this work is Mark Wilson, who has joined the RDL team as Chief Operating Officer and is tasked with ensuring delivery of gas to customers as a priority. Mark is an experienced operations officer with over 35 years' experience in the resources and energy sector and is one of a number of senior management changes within RDL. Steven Haswell has been appointed Chief Financial Officer, Henri Job as Director of Marketing.
Jonathan Scott Barrett, formerly Country Manager of RDL, has also rejoined the company on a consulting basis to help us with government and customer relations. Eric Friend, an experienced construction and project manager has joined as Project Manager with responsibility for pipeline construction, customer hook-ups and capital projects. Other corporate restructuring within RDL has so far resulted in 15% of cost savings on a year on year basis.
The production and sale of natural gas from Logbaba commenced in July 2012, one of the most significant achievements in the history of Cameroon's energy sector and reached a rate of 0.7mmscf/d this time last year. Since then, despite the addition of many kilometres of additional pipeline, sales have only increased to a current level of 2.4mmscf/d. This fact illustrates an important reality in the development of the Logbaba project over the next few years: the natural gas market in Douala is in its infancy and will take time to mature to the size and scale that we expect. It is frustrating to recognise that our 12.0mmscf/d target will slip into next year, but a principal underlying reason for this is rooted in the slow development of the customer base and the extra work that we have had to undertake to support this nascent market.
Organic growth in the thermal gas market has been protracted, but is showing good signs of progression. In a matter of weeks, a local brewery is due to come online, which will bring deliveries up to 2.9mmscf/d and at this point RDL will be operationally cash positive. Scheduled connections between now and year end are expected to increase deliveries to between 3.6 and 4.8mmscf/d by year end. As RDL production passes through 4.8mmscf/d of gas, revenue will increase to about $1.8 million per month, net of royalties, and with an average monthly operational "burn rate" of $1.1 million per month, RDL will be a cash generating business. Looking to 2014, a number of new projects will grow demand further. The completion of the construction and modification of a large foundry and cement plant on the south bank of the Wouri River will add a further 4.7mmscf/d.
This slower than anticipated utilisation of gas for thermal generation has been exacerbated by a significant increase in disruption and power outages during the period. Our customers often experience forced outages as the grid operator attempted to manage demand on a rotating basis. This disruption to power supply meant that customers reduced production hours, adversely impacting our thermal sales gas volume. This has presented us with a problem, but also an opportunity. A key operational change to our power strategy was agreed during Q2 2013 and we have now deferred the purchase of gas-fired generation units and opted for rental units under a large supply contract.
In July 2013, the Company finalised an agreement with Energyst Rental Solutions SAS ("Energyst") for the provision of 14 x 1.5MW new Caterpillar rental gas-fired generation units ("Gensets") with a phased delivery schedule throughout 2013 and an option for a further 21MW. Energyst is providing a full in-country installation, commissioning, operations and maintenance service for the duration of the contract. Five Gensets have arrived in Douala and will soon clear customs. These units will work seven days a week each consuming around 0.2mmscf/d of gas and have been allocated to Guinness, Icrafon (part of the Toyota Group) and SCTB (a flour mill). The next batch of four units has also been ordered and is scheduled to be installed by end December 2013.
This allows us to provide customers with gas to generate their own electricity. Customer contracts have a significant take-or-pay component during the interim rental provision period, to provide us with comfort on the level of revenues we can expect.
This option, it must be stressed, is only a short-term part of our power strategy. These units will enable us to monitor customer data and operating behaviour, but rental is expensive and the operating profit per unit of energy will not be comparable to thermal during this introductory period. Only longer-term pricing, which will be engineered for each individual customer's operating regime, can be expected to compare with our thermal gas supply pricing. However, we consider this is a prudent way forward for the Company in order to forge long-term relationships with its customers and to demonstrate to them the true economic value of a consistent supply of power.
Seeking methods of exploitation of our position in Douala to provide for the power market is still a key element of the long-term development programme for Logbaba. A further 4.3mmscf/d could be brought online by supplying a 20MW power station less than 2km from our plant. Discussions with Government Ministries and the operator have been ongoing for the installation of 20MW of temporary power at this substation for 12 months whilst the existing underutilised diesel generating capacity is converted to gas. This will result in cost savings for the operator and provide a quick increase in the country's generating capacity ahead of the dry season ending in May. Given the existing infrastructure it should only take eight weeks to construct and commission, so there remains a chance that this project could be online by late 2013.
As we focus on increasing our gas supply volumes, it should not be forgotten that Logbaba is also a condensate field. Following installation of a tanker-loading facility in August 2012, RDL began transporting condensate to the Sonara refinery in Limbe. Up to the present we have shipped 26 tanker loads totalling 7,784bbls. Sales have been secured at a price of Brent Crude minus $1.50/bbl, achieving an average sales price to date of $104.75 per barrel.
West Medvezhye, Russia
Our 100% owned West Medvezhye ("West Med") field has C1 plus C2 reserves of 14.4 million barrels of oil equivalent ("boe"), under the Russian resource classification system, from its discovery Well-103. In addition, best estimate prospective resources have been calculated of 1.4 billion boe comprising 722 mmbbl of oil and condensate and 695 mmboe of gas.
The West Med block, which covers 1,224km² lies adjacent to the Yamal Peninsula in North West Siberia. This area is one of the most prolific oil and gas producing regions in the world and our block neighbours the supergiant Medvezhye and Urengoy fields. The main productive horizon in Western Siberia is the vast Bazhenov Shale, shown in recent studies to be geologically very similar to the liquids-rich Bakken Shale in the United States. A recent study estimated the Bazhenov resource at two trillion barrels of oil in place, around five times larger than the Bakken, and recoverable resources are believed to represent around 40% of all U.S. shales combined. During 2013, several major Russian developers began development of tight oil plays in Western Siberia and the government is also considering changes to the tax structure to encourage further investment in shale reservoirs.
In August 2012, the Company received approval from the Russian Ministry of Natural Resources for its development plan for an early production scheme for Well-103 and the surrounding area. Based on our geotechnical work and a seismic attribute analysis from wells in adjacent acreage carried out by Mineral LLC, the Company believes that Well-103 was drilled on the edge of a significant structure. We hope that the next drilling campaign will lead to a significant reserve upgrade in the Upper Jurassic as well as the Lower Cretaceous Achimov layers.
Our updated work programme was presented to the Yamal District regional petroleum authorities in Salekhard on 20 February 2013 and the drilling design project, awarded to CJSC "TyumenNIPIneft" in 2012 is complete. We anticipate that the next drilling campaign will target the Jurassic discovery horizons successfully encountered by Well-103 and also new potential hydrocarbon horizons in the Achimov layers identified as part of the study carried out by Mineral LLC.
In February 2013, the Company announced the appointment of Renaissance Capital ("Rencap") to assist it in evaluating its various strategic options in relation to its 100% interest in West Med. Having completed this exercise with Rencap, the Company has proceeded to run a "limited auction" process with a selection of pre-screened companies. A number of these companies continue to review and work with the West Med data.
Corporate
As our company grows into a developer, we are undertaking a significant restructuring in London and Douala. With the departure of John Scott, I shall be taking over as interim CEO until such time as we have found a suitable replacement. In addition, we are looking to appoint non-executive directors to strengthen the Board. In Cameroon the changes in senior management are being complemented by a renewed focus on retaining skilled and highly competent local staff.
The Board has always sought to maximise shareholder returns when considering financial solutions for its ongoing capital requirements. The Company constantly reviews asset and corporate investment opportunities that will increase our value and which may require additional funding in the future. By the end of the period Victoria has invested a total of $111.1 million in Logbaba and $59.1 million in West Med.
In February 2013, the Company announced it had raised via an equity placing £23.4 million before expenses. As a fellow shareholder I recognise the dilution created, but this placing allowed us to get on with the job of building out our Cameroon business without chronic cash shortages. Furthermore it was supported by major financial institutions, who appreciate the implicit value in Victoria and remain strong supporters of the Company.
As production and cash flow from Logbaba grows, this will provide a solid platform for growth and the foundations upon which I believe we can progress our Company into a mid-market integrated E&P company. We believe that we can grow organically through cash-flow, rolling out our pipeline network and connecting new customers. We are in the final stages of credit approval for a new working capital facility. A further funding line using a bank guarantee and an equipment finance house is also in the approval stage.
Concerning the RDL-RSM case, the ICC has advised us that they expect to hand down the Award in the RSM vs. RDL arbitration by 31 October 2013. We remain confident that we will prevail but in the unlikely event that the Tribunal were to find in favour of RSM such that its interest was not forfeited, RSM would then be contractually obliged to:
· pay all outstanding debts and cash calls to RDL, currently this figure stands at approximately $20 million;
· pay all future cash calls for the project or risk forfeiture; and
· permit RDL to recoup approximately $65 million of drilling costs before RSM can claim its share of profits. This is projected to be in late 2016.
I would like to thank all Victoria employees, my fellow Directors and contractors who have participated in our progress this year. We have had some really notable achievements and I look forward to carrying on our work together to continue to build the business. I would also like to thank our shareholders for your continued support of the Company, especially over the last year. I firmly believe Victoria will look a very different company in 12 months with utility-led returns in Cameroon and a successful model that can be replicated in other areas.
Kevin Foo
Chairman & Acting Chief Executive Officer
24 October 2013
Financial Review
Following the commencement of continuous gas production in July 2012, the nature of our business has significantly changed. Historically the performance of Victoria Oil & Gas Plc. and its subsidiaries ("the Group") was measured in terms of our ability to develop our assets, control our costs and raise funds to achieve our objectives. Due to the risks associated with schedule and cost, this has typically necessitated funding each stage through equity placings.
As we have successfully transitioned from an Exploration company to a Production company we have developed and adapted our controls and procedures and the Group's financial performance is considered separately for the first time in this first Financial Review.
Revenue
The Group's revenue of $6.9 million is derived from the Logbaba gas and condensate field in Cameroon through the sales of gas for industrial customers thermal energy needs and the sale of condensate.
All gas sales to industrial customers were at a price of $16/mmbtu. The customers have signed long-term, exclusive gas sales agreements with a fixed US Dollar price for five years. The fixed US Dollar price is converted to Central African Francs ("CFA") and is payable in CFA. This helps us to manage our foreign currency exposure as the majority of our development and operating costs are in CFA but influenced by US Dollar prices for goods and services in our industry. Monthly revenues have fluctuated in the year due to the seasonality of our customers' businesses, particularly breweries and related industries. For some of our customers, which do not have adequate standby electricity generation capabilities, power outages have also resulted in reductions in overall gas consumption in some months. The total gas sold during the financial year was 369mmscf.
Condensate production is dependent on the amount of gas produced and averaged approximately 16 barrels per mmscf of gas. 7,784 bbls were produced in the year. Under the existing sale agreement, condensate is priced relative to Brent Crude and sold to the Limbe refinery. The average price achieved in the year was $104.75/bbl.
Operating Loss for the Year
The operating loss for the year was $11.6 million and reflects the high fixed cost element of our cost base. Cost of sales (excluding royalties) of $5.5 million includes $2.3 million for depreciation, depletion and amortisation, a non-cash item.
Administration costs have increased significantly in the year, to $11.2 million (2012: $4.5 million). In prior years, expenditure, including support services, incurred in relation to the development of the Logbaba project have been capitalised, whereas with the increased operational focus, a proportion of these costs is now attributed to operations and included in operating costs. We periodically review the operational structure due to the changing nature of our activities and seek to identify where efficiencies can be achieved. We are currently implementing cost-cutting measures through a restructuring of the organisation in Cameroon.
In the coming year, we expect to see continued increases in revenue and decreases in operating costs per unit of production.
Finance Revenue
Finance revenue represents the decrease in the fair value of embedded derivatives associated with convertible loan notes issued by the Group to fund development. The fair value gain increased to $0.4 million from $0.2 million in the prior year.
Finance Cost
Finance costs in the year were $4.7 million and include $3.4 million of interest on various monetary items. Interest on convertible loans is calculated at effective interest rates of between 93.9 - 149.1%. The interest rates payable in the event of non-conversion range between 6.5 - 15%.
The effective interest rates are a function of the valuation of the embedded derivative and the term of the loan, during which the interest on the host note component will compound to equate to the proceeds received from the convertible loan. In view of the volatility rates assumed in the model, this resulted in embedded derivative components which, at initial recognition, represented 91.4% of the Noor Petroleum Convertible Loan and 31.7% of the Convertible Loan Notes 2013. The terms of the loans during which interest was compounded were five and six months respectively.
Finance costs also include $0.8 million of loan finance fees and a non-cash cost of $0.5 million for unwinding discounts on provisions.
Capital Investment
During the 2013 financial year, the investment in intangibles and property, plant and equipment was $9.7 million in respect to our Cameroonian and Russian assets. This was significantly down on the prior year ($25.4 million) when the plant was constructed and we laid 13.2km of pipeline.
Potential for increased cost efficiencies has been identified with regard to future pipeline construction, including increasing the proportion of pipe laid by directional drilling, increasing the number of directional drilling units operated, and by reducing the use of rental construction equipment.
The Group also intends to purchase the processing plant at Logbaba, which is currently under a finance lease, and this will result in a significant long-term cost saving.
Working Capital
The net current liabilities of the Group reduced significantly during the year, down by $19.4 million compared to 2012.
This was principally due to the raising of $35.9 million (before charges) by way of equity share placings in February and March 2013 for development expenditure and working capital purposes.
With the commencement of production at Logbaba, there was a significant rise in trade and other receivables to $5.8 million at the year-end compared to $1.8 million in 2012. This included
$3.1 million from gas sales and $1.5 million of reimbursable customer conversion costs.
The finance provided by the equity placing and the sales of hydrocarbons was partly used to reduce current and non-current liabilities by $10.5 million and also to provide funding during the year of development and operating expenditure of the Group.
The cash balance at 31 May 2013 was $13.1 million, an increase of $11.2 million on the prior year.
Share-Based Payments
Each year, the Directors seek authority from the shareholders to issue shares to employees, advisors, contractors and consultants. The Directors use this authority where they feel that to do so will provide a long term benefit to the Group. In the 2013 financial year, 93,530,320 shares, equivalent to 3.6% of the shares in issue at the start of the year, were issued under this authority (2012: 126,524,095, equivalent to 5.9%). In addition, the Group issued 5,250,000 warrants to advisors in settlement of placing arrangement fees (2012: 45,103,516).
Share-based payments included 63,500,000 shares (2012: 63,500,000 shares ) issued to the ESOP Trust, as part of the long term incentive plan for Directors, senior management and staff, at a price of 0.5 pence per share. Awards by the Trustees of the ESOP Trust are entirely discretionary and 33,750,000 shares were awarded in the year (2012: 23,300,000).
Certain Directors and senior management also received part of their salary in shares based on entitlements in their service contract. These shares were valued at the market price of the shares at the end of each month of entitlement. A total of 1,941,179 shares were issued in lieu of salary (2012: 3,133,658).
In order to preserve cash for development activities, the Group also issued 28,089,141 shares to contractors and consultants in settlement of amounts due for services and professional fees (2012: 59,890,437). The shares were valued at the market price on the day of issue or the placing price if issued at the same time as an equity placing.
Cash Flow
The net cash used in operations for 2013 amounted to $13.4 million (2012: $4.5 million generated). The change was due primarily to the increased operational costs, as noted in Operating Loss for the Year above.
Net cash used in investing activities amounted to $9.5 million (2012: $29.4 million), of which $7.8 million was invested in property, plant and equipment, primarily the pipeline network in Cameroon.
The Company successfully raised $41.6 million of equity during the year, net of share issue costs, through the issue of new ordinary shares and raised $2.8 million of debt. The Company repaid $7.6 million of debt that matured in the period. After payment of loan interest and finance fees of $2.2 million, net cash generated from financing activities totalled $34.6 million (2012: $18.4 million).
The Group cash balance at year end was significantly higher than in 2012, with $13.1 million cash available compared to $1.9 million in 2012.
Risks and Uncertainties
The Group is subject to a number of potential risks and uncertainties, which could have a material impact on the long-term performance of the Group and could cause actual results to differ materially from expectation.
The management of risk is the collective responsibility of the Board of Directors and the Group has developed a range of internal controls and procedures in order to manage risk. These systems are discussed and reviewed annually by the Audit Committee and their findings reported to the Board.
Robert Palmer
Finance Director
24 October 2013
Consolidated Income Statement
for the year ended 31 May 2013
2013 | 2012 | ||
$000 | $000 | ||
Continuing operations | |||
Revenue | 6,934 | - | |
Cost of sales | |||
Production royalties | (1,100) | - | |
Other cost of sales | (5,519) | - | |
(6,619) | - | ||
Gross profit | 315 | - | |
Other income | 51 | - | |
Sales and marketing expenses | (437) | - | |
Administrative expenses | (11,201) | (4,526) | |
Other losses | (286) | (62) | |
Operating loss | (11,558) | (4,588) | |
Finance revenue | 367 | 200 | |
Finance costs | (4,744) | (3,337) | |
Loss before taxation | (15,935) | (7,725) | |
Income tax expense | - | - | |
Loss after taxation for the financial year | (15,935) | (7,725) | |
Cents | Cents | ||
Loss per share - basic | (0.52) | (0.33) | |
Loss per share - diluted | (0.52) | (0.33) | |
Consolidated Statement of Comprehensive Income | |||
for the year ended 31 May 2013 | |||
2013 | 2012 | ||
$000 | $000 | ||
Loss for the financial year | (15,935) | (7,725) | |
Exchange differences on translation of foreign operations | 1,000 | (4,111) | |
Total comprehensive loss for the year | (14,935) | (11,836) |
Consolidated Balance Sheet
as at 31 May 2013
2013 | 2012 | ||
$000 | $000 | ||
Assets: | |||
Non-current assets | |||
Intangible assets | 59,970 | 58,212 | |
Property, plant and equipment | 133,038 | 131,318 | |
Unlisted investments | 6,600 | 6,600 | |
199,608 | 196,130 | ||
Current assets | |||
Inventories | 56 | - | |
Trade and other receivables | 5,793 | 1,805 | |
Cash and cash equivalents | 13,107 | 1,887 | |
18,956 | 3,692 | ||
Total assets | 218,564 | 199,822 | |
Liabilities: | |||
Current liabilities | |||
Trade and other payables | (11,007) | (14,260) | |
Borrowings | (8,011) | (7,440) | |
Convertible loan - debt portion | (1,482) | (3,066) | |
Derivative financial instrument | (131) | - | |
(20,631) | (24,766) | ||
Net current liabilities | (1,675) | (21,074) | |
Non-current liabilities | |||
Borrowings | (267) | (3,178) | |
Deferred tax liabilities | (6,599) | (6,599) | |
Provisions | (9,664) | (13,099) | |
(16,530) | (22,876) | ||
Net assets | 181,403 | 152,180 | |
Equity: | |||
Called-up share capital | 34,240 | 20,803 | |
Share premium | 229,556 | 200,059 | |
ESOP Trust reserve | (1,061) | (860) | |
Translation reserve | (11,411) | (12,411) | |
Other reserve | 4,583 | 5,440 | |
Retained earnings - deficit | (74,504) | (60,851) | |
Total equity | 181,403 | 152,180 |
The financial statements of Victoria Oil & Gas Plc, registered number 5139892, were approved by the Board of Directors on 24 October 2013.
Kevin A. Foo Robert Palmer
Chairman Finance Director
Consolidated Statement of Changes in Equity
for the year ended 31 May 2013
Share capital |
Share premium |
ESOP Trust reserve |
Translation reserve |
Other reserves |
Retained earnings/ (accumulated deficit) |
Total | |
$000 |
$000 |
$000 |
$000 |
$000 |
$000 |
$000 | |
At 31 May 2011 | 17,178 | 183,867 | (587) | (8,300) | 4,408 | (53,126) | 143,440 |
Shares issued | 3,625 | 18,263 | - | - | - | - | 21,888 |
Share issue costs | - | (2,071) | - | - | - | - | (2,071) |
Shares purchased by ESOP Trust | - | - | (505) | - | - | - | (505) |
Shares granted to ESOP members | - | - | 188 | - | - | - | 188 |
Exchange adjustments | - | - | 44 | - | - | - | 44 |
Warrants issued | - | - | - | - | 1,032 | - | 1,032 |
Total comprehensive income/(loss) for the year | - | - | - | (4,111) | - | (7,725) | (11,836) |
At 31 May 2012 | 20,803 | 200,059 | (860) | (12,411) | 5,440 | (60,851) | 152,180 |
Shares issued | 13,437 | 32,519 | (3) | - | - | - | 45,953 |
Share issue costs | - | (3,022) | - | - | - | - | (3,022) |
Shares purchased by ESOP Trust | - | - | (509) | - | - | - | (509) |
Shares granted to ESOP members | - | - | 266 | - | - | 1,270 | 1,536 |
Exchange adjustments | - | - | 45 | - | - | - | 45 |
Transfer expired warrants to retained | |||||||
earnings | - | - | - | - | (1,012) | 1,012 | - |
Warrants issued | - | - | - | - | 155 | - | 155 |
Total comprehensive income/(loss) for the year | - | - | - | 1,000 | - | (15,935) | (14,935) |
At 31 May 2013 | 34,240 | 229,556 | (1,061) | (11,411) | 4,583 | (74,504) | 181,403 |
Share premium reserve
The share premium reserve is comprised of the excess of monies received in respect of share capital over the nominal value of shares issued, less direct and incremental share issue costs.
ESOP Trust reserve
The ESOP Trust reserve is comprised of shares in the Company held by Victoria Oil & Gas ESOP Trust.
Translation reserve
The translation reserve represents the foreign exchange gain/loss on translation of financial statements of foreign subsidiaries.
Other reserve
The other reserve includes the share-based payment reserve and an amount of $2.9 million which was the difference between the fair value on redemption and the redemption value of a convertible loan note settled in 2008.
Accumulated deficit
Accumulated deficit comprises accumulated losses in the current and prior years.
Consolidated Cash Flow Statement
for the year ended 31 May 2013
2013 | 2012 | ||
$000 | $000 | ||
Cash flows from operating activities | |||
Loss for the year | (15,935) | (7,725) | |
Finance revenue recognised in the Income Statement | (367) | (200) | |
Finance costs recognised in the Income Statement | 4,744 | 3,337 | |
Depreciation and amortisation of non-current assets | 2,955 | 485 | |
Other losses recognised in the Income Statement | 286 | 106 | |
Shares vested by ESOP Trust recognised in Income Statement | 609 | 188 | |
(7,708) | (3,809) | ||
Movements in working capital | |||
Increase in trade and other receivables | (3,984) | (943) | |
Increase in inventories | (56) | - | |
(Decrease)/increase in trade and other payables | (1,696) | 9,293 | |
Net cash (used in)/generated from operating activities | (13,444) | 4,541 | |
Cash flows from investing activities | |||
Payments for intangible assets | (1,765) | (358) | |
Payments for property, plant and equipment | (7,763) | (23,445) | |
Payment for investments | - | (5,600) | |
Interest received | 17 | 12 | |
Net cash used in investing activities | (9,511) | (29,391) | |
Cash flows from financing activities | |||
Proceeds from issue of equity shares | 44,516 | 14,666 | |
Payment of equity share issue costs | (2,867) | (1,039) | |
Proceeds from borrowings | 2,783 | 5,500 | |
Repayment of borrowings | (7,630) | (200) | |
Finance costs | (2,186) | (497) | |
Net cash generated from financing activities | 34,616 | 18,430 | |
Net increase/(decrease) in cash and cash equivalents | 11,661 | (6,420) | |
Cash and cash equivalents - beginning of year | 1,887 | 8,425 | |
Effects of exchange rate changes on the balance of cash held in foreign currencies | (441) | (118) | |
Cash and cash equivalents - end of year | 13,107 | 1,887 |
Notes
1. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not constitute statutory accounts.
The Balance Sheet at 31 May 2013 and Income Statement, Cash Flow Statement and associated Notes for the year ended have been extracted from the Group's 2013 statutory financial statements upon which the auditors' opinion is unqualified.
2. Annual Report
The Annual Report and Accounts and the Notice of the Annual General Meeting for the year ended 31 May 2013 will be available on the Company's website at www.victoriaoilandgas.com by no later than 4 November 2013. These documents will also be posted to those shareholders that requested it. The Annual General Meeting of the Company will be held on 27 November 2013 at the Gascoigne Room at Union Jack Club, Sandell Street, London, SE1 8UJ at 11.00 a.m.
For further information, please contact:
Victoria Oil & Gas Plc Kevin FooTel: +44 (0) 20 7921 8820
Fox-Davies Capital
Daniel Fox-DaviesTel: +44 (0) 20 3463 5010
Strand Hanson LimitedAngela Hallett / Stuart FaulknerTel: +44 (0) 20 7409 3494
Tavistock Communications
Ed Portman / Conrad Harrington / Simon HudsonTel: +44 (0) 20 7920 3150