WRES.L Regulatory News (WRES)

1 Jun 2007 17:51

Caspian Holdings plc01 June 2007 1 June 2007 CASPIAN HOLDINGS PLC ("Caspian" or "The Company") Preliminary Results for the year to 31 December 2006 Caspian Holdings Plc (AIM:CSH) the London-based AIM-quoted Company whose primaryactivity is the exploration, development and operation of oil fields in thecountries around the Caspian Sea, and in particular Kazakhstan, announces itspreliminary results for the year ended 31 December 2006. Highlights • Revenue increased 373% to £1.5million (2005: £318,578) • Nine new wells drilled • Commencement of export sales Post year end highlights • Drawdown of an unsecured credit facility from investors & shareholders raising £650,000 • New team established to focus on project generation and acquisitions Commenting on the results, Michael Masterman, Executive Chairman, said: "Although 2006 has proved to be a mixed and challenging year for the company,our aim is to continue to improve our results throughout 2007 and focus ourenergy into pursuing new project generation and acquisition. We look forward toa positive outcome." - Ends - Chairman's Statement and Financial Statements follow. A full version of theseaccounts is available on the Company's website www.caspianoil.co.uk For further information, please contact: Caspian Holdings Plc Hoodless Brennan Parkgreen Communications Michael Masterman Luke Cairns Justine Howarth/Clare Irvine T: +44 7791288381 T: +44 (0) 20 7538 1166 T: +44 (0) 20 7851 7480 CHAIRMAN'S STATEMENT 2006 has proved to be a mixed year for Caspian Holdings Plc. Revenue for the year increased 373% to £1.5 million reflecting the switch toexport sales, improved production and high oil prices. To support exports a newexport facility is under construction at Karsak and key export contracts are inplace with KazTransOil and KazMunayGaz. Exports continued into 2007 with atemporary suspension during the second quarter in order to meet domestic salesquotas and other regulatory requirements and is expected to recommence in thethird quarter. On an operational front, extensive activity was conducted on the Zhengeldy fieldwith nine new wells drilled (101, 102, 103, 105, 104, 109, 118, 119 and 121) andextensive workovers conducted on a further seven wells (114, 112, 115, 101, 113,102, 103). Five of the new wells drilled (121, 119, 105,102 and 103) returnedgood log results and commercial production. Log and test results from the othernew wells were poor and production has been marginal. The workover program,while producing some initially positive results, has overall been disappointing,as a result of difficulties with cementation in the early wells. Wellcompletion including cementation has been greatly improved in recent wells. Following extensive review, it is clear to the Board that while Zhengeldyretains commercial potential, this potential can best be pursued after anexpansion of the licence area. While the results of the 2006 drilling programhave been mixed and have not resulted in a sustained increase in production, thecompany has been able to successfully drill, at low cost, a number of wells (forexample 121 and 119) with 20 meter pay zones, good completion and goodproduction. The company now has a very clear view of the geological,operational and economic model necessary for success. Further developmenthowever requires an expansion of the licence area. The Zhengeldy licence expansion has been a frustrating exercise with delayscaused by a number of changes in ownership of the surrounding explorationlicence during the year. There is now ownership stability of the adjacentlicence and this stability provides a basis for the company to seek to reachcommercial agreement during the balance of 2007. The Company has taken the decision to focus it's energy and resources inpursuing new project generation and acquisition. A dedicated project team hasbeen established and the company is actively pursuing oil and gas projects inthe former Soviet Union and other leading oil provinces. The Company strengthened it's balance sheet in April 2007 with an unsecuredcredit facility agreement to raise up to £1 million from investors and majorshareholders. £650,000 of this facility has been drawn. This loan is a shortterm facility to fund working capital requirement of the Taraz operations, andnew project acquisition activities at the Caspian level. It is intended that thefacility is replaced with more permanent funding arrangements upon the extensionof the Zhengeldy licence area or execution of a new project acquisition. The 2006 year financials attached to this report show revenue growingsubstantially as a result of improved production to 2005 and export sales withrevenue of £1,508,015 (2005: £318,578). As a result of the mixed performance ofthe Zhengeldy oil field, the Company has considered the recoverability of it'sinvestment in the fixed assets of Taraz related to drilling activities and hasdecided to write-off £606,177 against the carry value of wells for 2006 and towrite off the goodwill on acquisition of Taraz of £980,987. After accounting forthese writedowns the loss after taxation for the 2006 financial year of£3,412,588 (2005: £1,183,876 loss). Following the year end of the Company, a significant focus at Zhengeldy has beento push the operation to sustainable profitability. Significant progress towardthis objective has been made reducing and consolidating the cost structure.Further progress towards this objective will be made with the expectedrecommencement of export sales in the third quarter of 2007. In closing I would like to thank the management, in particular Igor Borisov,Dietmar Greil, and Dom Del Borrello for their efforts in dealing with difficultoperating conditions. I would also like to thank the non executive Directorswho have strongly supported the company throughout this challenging period, andwe look forward to positive results in the year ahead. CASPIAN HOLDINGS Plc GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 REVENUE 1,508,015 318,578 Cost of sales (936,578) (428,497) GROSS PROFIT/(LOSS) 571,437 (109,919) Administrative expenses (3,289,610) (1,299,637) OPERATING LOSS (2,718,173) (1,409,556) Exchange (losses)/gains in year (595,594) 161,658Adjustment in fair values of fixed assets (52,864) -Provisions created in period (88,795) - Finance income 57,648 82,788Finance costs (14,810) (18,766) LOSS BEFORE TAX (3,412,588) (1,183,876) Tax - - RETAINED LOSS FOR THEFINANCIAL YEAR £(3,412,588) £(1,183,876) Basic and diluted loss per share 3.6p 1.4p CASPIAN HOLDINGS Plc GROUP BALANCE SHEET 31 DECEMBER 2006 2006 2005ASSETSNON-CURRENT ASSETSGoodwill 326,998 1,307,985Intangible assets 528,327 662,146Property, plant and equipment 3,196,870 2,135,393 4,052,145 4,105,524 CURRENT ASSETSInventories 296,268 16,349Trade and other receivables 767,890 425,168Cash and cash equivalents 200,652 477,747 1,264,810 919,264LIABILITIESCURRENT LIABILITIESTrade and other payables 519,797 330,705Financial liabilities - borrowings Interest bearing loans and borrowings 1,753 6,423Provisions 108,186 29,859 629,736 366,987 NET CURRENT ASSETS 635,074 552,277 NON CURRENT LIABILITIESTrade and other payables 98,728 117,870Financial liabilities - borrowings Interest bearing loans and borrowings - 8,524 98,728 126,394 NET ASSETS £4,588,541 £4,531,407 SHAREHOLDERS EQUITYCalled up share capital 98,699 84,492Share premium account 9,474,645 6,227,445Revaluation reserve 24,945 -Translation reserve 183,370 -Profit and loss account (5,193,118) (1,780,530) TOTAL EQUITY £4,588,541 £4,531,407 CASPIAN HOLDINGS Plc COMPANY BALANCE SHEET 31 DECEMBER 2006 2006 2005 ASSETSNON CURRENT ASSETSInvestments 1,145,146 1,145,146 CURRENT ASSETSTrade and other receivables 7,023,985 4,196,774Cash and cash equivalents 106,964 453,677 7,130,949 4,650,451 LIABILITIESCURRENT LIABILITIESTrade and other payables 120,336 35,382 NET CURRENT ASSETS 7,010,613 4,615,069 NET ASSETS £8,155,759 £5,760,215 SHAREHOLDERS' EQUITYCalled up share capital 98,699 84,492Share premium account 9,474,645 6,227,445Profit and loss account (1,417,585) (551,722) TOTAL EQUITY £8,155,759 £5,760,215 CASPIAN HOLDINGS Plc GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 Cash flows from operating activitiesCash generated from operations (1,232,898) (1,059,797)Finance cost (14,810) (18,766) Net cash from operating activities (1,247,708) (1,078,563) Cash flows from investing activitiesProceeds from disposal of fixed assets 1,345 -Purchase of intangible fixed assets (312,123) (188,430)Purchase of tangible fixed assets (2,024,468) (1,571,392)Finance income 57,648 82,788 Net cash from investing activities (2,277,598) (1,677,034) Cash flows from financing activitiesShare issue 3,261,407 140,300Repayment of financial liabilities - borrowings Interest bearing loans and borrowings (13,196) (7,541) Net cash from financing activities 3,248,211 132,759 (Decrease)/Increase in cash and cash equivalents (277,095) (2,622,838) Cash and cash equivalents at beginning of year 477,747 3,100,585 Cash and cash equivalents at end of year £200,652 £477,747 CASPIAN HOLDINGS Plc NOTES TO THE GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 1. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2006 2005 Operating loss (2,718,173) (1,409,556)Exchange gains/(losses) in period (648,986) 161,658Translation adjustments 183,370 (63,202)Translation adjustments relating to fixed assets 215,294 125,258Loss on disposal of tangible assets 738 -Depreciation charges 604,513 143,210Impairment losses 1,587,164 -(Increase)/decrease in inventories (279,919) 56,120(Increase) in trade and other receivables (342,722) (122,665)Increase/(decrease) in trade and other payables 169,951 23,618(Decrease)/increase in other provisions (4,128) 25,762Net cash outflowfrom operating activities £(1,232,898) £(1,059,797) 2. CASH AND CASH EQUIVALENTS The amounts disclosed on the cash flow in respect of cash and cash equivalentsare in respect of these balance sheet amounts. Year ended 31 December 2006 31.12.06 01.01.06 Cash and cash equivalents £200,652 £477,747 Year ended 31 December 2005 31.12.05 01.01.05 Cash and cash equivalents £477,747 £3,100,585 This information is provided by RNS The company news service from the London Stock Exchange