27th Apr 2006 07:02
Aminex PLC27 April 2006 AMINEX PLC ("Aminex" or "the Company") Preliminary results for the year ended 31 December 2005 Aminex, the oil and gas company listed on the London and Irish Stock Exchanges,today announces its preliminary results for the year ended 31 December 2005. Highlights • New Production Sharing Agreement for Ruvuma Basin, Tanzania • Onshore licence award in Madagascar • Three East African farmout agreements signed • Production Sharing Agreement in North Korea • Technical Evaluation Agreement offshore Kenya • Production Sharing Agreement for Block 2, West Esh el Mellahah, Egypt • 1,000 kilometres of new seismic shot at Ruvuma and Nyuni, Tanzania • Two new gas wells on stream at South Weslaco, Texas • Loss before tax for period of $4.98 million (2004: loss $4.51 million) Brian Hall, Chief Executive of Aminex said: "2005 has been a very active year for Aminex, particularly in East Africa wherewe have expanded our exploration acreage and acquired new seismic, as well asforging relations with new governments and new partners. We have continued toupgrade our US reserves bringing our leases in the South Weslaco Field on toproduction for the first time. Peter Elwes has decided to retire at the AGM in June after ten years service asChairman and I would like to record the major contribution he has made to Aminexover this time. Derek Tughan, at present Senior Non-Executive Director, hasagreed to serve as Chairman." 27 April 2006 Enquiries: Aminex PLC +44 (0) 20 7240 1600 Brian Hall - Chief Executive Simon Butterfield - Finance Director Pelham Public Relations +44 (0) 20 7743 6679 Archie Berens OVERVIEW The year saw intense activity for the Aminex Group with several issues from pastyears satisfactorily resolved, good progress on existing ventures and a numberof new projects initiated. Satisfactory resolution of a long running jointventure dispute in March and a placing and open offer to shareholders of newshares in June put the Company in a position to move ahead strongly with itsexploration and development programmes. In North Korea old seismic data wassystematically reprocessed and an initial Production Sharing Agreement ("PSA")negotiated covering all that country's prospective hydrocarbon-bearing basins.In East Africa a farmout was achieved on part of the Tanzanian Nyuni block andnew seismic acquired over the entire Nyuni block. Also in Tanzania, a PSA wasexecuted in November for the onshore/near-shore Ruvuma block in the south of thecountry following which a seismic survey was conducted in the marine area withinthirty days. In a similar geological setting in Madagascar a PSA for a largeonshore block was finalised in the fourth quarter. In the second half a companywhich the Aminex group controls was awarded onshore acreage in Egypt close tothe Red Sea. Meanwhile, in the USA two successful gas wells were drilled inTexas and one oil well recompleted for production in Louisiana. In operationalterms, by year end Aminex had acquired 1,000 kilometres of new marine seismicand drilled two successful wells. Since the year end farmouts have been finalised on the newly granted Ruvuma PSAand over another part of the Nyuni PSA, both in Tanzania, while a Group companyhas become party to a Technical Evaluation Agreement offshore Kenya. Furtherseismic is planned over both Ruvuma and Nyuni during the summer of 2006 with aview to finalising locations for a very active drilling programme in 2007. In recent months most of the operational activity has been in Africa rather thanKorea but Korean activity is expected to accelerate during 2006. FINANCIAL REVIEW The 2005 financial statements are the first to be prepared in accordance withInternational Financial Reporting Standards as adopted by the European Union("EU IFRS"). Up until this year, Aminex's financial statements had been preparedin accordance with Irish Generally Accepted Accounting Practice ("Irish GAAP").To comply with EU IFRS, the comparative 2004 figures have been restated inaccordance with EU IFRS. Reconciliations of the 2004 figures showing themovement from Irish GAAP to EU IFRS are set out in detail in the Appendix tothis announcement. Following the adoption of EU IFRS and in light of the content of IFRS 6"Exploration for and Evaluation of Mineral Resources", Aminex has reviewed itsaccounting policies and has decided to change the policy for its oil and gasassets from the "full cost" method to the "successful efforts" method. Under the"successful efforts" method, the costs of unsuccessful wells initiallycapitalised within the category of 'Exploration Assets' are written off to theincome statement in the period they are determined unsuccessful. Furthermore,producing assets are depleted on a field by field basis rather than as ageographical pool. Comparative figures for 2004 have been restated to reflectthe change in accounting policy. For the year 2005, Aminex's turnover comprises revenues from sales of oil andgas in the USA and also sales of goods and services by its oilfield service andsupply company. In December 2004, Aminex sold its Vinton Dome oilfield, aconsequence of which has been a reduction in 2005 Group turnover from US$5.4million in 2004 to US$3 million for the current year. The average oil priceobtained in 2005 of US$50.30 per barrel is US$9.73 per barrel higher than thatof 2004 and oil production during the period is similar to that of 2004(excluding Vinton Dome production). The average gas price achieved at US$7.81per mcf is US$1.72 per mcf higher than 2004 although gas production decreasedfrom 102 mmcf in 2004 to 59 mmcf in the current year. Much of this gas reductionis a consequence of having shut in the Alta Loma well which supplies BP's TexasCity refinery. This refinery has been out of commission since early 2005following a major fire and extensive repairs. The oil services and supplycompany's share of turnover amounts to US$1.2 million (2004: US$1.3 million). Cost of sales at US$2 million is US$1.2 million lower than 2004 as a consequenceof reduced oil and gas turnover. After taking into account depletion anddecommissioning charges of US$0.9 million (2004: US$1.2 million) the resultinggross profit of US$0.02 million compares with US$0.86 million for 2004. Following major cost reductions in the USA, Group administrative expense atUS$4.95 million is US$0.49 million lower than 2004, leaving a current periodoperating loss of US$4.93 million (2004: US$4.49 million). After taking intoaccount net interest costs of US$49,000 (2004: US$19,000) the net loss for theGroup after tax for the twelve months ended 31 December 2005 amounts to US$4.98million (2004: US$4.51 million). Balance sheet capital expenditures for exploration and evaluation assets show anincrease during the period of US$1.34 million and comprise mainly the cost ofseismic surveys over the Nyuni and Ruvuma licences as well as geological studiesand data evaluation in North Korea. Capital expenditures relating to property,plant and equipment during the period amounts to a net US$2.9 million. Thisincrease in cost includes the recognition of a provision of US$2.2 millionrelating to future decommissioning costs on Aminex's producing assets togetherwith additions to US oil and gas properties of US$1.6 million, offset by thecurrent year charge for depletion and decommissioning of US$0.9 million. Bothaccounts payable and accounts receivable period end balances show a significantreduction from the 2004 period end balances as a consequence of the settlementin early 2005 of a dispute with a joint venture partner regarding amounts owedto the Nyuni joint venture. The cash flow statement reflects a net cash inflow of US$8 million, primarilyfrom a share placing in July 2005. During the period, US$119,000 of new bankdebt was drawn down to finance the purchase of oilfield equipment for theSomerset field and US$82,000 of existing debt was repaid. As at 31 December2005, Aminex's cash balance amounted to US$3.9 million offset by negligible bankdebt of US$135,000. OPERATIONS REVIEW Tanzania Tanzania was the Group's main focus of exploration activity in 2005. InSeptember East Coast Energy Ltd., which operates the adjacent Songo Songoproducing gas field farmed into part of the Nyuni licence, provisionallydesignated Nyuni "A", with a commitment to shoot new seismic and an option toparticipate in an exploration well through paying a disproportionate share ofthe drilling cost. Aminex took advantage of a seismic vessel in the area also toacquire new seismic data over the remaining part of Nyuni, designated Nyuni "B".Since the year end a further farmout has been agreed for Nyuni "B" withprivately-owned East Africa Exploration Ltd. of Dubai, which will earn into thelicence by acquiring 2D and possibly 3D transition zone seismic over the manyreefs and small islands which overlay Nyuni's numerous leads and prospects. Thiswill complement the shallow marine 2D seismic data already acquired in 2005 witha view to firming up drilling locations for 2007. At present the government ofTanzania has not approved the division of Nyuni into "A" and "B" and in theevent that it does not do so, the parties will discuss other ways of meetingtheir objectives for the Nyuni licence. To the south, Aminex was awarded a PSA over the 12,000 sq km Ruvuma onshore/near-shore area in October 2005 and acquired approximately 330 kms of new marine2D seismic in November. Ruvuma is divided into two separate licences, Lindi andMtwara. Since the year end Aminex has farmed out 50% of both licences to HardmanResources Ltd. on the basis that Hardman will be responsible for the moreextensive onshore seismic during 2006. The objective of the Aminex/Hardman 50-50joint venture is to define firm locations during the remainder of 2006 for adrilling campaign in 2007. The geology of the Ruvuma basin lies partly inTanzania and partly in Mozambique and the Ruvuma River divides the twocountries. On the Mozambique side to the south a successful licensing round hasjust closed and all blocks on offer were awarded, some to large internationalcompanies offering major work commitments. Aminex looks forward to working withHardman in the exploration of the Tanzanian side of this very interestingregion. Madagascar Aminex and partner Mocoh Ltd., through a 50-50 new company "Amicoh ResourcesLtd.", were awarded the exploration rights to the 10,750 sq kilometre onshoreBlock 3108, known as "Manja", on the west coast of the country in the MorandavaBasin, with similar geology to the Company's Tanzanian licences. In the pastseveral wells have been drilled on Manja, firstly by the Madagascar state oilcompany and later by Chevron and Amoco, some of which had good oil and gasshows. With the benefit of modern exploration technology and strong markets forboth gas and oil, Aminex believes this to be a prime area for exploration.Gravity, aeromagnetic and seismic reprocessing work is ongoing and new seismicwill be acquired as soon as possible with a view to firming up a first welllocation. U.S.A. Towards the end of 2004 Aminex disposed of its declining Vinton Field producingproperties in Louisiana and consequently reduced overall production revenues andreserves. However this also enabled the company to make material reductions inits US overhead and to avoid a number of imminent remedial and abandonmentliabilities. With a reduced overhead burden, Aminex is working on replacing thelost revenues with new and more profitable production. Aminex's properties,which are all onshore, now consist of South Weslaco, Alta Loma and Somerset inTexas, together with the Shoats Creek Field in Louisiana. Two successful wellswere drilled on South Weslaco in the first half of 2005 but not put onproduction until December since when they have been performing satisfactorily.Gas production from Alta Loma has been shut in for several months because itssole customer, BP's Texas City Refinery, has been out of action for some timefollowing a major explosion and fire in 2005. Lack of production from thisimportant gas well has had an adverse impact on our US revenues in 2005. TheSomerset Field consists of a large number of stripper wells and produces arelatively heavy crude which is sold as "Texas sour". High oil prices havegreatly increased the netback of Texas sour and the field is being activelyproduced. Simultaneously a programme of abandonment of old and idle wells hasbeen accelerated. Shoats Creek is located in swampy forest in Louisiana andoperating costs are high. When Aminex still owned the nearby and morestraightforward Vinton Field, most of its efforts were directed there. However,with the Vinton Field sold and crude from Shoats Creek attracting a premium overthe price of marker crudes, Aminex has begun a programme of engineering studiesand well workovers with a view to exploiting the latent potential of ShoatsCreek. In 2005 one well was successfully worked over and put on stream and atthe time of writing there is a rig in the field carrying out further workovers. North Korea In North Korea, officially known as the Democratic Peoples Republic of Korea or"DPRK") a PSA was signed in August 2005 covering all that country's prospectivebasins for oil and gas exploration, onshore and offshore. This followed on froman earlier "Petroleum Agreement" signed in 2004 giving Aminex exclusive rightsto the whole country in return for performing certain technical services whichhave been diligently carried out. There is, however, one complicating issue inthe west which is the lack of a finally determined oil and gas boundary betweenDPRK and the Peoples Republic of China. This is a sensitive issue given theproximity of the Bohai Bay oilfields, the most significant reserves in China.Although Aminex has been assured in writing by the DPRK that its agreementsremain fully valid, prudence nevertheless dictates that its first field workwill concentrate on the undisputed East Sea area, which it believes to be highlyprospective, and on selected onshore basins. At the time of writing Aminex isexpecting imminently to sign a new agreement for the East Sea which will allowit to introduce partners and commence a seismic acquisition programme, bothregionally and over specific prospects. Egypt In November 2005 Aminex Petroleum Egypt Ltd. (formerly Red Sea Petroleum Ltd.)in which Aminex has a 51% interest was awarded the rights to Block 2 in the WestEsh el Mellahah concession on the Red Sea coast of Egypt close to important oilproduction. Other shareholders are First Energy Ltd., Sinopex and FSInternational Corporation. Sinopex is an Egyptian company which will support theproject with technical and administrative services. Formal presidential approvalof the licence is expected in the near future and exploration will begin during2006. Kenya In March 2006 Aminex joined Upstream Petroleum Services Ltd. ("UPSL") and SomKenLtd. in a Technical Evaluation Agreement ("TEA") covering approximately 5,000 sqkms offshore Kenya. This area comprises the near-shore parts of Kenya Blocks L9and L10, the remainder of which are either licensed to other companies or undernegotiation for new licences. UPSL is a seismic operator and sister company ofEast Africa Exploration Ltd., Aminex's farm-out partner in the Tanzanian Nyuni Blicence. Aminex has 25% of this TEA over which new seismic data has recentlybeen acquired. Further seismic, together with seabed coring as part of ageochemical testing programme, is planned to be carried out in summer 2006 witha view to applying for a full PSA and defining a drilling location. BOARD CHANGES Peter Elwes intends to relinquish the chairmanship of the Company at the AGM inJune and retire from the Board at that time. He has served as chairman for justover ten years during a period of great change. Derek Tughan, at present SeniorNon-Executive Director, has agreed to serve as Chairman. In early 2006 Michael Rego and Andrew Windham were invited to join the Company'sboard, as executive director and non-executive director respectively. Theirnames are being put forward for election at the AGM in June. Mr. Rego is aPetroleum Geologist who has been with the Company since 1998, working initiallyin Russia before becoming Group Exploration Manager in 2002. Mr. Windham is asolicitor who has spent most of his career in the oil industry. He has served asan executive director of Clyde Petroleum PLC and Energy Africa Ltd. STRATEGY & PROSPECTS Aminex's strategy is to acquire first class exploration prospects in relativelynew and under-explored areas, thereby gaining first mover advantage, introducingindustry partners where appropriate. The Company has greatly expanded itsportfolio during the last year. For an experienced company such as Aminex with agood portfolio of exploration assets there is unprecedented scope for growth ina market which has a strong appetite for exploration and new sources ofhydrocarbons. 27 April 2006 Group Income Statementfor the year ended 31 December 2005 2005 2004 Notes US$'000 US$'000 Revenue 2 3,000 5,384Cost of sales (2,038) (3,182)Unsuccessful exploration efforts - (103)Depletion, depreciation and decommissioning (941) (1,239) _______ _______Gross profit 21 860Administrative expenses (4,951) (5,436)Profit on disposal of oil and gas properties - 618Purchaser's share of Vinton Dome profit - (532) _______ _______ Loss on operations (4,930) (4,490) Financing income 3 123 15Financing costs 4 (172) (34) _______ _______ Loss before tax (4,979) (4,509)Income tax expense - - _______ _______ Net loss for the financial year 2 (4,979) (4,509) _______ _______ Basic and diluted loss per Ordinary Share (in US 5 (3.85) (4.85)cents) Group Statement of Recognised Income and Expensefor the year ended 31 December 2005 2005 2004 US$'000 US$'000 Currency translation differences (18) (57) ______ ______ Net loss recognised directly in equity (18) (57) Loss for the financial year (4,979) (4,509) ______ ______ Total recognised income and expense for the (4,997) (4,566)year ______ ______ Attributable to the equity holders of the (4,997) (4,566)Parent Company ______ ______ Group Balance Sheetat 31 December 2005 2005 2004 Notes US$'000 US$'000Assets Exploration and evaluation assets 15,649 14,310Property, plant and equipment 8,368 5,443Other investments 418 - ______ ______ Total non current assets 24,435 19,753 ______ ______ Trade and other receivables 1,179 6,102Cash and cash equivalents 3,884 767 ______ ______ Total current assets 5,063 6,869 ______ ______ Total assets 29,498 26,622 ______ ______ Equity Issued capital 6 11,057 6,777Share premium 6 40,289 36,222Capital conversion reserve fund 234 234Foreign currency reserve (75) (57)Retained earnings (26,416) (21,437) ______ ______ Total equity 25,089 21,739 ______ ______ Liabilities Interest bearing loans and borrowings 93 51Abandonment and site restoration provision 2,328 - ______ ______ Total non current liabilities 2,421 51 ______ ______ Interest bearing loans and borrowings 42 47Trade and other payables 1,946 4,785 ______ ______ Total current liabilities 1,988 4,832 ______ ______ Total liabilities 4,409 4,883 ______ ______ Total equity and liabilities 29,498 26,622 Group Statement of Cashflowsfor the year ended 31 December 2005 2005 2004 US$'000 US$'000 Operating activities Loss for the financial year (4,979) (4,509)Depletion, depreciation 997 1,289and decommissioning Unsuccessful exploration - 103efforts Foreign exchange losses (9) (68)Financing income (123) (15)Financing costs 172 34Gain on disposal of oil - (618)and gas properties Loss/(gain) on sale of 15 (121)plant and equipment Loss on sale of other - 184investments Equity-settled 26 238share-based payment charge Decrease in trade and 4,923 -other receivables (Decrease)/increase in (3,149) 707trade and other payables ______ ______ Net cash absorbed by (2,127) (2,776)operations Interest paid (15) (34)Tax paid - - ______ ______ Net cash outflows from (2,142) (2,810)operating activities Investing activities Acquisition of property, (1,379) (159)plant and equipment Expenditure on (1,429) (5,522)exploration and evaluation assets Acquisition of investment (44) -assets Proceeds from sale of 37 5,276property, plant and equipment Proceeds from sale of - 2,687investments Interest received 90 15 ______ ______ Net cash (outflows)/ (2,725) 2,297inflows from investing activities Financing activities Proceeds from the issue 8,698 1,265of share capital Payment of transaction (751) (34)costs Loans repaid (82) (145)Loans received 119 23 ______ ______Net cash inflows from 7,984 1,109financing activities ______ ______ Net increase in cash and 3,117 596cash equivalents Cash and cash equivalents 767 171at 1 January ______ ______ Cash and cash equivalents 3,884 767at 31 December Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices Aminex PLC (the "Company") is a company domiciled and incorporated in Ireland.The Group financial statements for the year ended 31 December 2005 consolidatethe individual financial statements of the Company and its subsidiaries(together referred to as "the Group"). Basis of preparation The Group and Company financial statements (together the "financial statements")have been prepared in accordance with International Financial ReportingStandards (IFRS) that are adopted by the European Union (EU) that are effectiveat 31 December 2005. These are our first Group Financial Statements prepared inaccordance with IFRS as adopted by the EU ("EU IFRS") and comparativeinformation, which was previously presented in accordance with Irish generallyaccepted accounting principles (Irish GAAP) for the year ended 31 December 2004has been restated under EU IFRS, with the exception of IAS 32 and 39 which wereadopted with effect from 1 January 2005. An explanation of the effect of the transition to EU IFRS is provided in Note 7. Where estimates had been made under Irish GAAP, consistent estimates (afteradjustments to reflect any difference in accounting policies) have been made ontransition to EU IFRS. Judgements affecting the balance sheets of the Companyand Group have not been revisited with the benefit of hindsight. The Group andCompany have taken advantage of the following exemptions as permitted under IFRS1: • IAS 21 requires that on disposal of a foreign operation, the cumulative amountof currency translation differences previously recognised directly in reservesfor that operation be transferred to the income statement as part of the profitor loss on disposal. Aminex PLC has deemed the cumulative currency translationdifferences applicable to foreign operations to be zero as at the transitiondate. The cumulative currency translation differences arising before thetransition date have been reclassified as part of retained earnings. • In accordance with the exemption allowed on transition, the fair valuecalculations in respect of share based payments under IFRS-2 "Share BasedPayment", have only been applied in respect of share options granted after 7November 2002. The financial statements are presented in US dollars, rounded to the nearestthousand ($'000) except when otherwise indicated. The financial statements areprepared on a historical cost basis except for the measurement at fair value ofshare options. The preparation of financial statements requires management touse judgements, estimates and assumptions that affect the application ofpolicies and reported amounts of assets, liabilities, income and expenses.Actual results may differ from those estimates. The preparation of the financial statements under EU IFRS has resulted inchanges to the accounting policies from the most recent annual financialstatements prepared under Irish GAAP. The accounting policies set out below have been applied consistently to allperiods presented in these financial statements and in preparing an opening EUIFRS balance sheet at 1 January 2004 for the purposes of the transition to EUIFRS. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Statement of compliance The Group financial statements have been prepared and approved by the directorsin accordance with International Financial Reporting Standards as adopted by theEU ("EU IFRSs"). The individual financial statements of the Company ("Companyfinancial statements") have been prepared and approved by the directors inaccordance with EU IFRSs and as applied in accordance with Companies Acts 1963to 2005 which permits a company that publishes its company and group financialstatements together, to take advantage of the exemption in Section 148(8) of theCompanies Act 1963 from presenting to its members its company income statementand related notes that form part of the approved company financial statements. The IFRSs adopted by the EU applied by the Company and Group in the preparationof these financial statements are those that were effective at 31 December 2005together with the early adoption of IFRS 6 "Exploration for and Evaluation ofMineral Resources". The following relevant IFRSs adopted by the EU which are notyet effective and have therefore not been early adopted in these financialstatements are not expected to have a material impact on our financial positionor income statement on adoption: • Amendment to IAS 1 - "Capital disclosures" (effective 1 January 2007) • Amendment to IAS 39 - "The Fair Value Option" (effective 1 January 2006) • Amendments to IAS 39 -"Cash Flow Hedge Accounting of Forecast Intragroup Transactions" (effective 1 January 2006) • Amendments to IAS 39 and IFRS 4: "Financial Guarantee Contracts" (effective 1 January 2006) • IFRS 7 - "Financial Instruments: Disclosures" (effective 1 January 2007) • IFRIC 4 - "Determining Whether an Arrangement Contains a Lease" (effective 1 January 2006) Basis of consolidation The Group financial statements consolidate the financial statements of AminexPLC and its subsidiaries. Subsidiaries are consolidated from the date on whichcontrol is transferred to the Group and cease to be consolidated from the dateon which effective control is transferred out of the Group. Control exists whenthe company has the power, directly or indirectly, to govern the financial andoperating policies of an entity so as to obtain economic benefits from itsactivities. Financial statements of subsidiaries are prepared for the samereporting year as the parent company. The Group will continue to prepare the statutory individual financial statementsof subsidiary companies under the GAAP applicable in their country ofincorporation but adjustments have been made to the results and financialposition of such companies to bring their accounting policies into line withthose of the Group. All inter-company balances and transactions, including unrealised profitsarising from inter-group transactions, have been eliminated in full. Unrealisedlosses are eliminated in the same manner as unrealised gains except to theextent that there is evidence of impairment. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Revenue recognition Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group, that it can be reliably measured, thatperformance has occurred under a service contract and that the significant risksand rewards of ownership of the goods have passed to the buyer. Revenuecomprises the invoiced value of goods and services supplied by the Group andexcludes inter-company sales, trade discounts and value added tax. Services areinvoiced as they are performed and goods are invoiced when supplied. Royalties Royalties are charged to the income statement in the period in which the relatedproduction is accounted for. Employee benefits (a) Pensions and other post-employment benefits The Group contributes towards the cost of certain individual employee pensionplans. Annual contributions are based upon a percentage of gross annual salary.Pension contributions are recognised as an expense in the income statement on anaccruals basis. (b) Share-based payment For equity-settled share-based payment transactions (i.e. the issuance of shareoptions), the Group measures the services received and the correspondingincrease in equity at fair value at the measurement date (which is the grantdate) using a recognised valuation methodology for the pricing of financialinstruments (i.e. the binomial model). Given the share options granted do notvest until the completion of a specified period of service, the fair valueassessed at the grant date is recognised in the income statement over thevesting period as the services are rendered by employees. For options granted toDirectors, there is no vesting period and the fair value is recognised in theincome statement at the date of the grant. The share options issued by the Company are not subject to market-based vestingconditions as defined in IFRS 2. Non-market vesting conditions are not takeninto account when estimating the fair value of share options as at the grantdate; such conditions are taken into account through adjusting the number ofequity instruments included in the measurement of the transaction amount sothat, ultimately, the amount recognised equates to the number of equityinstruments that actually vest. The expense in the income statement in relationto share options represents the product of the total number of optionsanticipated to vest and the fair value of these options. This amount isallocated to accounting periods on a straight-line basis over the vestingperiod. Given that the performance conditions underlying the Company's shareoptions are service-related and non-market in nature, the cumulative charge tothe income statement is reversed only where an employee in receipt of shareoptions leaves the company prior to completion of the service period. Theproceeds received by the Company on the exercise of share entitlements arecredited to share capital and share premium. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) In line with the transitional provisions applicable to a first-time adopter ofInternational Financial Reporting Standards, as contained in IFRS 2 "Share-basedPayment", the Group has elected to implement the measurement requirements of theIFRS in respect of share options that were granted after 7 November 2002 thathad not vested as at the effective date of the standard (1 January 2005). Inaccordance with the standard, the disclosure requirements of IFRS 2 have beenapplied in relation to all outstanding share-based payments regardless of theirgrant date. The Group does not operate any cash-settled share-based payment schemes orshare-based payment transactions with cash alternatives as defined in IFRS 2. Financing costs Financing costs comprise interest payable on borrowings calculated using theeffective interest rate method, interest receivable on funds invested, theimputed interest on the fair value of the abandonment and site restorationprovision and applicable foreign exchange gains and losses. The interest expensecomponent of finance lease payments is recognised in the income statement usingthe effective interest rate method. Financing income Interest income is recognised in the income statement as it accrues, using theeffective interest method. Leases Finance leases, which transfer to the Group substantially all the risks andbenefits of ownership of the leased asset, are capitalised at the inception ofthe lease at the fair value of the leased asset or if lower the present value ofthe minimum lease payments. The corresponding liability to the lessor isincluded in the balance sheet as a finance lease obligation. Lease payments areapportioned between the finance charges and reduction of the lease obligation soas to achieve a constant rate of interest on the remaining balance of theliability. Finance charges are charged to the income statement as part offinance costs. Capitalised leased assets are depreciated over the shorter of the estimateduseful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits ofownership of the assets are classified as operating leases. Operating leasepayments are recognised as an expense in the income statement on a straight linebasis over the lease term. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Tax The tax expense in the income statement represents the sum of the tax currentlypayable and deferred tax. Tax currently payable is based on taxable profit for the year. Taxable profitdiffers from net profit as reported in the income statement because it excludesitems of income or expense that are taxable or deductible in other years and itfurther excludes items that are not taxable or deductible. The Group's liabilityfor current tax is calculated using rates that have been enacted orsubstantially enacted at the balance sheet date. Tax is recognised in the income statement except to the extent that it relatesto items recognised directly in equity. Deferred income tax is provided, using the liability method, on all differencesbetween the carrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for taxation purposes except those arising fromnon-deductible goodwill or on initial recognition of an asset or liability whichaffects neither accounting nor taxable profit. Deferred tax assets andliabilities are measured at the tax rates that are expected to apply in the yearwhen the asset is expected to be realised or the liability to be settled. Deferred tax assets are recognised for all deductible differences, carry forwardof unused tax credits and unused tax losses, to the extent that it is probablethat taxable profit will be available against which the deductible temporarydifferences and the carry forward of unused tax credits and unused tax lossescan be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profit would be available to allow all or part of the deferred tax assetto be utilised. Earnings per ordinary share Basic earnings per share is computed by dividing the net profit for thefinancial period attributable to ordinary shareholders by the weighted averagenumber of ordinary shares in issue that ranked for dividend during the financialperiod. Diluted earnings per share is computed by dividing the profit for the financialperiod attributable to ordinary shareholders by the weighted average number ofordinary shares in issue after adjusting for the effects of all potentialdilutive ordinary shares that were outstanding during the financial period. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Foreign currency translation The presentation currency of the Group and the functional currency of Aminex PLCis the US dollar (US$). Transactions in foreign currencies are recorded at therate of exchange ruling at the date of the transaction. Monetary assets andliabilities denominated in foreign currencies are retranslated into thefunctional currency at the rate of exchange at the balance sheet date. Alltranslation differences are taken to the income statement with the exception ofdifferences on foreign currency borrowings that provide a hedge against a netinvestment in a foreign operation. These are taken directly to equity togetherwith the exchange difference on the net investment in the foreign operation. Results and cash flows of non-dollar subsidiary undertakings are translated intodollars at average exchange rates for the year and the related balance sheetsare translated at the rates of exchange ruling at the balance sheet date.Adjustments arising on translation of the results of non--dollar subsidiaryundertakings at average rates, and on the restatement of the opening net assetsat closing rates, are dealt with in a separate translation reserve withinequity, net of differences on related currency borrowings. All other translationdifferences are taken to the income statement. The principal exchange rates used for the translation of results, cash flows andbalance sheets into US dollars were as follows: Average Year-end US$ 1 equals 2005 2004 2005 2004 Pound sterling 0.5492 0.5456 0.5811 0.5190 Australian dollar 0.7620 0.7354 0.7298 0.7796 On disposal of a foreign entity, accumulated currency translation differencesare recognised in the income statement as part of the overall gain or loss ondisposal; the cumulative currency translation differences arising prior to thetransition date have been set to zero for the purposes of ascertaining the gainor loss on disposal of a foreign operation subsequent to 1 January 2004.Goodwill and fair value adjustments arising on acquisition of a foreignoperation are regarded as assets and liabilities of the foreign operation, areexpressed in the functional currency of the foreign operation and are recordedat the exchange rate at the date of the transaction and subsequentlyretranslated at the applicable closing rates. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Exploration and evaluation assets and property plant and equipment - developedand producing assets Subsequent to the publication of the Group's transition statement incorporatedin the interim results publication for the six months to 30 June 2005 the Groupmade the decision to early adopt IFRS 6. In light of the content of IFRS 6, theGroup has also decided to change its accounting policy for oil and gas assetsfrom the full cost method to the successful efforts method. Exploration and evaluation assets Expenditure incurred prior to obtaining the legal rights to explore an area iswritten off to the Income Statement. Expenditures incurred on the acquisition ofa licence interest are initially capitalised on a licence by licence basis.Exploration and evaluation expenditure incurred in the process of determiningexploration targets on each licence is also capitalised. These expenditures areheld undepleted within the exploration licence asset until such time as theexploration phase on the licence area is complete or commercial reserves havebeen discovered. Exploration and evaluation drilling costs are capitalised on a well by wellbasis within each licence until the success or otherwise of the well has beenestablished. Unless further evaluation expenditures in the area of the well havebeen planned and agreed or unless the drilling results indicate that hydrocarbonreserves exist and there is a reasonable prospect that these reserves arecommercial, drilling costs are written off on completion of a well. Property, plant and equipment - developed and producing oil and gas assets Following appraisal of successful exploration wells and the establishment ofcommercial reserves, the related capitalised exploration and evaluationexpenditures are transferred into a single field cost centre within developedand producing properties after testing for impairment. Where results ofexploration drilling indicate the presence of hydrocarbons which are ultimatelynot considered commercially viable, all related expenditures are written off tothe income statement. Subsequent expenditure is capitalised only where it either enhances the economicbenefits of the developed and producing properties or replaces part of theexisting developed and producing properties. Any costs associated with the partreplaced are expensed to the income statement. Interest on borrowings fordevelopment projects is capitalised by field up to the time of revenuegeneration. Disposal of exploration and evaluation assets and developed and producing oiland gas assets The net proceeds from any disposal of an exploration asset are initiallycredited against the previously capitalised costs. Any surplus proceeds arecredited to the income statement. The net proceeds from any disposal ofdeveloped and producing properties are compared with the previously capitalisedcost on a field by field basis. A gain or loss on disposal of the developed andproducing properties is recognised in the income statement to the extent thatthe net proceeds exceed or are less than the appropriate portion of the netcapitalised costs of the assets. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Depletion The Group depletes expenditure on developed and producing properties on a unitof production basis, based on proved and probable reserves on a field by fieldbasis. In certain circumstances, fields within a single development may becombined for depletion purposes. Capitalised costs, together with anticipated future development costs calculatedat price levels ruling at the balance sheet date, are amortised on a unit ofproduction basis. Amortisation is calculated by reference to the proportion thatproduction for the period bears to the total of the estimated remainingcommercial reserves as at the beginning of the period. Changes in reservesquantities and cost estimates are recognised prospectively. Impairment Exploration and evaluation assets are reviewed regularly for indicators ofimpairment and costs are written off where circumstances indicate that thecarrying value might not be recoverable. In such circumstances, the explorationand evaluation asset is allocated to developed and producing properties withinthe same geographical segment and tested for impairment. Any such impairmentarising is recognised in the income statement for the period. Where there are nodeveloped and producing properties, the impaired costs of exploration andevaluation are charged immediately to the income statement. Impairment reviews on developed and producing properties are carried out on eachcash-generating unit identified in accordance with IAS 36 "Impairment ofAssets". The Group's cash-generating units are those assets which generatelargely independent cash flows and are normally, but not always, singledevelopment areas or fields. Where there has been a charge for impairment in an earlier period, that chargewill be reversed in a later period where there has been a change incircumstances to the extent that the discounted future net cash flows are higherthan the net book value at the time. In reversing impairment losses, thecarrying amount of the asset will be increased to the lower of its originalcarrying value or the carrying value that would have been determined (net ofdepletion) had no impairment loss been recognised in prior periods. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Decommissioning costs Provision is made for the decommissioning of oil and gas wells and otheroilfield facilities. The cost of decommissioning is determined throughdiscounting the amounts expected to be payable to their present value at thedate the provision is recorded and is reassessed at each balance sheet date.This amount is included within developed and producing assets by field and theliability is included in provisions. Such cost is depleted over the life of thefield on a unit of production basis and charged to the income statement. Theunwinding of the discount is reflected as a finance cost in the income statementover the remaining life of the well. Other Property, Plant and Equipment Other property, plant and equipment is stated at cost less accumulateddepreciation and impairment losses. Depreciation is calculated to write off the original cost of property, plant andequipment less its estimated residual value over its expected useful lives on astraight line basis. The estimated useful lives applied in determining the charge to depreciation areas follows: Leasehold property 2% - 4% Plant and equipment 20% - 33.3% Motor vehicles 25% The useful lives and residual values are reassessed annually. On disposal of property, plant and equipment the cost and related accumulateddepreciation and impairments are removed from the financial statements and thenet amount less any proceeds is taken to the income statement. The carrying amounts of the Group's property, plant and equipment are reviewedat each balance sheet date to determine whether there is any indication ofimpairment. An impairment loss is recognised whenever the carrying amount of anasset or its cash generation unit exceeds its recoverable amount. Impairmentlosses are recognised in the income statement. Subsequent costs are included in an asset's carrying amount or recognised as aseparate asset, as appropriate, only when it is probable that future economicbenefits associated with the item will flow to the Group and the cost of thereplaced item can be measured reliably. All other repair and maintenance costsare charged to the income statement during the financial period in which theyare incurred. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Business combinations The purchase method of accounting is employed in accounting for the acquisitionof subsidiaries by the Group. The Group has availed itself of the exemptionunder IFRS 1, "First-time Adoption of International Financial ReportingStandards", whereby business combinations prior to the transition date of 1January 2004 are not restated. IFRS 3, "Business Combinations", has been appliedwith effect from the transition date of 1 January 2004 and goodwill amortisationceased from that date. The costs of a business combination are measured as the aggregate of the fairvalue at the date of exchange of assets given, liabilities incurred or assumedand equity instruments issued in exchange for control together with any directlyattributable costs. Deferred expenditure arising on business combinations isdetermined through discounting the amounts payable to their present value at thedate of exchange. The discount element is reflected as an interest charge in theincome statement over the life of the deferred payment. In the case of abusiness combination the assets and liabilities are measured at theirprovisional fair values at the date of acquisition. Adjustments to provisionalvalues allocated to assets and liabilities are made within twelve months of theacquisition date and reflected as a restatement of the acquisition balancesheet. Joint Ventures - jointly controlled operations Jointly controlled operations are those activities over which the Groupexercises joint control with other participants, established by contractualagreement. The Group recognises, in respect of its interests in jointlycontrolled operations, the assets that it controls, the liabilities that itincurs, the expenses that it incurs and its share of the income that it earnsfrom the sale of goods or services by the joint venture. Goodwill Goodwill written off to reserves under Irish GAAP prior to 1998 has not beenreinstated and will not be included in determining any subsequent profit or losson disposal. Goodwill on acquisitions is initially measured at cost, being the excess of thecost of the business combination over the acquirer's interest in the net fairvalue of the identifiable assets, liabilities and contingent liabilities.Following initial recognition, goodwill is measured at cost less any accumulatedimpairment losses. Goodwill relating to acquisitions from 1 January 2004 and thedeemed cost of goodwill carried in the balance sheet at 1 January 2004 is notamortised. Goodwill is reviewed for impairment annually or more frequently ifevents or changes in circumstances indicate that the carrying value may beimpaired. As at the acquisition date, any goodwill acquired is allocated to each of thecash-generating units expected to benefit from the combination's synergies.Impairment is determined by assessing the recoverable amount of thecash-generating unit to which the goodwill relates. Notes to the Financial Informationfor the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Where goodwill forms part of a cash-generating unit and part of the operationwithin that unit is disposed of, the goodwill associated with the operationdisposed of is included in the carrying amount of the operation when determiningthe gain or loss on disposal of the operation. Goodwill disposed of in thiscircumstance is measured on the basis of the relative values of the operationdisposed of and the proportion of the cash-generating unit retained. Financial assets Investments in subsidiary undertakings are stated at cost less provision forimpairment in the Company's balance sheet. Investments in companies are stated at fair value. The fair value of investmentsis their quoted market price at the balance sheet date. When market values forinvestments are not readily available, investments are held at cost. Investmentsare assessed for potential impairment at each balance sheet date. If any suchevidence exists, an impairment loss is recognised in the income statement. Cash and cash equivalents Cash and short term deposits in the balance sheet comprise cash at bank and inhand and short term deposits with an original maturity of three months or less.Bank overdrafts that are repayable on demand and form part of the Group's cashmanagement are included as a component of cash and cash equivalents for thepurposes of the statement of cashflows. Trade and other receivables Trade receivables, which generally have 30 to 90 day terms, are recognised andcarried at original invoice amount less an allowance for any potential shortfallin receipt. An estimate of any shortfall in receipt is made when there isobjective evidence that a loss has been incurred. Bad debts are written off whenidentified. Provisions A provision is recognised in the balance sheet when the Group has a presentlegal or constructive obligation as a result of a past event and it is probablethat an outflow of economic benefits would be required to settle the obligation.If the effect of the time value of money is material, provisions are determinedby discounting the expected future cash flows at a pre-tax rate that reflectsthe time value of money and, where appropriate, the risks specific to theliability. Where discounting is used, the increase in the provision due to thepassage of time is recognised as a finance cost. Segment reporting A segment is a distinguishable component of the Group that is engaged either inproviding products or services (business segment), or in providing products orservices within a particular economic environment (geographical segment), whichis subject to risks and rewards that are different from those other segments.The Group has identified the geographical segments as the primary segments andthe business segments as the secondary segments. Notes to the Financial Informationfor the year ended 31 December 2005 2 Segmental Information The Group's primary reporting format is geographical segments, being the USA,Africa, Asia and Europe. The Group's other operations by geographical segment donot currently represent 10% or more of the Group's revenue or assets and havetherefore not been separately disclosed. The Group's secondary reporting formatis by business segment, being exploration and evaluation, producing oil and gasproperties and the provision of oilfield goods and services. The Group's revenues and profits arise from oil and gas production in the USAand the provision of oilfield equipment and services included in the Europesegment. Inter-segment revenue is not material and has therefore not been disclosedseparately below. Segment results, assets and liabilities include items directly attributable toeach segment as well as items that can be allocated on a reasonable basis. Segment capital expenditure is the total amount of expenditure incurred duringthe period to acquire segment assets that are expected to be used for more thanone period. Segment revenue/segment result Continuing Producing Exploration Provision of operations Oil and gas and oilfield goods properties evaluation and services USA ROW Europe Total 2005 2004 2005 2004 2005 2004 2005 2004 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 America 1,833 4,048 - - 122 11 1,955 4,059Africa - - - - 108 641 108 641Asia - - - - 557 587 557 587Europe - - - - 380 97 380 97 Revenue 1,833 4,048 - - 1,167 1,336 3,000 5,384 Group net loss or the period (1,454) (903) (564) (479) (2,961) (3,127) (4,979) (4,509) Segment assets 8,652 6,487 15,603 19,244 5,243 891 29,498 26,622 Segment (3,627) (941) (38) (2,949) (744) (993) (4,409) (4,883)liabilities Capital 1,722 159 940 4,533 427 - 3,089 4,692expenditure Depletion and decommissioning charge 906 1,145 - - - - 906 1,145 Unsuccessful exploration efforts - 103 - - - - - 103Depreciation 35 94 - - 56 50 91 144 3 Financing income 2005 2004 US$'000 US$'000 Deposit interest income 123 2Interest receivable from associate - 13 _____ _____ 123 15 _____ _____ 4 Financing costs 2005 2004 US$'000 US$'000 Bank loans and overdraft interest 11 28Other finance charges 4 6Other finance costs - unwinding of discount 157 - _____ _____ 172 34 _____ _____ 5 Loss per Ordinary Share The basic net loss per Ordinary Share is calculated using a numerator of the netloss for the financial year and a denominator of the weighted average number ofOrdinary Shares in issue for the financial year. The diluted net loss perOrdinary Share is calculated using a numerator of the net loss for the financialyear and a denominator of the weighted average number of Ordinary Sharesoutstanding and adjusting for the effect of all potentially dilutive shares,including share options, assuming that they had been converted. The calculations for the basic net loss per share for the years ended 31December 2005 and 2004 are as follows: 2005 2004 Net loss for the financial year (US$'000) (4,979) (4,509) _____ _____ Weighted average number of Ordinary Shares ('000) 129,434 93,015 _____ _____ Basic loss per Ordinary Share (US cents) (3.85) (4.85) There is no difference between the net loss per Ordinary Share and the dilutednet loss per Ordinary Share for the years 31 December 2005 and 2004 as allpotentially dilutive Ordinary Shares outstanding are anti-dilutive. There were6,806,000 anti-dilutive share options in issue as 31 December 2005. 6 Issued capital Number Value • AuthorisedEquity shares - Ordinary Shares of €0.06 each:At 31 December 2005 289,630,632 17,377,838 ___________ __________ At 31 December 2004 189,630,632 11,377,838 ___________ __________ At an Extraordinary General Meeting held on 27 June 2005, shareholders approvedthe increase in the authorised share capital of Aminex PLC from €11,377,837.92to €17,377,837.92 by the creation of 100,000,000 new Ordinary Shares of €0.06each ranking equally in all respects with the existing Ordinary Shares of €0.06each in the capital of the Company. Number US$ Allotted called up and fully paid Ordinary Shares of €0.06 each: At 1 January 2005 99,060,402 6,776,668 Issued during year 58,556,612 4,280,598 ___________ __________ At 31 December 2005 157,617,014 11,057,266 The increase in the issued Ordinary Share capital of the Company and the sharepremium during the year related to the following: Price Issued Share Stg Number capital premium Total pence Details Date of issue per US$'000 US$'000 US$'000 share Investment in Kobril Limited: First instalment 5 January 2005 12 833,333 67 98 165Second instalment 12 September 15.75 634,920 47 126 173 2005 Placing and open 28 June 2005 8.7 56,988,359 4,159 3,794 7,953offer Exercise of 1 December 2005 17.5 100,000 7 23 30options __________ ____ _____ _____ At 31 December 58,556,612 4,280 4,041 8,3212005 The amounts shown under share premium are net of issue expenses. 7 Summary of transition to EU IFRS See Appendix 1. 8 2005 Reports and Accounts The 2005 Report and Accounts will be posted to shareholders shortly. 9 Statutory information The financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 December 2005 within the meaning of theCompanies (Amendment) Act, 1986. The statutory accounts will be finalised on thebasis of the financial information presented by the Directors in the preliminaryannouncement and together with the independent auditor's report thereon will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. APPENDIX 1 Summary of transition to EU IFRS As stated in the Accounting Policies, Aminex has prepared the 2005 Annual Reportcomprising the Group and Parent Company financial statements in accordance withEU IFRS. The Accounting Policies as set out on in Note 1 have been applied inpreparing the financial statements for the year ended 31 December 2004 and inthe preparation of the opening EU IFRS balance sheet at the transition date of 1January 2004. In preparing the opening balance sheet dated 1 January 2004, amounts previouslyreported in the financial statements prepared in accordance with Irish GAAP havebeen adjusted. The following reconciliations and explanations provideinformation on the impact of the transition to EU IFRS on the reported financialposition, financial performance and cash flows for the year ended 31 December2004. In addition to the adjustments detailed in the Aminex unaudited interimfinancial statements for the period ended 30 June 2005 prepared under EU IFRSand published on 28 September 2005, Aminex has subsequently adopted thesuccessful efforts method of accounting for its exploration, developed andproducing oil and gas properties, as further explained below. As a consequenceof adopting successful efforts accounting, the net loss for the year ended 31December 2004 has been increased by US$4,509,000 arising from a higher depletioncharge based on the restated cost of producing oil and gas assets and thewriting off of unsuccessful exploration costs. Reconciliations The effects of the transition to EU IFRS are shown in the followingreconciliations: (i) Group Balance Sheet at 31 December 2003; (ii) Group Income Statement for the year ended 31 December 2004; and (iii) Group Balance Sheet at 31 December 2004; Group Balance SheetAt 31 December 2003Reconciliation from Irish GAAP to EU IFRS Depletion Foreign Unsuccessful and decom- Currency Irish exploration missioning Conversion EU IFRS GAAP costs adjustments Reserve 2003 2003 b c d Notes on reconciling items US$'000 US$'000 US$'000 US$'000 US$'000 Assets Exploration and evaluation 11,068 - - - 11,068assets Property, plant and 12,834 (1,885) (1,038) - 9,911equipment Other investments 868 - - - 868 ______ ______ _____ ______ ______ Total non current assets 24,770 (1,885) (1,038) - 21,847 ______ ______ _____ ______ ______ Investment held for resale 2,003 - - - 2,003Trade and other 6,102 - - - 6,102receivables Cash and cash equivalents 346 - - - 346 ______ ______ _____ ______ ______ Total current assets 8,451 - - - 8,451 ______ ______ _____ ______ ______ Total assets 33,221 (1,885) (1,038) - 30,298 ______ ______ _____ ______ ______ Equity Issued capital 6,172 - - - 6,172Share premium 35,258 - - - 35,258Capital conversion reserve 234 - - - 234fund Foreign currency reserve 316 - - (316) -Retained earnings (14,321) (1,885) (1,038) 316 (16,928) ______ ______ _____ ______ ______ Total equity 27,659 (1,885) (1,038) - 24,736 ______ ______ _____ ______ ______ Liabilities Interest bearing loans and 88 - - - 88borrowings Abandonment and site - - - - -restoration provision ______ ______ _____ ______ ______ Total non current 88 - - - 88liabilities Bank overdraft 175 - - - 175Interest bearing loans and 132 - - - 132borrowings Trade and other payables 5,167 - - - 5,167 ______ ______ _____ ______ ______ Total current liabilities 5,474 - - - 5,474 ______ ______ _____ ______ ______ Total liabilities 5,562 - - - 5,562 ______ ______ _____ ______ ______ Total equity and 33,221 (1,885) (1,038) - 30,298liabilities Group Income Statementfor the year ended 31 December 2004Reconciliation from Irish GAAP to EU IFRS Depletion Irish Unsuccessful and decom- Disposal Share GAAP exploration missioning of based Other EU IFRS 2004 costs adjustments assets payment adjustments 2004Notes on reconciling items b c e f g US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Revenue 5,384 - - - - - 5,384Cost of sales (3,182) - - - - - (3,182)Unsuccessful exploration - (103) - - - - (103)efforts Depletion and (777) - (462) - - - (1,239)decommissioning ______ ______ _____ ______ ______ ______ ______ Gross profit 1,425 (103) (462) - - - 860 Administrative expenses (5,094) - - - (161) (181) (5,436)Profit on disposal of oil - - - 618 - - 618and gas properties Purchaser's share of (532) - - - - - (532)Vinton Dome profit Exceptional items: Loss on disposal of fixed (46) - - - - 46 -assets Loss on disposal of listed (184) - - - - 184 -investment ______ ______ _____ ______ ______ ______ ______ Loss on operations (4,431) (103) (462) 618 (161) 49 (4,490) Financing income 64 - - - - (49) 15Financing costs (34) - - - - - (34) ______ ______ _____ ______ ______ ______ ______ Loss before tax (4,401) (103) (462) 618 (161) - (4,509) Income tax expense - - - - - - - ______ ______ _____ ______ ______ ______ ______ Net loss for the financial (4,401) (103) (462) 618 (161) - (4,509)year ______ ______ _____ ______ ______ ______ ______ Group Statement of Recognised Income and Expensefor the year ended 31 December 2004Reconciliation from Irish GAAP to EU IFRS Depletion Irish Unsuccessful and Share EU IFRS GAAP exploration decommissioning Disposal based 2004 2004 costs adjustments assets payment Notes on reconciling b c e f items US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Currency translation (57) - - - - (57)differences ______ ______ _____ ______ ______ ______ Net loss recognised (57) - - - - (57)directly in equity Loss for the financial (4,401) (103) (462) 618 (161) (4,509)year ______ ______ _____ ______ ______ ______ Total recognised income (4,458) (103) (462) 618 (161) (4,566)and expense for the year Attributable to the (4,458) (103) (462) 618 (161) (4,566)equity holders of the Parent Company Group Balance Sheetat 31 December 2004Reconciliation from Irish GAAP to EU IFRS Depletion Disposal Foreign Irish Unsuccessful and of oil Share Currency EU GAAP exploration decommissioning and gas based Conversion IFRS 2004 costs adjustments properties payments Reserve 2004Notes on b c e f d reconciling US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 items Assets Exploration 14,310 - - - - - 14,310and evaluation assets Property, 8,313 (2,266) (1,119) 515 - - 5,443plant and equipment ______ ______ _____ ______ ______ ______ ______ Total non 22,623 (2,266) (1,119) 515 - - 19,753current assets ______ ______ _____ ______ ______ ______ ______ Trade and 6,102 - - - - - 6,102other receivables Cash and cash 767 - - - - - 767equivalents ______ ______ _____ ______ ______ ______ ______ Total current 6,869 - - - - - 6,869assets Total assets 29,492 (2,266) (1,119) 515 - - 26,622 ______ ______ _____ ______ ______ ______ ______ Equity Issued capital 6,777 - - - - - 6,777Share premium 36,061 - - - 161 - 36,222Capital 234 - - - - - 234conversion reserve fund Foreign 259 - - - - (316) (57)currency reserve Retained (18,722) (2,266) (1,119) 515 (161) 316 (21,437)earnings ______ ______ _____ ______ ______ ______ ______ Total equity 24,609 (2,266) (1,119) 515 - - 21,739 ______ ______ _____ ______ ______ ______ ______ Liabilities Interest bearing loans and borrowings 51 - - - - - 51Abandonment and site restoration - - - - - - -provision ______ ______ _____ ______ ______ ______ ______ Total non 51 - - - - - 51current liabilities ______ ______ _____ ______ ______ ______ ______ Interest bearing loans and borrowings 47 - - - - - 47Trade and 4,785 - - - - - 4,785other payables ______ ______ _____ ______ ______ ______ ______ Total current 4,832 - - - - - 4,832liabilities ______ ______ _____ ______ ______ ______ ______ Total 4,883 - - - - - 4,883liabilities ______ ______ _____ ______ ______ ______ ______ Total equity 29,492 (2,266) (1,119) 515 - - 26,622and liabilities (a) Exemptions under IFRS 1 In accordance with IFRS 1, which establishes the framework for the transition toEU IFRS by a first-time adopter, Aminex has availed itself of the followingexemptions from the general principle of retrospective restatement: (i) Share-based payments: IFRS 2 has been appliedretrospectively to those options that were issued after 7 November 2002 and hadnot vested by 1 January 2005. (ii) Financial instruments: Aminex has adopted IAS 32 and IAS 39from 1 January 2005, with no restatement of comparative information. Thereforefinancial instruments in the comparative 2004 period continue to be recorded onan Irish GAAP basis. (b) Successful efforts accounting The Group has taken note of the guidance issued by IFRIC in November 2005 andhas decided to adopt the successful efforts method of accounting for itsexploration and developed and producing assets, in place of the full costaccounting method previously followed. Previously incurred exploration costshave therefore been written off in the period in which they were determined tohave been unsuccessful. Similarly, costs incurred that previously had beenincluded in the producing/developed cost pool but that do not relate to theremaining producing fields, have also been written off in the period in whicheither they were determined to be unsuccessful or, if a field, when they ceasedproduction. The accumulated successful efforts exploration charge at 31 December2003 is US$1,885,000. The unsuccessful exploration efforts charge in 2004 isUS$103,000. (c) Depletion and decommissioning Under the successful efforts method of accounting, depletion is now charged on afield by field basis with fields being combined where appropriate. Theadditional accumulated depletion and decommissioning charge at 31 December 2003is US$1,038,000. The additional accumulated depletion and decommissioning chargein 2004 is US$462,000. (d) Foreign currency conversion. Under IAS 32 the Group has deemed the cumulative currency translation differenceapplicable to foreign operations to be zero at the transition date. Thecumulative balance of the translation differences amounting to US$316,000previously recognised directly in the foreign currency reserves has beentransferred to retained earnings. (e) Disposal of developed and producing gas property Following the adoption of the successful efforts method of accounting, thedisposal of oil and gas properties is now shown as a gain or loss on disposalwithin the Income Statement. During 2004, the Group disposed of certain USproperties, in particular the Vinton Dome gas field. Under Irish GAAP and thefull cost method of accounting, the proceeds of sale were credited to the poolof producing oil and gas assets. Under EU IFRS and the successful efforts methodof accounting, the cost and accumulated depletion are written off to the IncomeStatement and the proceeds credited against the resulting charge. In 2004, thisgave rise to a gain on disposal of the assets of US$618,000. (f) Share-based payments IFRS 2 "Share-based Payment" requires that an expense for share-based payments,which in the case of Aminex are share options, be recognised in the incomestatement based on their fair value at the date of grant. Under Irish GAAP,these share-based payments were accounted for at their intrinsic value and nocharge for any share options granted with an exercise price equal to the marketvalue of the Company's shares was made. Under EU IFRS, the expense, which is primarily in relation to the Aminex PLCshare option scheme, is recognised over the vesting period of the schemes. Fairvalue calculations have been applied in respect of share options granted after 7November 2002 as permitted under the framework for transition to EU IFRS. Thefair value of the share options to be expensed is determined by using optionpricing models and the Group has used the binomial model in its evaluation. Thecharge recognised in the Income Statement over the vesting period of three yearshas been adjusted to reflect the expected and actual levels of vesting. Wherethere is no vesting period and options are exercisable immediately, the value ofthe options has been charged to the Income Statement at the date of grant. Thefollowing inputs were used in determining the fair value of share entitlements: • The exercise price which is the market price at the date the shareentitlements were granted. • Future price volatility was based on historical volatility as a guideand was assessed over the last three to four years • The risk free interest rate used in the model is the rate applicableto Irish Government Bonds with a remaining term equal to the expected term ofthe share entitlements being valued • Expected share purchase/dividend payments. In both the Group retained earnings and the retained earnings of the ParentCompany, an expense of $161,000 has been charged for the year ended 31 December2004 and this is based on share options granted in July 2004. (g) Other adjustments Under EU IFRS, an amount of US$49,000 for income received from the sub-lease ofa rented property has been netted against rental payments on that property.Under Irish GAAP, it was shown as other income. This adjustment has no effect onretained earnings. An amount of US$230,000 arising on the loss on disposal of plant and equipmenthas been reclassified from a separate line item before operating loss toadministration expenses. This adjustment has no effect on retained earnings. (h) Cash flow statement The transition from Irish GAAP to EU IFRS does not change the cash flow, otherthan by changes to movements arising from adjustments to the balance sheets. TheEU IFRS cash flow format is similar to the Irish GAAP cash flow but cash flowsmay be shown in different categories and in a different order. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Aminex