24th Dec 2007 07:00
Xcite Energy Limited23 December 2007 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES December 21, 2007 XCITE ENERGY LIMITED ("Xcite Energy" or the "Company") INTERIM FINANCIAL RESULTS - 3 MONTHS ENDED 31 OCTOBER 2007 Xcite Energy (LSE-AIM: XEL, TSX-V: XEL) today announces the interim financialresults for the three months ended October 31, 2007. The three month period does not cover the Company's listing on the AIM market ofthe London Stock Exchange plc and the TSX Venture Exchange as a result of which: o The Company raised in excess of £13 million net of expenses andcommenced trading on November 16, 2007. o Proceeds will be used to fund the testing of the Block 9/3b appraisalwell on the Bentley field (which is due to spud imminently), drillingcontingencies and working capital and general corporate purposes. The three month period under review saw the Company move forward in its plans todrill the appraisal well on Block 9/3b. Material activities included: o Site survey completion in preparation for appraisal well. o Completion of drilling plans for submission to the Department forBusiness, Enterprise and Regulatory Reform ("DBERR") for approval. o Initial re-interpretation of 3D seismic confirmed increased reservoirvolumes. All DBERR approvals have now been obtained and the Company is preparingimminently to spud the appraisal well on Block 9/3b. Richard Smith, Chief Executive Officer of Xcite Energy, commented: "The support of the investment community at the time of our listing in Londonand Toronto means that we are fully funded for our near term drilling programme,which is due to commence shortly. We look forward to progressing the developmentof the Bentley field, targeting first production in early 2009." Xcite Energy is an exploration and development company currently focused on theappraisal and development of heavy oil resources in the North Sea on the UKContinental Shelf. Enquiries: Xcite Energy +44 1330 826 740Richard Smith Chief Executive OfficerRupert Cole Chief Financial Officer Westwind Partners + 44 20 7290 9716Paul Colucci Managing Director Strand Partners Ltd.James Harris Director +44 20 7409 3494Warren Pearce Associate Director Pelham Public Relations +44 20 7743 6676Alisdair HaythornthwaiteKatherine StewartLucy Frankland Forward-Looking Statements Certain statements contained in this announcement constitute forward-lookinginformation within the meaning of securities laws. Forward-looking informationmay relate to the Company's future outlook and anticipated events or resultsand, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "target", "potential", "continue" or other similar expressionsconcerning matters that are not historical facts. These statements are based oncertain factors and assumptions including expected growth, results ofoperations, performance and business prospects and opportunities. While theCompany considers these assumptions to be reasonable based on informationcurrently available to us, they may prove to be incorrect. Forward-lookinginformation is also subject to certain factors, including risks anduncertainties that could cause actual results to differ materially from what wecurrently expect. These factors include changes in market and competition,governmental or regulatory developments and general economic conditions.Additional information identifying risks and uncertainties are contained inXcite Energy' prospectus filed with the Canadian securities regulatoryauthorities, available at www.sedar.com. INTERIM FINANCIAL STATEMENTS 3 MONTHS ENDED OCTOBER 31, 2007 Xcite Energy Limited Geneva Place Waterfront Drive P.O. Box 3469 Road Town Tortola British Virgin Islands and Banchory Business Centre Hill of Banchory Business Park Burn O'Bennie Road Banchory AB31 5ZU Phone: +44 1330 826740 Fax: +44 1330 820670 www.xcite-energy.com [email protected] TSX-V: XEL LSE-AIM: XEL XCITE ENERGY LIMITED - INTERIM FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT For the 3 month period ended 31 October 2007 _____________________________________________________________________________ NOTES 3 Months ended 12 Months ended October October October October 2007 2006 2007 2006 £ £ £ £ Unaudited Unaudited Unaudited AuditedAdministrative expenses 193,481 73 1,021,151 188 ________ ______ ________ ________ Operating Loss (193,481) (73) (1,021,151) (188) Finance Income - bank 111,752 80 145,453 257interest ________ ______ ________ ________(Loss)/Profit before tax (81,729) 7 (875,698) 69 Tax Expense 3 - 2 - 21 ________ ______ ________ ________(Loss)/Profit for the period (81,729) 5 (875,698) 48attributable to equityholders ________ ______ ________ ________ (0.00p) 0.00p (0.03p) 0.00p Earnings per shareattributable to equityholders of the parent entity Basic and diluted 4 All results are derived from continuing operations. STATEMENT OF RECOGNISED INCOME AND EXPENSE There is no difference between the (loss)/profit for the periods shown and thetotal recognised income and expense for the respective periods. Reconciliationsof movements in total equity are given in note 10 to the financial statements. CONSOLIDATED BALANCE SHEET At 31 October 2007 _____________________________________________________________________________ Notes 2007 2006 £ £Assets Unaudited AuditedNon-current assetsIntangible assets 5 1,670,373 2,103,110 Current assetsTrade and other receivables 6 39,913 3,132Cash and cash equivalents 8,288,764 142,378 ________ ________Total current assets 8,328,677 145,510 ________ ________Total assets 9,999,050 2,248,620LiabilitiesCurrent liabilitiesTrade and other payables 7 874,663 2,248,535 ________ ________Total liabilities 874,663 2,248,535 ________ ________Net assets 9,124,387 85 ________ ________Capital and reserves attributable to equityholders of the companyShare Capital 9 10,000,000 -Merger Reserve 10 218 218Retained earnings 10 (875,831) (133) ________ ________Total equity 10 9,124,387 85 ________ ________ CONSOLIDATED CASH FLOW STATEMENT For the 3 month period ended 31 October 2007 _____________________________________________________________________________ Notes 3 Months ended 12 Months ended October October October October 2007 2006 2007 2006 £ £ £ £ Unaudited Unaudited Unaudited AuditedNet cash flow fromoperating activities(Loss)/Profit for the (81,729) 5 (875,698) 48period after taxAdjustment for Interest (111,752) (80) (145,453) (257)receivedMovement in workingcapital:- trade and other (21,728) - (36,781) 32,507receivables- trade and other payables (21,378) (35,343) (1,373,872) 455,516 ________ ________ ________ ________Cash flow from operations (236,587) (35,418) (2,431,804) 487,814Cash flow from investingactivitiesExploration and Evaluation (465,982) 143,543 432,737 (348,457)AssetsInterest received 111,752 80 145,453 257 _______ _______ ________ _______Net cash flow from (354,230) 143,623 578,190 (348,200)investing activities _______ _______ _______ _______Cash flow from financingactivitiesIssue of shares - 4 10,000000 4 _______ _______ _______ _______Net cash flow used in - 4 4financing activities ________ ________ ________ ________Net (decrease)/increase in (590,817) 108,209 8,146,386 139,618cash and cash equivalents Cash and cash equivalents 8,879,581 34,169 142,378 2,760at 1 August / 1 November ________ ________ ________ ________Cash and cash equivalents 8,288,764 142,378 8,288,764 142,378at 31 October ________ ________ ________ ________ Cash and cash equivalentscomprise:Cash available on demand 8,288,764 142,378 8,288,764 142,378 ________ ________ ________ ________ NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 _____________________________________________________________________________ 1 Accounting policies Basis of presentation These financial statements should be read in conjunction with the financialstatements included in the Prospectus as filed on November 8th, 2007 andavailable on www.sedar.com. The interim financial information for the three months ended October 31st, 2007has been prepared in accordance with the accounting policies that will apply forthe year ending December 31st, 2007 which will follow the InternationalFinancial Reporting Standards (IFRS) and interpretations as endorsed by theEuropean Union. Xcite Energy Limited is registered in the British Virgin Islands under the BVIBusiness Companies Act 2004. The interim financial information for the threemonths ended October 31st, 2007 is unaudited and does not constitute statutoryaccounts within the meaning of section 240 of the United Kingdom Companies Act1985. Basis of preparation The principal accounting policies adopted in the preparation of the consolidatedfinancial statements are set out below. The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS and IFRIC interpretations)issued by the International Accounting Standards Board (IASB). The consolidatedfinancial statements have also been prepared in accordance with IFRSs adopted byThe European Union and therefore they comply with Article 4 of the EU IASRegulation. Basis of consolidation The company was incorporated with the sole purpose of acquiring its controllinginterest in its directly held, wholly owned, subsidiary Xcite Energy ResourcesLimited ("XER"). XER was acquired through a transaction under common control,as defined in IFRS 3 Business Combinations. As a result of the transaction, theequity shareholders of Xcite Energy Limited ("XEL") and Xcite Energy ResourcesLimited became the equity shareholders of the combined entities. The Directorsnote that transactions under common control and those that involve a new shellcompany (XEL) with no business of its own acquiring a controlling interest in anexisting entity (XER), are outside the scope of IFRS 3 and that there is noguidance elsewhere in IFRS covering such transactions. IFRS contains specific guidance to be followed where a transaction falls outsidethe scope of IFRS. This guidance is included at paragraphs 10 to 12 of IAS 8Accounting Policies, Changes in Accounting Estimates and Errors. This requires,inter alia, that where IFRS does not include guidance for a particular issue,the Directors may also consider the most recent pronouncements of other standardsetting bodies that use a similar conceptual framework to develop accountingstandards. In this regard it is noted that the UK Accounting Standards Board(ASB) has issued an accounting standard covering acquisitions and mergers (FRS6). FRS 6 allows for merger accounting to be applied where two or morecompanies are combined to form one group on terms such that the equityshareholders in each company become the equity shareholders in the combinedentity. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 1 Accounting policies (continued) Having considered the requirements of IAS 8, and the guidance included withinFRS 6, it is considered appropriate to apply merger accounting when dealing withthe transaction in which the Company acquired its controlling interest in XciteEnergy Resources Limited. The effect of the above is: • New shares issued by XEL as consideration for the merger are recorded at their nominal amount in books of XEL; • The net assets of XER and XEL are combined using existing book values; • No amount is recognised as consideration for goodwill or negative goodwill; and • The consolidated profit and loss includes profits of each company for the entire period, regardless of the date of the merger, and the comparative amounts in the consolidated accounts are restated to the aggregate of the amounts recorded by the two companies. Revenue Revenue arises from the sale of oil produced from Block 9/3b on the UKContinental Shelf and reflects the actual sales value, net of VAT and overridingroyalties. Revenues are recognised when the risks and rewards of ownershiptogether with effective control are transferred to the customer and the amountof revenue and associated costs incurred in respect of the relevant transactioncan be reliably measured. Revenue is not recognised unless it is probable thatthe economic benefits associated with the sales transaction will flow to thegroup. Interest income is recognised on an accruals basis and is disclosed separatelyon the face of the income statement. Intangible fixed assets - Exploration and Evaluation Assets Capitalisation Certain costs (other than payments to acquire the legal right to explore)incurred prior to acquiring the rights to explore are charged directly to theincome statement. All costs incurred after the rights to explore an area havebeen obtained, such as geological and geophysical costs and other direct costsof exploration (drilling, trenching, sampling and technical feasibility andcommercial viability activities) and appraisal are accumulated and capitalisedas intangible Exploration and Evaluation ("E&E") assets. E&E costs are not amortised prior to the conclusion of appraisal activities. Atcompletion of appraisal activities if technical feasibility is demonstrated andcommercial reserves are discovered, then, following development sanction, thecarrying value of the relevant E&E asset will be reclassified as a developmentand production asset, but only after the carrying value of the relevant E&Easset has been assessed for impairment, and where appropriate, its carryingvalue adjusted. If after completion of appraisal in an area, it is not possibleto determine technical feasibility and commercial viability or if the legalright to explore expires or if the Company decides not to continue explorationand evaluation is written off to the income statement in the period the relevantevents occur. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 1 Accounting policies (continued) Impairment If and when facts and circumstances indicate that the carrying value of an E&Easset may exceed its recoverable amount an impairment review is performed. This is carried out by identifying groups of assets, within the E&E asset, whichtogether form the Cash Generating Unit ("CGU") and comparing the carrying valueof the CGU with its recoverable amount. And any resulting impairment loss iswritten off directly to the income statement. The recoverable amount of the CGUis determined as the higher of its fair value less costs to sell and its valuein use. Foreign currency The functional currency of the group is Pounds Sterling. Transactions enteredinto by the group entities in a currency other than the functional currency arerecorded at the rates ruling when the transactions occur. Foreign currencymonetary assets and liabilities are translated at the rates ruling at thebalance sheet date. Exchange differences arising on the retranslation ofunsettled monetary assets and liabilities are similarly recognised immediatelyin the income statement. For the purposes of presenting consolidated financial statements, the assets andliabilities of the parent are translated from US Dollars into Pounds Sterling atexchange rates prevailing on the balance sheet date. Income and expense itemsare translated at the average exchange rates for the period where itapproximates to the actual rate. Exchange differences arising, if any, areclassified as equity and transferred to the Group's translation reserve. Financial assets The Group's financial assets comprise the following: Other receivables - these are measured on initial recognition at fair value andare subsequently measured at amortised cost. Appropriate allowances forestimated irrecoverable amounts are recognised in profit or loss when there isobjective evidence that the asset is impaired. Cash and cash equivalents - comprise cash on hand and are subject to aninsignificant risk of changes in value. Financial liabilities The group's financial liabilities comprise trade and other payables and arerecognised on initial recognition at fair value and are subsequently measured atamortised cost. Deferred taxation Deferred tax assets and liabilities are recognised where the carrying amount ofan asset or liability in the balance sheet differs to its tax base. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 1 Accounting policies (continued) Recognition of deferred tax assets is restricted to those instances where it isprobable that taxable profit will be available against which the difference canbe utilised. The amount of the asset or liability is determined using tax rates that havebeen enacted or substantially enacted by the balance sheet date and are expectedto apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax assets and liabilities are offset when the group has a legallyenforceable right to offset current tax assets and liabilities and the deferredtax assets and liabilities relate to taxes levied by the same tax authority oneither: • the same taxable group company; or • different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. New accounting standards adopted during the period During the period the Group adopted IFRIC 10 'Interim Financial Reporting andImpairment'. IFRIC 10 prohibits impairment losses recognised in Interim Reportsfrom being reversed in the next annual financial statements. There has been noaffect on the Groups reported results on financial position arising from theadoption of IFRIC 10. New standards and interpretations not yet applied The following new standards and interpretations, which have been issued by theIASB and the IFRIC, are effective for future periods and have not been adoptedearly in these interim financial statements. A description of these standardsand interpretations, together with (where applicable) an indication of theeffect of adopting them, is set out below. None are expected to have a material effect on the reported results or financialposition of the Group. Amendment to IAS 23 'Borrowing Costs' was issued in May 2007 and is effectivefor accounting periods beginning on or after 1 January 2009. The amendmentrequires borrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset to be added to the cost of thatasset. IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions' was issued in November2006 and is effective for annual periods beginning on or after 1 March 2007.IFRIC 11 clarifies the accounting for share based transactions which fall withinthe scope of IFRS 2. IFRIC 12 'Service Concession Arrangements' was issued in November 2006 and iseffective for annual periods beginning on or after 1 January 2008. IFRIC 12prohibits private sector operators from recognising as their own thoseinfrastructure assets which are owned by the grantor. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 1 Accounting policies (continued) IFRIC 13 'Customer Loyalty Programmes' was issued in June 2007 and is effectivefor annual periods beginning on or after 1 July 2008. IFRIC 13 requires the fairvalue of revenue relating to customer loyalty rewards to be deferred until allrelated obligations to the customer have been fulfilled. IFRIC 14 'IAS 19 the limit on a defined benefit asset, minimum fundingrequirements and their interaction', was issued in June 2007 and is effectivefor annual periods beginning on or after 1 January 2008. IFRIC 14 clarifies howany asset to be recognised should be determined, in particular where a minimumfunding requirement exists. IFRS 7 'Financial Instruments: Disclosures and Amendment to IAS 1: CapitalDisclosures' were issued in August 2005 and are effective for annual periodsbeginning on or after 1 January 2007. They revise and enhance previousdisclosures required by IAS 32 'Financial Instruments: Disclosures andPresentation' and IAS 30 'Disclosures in the Financial Statements of Banks andsimilar Financial Institutions'. IFRS 8 'Operating Segments' was issued in November 2006 and is effective forannual periods beginning on or after 1 January 2009. It requires portableoperating segments to be based on the entity's own internal reporting structure.It also extends the scope and disclosure requirements of IAS 14 SegmentalReporting. Status of EU endorsement Entities in EU Member States which report in accordance with EU-endorsed IFRScan only apply IFRSs and IFRICs where the endorsement process has been completedat the date of approval of their financial statements. Of the standards andinterpretations listed above, the following had not yet been endorsed by theEuropean Union at the date these interim financial statements were authorisedfor issue: • IFRS 8 'Operating Segments'; • IFRIC 12 'Service Concession Arrangements'; • IFRIC 13 'Customer Loyalty Programmes'; • IFRIC 14 'IAS 19 the limit on a defined benefit asset'; and • Amendment to IAS 23 'Borrowing Costs'. 2 Segment Information The Company only operates in a single business and geographical segment. Thecompany's single line of business is the exploration and evaluation of oil andgas reserves, whilst the geographical segment in which it operates is currentlyrestricted to Block 9/3b situated in the North Sea. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 3 Taxation a) Reconciliation of the total tax charge Differences between the UK standard rate of corporation tax and tax assessed arereconciled below. 2007 2006 £ £ Accounting (loss)/profit before tax (81,729) 7 ________ ________Taxation at UK Statutory income tax rate of 30% (81,729) 2 Expenses not deductible 81,729 - ________ ________ Tax charge - 2 ________ ________ 4 Earnings per share The calculation of basic earnings per ordinary share is based on a loss of£81,729 (2006: £5 profit) and on 53,363,500 (2006: 21,800,000), being theweighted average number of ordinary shares in issue during the period. No share options or other instruments with a potentially dilutive effect weregranted during the 3 month period to 31 October 2007 or as at 31 October 2006. 5 Intangible Assets Exploration and Evaluation Assets Licence costs 2007 2006 Cost and Carrying Value £ £ At 1 August 66,297 36,162 Additions - 30,135 ________ ________At 31 October 66,297 66,297 ________ ________ NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 5 Intangible Assets (continued) Appraisal and exploration costs 2007 2006Cost and Carrying Value £ £ At 1 August 1,138,094 2,210,491 Additions - Costs capitalised 465,982 138,816 - Contributions to costs received - (312,494) ________ ________At 31 October 1,604,076 2,036,813 ________ ________ TOTAL 2007 2006Cost and Carrying Value £ £ At 1 August 1,204,391 2,246,653 Additions - Costs capitalised 465,982 168,951 - Contributions to costs received - (312,494) ________ ________At 31 October 1,670,373 2,103,110 ________ ________ Based on the Company's success in achieving the extension of its Licence overBlock 9/3b on the UK Continental Shelf, the costs associated with the appraisalof this Block have been capitalised in accordance with the Company's accountingpolicy in Note 1. In view of the forecast revenue streams and cashflows of these projects,management is confident that the carrying amount of the related intangibleassets as disclosed above will be recovered in full and that there is no needfor any impairment provision. The situation will be monitored by management andadjustments made in future periods if future events indicate that suchadjustments are appropriate. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 6 Trade and other receivables 2007 2006 £ £ Indirect taxes receivable 36,238 - Other receivables 3,675 3,132 ________ ________ 39,913 3,132 ________ ________ 7 Trade and other payables 2007 2006 £ £ Trade payables 199,974 170,148 Directors' loan accounts - 1,954,125 Corporation and other taxes payable 40,709 28,262 Accruals and other creditors 633,980 96,000 ________ ________ 874,663 2,248,535 ________ ________ 8 Financial instruments The Company's principal financial instruments are other receivables, trade andother payables and cash all of which are denominated in pounds sterling. Themain purpose of these financial instruments is to finance the Company's ongoingoperational requirements. The major financial risks faced by the Company are credit risk and liquidityrisk. The Company does not consider that it has any significant credit risk dueto the nature of its receivables. The Company does not trade in financial instruments. Policies for the managementof these risks are shown below a) Credit risk Receivables relate to VAT recoverable and an office rent deposit. As such, theyare regarded as low risk. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 8 Financial instruments (continued) b) Liquidity risk Company management has responsibility for reducing exposure to liquidity riskand for ensuring that adequate funds are available to meet anticipatedrequirements. It operates according to the policies and guidelines establishedby the Board. Cash management is carried out centrally. Carrying Amount October 2007 2006 £ £ Financial assets - Cash 8,288,764 142,378 - Receivables (Current) 39,913 3,132 Financial Liabilities - Payables (Current) 874,663 2,248,535 The management believes that as they are short term, the fair values for allitems equate to their carrying amount. The accounting policies for financial assets and financial liabilities aredisclosed in note 1. c) Interest rate risks Numeric information presented below. The currency and interest profile of the Group's financial assets andliabilities are as follows: Floating rate Fixed rate Interest free liabilities liabilities liabilities 2007 2007 2007 Total £ £ £ £ Sterling - - 874,663 874,663 $US - - - - ________ ________ ________ ________ - - 874,663 874,663 ________ ________ ________ ________ NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 8 Financial instruments (continued) Floating rate Fixed rate Interest free liabilities liabilities liabilities 2006 2006 2006 Total £ £ £ £Sterling - - 2,248,535 2,248,535$US - - - - ________ ________ ________ ________ - - 2,248,535 2,248,535 ________ ________ ________ ________ Floating rate assets Fixed rate assets Interest free assets 2007 2007 2007 Total £ £ £ £Sterling - 745,375 39,913 785,288$US - 7,543,389 - 7,543,389 ________ ________ ________ ________ - 8,288,764 39,913 8,328,677 ________ ________ ________ ________ Floating rate assets Fixed rate assets Interest free assets 2006 2006 2006 Total £ £ £ £Sterling - 142,378 3,132 145,510$US - - - - ________ ________ ________ ________ - 142,378 3,132 145,510 ________ ________ ________ ________ Sterling fixed rate assets earn interest at circa 5.5% per annum. $US fixedrate assets earn interest at circa 4.8% per annum. Cash deposits are only keptwith banks with "AA" rating. NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 9 Share capital Number of shares 2007 2006Authorised- Ordinary shares of no par value each Unlimited UnlimitedIssued and fully paid up- Ordinary shares of no par value each 41,800,000 - £ value of shares 2007 2006Authorised- Ordinary shares of no par value Unlimited UnlimitedIssued and fully paid up- Ordinary shares of no par value 10,000,000 - ________ ________ Xcite Energy Limited is registered in the British Virgin Islands under the BVIBusiness Companies Act 2004. Under BVI laws and regulations there is no conceptof "Share Premium", and all proceeds from the sale of no par value equity sharesis deemed to be Share Capital of the company. Shares issued £ value of shares 2007 2006 41,800,000 ordinary shares issued during the period 10,000,000 - ________ ________ NOTES TO THE FINANCIAL STATEMENTS For the 3 month period ended 31 October 2007 (continued) _____________________________________________________________________________ 10 Retained earnings, merger reserve and total equity Retained Earnings 2007 2006 £ £At 1 August (794,102) (138)(Loss)/profit for the period (81,729) 5 ________ ________At 31 October (875,831) (133) ________ ________ Merger Reserve 2007 2006 £ £At 1 August 218 214Change for the period - 4 ________ ________At 31 October 218 218 ________ ________ Total Equity 2007 2006 £ £At 1 August 9,206,116 76(Loss)/profit for the period (81,729) 5Shares issued - 4 ________ ________At 31 October 9,124,387 85 ________ ________ The following explains the nature and purpose of each reserve within ownersequity: Share Capital Amount of the contributions made by shareholders in return for the issue of shares. Retained Earnings Cumulative net gains and losses recognised in the company balance sheet. Merger Reserve The difference between the nominal value of the shares issued to acquire a subsidiary and the nominal value of the shares acquired. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Xcite Energy