7th Sep 2007 07:01
Roxi Petroleum Plc07 September 2007 Roxi Petroleum Plc("Roxi" or the "Company") Interim Results for the six months ended 30 June 2007 Roxi Petroleum, which was admitted to AIM in May this year and was created toacquire controlling interests in and develop oil and gas assets in Central Asiaparticularly focusing on Kazakhstan, is pleased to announce its maiden interimresults. Highlights O Introduction to AIM in May with a market capitalisation at issue of approximately £64 million at the placing price of 38p per share O Raised £39 million from institutional investors to pursue the strategy of building a diversified portfolio of oil and gas exploration and production assets in Central Asia O Strengthened operational team and infrastructure Post balance sheet events O Completed the purchase of Ravninnoe and Beibars contract areas - total of approximately 295 sq km. O Legal challenges on North Karamandybas have not yet been fully resolved O Commenced project to reprocess and reinterpret all previous 2D seismic and well log data on Ravninnoe O Bids received for 3D seismic programme on Ravninnoe O Second work-over rig to be mobilised on Ravninnoe Q4 O Invitations to tender issued for 3D seismic on Beibars block O Proposed acquisition of three further licensed areas for $190 million o Acquisitions cover approximately 1,200 sq km in Western Kazakhstan o Valuation in excess of Roxi market capitalisation: deemed as a reverse takeover under AIM Rules. Shares suspended pending full evaluation and due diligence process o Roxi's management will have operational and financial control of potentially large high quality exploration and production acreage o Acquisitions to be approved by EGM in due course Rob Schoonbrood, CEO of Roxi, Commented: "Roxi has had an extremely busy 2007. From creation of the company, through avery successful IPO; development of our licenses and a major acquisition, wehave worked constantly to expand our asset base, creating value forshareholders. The proposed acquisition marks an excting new phase in Roxi's development. Westated at IPO that we would both develop our portfolio and look to use ourexperience and contacts within the region to add to it through acquisition. Through the hard work of all the team, this strategy is beginning to bear fruit.I am confident that we will continue to build on our foundations and deliverlong term value for our shareholders." 7th September 2007 Enquiries: Roxi Petroleum plc Rob Schoonbrood, CEO 020 3159 5315 UK / 7 727 278 1022 KZ David Barker, COO 020 3159 5315 UK / 7 727 278 1022 KZ College Hill Paddy Blewer 020 7457 2020 Nick Elwes 020 7457 2020 WH Ireland James Joyce 020 7220 1666 Chairman's statement I am very pleased to issue our first report to shareholders as a public company.On 22 May the shares of Roxi Petroleum were admitted to trading on the LondonStock Exchange's junior stock market, AIM. At that time the Company raised some$78 million from institutional investors to purse a strategy of building adiversified portfolio of oil and gas exploration and production assets inCentral Asia within three to five years. Our initial focus is in Kazakhstan andI am pleased to report the Company has made significant progress since admissionas is reported later in this interim report. Progress since the Admission At the time of our admission to AIM we had agreements to buy three principalassets, Ravninnoe, Beibars, and North Karamandybas. Since admission, work hasproceeded as planned at Ravninnoe and Beibars but, as we reported at the time ofadmission, your Board resolved to await the outcome of a legal challengeregarding the ownership of the vendors' interests in the North Karamandybasasset before completing its acquisition. At the date of this interim report, the final result of the legal challenge hasnot yet been fully resolved. Although your Board is hopeful for a positiveoutcome, in order to take a prudent approach, the Directors have decided to makea $3 million provision against the carrying value of the North Karamandybasassets until the final legal position is determined. Asset Acquisitions On 22 August 2007, we announced three further asset acquisitions for anaggregate purchase consideration of $190 million. This transaction marks a verysignificant step forward in our development but it is only the first in what weexpect to be a number of significant acquisitions over the coming months andyears. The value of the acquisitions announced on 22 August 2007, compared to themarket capitalisation of the Company immediately before the announcement hasresulted in the transaction being deemed a reverse takeover under the AIM Rules.Consequently the Company's shares will remain suspended from trading until afterthe full evaluation and due diligence process is completed and the publicationof a re-admission document for the enlarged group to AIM. The completion of theacquisition is subject to shareholder approval at a forthcoming ExtraordinaryGeneral Meeting which is expected to be convened later this year. Financial results The financial statements in this interim report cover the interim period ended30 June 2007. Most of our activities in this period are related to thepreparatory work for the IPO and resultant closure of the admission processwhich is reflected in the results. Annual General Meeting It is conventional to requisition a company's Annual General Meeting followingthe publication of the results for the year rather than for the first six monthsof the financial year. However, under United Kingdom company law, as a recentlyincorporated company, we would be required to hold our first Annual GeneralMeeting before the planned publication of our full year results for 2007.Accordingly, you will find a notice of the Company's Annual General Meetingwhich has been convened for 19 October 2007 at the end of this interim report. Summary The hard work of many people both inside and outside the Company made admissionto AIM possible and I would like to take this opportunity to thank them fortheir efforts. One of the key strengths of your Company is the experience of the executivemanagement team. It is remarkable that only three months after the date ofadmission we have already moved a long way down the road in achieving ourstrategic goals. Based on our progress to date and the opportunities we havealready been presented with I look forward with confidence to a successfulfuture. Clive CarverNon-Executive Chairman 7 September 2007 Chief Executive's statement Acquisition strategy Roxi Petroleum's strategy is to acquire oil and gas assets and enhance theirvalue, either by further development or enhanced production techniques. We aremostly looking for assets that are either already producing or that havepromising near term production characteristics. Over the medium term we have identified Central Asia as the area of our plannedoperations, but in the short term have focused our efforts on the Pre-CaspianBasin of Western Kazakhstan. This is an area that has already witnessedsignificant discoveries and has an extensive extraction and distributioninfrastructure. It is our strategy to work with local partners who are already well establishedin the territories in which we wish to operate. We believe working with wellrespected and experienced local partners enhances our operations through betterunderstanding of the complicated regulatory processes as well as giving us adeeper knowledge of the local business environment. In our current and future assets we seek to retain operational and financialcontrol and believe this is the most effective way to deliver projects on timeand to budget. Pending acquisitions On 22 August 2007 we announced the acquisition of three further assets for acombined purchase consideration of $190 million, payable predominantly in newRoxi Petroleum shares to be issued at 65p per share. The assets being acquired cover approximately 1,200 square kilometres in WesternKazakhstan in the Pre-Caspian and Turgai Basins. The assets give Roxi Petroleumaccess to potentially large high quality exploration acreage and furtheropportunities for early development of reserves already on the State balance. The first asset is an Exploration Contract which covers an area of over 1,100square kilometres, not far from the Tengiz oilfield in the Pre-Caspian Basin ofWestern Kazakhstan. The contract for the block was signed earlier this year. Theblock is considered by the Company to be highly prospective in both the Jurassicsandstone at depths of 2,500-3,000m and in the pre-salt Carboniferous sandstonesand carbonates at depths of 4,000-5,000m. Exploration in this area since the1980's has resulted in the development of several Jurassic discoveries in thesurrounding acreage. The second asset is an Exploration and Production Contract in the Turgai Basinnear the town of Kyzylorda in central Kazakhstan. The field contains "probable"reserves, in Cretaceous and Jurassic sandstones, on a wrench fault structuraltrap. There are four wells on the block with three delineating the oil-watercontact and one well drilled higher on the structure tested at rates of up to70m3/d (500bopd). Exploration upside exists deeper in untested Triassicsandstone targets. The third asset is the rehabilitation of an oilfield in the southern Pre-CaspianBasin. The field produced low rates with a high water cut from Cretaceous andJurassic sands at depths of 500-1,200m. The field was re-licensed in 2004. Afull evaluation of remaining reserves needs to be undertaken. Explorationpotential exists deeper in the Permo-Triassic reservoirs. More than 99% of the purchase consideration is to be satisfied by the issue ofapproximately 146 million new Roxi Petroleum shares at a fixed price of US$1.30(65p at an exchange rate of 2US$ per 1£) per share. The consideration shareswill represent approximately 46 per cent. of the Company's enlarged sharecapital. The acquisitions, which give Roxi Petroleum a 59% interest in the holdingcompany of these assets, will constitute a reverse takeover under the AIM Rulesand also fall within the ambit of Rule 9 of the Takeover Code. Accordingly,completion of the acquisitions, and the resumption of trading in Roxi Petroleumshares, are conditional upon, inter alia, the publication of an admissiondocument on the enlarged company, obtaining a Rule 9 waiver from the TakeoverPanel, and approval by the Roxi Petroleum shareholders at a forthcomingExtraordinary General Meeting. The acquisitions follow the Company's strategy of acquiring further assets inCentral Asia. On completion of the acquisition, Roxi Petroleum's management willhave operational and financial control of the three oil and gas fields. The Company will provide detailed information regarding the acquisition in there-admission document which will be published as soon as practical; however,given the work involved this is expected to take several months. The completion of these acquisitions is subject to prior approval fromshareholders. Based on our current expectations of the process required toconvene the required shareholder meeting, we anticipate taking operational andfinancial control of these assets before the end of the year. Future acquisitions I am pleased to report that we have no shortage of projects to consider, many ofwhich appear to fit our strategy and show early promise. We have increased thenumber of people in our technical evaluation team to allow us to comfortablyhandle our existing and pending projects and to thoroughly evaluate newopportunities. Rob SchoonbroodChief Executive Officer7 September 2007 Chief Operating Officer's statement Staffing From a standing start in late 2006, we have established a fully functioningexploration and production infrastructure with effective technical, financial,and operational capabilities. At the time of the admission in May 2007, weemployed four staff and two managers in our Almaty office. Since then we haverecruited a further twenty one staff and two managers, principally in the areasof technical evaluation and finance. Kazakhstan is a booming economy and we have been pleased that experienced andsought after local staff have joined us. Infrastructure In Almaty, we have signed a lease for a new head office which will be capable ofaccommodating the company's staff for the next two years with the current andexpected asset base. We are making renovations now and anticipate moving intothese new offices before the end of the year. We have also opened a regional operations office in the Caspian Sea port ofAktau. This office will be the center of operations for the existing fields andtwo of the three expected acquisition assets We have recently hired two experienced Western professionals, one to be based inAktau as the Area Operations Manager for Western Kazakhstan and one based inAlmaty as the Reservoir Manager. Field activities As is normal in any asset acquisition, a series of approvals and regulatoryfilings must be submitted, reviewed and approved before actual work begins.Roxi Petroleum has made significant progress in getting all of the neededpermits and approvals to begin work on both the Ravninnoe and the Beibarsassets. Ravninnoe Contract Area The Ravninnoe Contract Area covers 121 square kilometres and is locatedapproximately 100 kilometres north east of the Tengiz field in the South Embasub-basin of the pre-Caspian basin, in the Atyrau Oblast of West Kazakhstan. Extensive time has been spent for the submission and approval of regulatoryfilings and licences in respect of the Ravninnoe asset. These include thefinalization of the extension of the area within the asset boundary and theextension of the allowable time for the Exploration period in the Sub SurfaceUse Contract. Annual work programs and environmental plans have been submittedand are in the process of review and approval at this time. Testing of Well #8, which was re entered prior to the admission, continues. Anew string of tubing has been acquired for the well and testing with aspecialised swabbing unit is underway. Results to date are inconclusive. Invitations to tender were submitted for workover rig services to re-enter up tofour additional existing wells. It is anticipated that a company will beawarded the tender and will mobilise a rig in the next 30 to 45 days. Equipmenthas been purchased and is being procured in preparation for this work. A secondtender was issued for 3D seismic acquisition on the asset. Bids for the 3Dseismic have been received and are currently being evaluated, prior to awardingthe contract and mobilisation in the fourth quarter. The existing field camp is in the process of being upgraded and health, safety,and environmental programs are being implemented. At this time, there aretwelve employees and two managers located in the Aktau office and Ravninnoefield location. Beibars Contract Area The Beibars contract area covers approximately 167 square kilometres and issituated on the coastline of the Caspian Sea approximately 40 kilometres southof the port of Aktau. As this asset does not have prior operations, the number of regulatorysubmissions are not as extensive as for Ravninnoe . The annual work program hasbeen submitted and approved. Additional technical information has beenpurchased from the State and is being analysed. In order to accelerate the development of this asset, the seismic acquisitionhas been brought forward and will commence this year. A 3D seimic programme hasbeen designed and invitations to tender have been submitted. Results of thetender are due by the end of September. This work will be started as soon asequipment is available for mobilisation. Environmental issues After the acquisition of the properties, no significant environmental issues oneither of the two assets have sufaced. Compliance with environmental regulatorybodies is being managed both from the Aktau and the Almaty offices. David BarkerChief Operations Officer7 September 2007 Independent Review Report to Roxi Petroleum plc Introduction We have been instructed by the Company to review the financial information setout below and we have read the other information in the Interim Statement setout above and considered whether it contains any apparent misstatements ormaterial inconsistencies. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The AIM Rulesrequire that the accounting policies and presentation applied to the interimfigures should be consistent with those applied in preparing the precedingannual accounts except where any changes, and the reasons for them, aredisclosed. This interim report has been prepared in accordance with the basis set out inthe notes below. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the disclosed accounting policies have beenapplied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for theCompany for the purposes of the AIM Rules and for no other purpose. We do not,in producing this report, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands it maycome save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. BDO Stoy Hayward8 Baker StreetLondon7 September 2007 CONSOLIDATED INCOME STATEMENT Period from 13 October 2006 to 30 June 2007 Note $000s IPO costs 611Share based payments 585Other administrative expenses 434 Administrative expenses (1,630)Impairment of non current asset investments (2,983)Finance income (net) 260 Loss on ordinary activities before taxation (4,353) Income tax expense - Loss for the period (4,353) Loss attributable to minority interests (159)Loss attributable to equity shareholders (4,194) (4,353) Loss per Ordinary share (US cents) Basic and diluted 4 (9.2) All of the activities of the Group during the period are classed as acquired. CONSOLIDATED BALANCE SHEETAs at 30 June 2007 30 June 2007 Note $000sASSETS Non-current assetsUnproven oil and gas assets 5 50,611Financial assets 1,000Property, plant and equipment 209 Total non-current assets 51,820 Current assetsInventories 65Trade and other receivables 980Cash and cash equivalents 53,831 Total current assets 54,876 Total assets 106,696 EQUITY AND LIABILITIES EquityIssued share capital 7 33,707Share premium account 8 52,029Other reserves 8 2,963Retained earnings 8 (4,194) Shareholders' equity 8 84,505 Minority interests (281) Total equity 84,224 Current liabilitiesTrade and other payables 5,303 Non-current liabilitiesBorrowings 3,900Deferred tax liabilities 13,269 Total non-current liabilities 17,169 Total liabilities 22,472 Total equity and liabilities 106,696 CONSOLIDATED CASH FLOW STATEMENT Period from 13 October 2006 to 30 June 2007 Note $000s Cash flow used in operating activities 9 (2,568) Cash flow from investing activitiesPurchase of property, plant and equipment (40)Purchase of unproven oil and gas assets (704)Purchase of subsidiary undertaking net of 6 (14,940)cash recieved Cash flow from investing activities (15,584) Cash flow from financing activitiesIssue of share capital, net ofexpenses relating to issue of shares 72,083 Increase in cash and cash equivalents 53,831 Notes to the interim financial statements 1. STATUTORY ACCOUNTS The interim results for the period ended 30 June 2007 are unaudited. Thefinancial information contained within this report does not constitute statutoryaccounts as defined by Section 240 of the Companies Act 1985. Statutoryaccounts have not yet been prepared for any period by the Company. 2. BASIS OF PREPARATION Roxi Petroleum Plc is registered and domiciled in England and Wales. The interim financial statements have been prepared in accordance withInternational Financial Reporting Standards, as adopted by the European Union.They do not include all of the information required for full annual financialstatements. They have been prepared on a consistent basis with the accountingpolicies to be adopted for the statutory accounts for the period ended 31December 2007, as set out below. The financial information is presented in USDollars and has been prepared under the historical cost convention and on agoing concern basis. 3. ACCOUNTING POLICIES Basis of consolidation (a) Subsidiaries Subsidiaries are entities that are directly or indirectly controlled by theGroup. Control exists where the Group has the power to govern the financial andoperating policies of the entity so as to obtain benefits from its activities.In assessing control, potential voting rights that are currently exercisable orconvertible are taken into account. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The cost of an acquisition is measured as the fairvalue of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minorityinterest. The excess of the cost of acquisition over the fair value of theGroup's share of the identifiable net assets acquired is recorded as goodwill. Inter-Company transactions, balances and unrealised gains on transactionsbetween Group companies are eliminated. (b) Transactions and minority interests The Group applies a policy of treating transactions with minority interests astransactions with parties external to the Group. Disposals to minorityinterests result in gains and losses for the Group that are recorded in theincome statement. Purchases from minority interests result in goodwill, beingthe difference between any consideration paid and the relevant share acquired ofthe carrying value of net assets of the subsidiary. Foreign currency translation Items included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates ('the functional currency'). The consolidated financialstatements are presented in US Dollars (USD), which is the Group's functionaland presentation currency. For the purpose of presenting consolidatedfinancial statements, the assets andliabilities of the Group's foreign operations are expressed in $US usingexchange rates prevailing at the balance sheet date. Income and expense itemsaretranslated at the average exchange rates for the period. Exchange differencesarising, if any are classified as a separate component of equity and transferredto the Group's translation reserve. Such exchange differences are recognised inprofit or loss in the period in which the foreign operation is disposed of. Goodwill and fair value adjustments arising are treated as assets andliabilities of the foreign operation and translated at the closing rate.. Deferred tax Deferred tax is provided on temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and the amounts usedfor taxation purposes. The following temporary differences are not providedfor: the initial recognition of assets or liabilities that affect neitheraccounting nor taxable profit other than in a business combination, anddifferences relating to investments in subsidiaries to the extent that they willprobably not reverse in the foreseeable future. The amount of deferred taxprovided is based on the expected manner of realisation or settlement of thecarrying amount of assets and liabilities, using tax rates enacted orsubstantively enacted at the balance sheet date. Exploration and unproven oil and gas properties The Group applies the full cost method of accounting for exploration andevaluation costs, in accordance with the requirements of IFRS 6 'Exploration forand Evaluation of Mineral Resources'. Under the full cost method of accounting,costs of exploring for and evaluating oil and gas properties are accumulated andcapitalised by reference to appropriate cost pools. Such cost pools are basedon geographic areas. The Group currently has one cost pool, being Kazakhstan. The amounts included within intangible fixed assets include the fair value thatwas paid for the acquisition of licences in Kazakhstan during the period ended30 June 2007. These licences have been capitalised to the Group's Kazakhstanfull cost pool. Intangible fixed assets are reviewed for impairments if events or changes incircumstances indicate that the carrying amount may not be recoverable. When areview for impairment is conducted, the recoverable amount is assessed byreference to the net present value of expected future cash flows of the relevantincome generating unit or disposal value, if higher. If an asset is impaired, aprovision is made to reduce the carrying amount to its estimated recoverableamount. Financial instruments The Group's financial assets consist of cash on interest bearing short-termdeposits. Other receivables are stated at cost less any provision forimpairment. The Group's financial liabilities are non-interest bearing tradeand other payables and other interest bearing borrowings. Currency of borrowings Management reviews the Group's exposure to currency risk, interest rate risk,liquidity risk and credit risk on a regular basis and considers that throughthis review they manage the exposure of the Group. No formal policies have beenput in place in order to hedge the Group's exposure to currency risk or interestrate risk. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents aredefined as short term cash deposits. Segmental analysis The Group operates in one business segment, being the exploration for,development and production of oil and gas in the Republic of Kazakhstan. Share capital Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares or options are shown in equity as adeduction from the proceeds. Share based payments The Group has used shares and share options as consideration for goods andservices received from suppliers and employees. Equity-settled share-basedpayments are measured at fair value (excluding the effect of non market-basedvesting conditions) at the date of grant. The fair value determined at thegrant date of the equity-settled share-based instrument is expensed on astraight-line basis over the vesting period, based on the Group's estimate ofthe shares that will eventually vest and adjusted for the effect of nonmarket-based vesting conditions. Notes to the financial statements (continued) 4. EARNINGS PER ORDINARY SHARE The calculation of earnings per ordinary share is based on: Period from 13 October 2006 to 30 June 2007The basic weighted average number ofOrdinary shares in issue during the period 45,564,366Dilutive effect of share options - The diluted weighted average number ofOrdinary shares in issue during the period 45,564,366 The loss for the period attributable to equity shareholders ($000s) (4,194) 5. Unproven oil and gas assets $000sAt the start of the period -Acquisitions (see Note 6) 49,907Additions 704 At the end of the period 50,611 6. ACQUISITIONS As described in the admission document dated 16 May 2007, during the period theCompany completed the acquisition of Sytero BV, Sytero 2 BV and Sytero 3 BV.Sytero 2 BV and Sytero 3 BV own interests in Beibars Munai LLP and Ravninnoe OilLLP, respectively. The preliminary assessment of the fair values of the assetsand liabilities acquired as at the date of acquisition is as follows: Fair value Book values adjustments Fair values $000s $000s $000s Unproven oil and gas assets 5,678 44,229 49,907Financial assets 1,000 2,983 3,983Property, plant and equipment 169 - 169Inventories 65 - 65Trade receivables 427 - 427Other receivables 3,600 - 3,600Cash and cash equivalents 26 - 26Trade and other payables (6,533) - (6,533)Deferred taxation - (13,269) (13,269) 4,432 33,943 38,375 Minority interests 122 Net assets acquired 38,497 Consideration:- Ordinary shares 16,031- Cash 14,292- Deferred consideration 7,500- Expenses 674 Total consideration 38,497 Related cashflows:- Cash consideration 14,292- Expenses 674- Cash acquired (26) 14,940 The surplus of the fair value of the consideration over the other separable netassets and liabilities of the acquired entities has been attributed to the valueof the negotiated rights in respect of the unproven oil and gas properties andfinancial assets, based on the findings contained in the relevant competentpersons' reports: Subsequent to the Group's investment in Sytero BV it has not been able tocomplete the legal transfer of ownership of RS Munai, and therefore theDirectors have concluded that the investment of $3,983,000 in the RS Munaiproject has been impaired and should be written down to its net realisable valueof $1,000,000. Notes to the interim financial statements (continued) 7. CALLED UP SHARE CAPITAL Number $000sAuthorisedOrdinary shares of 10p each 1,000,000,000 188,000 Issued and fully paidOrdinary shares of 10p each 168,207,490 33,707 A Share issues during the period The Company was incorporated on 13 October 2006 with an authorised share capitalof £100,000,000 divided into 1,000,000,000 Ordinary Shares of 10 pence each. Onincorporation 2 Ordinary Shares of 10 pence each were issued at par, nil paid. On 26 October 2006 499,998 Ordinary Shares were subscribed for in cash at aprice of 10 pence per share and issued paid up as to one quarter and the twosubscriber shares paid as to one quarter, for an aggregate consideration of£12,500. On 5 February 2007 10,000,000 Ordinary Shares were issued at par as partialconsideration under the Sytero 2 SPA, as referred to in paragraph 11.5(a) ofPart V of the Company's Admission Document. On 2 March 2007 20,000,000 Ordinary Shares were issued at par as partialconsideration under the Sytero SPA, as referred to in paragraph 11.5(a) of theCompany's Admission Document. On 2 March 2007 30,000,000 Ordinary Shares were issued at par as partialconsideration under the Sytero 3 SPA, as referred to in paragraph 11.5(a) of theCompany's Admission Document. On 21 May 2007 102,444,332 Ordinary Shares were issued upon the Admission of theCompany's shares to trading on the AIM market, for cash, net of relatedexpenses, of $71.5m. On 21 May 2007 5,263,158 Ordinary Shares were issued in settlement of deferredconsideration in relation to the acquisition of Sytero 3 BV. As referred to in paragraph 11.8 of the Company's Admission Document AristeaInternational S.A. have paid up the remainder of the amount of the nominal valueplus the difference between the Placing Price and the nominal value of suchshares. B Share option schemes During the period the Company issued equity-settled share-based instruments toits directors and certain employees. Equity-settled share-based instrumentshave been measured at fair value at the date of grant. The fair valuedetermined at the grant date of the equity-settled share-based instrument isexpensed on a straight-line basis over the vesting period, based on an estimateof the shares that will eventually vest. Options generally vest in equaltranches over the four year period following grant, provided the option holderremains an employee of the Group. Exercise Number price Expiry Directors 10,092,450 38p 21 May 2017 Employees 3,364,150 38p 21 May 2017 13,456,600 Fair value is measured using a trinomial lattice model that takes into accountthe effect of financial assumptions, including the future share pricevolatility, dividend yield, and risk-free interest rates. The expectedvolatility was determined based on both the volatility of the Company's shareprice since flotation and the volatility of similar quoted companies. Employeeexit rates and the expected period from vesting to exercise are also considered,based on historical experience. The principal assumptions are: Share price at grant date (p) 38Exercise price (p) 38Expected volatility (%) 60Expected life (years) 2-5Risk-free rate (%) 5.75Fair value per option (p) 11.8 - 16.7 C Share warrants During the period the Company issued warrants over 10,023,112 Ordinary shares ofthe Company. These warrants entitle the holders to subscribe for Ordinaryshares for cash consideration of 38p per Ordinary Share, and were issued asconsideration for corporate and advisory services to the Company prior to itsflotation. Warrants over 7.5m shares may be exercised at any time prior to 21May 2017, while the remainder may be exercised at any time prior to 21 May 2010. Notes to the financial statements (continued) 8. Movement in Capital and Reserves Share Share Other Retained capital premium reserves earnings Total $000s $000s $000s $000s $000s At the start of the period - - - - -Arising on share issues 33,707 54,407 - - 88,114Arising on employee share - - 585 - 585optionsArising on warrants - (2,378) 2,378 - -Loss for the financial period - - - (4,194) (4,194)and total recognised incomeand expense At the end of the period 33,707 52,029 2,963 (4,194) 84,505 9. RECONCILIATION OF LOSS ON ORDINARY ACTIVITIES BEFORE TAX TO CASH FLOW USED IN OPERATING ACTIVITIES Period from 13 October 2006 to 30 June 2007 $000s Loss before taxation (4,353)Employee share options 585Increase in recievables (553)Decrease in payables (1,230)Impairment of non current asset investment 2,983Cash flow used in operating activities (2,568) 10. SUBSEQUENT EVENTS The Company's shares were suspended from trading on AIM on 22nd August 2007following the announcement by the Company that it is planning to enter into areverse takeover as detailed in the Chairman's report. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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