7th Sep 2007 07:01
Star Energy Group PLC07 September 2007 7 September 2007 Star Energy Group plc ("Star Energy" or "the Company") Unaudited interim results for the six months ended 30 June 2007 Star Energy, the gas storage and onshore UK oil and gas E&P company, announcesinterim results for the six months to 30 June 2007. These figures are presentedunder IFRS for the first time. OPERATING HIGHLIGHTS: • Group restructured to provide greater focus and flexibility to develop the gas storage business - separate divisions created for gas storage and oil production and reported as such in this statement • Planning permission granted to: - drill appraisal well at Bletchingley; and - construct additional compression equipment at Humbly Grove to increase gas storage capacity by up to 2 bcf (20%) from April 2008 • Conceptual design study underway to assess the viability of the Esmond and Gordon southern North Sea gas fields as gas stores with a combined capacity of up to 150 bcf to complete by end of 2007 • Building foundation for developing a pan-European gas storage business FINANCIAL HIGHLIGHTS: • £28.6 million net proceeds from share placing to facilitate restructuring of debt facility and provide funding for gas storage projects • Revenue of £30.5 million (H1 2006: £33.2 million*). UK GAAP equivalent £25.3 million (H1 2006: £24.3 million*) • Profit before tax of £2.1 million (H1 2006: £3.4 million*). UK GAAP equivalent £3.1 million (H1 2006: £3.3 million*) * After adjusting for non-recurring sales of natural gas in H1 2006 of £4.9million which had no associated cost of sale Roland Wessel, Chief Executive of Star Energy, said: "We have made steady progress and performance in the first half of 2007 has beenin line with expectations. Star Energy has 5 onshore gas storage projects and one large offshore gasstorage project which could see it become the UK's largest gas storage operatorwithin the next 5-6 years. The fundamentals for developing gas storage in the UKcontinue to strengthen. "In addition, promising projects in the Netherlands and two other Europeanlocations offer a potential foundation for a significant pan-European gasstorage business." 7 September 2007 Enquiries: Star Energy 020 7925 2121 Roland Wessel, Chief Executive Colin Judd, Finance Director Hoare Govett - Nominated Advisor and Joint Broker 0207 678 7106 Andrew Foster Citigroup - Joint Broker 0207 986 0505 Andrew Chapman Financial Dynamics 020 7831 3113 Ben Brewerton / Ed Westropp Chairman's and Chief Executive's Statement Review of operating activities Group Reorganisation During the first half of 2007, the Group was restructured to provide an improvedorganisational and financial platform to develop the gas storage business. Thisrestructuring resulted in the creation of two separate business units: GasStorage and Production. Roger Pearson has been appointed as Managing Director ofthe Gas Storage business and has access to the resources, skills and financerequired to press forward with our multi-site, onshore UK planning applicationsand our significant offshore opportunity. From this point onwards we will reporton the two businesses separately, which will give our shareholders greatertransparency on performance and use of resources. Gas Storage • Humbly Grove The planning application to install a booster compressor at the Humbly Grove "A"wellsite was approved by Hampshire County Council in May 2007. The newcompressor will facilitate the expansion of capacity in the Rhaetic reservoir,with the total gas store capacity increasing from the current 10 bcf to up to 12bcf. The additional capacity will be offered to the existing customer, Vitol SA,from April 2008. • Albury Phase 1 The Albury field, near Guildford in Surrey, lies substantially under an area ofoutstanding natural beauty (AONB). In order to minimise the environmental impactof the development of a gas storage facility using the Albury reservoir, theCompany secured an option over a remote site for the gas storage facility atFurze Copse, near Ripley. The new site is away from the AONB and in a wellscreened setting. A Scoping Report was submitted to Surrey County Council inanticipation of our planning submission scheduled for September 2007. • Albury Phase 2 The appraisal well required to determine the feasibility of storing gas in rockformations adjacent to the existing producing reservoir at Albury has beendelayed pending the completion of additional noise attenuation modifications tothe Company's newly contracted Larchford drilling rig. • Gainsborough A planning application is scheduled for submission around the end of 2007 andpreparatory engineering analysis and planning preparation is at an advancedstage. • Bletchingley Planning permission to drill the appraisal well for the Company's Bletchingleygas storage project was granted by Surrey County Council in May 2007, subject tocertain environmental conditions being achieved. A well-screened drilling sitehas been secured and site preparation will commence in preparation for theLarchford drilling rig to commence drilling in Q4 2007. • Welton In order to address issues that resulted in Lincolnshire County Council'srefusal of the Company's planning application in 2006, the Welton gas storagescheme is being re-configured and a planning application submission, using theGas Act 1965 is planned for late 2007 / early 2008. • Esmond Gordon - Southern North Sea Pursuant to sub-surface evaluation studies, agreement was reached with EnCore,the licence holder of the Esmond, Forbes and Gordon fields in the southern NorthSea, to extend the scope of the Forbes gas storage feasibility study to includethe Esmond and Gordon fields. As a consequence, the Company is currentlyevaluating a considerably larger offshore gas storage project of up to 150 bcfof working capacity, 50% larger than the Centrica operated Rough gas storagefacility. AMEC have been contracted to undertake a Conceptual Design Study andthe feasibility study is now scheduled to be completed by the end of 2007. • Waalwijk - Netherlands In April 2007, the Company signed an agreement with Northern Petroleum plc(Northern) to assume 50% of Northern's interest in the Waalwijk gas storageproject in the Netherlands. This project has a potential working gas capacity ofc. 70 bcf and, subject to partners' approval, the Company will commence work todevelop the project, including undertaking a front-end engineering and designstudy and planning and permitting activities. • Italy The Company has signed an agreement with Po Valley Operations Pty Limited toapply for a gas storage development licence for the Bagnolo Mella field. Theapplication will be made on the basis of a 50:50 joint venture arrangement,should the two companies be successful in gaining the licence. Production Oil and gas production averaged 4,410 (H1 2006: 4,635) boepd for the six monthsto 30 June 2007. From the beginning of April 2007, the Company had the benefitof the new Larchford drilling rig and production enhancement wells were drilledat Stockbridge (Star Energy holds a 100% interest and is the operator) andAvington (Star Energy holds a 50% interest and is the operator). Although oilproduction from several of the Company's fields was disappointing due primarilyto well down time, significant additional oil production was enjoyed as a resultof reservoir re-pressurisation at Humbly Grove as a result of gas storageactivities, with peak production rates in excess of 1,000 bopd. Conclusion The continued strong cash flows from the Company's production business (aided byhigh oil prices), combined with the proceeds from the placing in March 2007, hasenabled the Company to continue its development towards being a significantmulti-site gas storage company. With the UK now more connected to thecontinental European market, the expansion into Western Europe will providecross-border gas storage opportunities. A strong sustained supply of Norwegiangas via the newly commissioned Langeled pipeline depressed gas prices during thefirst half of the year. Yet despite this, the fundamentals for gas storagecontinue to strengthen and with it, the potential value of the Company'smultiple storage projects. Stephen GutteridgeChairman Roland WesselChief Executive Officer Financial review Presentation of results - adoption of IFRS The financial results of the Group for the six months ended 30 June 2007 havebeen prepared on a basis which is consistent with International FinancialReporting Standards (IFRS). In preparing its financial results for the sixmonths ended 30 June 2007, the Group has applied the accounting policies itexpects to apply in the first set of annual accounts it will present under IFRS(those for the year ending 31 December 2007). Where appropriate, comparativenumbers have been restated under IFRS. Previously the Group had reported under United Kingdom Generally AcceptedAccounting Principles (UK GAAP). The following reconciliation is presented inorder to facilitate understanding of how the transition from UK GAAP to IFRS hasimpacted on the Group's profit before tax, adjusted for the non-recurringnatural gas sales of £4.9 million in H1 2006: 6 months 6 months to to 30 June 30 June 2007 2006 £'000 £'000 Profit before tax under UK GAAP 3,127 8,189 Less: non-recurring natural gas sales - (4,858) 3,127 3,331 IAS 39: Under UK GAAP, derivative financial instrument (916) 150 contracts did not impact the profit and lossFinancial account until the period to which the transactionInstruments related arose. Under IFRS, such contracts are shown in the balance sheet at fair value and period to period movements reflected in the income statement. IAS 39: The Group has a senior debt facility. Under UK (104) (5) GAAP, the finance charge in respect of thisFinancial facility was interest paid less arrangement feesInstruments unwound during the period. Under IFRS, the finance cost is calculated at the effective interest rate. IAS 28: The Group's share of losses incurred by its 37 - associate in excess of the Group's investment inInvestments in the associate are not reflected under IFRS.Associates Accounting The accounting policy for emissions credits was - (80)policy change amended on adoption of IFRS such that no value is attributed to emissions credits granted to the Group. Profit before tax under IFRS 2,144 3,396 As shown above, the most significant impact of changing from UK GAAP to IFRS onthe profit for the six months ended 30 June 2007 arises due to unrealised losseson financial instrument contracts. The £916,000 loss (H1 2006: £150,000 gain)comprises of the following net unrealised amounts: 6 months 6 months to to 30 June 30 June 2007 2006 £'000 £'000 Losses on oil price contracts (reflected in cost of sales) (1,105) (409)Losses on foreign exchange forward contracts (reflected in cost of (178) (8)sales)Gain on interest rate derivative contract (reflected in finance costs) 367 567 (916) 150 The net loss on oil price contracts of £1,105,000 arising in the six months to30 June 2007 results from Zero Cost Collar (ZCC) contracts which the Group hasentered into but which do not meet the criteria to qualify for hedge accounting.As the ZCC contracts do not qualify for hedge accounting, the full movements intheir fair values from 31 December 2006 to 30 June 2007 are reflected throughthe income statement therefore creating volatility to the reported profit. It is the Group's view that ZCC contracts, whilst failing to qualify for hedgeaccounting, are advantageous for the Group from an operational perspective asthey enable the Group to manage risk by creating a level of cash flow certainty.The Group will continue to review its financial instrument policy on an ongoingbasis. It should also be noted that under UK GAAP, realised gains and losses on oilprice derivative and foreign currency contracts were adjusted for throughturnover. Under IFRS, such realised gains and losses, together with theunreleased gains and losses discussed above, are adjusted for through cost ofsales. Further details on the adjustments arising from the transition from UK GAAP toIFRS for previous reporting periods together with the Group's anticipatedaccounting policies are provided in the Group's 'First Time Adoption ofInternational Financial Reporting Standards (IFRS)' issued on 31 August 2007.Copies of this document are available from the Group's website(www.starenergy.co.uk) and its registered office. The remainder of this document focuses on numbers presented in the IFRS format. Group Following reorganisation of the Group into two distinct operating divisions: aGas Storage Division and a Production Division, together with a Corporate CostCentre, the Group's results are analysed between these divisions to theoperating profit level: 6 months to 30 June 2007 6 months to 30 June 2006 Gas storage Production Corporate Total Gas Production Corporate Total storage £m £m £m £m £m £m £m £m Total revenue 6.3 24.2 - 30.5 4.9 33.2 - 38.1Losses on - (6.5) - (6.5) - (9.3) - (9.3)derivativecontractsOther costs of (1.9) (9.1) - (11.0) (1.5) (8.5) - (10.0)salesGeneral & (0.3) (1.2) (1.2) (2.7) (0.5) (1.3) (1.1) (2.9)administrativecosts EBITDA 4.1 7.4 (1.2) 10.3 2.9 14.1 (1.1) 15.9Depletion, (2.5) (3.4) - (5.9) (2.5) (3.0) - (5.5)depreciation &amortisation Operating profit/ 1.6 4.0 (1.2) 4.4 0.4 11.1 (1.1) 10.4(loss) Gas Storage Division The results of the Gas Storage Division comprise the Humbly Grove gas storagefacility only. All direct and overhead costs incurred with respect to thedevelopment of the Group's gas storage projects are capitalised against therelevant project. Revenues for the six months to 30 June 2007 were £6.3 million (H1 2006: £4.9million). The increase is due to the gas storage contract with Vitol SA havingan effective start date of 1 April 2006, with specific provisions within thecontract for earning revenues in the first quarter of 2006 (Q1 2006). Actual Q12006 revenues were below the contracted capacity revenues generated from 1 April2006, giving aggregate revenues for the six months ended 30 June 2006 at a lowerlevel than two quarters at the contracted capacity charge, as in the six monthsto 30 June 2007. Cost of sales amounted to £4.4 million (H1 2006: £4.0 million) and comprisedoperating costs of £1.9 million (H1 2006: £1.5 million) and DD&A of £2.5 million(H1 2006: £2.5 million). The increase in operating costs principally reflectsthe full six months of operation in 2007 compared to only five months in 2006. Administrative expenses totalled £0.3 million (H1 2006: £0.5 million). Theperiod to 30 June 2006 included set-up costs which inflated the level ofexpenses. EBITDA for the Gas Storage Division was £4.1 million (H1 2006: £2.9 million) or65% (H1 2006: 59%). Production Division The results of the Production Division comprises of sales of oil, electricityand natural gas. Revenues for the six months to 30 June 2007 amounted to £24.2 million (H1 2006:£33.2 million) and comprised oil sales of £23.1 million (H1 2006: £27.2 million)and electricity of £1.1 million (H1 2006: £1.1 million). Revenues in 2006included £4.9 million from the sale of natural gas, which has not recurred in2007. Oil production levels averaged 3,935 bopd (H1 2006: 4,107 bopd) for the period.Oil sold totalled 733,882 barrels (H1 2006: 750,827 barrels). The effective oilprice achieved by the Group was $46.54 (H1 2006: $43.92) per barrel resultingfrom oil price hedging contracts in place and an average Dated Brent price forthe period of $63.26 (H1 2006: $66.02) combined with an average effective USdollar exchange rate for the period of $1.90 (1H 2006: $1.80), the effectiveaverage sterling revenue per barrel for the period increased to £24.45 (H1 2006:£24.34). The low effective US dollar oil price achieved by the Group compared toDated Brent results from hedging contracts taken out by the Group in part tosatisfy the lender requirements of the Group's initial debt facility. Cost of sales for the six months to 30 June 2007 totalled £19.0 million (H12006: £20.8 million) and comprised operating costs of £9.1 million (H1 2006:£8.5 million), depletion, depreciation and amortisation (DD&A) of £3.4 million(H1 2006: £3.0 million), net realised losses on oil price derivative and foreignexchange contracts of £5.2 million (H1 2006: £8.9 million) and non-cash losseson unrealised oil price derivative and foreign exchange contracts of £1.3million (H1 2006: £0.4 million) arising from the adoption of InternationalAccounting Standard (IAS) 39. Administrative expenses amounted to £1.2 million (H1 2006: £1.3 million). Adding back the DD&A charge of £3.4 million (H1 2006 £3.0 million) and, for thepurposes of comparison, deducting £4.9 million from the 2006 result for thenon-recurring sales of natural gas for which there were no costs of sale,earnings before interest, tax, depreciation, depletion and amortisation (EBITDA)for the Production Division was £7.4 million (H1 2006: £9.2 million) or 31% ofturnover (H1 2006: 33% after adjusting for the non-recurring sales of naturalgas). Corporate Corporate costs comprise those which relate principally to the centralmanagement of the Group and which cannot be specifically attributed to theProduction or Gas Storage Divisions. Finance charge The net finance charge for the Group was £2.2 million (H1 2006: £2.1 million). Taxation The tax charge of £1.1 million (H1 2006: £5.4 million) for the period comprisesonly deferred tax (H1 2006: £2.4 million for current tax and £3.0 million fordeferred tax), representing an effective rate of 49% (H1 2006: 65%). Theeffective tax rate is based on the expected taxable results for the full year.No current tax charge occurred for the six months ended 30 June 2007 as at theperiod end it was considered that first year allowances would offset any profitschargeable to current tax for the year. Cash flow The Group's cash generated from operations for the period increased to £11.1million (H1 2006: £5.1 million). Lower profitability in H1 2007 was more thanoffset by payments in H1 2006 to trade creditors in respect of the Humbly Grovegas storage facility construction. Capital expenditure totalled £6.5 million (H1 2006: £14.5 million), comprising£2.6 million (H1 2006: £8.7 million) for the Gas Storage Division and £3.9million (H1 2006: £5.8 million) for the Production Division. The equity placing in March 2007 raised net funds of £28.6 million, enabling theGroup to enter into an amended senior debt facility and reducing the debt burdenby £11.7 million. Costs of amending the debt facility amounted to £0.4 million.Under the terms of the facility, a further £2.5 million was repaid on 30 June2007. The net increase in cash balances for the period was £16.9 million (H1 2006: netdecrease of £10.1 million), giving cash as at 30 June 2007 of £23.4 million (H12006: £7.1 million). Cash and cash equivalents as at 30 June 2007 were negative£37.9 million (H1 2006: negative £69.3 million). Colin JuddFinancial Director Consolidated Income Statementfor the six months to 30 June 2007 Unaudited Unaudited Unaudited Six Months to Six Twelve 30 June 2007 Months to Months to 30 June 31 December 2006 2006 £'000 £'000 £'000 REVENUE 30,530 38,087 73,310Cost of sales: - Depletion, depreciation and (5,930) (5,518) (12,444) amortisation Losses on oil price derivative (6,970) (9,299) (14,468) contracts Gains/(losses) on foreign exchange 486 (8) 478 contracts Other costs of sales (10,953) (10,032) (20,121) Total cost of sales (23,367) (24,857) (46,555) GROSS PROFIT 7,163 13,230 26,755General and administration costs (2,773) (2,871) (5,797)Other income 4 20 27Loss on sale of fixed assets (2) - (2) OPERATING PROFIT 4,392 10,379 20,983Finance income 395 236 792Finance costs (2,640) (2,361) (5,360)Finance costs - net (2,245) (2,125) (4,568) Share of net loss in associate (3) - (97)PROFIT BEFORE INCOME TAX 2,144 8,254 16,318 Income tax expense (1,050) (5,401) (11,550)PROFIT FOR THE PERIOD 1,094 2,853 4,768 EARNINGS PER SHARE Pence Pence Pence Basic 1.24 3.59 6.01 Diluted 1.22 3.52 5.89 Consolidated Balance Sheetas at 30 June 2007 Unaudited Unaudited Unaudited As at As at As at 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000ASSETSNON-CURRENT ASSETSExploration and evaluation assets - 588 -Property, plant and equipment 185,280 181,371 184,295Intangible assets 793 - 588Investment in associate - - 4Investments 65 100 -Derivative financial Instruments 598 243 934Deferred tax asset - 928 - Total non-current assets 186,736 183,230 185,821 CURRENT ASSETSInventories 813 439 1,134Receivables and prepayments 11,402 11,682 10,235Derivative financial instruments 1,541 40 1,250Cash and cash equivalents 23,357 7,128 6,456 Total current assets 37,113 19,289 19,075 TOTAL ASSETS 223,849 202,519 204,896 EQUITY AND LIABILITIES CURRENT LIABILITIESTrade and other payables 9,378 8,798 8,705Financial liabilities: Borrowings 4,634 4,887 9,045 Derivative financial instruments 8,782 19,313 11,648Current tax liabilities - 1,812 - Total current liabilities 22,794 34,810 29,398 NON-CURRENT LIABILITIESFinancial liabilities: Borrowings 56,643 71,491 66,536 Derivative financial instruments 630 9,396 411Deferred tax liabilities 15,264 - 12,456Provisions 7,658 7,820 7,117 Total non-current liabilities 80,195 88,707 86,520 NET ASSETS 120,860 79,002 88,978 EQUITYShare capital 9,302 7,937 7,937Share premium account 152,696 125,457 125,457Merger reserve (45,093) (45,093) (45,093)Equity reserve (3,209) (12,743) (4,969)Retained earnings 7,164 3,444 5,646 TOTAL EQUITY 120,860 79,002 88,978 TOTAL EQUITY AND LIABILITIES 223,849 202,519 204,896 Consolidated cash flow statementfor the six months to 30 June 2007 Unaudited Unaudited Unaudited Six Months Six Months Twelve Months to 30 June to 30 June to 31 December 2007 2006 2006 £'000 £'000 £'000 PROFIT BEFORE INCOME TAX 2,144 8,254 16,318Adjustments for:Depletion, depreciation and amortisation 5,479 5,482 12,152Losses/(profits) on disposal of property plant and 2 (15) 2equipmentFair value losses/(gains) on financial instruments 1,283 417 (2,223)Non cash items 611 - 620Finance costs - net 2,245 2,125 4,580Changes in working capital:Decrease/(increase) in inventories 321 (78) (773)(Increase)/decrease in trade and other receivables (451) 1,667 (1,047)(Decrease) in trade and other payables (577) (12,746) (7,774) CASH GENERATED FROM OPERATIONS 11,057 5,106 21,855Taxation paid (959) (2,001) (5,283)Interest paid (1,323) (3,874) (6,647) NET CASH GENERATED/(UTILISED) BY OPERATIONS 8,775 (769) 9,925 CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (6,532) (14,479) (24,825)Purchase of interest in associate - - (100)Interest received 681 315 503 NET CASH USED IN INVESTING ACTIVITIES (5,851) (14,164) (24,422) CASH FLOW FROM FINANCING ACTIVITIESProceed from issue of share capital 28,594 - -Proceeds from borrowings - 5,170 4,970Repayments of borrowings (14,628) (369) (1,391) NET CASH USED IN FINANCING ACTIVITIES 13,966 4,801 3,579 NET INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS 16,890 (10,132) (10,918)AND BANK OVERDRAFTSCash, and cash equivalents at beginning of the 6,456 17,283 17,283periodExchange gains/(losses) on cash and bank overdrafts 11 (23) 91 CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS AT THE 23,357 7,128 6,456END OF THE PERIOD Notes 1. Basis of preparation The period beginning 1 January 2007 is the first period for which it becamemandatory for the Group to comply with International Financial ReportingStandards (IFRS). The financial results of the Group for the six months ended 30 June 2007 havebeen prepared on a basis which is consistent with International FinancialReporting Standards (IFRS) as adopted by the European Union which the Groupexpect to apply in the first annual audited accounts presented as at 31 December2007. Comparative information for 2006 has been restated under IFRS. This interim report has been prepared on a basis consistent with the Group'santicipated 2007 accounting policies. These accounting policies are set out inthe Group's 'First Time Adoption of International Financial Reporting Standards(IFRS)' issued on 31 August 2007, a copy of which is available from the Group'swebsite (www.starenergy.co.uk) or from its registered office. Despite a 'stable platform' currently being in place, it is possible that therestated information presented in this document may be subject to change priorto its inclusion in the 2007 Annual Report and Accounts which will include theGroup's first annual financial statements under IFRS. Such changes may occurdue to interpretive guidance issued by the International Financial ReportingInterpretation Committee (IFRIC) or to align to developing industry practice. The financial information presented in this report is unaudited. These interimfinancial statements do not constitute statutory accounts within the meaning ofsection 240 of the Companies Act 1985. The comparative figures for thefinancial year ended 31 December 2006 have been abridged from the Group'sstatutory accounts for that financial year, translated from United KingdomGenerally Accepted Accounting Principles (UK GAAP) to IFRS. The UK GAAP versionof those accounts have been reported on by the Group's auditors and delivered tothe Registrar of Companies. The auditors' report on those UK GAAP accounts wasunqualified did not include references to any matters to which the auditors drewattention by way of emphasis without qualifying their report and did not containany statement under section 237(2) or (3) of the Companies Act 1985. 2. Earnings per share (EPS) The calculation of the basic EPS is based on the weighted average number ofshares outstanding in the six months to 30 June 2007 of 88,189,112 (six monthsto 30 June 2006: 79,374,446; twelve months to 31 December 2006: 79,374,446). The calculation of the diluted EPS is based on the weighted average number ofshares outstanding in the six months to 30 June 2007 of 89,739,288 (six monthsto 30 June 2006: 81,130,102; twelve months to 31 December 2006: 80,924,622). The profit after tax for the six months ended 30 June 2007 was £1,094,000 (sixmonths to 30 June 2006: £2,853,000; twelve months to 31 December 2006:£4,768,000). The calculation of the dilutive elements of the issued share capital relate tovarious share incentive plans including an Approved Share Option Scheme, aLong-Term Incentive Plan and a Sharesave Scheme. The calculation of the dilutedEPS assumes all criteria giving rise to the potential dilution of the EPS areachieved and all outstanding share options are exercised. 3. Cash and cash equivalents As at Net movement As at 1 January 2007 30 June 2007 £'000 £'000 £'000 Cash 6,456 16,901 23,357Loans (75,581) 14,304 (61,277) Total (69,125) 31,205 (37,920) 4. Movements in total shareholders' equity during the period Share Share Merger Equity Retained capital premium reserve reserve earnings account £'000 £'000 £'000 £'000 £'000 As at 1 January 2007 7,937 125,457 (45,093) (4,969) 5,646Cost relating to share incentive plans - - - - 424Net gains not recognised in income - - - 1,760 -statement(*)Issue of new shares 1,365 27,239 - - -Profit attribitable to equity - - - - 1,094shareholders As at 30 June 2007 9,302 152,696 (45,093) (3,209) 7,164 (*) Represents the net movement in the fair values of those derivative financialinstruments (net of deferred tax) which qualify for hedge accounting (theeffective portion) and hence are accounted for directly through equity ratherthan through the income statement. Independent Review Report to the Board of Directors of Star Energy Group plc onthe financial information for the six months ended 30 June 2007 Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 as presented above. We have read the otherinformation contained in the interim report and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Our report has been prepared in accordance with the terms of our engagement toassist the Company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibilityfor this report to any other person or for any other purpose and we herebyexpressly disclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directorsare responsible for preparing the interim report in accordance with the rules ofthe London Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. 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 management and applying analyticalprocedures to the financial information and underlying financial data and basedthereon, assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information. 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 HAYWARD LLPChartered AccountantsLondon6 September 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Star Energy