19th Oct 2007 13:39
UMC Energy PLC19 October 2007 UMC Energy Plc Registered Number: 05331770 Interim Financial Results For the six months ending 31 July 2007 19th October 2007 CONTENTS Corporate Directory Chairman's Statement Independent Review Report Consolidated Income Statement Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements CORPORATE DIRECTORY Directors Robert Cleary (Chairman) Mike Smith (Chief Executive Officer) Kenneth Bates (Non-Executive Director) George Bujtor (Non-Executive Director) Chrisilios Kyriakou (Non -Executive Director) William McKnight (Non-Executive Director) Glen Whiddon (Non-Executive Director) Secretary Jonathan Reynolds Registered Office Ground Floor, 11 Albemarle Street London W1S 4HH Nominated Adviser Nabarro Wells & Co Limited Saddlers House Gutter Lane London EC2V 6HS Broker ODL Securities Limited The Northern & Shell Building 10 Lower Thames Street London EC3R 6AD Solicitors Beshoffs Solicitors 12 Walker Avenue, Stratford Office Village Wolverton Mill, Milton Keynes MK12 5TW Auditors Sawin & Edwards 15 Southampton Place London WC1A 2AJ Principal Bankers Coutts & Co 188 Fleet Street London EC2A 2HT Registrars Capita Registrars The Registry 34 Beckenham Road, Beckenham Kent, BR3 4TU UMC ENEGY PLC CHAIRMAN'S STATEMENT For the six months period ended 31 July 2007 The Company, through its subsidiary Uramad SA, holds eight exploration permitscovering approximately 9,994 km2 located in the Morondava Basin, Madagascar. The 2007 exploration program comprises both an airborne survey of some 19,000line kilometres for the detection of uranium radiometric anomalies on thepermits located in the Makay District and a 3,000 metre drilling program on thepermits located in the Folakara District. Both the Makay District and theFolakara Distict are located in the Morondava Basin of Madagascar. The drilling on the Folakara permit areas has been directed at verifying thepresence of radiometric anomalies previously identified in the late 1950s byCogema and others. This follows on from the encouraging uranium readings foundin two of the six holes drilled in 2006, as reported previously. To date 45 of the 60 holes planned for 2007 have been drilled. Drilling hasbeen handicapped by unacceptably low core recoveries, as a result of theextremely friable porous sandstones in the uranium bearing zones. Remedialattention has been paid to this activity and specialized equipment, bettersuited to the recovery of very soft material, has been sourced. Regrettably,much of the drilling work may need to be repeated next dry season in order toobtain reliable data upon which to build improved geological knowledge of theuranium potential of the permit areas. The airborne survey was completed in early October 2007. Results will bereleased as they become available. R A ClearyChairman 19 October 2007 INDEPENDENT REVIEW REPORT TO UMC ENERGY PLC Introduction We have been instructed by the Company to review the financial information forthe six months ended 31 July 2007, set out on pages 4 to 17. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. 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. The report is made solely to the Company in accordance with guidance containedin Bulletin 1999/4 ''Review of interim financial information'' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company, for our work,for this report, or for the conclusions we have formed. 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 accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not 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 31 July 2007 except for any adjustments that may be required in the eventthat the Company is not a going concern as referred to in note 1 to thefinancial information. Sawin & EdwardsChartered Accountants15 Southampton PlaceWC1A 2AJ19 October 2007 UMC ENERGY PLC UNAUDITED CONSOLIDATED INCOME STATEMENT For the six months period ended 31 July 2007 Note Six months period Six months period Year ended 31 ended 31 July 2007 ended 31 July 2006 January 2007 (Unaudited) (Unaudited) (Audited) £ £ £ Administrative expenses (740,318) (184,797) (913,425)Exceptional expenses 3 - (59,826) (75,019)Other operating income 9,862 - 9,392 Loss from operations (730,456) (244,623) (979,052) Investment income 128,210 50,493 95,584Finance costs (72,253) - (50,693) Loss before taxation (674,499) (194,130) (934,161)Income tax expense 4 - - - Loss for the period (674,499) (194,130) (934,161) Attributable to:Equity holders of the parent (689,969) (194,130) (936,672)Minority interest 15,470 - 2,511 (674,499) (194,130) (934,161) Loss per share (pence) 5 (2.24) (1.05) (4.73)Fully diluted loss per share 5 (1.98) (0.75) (1.84)(pence) The Group has no recognised gains or losses other than the results for theperiod as set out above. UMC ENERGY PLC UNAUDITED CONSOLIDATED BALANCE SHEET 31 July 2007 Note As at As at As at 31 January 31 July 2007 31 July 2006 2007 (Unaudited) (Unaudited) (Audited) £ £ £ASSETSNon Current AssetsIntangible assets 6 4,346,111 - 3,775,407Property, plant and equipment 22,541 - 21,282Trade and other receivables 82,383 - 57,278Total non current assets 4,451,035 - 3,853,967 Current AssetsTrade and other receivables 210,625 43,415 12,275Cash and cash equivalents 1,054,886 2,664,146 1,865,222Total current assets 1,265,511 2,707,561 1,877,497 Total Assets 5,716,546 2,707,561 5,731,464 EQUITY AND IABILITIESCurrent Liabilities 193,893 56,043 142,935 Trade and other payables Non current liabilitiesLong term provision 122,945 - 50,693 Total Liabilities 316,838 56,043 193,628 Equity and ReservesCalled up share capital 7 1,540,333 920,450 1,534,083Share premium 4,478,453 2,422,213 4,447,203Share based payments reserve 1,156,591 591,771 916,590Translation reserve 751 - (48)Retained loss (2,457,543) (1,282,916) (2,025,458)Equity attributable to equity 4,718,585 2,651,518 4,872,370holders of the parentMinority interest 681,123 - 665,466Total Equity 5,399,708 2,651,518 5,537,836Total equity and liabilities 5,716,546 2,707,561 5,731,464 These interim results were approved by the Board on 19 October 2007 and signedon their behalf by: R Cleary, Chairman UMC ENERGY PLC UNAUDITED STATEMENT OF CHANGES IN EQUITY for the six months period 31 July 2007 Share Based Trans- Share Share Payments Profit and lation Capital Premium Reserve Loss Reserve Total £ £ £ £ £ £ Balance at 1 February 2007 1,534,083 4,447,203 916,590 (2,025,458) (48) 4,872,3702007uary 2007Share issue 6,250 31,250 - - - 37,500Loss for the period - - - (689,969) - (689,969)Share based payment - - 497,885 - - 497,885Share based payment transfer - (257,884) 257,884 - -Translation movement - - - - 799 799Balance at 31 July 2007 1,540,333 4,478,453 1,156,591 (2,457,543) 751 4,718,585 Share Based Trans- Share Share Payments Profit and lation Capital Premium Reserve Loss Reserve Total £ £ £ £ £ £ Balance at 1 February 2006 920,450 2,422,213 - (497,015) - 2,845,648IFRS Transition adjustment - - 591,771 (591,771) - -Restated balances 920,450 2,422,213 591,771 (1,088,786) - 2,845,648Loss for the period - - - (194,130) - (194,130) Balance at 31 July 2006 920,450 2,422,213 591,771 (1,282,916) - 2,651,518 Share Based Trans- Share Share Payments Profit and lation Capital Premium Reserve Loss Reserve Total £ £ £ £ £ £ Balance at 1 February 2006 920,450 2,422,213 - (497,015) - 2,845,648IFRS Transition adjustment - - 591,771 (591,771) - -Restated balances 920,450 2,422,213 591,771 (1,088,786) - 2,845,648Share issue 613,633 2,024,990 - - - 2,638,623Loss for the period - - - (936,672) - (936,672)Share based payment - - 324,819 - - 324,819Translation movement - - - - (48) (48)Balance at 31 January 2007 1,534,083 4,447,203 916,590 (2,025,458) (48) 4,872,370 UMC ENERGY PLC UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the six months period 31 July 2007 Six months period Six months period Year ended ended ended 31 July 2007 31 July 2006 31 January 2007 (Unaudited) (Unaudited) (Audited) £ £ £Cash flows from operating activitiesOperating loss (730,456) (244,623) (979,052)(Increase)/decrease in trade & other (223,268) 583,363 557,752receivablesIncrease/(decrease) in trade and other 50,956 (116,495) (29,603)payablesDepreciation 2,645 - 474Translation reserve movement 799 - (48)Share based payment 497,885 - 324,819 Net cash flow from operating activities (401,439) 222,245 (125,658) CASH FLOW STATEMENTNet cash flows from operating activities (401,439) 222,245 (125,658) Investing ActivitiesInvestment income 128,210 50,493 95,584Property, plant & equipment acquired (3,904) - (21,756)Intangibles assets (570,704) - (474,356) Net cash flow from investing activities (446,398) 50,493 (400,528) Financing activitiesIssue of equity share capital 37,501 - - Net cash flow from financing activities 37,501 - - (Decrease)/increase in cash & cash (810,336) 272,738 (526,186)equivalents Cash and cash equivalents brought forward 1,865,222 2,391,408 2,391,408Cash and cash equivalents carried forward 1,054,886 2,664,146 1,865,222 UMC ENERGY PLC NOTES TO THE UNAUDITED INTERIM RESULTS For the six months period ended 31 July 2007 1. General information UMC Energy Plc is a company incorporated in England and Wales under theCompanies Act 1985. The Company's registered office is 11 Albemarle Street,London, W1S 4HH. The principal activity of the Group is the investment in and exploration anddevelopment of uranium mining projects, specifically in an uranium explorationproject in Madagascar. The Group's principal activity is carried out in US dollars. The interimresults are presented in pounds sterling as this is the currency of the country(the UK) from which the Group operates. The Board of directors has authorised the issue of these interim results on thedate of the statement as set out on page 5. 2. Accounting policies Basis of accounting The interim results have been prepared in accordance with InternationalFinancial Reporting Standards (IFRSs). The disclosures required by IFRS 1concerning the transition from UK GAAP to IFRSs are given in note 9. The interim results have been prepared on the historical cost basisexcept that certain financial instruments are accounted for at fair values. Theinterim results are unaudited and do no constitute statutory accounts inaccordance with Section 240 of the Companies Act 1985. The principal accountingpolicies adopted are set out below. Going Concern The interim results have been prepared on a going concern basis, whichcontemplates continuity of normal business activities and the realisation ofassets and settlement of liabilities in the ordinary course of business. The directors believe that it is appropriate to prepare the financialreport on a going concern basis as they are confident that the Company will beable to raise additional funds through capital raisings when required. Thedirectors are of the opinion that the proposed equity raising measures and theexisting cash resources will provide sufficient funds to enable the Company tocontinue its operations for at least the next 12 months. Basis of consolidation The consolidated interim results incorporate the interim results of theCompany and all Group undertakings. Control is achieved when the Company hasthe power to govern the financial and operating policies of an investee entityso as to obtain benefits from its activities. On acquisition, the assets and liabilities and contingent liabilities ofa subsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair value of the identifiable net assets acquired (i.e.discount on acquisition) is credited to profit and loss in the period ofacquisition. The interest of minority shareholders is stated at the minority'sproportion of the fair values of the assets and liabilities recognised.Subsequently, any losses applicable to the minority interest in excess theminority interest are allocated against the interests of the parent. The results of subsidiaries acquired or disposed of during the period areincluded in the consolidated income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the interim results ofsubsidiaries to bring the accounting policies used into line with those used bythe Group. All intra-group transactions, balances, income and expenses areeliminated on consolidation. Revenue recognition Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount. Long term provision A provision is recognised for future withholding tax payable on any remittancesmade from Madagascar on the loan investments made to the subsidiary Uramad SA Foreign currencies Transactions in currencies other than pounds sterling are recorded at the ratesof exchange prevailing on the dates of the individual transactions. Forpractical reasons, a rate that approximates the actual rate at the date of thetransaction is often used. At each balance sheet date, monetary assets andliabilities that are denominated in foreign currencies are retranslated at therates prevailing on the balance sheet date. Non-monetary assets and liabilitiesthat are denominated in foreign currencies are retranslated at the ratesprevailing at the balance sheet date. Gains and losses arising on retranslationare included in net profit or loss for the period. On consolidation, the assetsand liabilities of the Group's overseas operations are translated at exchangerates prevailing on the balance sheet date. Income and expense items aretranslated at the average exchange rates for the period unless exchange ratesfluctuate significantly. Exchange differences arising, if any, are classifiedas equity and transferred to the Group's translation reserve. Such translationdifferences are recognised as income or as expenses in the period in which theoperation is disposed of. Deferred taxation Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the interim resultsand the corresponding tax bases used in the computation of taxable profit, andis accounted for using the balance sheet liability method. Deferred taxliabilities are generally recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if thetemporary difference arises from the original recognition of other assets andliabilities in a transaction that affects neither the tax profit nor theaccounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. No recognition has been made for the deferred tax asset arising in respect ofcurrent losses as the directors are of the opinion that this may not berealisable in the foreseeable future. Financial instruments Financial assets and financial liabilities are recognised on the balance sheetwhen the Company becomes a party to the contractual provisions of theinstrument. Non-current intangible assets Non-current intangible assets are shown at cost less any provisions made inrespect of impairment. Asset impairments Non-current intangible assets are reviewed for impairments if events or changesin circumstances indicate that the carrying amount may not be recoverable. Whena review is conducted, the recoverable amount is assessed by reference to thenet present value of expected future cash flows of the relevant incomegenerating unit or disposal value, if higher. If an asset is impaired, a provision is made to reduce the carrying amount toits estimated recoverable amount. Non-current asset investments Loan investments are shown at cost less provision for any permanent diminutionin value. Loan investments are recognised as an asset when sums are advanced. Property, plant and equipment Office equipment and furniture are shown at cost less accumulated depreciationand any recognised impairment loss. Depreciation is charged so as to write offthe cost of assets over their estimated useful lives, using the straight linemethod on the following basis: Equipment 25% Furniture 25% Financial liabilities and equity Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangement entered into. An equity instrument isany contract that evidences a residual interest in the assets of the Companyafter deducting all of its liabilities. Cash and cash equivalents Cash and cash equivalents comprise cash held at bank and on short term deposits. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Equity instruments Equity instruments issued by the Company are recorded at the proceeds receivedexcept where those proceeds appear to be less than the fair value of the equityinstruments issued, in which case the equity instruments are recorded at fairvalue. The difference between the proceeds received and the fair value isreflected in the share based payments reserve. The costs of issuing new equity are charged against the share premium account. Share based payments The Group has applied the requirements of IFRS 2 Share-based Payments. The Group issues equity-settled based payments to directors and certainprofessional advisors of the Group. Equity-settled share-based payments aremeasured at fair value at the date of grant. The fair value determined at thegrant date of the equity-settled share-based payments is expensed on astraight-line basis over the vesting period, based on the Group's estimate ofshares that will eventually vest. Fair value is measured by use of a Black Scholes model. The expected life usedin the model has been adjusted, based on management's best estimate, for theeffects of non-transferability, exercise restrictions, and behaviouralconsiderations. The Company issued equity in consideration for the acquisition of the subsidiaryundertaking, Uramad UK Ltd. The Company recognises the cost of these transactions at the fair value of theinstruments issued less any cash consideration subscribed. 3. Exceptional items The Company had examined opportunities to acquire uranium and oil/gas projectsin Kazakhstan. Following extensive negotiations, the Company was unable toconclude any acquisitions. The total cost incurred in relation to theseactivities in the previous periods were £59,826 (31 July 2006) and £75,019 (31January 2007). 4. Taxation No provision for corporation tax has been provided for, due to losses incurredin the current and previous periods. 5. Loss per share Loss per share has been calculated by dividing the loss for the period aftertaxation attributable to the equity holders of the parent company of £689,969(2006: £194,130) by the weighted average number of shares in issue at the periodend of 30,780,425 (2006: 18,409,001). Diluted loss per share has been calculated using the weighted average number ofshares in issue at the period end, diluted for the effect of share options andwarrants in existence at the period end of 4,073,408 (2006: 7,574,500). 6. Intangible assets As at As at As at 31 January 31 July 2007 31 July 2006 2007 (Unaudited) (Unaudited) (Audited) £ £ £Development expenditure Balance brought forward 18,556 - -Additions 570,704 - 18,556 Balance carried forward 589,260 - 18,556 Exploration licences at fair valueBalance brought forward 3,756,851 - -Additions - - 3,756,851 3,756,851 - 3,756,851 Balance carried forward Total 4,346,111 - 3,775,407 The development expenditure relates to development of the uranium explorationproject in the Morondava basin of Madagascar. The licences relate to uranium exploration licences over approximately 10,000square kilometres in the Morondava basin of Madagascar. 7. Called up share capital As at As at As at 31 January 31 July 2007 31 July 2006 2007 (Audited) (Unaudited) (Unaudited) Share capital Authorised No No NoOrdinary shares of 5p each 200,000,000 200,000,000 200,000,000 £ £ £Ordinary shares of 5p each 10,000,000 10,000,000 10,000,000 Issued No No NoOrdinary shares of 5p each 30,806,668 18,409,001 30,681,668 £ £ £Ordinary shares of 5p each 1,540,333 920,450 1,534,083 8. Post balance sheet events There has not arisen in the interval between the end of the financial period andthe date of this report any item, transaction or event of a material and unusualnature likely, in the opinion of the Directors, to affect significantly theoperations of the Company, the results of those operations or the state ofaffairs of the Company, in subsequent financial periods. 9. First time adoption of IFRS The financial statements for the year ended 31 January 2007 were prepared inaccordance with International Financial Reporting Standards (IFRSs) for thefirst time. A reconciliation between the 2006 Income Statement and Balance Sheet as shownunder UK GAAP and IFRSs is shown below. INCOME STATEMENT Period Period 13 January 2005 Reconciling 13 January 2005 to 31 January 2006 Item to 31 January 2006 IFRS UK GAAP £ £ £ Administration expenses (954,649) (591,771) (362,878) Exceptional costs (191,880) (191,880) Loss from operations (1,146,529) (554,758) Bank interest 57,743 57,743 Loss before taxation (1,088,786) (497,015) Income tax expense - - Loss for the period (1,088,786) (497,015) BALANCE SHEET 31 January 2006 Reconciling 31 January 2006 IFRS Item UK GAAP £ £ £ASSETSCurrent assetsTrade and other receivables 626,778 626,778Cash and cash equivalents 2,391,408 2,391,408Total current assets 3,018,186 3,018,186TOTAL ASSETS 3,018,186 3,018,186 EQUITY AND LIABILITIESCurrent liabilitiesTrade and other payables 172,538 172,538Total liabilities 172,538 172,538 EquityShare capital 920,450 920,450Share premium account 2,422,213 2,422,213Share based payments reserve 591,771 591,771 -Retained loss (1,088,786) (591,771) (497,015)Total equity 2,845,648 2,845,648Total equity and liabilities 3,018,186 3,018,186 Reconciling item The reconciling item of £591,771 relates to the recognition of share basedpayments as required under IFRS 2. 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