28th Mar 2008 07:02
Xtract Energy plc28 March 2008 28 March 2008 AIM: XTR XTRACT ENERGY PLC Interim Results for the six months ended 31 December 2007 Xtract Energy ("Xtract" or "the Company") today announces its unaudited interimresults for the six months ended 31 December 2007. Financial Highlights • Profit before tax of £3.8 million (2006: £3.4 million) • Other gains of £6.0 million included the disposal of MEO shares during the period at an average price of A$1.20 / share. • Strong balance sheet with a net asset position of £49.0 million (2006: £26.8 million) and cash of £4.7 million (2006: £4.2 million). Operational Highlights • Elko Energy Inc ("Elko"): US$18 million raised in pre-IPO fundraising, including US$6 million follow-on investment by Xtract, increasing Xtract's holding to approximately 35.2% of Elko's total issued capital. • MEO Australia Ltd ("MEO"): Disposal by Xtract of 16.5 million shares in MEO raising £8.5 million for investment and working capital. • Simplification of holding structure through the sale of Xtract's 61.5 million shares in Aviva Corporation Ltd to Wasabi Energy Ltd ("Wasabi") in exchange for 175 million new shares and 25 million warrants in Wasabi. • Appointment of Andrew Morrison as Chief Executive Officer (CEO). Post Period Highlights • Elko: Awarded offshore exploration license in Block P2, Dutch North Sea. • Oil Shale: Significant increase in oil shale resource estimate at Julia Creek, Queensland. • MEO: Two new gas discoveries declared from a two-well exploration and appraisal drilling programme in the Australian Timor Sea. • Mark Nichols appointed to the Board as a non-executive director. Andy Morrison, Chief Executive of Xtract Energy, commented "The reported results for the period were strong and reflect the profits takenon the sale of part of Xtract's shareholding in MEO Australia. The Board remains confident of the enormous potential in its diversifiedportfolio of high quality assets in which Xtract is taking an increasinglyactive role and which offer investors considerable upside potential in theshort-, medium-, and long-term. Furthermore, Xtract's strong and liquid balance sheet and active managementportfolio approach gives Xtract the potential to capitalise on future potentialinvestment opportunities. These combined factors give the Board confidence thatXtract will continue to make progress in the current year and thereafter." For further information, please contact: Xtract Energy plc Andy Morrison, CEO +44 (0) 20 7079 1798 Smith & Williamson Corporate David Jones +44 (0) 20 7131 4000Finance Limited Azhic Basirov Scott Harris Stephen Scott +44 (0) 20 7653 0030 Annabel Michie For further Information on Xtract please visit www.xtractenergy.co.uk CHAIRMAN'S STATEMENT Xtract continues to identify and invest in a diversified portfolio of earlystage energy sector businesses and technologies with very significant growthpotential. In line with the Company's strategy, Xtract is making further progress in itsmove from a 'pure' holding company to a company with a more active role in itsunderlying investments. During the period, the Company's wholly owned subsidiary Xtract InternationalLtd ("Xtract International") increased its holding in Elko Energy Inc ("Elko")and Xtract invested further in Wasabi Energy Limited ("Wasabi"), of which itcurrently holds approximately 35.4%. Elko Elko Energy Inc ("Elko") is a privately held Canadian oil and gas explorationcompany formed in 2005. It has an interest in a 5,370 km2 exploration andproduction licence in the Danish North Sea, an interest in two gas-bearingblocks in the Dutch North Sea, and a majority holding in Dragon Energy Inc, aprivate Canadian company with a 30% share in a producing field in Canada and afield redevelopment project in Gansu Province, China. In early 2007, Elko applied for two off-shore blocks in the Dutch sector of theNorth Sea, both of which contain a number of drilled and tested gas bearingstructures. Block P1 has been awarded to a consortium in which Elko will be theoperator and will retain a 33% interest. The award of adjacent Block P2 wasannounced in February 2008 on similar terms. A number of Rotliegendes gas bearing structures containing an estimated 700 BCFhydrocarbon gas have been confirmed on blocks P1 and P2 through the drilling of18 exploration wells and 3-D seismic. Work has been started to appraise anddevelop these gas accumulations. Xtract invested a total of US$8 million in Elko through two direct privateplacements and currently holds approximately 35.2% of the issued capital ofElko. The second placing was as part of a successful US$18 million pre-IPOfundraising completed in December 2007. Xtract's holding in Elko offers the Company's shareholders an opportunity toparticipate in an unlisted company investing in exciting exploration acreage inthe North Sea. Oil Shale Xtract's wholly owned subsidiary, Xtract Oil Ltd, is focused upon thedevelopment of the Company's oil shale resources in Australia and the technologyfor oil extraction from oil shale minerals. The development of Xtract's oil shale technology could lead to the production ofliquid hydrocarbons to partially address the global decline of conventional oilreserves with significant environmental benefits and higher yields overpreviously tried extraction methods. A supplementary drilling programme was completed in the Julia Creek concession area in Queensland, Australia in 2007. A review of the new data, in conjunctionwith existing data, was carried out by independent geologists Nolan and Associates Pty Ltd. The total indicated and inferred resources have been assessed as 2.12 billion barrels of oil in situ*, comprising 240 million barrelsof indicated resources and 1,875 million barrels of inferred resources. The revised resource statement represents an increase of over 150% compared with thepreviously declared figure of 825 million barrels. Advanced autoclave equipment designed to scale up the batch size for testing anddevelopment of Xtract's proprietary technology was commissioned on the campus ofone of Australia's leading Universities in November 2007. *Based on the internationally recognised Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code - 2004 Edition.) MEO Australia Ltd MEO is focused on developing gas-to-liquids ("GTL") projects in the Timor Sea,Australia, in an area of shallow water known as Tassie Shoal, locatedapproximately 275km northwest of Darwin, Australia. MEO has secured Australian Government environmental approvals to install twolarge scale methanol plants and one 3 million tonne per annum (Mtpa) LiquefiedNatural Gas (LNG) plant in Tassie Shoal. During the fourth quarter of 2007 and the first quarter of 2008, MEO conducted atwo-well exploration and appraisal drilling programme in its NT/P68 permit inAustralian waters of the Timor Sea. The first well, Heron-2, was funded 25% byfarm-in partner Petrofac Resources Ltd to earn a 10% interest in the asset. Thesecond well, Blackwood-1, was drilled as a sole-risk venture by MEO. The Heron-2 well penetrated the Epenarra Darwin Formation and the deeper Elang/Plover Formation of the Heron North structure. Electric logging indicated thatboth of the target reservoirs were gas saturated. Production testing of theHeron North Elang/Plover sandstone section recorded a maximum interpretedhydrocarbon flow between of between 6 and 8 million standard cubic feet (MMscf)per day before operations were halted due to the approach of Cyclone Helen.Further testing was not successful due to the partial collapse of the well. Given the encouraging mud log indications while drilling the Plover formation,including the possible existence of wet gas (gas with associated liquefiedpetroleum gas (LPG) and condensate), a significant gross column (164m) of Plovergas saturated sands and positive electric log interpretation, MEO is currentlyplanning a re-drill of the Heron North structure to production test the Ploversandstone section. Blackwood-1 confirmed 49m of gross Plover gas bearing sands to a preliminarygas-water contact (GWC) at 3225mMD (3188m subsea). The raw gas contingentresource gas in place (GIP) (P50 - "most likely") was announced as 2,473 billioncubic feet (Bcf). Given current assumptions of a 60% net to gross and 10% matrixporosity, MEO has assumed a 70% recovery factor, and estimated that Blackwoodmay offer approximately 1700 Bcf of raw recoverable gas. The first methanol plant proposed for the Tassie Shoal Methanol Project requiresapproximately 1400 Bcf of raw gas (including inerts) to produce 1,750,000 tonnesper annum for 20 years of operation. Given the encouraging results from the Blackwood-1 well and indications of apossible gas resource adequate in volume and quality to supply a methanol plant,MEO has accelerated the selection process to identify and secure a casting basinsite in Southeast Asia for the possible construction of the concrete gravitybase structure. MEO has also initiated the development of the Basis of Designdocumentation in preparation for the commencement of Front End Engineering andDesign (FEED) studies of the Tassie Shoal Methanol Project (TSMP) later in theyear. Following the sale of 16.5 million shares at an average price of A$1.20 / sharefor cash, Xtract now holds 15.7% of the total issued share capital of MEO. Theproceeds of this sale provided Xtract with working capital and the opportunityto offer development support to other investee companies within its portfolio. Subsequent to period end, MEO's share price decreased significantly due toinconclusive appraisal well results at Heron-2. Xtract's carrying value for MEOat 31st December 2007 was £39.3 million based on the company's 60.7 millionshareholding and an MEO share price of A$ 1.49. As MEO is classified as anavailable for sale investment any reduction in its carrying value will be offsetagainst the available for sale reserve at 30 June 2008, net of deferred taximpact. Wasabi Energy and other businesses Wasabi Energy Limited ("Wasabi") is a diversified investor in renewable energyand low greenhouse emission technologies, with interests in geothermal waste/heat, uranium exploration and biodiesel investments in Australia. Wasabi holds approximately 38% of Rum Jungle Uranium Ltd ("Rum Jungle"), whichwas admitted to the official list of the Australian Stock Exchange (ASX) inNovember 2007. Rum Jungle has interests in exploration licences covering some4,150 km2 of the Northern Territory of Australia, and has entered intoagreements which will give it rights to explore for uranium over a further 3,330km2. Subsequent to the period end, Xtract provided a loan of A$1.25 million to Wasabifor the specific purpose of assisting Wasabi to participate in the IPO of ASXlisted Greenearth Energy Ltd who are intending to explore and develop geothermalresources in Australia, New Zealand and the wider Pacific Rim. The loan wasrepaid in full by Wasabi in February 2008. Xtract is also participating in several oil & gas projects in the KyrgyzRepublic, including exploration (2D seismic programme completed) and waterinjection (with Kyrgyzneftegas, the state oil company) and continues to holdgold exploration tenements in Mexico. Portfolio Simplification During the period Xtract Energy completed the sale of its holding of 61.5million ordinary shares in Aviva Corporation Ltd ("Aviva"), together with aninterest in a steel-making technology, to Wasabi in exchange for 175 million newWasabi ordinary shares and 25 million warrants. Xtract continues to focus on its strategy of building a diversified portfolio ofhigh potential businesses in the energy sector to provide growth opportunitiesover the short-, medium- and longer-term. Xtract works closely with themanagement teams of its investee companies to build value, including overseeingthe development of its oil shale extraction technology. John NewtonChairman The information in this announcement in relation to oil shale has been reviewed by Dr John E. Shirley, Managing Director of Xtract Oil Ltd. Dr. Shirley has a BSc and PhD in Geophysics from the University of Tasmania, over 40 years experience in the resources and energy sector and is a member of the Society ofPetroleum Engineers. The information in this announcement relating to the resources of Xtract's otherinvestee companies (none of which are subject to the AIM Rules) has not been reviewed by a named "qualified person" as defined and required by the AIM Guidance Note for Mining, Oil and Gas Companies. Consolidated Income StatementFor the six months ended 31 December 2007 18 months Six months ended ended Notes 31 December 31 December 30 June 2007 2006 2007 Unaudited Unaudited Audited (Restated) £'000 £'000 £'000 Administrative expenses (1,426) (492) (2,124)Other operating income 5 66 66Gain on disposal of fixed assets - - 10 ------ ----- ------Operating loss (1,421) (426) (2,048) Investment revenue 55 25 99Other gains and losses 3 6,046 822 5,968Finance costs - (89) (128)Share of results of associates 5 (906) (17) (362)Negative goodwill on acquisition - 3,077 5,730of subsidiary ------ ----- ------ Profit before tax 3,774 3,392 9,259 Tax expense (1,461) (246) (1,787) ------ ----- ------Profit for the period 2,313 3,146 7,472 ------ ----- ------Attributable to:Equity holders of the parent 2,313 2,983 6,284Minority interest - 163 1,188 ------ ------ ------ 2,313 3,146 7,472 ------ ------ ------Earnings per share Basic (pence) 4 0.33 0.77 1.49 ------ ------ ------Diluted (pence) 4 0.30 0.62 1.29 ------ ------ ------ The Group's results relate to continuing operations. Consolidated statement of recognised income and expenseFor the six months ended 31 December 2007 18 months Six months ended ended Notes 31 December 31 December 30 June 2007 2006 2007 Unaudited Unaudited Audited (Restated) £'000 £'000 £'000 Movements in available-for-sale 19,268 374 782investments taken to equity Movements in share based payments 253 134 -reserve taken to equity Revaluation of intangible assets - - 962 962acquisition of subsidiaries Exchange differences 219 - (18) Tax on items taken directly to equity (5,820) (113) (235) ------ ------ -----Net income recognised directly in equity 13,920 1,357 1,491 Profit for the period 2,313 3,146 7,472 ------ ----- -----Total recognised income and expense for 16,233 4,503 8,963the period ------ ----- ----- Attributable to:Equity holders of the parent 16,233 4,340 7,775Minority interests - 163 1,188 ------ ----- ----- 16,233 4,503 8,963 ------ ----- -----The Group's results relate to continuing operations. Consoldiated balance sheetAs at 31 December 2007 Notes 31 December 31 December 30 June 2007 2006 2007 Unaudited Unaudited Audited (Restated) £'000 £'000 £'000Non-current assetsIntangible assets 11,974 11,408 11,601Property, plant and equipment 298 190 231Interests in associates 5 7,746 10,075 23,818Available-for-sale investments 6 39,323 2,798 3,206Deferred tax asset 501 268 312 ------ ------ ------ 59,842 24,739 39,168 ------ ------ ------Current assetsInventories 118 13 16Financial assets 376 4,848 9Trade and other receivables 281 398 293Cash and cash equivalents 4,670 4,214 1,582 ------ ------ ------ 5,445 9,473 1,900 ------ ------ ------Total assets 65,287 34,212 41,068 ------ ------ ------Current liabilitiesTrade and other payables 390 285 375Current tax liabilities 2,838 - 698Amounts due to parent company - 1,529 - ------ ------ ------ 3,228 1,814 1,073 ------ ------ ------Net current assets 2,217 7,659 827 ------ ------ ------Non-current liabilitiesDeferred tax liabilities 13,050 5,564 7,616 ------ ------ ------Total liabilities 16,278 7,378 8,689 ------ ------ ------Net assets 49,009 26,834 32,379 ------ ------ ------ Notes 31 December 31 December 30 June 2007 2006 2007 Unaudited Unaudited Audited (Restated) £'000 £'000 £'000EquityShare capital 7 734 557 704Share premium account 7 24,168 17,210 23,800Share based payments reserve 7 636 257 411Available-for-sale investment 7 14,035 261 547reserveRevaluation reserve 7 962 962 962Foreign currency translation 7 188 - (18)reserveRetained earnings 7 8,377 2,289 6,064 ------ ------ ------Equity attributable to equity 49,100 21,536 32,470holders of the parent Minority interest 7 (91) 5,298 (91) ------ ------ ------Total equity 49,009 26,834 32,379 ------ ------ ------ Consolidated cash flow statementFor the six months ended 31 December 2007 6 month 6 month 18 months Period ended Period ended ended 31 December 31 December 30 June 2007 2006 2007 Unaudited Unaudited Audited (Restated) £'000 £'000 £'000 Net cash used in operating activities (1,574) (410) (1,634) ------ ----- -------Investing activities Interest received 55 25 99Government grants 5 - 66Purchase of property, plant and equipment (69) (15) (65)Disposal of property, plant and equipment 2 - 11Acquisition of intangible assets (24) (172) (282)Disposal of trading investments 345 - 2,326Purchase of trading investments (433) (406) (406)Acquisition of associates (4,224) (1,545) (2,973)Disposal of associate 8,515 - -Acquisition of subsidiaries, net of - 831 (149)cash acquired ------ ------ ------- Net cash used in investing activities 4,172 (1,282) (1,373) ------ ------ ------Financing activitiesInterest paid - - (80)Proceeds on issue of shares 398 6,185 6,504Proceeds received on exercise of - - 639options in subsidiaryIssue of subsidiary shares to minority - 128 -interestsShort term loan repayments - (400) (3,436)Share issue expenses - (355) (354) ------ ------ -------Net cash from financing activities 398 5,558 3,273 ------ ------ -------Net increase in cash and cash 2,996 3,866 266equivalents Cash and cash equivalents at beginning 1,582 348 1,321of period Effect of foreign exchange rate changes 92 - (5) ------ ------ -------Cash and cash equivalents at end of 4,670 4,214 1,582period ------ ------ ------- Notes to the interim financial informationFor the six months ended 31 December 2007 1. Corporate information The interim consolidated financial statements of the Group for the six monthsended 31 December 2007 were authorised for issue in accordance with a resolutionof the directors on 27 March 2008. Xtract Energy Plc is a company incorporated in the United Kingdom under theCompanies Act 1985. The company's ordinary shares are traded on the AIM marketof the London Stock Exchange. 2. Basis of preparation Xtract Energy Plc prepares its Group Financial Statements on the basis ofInternational Financial Reporting Standards (IFRS) as adopted for use by theEuropean Union (EU). The financial information presented herein has beenprepared in accordance with the accounting policies expected to be used inpreparing the Group Financial Statements for the year ending 30 June 2008 whichdo not differ significantly from those used for the 2007 Group FinancialStatements. The interim consolidated financial statements do not include all the informationand disclosures required in the annual financial statements, and should be readin conjunction with the Group's annual financial statements for the period ended30 June 2007. The Group's interim financial statements for the period ended 31 December 2006had incorrectly accounted for the acquisition of Xtract Oil Limited and CambrianOil and Gas Plc. The annual financial statements for the period ended 30 June2007 had correctly accounted for these acquisitions. Accordingly, thecomparative financial information for the six months ended 31 December 2006 hasbeen restated. A reconciliation of the restated comparative interim financialinformation from the previously published interim financial statements for thesix months period to 31 December 2006 is included at note 8. The interim financial information is not audited and does not constitutestatutory accounts within the meaning of section 240 of the Companies Act 1985.Comparative figures for the period ended 30 June 2007 have been extracted fromthe Group Financial Statements which received an unqualified opinion from theauditors and have been filed with the Registrar of Companies. The interim financial information is presented in Sterling and all values arerounded to the nearest thousand pounds (£'000) unless otherwise stated. 3. Other gains and losses An analysis of the Group's other gains and losses are as follows: Period ended Period ended 18 months 31 December 31 December ended 30 June 2007 2006 2007 (Restated) £'000 £'000 £'000 Disposal of associate 3,335 - -Disposal of available for sale 1,002 - -investmentsFair value movement on derivative 272 822 -assetsGain on dilution of interests in 1,255 - -associates (note 5)Commission received 182 - -Realised gains on sale of held for - - 1,233trading investmentsUnrealised gains on held for trading - - 5,091investmentsLoss on dilution from subsidiary share - - (356)issue ------ ------ ------ Total other gains and losses 6,046 822 5,968 ------ ------ ------ 4. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: Six months 18 months ended endedEarnings 31 December 31 December 30 June 2007 2006 2007 (Restated) £'000 £'000 £'000 Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent 2,313 2,983 6,284 ----------------------------- Six months 18 months ended ended 31 December 31 December 30 June 2007 2006 2007 (Restated)Number of sharesWeighted average number of ordinary shares for the purposes of basic earnings per share 709,330,848 388,196,649 420,569,934 Effect of dilutive potential ordinary shares - options and warrants 63,236,220 95,792,873 67,143,088 --------------------------------------Weighted average number of ordinary shares for the purposes of diluted earnings per share 772,567,068 483,989,522 487,713,022 -------------------------------------- Certain options and warrants of the Group are not dilutive and are thereforeexcluded from the weighted average number of ordinary shares for the purposes ofdiluted earnings per share. 5. Interests in Associates Details of the Group's associates for the period ended 31 December 2007 are asfollows: 31 December 31 December 30 June 2007 2006 2007 (Restated) £'000 £'000 £'000 At beginning of the period 23,818 - 412Acquired on acquisition of subsidiary - 10,093 10,093Revaluation on acquisition of minority - - 3,481interestInvestment in associate (a) 6,621 - -Exercise of options in associate 333 - 2,973Transferred from derivatives 128 - -Gain on dilution of interests in associates 1,255 - -Share of associates' share based payments 91 - -reserveShare of associates' foreign currency (2) - -translation reserveShare of associates' available for sale (188) - -reserveDisposal of investment in associate (b) (5,180) - -Transferred to available for sale investments (18,268) - -(c) (note 6)Transferred from trading investments - - 7,628Transferred to investment in subsidiary - - (407)Share of associates losses for the period (906) (17) (362)Exchange translation 44 (1) - ------- ------ ------At end of the period 7,746 10,075 23,818 ------- ------ ------ a) Includes additional investments in the Group's Wasabi Energy Limited and Elko Energy Limited associates during the period. b) Carrying value of MEO shares disposed during the period. c) Carrying value of Wasabi Energy Limited transferred from available for sale investments on becoming an associate in August 2007 and the transfer of MEO Australia Limited cost to available for sale investments on ceasing to be an associate in December 2007. Name Place of Date Date Proportion of Principal Incorporation associate associate ownership & Activities and Operation interest interest voting power acquired disposed held % MEO Australia Australia 15/11/06 13/12/07 N/A Oil & gasLimited i) exploration Elko Energy Canada 15/11/06 N/A 35.24 Oil & gasLimited exploration Wasabi Energy Australia 2/08/07 N/A 36.02 Energy andLimited technology investments i) Transferred to available for sale investment during the period. 6. Available-for-sale investments Details of the Group's available-for-sale investments for the period ending 31December 2007 are as follows: 31 December 31 December 30 June 2007 2006 2007 (Restated) £'000 £'000 £'000 At beginning of the period 3,206 - -Acquired during the period - 2,424 2,424Disposals (a) (4,274) - -Unwinding of fair value on transfer to (547) - -investment in associate (b)Transferred from investments in 18,268 - -associates (c) (note 5)Movement in fair value (d) 22,670 374 782 ------ ----- -----At end of the period 39,323 2,798 3,206 ------ ----- ----- (a) Carrying value of Aviva investment disposed during the period. (b) Fair value adjustments unwound against available-for-sale reserve upon ceasing to be available-for-sale and becoming an associate. (c) Carrying value of Wasabi Energy Limited transferred from available-for-sale investments on becoming an associate in August 2007 and the transfer of MEO Australia Limited cost to available-for-sale investments on ceasing to be an associate in December 2007. (d) Movement in fair value of investments during the period. Available-for-sale investments Available-for-sale investments comprise the Group's investment in listedsecurities and unlisted securities, which have been held by the Group for longterm returns. 7. Reconciliation of changes in equity Share Share Share Available- Revaluation Foreign Retained Minority Total Capital premium based for-sale reserve currency Earnings Interest Equity account payments investments translation reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1 July 2006 287 6,009 123 - - - (695) - 5,724Issue of shares 270 11,690 - - - - - - 11,960Share issue - (489) - - - - - - (489)expensesShare based - - 134 - - - - - 134payments expenseGain on - - - 374 - - - - 374revaluation ofavailable-for-sale investmentsDeferred tax on - - - (113) - - - - (113)revaluation ofavailable-for-sale investmentsCurrency - - - - - - 1 128 129translationdifferencesRevaluation on - - - - - 962 - - 962acquisition ofsubsidiaries Minority interest - - - - - - - 5,007 5,007arising onacquisition of subsidiaryProfit for the - - - - - - 2,983 163 3,146period ----- ------ ---- ----- ----- ----- ----- ----- -----At 31 December 557 17,210 257 261 962 - 2,289 5,298 26,8342006 (restated) Issue of shares 147 6,699 - - - - - - 6,846Share issue - (109) - - - - - - (109)expensesShare based - - 154 - - - - - 154payments expenseGain on - - - 408 - - - - 408revaluation ofavailable-for-sale investmentsDeferred tax on - - - (122) - - - - (122)revaluation ofavailable-for-sale investmentsCurrency - - - - - (18) - - (18)translationdifferencesIssue of shares by - - - - - - - 995 995subsidiaryAcquisition of - - - - - - - (7,281) (7,281)minority interestProfit for the - - - - - - 3,775 897 4,672period ----- ------ ---- ---- ---- ---- ----- ---- ------At 30 June 2007 704 23,800 411 547 962 (18) 6,064 (91) 32,379 ----- ------ ---- ---- ---- ---- ----- ---- ------ Share Share Share Available- Revaluation Foreign Retained Minority Total Capital premium based for-sale reserve currency Earnings Interest Equity account payments investments translation reserve reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 July 2007 704 23,800 411 547 962 (18) 6,064 (91) 32,379Issue of shares 30 368 - - - - - - 398Share based - - 162 - - - - - 162payments expenseGain on - - - 22,670 - - - - 22,670revaluation ofavailable-for-sale investmentsUnwinding of fair - - - (545) - - - - (545)value on transferto investment in associateDeferred tax on - - - (6,638) - - - - (6,638)revaluation ofavailable-for-sale investmentsTransfer of - - - (2,669) - - - - (2,669)available-for-salerevaluations toincome statementon disposalTransfer of - - - 802 - - - - 802deferred tax onrevaluation ofavailable-for-saleassets on disposalShare of - - 91 (188) - (1) - - (98)associatesreservesDeferred tax on - - (28) 56 - (12) - - 16share ofassociates reservesCurrency - - - - - 219 - - 219translationdifferencesProfit for the - - - - - - 2,313 - 2,313period ----- ------ ---- ------ ------ ----- ----- ----- ------At 31 December 734 24,168 636 14,035 962 188 8,377 (91) 49,0092007 ----- ------ ----- ------ ------ ----- ----- ----- ------ 8. Adjustments to restate comparative interim financial information In preparing this interim financial information, the comparative results for thesix months to 31 December 2006 have been restated in line with the accountingtreatment of the acquisition of Xtract Oil Limited and Cambrian Oil and Gas Plcin the previously published financial statements of the Group for the periodended 30 June 2007. A reconciliation of the comparative amounts previously reported to restatecomparative amounts for the consolidated income statement and the consolidatedbalance sheet is provided below. A description of each adjustment then follows. a) Consolidated income statement Six months ended 31 December 2006 As previously reported Adjustments Restated £'000 £'000 £'000Income statement Administrative expenses (331) (162) (493)Other operating income 67 - 67 ----- ----- -----Operating loss (264) (162) (426) Investment revenues 25 - 25Other gains and losses 822 - 822Finance costs (89) - (89)Share of results of associates 812 (829) (17)Negative goodwill on acquisition - 3,077 3,077of subsidiary ------ ------ ------ Profit before tax 1,306 2,086 3,392 Tax (246) - (246) ------ ------ -------Profit for the period 1,060 2,086 3,146 ------ ------ -------Attributable to:Equity holders of the parent 897 2,086 2,983Minority interest 163 - 163 ------ ------ ------- 1,060 2,086 3,146 ------ ------ ------- b) Consolidated balance sheet 31 December 2006 As previously stated Adjustments Restated £'000 £'000 £'000 Non-current assetsIntangible assets 10,170 1,238 11,408Property, plant and equipment 190 - 190Interests in associates 1,216 8,859 10,075Available-for-sale investments 2,798 - 2,798Deferred tax asset - 268 268 ------ ------ ------ 14,374 10,365 24,739 ------ ------ ------Current assetsCash and cash equivalents 4,214 - 4,214Inventories 14 - 13Trade and other receivables 398 - 398Financial assets 4,847 - 4,848 ------ ------- ------ 9,473 - 9,473 ------ ------- ------Total assets 23,847 10,365 34,212 ------ ------- ------Current liabilitiesTrade and other payables 285 - 285Amounts due to parent company 1,529 - 1,529 ------ ------- ------ 1,814 - 1,814 ------ ------- ------Net current assets 7,659 - 7,659 ------ ------- ------Non-current liabilitiesDeferred tax liabilities 1,332 4,232 5,564 ------ ------- ------Total liabilities 3,146 4,232 7,378 ------ ------- ------Net assets 20,701 6,133 26,834 ------ ------- ------ EquityShare capital 557 - 557Share premium account 17,210 - 17,210Share based payments reserve 257 - 257Available-for-sale investment 374 (113) 261reserveRevaluation reserve - 962 962Retained earnings 208 2,081 2,289 ------ ------ ------Equity attributable to equity 18,606 2,930 21,536holders of the parent Minority interest 2,095 3,203 5,298 ------ ------ ------Total equity 20,701 6,133 26,834 ------ ------ ------ c) Consolidated income statement reconciliation Six months ended 31 December 2006 £'000 Reported profit for the period after tax as 1,060previously stated Revisions to acquisition accounting for Xtract 2,086Oil Limited and Cambrian Oil and Gas Plc -----Total adjustments 2,086 -----Revised profit for the period 3,146 ----- d) Consolidated balance sheet reconciliation 31 December 2006 £'000 Net assets as previously stated 20,701 Revision to acquisition accounting for Xtract Oil 957Limited (i)Revisions to acquisition accounting for Cambrian Oil 5,289and Gas Plc (ii)Deferred tax on available for sale investments (113) ------Total adjustments 6,133 ------Revised net assets 26,834 ------ Description of restatement of comparative interim information (i) Revision to acquisition accounting for Xtract Oil Limited On 17 February 2006, the Group acquired the remaining 78.3% share capital ofXtract Oil Limited ("Xtract Oil" or "XOIL"). On acquisition of the remainingshare capital, the Group accounted for the transaction as a business combinationand applied purchase accounting but did not take account of the 'step-up' inaccordance with IFRS 3 'Business Combinations'. Furthermore, the fair value ofthe net assets acquired is assessed to have been £5,351,000, rather than£6,308,000, a difference of £957,000. In addition, Xtract Oil was an associateof the Group prior to this transaction but no share of its result was previouslyrecognised. The revised purchase accounting resulted in the adjustments in thefollowing tables. (ii) Revisions to acquisition accounting for Cambrian Oil and Gas Plc As at 15 November 2006 the Group acquired a controlling interest of 65.5% inCambrian Oil and Gas Plc ("COIL"). The Group accounted for the transaction as abusiness combination and applied purchase accounting. However, the fair value ofthe net assets acquired is assessed to have been £14,663,000 rather than£9,213,000, an increase of £5,450,000. Also, the Group had previously accountedfor initial interest in COIL as an associate when instead these initialtransactions formed part of a group of closely related transactions in a shortperiod of time to acquire a controlling interest of 65.5% of COIL. The revisedaccounting for the business combination and subsequent purchases of minorityinterests resulted in the adjustments in the tables following: Income statement adjustments COIL XOIL Six months Six months ended 31 ended 31 December December 2006 2006 £'000 £'000 Reversal of incorrectly recorded share of (829) -associate resultsRecognition of negative goodwill on acquisition 3,077 -Adjustment to administrative costs (162) - ----- ----- 2,086 - ----- ----- Balance sheet adjustments COIL XOIL 31 December 31 December 2006 2006 £'000 £'000 Mining rights - 3,603Intangible assets (2,365) -Investment in associates 8,859 -Deferred tax asset 268 -Deferred tax liabilities (1,586) (2,646) ------- ------- 5,176 957 ------- -------Revaluation reserve - 962Available-for-sale investment reserve (113)Minority interests 3,203 -Profit for the period 2,086 -Retained earnings - (5) ------- ------- 5,176 957 ------- ------- Refer to note 21 of the Audited Group Financial Statements for the period ended30 June 2007 for the full details of the acquisitions. 9. Subsequent events In January 2008, MEO Australia Limited (MEO) announced that the results of theHeron-2 appraisal well were inconclusive. Production testing at the time wasunsuccessful in confirming economically recoverable reserves within the EpenarraDarwin formation. A decline in the share price of MEO coincided with the releaseof these results. At 31 December 2007, MEO had a share price (ASX: MEO) ofAUD$1.49, and at 27 March 2008 a share price of $AUD 0.29. MEO was classified asan available for sale investment at 31 December 2007 with its carrying valuerecorded at the market value at that date. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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