1st Jun 2005 07:03
Petroceltic International PLC01 June 2005 1st June 2005 Petroceltic International plc Full Year Results for the Year Ended 31st December 2004 Petroceltic International plc ("Petroceltic" or "the Company") is a leading oiland gas exploration and production company owning a portfolio of significantassets in Algeria, Tunisia, Italy and Ireland. Petroceltic is headquartered inDublin and is listed on the Alternative Investment Market. Highlights for the period Algeria • Acquired a 75% interest in an extensive permit area in Algeria • Contains 8 gas discoveries and one oil discovery made by previous operator • Sonatrach estimates discovered oil and gas reserves of 28m barrels and 380 billion cubic feet, with potential of more than 400m barrels of oil and 4 trillion cubic feet of gas • Two prospects already identified for appraisal drilling • BP has acquired adjacent blocks in 6th Round on very competitive terms Tunisia • First operated well drilled on cost at Sidi Toui 3, with oil and gas shows • New seismic acquired over Oryx prospect Italy • Two highly prospective licenses adjacent to existing discoveries over proven petroleum system • Significant discovery 800 from block boundary Ireland • New license over gas prospect off the west coast with petroleum system predicted to be similar to Corrib and Morecambe Bay Gas Fields • Large dip closed anticline ready to drill • Kinsale licensing Option extended • Kinsale Royalty continues to provide steady cashflow Raised $30m in new equity capital - strong balance sheet with over $27m in netcurrent assets at year end Future activity planned with two appraisal wells scheduled for Algeria in H22005 and further drilling in Algeria, Italy, Ireland and Tunisia in 2006 Production Sharing Contract (PSC) with Sonatrach, the Algerian state oilcompany, covering the Isarene contract area in the Illizi basin of southernAlgeria has today been approved, allowing Petroceltic to commence oil and gasexploration, appraisal and production activities within the contract area. Aseparate press release has been issued today. John Craven, Chief Executive of Petroceltic International plc said: "Petroceltic now has a good portfolio of exciting prospects. Eighteen months agowe had one exploration prospect. We now have large stakes in substantialdiscovered resources and in several exploration and appraisal prospects in fourcountries. We have made significant progress in the period and I believe thecompany is in an excellent position to enhance shareholder returns in thefuture." For further information, call: John Craven, Petroceltic International plc 00353 1495 9285Billy Clegg/Caroline Stewart, Financial Dynamics 020 7831 3113 CHAIRMANS STATEMENT 2004 was a landmark year for your company in which Petroceltic: • Acquired a 75% interest in an extensive permit area in Algeria containing nine existing oil and gas discoveries. • Gained a portfolio of material and exciting oil and gas appraisal and exploration projects in Italy, Tunisia and offshore Ireland. • Raised approximately $30 million in new equity capital. • Drilled its first operated well in North Africa. It is pleasing that the market and the industry have endorsed Petroceltic'sstrategy and projects. This is reflected in an increase in the share price overthe period from the beginning of 2004 to April 2005 during which time a numberof additional financial institutions have invested in your company. It is alsosignificant that British Petroleum plc (BP) successfully bid for the blocksadjacent to our Isarene permit in Algeria which I believe is an endorsement ofthe considerable hydrocarbon potential of the area. The outlook for upstream oil and gas companies continues to look good. Globaldemand for hydrocarbons continues to grow. The long term futures market for oilis very strong. Now, after many years of low level activity in the oil industry,the major oil companies are aggressively increasing their exploration activity.At the same time, there is currently a global shortage of quality ready to drillprospects that are capable of delivering material volumes of new hydrocarbonreserves. This, together with the increasing international participation ofAsian companies for oil and gas ventures, means that there is considerablecompetition in the sector for attractive exploration projects. Against this background, I believe that Petroceltic's portfolio of appraisal andexploration interests places your company in a strong position. Petroceltic iscontinuing to review new projects in its main areas of operations in NorthAfrica, the Mediterranean and Offshore Ireland. Since year end a new gasprospect off the west coast of Ireland has been added to our portfolio. Thisproject, together with each new venture, has to meet Petroceltic's stringentevaluation criteria and be capable of adding significant shareholder value. NORTH AFRICA 2004 has seen the beginning of an intense period of competition for oil and gasinterests in North Africa. For instance in Algeria, which currently suppliescirca 25% of Europe's natural gas imports, there is considerable ongoinginvestment being made by the industry, involving increased exploration activity,the construction of oil and gas processing facilities, export terminals for oil,LNG and natural gas, and new pipelines into Europe. Tunisia has had significantexploration success in 2004 with Anadarko and Agip making new discoveries in thesouth. Libya has reopened to Western investment and has had a successfullicensing round which closed in February 2005. Egypt has enjoyed a big increasein both investment and exploration success. Elsewhere countries that were onceperceived as land locked or non-prospective such as Chad, Mali and Sudan havenow opened up for oil and gas exploration and development. Over the last eighteen months Petroceltic has established very good workingrelationships and contacts in North Africa, more particularly in Tunisia andAlgeria. Your company acquired a licence in Tunisia as operator and subsequentlydrilled an exploration well within twelve months of acquisition. Petroceltic wasinvited to tender as operator for blocks in the 5th Algerian Bid Round in whichwe were successful. It is intended to develop further North African interests. ALGERIA In July 2004 Petroceltic made a successful bid for the Isarene Permit Areaconsisting of blocks 228 and 229 in the 5th Algerian Bid Round. We were verypleased in the first instance to be invited to tender and then to be successfulin the bid process. In September the Isarene Production Sharing Agreement (PSC)was signed in Algiers with Sonatrach, the Algerian State Oil Company, and havingbeen notified by Sonatrach of the gazetting of the PSC by the Algeriangovernment, exploration and drilling can commence. The Isarene Permit Area covers more than 10,800 square kilometres in area.Previous exploration of the licence over the last 50 years has included theacquisition of over 8,000 kms of 2D seismic and the drilling of sixteenexploration wells. Of these there were a total of nine oil and gas discoveries.Sonatrach estimate that these discoveries could contain more than 4 trillioncubic feet of gas and over 400 million barrels of oil. Our work to date confirmsthese conclusions and indicates that there is further substantial explorationpotential, particularly for gas, in the permit area. The permit area is locatedclose to existing gas infrastructure which transports gas to Italy and Spain. Weare encouraged also by the success of other companies of similar resources insimilar geological settings in Algeria over the last ten years. We are veryoptimistic that our operations in Algeria and in the Isarene area in particularwill add significant value to your company. In the recently completed Algerian 6th Licensing Round a record number of 33companies bid, of which only four were successful. Both successful andunsuccessful bids were on terms considerably more onerous than our successfulIsarene tender submitted in 2004. For economic and competitive reasons, we didnot participate in the 6th Licensing round. It is pleasing to note that thesuccessful bid for the two blocks adjacent to ours was awarded to BP with mostof the under bidders also being large international companies. TUNISIA In November 2004, Petroceltic drilled its first operated well Sidi Toui 3 in theKsar Hadada contract area. Despite the occurrence of oil and gas shows duringthe drilling of the well, subsequent testing did not recover any hydrocarbons.The Ksar Hadada permit covers over 7,000 square kilometres and contains severalother leads and prospects. Of these, the Oryx structure looks the most promisingand according to our interpretation of available technical data is connected toa proven hydrocarbon system to the south. In order to find an optimal place todrill we have undertaken the acquisition and processing of new 2 D seismic dataover this prospect. The interpretation of the results of this new data will beavailable in the third quarter of 2005 at which time decisions on furtherdrilling will be made. ITALY In June 2004, Petroceltic acquired a 15% interest with an option to increase to40% in licence B.R. 268 VG, offshore Italy in the Adriatic Sea. The area iscontiguous to a recent AGIP onshore discovery named Miglianico that is now inproduction. The licence area is in shallow water with the shoreline forming oneside of the licence. Previous drilling in B.R. 268 VG has discovered oil. Workundertaken since the discovery has confirmed the potential of the licence topossibly contain more than 300 million barrels of recoverable oil. We areplanning to drill a well on the main prospect on the licence as soon aspractical, possibly in the fourth quarter of 2005. As part of the B.R. 268 VG transaction we also acquired a 40% interest in anonshore Italian licence (Civitiquana). This area has large potential but is at amuch earlier stage of development. IRELAND In line with international trends there has been an increase in activity inoffshore Ireland. The Kinsale Gas Field continues to perform well and the CorribGas Field has received environmental approval for development. Petroceltic has continued to acquire interests over the proven gas reservoirsystems of Kinsale and Corrib including a 16.25% interest in PetroleumExploration Licence 1 / 05 covering blocks 13 / 7, 13 / 11 & 13 / 12 off thewest coast of Ireland. The main target in these blocks is a four way dip closurethat is in a similar geological setting to the Corrib gas accumulation. Workcontinues on the Old Head Prospect near the Kinsale Gas Field. Petroceltic's Kinsale Gas royalty continues to provide valuable cash flow.Income for the year was $431,000 (2003: $354,000). FINANCES Financially 2004 was an extremely active and successful one for the company. Wehad two share placements which between them raised approximately $30 million. Aspart of these placements we welcomed more than twelve institutional investors asshareholders. This support from high quality professional market investors isvery welcome and appreciated. At year end, the group had net current assets of $27,720,000 (2003: $2,946,000)and our 2004 income from the Kinsale Gas Field was $431,000 (2003: $354,000).Our administrative expenses were $733,000 compared to $533,000 for the previousyear. With our increased level of activity we expect a further increase in thesecosts this year. ORGANISATION / PERSONNEL During the year under review we outsourced most of our exploration andadministration requirements. Now with more projects and an expanded workprogramme we are actively recruiting more personnel to assist us to execute ourplans. We will continue to work closely with our partners in North Africa andItaly. For a new company to successfully manage and operate a drilling campaignover a very short time scale in Tunisia was a big challenge which was well met.We have through this operation established very good relationships with a numberof service companies in various disciplines. We intend developing andconsolidating these relationships for the benefit of our further explorationactivities. We continue to use our website www.petroceltic.com as an effective medium forshareholder communication and I invite all shareholders to visit the site forinformation and news updates. We encourage shareholders to avail of oure-communications option, details of which are enclosed with this report. STATUTORY MATTERS There are a number of resolutions before you for consideration at our AnnualGeneral Meeting as outlined in pages 39 to 40. It is proposed to amend theCompany's Articles of Association by deleting Article 5 and 6 as the power givento the Directors by those Articles is granted to the Directors each year at theCompany's Annual General Meeting in the form of Resolution 6 and 7 proposed atthis year's AGM. The deletion of these Articles therefore avoids duplication. It is our Board's view that these resolutions are in the best interests of thecompany and I look forward to receiving your support for them at the forthcomingGeneral Meeting. THE FUTURE I continue to be optimistic for Petroceltic's future. After many years of lowenergy prices and oversupply the market has stabilised with bullish medium termoil and gas price forecasts. Relatively modest levels of industry investment inrecent years have readjusted and the outlook is now generally regarded as beingmuch more optimistic. The industry is in a growth phase with high energy pricesand there is also an elevated level of activity in our area of operation. Theinvestment market is also supportive of exploration and production companies.Investment continues at a high level and most investors have seen substantialreturns from the sector in the last few years. Petroceltic now has a good portfolio of exciting prospects. Eighteen months agowe had one exploration prospect. We now have large stakes in substantialdiscovered resources and in several exploration and appraisal prospects in fourcountries. We believe your company is in an excellent position to enhanceshareholder returns in the future The substantial progress made by the company in the last year would not havebeen possible without the dedication of your Chief Executive and Board ofDirectors. The effort made by all continues at an extraordinary level and forthis I thank them. I would also like to thank the company's many professionaland technical advisors for their advice and assistance during the year. Finally I would like to thank you our shareholders for all your support duringthe year and I look forward to another successful year for the company. Brian CusackChairmanMay 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended December 31, 2004 (in thousands of U.S. dollars, except (loss) / earnings per share) Notes 2004 2003 Turnover 1 431 354 ExpensesAdministrative (733) (533)Amortisation (79) (162)Operations and exploration (63) (513)Foreign currency gains 490 324Exceptional item: cost of share awards 12 (2419) - Operating loss on ordinary activities (2,373) (530)Gain on disposal of investments 411 39Gain on disposal of fixed assets 7 - 1,882 (Loss) / profit on ordinary activities before interest (1,962) 1,391Interest receivable and similar income 525 2Interest payable and similar charges 2 (5) (17) (Loss) / profit on ordinary activities before taxation 3 (1,442) 1,376Taxation on profit on ordinary activities 4 (121) - (Loss) / profit for the financial year (1,563) 1,376Profit and loss account, beginning of year (64,518) (65,933)Transfer in respect of share awards 12 2,419 -Foreign currency translation adjustment (399) 39 Profit and loss account, end of year (64,061) 64,518) (Loss) / earnings per share in cents - basic 6 (0.32) 0.45 (Loss) / earnings per share in cents - diluted 6 (0.32) 0.43 The accompanying notes form part of these financial statements. CONSOLIDATED BALANCE SHEETAs at December 31, 2004 (in thousands of U.S. dollars) Notes 2004 2004 Fixed assetsIntangible assets 7 6,516 1,434 Current assetsDebtors 9 450 2,524Investments 10 57 61Cash at bank and in hand 29,340 1,330 29,847 3,915 Creditors (amounts falling due within one year) 11 (2,127) (969) Net current assets 27,720 2,946 Net assets 34,236 4,380 Capital and reservesCalled up share capital 12 23,727 20,390Capital conversion reserve fund 51 51Shares to be issued as consideration - 279Share premium account 12 74,519 48,178Profit and loss account (64,061) (64,518) Total shareholders' funds (all equity interests) 13 34,236 4,380 The accompanying notes form part of these financial statements. CONSOLIDATED CASH FLOW STATEMENTFor the year ended December 31, 2004 (in thousands of U.S. dollars) Notes 2004 2003 Net cash inflow / (outflow) from operating activities 14 869 (159) Returns on investment and servicing of financeInterest received 525 2Interest paid (5) (17) Net cash inflow / (outflow) from returns on investments and servicing of finance 520 (15) Capital expenditure and financial investmentExpenditure on intangible assets (5,161) (317)Sale of fixed assets 2,250 794Sale of investments 411 42 Net cash (outflow) / inflow from capital expenditure and financial investment (2,500) 519Net cash (outflow) / inflow before financing activities (1,111) 345 Financing activitiesIssue of shares, net of expenses 29,399 965Repayment of bank loan (283) (147) Net cash inflow from financing activities 29,116 818 Increase in cash 28,005 1,163 Reconciliation of net cash flow to movement in net debtIncrease in cash during the year 28,005 1,163Cash outflow from repayment of debt 283 147 Movement in net debt in the period 28,288 1,310Net funds / (debt) at start of year 1,052 (258) Net funds at end of year 29,340 1,052 Net funds is analysed as follows:Bank loan and overdraft due within one year - (278)Cash at bank and in hand 29,340 1,330 29,340 1,052 The accompanying notes form part of these financial statements. NOTES TO THE FINANCIAL STATEMENTSFor the year ended December 31, 2004 Tabular amounts expressed in thousands of U.S. dollars1. 1. Turnover Group turnover is generated in the Republic of Ireland and comprises royaltyincome from the production of gas from the group's interest in certain Kinsalegas fields. 2. Interest Payable and Similar Charges 2004 2003 On bank loans repayable within five years by instalments 5 17 3. Statutory Information 2004 2003The loss for the financial year is stated after charging:(i) Auditors' remuneration 25 20(ii) Directors' remunerationFees 44 66Executive services incl. pension contributions 462 85 506 151(iii) The loss for the financial year in the company amounted to 15,154 1,621 Details of directors' emoluments are more fully dealt with in the directors'report on page 24. 4. Tax on profit on ordinary activities 2004 2003 Current tax 121 - The difference between the total current tax shown above and the amountcalculated by applying the standard rate of Irish corporation tax to theloss before tax is as follows: (Loss) / profit on ordinary activities before tax (1,442) 1,376 Tax on group loss on ordinary activities at standard Irish corporation tax rate of 25% (2003 - 25%) - 344 Effects of:Expenses not deductible for tax purposes 142 94Loss relief utilised (106) (361)Other, net 85 (77) Current tax charge for the year 121 - There is no unprovided deferred tax at December 31, 2004 (2003: nil). 5. Employee Data 2004 2003 Employee Costs:Salaries 260 63Social insurance costs 2 6Pensions 174 16 462 85 Average number of employees (including Directors) No. No. Operations and exploration 2 2 6. Earnings per share 2004 2003Basic and diluted (loss) / earnings per ordinary share is as follows: Numerator (Loss) / profit on ordinary activities after taxation (1,563) 1,376 Denominator Weighted average number of ordinary shares in issue - basic 485,518,242 307,901,254 Effect of share options and warrants in issue (1) - 15,359,451 Weighted average number of ordinary shares in issue - diluted 485,518,242 323,260,705 Basic (loss) / earnings per ordinary share (0.32) cent 0.45 cent Diluted (loss) / earnings per ordinary share (0.32) cent 0.43 cent (1) All share options and warrants are anti-dilutive in the year ended December31, 2004. 7. Intangible Assets The movement on intangible assets during the year was: Oil and Gas Goodwill Total Interests At costJanuary 1, 2004 17,168 21 17,189Additions 5,161 - 5,161December 31, 2004 22,329 21 22,350 AmortisationJanuary 1, 2004 15,746 9 15,755Amortisation 75 4 79December 31, 2004 15,821 13 15,834 Net book valueDecember 31, 2003 1,422 12 1,434December 31, 2004 6,508 8 6,516 The oil and gas interests as at 31 December 2004 comprise the group's interestin the Ballycotton and Kinsale gas fields, a production sharing contract withthe Tunisian state oil company to explore for and produce oil and gas in alicenced area in Tunisia, an agreement to acquire up to 40% interest in twopermits which give exclusive rights to explore and produce hydrocarbons in twoblocks in eastern Italy, a production sharing agreement with the Algerian stateoil company to explore for and produce oil and gas in a licenced area in Algeriaand a licencing option agreement with Island Expro over two blocks adjacent tothe Kinsale gas fields with exclusive rights to convert this licencing optioninto an exploration licence. The goodwill figure of $21,000 arose from the acquisition of the Ballycotton andKinsale gas fields interest and is being amortised over an estimated useful lifeof five years. The net book values of oil and gas interests by geographical area are asfollows: 2004 2003 Ballycotton / Kinsale 1,442 1,151Algeria 842 -Italy 86 -Tunisia 4,138 271 6,508 1,422 Gains on disposals in the prior year were as follows: 2004 2003 Disposal of Shaimerden - 1,899Disposal of Faroe Petroleum plc - (17) - 1,882 8. Financial Fixed Assets Company 2004 2003 Investment in subsidiary undertakings at cost 2,707 2,707Less: Provision for impairment - - Total 2,707 2,707 9. Debtors Amounts falling due within one yearGroup 2004 2003 Prepayments and accrued income 124 149Consideration receivable in respect of disposal of fixed assets - 2,250Taxes refundable- Corporation Tax 253 85- VAT 73 40 450 2,524 10. Investments Group and Company 2004 2003 Quoted investments:January 1 61 12Additions - 61Disposals in year (4) (12) December 31 57 61 The group owns shares in the following: Name Quoted Market Value at year end Dana Petroleum plc London Stock Exchange 156ZincOx Resources plc AIM 65 221 11. Creditors Amounts falling due within one year Group 2004 2003 Bank loan and overdraft - 278Trade creditors 1,540 101PAYE / PRSI 52 29Other creditors 24 -Corporation tax 276 -Accruals 235 561 2,127 969 The bank loan was secured by a charge over the assets of two subsidiaries,Petroceltic Investments Limited and Gostem Limited, and bore a fixed interestrate of 6.53%. 12. Called-Up Share Capital and Share Premium Authorised 2004 2003 • • 900,000,000 Ordinary shares of €0.0125 11,250,000 5,625,000(2003: 450,000,000)200,000,000 Deferred shares of €0.11427 22,855,285 22,855,285 34,105,285 28,480,285 On 21 April 2004 the company increased its authorised share capital from€28,480,285 to €34,105,285 by the creation of 450,000,000 additional ordinaryshares of €0.0125 each. Issued, Called Up and Fully Paid: Number Ordinary Share Share Premium Capital $000 $000 Balance at January 1, 2004 359,413,843 20,390 48,178Issue of ordinary shares 217,278,350 3,337 26,341 Balance at December 31, 2004 576,692,193 23,727 74,519 On 2 March 2004, the company raised stg£4,300,000 from the issue of new ordinaryshares to institutional investors in Ireland, U.K. and France. Pursuant to thisfundraising the company issued 85,168,954 ordinary shares at stg5p and42,584,477 warrants, which were exercised on 7 May 2004 at stg6p. On 23 April2004, the company issued 4,917,202 ordinary shares to Island Expro as part of alicence option agreement. On 23 August 2004, a further 1,607,717 ordinary shareswere issued to Island Expro in order to extend the present licence optionagreement. During the year, the company issued 2,000,000 ordinary shares at par on foot ofthe exercise of 2,000,000 share options. On 27 May 2004, the company issued 9,000,000 new ordinary shares to G.A.I.A. srland Derwent Resources Limited on foot of the successful conclusion of anapplication by the group for an exploration licence in Tunisia. On 5 October 2004, the company raised stg£9,400,000 from the issue of newordinary shares to institutional investors in Ireland, U.K. and France. Pursuantto this fundraising the company issued 72,000,000 ordinary shares at stg13p and18,000,000 warrants, exercisable before 30 June 2005, at stg17p. All of thesewarrants remained outstanding at year end. At 31 December 2004, the following options over ordinary shares wereoutstanding: Number Exercise price (euro cent) Exercise period 23,300,000 1.25 Up to July 22, 201040,000,000 1.25 Up to July 31, 20159,500,000 1.25 Up to December 31, 2015 During the year, options over 2,000,000 ordinary shares due to expire on July22, 2010 were exercised. In addition, 40,000,000 options with an exercise priceof 1.25c and exercise period up to 31 July 2015 and 9,500,000 options with anexercise price of 1.25c and exercise period up to 31 December 2015 wereconditionally granted to the directors of the company. As described above, the company has entered into arrangements to issue optionsover shares to directors during the year. Having regard to the conversion termsassociated with these share awards, together with the fair value of the ordinaryshares of the company at the date of issue of the options, a charge of $2.4million arises in respect of these share awards. A corresponding transfer hasbeen made to the profit and loss account reserve in accordance with UITFAbstract 17 "Employee Share Schemes". No other options were granted, exercised or lapsed during the year ended 31December 2004. 13. Reconciliation of Movement in Shareholders' Funds 2004 2003 Opening shareholders' funds 4,380 1,334(Loss) / profit for the financial year (1,563) 1,376Foreign currency translation adjustment (399) 39Shares to be issued as consideration - 279Transfer in respect of share awards 2,419 -Shares issued during the year, net of issue expenses 29,399 1,352 Closing shareholders' funds 34,236 4,380 14. Reconciliation of Operating Loss to Net Cash Inflow / (Outflow) fromOperating Activities 2004 2003 Operating (loss) on ordinary activities (2,373) (530)Amortisation 79 162Cost of share awards 2,419 -(Increase) / decrease in debtors (176) 87Decrease in investments 4 -Increase in creditors 1,315 323Foreign currency debtor movement - (240)Foreign currency translation (399) 39 Net cash inflow / (outflow) from operating 869 (159) 15. Pension Schemes The group contributes to a defined contribution pension scheme for a director.The scheme is administered by Trustees and is independent of the group'sfinances. Pension contributions for the year amounted to $173,800 (2003:$16,000). There were no outstanding pension contributions at the year end. 16. Related party transactions The group uses the accounting, administrative and consultancy services of LHMCasey McGrath (formerly Casey McGrath & Associates) on an arms length basis. MrC. Casey is the managing partner of this accountancy practice. The total feesinvoiced to the group during the year were $123,915 (2003: $70,145). Amountsowing to LHM Casey McGrath at year end amounted to $19,091 (2003: $8,443). During the year, Green Orphan Trust Limited purchased two group companies,Summit Exploration Limited and its subsidiary Mogul of Ireland Limited, fornominal consideration. Mr Christian Schaffalitzky and Mr Brian Cusack aredirectors of Green Orphan Trust Limited. 17. Segmental Information Current assets and current liabilities are considered to be common to the groupand are thus not allocated by geographical segment. 18. Capital Commitments At year-end, there were no capital commitments (2003 - Nil). 19. Derivatives and other financial instruments The Board reviews and agrees the policies for managing financial risks. The group's strategy is to finance its operations through a mixture of equityfinance and project finance. The board, when appropriate to fund substantialacquisitions or development prospects, reviews other alternatives. The group's principal financial instruments comprise investments, cash andshort-term deposits. The main purpose of these financial instruments is tofinance the group's operations. The group has other financial instruments, suchas debtors, prepayments and creditors that arise directly from its operations.The group has taken advantage of the exemption under Financial ReportingStandard No. 13 for short-term debtors and creditors. They have, therefore, beenexcluded from all numerical disclosures. The Board monitors the availability of and requirements for funds in the group.Surplus cash within the group is put on deposit in accordance with limits andcounterparties agreed by the Board, the objective being to maximise return onfunds whilst insuring that the short-term cashflow requirements of the group aremet. The group may, from time to time, with the approval of the Board, use derivativefinancial instruments to manage its exposure to fluctuations in foreign currencyexchange rates. The group does not undertake any trading activity in financialinstruments. The main risks arising from the group's financial instruments are foreigncurrency risk and liquidity risk. The current policy for managing these risks isdetailed below. Liquidity / Interest Rate Risk Surplus funds on short-term deposit are currently at floating rates of interest. Foreign Currency Risk Although the group reports in US$, a portion of its business is conducted ineuro. The group manages this, and other exposures, by matching receipts andpayments in the same currency and actively managing the residual net position. No forward foreign exchange contracts were entered into during the year andthere were no outstanding foreign exchange contracts at the start of the year orat the end of the year. Maturity of Financial LiabilitiesThe maturity of the group's financial liabilities is provided in Note 11. 20. Significant events since year-end There have been no significant events since year end. 21. Subsidiary Undertakings The company's principal subsidiary undertakings at December 31, 2004, all ofwhich are wholly owned, are as follows: Name Registered Office Activity Gostem Limited 6 Northbrook Road, Dublin 6, Ireland 1Petroceltic Investments 6 Northbrook Road, Dublin 6, Ireland 2LimitedPetroceltic Ksar Hadada Waterloo House, Don Street, St. Helier, Jersey JE4 5RS 2LimitedPetroceltic Isarene Waterloo House, Don Street, St. Helier, Jersey JE4 5RS 2Limited Key to activity: 1 Technical services and/or investment holding company2 Mineral exploration and development company. Each company's registered office is located in the country in which it operates,except for Petroceltic Ksar Hadada Limited which operates in Tunisia, andPetroceltic Isarene Limited which operates in Algeria. During the year the Group disposed of Westland Exploration Limited, SummitExploration Limited and Mogul of Ireland Limited for nominal consideration. A full list of subsidiary companies will be filed with the Registrar ofCompanies. 22. Approval of Financial Statements The directors approved these financial statements on 16 May 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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