Preliminary Results for the year ended 31 December

2 April, 2014

SeaEnergy PLC

("SeaEnergy" or the "Company")

Unaudited Preliminary Results for the year ended 31 December 2013

SeaEnergy PLC (AIM: SEA) today announces its unaudited preliminary results for the year ended 31 December 2013.

Operational highlights:

· Continuing R2S growth and internationalisation; Houston office opened.

· R2S vendor earn-out target exceeded and consideration capped at the maximum level of £4.6 million, this will be paid later this month.

· Establishment of Ship Management business.

· New and extended contracts in Consulting.

Financial highlights:

· Loss for the year of £0.8 million (2012: loss of £2.4 million,).

· Progress towards breakeven shown by half year analysis: first half loss of £0.6 million, second half loss £0.2 million

· Operating expenses further reduced from £3.1 million to £2.2 million.

· Loss per share 1.45 pence (2012: loss per share 3.82 pence).

· Net assets at 31 December 2013 £17.9 million (2012: £18.7 million).

· Cash position at the end of 2013 of £4.7 million (2012: £5.5 million).

David Sigsworth, Chairman, said:

"We are delighted to have seen a year of growth across the Group. The earn-out of R2S demonstrates the value this important element of the business has delivered and we are pleased to have seen the Company grow in line with strategy, here in the UK and internationally. The Consulting Division has also expanded during 2013 and the addition of the Ship Management team has broadened SeaEnergy's capacity in the Marine space. We look forward to 2014 which is set to see us move into profitability."

For further information contact:

www.seaenergy-plc.com

www.r2s.co.uk

www.seasm.com

www.lansdowneoilandgas.com

Chairman's Statement

Over the past twelve months, the Company has made a very significant step towards a return to profitability. This letter, and the Chief Executive's Review which follows, will describe our progress in some detail.

Share Price Performance

The Company believes that recent strengthening of the share price reflects a growing understanding and appreciation among the investment community of our energy services strategy. Over recent months, we have increased our investor relations efforts, and are now setting out clearly both the strategy and the results which they are generating. We plan to maintain this higher level of engagement with investors to ensure that our shareholders are well informed at all times.

Governance

The Board's principal priorities are to set the strategy for the Group, to provide leadership, to ensure that the necessary resources are available to drive the business forward, to review management performance and to set the Group's values and standards.

Once again, we have stated the Company's Vision and Values in the Annual Report. They remain unchanged and are fundamental to our business. This year we have added a statement of the Company's Mission: to be an innovation-led offshore energy services business.

Work is continuing in implementing robust management systems across the Group, and we have begun a project to gain accreditation under internationally recognised standards ISO 9001, ISO 14001 and ISO 18001.

Risk Management and HSE

Safe operations remain a key priority across the SeaEnergy Group. Once again, I am pleased to report that SeaEnergy had no reportable HSE incidents during 2013. A robust framework for risk management has been introduced, and, under the oversight of the Board, the Executive Team regularly review the Risk Register to ensure that risk reduction and mitigation plans are developed and implemented.

Strategy

Our energy services strategy began to bear fruit in 2013, with contributions from R2S and the Consulting division. R2S was the strongest financial contributor during 2013, and the Company's strategy in 2014 is to maintain the focus of R2S on delivering photographic capture and model building for offshore installations, whilst positioning the growing Consulting division to realise synergistic opportunities. 

In parallel, we are at an advanced stage with discussions on vessel opportunities which are expected to lead to ship management work in the near term as well as opportunities to provide vessels for "walk to work" using motion- compensating gangways.

The Chief Executive's review describes each of these areas in more detail.

In summary, I am pleased that our commitment to SeaEnergy's clearly-defined strategy has delivered a substantial reduction is losses in 2013. Business across the Group is growing strongly, and we are targeting an overall Group profit in 2014.David Sigsworth

Chairman

Chief Executive's Review

During 2013, SeaEnergy has made further progress in delivering the strategy we set out in 2012, and in this review I will describe the main developments and the outlook for the business over the next year.

Financial Review

The Group recorded a loss after tax of £0.8 million in 2013 compared to a loss of £2.4 million for 2012. Our movement towards profitability would have been greater had it not been for Board restructuring costs of £311,000 and the launch of our Ship Management operation during the course of the year which incurred start-up losses of £222,000. 

Group revenue rose sharply from £0.9 million in 2012 to £5.1 million in 2013 reflecting the first full year of activity from both R2S and Consulting and an initial contribution from the nascent Ship Management operation.

The growth trajectory is shown up even more clearly when considering revenue and earnings growth within the year: in the first half of 2013, revenues amounted to £2.1 million, compared with £3.0 million in the second half. The loss in the first half was £0.6 million, reducing to £0.2 million in the second half.

Operating expenses fell by 29% from £3.1 million in 2012 to £2.2 million reflecting the restructuring of the Board and the recharge of some costs to the operating business.

Share of associate losses for the year and other movements totalled £0.2 million (2012: gain £1.3 million). Net finance income of £0.1 million was recorded in 2013 (2012: £0.2 million).

Group net assets are £17.9 million at 31 December 2013 (2012: £18.7 million).

The Group's overall cash flow for 2013 was an outflow of £0.8 million (2012: £16.4 million)

During 2013, we resolved an outstanding warranty claim from Repsol relating to the sale of SeaEnergy Renewables in 2011. SeaEnergy received payment in full of the withheld amount of £849,000, together with associated interest, and this matter is now closed.

R2S Acquisition and Earn-out

Since its acquisition by SeaEnergy in August 2012, R2S has maintained strong revenue and profits growth, both from the UK and increasingly internationally. We are very pleased to confirm that R2S has exceeded its earnings target, and that payment of the maximum earn-out consideration of £4.6 million will be made in the next few weeks.

We are now developing plans to strengthen the capture of synergies across the Group, to further enhance the revenue, earnings and value of SeaEnergy, building on the foundations we have now put in place.

Strategic Update

Since February 2012, when we defined our strategy in offshore energy services, the business has made progress in all areas:

· R2S, acquired in August 2012, has exceeded the profit growth target set at the time of acquisition, and continues to grow strongly.

· Marine recruited a ship management team in 2013, and this team is already contributing revenue to the Group. SeaEnergy is in joint venture discussions regarding wider collaboration in the marine sector, which is expected to contribute additional ship management revenues and offer SeaEnergy a direct participation in "walk-to-work" offshore wind opportunities.

· Consulting has recruited Mark Stagg as Director of Consulting, and is successfully capturing both new work and extensions to existing contracts, and is growing a skilled team to offer services across the Group.

I will describe each of these in more detail in turn.

R2S

We are very pleased that R2S accelerated its sales growth during its first full year within the SeaEnergy Group. R2S sales, which are dominated by photographic capture and model building, contributed £4.7 million to SeaEnergy's turnover in 2013. 

This growth in sales and R2S profitability, which is continuing into 2014, has resulted in the former owners earning the maximum payment under the earn-out terms of the acquisition. SeaEnergy has taken great care to ensure that R2S has benefited from the optimum level of Group support to allow the team to achieve this growth target. 

While we anticipate continuing strong growth in asset capture, we are also seeking out significant added-value opportunities in which SeaEnergy's Consulting division will assist its clients to use R2S technology more fully across their organisations.

Internationalisation and expansion

There is an increasing international demand for the R2S photographic capture and model building services. During 2013, SeaEnergy opened an office in Houston, Texas, to service the Gulf of Mexico market. This office delivered projects in Mexico and the US, including R2S's largest project to date on the BP-operated Thunder Horse Production, Drilling and Quarters facility - the largest facility of its kind in the world. We expect to see growing activity levels in the Gulf of Mexico during 2014, as well as potential for additional international expansion in response to client requirements.

In 2014, we also expect to see an increasing range of projects undertaken, as assets previously captured are recaptured, and, in the case of new facilities, we provide services from the design and build phases all the way through to decommissioning. In recent years the typical project size for R2S has grown with the value of the typical "large" projects growing from £50,000 to £500,000.

Other international expansion opportunities are under review, driven by client requirements and taking account of the risks and benefits of doing business in different regions.

Product development

During 2013, R2S held a successful launch event for a client user group, at which client companies presented to industry peers their experience of the value that the service delivers. This client user group meets regularly and provides an opportunity for clients to identify potential features and enhancements, as well as sharing the benefits of using R2S with each other. As part of this event, R2S announced the launch of Version 3.0 of the software, which delivers many new features requested by clients. We continue to develop and innovate with the R2S software and service to maintain our innovative market lead.

Discussions with clients have also identified the demand for additional services in support of the asset capture/modelling service. We are now working on development of these services, which we expect will add continuing licence and service revenues to the current capture-dominated revenues. 

The potential to deploy R2S in other industries, such as nuclear power generation, thermal power generation, refineries, gas terminals and even cruise liners and commercial shipping, remains huge. SeaEnergy is actively considering how best to access these markets.

Marine

The recruitment of the Ship Management team has added significantly to SeaEnergy's capability in the marine space, and is already generating revenue from the placing of professional staff as owner's representatives on vessels under construction. It has also brought additional skills to the Group and a range of valuable industry contacts.

Ship management involves ensuring, on behalf of clients, that vessels are correctly crewed with appropriately qualified crew members as agreed with the client, and that the vessels are correctly provisioned and fuelled. In addition, the ship manager schedules and arranges for routine and corrective maintenance of the vessel to ensure it achieves a high level of operational availability. The Ship Management business requires little capital and is easily scalable.

In parallel with launching the Ship Management business, SeaEnergy has been continuing to market the purpose-built Service Operations Vessel concept, and is beginning to market a similar concept for specialist roles in oil & gas operations support. During 2013, SeaEnergy saw an increasing and encouraging level of interest in our "walk-to-work" vessel designs.

We are already seeing tendering activity in 2014, and expect to see this increase as new offshore wind farm developments move from planning to delivery.

Joint venture discussions

SeaEnergy is in advanced discussions with a vessel owning and operating company, in relation to joint venturing activities including:

· Provision of ship management for ships owned by the joint venture partner which is expected to be revenue generative in 2014.

· Provision of ship management services for ships owned by third parties, also with potential for revenue generation from 2014.

· Collaborating on "walk to work" opportunities, providing specialist vessels equipped with motion-compensating gangway systems to provide a safe, highly reliable and weather-resilient means of accessing offshore wind farm structures. This will leverage the partner's financial capacity with SeaEnergy's market leading position to secure charters and build our purpose-designed vessels in shipyards where we have negotiated attractive commercial terms. This is a medium term opportunity, with a vessel build project taking 18-24 months, but then generating secure cash flows over many years. 

· Collaboration on "walk-to-work" opportunities using existing vessels, either from the joint venture partner's fleet or from third party providers. There is potential for initial revenue in this sector within 2014.

Consulting

The Consulting division has continued to grow during 2013, adding new clients and extending existing relationships. In addition, it has added capacity by recruiting a new Director of Consulting, Mark Stagg and additional staff and associates from the UK, the US and Greece.

The division is focussed on high-level strategic work. For example, our assignment with a world leader in offshore wind, involves helping them to develop an integrated approach to asset integrity management across its fleet of wind farms. This involves strategic support, technical input, implementation of international standards and management of change. SeaEnergy is delivering a high quality service across the client and this has resulted in the contract being renewed and extended in scope.

The Consulting division also secured a project from the Carbon Trust Offshore Wind Accelerator ("OWA") - a group which comprises nine international energy companies including DONG, Eon, Mainstream, RWE, Scottish Power Renewables, SSE, Statoil, Statkraft and Vattenfall - under which we are developing standardised measures for assessing the performance of offshore wind support vessels and will be evaluating OWA-supported wind farm support vessels according to these measures.

We are driving a number of initiatives which are built on our established reputation for thought leadership. The Knowledge Transfer Partnership project we announced last August, working with Robert Gordon University, is now well under way, and is making significant progress in developing new and innovative tools to maximise the operational efficiency of vessels operating in support of offshore wind farms.

We have also launched a Joint Industry and Academic Project, drawing together industrial and academic partners to develop an optimised model for the supply chain required for offshore wind to deliver electricity to the grid at a competitive Levelised Cost of Energy. SeaEnergy is leading and coordinating this project, which involves key industrial partners including Areva, Babcock, Gamesa, Petrofac together with the Offshore Renewables Institute and Strathclyde University. The project will pool innovative industry and academic thinking to identify improvements to the supply chain for offshore wind. It takes a high-level approach, considering radical changes to technologies, processes and contracting strategies, to develop disruptive improvements to the supply chain.

Legacy assets

It remains our plan to realise the value of our legacy oil & gas assets over time and to return a portion of that realised value to shareholders. We note the recent weakness in the Lansdowne Oil & Gas plc share price, however we remain optimistic that Lansdowne will successfully conclude its farm-outs on both the Barryroe discovery and its own exploration acreage. We believe that the value and the marketability of our 21.5% stake in Lansdowne will be clearer at that time.

There is more encouraging news on our UK royalty interest in Block 21/8a, which contains the Scolty discovery. In October 2013, EnQuest acquired a 50% interest and operatorship in the Greater Kittiwake Area fields. As part of this agreement, it agreed a contingent consideration to be paid in the event of the Scolty field achieving Field Development approval. The acquisition was driven in part by EnQuest's aim to develop the Scolty and Crathes fields, and this has significantly enhanced the likelihood of these discoveries moving to production. We believe that the value of our royalty interest has been enhanced by this transaction and we look forward to the Field Development Plan being approved.

Culture

SeaEnergy continues to develop internally, and to project externally, a powerful, positive and enabling culture, and we have found during the past year that this is enhancing the business in a number of ways:

· Recruitment and retention: we are building an organisation which is attractive to talented individuals and in which they can and are empowered to grow.

· Acquisitions: as with recruitment, the organisational culture is seen to be positive, making us an attractive acquiror.

· Investor relations: with our energy services strategy beginning to bear fruit, we are taking a more proactive stance in investor relations. We aim to be communicative and open, whilst always ensuring that all information is available to all shareholders.

Outlook

The Company continues to progress in delivering the strategy we set out in 2012. Strong growth continues in R2S and the Consulting and Marine divisions are now generating increasing revenues and identifying synergy opportunities. When negotiations are concluded, we expect the joint venture to accelerate the rapid growth of the marine business.

John Aldersey-Williams

Chief Executive

SeaEnergy PLC

Preliminary results for the year ended 31 December 2013

Consolidated Balance Sheet

As at 31 December 2013

SeaEnergy PLC

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2013

SeaEnergy PLC

Consolidated Statement of Changes in Equity

For the year ended 31 December 2013

SeaEnergy PLC

Consolidated Statement of Cash Flows

For the year ended 31 December 2013

Unaudited Notes to the Financial Information

For the year ended 31 December 2013

1. Basis of Presentation

This unaudited preliminary consolidated financial information has been prepared in accordance with the International Financial Reporting Standards ("IFRS") and the IFRS Interpretation Committee ("IFRIC") interpretations as endorsed by the European Union. The accounting policies applied are consistent with those described in the financial statements for the year ended 31 December 2012.

The preliminary consolidated financial information contained in this document does not constitute statutory consolidated financial statements for the year ended 31 December 2013 or the year ended 31 December 2012 as defined in section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2012 was approved by the Board of Directors on 5 April 2013 and have been filed with the Registrar of Companies. The report of the auditors on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The financial statements for 2013 will be filed with the Registrar of Companies in due course. The auditors have not yet signed there audit report, however, they have confirmed that they are not aware of any matter that may give rise to a modification to it.

Full disclosure of the Group accounting policies can be found in the 2012 Annual Report and Financial Statements as presented on the SeaEnergy PLC website. These have been consistently applied throughout the 2013 financial year and the in disclosures made in this statement.

2. Loss per Ordinary Share

Loss per share attributable to owners of the parent arise from continuing operations as follows:

The calculations were based on the following information.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Company has one class of potential ordinary shares; share options. Only share options that are exercisable at the reporting date are potential ordinary shares. The lowest exercise price of exercisable share options is 34 pence per share. This is above the average market price of the shares in issue for the year.

3. Goodwill and Other Intangible Assets

Goodwill

The £489,000 relates to the deferred tax element on the acquisition of Eagle HC Limited in 2008 (2012: £489,000). The £9.3 million relates to the acquisition of Return To Scene Limited in August 2012 and represents the excess of purchase consideration over the fair value of net assets acquired (2012: £9.3 million).

Oil & gas intangible assets

Oil and gas project expenditures, including geological, geophysical and seismic costs, are accumulated as intangible fixed assets prior to the determination of commercial reserves. At 31 December 2013, such intangible fixed assets totalled £1.8 million (31 December 2012: £1.8 million).

Other intangible assets

This category includes customer relationships £197,000 (2012: £251,000), research and development expenditure £171,000 (2012: £118,000) and other acquired goodwill £nil (2012: £19,000).

The Directors have considered the need for impairment of all classes of intangible assets at the reporting date

and have concluded that no impairment adjustment is necessary.

4. Investments

The Group's share of the results of its principal associates and its aggregated assets and liabilities are as follows:

The closing mid-market price for Lansdowne at 31 December 2013 was 24p per share (2012: 56.75p per share)

* Mesopotamia Petroleum Company Limited had net liabilities at 31 December 2013. The investment was written down to nil during 2009.

The unrecognised share of loss for the year relating to MPC was £27,000 (2012: £56,000).

5. Share Capital and Premium

On 26 July 2012 the Company purchased and then cancelled 19,197,442 ordinary shares in a Tender Offer which returned £6.9 million of capital to ordinary shareholders.

The LTIP shares issued on 27 July 2012 have been paid up as to 10 pence each (being their nominal value) and 30 pence remains unpaid with the liability for the unpaid amount being becoming payable under certain conditions pertaining to the Company's Long Term Incentive Plan.

6. Retained Earnings and Special Reserve

The Special Reserve was created in 2011 and represents the balance held by the Company pursuant to an Undertaking which it was required to give the Court in respect of creditor protection. The Undertaking required the transfer of £78.075 million from the Share Premium account to a Special Reserve upon the grant of the Court Order. In accordance with the terms of the Undertaking the Special Reserve has been reduced to £1.404 million at the year end and will be further reduced, and become distributable, as and when the related obligations at the date of the Court Order are satisfied.

7. Reconciliation of Loss before Income Tax to Cash used in Operations

8. Business Combination

(a) Acquisition of Return to Scene Limited ("R2S")

On 23 August 2012, the Group acquired the entire issued share capital of R2S an unlisted company based in

Aberdeen and specialising in Visual Asset Management. The Group acquired R2S in line with its strategy of

building and acquiring innovative and complementary energy services businesses.

Deferred cash consideration

In accordance with the purchase agreement contingent consideration of £500,000 was due to the vendors of

R2S subject to certain revenue targets being met. These targets were met in February 2013 and accordingly the

payment of £500,000 was made to the vendors in March 2013.

Earn-out consideration

Additional Earn-out consideration of £4.6 million has been earned and will be settled in April 2014. The Earn-out consideration can be settled through the issue of shares in SeaEnergy, subject to certain restrictions, at the sole election of SeaEnergy.

(b) Eagle HC Limited

On 14 May 2008 the Group acquired Eagle HC Limited ("Eagle"). Eagle owns a portfolio of North Sea royalty interests that were accumulated by Exploration Geosciences Limited ("EGL"). Consideration totalling £1.75 million was paid in 2008 through the issue of 4,173,648 ordinary shares in the Company.

A further £500,000 becomes payable when cash flow from the royalty portfolio commences. All such contingent

consideration can be settled at the Company's option, either in cash or through the issue of new shares.

Eagle was non-trading during the financial year and had no effect on the Group profit and loss account for the year.

While there is no evidence of impairment to the assets since their purchase, the projects remain at an early stage,

with a Field Development Plan over one of royalty areas, expected to be submitted in 2014. Consequently the Board believes it is too early for it to determine that the final sum of £500,000 will be payable or to develop a reliable estimate of when any cash flows from production might arise. It therefore has not recognised a liability (and additional goodwill) for this contingent deferred consideration.

9. Post Balance Sheet Events

R2S Earn-out consideration

Since the balance sheet date the R2S Earn-out target has been met and the maximum amount of £4.6 million has become payable. This amount will be settled in April 2014. The Earn-out consideration can be settled through the issue of shares in SeaEnergy, subject to certain restrictions, at the sole election of SeaEnergy.

10. Contingent Liability

Under the terms of a joint venture ("JV") agreement dated 26 February 2009 between the Iraqi Drilling Company ("IDC") and the Company's associate Mesopotamia Petroleum Company Limited ("MPC"), MPC was required to confirm its share of the initial JV funding by a prescribed date and failure to do so was to result in liability for a penalty of US $ 2.2 million. MPC's liability for this penalty was guaranteed jointly and severally by the Company, another MPC shareholder and an associate of that shareholder.

In July 2009 IDC unilaterally purported to terminate the JV while MPC argued that it was entitled to an extension of the date by which its share of JV funding was to be confirmed.

In October 2011 IDC commenced an action against MPC in the Specialised Commercial Court in Baghdad

claiming payment of the penalty sum. A Power of Attorney has been provided to local counsel to allow them to manage Court proceedings as appropriate. A series of postponements followed while certain documents were translated into Arabic as required by the Court. On 28 August 2012 the Court ruling decided against MPC and upheld the first decision that it is liable to pay the penalty. MPC has appealed against this decision and its Directors are reviewing the Court's latest decision and the options available to it. As at the date of issue of these results, no further Court rulings have been announced since August 2012 and it is unclear when the next ruling will be made.