Final Results

Aminex PLC 27 April 2006 AMINEX PLC ("Aminex" or "the Company") Preliminary results for the year ended 31 December 2005 Aminex, the oil and gas company listed on the London and Irish Stock Exchanges, today announces its preliminary results for the year ended 31 December 2005. Highlights • New Production Sharing Agreement for Ruvuma Basin, Tanzania • Onshore licence award in Madagascar • Three East African farmout agreements signed • Production Sharing Agreement in North Korea • Technical Evaluation Agreement offshore Kenya • Production Sharing Agreement for Block 2, West Esh el Mellahah, Egypt • 1,000 kilometres of new seismic shot at Ruvuma and Nyuni, Tanzania • Two new gas wells on stream at South Weslaco, Texas • Loss before tax for period of $4.98 million (2004: loss $4.51 million) Brian Hall, Chief Executive of Aminex said: "2005 has been a very active year for Aminex, particularly in East Africa where we have expanded our exploration acreage and acquired new seismic, as well as forging relations with new governments and new partners. We have continued to upgrade our US reserves bringing our leases in the South Weslaco Field on to production for the first time. Peter Elwes has decided to retire at the AGM in June after ten years service as Chairman and I would like to record the major contribution he has made to Aminex over this time. Derek Tughan, at present Senior Non-Executive Director, has agreed to serve as Chairman." 27 April 2006 Enquiries: Aminex PLC +44 (0) 20 7240 1600 Brian Hall - Chief Executive Simon Butterfield - Finance Director Pelham Public Relations +44 (0) 20 7743 6679 Archie Berens OVERVIEW The year saw intense activity for the Aminex Group with several issues from past years satisfactorily resolved, good progress on existing ventures and a number of new projects initiated. Satisfactory resolution of a long running joint venture dispute in March and a placing and open offer to shareholders of new shares in June put the Company in a position to move ahead strongly with its exploration and development programmes. In North Korea old seismic data was systematically reprocessed and an initial Production Sharing Agreement ("PSA") negotiated covering all that country's prospective hydrocarbon-bearing basins. In East Africa a farmout was achieved on part of the Tanzanian Nyuni block and new seismic acquired over the entire Nyuni block. Also in Tanzania, a PSA was executed in November for the onshore/near-shore Ruvuma block in the south of the country following which a seismic survey was conducted in the marine area within thirty days. In a similar geological setting in Madagascar a PSA for a large onshore block was finalised in the fourth quarter. In the second half a company which the Aminex group controls was awarded onshore acreage in Egypt close to the Red Sea. Meanwhile, in the USA two successful gas wells were drilled in Texas and one oil well recompleted for production in Louisiana. In operational terms, by year end Aminex had acquired 1,000 kilometres of new marine seismic and drilled two successful wells. Since the year end farmouts have been finalised on the newly granted Ruvuma PSA and over another part of the Nyuni PSA, both in Tanzania, while a Group company has become party to a Technical Evaluation Agreement offshore Kenya. Further seismic is planned over both Ruvuma and Nyuni during the summer of 2006 with a view to finalising locations for a very active drilling programme in 2007. In recent months most of the operational activity has been in Africa rather than Korea but Korean activity is expected to accelerate during 2006. FINANCIAL REVIEW The 2005 financial statements are the first to be prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("EU IFRS"). Up until this year, Aminex's financial statements had been prepared in accordance with Irish Generally Accepted Accounting Practice ("Irish GAAP"). To comply with EU IFRS, the comparative 2004 figures have been restated in accordance with EU IFRS. Reconciliations of the 2004 figures showing the movement from Irish GAAP to EU IFRS are set out in detail in the Appendix to this announcement. Following the adoption of EU IFRS and in light of the content of IFRS 6 "Exploration for and Evaluation of Mineral Resources", Aminex has reviewed its accounting policies and has decided to change the policy for its oil and gas assets from the "full cost" method to the "successful efforts" method. Under the "successful efforts" method, the costs of unsuccessful wells initially capitalised within the category of 'Exploration Assets' are written off to the income statement in the period they are determined unsuccessful. Furthermore, producing assets are depleted on a field by field basis rather than as a geographical pool. Comparative figures for 2004 have been restated to reflect the change in accounting policy. For the year 2005, Aminex's turnover comprises revenues from sales of oil and gas in the USA and also sales of goods and services by its oilfield service and supply company. In December 2004, Aminex sold its Vinton Dome oilfield, a consequence of which has been a reduction in 2005 Group turnover from US$5.4 million in 2004 to US$3 million for the current year. The average oil price obtained in 2005 of US$50.30 per barrel is US$9.73 per barrel higher than that of 2004 and oil production during the period is similar to that of 2004 (excluding Vinton Dome production). The average gas price achieved at US$7.81 per mcf is US$1.72 per mcf higher than 2004 although gas production decreased from 102 mmcf in 2004 to 59 mmcf in the current year. Much of this gas reduction is a consequence of having shut in the Alta Loma well which supplies BP's Texas City refinery. This refinery has been out of commission since early 2005 following a major fire and extensive repairs. The oil services and supply company's share of turnover amounts to US$1.2 million (2004: US$1.3 million). Cost of sales at US$2 million is US$1.2 million lower than 2004 as a consequence of reduced oil and gas turnover. After taking into account depletion and decommissioning charges of US$0.9 million (2004: US$1.2 million) the resulting gross profit of US$0.02 million compares with US$0.86 million for 2004. Following major cost reductions in the USA, Group administrative expense at US$4.95 million is US$0.49 million lower than 2004, leaving a current period operating loss of US$4.93 million (2004: US$4.49 million). After taking into account net interest costs of US$49,000 (2004: US$19,000) the net loss for the Group after tax for the twelve months ended 31 December 2005 amounts to US$4.98 million (2004: US$4.51 million). Balance sheet capital expenditures for exploration and evaluation assets show an increase during the period of US$1.34 million and comprise mainly the cost of seismic surveys over the Nyuni and Ruvuma licences as well as geological studies and data evaluation in North Korea. Capital expenditures relating to property, plant and equipment during the period amounts to a net US$2.9 million. This increase in cost includes the recognition of a provision of US$2.2 million relating to future decommissioning costs on Aminex's producing assets together with additions to US oil and gas properties of US$1.6 million, offset by the current year charge for depletion and decommissioning of US$0.9 million. Both accounts payable and accounts receivable period end balances show a significant reduction from the 2004 period end balances as a consequence of the settlement in early 2005 of a dispute with a joint venture partner regarding amounts owed to the Nyuni joint venture. The cash flow statement reflects a net cash inflow of US$8 million, primarily from a share placing in July 2005. During the period, US$119,000 of new bank debt was drawn down to finance the purchase of oilfield equipment for the Somerset field and US$82,000 of existing debt was repaid. As at 31 December 2005, Aminex's cash balance amounted to US$3.9 million offset by negligible bank debt of US$135,000. OPERATIONS REVIEW Tanzania Tanzania was the Group's main focus of exploration activity in 2005. In September East Coast Energy Ltd., which operates the adjacent Songo Songo producing gas field farmed into part of the Nyuni licence, provisionally designated Nyuni "A", with a commitment to shoot new seismic and an option to participate in an exploration well through paying a disproportionate share of the drilling cost. Aminex took advantage of a seismic vessel in the area also to acquire new seismic data over the remaining part of Nyuni, designated Nyuni "B". Since the year end a further farmout has been agreed for Nyuni "B" with privately-owned East Africa Exploration Ltd. of Dubai, which will earn into the licence by acquiring 2D and possibly 3D transition zone seismic over the many reefs and small islands which overlay Nyuni's numerous leads and prospects. This will complement the shallow marine 2D seismic data already acquired in 2005 with a view to firming up drilling locations for 2007. At present the government of Tanzania has not approved the division of Nyuni into "A" and "B" and in the event that it does not do so, the parties will discuss other ways of meeting their objectives for the Nyuni licence. To the south, Aminex was awarded a PSA over the 12,000 sq km Ruvuma onshore/ near-shore area in October 2005 and acquired approximately 330 kms of new marine 2D seismic in November. Ruvuma is divided into two separate licences, Lindi and Mtwara. Since the year end Aminex has farmed out 50% of both licences to Hardman Resources Ltd. on the basis that Hardman will be responsible for the more extensive onshore seismic during 2006. The objective of the Aminex/Hardman 50-50 joint venture is to define firm locations during the remainder of 2006 for a drilling campaign in 2007. The geology of the Ruvuma basin lies partly in Tanzania and partly in Mozambique and the Ruvuma River divides the two countries. On the Mozambique side to the south a successful licensing round has just closed and all blocks on offer were awarded, some to large international companies offering major work commitments. Aminex looks forward to working with Hardman in the exploration of the Tanzanian side of this very interesting region. Madagascar Aminex and partner Mocoh Ltd., through a 50-50 new company "Amicoh Resources Ltd.", were awarded the exploration rights to the 10,750 sq kilometre onshore Block 3108, known as "Manja", on the west coast of the country in the Morandava Basin, with similar geology to the Company's Tanzanian licences. In the past several wells have been drilled on Manja, firstly by the Madagascar state oil company and later by Chevron and Amoco, some of which had good oil and gas shows. With the benefit of modern exploration technology and strong markets for both gas and oil, Aminex believes this to be a prime area for exploration. Gravity, aeromagnetic and seismic reprocessing work is ongoing and new seismic will be acquired as soon as possible with a view to firming up a first well location. U.S.A. Towards the end of 2004 Aminex disposed of its declining Vinton Field producing properties in Louisiana and consequently reduced overall production revenues and reserves. However this also enabled the company to make material reductions in its US overhead and to avoid a number of imminent remedial and abandonment liabilities. With a reduced overhead burden, Aminex is working on replacing the lost revenues with new and more profitable production. Aminex's properties, which are all onshore, now consist of South Weslaco, Alta Loma and Somerset in Texas, together with the Shoats Creek Field in Louisiana. Two successful wells were drilled on South Weslaco in the first half of 2005 but not put on production until December since when they have been performing satisfactorily. Gas production from Alta Loma has been shut in for several months because its sole customer, BP's Texas City Refinery, has been out of action for some time following a major explosion and fire in 2005. Lack of production from this important gas well has had an adverse impact on our US revenues in 2005. The Somerset Field consists of a large number of stripper wells and produces a relatively heavy crude which is sold as "Texas sour". High oil prices have greatly increased the netback of Texas sour and the field is being actively produced. Simultaneously a programme of abandonment of old and idle wells has been accelerated. Shoats Creek is located in swampy forest in Louisiana and operating costs are high. When Aminex still owned the nearby and more straightforward Vinton Field, most of its efforts were directed there. However, with the Vinton Field sold and crude from Shoats Creek attracting a premium over the price of marker crudes, Aminex has begun a programme of engineering studies and well workovers with a view to exploiting the latent potential of Shoats Creek. In 2005 one well was successfully worked over and put on stream and at the time of writing there is a rig in the field carrying out further workovers. North Korea In North Korea, officially known as the Democratic Peoples Republic of Korea or "DPRK") a PSA was signed in August 2005 covering all that country's prospective basins for oil and gas exploration, onshore and offshore. This followed on from an earlier "Petroleum Agreement" signed in 2004 giving Aminex exclusive rights to the whole country in return for performing certain technical services which have been diligently carried out. There is, however, one complicating issue in the west which is the lack of a finally determined oil and gas boundary between DPRK and the Peoples Republic of China. This is a sensitive issue given the proximity of the Bohai Bay oilfields, the most significant reserves in China. Although Aminex has been assured in writing by the DPRK that its agreements remain fully valid, prudence nevertheless dictates that its first field work will concentrate on the undisputed East Sea area, which it believes to be highly prospective, and on selected onshore basins. At the time of writing Aminex is expecting imminently to sign a new agreement for the East Sea which will allow it to introduce partners and commence a seismic acquisition programme, both regionally and over specific prospects. Egypt In November 2005 Aminex Petroleum Egypt Ltd. (formerly Red Sea Petroleum Ltd.) in which Aminex has a 51% interest was awarded the rights to Block 2 in the West Esh el Mellahah concession on the Red Sea coast of Egypt close to important oil production. Other shareholders are First Energy Ltd., Sinopex and FS International Corporation. Sinopex is an Egyptian company which will support the project with technical and administrative services. Formal presidential approval of the licence is expected in the near future and exploration will begin during 2006. Kenya In March 2006 Aminex joined Upstream Petroleum Services Ltd. ("UPSL") and SomKen Ltd. in a Technical Evaluation Agreement ("TEA") covering approximately 5,000 sq kms offshore Kenya. This area comprises the near-shore parts of Kenya Blocks L9 and L10, the remainder of which are either licensed to other companies or under negotiation for new licences. UPSL is a seismic operator and sister company of East Africa Exploration Ltd., Aminex's farm-out partner in the Tanzanian Nyuni B licence. Aminex has 25% of this TEA over which new seismic data has recently been acquired. Further seismic, together with seabed coring as part of a geochemical testing programme, is planned to be carried out in summer 2006 with a view to applying for a full PSA and defining a drilling location. BOARD CHANGES Peter Elwes intends to relinquish the chairmanship of the Company at the AGM in June and retire from the Board at that time. He has served as chairman for just over ten years during a period of great change. Derek Tughan, at present Senior Non-Executive Director, has agreed to serve as Chairman. In early 2006 Michael Rego and Andrew Windham were invited to join the Company's board, as executive director and non-executive director respectively. Their names are being put forward for election at the AGM in June. Mr. Rego is a Petroleum Geologist who has been with the Company since 1998, working initially in Russia before becoming Group Exploration Manager in 2002. Mr. Windham is a solicitor who has spent most of his career in the oil industry. He has served as an executive director of Clyde Petroleum PLC and Energy Africa Ltd. STRATEGY & PROSPECTS Aminex's strategy is to acquire first class exploration prospects in relatively new and under-explored areas, thereby gaining first mover advantage, introducing industry partners where appropriate. The Company has greatly expanded its portfolio during the last year. For an experienced company such as Aminex with a good portfolio of exploration assets there is unprecedented scope for growth in a market which has a strong appetite for exploration and new sources of hydrocarbons. 27 April 2006 Group Income Statement for the year ended 31 December 2005 2005 2004 Notes US$'000 US$'000 Revenue 2 3,000 5,384 Cost of sales (2,038) (3,182) Unsuccessful exploration efforts - (103) Depletion, depreciation and decommissioning (941) (1,239) _______ _______ Gross profit 21 860 Administrative expenses (4,951) (5,436) Profit on disposal of oil and gas properties - 618 Purchaser's share of Vinton Dome profit - (532) _______ _______ Loss on operations (4,930) (4,490) Financing income 3 123 15 Financing costs 4 (172) (34) _______ _______ Loss before tax (4,979) (4,509) Income tax expense - - _______ _______ Net loss for the financial year 2 (4,979) (4,509) _______ _______ Basic and diluted loss per Ordinary Share (in US 5 (3.85) (4.85) cents) Group Statement of Recognised Income and Expense for the year ended 31 December 2005 2005 2004 US$'000 US$'000 Currency translation differences (18) (57) ______ ______ Net loss recognised directly in equity (18) (57) Loss for the financial year (4,979) (4,509) ______ ______ Total recognised income and expense for the (4,997) (4,566) year ______ ______ Attributable to the equity holders of the (4,997) (4,566) Parent Company ______ ______ Group Balance Sheet at 31 December 2005 2005 2004 Notes US$'000 US$'000 Assets Exploration and evaluation assets 15,649 14,310 Property, plant and equipment 8,368 5,443 Other investments 418 - ______ ______ Total non current assets 24,435 19,753 ______ ______ Trade and other receivables 1,179 6,102 Cash and cash equivalents 3,884 767 ______ ______ Total current assets 5,063 6,869 ______ ______ Total assets 29,498 26,622 ______ ______ Equity Issued capital 6 11,057 6,777 Share premium 6 40,289 36,222 Capital conversion reserve fund 234 234 Foreign currency reserve (75) (57) Retained earnings (26,416) (21,437) ______ ______ Total equity 25,089 21,739 ______ ______ Liabilities Interest bearing loans and borrowings 93 51 Abandonment and site restoration provision 2,328 - ______ ______ Total non current liabilities 2,421 51 ______ ______ Interest bearing loans and borrowings 42 47 Trade and other payables 1,946 4,785 ______ ______ Total current liabilities 1,988 4,832 ______ ______ Total liabilities 4,409 4,883 ______ ______ Total equity and liabilities 29,498 26,622 Group Statement of Cashflows for the year ended 31 December 2005 2005 2004 US$'000 US$'000 Operating activities Loss for the financial year (4,979) (4,509) Depletion, depreciation 997 1,289 and decommissioning Unsuccessful exploration - 103 efforts Foreign exchange losses (9) (68) Financing income (123) (15) Financing costs 172 34 Gain on disposal of oil - (618) and gas properties Loss/(gain) on sale of 15 (121) plant and equipment Loss on sale of other - 184 investments Equity-settled 26 238 share-based payment charge Decrease in trade and 4,923 - other receivables (Decrease)/increase in (3,149) 707 trade and other payables ______ ______ Net cash absorbed by (2,127) (2,776) operations Interest paid (15) (34) Tax paid - - ______ ______ Net cash outflows from (2,142) (2,810) operating activities Investing activities Acquisition of property, (1,379) (159) plant and equipment Expenditure on (1,429) (5,522) exploration and evaluation assets Acquisition of investment (44) - assets Proceeds from sale of 37 5,276 property, plant and equipment Proceeds from sale of - 2,687 investments Interest received 90 15 ______ ______ Net cash (outflows)/ (2,725) 2,297 inflows from investing activities Financing activities Proceeds from the issue 8,698 1,265 of share capital Payment of transaction (751) (34) costs Loans repaid (82) (145) Loans received 119 23 ______ ______ Net cash inflows from 7,984 1,109 financing activities ______ ______ Net increase in cash and 3,117 596 cash equivalents Cash and cash equivalents 767 171 at 1 January ______ ______ Cash and cash equivalents 3,884 767 at 31 December Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices Aminex PLC (the "Company") is a company domiciled and incorporated in Ireland. The Group financial statements for the year ended 31 December 2005 consolidate the individual financial statements of the Company and its subsidiaries (together referred to as "the Group"). Basis of preparation The Group and Company financial statements (together the "financial statements") have been prepared in accordance with International Financial Reporting Standards (IFRS) that are adopted by the European Union (EU) that are effective at 31 December 2005. These are our first Group Financial Statements prepared in accordance with IFRS as adopted by the EU ("EU IFRS") and comparative information, which was previously presented in accordance with Irish generally accepted accounting principles (Irish GAAP) for the year ended 31 December 2004 has been restated under EU IFRS, with the exception of IAS 32 and 39 which were adopted with effect from 1 January 2005. An explanation of the effect of the transition to EU IFRS is provided in Note 7. Where estimates had been made under Irish GAAP, consistent estimates (after adjustments to reflect any difference in accounting policies) have been made on transition to EU IFRS. Judgements affecting the balance sheets of the Company and Group have not been revisited with the benefit of hindsight. The Group and Company have taken advantage of the following exemptions as permitted under IFRS 1: • IAS 21 requires that on disposal of a foreign operation, the cumulative amount of currency translation differences previously recognised directly in reserves for that operation be transferred to the income statement as part of the profit or loss on disposal. Aminex PLC has deemed the cumulative currency translation differences applicable to foreign operations to be zero as at the transition date. The cumulative currency translation differences arising before the transition date have been reclassified as part of retained earnings. • In accordance with the exemption allowed on transition, the fair value calculations in respect of share based payments under IFRS-2 "Share Based Payment", have only been applied in respect of share options granted after 7 November 2002. The financial statements are presented in US dollars, rounded to the nearest thousand ($'000) except when otherwise indicated. The financial statements are prepared on a historical cost basis except for the measurement at fair value of share options. The preparation of financial statements requires management to use judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. The preparation of the financial statements under EU IFRS has resulted in changes to the accounting policies from the most recent annual financial statements prepared under Irish GAAP. The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing an opening EU IFRS balance sheet at 1 January 2004 for the purposes of the transition to EU IFRS. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Statement of compliance The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("EU IFRSs"). The individual financial statements of the Company ("Company financial statements") have been prepared and approved by the directors in accordance with EU IFRSs and as applied in accordance with Companies Acts 1963 to 2005 which permits a company that publishes its company and group financial statements together, to take advantage of the exemption in Section 148(8) of the Companies Act 1963 from presenting to its members its company income statement and related notes that form part of the approved company financial statements. The IFRSs adopted by the EU applied by the Company and Group in the preparation of these financial statements are those that were effective at 31 December 2005 together with the early adoption of IFRS 6 "Exploration for and Evaluation of Mineral Resources". The following relevant IFRSs adopted by the EU which are not yet effective and have therefore not been early adopted in these financial statements are not expected to have a material impact on our financial position or income statement on adoption: • Amendment to IAS 1 - "Capital disclosures" (effective 1 January 2007) • Amendment to IAS 39 - "The Fair Value Option" (effective 1 January 2006) • Amendments to IAS 39 -"Cash Flow Hedge Accounting of Forecast Intragroup Transactions" (effective 1 January 2006) • Amendments to IAS 39 and IFRS 4: "Financial Guarantee Contracts" (effective 1 January 2006) • IFRS 7 - "Financial Instruments: Disclosures" (effective 1 January 2007) • IFRIC 4 - "Determining Whether an Arrangement Contains a Lease" (effective 1 January 2006) Basis of consolidation The Group financial statements consolidate the financial statements of Aminex PLC and its subsidiaries. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which effective control is transferred out of the Group. Control exists when the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain economic benefits from its activities. Financial statements of subsidiaries are prepared for the same reporting year as the parent company. The Group will continue to prepare the statutory individual financial statements of subsidiary companies under the GAAP applicable in their country of incorporation but adjustments have been made to the results and financial position of such companies to bring their accounting policies into line with those of the Group. All inter-company balances and transactions, including unrealised profits arising from inter-group transactions, have been eliminated in full. Unrealised losses are eliminated in the same manner as unrealised gains except to the extent that there is evidence of impairment. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group, that it can be reliably measured, that performance has occurred under a service contract and that the significant risks and rewards of ownership of the goods have passed to the buyer. Revenue comprises the invoiced value of goods and services supplied by the Group and excludes inter-company sales, trade discounts and value added tax. Services are invoiced as they are performed and goods are invoiced when supplied. Royalties Royalties are charged to the income statement in the period in which the related production is accounted for. Employee benefits (a) Pensions and other post-employment benefits The Group contributes towards the cost of certain individual employee pension plans. Annual contributions are based upon a percentage of gross annual salary. Pension contributions are recognised as an expense in the income statement on an accruals basis. (b) Share-based payment For equity-settled share-based payment transactions (i.e. the issuance of share options), the Group measures the services received and the corresponding increase in equity at fair value at the measurement date (which is the grant date) using a recognised valuation methodology for the pricing of financial instruments (i.e. the binomial model). Given the share options granted do not vest until the completion of a specified period of service, the fair value assessed at the grant date is recognised in the income statement over the vesting period as the services are rendered by employees. For options granted to Directors, there is no vesting period and the fair value is recognised in the income statement at the date of the grant. The share options issued by the Company are not subject to market-based vesting conditions as defined in IFRS 2. Non-market vesting conditions are not taken into account when estimating the fair value of share options as at the grant date; such conditions are taken into account through adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised equates to the number of equity instruments that actually vest. The expense in the income statement in relation to share options represents the product of the total number of options anticipated to vest and the fair value of these options. This amount is allocated to accounting periods on a straight-line basis over the vesting period. Given that the performance conditions underlying the Company's share options are service-related and non-market in nature, the cumulative charge to the income statement is reversed only where an employee in receipt of share options leaves the company prior to completion of the service period. The proceeds received by the Company on the exercise of share entitlements are credited to share capital and share premium. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) In line with the transitional provisions applicable to a first-time adopter of International Financial Reporting Standards, as contained in IFRS 2 "Share-based Payment", the Group has elected to implement the measurement requirements of the IFRS in respect of share options that were granted after 7 November 2002 that had not vested as at the effective date of the standard (1 January 2005). In accordance with the standard, the disclosure requirements of IFRS 2 have been applied in relation to all outstanding share-based payments regardless of their grant date. The Group does not operate any cash-settled share-based payment schemes or share-based payment transactions with cash alternatives as defined in IFRS 2. Financing costs Financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on funds invested, the imputed interest on the fair value of the abandonment and site restoration provision and applicable foreign exchange gains and losses. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method. Financing income Interest income is recognised in the income statement as it accrues, using the effective interest method. Leases Finance leases, which transfer to the Group substantially all the risks and benefits of ownership of the leased asset, are capitalised at the inception of the lease at the fair value of the leased asset or if lower the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between the finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the income statement as part of finance costs. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the assets are classified as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Tax The tax expense in the income statement represents the sum of the tax currently payable and deferred tax. Tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group's liability for current tax is calculated using rates that have been enacted or substantially enacted at the balance sheet date. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity. Deferred income tax is provided, using the liability method, on all differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes except those arising from non-deductible goodwill or on initial recognition of an asset or liability which affects neither accounting nor taxable profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is expected to be realised or the liability to be settled. Deferred tax assets are recognised for all deductible differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit would be available to allow all or part of the deferred tax asset to be utilised. Earnings per ordinary share Basic earnings per share is computed by dividing the net profit for the financial period attributable to ordinary shareholders by the weighted average number of ordinary shares in issue that ranked for dividend during the financial period. Diluted earnings per share is computed by dividing the profit for the financial period attributable to ordinary shareholders by the weighted average number of ordinary shares in issue after adjusting for the effects of all potential dilutive ordinary shares that were outstanding during the financial period. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Foreign currency translation The presentation currency of the Group and the functional currency of Aminex PLC is the US dollar (US$). Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the rate of exchange at the balance sheet date. All translation differences are taken to the income statement with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign operation. These are taken directly to equity together with the exchange difference on the net investment in the foreign operation. Results and cash flows of non-dollar subsidiary undertakings are translated into dollars at average exchange rates for the year and the related balance sheets are translated at the rates of exchange ruling at the balance sheet date. Adjustments arising on translation of the results of non--dollar subsidiary undertakings at average rates, and on the restatement of the opening net assets at closing rates, are dealt with in a separate translation reserve within equity, net of differences on related currency borrowings. All other translation differences are taken to the income statement. The principal exchange rates used for the translation of results, cash flows and balance sheets into US dollars were as follows: Average Year-end US$ 1 equals 2005 2004 2005 2004 Pound sterling 0.5492 0.5456 0.5811 0.5190 Australian dollar 0.7620 0.7354 0.7298 0.7796 On disposal of a foreign entity, accumulated currency translation differences are recognised in the income statement as part of the overall gain or loss on disposal; the cumulative currency translation differences arising prior to the transition date have been set to zero for the purposes of ascertaining the gain or loss on disposal of a foreign operation subsequent to 1 January 2004. Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the foreign operation, are expressed in the functional currency of the foreign operation and are recorded at the exchange rate at the date of the transaction and subsequently retranslated at the applicable closing rates. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Exploration and evaluation assets and property plant and equipment - developed and producing assets Subsequent to the publication of the Group's transition statement incorporated in the interim results publication for the six months to 30 June 2005 the Group made the decision to early adopt IFRS 6. In light of the content of IFRS 6, the Group has also decided to change its accounting policy for oil and gas assets from the full cost method to the successful efforts method. Exploration and evaluation assets Expenditure incurred prior to obtaining the legal rights to explore an area is written off to the Income Statement. Expenditures incurred on the acquisition of a licence interest are initially capitalised on a licence by licence basis. Exploration and evaluation expenditure incurred in the process of determining exploration targets on each licence is also capitalised. These expenditures are held undepleted within the exploration licence asset until such time as the exploration phase on the licence area is complete or commercial reserves have been discovered. Exploration and evaluation drilling costs are capitalised on a well by well basis within each licence until the success or otherwise of the well has been established. Unless further evaluation expenditures in the area of the well have been planned and agreed or unless the drilling results indicate that hydrocarbon reserves exist and there is a reasonable prospect that these reserves are commercial, drilling costs are written off on completion of a well. Property, plant and equipment - developed and producing oil and gas assets Following appraisal of successful exploration wells and the establishment of commercial reserves, the related capitalised exploration and evaluation expenditures are transferred into a single field cost centre within developed and producing properties after testing for impairment. Where results of exploration drilling indicate the presence of hydrocarbons which are ultimately not considered commercially viable, all related expenditures are written off to the income statement. Subsequent expenditure is capitalised only where it either enhances the economic benefits of the developed and producing properties or replaces part of the existing developed and producing properties. Any costs associated with the part replaced are expensed to the income statement. Interest on borrowings for development projects is capitalised by field up to the time of revenue generation. Disposal of exploration and evaluation assets and developed and producing oil and gas assets The net proceeds from any disposal of an exploration asset are initially credited against the previously capitalised costs. Any surplus proceeds are credited to the income statement. The net proceeds from any disposal of developed and producing properties are compared with the previously capitalised cost on a field by field basis. A gain or loss on disposal of the developed and producing properties is recognised in the income statement to the extent that the net proceeds exceed or are less than the appropriate portion of the net capitalised costs of the assets. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Depletion The Group depletes expenditure on developed and producing properties on a unit of production basis, based on proved and probable reserves on a field by field basis. In certain circumstances, fields within a single development may be combined for depletion purposes. Capitalised costs, together with anticipated future development costs calculated at price levels ruling at the balance sheet date, are amortised on a unit of production basis. Amortisation is calculated by reference to the proportion that production for the period bears to the total of the estimated remaining commercial reserves as at the beginning of the period. Changes in reserves quantities and cost estimates are recognised prospectively. Impairment Exploration and evaluation assets are reviewed regularly for indicators of impairment and costs are written off where circumstances indicate that the carrying value might not be recoverable. In such circumstances, the exploration and evaluation asset is allocated to developed and producing properties within the same geographical segment and tested for impairment. Any such impairment arising is recognised in the income statement for the period. Where there are no developed and producing properties, the impaired costs of exploration and evaluation are charged immediately to the income statement. Impairment reviews on developed and producing properties are carried out on each cash-generating unit identified in accordance with IAS 36 "Impairment of Assets". The Group's cash-generating units are those assets which generate largely independent cash flows and are normally, but not always, single development areas or fields. Where there has been a charge for impairment in an earlier period, that charge will be reversed in a later period where there has been a change in circumstances to the extent that the discounted future net cash flows are higher than the net book value at the time. In reversing impairment losses, the carrying amount of the asset will be increased to the lower of its original carrying value or the carrying value that would have been determined (net of depletion) had no impairment loss been recognised in prior periods. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Decommissioning costs Provision is made for the decommissioning of oil and gas wells and other oilfield facilities. The cost of decommissioning is determined through discounting the amounts expected to be payable to their present value at the date the provision is recorded and is reassessed at each balance sheet date. This amount is included within developed and producing assets by field and the liability is included in provisions. Such cost is depleted over the life of the field on a unit of production basis and charged to the income statement. The unwinding of the discount is reflected as a finance cost in the income statement over the remaining life of the well. Other Property, Plant and Equipment Other property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Depreciation is calculated to write off the original cost of property, plant and equipment less its estimated residual value over its expected useful lives on a straight line basis. The estimated useful lives applied in determining the charge to depreciation are as follows: Leasehold property 2% - 4% Plant and equipment 20% - 33.3% Motor vehicles 25% The useful lives and residual values are reassessed annually. On disposal of property, plant and equipment the cost and related accumulated depreciation and impairments are removed from the financial statements and the net amount less any proceeds is taken to the income statement. The carrying amounts of the Group's property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an asset or its cash generation unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Subsequent costs are included in an asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the replaced item can be measured reliably. All other repair and maintenance costs are charged to the income statement during the financial period in which they are incurred. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Business combinations The purchase method of accounting is employed in accounting for the acquisition of subsidiaries by the Group. The Group has availed itself of the exemption under IFRS 1, "First-time Adoption of International Financial Reporting Standards", whereby business combinations prior to the transition date of 1 January 2004 are not restated. IFRS 3, "Business Combinations", has been applied with effect from the transition date of 1 January 2004 and goodwill amortisation ceased from that date. The costs of a business combination are measured as the aggregate of the fair value at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued in exchange for control together with any directly attributable costs. Deferred expenditure arising on business combinations is determined through discounting the amounts payable to their present value at the date of exchange. The discount element is reflected as an interest charge in the income statement over the life of the deferred payment. In the case of a business combination the assets and liabilities are measured at their provisional fair values at the date of acquisition. Adjustments to provisional values allocated to assets and liabilities are made within twelve months of the acquisition date and reflected as a restatement of the acquisition balance sheet. Joint Ventures - jointly controlled operations Jointly controlled operations are those activities over which the Group exercises joint control with other participants, established by contractual agreement. The Group recognises, in respect of its interests in jointly controlled operations, the assets that it controls, the liabilities that it incurs, the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the joint venture. Goodwill Goodwill written off to reserves under Irish GAAP prior to 1998 has not been reinstated and will not be included in determining any subsequent profit or loss on disposal. Goodwill on acquisitions is initially measured at cost, being the excess of the cost of the business combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill relating to acquisitions from 1 January 2004 and the deemed cost of goodwill carried in the balance sheet at 1 January 2004 is not amortised. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination's synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Notes to the Financial Information for the year ended 31 December 2005 1 Statement of Accounting Polices (continued) Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the proportion of the cash-generating unit retained. Financial assets Investments in subsidiary undertakings are stated at cost less provision for impairment in the Company's balance sheet. Investments in companies are stated at fair value. The fair value of investments is their quoted market price at the balance sheet date. When market values for investments are not readily available, investments are held at cost. Investments are assessed for potential impairment at each balance sheet date. If any such evidence exists, an impairment loss is recognised in the income statement. Cash and cash equivalents Cash and short term deposits in the balance sheet comprise cash at bank and in hand and short term deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form part of the Group's cash management are included as a component of cash and cash equivalents for the purposes of the statement of cashflows. Trade and other receivables Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at original invoice amount less an allowance for any potential shortfall in receipt. An estimate of any shortfall in receipt is made when there is objective evidence that a loss has been incurred. Bad debts are written off when identified. Provisions A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits would be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those other segments. The Group has identified the geographical segments as the primary segments and the business segments as the secondary segments. Notes to the Financial Information for the year ended 31 December 2005 2 Segmental Information The Group's primary reporting format is geographical segments, being the USA, Africa, Asia and Europe. The Group's other operations by geographical segment do not currently represent 10% or more of the Group's revenue or assets and have therefore not been separately disclosed. The Group's secondary reporting format is by business segment, being exploration and evaluation, producing oil and gas properties and the provision of oilfield goods and services. The Group's revenues and profits arise from oil and gas production in the USA and the provision of oilfield equipment and services included in the Europe segment. Inter-segment revenue is not material and has therefore not been disclosed separately below. Segment results, assets and liabilities include items directly attributable to each segment as well as items that can be allocated on a reasonable basis. Segment capital expenditure is the total amount of expenditure incurred during the period to acquire segment assets that are expected to be used for more than one period. Segment revenue/segment result Continuing Producing Exploration Provision of operations Oil and gas and oilfield goods properties evaluation and services USA ROW Europe Total 2005 2004 2005 2004 2005 2004 2005 2004 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 America 1,833 4,048 - - 122 11 1,955 4,059 Africa - - - - 108 641 108 641 Asia - - - - 557 587 557 587 Europe - - - - 380 97 380 97 Revenue 1,833 4,048 - - 1,167 1,336 3,000 5,384 Group net loss or the period (1,454) (903) (564) (479) (2,961) (3,127) (4,979) (4,509) Segment assets 8,652 6,487 15,603 19,244 5,243 891 29,498 26,622 Segment (3,627) (941) (38) (2,949) (744) (993) (4,409) (4,883) liabilities Capital 1,722 159 940 4,533 427 - 3,089 4,692 expenditure Depletion and decommissioning charge 906 1,145 - - - - 906 1,145 Unsuccessful exploration efforts - 103 - - - - - 103 Depreciation 35 94 - - 56 50 91 144 3 Financing income 2005 2004 US$'000 US$'000 Deposit interest income 123 2 Interest receivable from associate - 13 _____ _____ 123 15 _____ _____ 4 Financing costs 2005 2004 US$'000 US$'000 Bank loans and overdraft interest 11 28 Other finance charges 4 6 Other finance costs - unwinding of discount 157 - _____ _____ 172 34 _____ _____ 5 Loss per Ordinary Share The basic net loss per Ordinary Share is calculated using a numerator of the net loss for the financial year and a denominator of the weighted average number of Ordinary Shares in issue for the financial year. The diluted net loss per Ordinary Share is calculated using a numerator of the net loss for the financial year and a denominator of the weighted average number of Ordinary Shares outstanding and adjusting for the effect of all potentially dilutive shares, including share options, assuming that they had been converted. The calculations for the basic net loss per share for the years ended 31 December 2005 and 2004 are as follows: 2005 2004 Net loss for the financial year (US$'000) (4,979) (4,509) _____ _____ Weighted average number of Ordinary Shares ('000) 129,434 93,015 _____ _____ Basic loss per Ordinary Share (US cents) (3.85) (4.85) There is no difference between the net loss per Ordinary Share and the diluted net loss per Ordinary Share for the years 31 December 2005 and 2004 as all potentially dilutive Ordinary Shares outstanding are anti-dilutive. There were 6,806,000 anti-dilutive share options in issue as 31 December 2005. 6 Issued capital Number Value € Authorised Equity shares - Ordinary Shares of €0.06 each: At 31 December 2005 289,630,632 17,377,838 ___________ __________ At 31 December 2004 189,630,632 11,377,838 ___________ __________ At an Extraordinary General Meeting held on 27 June 2005, shareholders approved the increase in the authorised share capital of Aminex PLC from €11,377,837.92 to €17,377,837.92 by the creation of 100,000,000 new Ordinary Shares of €0.06 each ranking equally in all respects with the existing Ordinary Shares of €0.06 each in the capital of the Company. Number US$ Allotted called up and fully paid Ordinary Shares of €0.06 each: At 1 January 2005 99,060,402 6,776,668 Issued during year 58,556,612 4,280,598 ___________ __________ At 31 December 2005 157,617,014 11,057,266 The increase in the issued Ordinary Share capital of the Company and the share premium during the year related to the following: Price Issued Share Stg Number capital premium Total pence Details Date of issue per US$'000 US$'000 US$'000 share Investment in Kobril Limited: First instalment 5 January 2005 12 833,333 67 98 165 Second instalment 12 September 15.75 634,920 47 126 173 2005 Placing and open 28 June 2005 8.7 56,988,359 4,159 3,794 7,953 offer Exercise of 1 December 2005 17.5 100,000 7 23 30 options __________ ____ _____ _____ At 31 December 58,556,612 4,280 4,041 8,321 2005 The amounts shown under share premium are net of issue expenses. 7 Summary of transition to EU IFRS See Appendix 1. 8 2005 Reports and Accounts The 2005 Report and Accounts will be posted to shareholders shortly. 9 Statutory information The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2005 within the meaning of the Companies (Amendment) Act, 1986. The statutory accounts will be finalised on the basis of the financial information presented by the Directors in the preliminary announcement and together with the independent auditor's report thereon will be delivered to the Registrar of Companies following the Company's Annual General Meeting. APPENDIX 1 Summary of transition to EU IFRS As stated in the Accounting Policies, Aminex has prepared the 2005 Annual Report comprising the Group and Parent Company financial statements in accordance with EU IFRS. The Accounting Policies as set out on in Note 1 have been applied in preparing the financial statements for the year ended 31 December 2004 and in the preparation of the opening EU IFRS balance sheet at the transition date of 1 January 2004. In preparing the opening balance sheet dated 1 January 2004, amounts previously reported in the financial statements prepared in accordance with Irish GAAP have been adjusted. The following reconciliations and explanations provide information on the impact of the transition to EU IFRS on the reported financial position, financial performance and cash flows for the year ended 31 December 2004. In addition to the adjustments detailed in the Aminex unaudited interim financial statements for the period ended 30 June 2005 prepared under EU IFRS and published on 28 September 2005, Aminex has subsequently adopted the successful efforts method of accounting for its exploration, developed and producing oil and gas properties, as further explained below. As a consequence of adopting successful efforts accounting, the net loss for the year ended 31 December 2004 has been increased by US$4,509,000 arising from a higher depletion charge based on the restated cost of producing oil and gas assets and the writing off of unsuccessful exploration costs. Reconciliations The effects of the transition to EU IFRS are shown in the following reconciliations: (i) Group Balance Sheet at 31 December 2003; (ii) Group Income Statement for the year ended 31 December 2004; and (iii) Group Balance Sheet at 31 December 2004; Group Balance Sheet At 31 December 2003 Reconciliation from Irish GAAP to EU IFRS Depletion Foreign Unsuccessful and decom- Currency Irish exploration missioning Conversion EU IFRS GAAP costs adjustments Reserve 2003 2003 b c d Notes on reconciling items US$'000 US$'000 US$'000 US$'000 US$'000 Assets Exploration and evaluation 11,068 - - - 11,068 assets Property, plant and 12,834 (1,885) (1,038) - 9,911 equipment Other investments 868 - - - 868 ______ ______ _____ ______ ______ Total non current assets 24,770 (1,885) (1,038) - 21,847 ______ ______ _____ ______ ______ Investment held for resale 2,003 - - - 2,003 Trade and other 6,102 - - - 6,102 receivables Cash and cash equivalents 346 - - - 346 ______ ______ _____ ______ ______ Total current assets 8,451 - - - 8,451 ______ ______ _____ ______ ______ Total assets 33,221 (1,885) (1,038) - 30,298 ______ ______ _____ ______ ______ Equity Issued capital 6,172 - - - 6,172 Share premium 35,258 - - - 35,258 Capital conversion reserve 234 - - - 234 fund Foreign currency reserve 316 - - (316) - Retained earnings (14,321) (1,885) (1,038) 316 (16,928) ______ ______ _____ ______ ______ Total equity 27,659 (1,885) (1,038) - 24,736 ______ ______ _____ ______ ______ Liabilities Interest bearing loans and 88 - - - 88 borrowings Abandonment and site - - - - - restoration provision ______ ______ _____ ______ ______ Total non current 88 - - - 88 liabilities Bank overdraft 175 - - - 175 Interest bearing loans and 132 - - - 132 borrowings Trade and other payables 5,167 - - - 5,167 ______ ______ _____ ______ ______ Total current liabilities 5,474 - - - 5,474 ______ ______ _____ ______ ______ Total liabilities 5,562 - - - 5,562 ______ ______ _____ ______ ______ Total equity and 33,221 (1,885) (1,038) - 30,298 liabilities Group Income Statement for the year ended 31 December 2004 Reconciliation from Irish GAAP to EU IFRS Depletion Irish Unsuccessful and decom- Disposal Share GAAP exploration missioning of based Other EU IFRS 2004 costs adjustments assets payment adjustments 2004 Notes on reconciling items b c e f g US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Revenue 5,384 - - - - - 5,384 Cost of sales (3,182) - - - - - (3,182) Unsuccessful exploration - (103) - - - - (103) efforts Depletion and (777) - (462) - - - (1,239) decommissioning ______ ______ _____ ______ ______ ______ ______ Gross profit 1,425 (103) (462) - - - 860 Administrative expenses (5,094) - - - (161) (181) (5,436) Profit on disposal of oil - - - 618 - - 618 and gas properties Purchaser's share of (532) - - - - - (532) Vinton Dome profit Exceptional items: Loss on disposal of fixed (46) - - - - 46 - assets Loss on disposal of listed (184) - - - - 184 - investment ______ ______ _____ ______ ______ ______ ______ Loss on operations (4,431) (103) (462) 618 (161) 49 (4,490) Financing income 64 - - - - (49) 15 Financing costs (34) - - - - - (34) ______ ______ _____ ______ ______ ______ ______ Loss before tax (4,401) (103) (462) 618 (161) - (4,509) Income tax expense - - - - - - - ______ ______ _____ ______ ______ ______ ______ Net loss for the financial (4,401) (103) (462) 618 (161) - (4,509) year ______ ______ _____ ______ ______ ______ ______ Group Statement of Recognised Income and Expense for the year ended 31 December 2004 Reconciliation from Irish GAAP to EU IFRS Depletion Irish Unsuccessful and Share EU IFRS GAAP exploration decommissioning Disposal based 2004 2004 costs adjustments assets payment Notes on reconciling b c e f items US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Currency translation (57) - - - - (57) differences ______ ______ _____ ______ ______ ______ Net loss recognised (57) - - - - (57) directly in equity Loss for the financial (4,401) (103) (462) 618 (161) (4,509) year ______ ______ _____ ______ ______ ______ Total recognised income (4,458) (103) (462) 618 (161) (4,566) and expense for the year Attributable to the (4,458) (103) (462) 618 (161) (4,566) equity holders of the Parent Company Group Balance Sheet at 31 December 2004 Reconciliation from Irish GAAP to EU IFRS Depletion Disposal Foreign Irish Unsuccessful and of oil Share Currency EU GAAP exploration decommissioning and gas based Conversion IFRS 2004 costs adjustments properties payments Reserve 2004 Notes on b c e f d reconciling US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 items Assets Exploration 14,310 - - - - - 14,310 and evaluation assets Property, 8,313 (2,266) (1,119) 515 - - 5,443 plant and equipment ______ ______ _____ ______ ______ ______ ______ Total non 22,623 (2,266) (1,119) 515 - - 19,753 current assets ______ ______ _____ ______ ______ ______ ______ Trade and 6,102 - - - - - 6,102 other receivables Cash and cash 767 - - - - - 767 equivalents ______ ______ _____ ______ ______ ______ ______ Total current 6,869 - - - - - 6,869 assets Total assets 29,492 (2,266) (1,119) 515 - - 26,622 ______ ______ _____ ______ ______ ______ ______ Equity Issued capital 6,777 - - - - - 6,777 Share premium 36,061 - - - 161 - 36,222 Capital 234 - - - - - 234 conversion reserve fund Foreign 259 - - - - (316) (57) currency reserve Retained (18,722) (2,266) (1,119) 515 (161) 316 (21,437) earnings ______ ______ _____ ______ ______ ______ ______ Total equity 24,609 (2,266) (1,119) 515 - - 21,739 ______ ______ _____ ______ ______ ______ ______ Liabilities Interest bearing loans and borrowings 51 - - - - - 51 Abandonment and site restoration - - - - - - - provision ______ ______ _____ ______ ______ ______ ______ Total non 51 - - - - - 51 current liabilities ______ ______ _____ ______ ______ ______ ______ Interest bearing loans and borrowings 47 - - - - - 47 Trade and 4,785 - - - - - 4,785 other payables ______ ______ _____ ______ ______ ______ ______ Total current 4,832 - - - - - 4,832 liabilities ______ ______ _____ ______ ______ ______ ______ Total 4,883 - - - - - 4,883 liabilities ______ ______ _____ ______ ______ ______ ______ Total equity 29,492 (2,266) (1,119) 515 - - 26,622 and liabilities (a) Exemptions under IFRS 1 In accordance with IFRS 1, which establishes the framework for the transition to EU IFRS by a first-time adopter, Aminex has availed itself of the following exemptions from the general principle of retrospective restatement: (i) Share-based payments: IFRS 2 has been applied retrospectively to those options that were issued after 7 November 2002 and had not vested by 1 January 2005. (ii) Financial instruments: Aminex has adopted IAS 32 and IAS 39 from 1 January 2005, with no restatement of comparative information. Therefore financial instruments in the comparative 2004 period continue to be recorded on an Irish GAAP basis. (b) Successful efforts accounting The Group has taken note of the guidance issued by IFRIC in November 2005 and has decided to adopt the successful efforts method of accounting for its exploration and developed and producing assets, in place of the full cost accounting method previously followed. Previously incurred exploration costs have therefore been written off in the period in which they were determined to have been unsuccessful. Similarly, costs incurred that previously had been included in the producing/developed cost pool but that do not relate to the remaining producing fields, have also been written off in the period in which either they were determined to be unsuccessful or, if a field, when they ceased production. The accumulated successful efforts exploration charge at 31 December 2003 is US$1,885,000. The unsuccessful exploration efforts charge in 2004 is US$103,000. (c) Depletion and decommissioning Under the successful efforts method of accounting, depletion is now charged on a field by field basis with fields being combined where appropriate. The additional accumulated depletion and decommissioning charge at 31 December 2003 is US$1,038,000. The additional accumulated depletion and decommissioning charge in 2004 is US$462,000. (d) Foreign currency conversion. Under IAS 32 the Group has deemed the cumulative currency translation difference applicable to foreign operations to be zero at the transition date. The cumulative balance of the translation differences amounting to US$316,000 previously recognised directly in the foreign currency reserves has been transferred to retained earnings. (e) Disposal of developed and producing gas property Following the adoption of the successful efforts method of accounting, the disposal of oil and gas properties is now shown as a gain or loss on disposal within the Income Statement. During 2004, the Group disposed of certain US properties, in particular the Vinton Dome gas field. Under Irish GAAP and the full cost method of accounting, the proceeds of sale were credited to the pool of producing oil and gas assets. Under EU IFRS and the successful efforts method of accounting, the cost and accumulated depletion are written off to the Income Statement and the proceeds credited against the resulting charge. In 2004, this gave rise to a gain on disposal of the assets of US$618,000. (f) Share-based payments IFRS 2 "Share-based Payment" requires that an expense for share-based payments, which in the case of Aminex are share options, be recognised in the income statement based on their fair value at the date of grant. Under Irish GAAP, these share-based payments were accounted for at their intrinsic value and no charge for any share options granted with an exercise price equal to the market value of the Company's shares was made. Under EU IFRS, the expense, which is primarily in relation to the Aminex PLC share option scheme, is recognised over the vesting period of the schemes. Fair value calculations have been applied in respect of share options granted after 7 November 2002 as permitted under the framework for transition to EU IFRS. The fair value of the share options to be expensed is determined by using option pricing models and the Group has used the binomial model in its evaluation. The charge recognised in the Income Statement over the vesting period of three years has been adjusted to reflect the expected and actual levels of vesting. Where there is no vesting period and options are exercisable immediately, the value of the options has been charged to the Income Statement at the date of grant. The following inputs were used in determining the fair value of share entitlements: • The exercise price which is the market price at the date the share entitlements were granted. • Future price volatility was based on historical volatility as a guide and was assessed over the last three to four years • The risk free interest rate used in the model is the rate applicable to Irish Government Bonds with a remaining term equal to the expected term of the share entitlements being valued • Expected share purchase/dividend payments. In both the Group retained earnings and the retained earnings of the Parent Company, an expense of $161,000 has been charged for the year ended 31 December 2004 and this is based on share options granted in July 2004. (g) Other adjustments Under EU IFRS, an amount of US$49,000 for income received from the sub-lease of a rented property has been netted against rental payments on that property. Under Irish GAAP, it was shown as other income. This adjustment has no effect on retained earnings. An amount of US$230,000 arising on the loss on disposal of plant and equipment has been reclassified from a separate line item before operating loss to administration expenses. This adjustment has no effect on retained earnings. (h) Cash flow statement The transition from Irish GAAP to EU IFRS does not change the cash flow, other than by changes to movements arising from adjustments to the balance sheets. The EU IFRS cash flow format is similar to the Irish GAAP cash flow but cash flows may be shown in different categories and in a different order. This information is provided by RNS The company news service from the London Stock Exchange

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