Interim Results
Egdon Resources PLC
30 April 2008
For Immediate Release 30 April 2008
EGDON RESOURCES PLC
('Egdon' or 'the Company')
Interim Results for the six months ended 31 January 2008
Egdon Resources plc, the UK-based exploration and production company primarily
focused on the hydrocarbon-producing basins of the onshore UK, today announces
its Interim Results for the six months ended 31 January 2008.
The Company is listed on AIM under the code EDR.
Overview and Highlights
Operational Highlights
• First sustained production from the Keddington oil field
• Extended well test completed on Avington-3z well with further test
production and appraisal planned during 2008
• Acquisition of four licences from Stag Energy Limited including PEDL118
containing the Eakring-Dukes Wood abandoned oil field which is scheduled for
rejuvenation
• Portfolio of 21 licences in UK and France
• New licence applications pending in UK onshore and France
• Wells drilled at Burton Agnes-1, Grenade-3 and Tees Prospect during the
period
Financial and Corporate Highlights
• Successful admission of 'new' Egdon Resources plc to AIM on 17 January
2008, following demerger of Gas Storage business, Portland Gas plc
• First revenues from oil production received in the period totalling
£758,000 (2007 - nil)
• Loss for period from continuing operations (after demerger expenses of
£420,000 and dry-well write-offs of £1,000,000) of £1,494,000 (2007:
£247,000)
• Loss per share from continuing operations for period of 2.23p (2007:
0.40p)
• Completion of an institutional placing during September 2007 to raise
£4.8 million net of expenses with £4.0 million for Portland Gas
• Net funds as at 31 January 2008 £3.3 million (31 January 2007: £11.8
million)
Commenting on the results, Philip Stephens, Chairman of Egdon said
'I am pleased to be able to report the successful completion of the demerger and
most importantly our first significant revenue producing period. Egdon has the
potential to build an exciting portfolio in the UK and mainland Europe, which in
the medium term we expect to provide good shareholder returns. We look forward
to the future with confidence.'
For further information please contact:
Egdon Resources plc 01256 702292
Mark Abbott Managing Director
Buchanan Communications 020 7466 5000
Ben Willey, Nick Melson, Miranda Higham
Nominated Adviser and Broker - Seymour Pierce 020 7107 8000
Jonathan Wright, Sarah Jacobs
Chairman's Statement
Overview
The period covered by these results saw the successful listing on 17 January
2008 of Egdon Resources plc as a new focused Exploration and Production business
following the demerger of Portland Gas plc. This demerger provides clear focus
on the two distinct business units which had developed within Egdon since
listing on AIM in December 2004. During this time the Company's strategy added
significant shareholder value and we now look forward to developing further
value as a stand-alone onshore European E&P business.
Although technically the Company was only incorporated on 25 October 2007 and
only received a certificate allowing it to trade on 7 November 2007, it
inherited every aspect of the former holding company of the Egdon group except
the Gas Storage business, which in turn was inherited by Portland Gas plc. This
interim statement has therefore been prepared on the basis that the two parts of
the business were separate over the reporting period. However caution should be
exercised in interpreting comparisons with the previous year.
Financial
The Company recorded a consolidated loss from continuing operations of
£1,494,000 for the six months ended 31 January 2008 (2007: £247,000). This
figure includes one-off demerger costs of £420,000 and a write-down of
£1,000,000 associated with unsuccessful exploration drilling during the period.
This equates to a loss per share for continuing operations for the period of
2.23p compared to 0.40p for the six months ended 31 January 2007.
During September 2007 the former holding company of the Egdon group (essentially
the Company when it included Portland Gas plc) placed 2,325,582 shares at a
price of 215p per share to raise £4.8 million net of expenses, £4.0 million of
which was to fund Portland Gas. An additional 10,494 shares were issued as part
of the acquisition of the onshore assets of Stag Energy Limited during October
2007. Upon the demerger of the former holding company of the Egdon group into
the Company and Portland Gas plc, shareholders received one share in each of the
Company and Portland Gas plc for every share they held in the former holding
company. Accordingly at demerger 67,801,840 shares in the Company were issued
and as at 31 January 2008 the same number of shares were in issue.
The six month period covered by these results also saw the Company's first
sustained oil production. Oil sales from the Keddington oil field during the
period totalled 6,147 barrels. In addition oil sales over a six month well test
of the Avington-3z well totalled 12,240 barrels net to Egdon. Total revenues
from oil sales during the period were £758,000 (2007: nil).
The Company had net cash of £3.3 million as at 31 January 2008 (31 January 2007:
£11.8 million).
Operations
Progress has been made in a number of areas of Egdon's portfolio during the
period.
Egdon operated Keddington oil field, which was acquired from Roc Oil during
March 2007, and is located to the east of Louth in Lincolnshire, was restored to
production in June 2007 following a workover and re-completion of the
Keddington-1z well. This well has produced around 40 barrels of oil per day
('bopd') with associated gas during the period. In January 2008 production was
restarted from the Keddington-2y well. This well is flowed on a three to five
day cycle and produces 40-45 barrels of oil during vent-down. This has increased
daily field production at Keddington to around 50 bopd.
A full technical evaluation of the field is currently ongoing with the objective
of identifying opportunities for additional drilling to increase the current
production levels and total field recovery. Planning consent is already in place
for additional wells and as such drilling could commence early in 2009.
A six month production test was undertaken during the period on the Avington-3z
well, where Egdon holds a 20% interest. Avington-3z was completed as a
horizontal production well in the Great Oolite reservoir, with drilling
operations completed during July 2007. After an initial period of free-flow
production, which produced 28 degree API oil at rates of up to 470 bopd, the
well was completed with a jet-pump for a prolonged period of pumped test
production. The Avington-3z well is currently shut-in. Approvals are being
sought by the operator Star Energy Limited to put the Avington-3z and -2z wells
back onto test production through enhanced facilities and also for the drilling
of two further appraisal wells. It is anticipated that test production could
re-commence during the summer of 2008.
During October 2007, the Company completed the acquisition from Stag Energy
Limited of 100% interests in four licences in the East Midlands. The
consideration for the acquisition was £100,000 in cash and 10,494 shares. In
addition Egdon has granted a Gross Overriding Royalty of 5% of future production
from the licences.
This acquisition adds significant acreage to a core area and has the potential
to add material reserves. One of the licences contains the Eakring-Dukes Wood
abandoned oil field which produced from 1940 until 1966. The Company believes
there is potential to rejuvenate the field to take advantage of increased oil
prices, improved technology and the recognition of undrilled and undrained parts
of the field. The Eakring-Dukes Wood abandoned oil field was discovered in 1939
and extensively drilled and produced during the second world war, when
production peaked at 1,600 bopd in 1941. Production was from a number of stacked
shallow sandstone reservoirs of Carboniferous age.
Planning approval is in place for the drilling of the Eakring North prospect and
planning is being sought at an additional site on the main Dukes Wood anticline.
The Department for Business, Enterprise and Regulatory Reform ('DBERR') has
granted an extension to the first term of the licence to enable a well to be
drilled on the prospect during the last quarter of 2008.
Progress has been made during the period in negotiations for a gas sales
agreement for production from the Kirkleatham gas discovery in the operated
licence PEDL068 where the Company holds a 20% interest. It is hoped to conclude
an agreement during the first half of 2008 to enable development to progress. As
previously reported Kirkleatham has the potential for conversion into a gas
storage facility.
The Westerdale-1 well has been plugged and abandoned and the site restored
during the period. The Westerdale-1 well proved a separate northern closure to
the Ralph Cross gas accumulation proven by the Ralph Cross-1 well drilled and
tested by Home Oil in 1966. A site has been identified for a possible
Westerdale-2 well to test the main part of the Ralph Cross gas accumulation and
progress is being made with a view to submitting a planning application possibly
later this year.
The Company has participated in the drilling of three wells during the period,
two of which are in the UK and the other in South-West France.
The Burton Agnes-1 Exploration well in the Company's operated licence PEDL071,
located in East Yorkshire, where Egdon holds a 25% interest, reached 2,290
metres measured depth on 17 December 2007. The primary reservoir target, the
Leman Sandstone, was water wet and zones of gas shows observed within the
Zechstein carbonates were not considered worth testing. The well confirmed the
presence of thick, good quality Leman sandstone reservoir and a viable petroleum
system but showed the area to be more complex than the pre-drill view. The
Burton Agnes-1 well has been suspended to provide the option to sidetrack to a
more elevated part of the structure once the ongoing post-well evaluation is
completed and we remain encouraged by the potential for the area. Egdon's costs
in the well were carried by other participants.
The Tees Prospect exploration well where the Company holds a 10% interest
reached a depth of 3,238m on 31 December 2007. The well, operated by RWE Dea UK
Limited, and located approximately 20 kilometres south-east of Flamborough Head,
was targeting the Tees Prospect, a Lower Permian Leman Sandstone structural
closure mapped on proprietary 3D seismic data. The primary Leman Sandstone
target was penetrated close to prognosis with minor gas shows but the sands
encountered were water bearing. There were also good indications of gas within a
25m sandstone in the Carboniferous interval but following log evaluation these
were not considered worth testing. As such the well has been plugged and
abandoned and a write-down of £1,000,000 has been made in respect of this
licence. Post-well analysis is currently ongoing and a decision on these
licences is expected later in the year.
The Grenade-3 well in the St Laurent Permit of SW France where the Company holds
a 33.423% operated interest reached a total depth of 2,310 metres on 10 February
2008. The target 'Vraconian' limestone interval was penetrated 21m up-dip of the
Grenade-1 oil discovery well. However, coring and logging indicated that the
target interval had no effective porosity and was therefore not hydrocarbon
bearing. The well has defined the eastern limit of reservoir development within
the structure with potential still existing to the west and south around the
Grenade-1 well and also northwards towards the Maurrin-1 well. The well has been
suspended to retain the option to target other areas of the Grenade prospect via
a sidetrack, pending the outcome of detailed post-well technical and commercial
evaluation.
Further technical work during the period has enabled the definition of the
Audignon Prospect, a multi-TCF Triassic sub-salt gas prospect within the St
Laurent Permit.
As part of the normal exploration cycle a number of licences have come to the
end of their term and been relinquished during the period. Promote licence P1296
covering block 15/7 in the outer Moray Firth was surrendered during the period.
In the Weald Basin all of PEDL110 and most of PEDL069 have also been
relinquished. That part of PEDL069 which contains the potential extension of the
Avington oil accumulation has been retained.
Your Board recognises the need to replenish and widen its opportunity base as
non-prospective licences and areas within its existing portfolio are
relinquished. As such I can report that Egdon has been active in the long
awaited UK 13th Landward Licensing Round having made a number of applications in
and around our areas of focus. It is anticipated that awards will be announced
by DBERR in the summer and we will provide an update at that time should any of
our applications be successful.
Egdon has identified France as an area for potential growth. The Company has
been evaluating a number of opportunities and currently has two applications
pending. It is expected that further applications will be made during 2008.
Outlook
The strategy for the future is to remain focused on oil and gas exploration and
production in the onshore UK and mainland Europe.
The Company currently has operated production and revenues from the Keddington
oil field where it looks to progress plans for infill drilling. Egdon also await
further test-production from the Avington oil discovery. In addition there is a
programme of field appraisal and developments planned for 2008 at the
Kirkleatham gas discovery, the Eakring- Dukes Wood oil field and the Waddock
Cross oil discovery and during the year decisions will be taken on further
drilling at both Burton Agnes and Grenade.
Conditional upon planning, exploration wells are planned for the fourth quarter
of 2008 at Holmwood and Winfrith. Egdon also awaits the outcome of licence
applications in the onshore UK and onshore France.
Your Board recognises the challenges of developing and growing the oil and gas
business to a more material size as an independent entity following the
successful demerger of the Gas Storage business, and continues to review various
options to achieve this.
We look forward to a further year of progress and thank our shareholders for
their continued support.
Philip Stephens
Chairman
30 APril 2008
EGDON RESOURCES PLC
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 January 2008
Notes Unaudited Unaudited Unaudited
Six months Six months Year
ended ended ended
31-Jan-08 31-Jan-07 31-Jul-07
£'000 £'000 £'000
Continuing operations
Revenue 758 0 41
Cost of sales : Write-down of
exploration costs (1,000) 0 0
Cost of sales: other (736) 0 (53)
Total cost of sales (1,736) 0 (53)
Gross (loss) (978) 0 (12)
Administrative expenses (780) (345) (635)
Other operating income 146 26 59
--------- --------- --------
Operating loss (1,612) (319) (588)
Financial income 118 72 260
--------- --------- --------
Loss before taxation (1,494) (247) (328)
Taxation 0 0 0
--------- --------- --------
Loss on ordinary activities after
taxation (1,494) (247) (328)
--------- --------- --------
Loss from discontinued operations 5 (798) (109) (209)
--------- --------- --------
Loss for the period retained (2,292) (356) (537)
--------- --------- --------
--------- --------- --------
EGDON RESOURCES PLC
CONSOLIDATED BALANCE SHEET
As at 31 January 2008
Notes Unaudited Unaudited Unaudited
31-Jan-08 31-Jan-07 31-Jul-07
£'000 £'000 £'000
Non-current assets
Intangible assets 5,553 9,973 14,735
Plant and equipment 526 8 147
--------- --------- ---------
Total non-current assets 6,079 9,981 14,882
Current assets
Inventory 26 0 24
Trade and other receivables 2,069 253 640
Available for sale financial
assets 50 0 0
Cash and cash equivalents 6 3,341 11,774 7,900
--------- --------- ---------
Total current assets 5,486 12,027 8,564
Current liabilities
Trade and other payables (2,180) (641) (2,015)
--------- --------- ---------
Net current assets 3,306 11,386 6,549
--------- --------- ---------
Total assets less current
liabilities 9,385 21,367 21,431
Non-current liabilities
--------- --------- ---------
Decommissioning provision (247) 0 (246)
--------- --------- ---------
9,138 21,367 21,185
--------- --------- ---------
Shareholders' funds
Share capital 3,7 6,780 655 655
Merger reserve 7 0 20,387 20,387
Retained earnings 7 2,358 325 143
--------- --------- ---------
9,138 21,367 21,185
--------- --------- ---------
EGDON RESOURCES PLC
CONSOLIDATED CASHFLOW STATEMENT
for the half year ended 31 January 2008
Notes Unaudited Unaudited Unaudited
Six months Six months Year
ended ended ended
31-Jan-08 31-Jan-07 31-Jul-07
£'000 £'000 £'000
------ --------- --------- --------
Loss from Operations (2,292) (356) (537)
Adjustments for:
Depreciation and impairment of
property plant and equipment 1,108 1 17
(Increase)/decrease in trade and
other receivables (1,859) 785 397
Increase in inventory (2) 0 (24)
Increase in trade payables 1,376 (286) (446)
Increase in provisions 1 (412) (167)
Interest Income (247) (74) (403)
------ --------- --------- --------
Net cash flow from Operating
Activities (1,915) (342) (1,163)
Investing Activities
Interest received 5 247 74 403
Payments for intangible fixed
assets 5 (3,882) (1,690) (4,917)
Purchase of plant and equipment 5 (59) (6) (161)
Purchase of financial assets 5 (100) 0 0
Demerger of subsidiary 4 (3,650) 0 0
------ --------- --------- --------
Net cash flow from investing
activities (7,444) (1,622) (4,675)
Financing Activities
Issue of shares 5,000 12,325 12,325
Costs associated with issue of
shares (200) (480) (480)
------ --------- --------- --------
Net cash flow from financing 4,800 11,845 11,845
Net (increase)/decrease in cash
and cash equivalents (4,559) 9,881 6,007
Cash and cash equivalents as at 1
August 2007 7,900 1,893 1,893
------ --------- --------- --------
Cash and cash equivalents as at 31
January 2008 3,341 11,774 7,900
------ --------- --------- --------
NOTES TO THE INTERIM RESULTS for the six months ended 31 January 2008
1. General information
Egdon Resources plc ('the Company' and ultimate parent of the Group) is a public
limited company listed on the AIM market of the London Stock Exchange plc (AIM)
and incorporated in England. The registered office is Suite 2 90-96 High Street,
Odiham, Hampshire, RG29 1LP.
This interim report was authorised for issue by the directors on the 30 April
2008.
Accounting policies
The principal accounting policies are summarised below. They have been applied
consistently throughout the period covered by this interim report.
Basis of preparation
Egdon Resources plc, an AIM listed entity, adopted International Financial
Reporting Standards (IFRS) and IFRIC Interpretations expected to be effective in
July 2008 as the basis for preparation of its financial statements from the 1
August 2007, with a date of transition of 1 August 2006. The financial
information has been prepared under the historical cost convention as modified
by the revaluation of certain financial assets, in accordance with applicable
Accounting Standards and the Statement of Recommended Practice: Accounting for
Oil and Gas Development production and Decommissioning Activities published by
the Institute of Petroleum on behalf of the U. K. Oil Industry Accounting
Committee ('the SORP'). The Group has not presented reconciliations of UK GAAP
to IFRS as required by IFRS1, 'First time adoption of International Financial
Reporting Standards' as there are no material reconciling items.
Non-statutory accounts
The unaudited results contained in this document do not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. Copies of the
statutory accounts of the relevant Group companies, which were prepared under UK
GAAP, for the year ended 31 July 2007 have been delivered to the Registrar of
Companies. The audit reports on those accounts were unqualified, did not include
references to any matters to which the auditors drew attention by way of
emphasis without qualifying their reports and did not contain a statement under
Sections 237(2)-237(3) of the Companies Act 1985. The first statutory accounts
for Egdon Resources plc will be in respect of the period ended 31 July 2008.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted
accounting practice requires management to make estimates and judgements that
affect the reported amounts of assets and liabilities as well as the disclosure
of contingent assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the reporting period.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Basis of consolidation
The financial information incorporates the financial information of the Company
and entities controlled by the Company. Control is achieved where the Company
has power to govern the financial and operating policies of an investee entity
so as to obtain benefits from its activities.
NOTES TO THE INTERIM RESULTS for the six months ended 31 January 2008
Business combinations and goodwill
On acquisition, the assets and liabilities and contingent liabilities of
subsidiaries are measured at their fair values at the date of acquisition. Any
excess of cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to the income statement in the period of
acquisition. Goodwill arising on consolidation is recognised as an asset and
reviewed for impairment at least annually. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
With effect from 16 January 2008 a new parent company was introduced to the
Group via a share for share exchange between the new parent company Egdon
Resources plc and the former parent company Egdon Resources U.K. Limited.
The introduction of a new holding company does not result in the addition of any
new businesses to the group, and as such it falls outside of the scope of IFRS
3. Therefore, it has been accounted for using merger accounting principles. As a
result, although the group reconstruction did not become effective until January
2008, the consolidated financial statements of Egdon Resources plc are presented
as if Egdon Resources plc and its subsidiaries had always been part of the same
group. Accordingly, the financial information for the current period has been
presented, and that for the prior periods restated, as if the subsidiaries had
been owned by Egdon Resources plc throughout the current and comparative
accounting periods.
The results for the period ended 31 January 2007 and the year ended 31 July 2007
incorporate the results of Egdon Resources U.K. Limited and its subsidiaries for
the relevant periods. The results for the period ended 31 January 2008
incorporate the results of Egdon Resources U.K. Limited for the six months ended
31 January 2008, or the period to the date of disposal as appropriate and the
results of Egdon Resources plc from the 25 October 2007 to 31 January 2008.
Revenue
Revenue represents amounts receivable for oil sales net of VAT and trade
discounts and is recognised as the goods are provided.
Income charged to other companies by the Group, net of VAT, in respect of fees
for acting as Operator is disclosed within Other operating income.
Consortium accounting
The Group's exploration and development activities are generally conducted as
co-licensee in joint operation with other companies. The financial statements
reflect the relevant proportions of capital expenditure and operating costs
applicable to the Group's interest.
Oil and gas interests
The Group financial statements for oil and gas exploration have been prepared on
the full cost basis as set out in the SORP.
Licence acquisition costs, geological and geophysical costs, costs of drilling
exploration, appraisal and development wells, and an appropriate share of
overheads (including appropriate Director's costs) are capitalized and
accumulated in full cost pools within property, plant and equipment on a
geographical basis.
Costs relating to the exploration and appraisal of oil and gas interests which
the Directors consider to be unevaluated are initially held outside the cost
pool as intangible assets. These costs are reassessed at each year end and when
there are indications of impairment or at the conclusion of an appraisal
programme the related costs are transferred to the full cost pool within
property, plant and equipment. The Group's oil and gas assets, currently shown
in intangible assets, would be held in two cost pools, the UK and France.
An impairment test is carried out at each balance sheet date to assess whether
the net book value of the capitalized costs in each pool is covered by the
associated recoverable amount. Impairment losses are recognized in the income
statement.
Depletion is provided on balances held in each pool, plus the expected future
costs to extract all commercial oil and gas reserves, using the unit of
production method. (Commercial oil and gas reserves are proven and probable oil
and gas reserves as defined in the SORP). Depletion is not provided on interests
held outside the cost pool. For material interests, reserve data supplied by
operators is used.
Depreciation of plant and equipment
Plant and equipment is stated at cost less depreciation. Depreciation is
provided at rates calculated to write off the cost less estimated residual
values of each asset over its expected useful life, as follows:-
Plant and equipment 20% straight line
Fixtures and fittings 25% straight line
Computer equipment 33% straight line
Decommissioning provision and asset
Licensees have an obligation to restore producing fields to a condition
acceptable to the relevant authorities at the end of their commercial lives.
Such provisions represent the Group's share of the estimated liability for costs
which will be incurred in removing production facilities at the end of
commercial production from the field. Where the time value of money is material,
the provision made in the financial statements is for the present value of the
estimated future costs. A corresponding asset is also created for the amount
equal to the provision when it is first made in the financial statements. This
asset is subsequently depleted as part of oil and gas assets in accordance with
the depreciation and depletion policy applied to such assets. The increase in
the net present value of the future cost is included within finance costs.
Foreign currencies
Transactions denominated in foreign currencies are translated into sterling at
the rate of exchange ruling at the date of the transaction. Monetary assets and
liabilities in foreign currencies are translated into sterling at the rate of
exchange ruling at the end of the financial year. All exchange differences are
dealt with in the income statement.
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Trade and other receivables are measured at initial recognition at fair value,
and are subsequently measured at amortised cost using the effective interest
method. A provision is established when there is objective evidence that the
Group will not be able to collect all amounts due. The amount of any provision
is recognised in the income statement. Cash and cash equivalents comprise cash
held by the Group and short-term bank deposits with an original maturity of
three months or less.
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective interest rate
method.
Financial liabilities and equity instruments issued by the Group are classified
in accordance with the substance of the contractual arrangements entered into
and the definitions of a financial liability and an equity instrument. An equity
instrument is any contract that evidences a residual interest in the assets of
the Group after deducting all of its liabilities. Equity instruments issued by
the company are recorded at the proceeds received, net of direct issue costs.
Interest bearing bank loans, overdrafts and other loans are recorded at the
proceeds received, net of
direct issue costs. Finance costs are accounted for on an accruals basis in the
income statement using the effective interest method.
Available for sale assets are those non-derivative financial assets that are
designated as available for sale or are not classified as financial assets at
fair value through profit and loss, held to maturity investments or loans and
receivables. After initial recognition available for sale financial assets are
measured at fair value with gains or losses being recognised as a separate
component of equity until the investment is derecognised or until the investment
is determined to be impaired at which time the cumulative gain or loss
previously reported in equity is included in the income statement. The fair
value of investments that are actively traded in organised financial markets is
determined by reference to quoted market bid prices at the close of business on
the balance sheet date. For investments where there is no active market, fair
value is determined using appropriate valuation techniques.
Taxation
Tax expense represents the sum of the tax currently payable and any deferred
tax. No tax is currently payable being based upon the taxable result for the
year. The taxable result differs from the net result 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 never taxable
or deductible. The Company's liability for current tax is calculated using tax
rates that have been enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit. Deferred tax
liabilities are recognised for taxable temporary differences arising on
investments in subsidiaries, except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
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 profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset realised.
Deferred tax is charged or credited to the income statement, except when it
relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Operating leases
Rentals under operating leases are charged on a straight line basis over the
lease term, even if the payments are not made on such a basis.
Inventory
Inventory is stated at the lower of cost and net realisable value.
2. Loss per share
Six months Six months Year
ended 31 ended 31 ended 31
January 2008 January 2007 July 2007
p p p
Basic (total) (3.41) (0.58) (0.85)
Continuing operations (2.23) (0.40) (0.52)
The calculation of basic loss per share is based upon a loss of £2.29 million
(January 2007: £0.356million, July 2007: £0.537 million) divided by the weighted
average number of ordinary shares in issue of 67,089,549 (January 2007:
61,262,674, July 2007: 63,392,512).
The calculation of loss per share for continuing operations is based upon a loss
of £1.49 million (January 2007: £0.247million, July 2007: £0.328 million)
divided by the weighted average number of ordinary shares in issue of 67,089,549
(January 2007: 61,262,674, July 2007: 63,392,512).
In accordance with IAS 33, diluted earnings per share calculations are not
presented as no share options were outstanding during the period.
31 January 31 January 31 July
2008 2007 2007
£ £ £
3. Called up share capital
Authorised
100,000,000 ordinary shares - 1,000,000 1,000,000
of £0.01 each
100,000,000 ordinary shares 10,000,000 - -
of 10p each
50,000 redeemable preference 50,000 - -
shares of £1 each
(classified as liabilities)
Allotted, called up and
fully paid
65,465,764 ordinary shares - 654,657 654,657
of £0.01 each
67,801,840 ordinary shares 6,780,184 - -
of 10p each
50,000, redeemable 50,000 - -
preference shares of £1 each
(classified as liabilities)
On 28 September 2007 the former holding company of the Egdon group placed
2,325,582 new 1p ordinary shares with a nominal value of £23,256 for aggregate
cash consideration of £5,000,000. Following the Placing, 67,791,346 ordinary
shares were in issue.
On 23 October 2007 10,494 1p ordinary shares with a nominal value of £105 and an
aggregate market value of £25,000 were issued to Stag Energy Limited in part
consideration for the acquisition of their entire interest in licences PEDL094,
PEDL118, PEDL130 and PEDL132. Following the Placing, 67,801,840 ordinary shares
were in issue.
At demerger on 16 January 2008, 67,801,840 Ordinary 10p shares in Egdon
Resources plc were issued to each shareholder who held one share in the former
holding company of the Egdon group
4. Demerger
The demerger of Portland Gas and the Gas Storage business in essence resulted in
each shareholder who held one share in the former holding company of the Egdon
group receiving one share in Portland Gas plc, (holding the gas storage assets
and business), and one share in the Company, (holding the balance of the oil and
gas exploration and production assets).
As a precursor to the demerger, Portland Gas plc was incorporated as New
Portland PLC on the 25 October 2007 with an authorised share capital of 500,000
ordinary shares of 10p each. On the 6 November 2007 the authorised share capital
was increased by the creation of 99,500,000 additional ordinary shares of 10p
each and 50,000 redeemable preference shares of £1 each, the latter being held
by the Company. For the purposes of the demerger, it was necessary for the Egdon
Group to be held by a new holding company, the Company (formerly New Egdon PLC)
which was also incorporated on 25 October 2007. The Company became the ultimate
holding company of the Egdon group pursuant to a Scheme of Arrangement under
Section 425 of the Companies Act 1985. Under the Scheme of Arrangement
shareholders on the register of the former holding company of the Egdon group
exchanged shares for one share in the Company. The transfer of the Gas Storage
business was effected by means of a reduction in capital of the Company,
following which the Company transferred Portland Gas A Limited (one holding
company of the Gas Storage business) to Portland Gas plc by way of consideration
for such transfer, Egdon shareholders received shares in Portland Gas plc in
proportions that mirrored their holdings in Egdon.
Portland Gas A Limited was distributed by means of a dividend in specie. The
book value of the assets and liabilities distributed was £14,579,402. The assets
and liabilities were made up as follows:
£
Intangible assets 11,605,687
Equipment 54,617
Trade and other receivables 430,250
Cash and cash equivalents 3,650,735
Available for sale assets 50,000
Trade and other payables (1,211,887)
---------
Net assets on disposal 14,579,402
5. Discontinued Operations
Included within the cash flow are the following amounts in relation to
discontinued operations:
Investing Activities 31 January 2008 31January 2007 31 July 2007
£'000 £'000 £'000
Interest received 129 2 143
Payments to acquire
intangible assets (2,176) (1,357) (3,749)
Purchase of equipment (59) 0 (5)
Purchase of
financial assets (50) 0 0
--------- --------- --------
(2,156) (1,355) (3,611)
--------- --------- --------
The results of discontinued operations can be analysed as follows:
31 January 2008 31 January 2007 31 July 2007
£'000 £'000 £'000
Administrative expenses (927) (111) (352)
Investment revenues 129 2 143
--------- --------- --------
(798) (109) (209)
--------- --------- --------
6. Cash and Cash Equivalents
31 January 2008 31January 2007 31 July 2007
£'000 £'000 £'000
Cash at Bank and in hand 572 962 159
Short term bank deposits 2,769 10,812 7,741
--------- -------- ---------
3,341 11,774 7,900
7. Reconciliation of movement in capital and reserves
Share Merger Retained
capital reserve earnings Total
£'000 £'000 £'000 £'000
--------- --------- -------- --------
Balance at 31 July 2006 571 8,626 681 9,878
Issue of ordinary shares 84 11,761 11,845
Loss for the period (356) (356)
--------- --------- -------- --------
Balance at 31 January
2007 655 20,387 325 21,367
Loss for the period (182) (182)
--------- --------- -------- --------
Balance at 31 July 2007 655 20,387 143 21,185
Issue of ordinary shares 23 4,802 4,825
Effect of share
cancellation (678) 678
Issue of shares following
scheme of arrangement 6,780 (6,780)
Cancellation of share
premium (19,087) 19,087
Distribution of Portland
group by means of
dividend in specie (14,580) (14,580)
Loss for the period (2,292) (2,292)
--------- --------- -------- --------
Balance at 31 January
2008 6,780 - 2,358 9,138
8. Post balance sheet events
The Grenade-3 well reached total depth on 10 February. The well was not
hydrocarbon bearing due to a lack of reservoir and has defined the eastern limit
of the Grenade oil accumulation. The well has been suspended to retain the
option to target other areas of the Grenade prospect via a sidetrack, pending
the outcome of detailed post-well technical and commercial evaluation.
9. Publication of the interim report
This interim report is available on the Company's website
www.egdon-resources.com.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 31st May 2024
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