Final Results

Sound Oil PLC 30 March 2006 SOUND OIL PLC PRELIMINARY RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2005 The Board of Sound Oil plc ("Sound Oil" or the "Company") announces its preliminary results for its first trading period from 27 January 2005 to 31 December 2005. Trading in the Company's shares on AIM is currently suspended following the announcement on 20 March 2006 of a possible reverse takeover. CHAIRMAN'S STATEMENT Sound Oil plc was admitted to AIM on 29 June 2005 with a remit to invest in energy resource opportunities in North and West Africa and raised £10.8 million from a share placing. The Company has concentrated on opportunities which either gave significant upside in the event of an early discovery or gave an early revenue return, preferably both. Initially the Company focused its efforts on offshore areas of West Africa and has evaluated over thirty opportunities in Liberia, Morocco, Equatorial Guinea, Nigeria, Ivory Coast, Angola, Sierra Leone, Gambia, Gabon and Senegal. In its first accounting period to 31 December 2005, the Company made a net loss of £193,000. Expenditure incurred on pursuing investment opportunities and on administration was £361,000, partly offset by £168,000 of income from bank deposit interest net of tax. Total shareholders' funds at the year end were £10.7 million. Our initial cash reserves are virtually intact and we have a strong balance sheet. Our overheads are low and we outsource, where appropriate, to expert associates. We are determined to find value for shareholders and not to tie up funds in areas with little hope of early action. Towards the end of 2005 we extended our area of evaluation outside Africa to check whether there was better value elsewhere, while also continuing to review opportunities in that region. On 20 March 2006 we announced that we had reached agreement in principle for the acquisition of energy resource assets in Asia. We are making progress with this transaction which would result in the Company acquiring interests in an undeveloped gas field and exploration activity in Indonesia. The transaction would represent a reverse takeover under the AIM Rules and would be conditional on the approval of the Company's shareholders. Gerry Orbell Chairman 29 March 2006 PROFIT AND LOSS ACCOUNT for the period from 27 January to 31 December 2005 Notes £'000's Exploration expenditure (151) ------ Gross loss (151) Administrative costs (210) ------ Operating loss (361) Interest receivable 234 ------ Loss on ordinary activities before tax (127) Tax 4 (66) ------ Loss after tax (193) ------ Loss per share (pence): basic 5 (0.12) Loss per share (pence): diluted 5 (0.12) Results for the period reflect ongoing operations which are presently based in the UK BALANCE SHEET as at 31 December 2005 Notes £'000's Current assets Debtors 6 24 Cash and short-term deposits 10,839 -------- Total current assets 10,863 Creditors: amounts falling due within one year 7 115 -------- Net current assets 10,748 -------- Total assets less current liabilities 10,748 Creditors: amounts falling due after one year - Provisions for liabilities and charges - -------- Net assets 10,748 -------- Capital and reserves Share capital 300 Share premium account 10,641 Profit and loss account (193) -------- Total equity shareholders' funds 3 10,748 -------- CASH FLOW STATEMENT for the period to 31 December 2005 Notes £'000's Net cash outflow from operating activities 8 (336) Returns on investment and servicing of finance Interest received 234 Taxation - -------- Cash outflow before management of liquid resources and (102) financing Financing Issue of Ordinary Shares 11,115 Costs associated with raising capital (174) -------- Net cash from financing 10,941 Increase in cash 10,839 -------- NOTES TO THE FINANCIAL INFORMATION for the period to 31 December 2005 1. Accounting policies The financial information contained in this document does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 but has been extracted from the audited statutory accounts for the period to 31 December 2005. The audited statutory accounts received an unqualified auditors' report which did not contain a statement under section 237 of the Companies Act 1985 and will be delivered to the Registrar of Companies in due course. The audited accounts have been prepared under the historical cost convention and in accordance with the Oil Industry Accounting Committee Statement of Recommended Practice - 'Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities', using the accounting policies set out in the Company's 2005 statutory accounts. 2. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the period to 31 December 2005 £'000's Net loss for the period attributable to members of (193) the company Total recognised losses (193) 3. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS FUNDS for the period to 31 December 2005 £'000's Total recognised losses relating to the period (193) New shares issued 11,115 Costs associated with raising capital (174) ------ Total movements during the period 10,748 Shareholders' funds at 27 January 2005 - ------ Shareholders' funds at 31 December 2005 10,748 ------ 4. Tax on profit on ordinary activities Analysis of tax charge £'000's Loss on ordinary activities before tax (127) Loss on ordinary activities at Standard Rate of UK Corporation Tax 38 (30%) Non-deductible expenditure at Standard Rate (108) Small companies relief 4 ------ Total tax - current (66) ------ The most significant event to affect the tax charge in the future will be the establishment of exploration activities which will allow certain expenses to be deducted, and losses from the trade to be offset, in the calculation of the charge. 5. Loss per share The calculation of basic loss per Ordinary Share is based on the loss after tax and on the weighted average number of Ordinary Shares in issue during the period. Diluted earnings per Ordinary Share reflect the notional exercise of the weighted average number of dilutive Ordinary Share options outstanding during the period. Basic and diluted loss per share are calculated as follows: Loss Weighted Earnings after average per share tax number pence of shares £'000s Pence Basic (193) 165 (0.12) Diluted (193) 166 (0.12) 6. Debtors: amounts due within one year £'000's Prepayments 24 ------- Total 24 ------- 7. Creditors: amounts falling due within £'000's one year Trade creditors 11 Corporation Tax 66 Accruals 38 -------- Total 115 -------- 8. Cash flow statement analysis £'000's a. Reconciliation of operating loss to net cash flow from operating activities Operating loss (361) Increase in debtors (24) Increase in creditors 49 -------- Net cash outflow from operating activities (336) -------- b. Reconciliation of net cash flow to movement in net debt £'000's Increase in cash in the period 10,839 Cash flow from movement in liquid resources - Change in net cash resulting from cash flows - -------- Net cash as at 31 December 2005 10,839 -------- c. Analysis of Net Cash At Cash Flow 31 December 2005 £'000's £'000's Cash in hand and at bank 144 144 Short term deposits 10,695 10,695 ------- -------- Total net cash 10,839 10,839 ------- -------- 9. 2005 Report and Accounts Copies of the 2005 report and accounts will be sent to shareholders in due course. Further copies will be available from the Company's nominated adviser, Smith & Williamson Corporate Finance Limited, 25 Moorgate, London EC2R 6AY, free of charge. This information is provided by RNS The company news service from the London Stock Exchange

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