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Victoria Oil & Gas (VOG)

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Friday 28 February, 2014

Victoria Oil & Gas

Interim Results

RNS Number : 1590B
Victoria Oil & Gas PLC
28 February 2014
 



28 February 2014

 

Victoria Oil & Gas Plc

("VOG" or the "Company")

 

INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2013

 

Victoria Oil and Gas Plc (AIM: VOG), the emerging African energy utility company, is pleased to announce its unaudited interim results for the six months ended 30 November 2013.

 

Financial Highlights

 

·      Operating profit for the period of $3.7 million (2012: Loss $3.7 million)

 

·      Revenue for the period of $6.0 million (6 months to 30 November 2012: $1.7 million, 12 months to 31 May 2013: $6.9 million)

 

·      Revenue during the period comprised:

 

gas sales totalling $5.4 million at $16 per million British thermal units (6 months to 30 November 2012: $1.5 million, 12 months to 31 May 2013: $6.3 million)

 

condensate sales totalling $0.6 million at an average price of $107.22 per barrel (6 months to 30 November 2012: $0.2 million, 12 months to 31 May 2013: $0.6 million)

 

·      Improvement in liquidity of the Group with Net Current Assets of $12.3 million (6 months to 30 November 2012: Net Current Liabilities $27.6 million, 12 months to 31 May 2013: Net Current Liabilities $1.7 million)

 

 

Operational Highlights

 

·      Inauguration of gas plant and pipeline by President Biya in November 2013

 

·      Production levels rose from 2.0mmscf/d in July 2013 to 3.2mmscf/d in February 2014 and

Gaz du Cameroun operational break-even at these levels

 

·      Collaboration agreement with AES-Sonel to evaluate supply of gas for 45MW of power generation

 

·      All 1.5MW gensets cleared customs and at customer plants

 

·      BGFIBank loan for XAF 4,000,000,000 ($8.3 million) drawn down

 

·      Resolution of RDL- RSM arbitration

 

·      Permits for drilling under Wouri River to access Bonaberi market received

 

 

For further information, please visit www.victoriaoilandgas.com or contact:

 

Victoria Oil & Gas Plc

Kevin Foo/Laurence Read

 

 

 

Tel: +44 (0) 20 7921 8820

Fox-Davies Capital

Daniel Fox-Davies

 

 

Tel: +44 (0) 20 3463 5010

Strand Hanson Limited

Simon Raggett/Stuart Faulkner/Angela Hallett

 

 

Tel: +44 (0) 20 7409 3494

Tavistock Communications

Ed Portman/Conrad Harrington/Simon Hudson

 

 

Tel: +44 (0) 20 7920 3150

 

CHAIRMAN'S STATEMENT

 

 

 

Dear Shareholder,

 

I am pleased to present the Group's unaudited interim results for the six months to 30 November 2013 and to update you on recent corporate and operational developments.

 

This reporting period was one of the most significant in the Group's history. We faced serious challenges to operational delivery in Cameroon and the Board took comprehensive steps to address these issues.

 

Following the departure of John Scott, as announced at the end of September 2013, I assumed the role of interim Chief Executive. Since then we have provided comprehensive updates to the market on the Group's strategy, operations and the changes that we were implementing. The business principles guiding these changes were to:

 

·      Quickly turn revenue into profits

·      Aggressively build our market share

·      Preserve the highest standards of safety, environmental compliance and corporate governance

 

These changes were undertaken at all levels of the Group, primarily at an expatriate level, with the senior management team in Douala being strengthened by way of new appointments in the operations, project management and sales & marketing departments. Internal systems were also overhauled with regard to the assessment of production forecasting and expansion of operations. Real production growth has been achieved.

 

Importantly, all changes have been successfully implemented with no further dilution to shareholders during this financial period.

 

We have recognised for some time that the Board of Directors needs to be substantially strengthened and with this in mind we are currently finalising the selection process for Non-Executive Directors. Announcements regarding such appointments will be made in due course.

 

 

Logbaba, Cameroon

 

A key event was the visit by the President of the Republic of Cameroon, His Excellency Paul Biya, to inaugurate our gas plant and pipeline on 15 November 2013. Not only did the President endorse our efforts and achievements, but he also emphasised the importance of gas as a cleaner and more efficient strategic energy source for the country. The visit attracted a lot of national press coverage and we have now earned recognition as an energy provider and growing utility company in Cameroon. This compliments our rebranding of Rodeo Development Ltd ("RDL") to Gaz du Cameroun S.A. ("GDC").

 

Our project teams are now focussed on:

 

·      Pursuing and delivering against realistic targets set for pipeline laying, connection of new customers to the pipeline network and installation and commissioning of gas fired generators ("gensets")

·      Building robust project management skills, tools and procedures that will form a sustainable base for future growth

·      Re-emphasising the quality and health & safety elements of our business and the importance of community engagement and support

 

Key Developments at Logbaba

 

·      Production levels have risen from an average of 2.0mmscf/d in July 2013 to 3.2mmscf/d in February 2014. At these current production levels we are now achieving operational break-even at Logbaba

 

·      Total Production for the project for 6 months to 31 December 2013 was 364.3mmscf (6 months to 30 November 2012: 89.8mmscf, 12 months to 31 May 2013: 367.7mmscf). To date we have shipped 14,453 bbls of condensate

 

·      At the period end we had made 19 gas thermal customer connections (currently 20, 31 May 2013: 19, 30 November 2012: 4) and one condensate customer.

 

·      We currently have 15 additional thermal gas  and 8 power agreements signed

 

·      Glass manufacturer SOCAVER, part of the SABC group, was brought online in February 2014, consuming an average of 0.3mmscf/d with a peak demand estimated at 0.7mmscf/d

 

·      GDC has also reached an agreement with Dangote, a major cement manufacturing company, to supply gas for its thermal energy requirements. GDC anticipates that the Dangote connection will be completed during Q2 2014 and it is anticipated that gas consumption will be in the order of  0.4mmscf/d

 

·      All six 1.5MW gensets have cleared customs and are being installed at customer plants

 

·      A collaboration agreement with AES-Sonel, the sole electric utility company in Cameroon, has been successfully negotiated. GDC and AES-Sonel will work on a technical and operational plan to progressively replace Heavy Fuel Oil and Light Fuel Oil power generation stations with gas-fired generation. It is currently intended that GDC will initially supply gas to temporary units with a combined generating capacity of 45MW. This first stage is targeted to be online by July 2014

 

·      Now that Phase I and Phase II trunk lines have been commissioned with gas, our teams are focussed on building spur connections to customers along the line

 

·      We have also received permits to enable us to drill under the Wouri River and lay pipe to access the gas market in Bonaberi

 

·      Draw down on the XAF 4,000,000,000 ($8.3 million) BGFIBank loan facility

 

 

Other News

 

Details of the Award of the ICC International Court of Arbitration were published on 11 December 2013. The Tribunal found that RSM Production Corporation ("RSM") had not forfeited its interest in the Logbaba project but had a continuing obligation to pay the outstanding cash call to RDL (now GDC). As a result, from 30 November 2013 to date, the Group has received over $20 million from RSM and has reached an agreement to constructively work together to realise the full potential of the Logbaba Project.

 

The Group's participating interest in Logbaba now stands at 60% through VOG's wholly owned subsidiary, GDC, with 40% held by RSM. The Government owned Société Nationale des Hydrocarbures ("SNH") is entitled to a 5% interest and we are working with them on a participation agreement.

 

At West Medvezhye, Russia, the Company is looking at a number of ways to derive value from West Medvezhye through farm-outs, joint ventures or mergers.

 

It is very pleasing to announce a profit for this period. However we acknowledge that this is essentially a reflection of the accounting adjustments made following the aforementioned ICC judgement. The full detail of the accounting treatment in this regard is set out in Note 3 of the unaudited interim condensed consolidated financial statements below.

 

In conclusion, 2013 was a very challenging one where hard decisions were needed and a strong refocus of the company on its core business which was to deliver a reliable gas energy source to customers.  We now have the financial resources and the management team to achieve this.

 

 

 

Kevin Foo

Chairman

 

28th February 2014

FINANCIAL REVIEW

 

 

Income Statement

Revenue from the Logbaba project was $6.0 million in the six months to 30 November 2013, compared to $1.7 million in the comparative six month period, reflecting the expansion of our customer network. All gas sales were at $16/mmbtu and condensate sales averaged $107.22 per barrel.

 

Production royalties were $1.9 million or approximately 32% of revenue, $1.4 million of which is payable to a company in which the Group holds a 35% interest. That royalty stream will decline based on achieving certain revenue milestones such that the long term cash cost of all royalties is expected to average 17% of revenue. The $2.9 million of 'Other cost of sales' relates to operation of the wells, processing facility and pipeline network and includes $2.0 million of depreciation. Gross profit was $1.2 million compared to $0.1 million in the comparative six month period.

 

An income statement adjustment of $5.2 million at 1 June 2013 was necessary to reflect the outcome of the ICC Arbitration between RSM and the Group (refer to Note 3 in the unaudited interim condensed consolidated financial statements for further details). Excluding this non-recurring item, EBITDA was $0.7 million.

 

The profit before and after taxation for the half year was $2.5 million. Excluding the aforementioned non-recurring income statement adjustment, the Group recorded a loss of $2.6 million for the period compared to a loss in the comparative period of $5.3 million, reflecting the increase in production and the reduction in administrative expenses.

 

 

Balance Sheet and Cash Flow

The Group continued its expansion of the pipeline in Cameroon, investing $9.0 million (six months to 30 November 2012: $5.2 million). In Russia, an investment of $0.4 million (six months to 30 November 2012: $0.6 million) was made to define drilling targets.

 

Excluding the impact of the ICC Arbitration adjustment, working capital increased by $1.8 million, reflecting an increase of $5.4 million in trade and other receivables and an increase of $3.6 million in trade and other payables.

 

Net cash decreased by $11.7 million in the six months to $1.4 million. Following the year end, the Group raised $8.3 million of debt financing and has received a total of $20.4 million to date from RSM, being a payment on account for its share of downstream development costs for the Logbaba project. The total of these costs is subject to an audit to be conducted within 90 days of 1 April 2014.

 

 

Going Concern

The Directors are satisfied that the Group has sufficient resources to continue operations for the foreseeable future, being a period of not less than twelve months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial information.

 

 

Outlook

Our financial strategy continues to be to develop the Logbaba asset, financed by a mixture of debt and equity, into a significant cash-generating asset in order to support future growth of the Group.

 

 

 

 

Robert Palmer

Finance Director

 

 

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT

 

FOR THE SIX MONTHS ENDED 30 NOVEMBER 2013

 

 

 



6 months
ended
30 November 2013

6 months
ended
30 November 2012

12 months
ended
31 May
2013



Unaudited

Unaudited

Audited


Notes

$000

$000

$000






Continuing operations

4




Revenue


6,014

1,671

6,934

Cost of sales





Production royalties


(1,928)

(196)

(1,100)

Other cost of sales


(2,906)

(1,337)

(5,519)



 

 

 



(4,834)

(1,533)

(6,619)



 

 

 

Gross profit


1,180

138

315






Other income


4

-

51

Sales and marketing expenses


(817)

(175)

(437)

Administrative expenses


(1,700)

(3,670)

(11,201)

Other gains/(losses)


(130)

13

(286)

Adjustment resulting from arbitration decision

3

5,169

-

-



 

 

 

Operating profit/(loss)


3,706

(3,694)

(11,558)

Finance revenue


142

1

367

Finance costs


(1,308)

(1,600)

(4,744)



 

 

 

Profit/(loss) before taxation


2,540

(5,293)

(15,935)

Income tax expense


-

-

-



 

 

 

Profit/(loss) after taxation for the period


2,540

(5,293)

(15,935)



 

 

 

 

 


 

Cents

 

Cents

 

Cents

Earnings/(loss) per share - basic

5

0.06

(0.20)

(0.52)

Earnings/(loss) per share - diluted

5

0.06

(0.20)

(0.52)

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE SIX MONTHS ENDED 30 NOVEMBER 2013

 

 

 


6 months
ended
30 November 2013

6 months
ended
30 November 2012

12 months
ended
31 May
2013


Unaudited

Unaudited

Audited


$000

$000

$000





Profit/(loss) for the financial period

2,540

(5,293)

(15,935)

Exchange differences on translation of
foreign operations

(1,702)

1,394

1,000


 

 

 

Total comprehensive income/(loss) for the period

838

(3,899)

(14,935)


 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

AS AT 30 NOVEMBER 2013

 

 

 



30 November 2013

30 November 2012

31 May
2013



Unaudited

Unaudited

Audited


Notes

$000

$000

$000











Assets:





Non-current assets





Intangible assets

6

58,035

59,987

59,970

Property, plant and equipment

7

121,680

135,904

133,038

Unlisted investments


6,600

6,600

6,600



 

 

 








186,315

202,491

199,608



 

 

 






Current assets





Inventories


13

-

56

Trade and other receivables

8

30,337

2,733

5,793

Cash and cash equivalents


1,372

995

13,107



 

 

 








31,722

3,728

18,956



 

 

 






Total assets


218,037

206,219

218,564



 

 

 






Liabilities:





Current liabilities





Trade and other payables

9

(12,458)

(22,410)

(11,007)

Borrowings


(6,964)

(5,109)

(8,011)

Convertible loan - debt portion


-

(3,770)

(1,482)

Derivative  financial  instrument


-

-

(131)



 

 

 








(19,422)

(31,289)

(20,631)



 

 

 






Net current assets/(liabilities)


12,300

(27,561)

(1,675)



 

 

 






Non-current liabilities





Borrowings


(247)

(2,174)

(267)

Deferred tax liabilities


(6,599)

(6,599)

(6,599)

Provisions


(9,325)

(9,464)

(9,664)



 

 

 








(16,171)

(18,237)

(16,530)



 

 

 

Net assets


182,444

156,693

181,403



 

 

 






Equity:





Called-up share capital


34,240

22,855

34,240

Share premium


229,556

206,735

229,556

ESOP Trust reserve


(1,138)

(1,329)

(1,061)

Translation reserve


(13,113)

(11,017)

(11,411)

Other reserves


4,162

5,043

4,583

Retained earnings - deficit


(71,263)

(65,594)

(74,504)



 

 

 






Total equity


182,444

156,693

181,403



 

 

 






 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE SIX MONTHS ENDED 30 NOVEMBER 2013

 

 

 









Share capital

Share premium

ESOP Trust reserve

Other reserve

Retained earnings / (accumulated deficit)

Total


$000

$000

$000

$000

$000

$000


 

 

 

 

 

 








At 31 May 2012

20,803

200,059

(860)

(12,411)

5,440

(60,851)

152,180

Shares issued

2,052

7,153

-

-

-

-

9,205

Share issue costs

-

(477)

-

-

-

-

(477)

Shares purchased by ESOP Trust

-

-

(509)

-

-

-

(509)

Shares granted to ESOP members

-

-

71

-

-

-

71

Exchange adjustments

-

-

(31)

-

-

-

(31)

Transfer expired warrants to retained earnings

-

-

-

-

(550)

550

-

Warrants issued

-

-

-

-

153

-

153

Total comprehensive income/(loss) for the period

-

-

-

1,394

-

(5,293)

(3,899)


 

 

 

 

 

 

 









At 30 November 2012

22,855

206,735

(1,329)

(11,017)

5,043

(65,594)

156,693

Shares issued

11,385

25,366

(3)

-

-

-

36,748

Share issue costs

-

(2,545)

-

-

-

-

(2,545)

Shares granted to ESOP members

-

-

195

-

-

1,270

1,465

Exchange adjustments

-

-

76

-

-

-

76

Transfer expired warrants to retained earnings

-

-

-

-

(462)

462

-

Warrants issued

-

-

-

-

2

-

2

Total comprehensive income/(loss) for the period

-

-

-

(394)

-

(10,642)

(11,036)


 

 

 

 

 

 

 

At 31 May 2013

34,240

229,556

(1,061)

(11,411)

4,583

(74,504)

181,403








 

Exchange adjustments

-

-

(77)

-

-

-

(77)

Transfer expired warrants to retained earnings

-

-

-

-

(701)

701

-

Warrants issued

-

-

-

-

280

-

280

Total comprehensive income/(loss) for the period

-

-

-

(1,702)

-

2,540

838


 

 

 

 

 

 

 









At 30 November 2013

34,240

229,556

(1,138)

(13,113)

4,162

(71,263)

182,444


 

 

 

 

 

 

 

 

 

 

UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT

 

FOR THE HALF YEAR ENDED 30 NOVEMBER 2013

 

 

 


6 months
ended
30 November
2013

6 months
ended
30 November
2012

12 months
ended
31 May
2013


Unaudited

Unaudited

Audited


$000

$000

$000









Cash flows from operating activities




Profit/(loss) for the period

2,540

(5,293)

(15,935)

Finance revenue recognised in the Income Statement

(142)

(1)

(367)

Finance costs recognised in the Income Statement

1,308

1,600

4,744

Depreciation and amortisation of non-current assets

2,149

663

2,955

Other (gains)/losses recognised in the Income Statement

130

(76)

286

Shares vested by ESOP Trust recognised in Income Statement

-

71

609

Adjustment relating from arbitration decision

(5,169)

-

-


 

 

 






816

(3,036)

(7,708)

Movements in working capital




Increase in trade and other receivables

(5,434)

(929)

(3,984)

(Increase)/decrease in inventories

21

-

(56)

Increase/(decrease) in trade and other payables

3,571

4,385

(1,696)


 

 

 





Net cash (used in)/generated from operating activities

(1,026)

420

(13,444)





Cash flows from investing activities




Payments for intangible fixed assets

-

(550)

(1,765)

Payments for property, plant and equipment

(9,451)

(5,229)

(7,763)

Interest received

11

1

17


 

 

 





Net cash used in investing activities

(9,440)

(5,778)

(9,511)





Cash flows from financing activities




Proceeds from issue of equity shares

-

8,184

44,516

Payment of equity share issue costs

-

(322)

(2,867)

Proceeds from borrowings

438

750

2,783

Repayment of borrowings

(1,676)

(4,153)

(7,630)

Finance costs

(268)

-

(2,186)


 

 

 





Net cash generated from financing activities

(1,506)

4,459

34,616


 

 

 





Net (decrease)/increase in cash and cash equivalents

(11,972)

(899)

11,661





Cash and cash equivalents - beginning of the period

13,107

1,887

1,887

Effects of exchange rate changes on the balance of cash held in
foreign currencies

237

7

(441)


 

 

 





Cash and cash equivalents - end of the period

1,372

995

13,107


 

 

 





 

 

 

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2013

 

 

1.         GENERAL INFORMATION AND BASIS OF PREPARATION

 

The unaudited interim condensed consolidated financial statements of Victoria Oil & Gas Plc and its subsidiaries ("the Group") are prepared in accordance with International Financial Reporting Standards ("IFRS") and in accordance with International Accounting Standard 34 'Interim Financial Reporting'.

 

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements as at 31 May 2013.

 

 

2.         ACCOUNTING POLICIES

 

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 May 2013, with the exception of the following:

 

Adoption of new and revised Standards

The following new and revised Standards have been mandatorily adopted by the Group during the period. Their adoption has not had a material impact on the financial statements of the Group.

 

Name of new Standards/Amendments

Effective from

IAS 1 Presentation of Financial Statements

1 July 2012

IFRS 13 Fair Value Measurement

1 January 2013

IAS 19 Employee Benefits

1 January 2013

 

 

3.         ADJUSTMENT RESULTING FROM ARBITRATION DECISION

 

On 11 December 2013, the International Chamber of Commerce ("ICC") published its decision on the Arbitration brought by RSM Production Corporation ("RSM") against the Group. A number of claims were withdrawn or rejected but the ICC found that RSM had not forfeited its interest in the Logbaba project due to its failure to pay its cash calls on time.

 

The Tribunal found that RSM was in default for non-payment of the cash calls. It also found that whilst the parties had conflicting but equally plausible interpretations of the First Arbitration Award in May 2011, there was sufficient uncertainty in the resulting application of the findings in that Award to the contractual forfeiture provisions under Texas law to avoid upholding the forfeiture of RSM's interest.

 

In the six months to 30 November 2012 and twelve months to 31 May 2013 (the comparative periods for the purposes of this report), the financial statements were prepared on the basis that RSM had forfeited its interest in the Logbaba Concession as that was the legal contractual position pending clarifications in the Arbitration, which the Directors expected to be resolved in the Group's favour.

 

These interim financial statements for the six months to 30 November 2013 include an adjustment as at 1 June 2013 necessary to reflect the ICC Arbitration decision on the participating interests in the Logbaba gas and condensate project. The adjustment has resulted in:

 

·      a credit of $5.2 million to the income statement in relation to RSM's share of prior period operating expenses. An analysis of these costs which were expensed through the income statements in prior periods, is as follows:

 


$000



Cost of sales


Production royalties

222

Other cost of sales

2,207


 

Increase in gross profit

2,429

Sales and marketing expenses

175

Administrative expenses

1,875

Other gains/(losses)

(29)


 

Increase in operating profit

4,450

Finance costs

719


 

Income statement adjustment

5,169

 

 

·      the following Balance Sheet reclassifications to record the transfer to RSM of its participating share of assets and liabilities incurred on the project. Previously these assets and liabilities had been accounted for as if they were held 100% by the Group:

 


$000





Assets:


Non-current assets


Intangible assets

(219)

Property, plant and equipment

(18,253)



Current assets


Inventories

(22)

Trade and other receivables

(862)



Liabilities:


Current liabilities


Trade and other payables

2,423

Borrowings

1,550



Non-current liabilities


Borrowings

107

Provisions

688



Income statement adjustment (see above)

(5,169)


 

Receivable from RSM at 1 June 2013

19,757

 

 

Please refer to Note 12 for further information regarding the RSM Arbitration.

 

Société Nationale des Hydrocarbures ("SNH"), the state-owned national oil and gas company of Cameroon, is entitled to acquire a 5% interest in the Logbaba Concession but has not yet signed a participation agreement. Accordingly, these interim financial statements have been prepared on the basis that the Group and RSM have 60% and 40% interests respectively in the Concession. In the event that SNH signs the participation agreement for its 5% interest, the interests of the Group and RSM will be reduced to 57% and 38% respectively, and SNH will be required to reimburse 5% of costs relating to the project to date.  

 

 

 

4.         SEGMENTAL ANALYSIS

 

The Group operates in one class of business being oil and gas exploration, development and production, and the sale of hydrocarbons and related activities. This is analysed on a location basis. Only the Cameroon segment is generating revenue, which is from the sale of hydrocarbons. The accounting policies of the reportable segments are the same as the Group's accounting policies.  

 

The following tables present revenue, profit/(loss) and certain asset and liability information regarding the Group's business segments:

 

Six months to 30 November 2013 (Unaudited)

Cameroon
$000

Kazakhstan
$000

Total
$000

Revenue

6,014

-

-

-

6,014

Cost of sales






Production royalties

(1,928)

-

-

-

(1,928)

Other cost of sales

(2,906)

-

-

-

(2,906)








(4,834)

-

-

-

(4,834)







Gross profit

1,180

-

-

-

1,180

Other income

4

-

-

-

4

Sales and marketing expenses

(817)

-

-

-

(817)

Administrative expenses

(113)

(115)

(135)

(1,337)

(1,700)

Other gains and (losses)

(51)

-

(295)

216

(130)

Adjustment resulting from arbitration decision

5,169

-

-

-

5,169







Operating profit/(loss)

5,372

(115)

(430)

(1,121)

3,706

Finance revenue

-

-

-

142

142

Finance costs

(667)

(14)

-

(627)

(1,308)







Profit/(loss) before  tax

4,705

(129)

(430)

(1,606)

2,540

Taxation

-

-

-

-

-







Profit/(loss) after tax

4,705

(129)

(430)

(1,606)

2,540







Total Assets

158,831

57,793

103

1,310

218,037







Total Liabilities

(26,803)

(412)

(3)

(8,375)

(35,593)







 

 

 

Six months to 30 November 2012 (Unaudited)

Cameroon
$000

Kazakhstan
$000

Total
$000

Revenue

1,671

-

-

-

1,671

Cost of sales






Production royalties

(196)

-

-

-

(196)

Other cost of sales

(1,337)

-

-

-

(1,337)








(1,533)

-

-

-

(1,533)







Gross profit

138

-

-

-

138

Sales and marketing expenses

(175)

-

-

-

(175)

Administrative expenses

(1,395)

(330)

(146)

(1,799)

(3,670)

Other gains and (losses)

49

-

-

(36)

13







Operating loss

(1,383)

(330)

(146)

(1,835)

(3,694)

Finance revenue

-

-

-

1

1

Finance costs

(579)

(29)

-

(992)

(1,600)







Loss before  tax

(1,962)

(359)

(146)

(2,826)

(5,293)

Taxation

-

-

-

-

-







Loss after tax

(1,962)

(359)

(146)

(2,826)

(5,293)







Total Assets

145,152

59,595

114

1,358

206,219







Total Liabilities

(40,785)

(366)

(2)

(8,373)

(49,526)







 

 

 

Twelve months to 31 May 2013

(Audited)

Cameroon
$000

Kazakhstan
$000

Total
$000

Revenue

6,934

-

-

-

6,934

Cost of sales






Production royalties

(1,100)

-

-

-

(1,100)

Other cost of sales

(5,519)

-

-

-

(5,519)








(6,619)

-

-

-

(6,619)







Gross profit

315

-

-

-

315

Other income

51

-

-

-

51

Sales and marketing expenses

(437)

-

-

-

(437)

Administrative expenses

(5,027)

(572)

(307)

(5,295)

(11,201)

Other gains and (losses)

(58)

(17)

-

(211)

(286)







Operating loss

(5,156)

(589)

(307)

(5,506)

(11,558)

Finance revenue

-

-

-

367

367

Finance costs

(2,271)

(28)

-

(2,445)

(4,744)







Loss before  tax

(7,427)

(617)

(307)

(7,584)

(15,935)

Taxation

-

-

-

-

-







Loss after tax

(7,427)

(617)

(307)

(7,584)

(15,935)







Total Assets

145,748

59,515

120

13,181

218,564







Total Liabilities

(29,137)

(369)

(9)

(7,646)

(37,161)







 

 

5.         EARNINGS/(LOSS) PER SHARE

 

Basic earnings or loss per share is computed by dividing the profit or loss after tax for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year, excluding those held by the ESOP Trust. Diluted earnings or loss per share is computed by dividing the profit or loss after taxation for the period by the weighted average number of ordinary shares in issue, each adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the period.

 

Basic and diluted loss per share are the same, as the effect of any potential shares is anti-dilutive and is therefore excluded.

 

The following table sets forth the computation for basic and diluted loss per share.

 


30 November

30 November

31 May


2013

2012

2013


Unaudited

Unaudited

Audited


$000

$000

$000

Earnings/(loss)




Earnings/(loss) for the purposes of basic earnings/(loss) per share

2,540

(5,293)

(15,935)


 

 

 

 

 

 

Number

 

Number

Number

Number of shares




Weighted average number of ordinary shares for the purposes of basic earnings/(loss) per share

4,108,299,238

2,607,956,721

3,048,827,596


 

 

 


 

Cents

 

Cents

Cents

Earnings/(loss) per share - basic and diluted

0.06

(0.20)

(0.52)


 

 

 

 

 

6.         INTANGIBLE ASSETS

 

Six months to 30 November 2013 (Unaudited)

Exploration and evaluation assets

Software

Total

Cost

$000

$000

$000

Opening balance

93,838

104

93,942

Transfer to other receivables

(199)

(42)

(241)

Exchange adjustments

(2,106)

-

(2,106)

Additions

402

-

402





Closing balance

91,935

62

91,997





 

Accumulated amortisation and impairment




Opening balance

33,948

24

33,972

Transfer to other receivables

(12)

(10)

(22)

Charge for the period

5

7

12





Closing balance

33,941

21

33,962





 





Carrying amount 30 November 2013

57,994

41

58,035





 

 

Six months to 30 November 2012 (Unaudited)

Exploration and evaluation assets

Software

Total

Cost

$000

$000

$000

Opening balance

92,186

23

92,209

Exchange adjustments

1,225

-

1,225

Additions

550

-

550





Closing balance

93,961

23

93,984





 

Accumulated amortisation and impairment




Opening balance

33,997

-

33,997





Closing balance

33,997

-

33,997





 





Carrying amount 30 November 2012

59,964

23

59,987





 

 

Twelve months to 31 May 2013 (Audited)

Exploration and evaluation assets

Software

Total

Cost

$000

$000

$000

Opening balance

92,186

23

92,209

Exchange adjustments

782

-

782

Additions

965

81

1,046

Disposals

(95)

-

(95)





Closing balance

93,838

104

93,942





 

Accumulated amortisation and impairment




Opening balance

33,997

-

33,997

Exchange adjustments

29

-

29

Disposals

(78)

-

(78)

Charge for the year

-

24

24





Closing balance

33,948

24

33,972





 





Carrying amount 31 May 2013

59,890

80

59,970





 

 

Segmental Analysis

 

Six months to 30 November 2013 (Unaudited)

Cameroon

Russia

Total


$000

$000

$000

Opening balance

558

59,412

59,970

Transfer to other receivables

(219)

-

(219)

Exchange

-

(2,106)

(2,106)

Additions

-

402

402

Charge for the year

(12)

-

(12)





Closing balance

327

57,708

58,035





 

Six months to 30 November 2012 (Unaudited)

Cameroon

Russia

Total


$000

$000

$000

Opening balance

501

57,711

58,212

Exchange

-

1,225

1,225

Additions

-

550

550





Closing balance

501

59,486

59,987





 

Twelve months to 31 May 2013 (Audited)

Cameroon

Russia

Total


$000

$000

$000

Opening balance

501

57,711

58,212

Exchange

-

753

753

Additions

81

965

1,046

Disposals

-

(17)

(17)

Charge for the year

(24)

-

(24)





Closing balance

558

59,412

59,970





 

During the period, $0.2 million previously recognised as intangible assets in the Cameroon segment was transferred to other receivables following the outcome of the ICC arbitration with RSM. Refer to Note 3 and Note 12 for more details.

 

 

7.         PROPERTY PLANT AND EQUIPMENT

 

Six months to 30 November 2013 (Unaudited)


Plant and equipment

Oil and gas interest

Assets under construction at cost

Total

Cost


$000

$000

$000

$000

Opening balance


33,025

102,786

3,093

138,904

Transfer to other receivables


(13,146)

(4,585)

(1,324)

(19,055)

Additions


1,463

1,322

6,247

9,032







Closing balance


21,342

99,523

8,016

128,881







 

 

Depreciation






Opening balance


1,383

4,483

-

5,866

Transfer to other receivables


(254)

(548)

-

(802)

Charge for financial period


257

1,880

-

2,137







Closing balance


1,386

5,815

-

7,201







 







Carrying amount 30 November 2013


19,956

93,708

8,016

121,680







 

 

 

Six months to 30 November 2012 (Unaudited)


Plant and equipment

Oil and gas interest

Assets under construction at cost

Total

Cost


$000

$000

$000

$000

Opening balance


2,869

104,839

26,572

134,280

Additions


830

44

4,355

5,229

Exchange


-

68

-

68







Closing balance


3,699

104,951

30,927

139,577







 

 

Depreciation






Opening balance


696

2,266

-

2,962

Charge for financial period


3

660

-

663

Exchange


-

48

-

48







Closing balance


699

2,974

-

3,673







 







Carrying amount 30 November 2012


3,000

101,977

30,927

135,904







 

 

Twelve months to 31 May 2013

(Audited)


Plant and equipment

Oil and gas interest

Assets under construction at cost

Total

Cost


$000

$000

$000

$000

Opening balance


2,869

104,839

26,572

134,280

Additions


2,506

1,947

4,211

8,664

Transfer from assets under construction


27,690

-

(27,690)

-

Reclassification of development funding obligation


-

(4,000)

-

(4,000)

Disposals


(40)

-

-

(40)







Closing balance


33,025

102,786

3,093

138,904







 

 

Depreciation






Opening balance


696

2,266

-

2,962

Disposals


(27)

-

-

(27)

Charge for the year


714

2,217

-

2,931







Closing balance


1,383

4,483

-

5,866







 







Carrying amount 31 May 2013


31,642

98,303

3,093

133,038







 

 

 

Segmental analysis

 

 

Six months to 30 November 2013 (Unaudited)


Cameroon

Russia

Corporate

Total

Cost


$000

$000

$000

$000

Opening balance


Transfer to other receivables


Additions




Closing balance


126,507

2,351

23

128,881



 

Depreciation






Opening balance


Transfer to other receivables


Charge for financial period




Closing balance


4,888

2,299

14

7,201



 

Carrying amount 30 November 2013


121,619

52

9

121,680



 

 

Six months to 30 November 2012 (Unaudited)


Cameroon

Russia

Corporate

Total

Cost


$000

$000

$000

$000

Opening balance


Additions


Exchange




Closing balance


137,136

2,419

22

139,577



 

Depreciation






Opening balance


Charge for financial period


Exchange




Closing balance


1,257

2,409

7

3,673



 

Carrying amount 30 November 2012


135,879

10

15

135,904



 

 

 

Twelve months to 31 May 2013 (Audited)


Cameroon

Russia

Corporate

Total

Cost


$000

$000

$000

$000

Opening balance


Additions


Reclassification of development funding obligation

Disposals




Closing balance


136,530

2,351

23

138,904



 

Depreciation






Opening balance


Disposals


Charge for the year




Closing balance


3,556

2,299

11

5,866







Carrying amount 31 May 2013


132,974

52

12

133,038



 

During the period, $18.3 million previously recognised as property, plant and equipment in the Cameroon segment was transferred to other receivables following the outcome of the ICC arbitration with RSM. Refer to Note 3 and Note 12 for more details.

 

 

8.         TRADE AND OTHER RECEIVABLES

 


30 November
2013

30 November
2012

31 May
2013


Unaudited

Unaudited

Audited


$000

$000

$000

Amounts due within one year:




Trade receivables

2,669

1,191

3,075

VAT recoverable

156

62

91

Prepayments

648

583

735

Other receivables

26,864

897

1,892






30,337

2,733

5,793





 

Other receivables at 30 November 2013 includes the net amount of $25.9 million owed by RSM to the Group. This amount includes the adjustment at 1 June 2013 following the ICC Arbitration decision and, additionally, the amount receivable from RSM for its share of costs for the six months to 30 November 2013.

 

Allowances for doubtful debts of $0.3 million and $0.2 million have been applied to trade receivables and other receivables respectively. These allowances relate to individually impaired receivables due from thermal gas customers who have been disconnected from the pipeline network. In prior periods, no impairment was recognised. The Group does not hold any collateral over these balances.

 

 

9.         TRADE AND OTHER PAYABLES


30 November
2013

30 November
2012

31 May
2013


Unaudited

Unaudited

Audited


$000

$000

$000

Amounts due within one year:




Trade payables

(10,450)

(17,231)

(8,955)

Taxes and social security costs

(370)

(527)

(305)

Accruals

(1,638)

(4,652)

(1,747)






(12,458)

(22,410)

(11,007)





 

During the period, $2.4 million previously recognised as trade and other payables was transferred to other receivables following the outcome of the ICC Arbitration with RSM. Refer to Note 3 and Note 12 for more details.

 

 

10.        SHARE-BASED PAYMENTS

 

Other than as disclosed below, no grants of warrants or options were made in the current or prior periods.

 

Warrants to subscribe for Ordinary Shares

During the period, Victoria Oil & Gas Plc ("the Company") issued 30,000,000 warrants in settlement of financial arrangement fees. Each warrant entitles the holder to purchase an ordinary share in the Company. The fair value of warrants issued, calculated using a Black-Scholes model, was $280,000. In the six months to 30 November 2012 and 12 months to 31 May 2013, 5,250,000 warrants with a total fair value of $155,000 were issued.

 

The inputs into the Black-Scholes model were as follows:

 


30 November
2013

30 November
2012

31 May
2013


Unaudited

Unaudited

Audited





Number of warrants

30,000,000

5,250,000

5,250,000

Weighted average share price - pence Sterling

1.6

3.0

3.0

Option term - years

2.0

3.0

3.0

Share exercise price - pence Sterling

1.6

3.0

3.0

Risk-free rate

0.25%

0.44%

0.44%

% expected volatility

96%

103%

103%

Expected dividend yield

Nil

Nil

Nil

 

The expected volatility was determined based on the historical movement in the Company's share price over a period equivalent to the option period.

 

11,076,445 warrants with a weighted average exercise price of 3.8 pence expired during the period.

 

 

11.        RELATED PARTY TRANSACTIONS

 

Payments to Directors and other key management personnel are set out below.

 


30 November
2013

30 November
2012

31 May
2013


Unaudited

Unaudited

Audited


$000

$000

$000

Directors' remuneration - cash payments

716

409

940

Directors' remuneration - shares in lieu

-

77

149

Directors' remuneration - awarded by ESOP

-

246

246

Directors' remuneration - consultancy fees

-

-

16

Other key management - short term benefits

687

402

1,123

Other key management - payment in shares

-

24

989

Other key management - professional fees

242

396

844

 

The following table provides details of other transactions entered into by the Company with its subsidiaries and by the Group with other related parties:

 


Company transactions with subsidiaries

Directors' other interests

Key management personnel


$000

$000

$000

6 months to 30 November 2013 (Unaudited)



Advances to subsidiaries during the period that form part of the Company's net investment in subsidiaries

509

-

-

Advances to subsidiaries during the period that form part of the Company's receivables

7,289

-

-

Purchases from/(recharges to) related parties during the period

(993)

-

242

Amounts due from/(to) related parties at the end of the period

120,799

-

(429)




6 months to 30 November 2012 (Unaudited)



Advances to subsidiaries during the period that form part of the Company's net investment in subsidiaries

349

-

-

Advances to subsidiaries during the period that form part of the Company's receivables

4,792

-

-

Purchases from/(recharges to) related parties during the period

(119)

-

396

Loans repaid to related parties during the period

-

408

-

Amounts due from/(to) related parties at the end of the period

102,906

(751)

(330)




12 Months to 31 May 2013 (Audited)



Advances to subsidiaries during the period that form part of the Company's net investment in subsidiaries

837

-

-

Advances to subsidiaries during the period that form part of the Company's receivables

22,848

-

-

Purchases from/(recharges to) related parties during the year

(510)

-

844

Loans repaid to related parties during the year

-

407

-

Amounts due from/(to) related parties at the year end

120,992

-

(432)

 

The carrying value of investments in subsidiaries by the Company at 30 November 2013 was $29.9 million (30 November 2012 and 31 May 2013: $29.9 million). The balance of advances to subsidiaries by the Company that were treated as part of the Company's net investments in subsidiaries at 30 November 2013 was $42.4 million (30 November 2012: $41.4 million; 31 May 2013: $41.9 million).

 

The balance of the amounts due from subsidiaries at 30 November 2013 is stated net of an allowance against the amounts due from Victoria Energy Central Asia LLP of $17.5 million and Victoria Oil and Gas Central Asia Limited of $5.2 million (30 November 2012: $17.2 million and $5.1 million; 31 May 2013: $17.6 million and $5.1 million).

 

There was no intragroup trading or transactions between Group subsidiaries.

 

Radwan Hadi is included in key management personnel due to his position as Chief Operating Officer of the Company, and he is also a Director of Blackwatch Petroleum Services Limited, a firm of upstream oil and gas consultants. These accounts include professional fees of $0.2 million for the 6 months to 30 November 2013 (6 months to 30 November 2012: $0.4 million; 12 months to 31 May 2013: $0.8 million) in relation to oil and gas technical services provided by Blackwatch Petroleum Services Limited to the Group.

 

 

12.        POST BALANCE SHEET EVENTS

 

RSM arbitration

In December 2013, the award in the ICC Arbitration proceedings brought by RSM was handed down to the parties. The contractual forfeiture of RSM's interest in the Logbaba Concession was not upheld, and RSM became liable for its participating interest share of incurred expenses.

 

Following the arbitration decision, RSM paid $4.1 million in settlement of the outstanding July 2011 cash call (the subject of the second arbitration). Additionally, the Company issued cash calls of:

·      $24.0 million being RSM's participating interest share of incurred expenses since the end of the first arbitration (July 2011); and

·      $2.0 million being the January 2014 advance on RSM's participating interest share of expenses for the month.

 

RSM failed to pay the two additional cash calls, and commenced emergency arbitration proceedings.

 

In January 2014, the Company reached a settlement with RSM whereby RSM agreed to pay $16.3 million towards the cash calls for expenses with an agreement for an audit to determine the final balance payable by or to be refunded to RSM. RSM withdrew its emergency application to the ICC and third arbitration request, and the Company withdrew the notices of default served on RSM. The audit is due to commence in April 2014 and will be undertaken by an independent auditor, jointly instructed in accordance with the terms of the operating agreement, and will be completed within 90 days of commencement.

 

BGFIBank loan and customs bond

On 17 January 2014, the Company announced that its subsidiary, Gaz du Cameroun S.A., had secured the following financial facilities with a Cameroonian bank:

·      XAF 4,000,000,000 ($8.3 million) loan to facilitate new customer connections

·      XAF 800,000,000 ($1.7 million) customs bond supporting the waiver of duty on the temporary importation of gas-powered generator equipment

 

 

13.        APPROVAL OF INTERIM FINANCIAL STATEMENTS

 

The unaudited interim condensed consolidated financial statements were approved by the Board of Directors on 27 February 2014.

 

Copies of the Interim report are available by download from the Company's website at: www.victoriaoilandgas.com


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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