In April 2011, the Group issued 23,438,000 ordinary shares at a
value of $146.1 million net of transaction fees to fund exploration
and development activity. The cash proceeds will be used to finance
drilling and infrastructure related projects in Exillon WS and
Exillon TP. With the Group's profit for the six months period of
$11.2 million, the Group equity attributable to shareholders
increased by $182.7 million (45%) to $590.7 million.
The Group ended the period in a strong financial position with
$152.7 million of cash and cash equivalents (2010: $56.3 million)
with outstanding borrowings of $48.5 million, equivalent to a net
cash position of $104.2 million.
In May 2011, as part of its ongoing treasury and cash management
operations, the Group purchased AAA-rated (S&P) Eurobonds
issued by EBRD for a total consideration of $15.4 million. These
bonds have a nominal value of RUR 410 million, annual coupon rate
of 6.00%, and maturity date in February 2012.
The increase in the cost of property, plant and equipment has
been driven by the drilling of wells and extensive field
developments in Exillon WS, and by the strengthening of the Russian
Rouble against the US Dollar.
Principal risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group are set out on pages 24 to 25 of the
Directors' Report section of the Annual Report for the year ended
31 December 2010, a copy of which is available on the Company's
website at www.exillonenergy.com. The Board continually assesses
and monitors the key risks of the business. The principal risks and
uncertainties that could have a material impact on the Group's
performance over the remainder of the financial year have not
changed from those which are set out in the Group's 2010 Annual
Report.
In accordance with DRT 4.2.7, we summarise below the principal
risks that could have a material impact on our business for the
remaining six months of the year:
-- The Group may be adversely affected by a substantial or
extended decline in the prices for crude oil.
-- The Group's business depends on exploration and production
licences issued by the Russian authorities, which could be
suspended, restricted, terminated or not extended.
-- Leases relating to some of the Group's oil wells have
expired, which may result in a potential inability to operate these
wells.
-- Fluctuations in currency exchange rates may materially and
adversely affect the Group's financial results and condition.
-- The Group relies on the services of third party
providers.
-- Most of the crude oil produced by the Group is transported
via a single pipeline system operated by an external provider.
-- The Group could be subject to claims and liabilities under
environmental, health, safety and other laws and regulations.
-- The Group faces drilling, exploration and production
risks,which may prevent it from realising profits and may result in
substantial losses.
-- The Group does not carry the types of insurance normally
carried by a business of its size and nature.
-- The Company will be subject to restrictions on foreign
ownership in future.
-- There are high levels of inflation in Russia.
-- Russian tax law and practice are not fully developed and are
subject to frequent changes.
Directors
The names of the Chairman of the Board and Chief Executive
Officer of Exillon Energy plc have been changed as set out on page
5 in comparison to those listed in the Group's Annual Report for
2010. There were no subsequent changes made to their functions. A
full list of Directors is maintained on the Group's website:
exillonenergy.com.
Related parties
Related party transactions are given in note 24.
Statement of directors' responsibilities
The Directors of the Company hereby confirm that to the best of
their knowledge:
(a) the condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 and give a true and fair
view of the assets, liabilities, financial position and profit and
loss of the Group as required by DTR 4.2.10(4); and
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7 (being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year) and DTR
4.2.8 (being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period).
On behalf of the board of directors of Exillon Energy plc.
Mark Martin
Chief Executive Officer
Disclaimer
This statement may contain forward-looking statements concerning
the financial condition and results of operations of the Group.
Forward-looking statements are statements of future expectations
that are based on the management's current expectations and
assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ
materially from those expressed or implied in these statements. No
assurances can be given as to future results, levels of activity
and achievements and actual results, levels of activity and
achievements may differ materially from those expressed or implied
by any forward-looking statements contained in this report. The
Company does not undertake any obligation to update publicly or
revise any forward-looking statement as a result of new
information, future events or other information.
Independent review report to Exillon Energy plc
Introduction
We have been engaged by the company to review the condensed set
of financial information in the half-yearly financial report for
the six months ended 30 June 2011, which comprises the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flow, and related notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial information.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 2 the annual financial statements of the
group are prepared in accordance with IFRS. The condensed set of
financial information included in this half-yearly financial report
has been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial information in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of the Disclosure and Transparency Rules of the Financial
Services Authority and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial
information in the half-yearly financial report for the six months
ended 30 June 2011 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
PricewaterhouseCoopers LLP Chartered Accountants
London 25 August 2011
(a) The maintenance and integrity of the Exillon Energy plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
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