TIDMGED
RNS Number : 6714N
Global Energy Development PLC
06 September 2011
Immediate Release 6 September 2011
GLOBAL ENERGY DEVELOPMENT PLC
("Global" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
Global Energy Development PLC, the Latin America focused
petroleum exploration and production company (LSE-AIM:
"GED"),announces its interim results for the six months ended 30
June 2011.
HIGHLIGHTS:
-- Net Profit of $3.9 million (first half of 2010: $1.3 million
Net Loss);
-- Revenue increased by 52% to $17.1 million (first half of
2010: $11.3 million);
-- Gross profit increased by 138% to $7.4 million (first half of
2010: $3.1 million);
-- Average gross production increased 15% at 244,040 barrels of
oil ("bbls") (first half of 2010: 212,692 bbls);
-- As a result of the successful workover programme of the
Tilodiran 2 and 3 wells within the Colombian Rio Verde contract,
gross production for the month of June 2011 increased 86% to 68,317
bbls (month of June 2010: 36,642 bbls);
-- Average cash netback per barrel sold of $61 (first half of
2010: $43);
-- Tax credit of $1.2 million reflected in the income statement
as a result of realised tax losses reported to the Colombian tax
authorities and also due to favorable fluctuations in the
peso-dollar exchange rate;
-- Capital expenditures of $3.3 million, predominantly related
to the successful workover programme of the Tilodiran 2 and 3 wells
and improved surface handling facilities;
-- Debt repayments of $1.3 million, funded out of cash flow from
operations and cash available; and
-- Purchase and cancellation of $0.6 million in variable coupon
convertible notes due 2012 plus all accrued interest in
consideration for the issue of 317,000 ordinary shares of 1p
each.
For further information:
Global Energy Development PLC
Anna Williams, Director of
Business Development +001 817 773 1502
awilliams@globalenergyplc.
com
www.globalenergyplc.com
Buchanan Communications
Tim Thompson +44 (0)20 7466 5126
Ben Romney +44 (0)20 7466 5132
Matrix Corporate Capital LLP
Stephen Mischler +44 (0)20 3206 7203
Nick Stone
Notes to Editors:
The Company's shares have been traded on AIM, a market operated
by the London Stock Exchange, since March 2002 (AIM: GED). The
Company's balanced portfolio includes the countries of Colombia and
Peru and comprises a base of production, developmental drilling and
workover opportunities and several high-potential exploration
projects. The Company currently holds six contracts: five in
Colombia and one in Peru.
Proven and probable oil and gas reserves are estimated
quantities of commercially producible hydrocarbons which the
existing geological, geophysical and engineering data show to be
recoverable in future years from known reservoirs. The proved
reserves reported by Ralph E. Davis ("RED") independent petroleum
engineers, conform to the definition approved by the Society of
Petroleum Engineers ("SPE") and the World Petroleum Council
("WPC"). The probable and possible reserves reported by RED conform
to definitions of probable and possible reserves approved by the
SPE/WPC using the deterministic methodology.
The information contained within this announcement has been
reviewed by RED. In addition, the information contained within this
announcement has been reviewed by Mr. Stephen Voss, a Director of
the Company, for the purpose of the Guidance Note for Mining, Oil
and Gas Companies issued by the London Stock Exchange in respect of
AIM companies which outlines standards of disclosure for natural
resource projects. Mr. Voss is a Registered Professional Engineer
in Texas and has been a Member of SPE for 28 years.
Forward-looking statements
This release may include statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
release and include, but are not limited to, statements regarding
the Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial
position, liquidity, prospects, growth, strategies and expectations
of the industry. By their nature, forward-looking statements
involve risk and uncertainty because they relate to future events
and circumstances. Forward-looking statements are not guarantees of
future performance and the development of the markets and the
industry in which the Group operates may differ materially from
those described in, or suggested by, any forward-looking statements
contained in this release. In addition, even if the development of
the markets and the industry in which the Group operates are
consistent with the forward-looking statements contained in this
release, those developments may not be indicative of developments
in subsequent periods. A number of factors could cause developments
to differ materially from those expressed or implied by the
forward-looking statements including, without limitation, general
economic and business conditions, industry trends, competition,
commodity prices, changes in law or regulation, currency
fluctuations (including the US dollar), the Group's ability to
recover its reserves or develop new reserves, changes in its
business strategy, political and economic uncertainty. Save as
required by law, the Company is under no obligation to update the
information contained in this release.
Past performance cannot be relied on as a guide to future
performance.
CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT & REVIEW OF
OPERATIONS
Financials
Favourable oil pricing along with an increase in the Company's
daily production volumes generated the significantly improved
results reported by the Company for the first half of 2011 (the
"Period"). Revenues for the six months ended 30 June 2011 increased
52% to $17.1 million (six months ended 30 June 2010: $11.3
million). Crude oil commodity prices increased during the Period
with the Company averaging $93.59 per barrel ("bbl"), a 36%
increase against $68.97 per bbl in the first half of 2010.
As a result of the successful workover programme completed in
June 2011 on the Company's Tilodiran 2 and Tilodiran 3 wells within
the Colombian Rio Verde Concession Contract, net production (after
all royalty payments) during the Period rose 16% to 212,934 bbls
(first half of 2010: 183,658 bbls). The country of Colombia, where
the Company maintains its operations and crude oil production, has
sustained an increase in overall drilling activities and
hydrocarbon production which has led to competitive pressures for
operators in transporting and marketing crude oil production.
During the first half of 2011, the Company's net sales volumes were
182,750 bbls (first half of 2010: 163,343 bbls), and the Company
held in unsold crude oil inventory approximately 41,000 net barrels
as at 30 June 2011. Through the Company's marketing efforts, the
Company's net crude oil inventory at 30 June 2011 was subsequently
sold in the month of July 2011.
The limited available capacity of Colombia's current pipeline
infrastructure has also continued to lead to rising transportation
costs for trucking the majority of the Company's oil sales. Cost of
sales increased 18% during the Period to $9.7 million (first half
of 2010: $8.2 million). Despite this increase, the Company averaged
a cash netback per bbl of $61.05 for the Period (first half of
2010: $43.15), and Gross Profit increased to $7.4 million during
the Period against $3.1 million in the same period in the prior
year.
In terms of cash position, the Company ended the Period with
cash and cash equivalents of $5.7 million. Capital expenditures for
the Period were $3.3 million primarily related to the Rio Verde
workover programme highlighting the Company's emphasis on enhancing
cash flow from operations, improving shareholder value and
increasing production rates by developing its reserve base.
Operations
In April 2011, the Company commenced workover operations at its
Tilodiran 2 and Tilodiran 3 wells located within the Rio Verde
Concession Contract. The workover operations were completed in
mid-May with testing and the installation of temporary facilities
completed by mid-June 2011. The results of those workovers took the
Company from average gross daily production of approximately 1,100
barrels of oil per day ("bopd") prior to the completion of these
workovers to an average gross daily production of 2,200 bopd
following the workovers and through 30 June 2011. Following the
completion of testing, the Company undertook an internal review of
its development programme for the Tilodiran field and determined
further evaluations and studies were required. The Company
presented the ANH (the National Hydrocarbons Agency in Colombia)
with the conclusions of its initial internal studies in July 2011
and submitted a modified development program to the agency
requesting the suspension of the previously planned development
drilling of two wells, the Tilodiran 4 and Tilodiran 5
respectively, until such time as a third party evaluation report is
completed with regard to the best development program for that
field. The Company believes its internal analysis and the third
party study will support the following:
-- The substantial radial flow drainage areas combined in both
Tilodiran 2 and Tilodiran 3 represent current Proved Developed
Producing reserves in excess of the risked 3P reserves estimated
for all of Tilodiran Field by the independent reserve engineers,
Ralph E. Davis as of 31 December 2010.
-- No additional development drilling will be required to drain
any Tilodiran field reserves beyond those under production in the
Tilodiran 2 and Tilodiran 3 wells.
In August 2011, the ANH formally approved the suspension of the
drilling of the Tilodiran 4 and Tilodiran 5 wells based on the
Company completing the third party reservoir study and report and
providing the results of such report to the ANH. The Company
anticipates having the third party study completed within the next
four to five months and presented to the ANH in the first quarter
of 2012.
The positive results of increased crude oil production from the
Tilodiran workover programme brought with it challenges such as the
need for upgraded treatment facilities, increased water production,
logistics, transportation and marketing. Along with the increased
crude oil production, water handling increased substantially,
primarily from the Tilodiran 2 well. The Company is currently
operating with temporary facilities at its Tilodiran field pending
the design and construction of permanent facilities. Permanent
upgraded facilities are intended to include a water injection
conversion of the Company's existing Rio Verde 2 well once the
requisite environmental and other regulatory permits are obtained.
Also, in August 2011, the Company elected to temporarily suspend
production from the Tilodiran 2 well while the Company finalises
field water disposal preparations. The oil rate from the Tilodiran
2 well was stable prior to temporary shut-in. The Company plans to
recommence production from the Tilodiran 2 well immediately
following the conversion and start up of water disposal operations
utilising Rio Verde 2.
For the remainder of 2011, with a cash balance of approximately
$11 million as at 31 August 2011, the Company is able to focus on
reducing its outstanding debt obligations and to also focus on
development opportunities within its other fields, including the
Bolivar and Bocachico fields in particular. The Company is
currently completing the evaluation of a recompletion project at
its Bolivar field with the intent of executing that project before
the end of this year.
Recent events have demonstrated that volatility in the public
markets may have an impact on the Company's operations, principally
the recent declines in oil prices. Nonetheless, the Company
believes in the strength of long-term oil prices. With a portfolio
of development opportunities, a streamlined organisation and the
positive financial performance experienced during the first six
months of 2011, the Company is well positioned and optimistic with
regard to improving its production profile throughout the remainder
of this year and into the next year.
Mikel Faulkner
Chairman
Stephen Voss
Managing Director
5 September 2011
INDEPENDENT REVIEW REPORT TO GLOBAL ENERGY DEVELOPMENT PLC
Introduction
We have been engaged by the Company to review the 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 Cash Flow Statement, the
Consolidated Statement of Changes in Equity and related explanatory
notes 1 to 12.
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 interim report, including the financial information
contained therein, is the responsibility of and has been approved
by the Directors. The Directors are responsible for preparing the
interim report in accordance with the rules of the London Stock
Exchange for companies whose securities are traded on AIM which
require that the half-yearly report be presented and prepared in a
form consistent with that which will be adopted in the Company's
annual accounts having regard to the accounting standards
applicable to such annual accounts.
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.
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies whose securities
are traded on AIM and for no other purpose. No person is entitled
to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms
of engagement or has been expressly authorised to do so by our
prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
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 the rules of the London Stock Exchange for
companies whose securities are traded on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London W1U 7EU
UK
5 September 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2011
Six Months Six Months Twelve Months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
$'000 $'000 $'000
Note (Unaudited) (Unaudited) (Audited)
------------- ------------- --------------
Revenue 17,096 11,265 23,763
Impairment of Oil & Gas
assets - (1,204) (1,185)
Other cost of sales
including DD&A (9,705) (6,957) (17,419)
------------- ------------- --------------
Cost of sales (9,705) (8,161) (18,604)
Gross profit 7,391 3,104 5,159
Other income 9 5 26
Administrative expenses (3,629) (2,914) (6,558)
Profit from operations 3,771 195 (1,373)
Finance income 10 6 28
Finance expense (1,138) (776) (1,840)
------------- ------------- --------------
Profit / (Loss) before
taxation 2,643 (575) (3,185)
Tax credit / (expense) 6 1,232 (759) 1,125
------------- ------------- --------------
Profit/(Loss) from
continuing operations 3,875 (1,334) (2,060)
Total Comprehensive income /
(loss) attributable to the
equity holders of the parent 3,875 (1,334) (2,060)
============= ============= ==============
Earnings / (loss) Per
Share
- Basic 4 $0.11 ($0.04) ($0.06)
- Diluted 4 $0.11 ($0.04) ($0.06)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2011
30 June 30 June 31 December
2011 2010 2010
$'000 $'000 $'000
Note (Unaudited) (Unaudited) (Audited)
------------- ------------- ------------
Assets
Non-current assets
Intangible assets 5,746 4,758 5,034
Property, plant and
equipment 101,780 104,428 102,896
Total non-current
assets 107,526 109,186 107,930
Current assets
Inventories 2,964 1,948 1,550
Trade and other
receivables 9,994 6,595 4,881
Term deposits 1,728 1,518 1,466
Cash and cash equivalents 5,713 1,043 7,344
------------- ------------- ------------
Total current assets 20,399 11,104 15,241
------------- ------------- ------------
Total assets 127,925 120,290 123,171
============= ============= ============
Liabilities
Non-current liabilities
Convertible loan notes (16,577) (16,773) (16,967)
Deferred tax liabilities
(net) 7 (5,764) (10,834) (8,034)
Equity tax liability (1,267) - -
Long term provisions (3,278) (923) (2,982)
Long term loans payable 8 (5,000) - -
------------- ------------- ------------
Total non-current
liabilities (31,886) (28,530) (27,983)
Current liabilities
Trade and other payables (10,107) (9,150) (14,566)
Corporate and equity
tax liability (1,456) (2,190) (700)
Provision (96) - (96)
------------- ------------- ------------
Total current liabilities (11,659) (11,340) (15,362)
------------- ------------- ------------
Total liabilities (43,545) (39,870) (43,345)
------------- ------------- ------------
Net assets 84,380 80,420 79,826
============= ============= ============
Capital and reserves attributable
to
equity holders of the company
Share capital 545 540 540
Share premium account 27,139 26,544 26,544
Other reserve 1,767 1,826 1,826
Capital reserve 210,844 210,844 210,844
Retained deficit (155,915) (159,334) (159,928)
------------- ------------- ------------
Total equity 84,380 80,420 79,826
============= ============= ============
The financial information contained in this announcement was
approved and authorised for issue by the Board of Directors on 5
September 2011 and is signed on its behalf by:
Mikel Faulkner Stephen Voss
Chairman Managing Director
5 September 2011 5 September 2011
-------------------------------- ----------------------------------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2011
Twelve months
Six months Six months ended 31
ended 30 ended 30 December
June 2011 June 2010 2010
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
------------ ------------ ----------------
Cash flows from operating
activities
Operating profit before
interest and taxation 3,771 195 (1,373)
Depreciation, depletion and
amortisation 3,735 3,697 6,031
(Increase) in trade and other
receivables (3,698) (1,790) (26)
(Increase) in inventories (1,414) (801) (402)
Increase in trade and other
payables 1,828 6,866 1,670
Increase /(decrease) / in
long-term provisions 213 (108) 1,959
Loss on disposal of assets - - 692
Other non-cash items - (40) (11)
Share-based payments 103 120 252
------------ ------------ ----------------
Cash generated from operations 4,538 8,139 8,792
Taxes paid (430) (804) (1,766)
------------ ------------ ----------------
Net cash flows from operating
activities 4,108 7,335 7,026
Investing activities
Capital expenditure
- Expenditure on property,
plant and equipment (2,619) (8,508) (10,354)
- Expenditure on intangible
assets (712) (204) (462)
Disposal of property, plant
and equipment - - 687
Interest received 8 6 28
Increase in short-term
investments (262) (113) (61)
------------ ------------ ----------------
Net cash flows from investing
activities (3,585) (8,819) (10,162)
Financing activities
Short term loans (paid) drawn
during the period (1,285) - 8,768
Interest paid (869) (541) (1,356)
------------ ------------ ----------------
Net cash flows from financing
activities (2,154) (541) 7,412
------------ ------------ ----------------
(Decrease) / increase in cash
and cash equivalents (1,631) (2,025) 4,276
------------ ------------ ----------------
Cash and cash equivalents at
beginning of period 7,344 3,068 3,068
------------ ------------ ----------------
Cash and cash equivalents at
end of period 5,713 1,043 7,344
============ ============ ================
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2011
Share Share Other Capital Retained
Capital Premium Reserves Reserve deficit Total
$'000 $'000 $'000 $'000 $'000 $'000
-------- -------- --------- -------- ---------- --------
At 1 January
2010
(Audited) 540 26,544 1,826 210,844 (158,120) 81,634
Total
comprehensive
loss for the
period - - - - (1,334) (1,334)
Share-based
payments - - - - 120 120
At 30 June
2010
(Unaudited) 540 26,544 1,826 210,844 (159,334) 80,420
Total
comprehensive
loss for the
period - - - - (726) (726)
Share-based
payments - - - - 132 132
At 31 December
2010
(Audited) 540 26,544 1,826 210,844 (159,928) 79,826
Total
comprehensive
income for
the period - - - - 3,875 3,875
Share-based
payments - - - - 103 103
Exercise of
convertible
notes (Note
11) 5 595 (59) - 35 576
-------- -------- --------- -------- ---------- --------
At 30 June
2011
(Unaudited) 545 27,139 1,767 210,844 (155,915) 84,380
======== ======== ========= ======== ========== ========
UNAUDITED NOTES FORMING PART OF THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2011
1. Accounting Policies
Basis of Preparation
The condensed interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board ("IASB") as adopted for use in the EU.
The condensed interim financial information has been prepared using
the accounting policies which will be applied in the Group's
statutory financial information for the year ended 31 December
2011.
2. Financial reporting period
The condensed interim financial information for the period 1
January 2011 to 30 June 2011 is unaudited. In the opinion of the
Directors the condensed interim financial information for the
period presents fairly the financial position, results from
operations and cash flows for the period in conformity with the
generally accepted accounting principles consistently applied. The
condensed interim financial information incorporates comparative
figures for the interim period 1 January 2010 to 30 June 2010 and
the audited financial year to 31 December 2010.
The financial information contained in this interim report does
not constitute statutory accounts as defined by section 435 of the
Companies Act 2006. The comparatives for the full year ended 31
December 2010 are not the Company's full statutory accounts for
that year. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under section 498(2)-(3) of the Companies Act 2006.
3. Revenue
Revenue is attributable to one continuing activity, which is oil
production from Colombia Energy Development Company ("CEDCo"), a
wholly-owned subsidiary of the Group, located in Colombia, South
America.
4. Earnings per share
Basic earnings per share amounts are calculated by dividing
profit / (loss) for the period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding for the period.
Diluted earnings per share amounts are calculated by dividing
the profit / (loss) for the period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
share outstanding during the period plus the weighted average
number of ordinary shares that would be issued on the conversion of
all the dilutive potential ordinary shares into ordinary shares.
The calculation, of the dilutive potential ordinary shares related
to employee and director share option plans, includes only those
options with exercise prices below the average share trading price
for each period.
The following reflects the profit / (loss) and share data used
in the basic and diluted earnings per share calculations:
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
$'000 $'000 $'000
(Unaudited) (Unaudited) Audited
-------------------------------- ------------- ------------- --------------
Net profit / (loss)
attributable to equity holders
used in basic calculation 3,875 (1,334) (2,060)
-------------------------------- ------------- ------------- --------------
Add back interest and accretion
charge in respect of
convertible loan notes 727 722 1,457
-------------------------------- ------------- ------------- --------------
Net profit / (loss)
attributable to equity holders
used in dilutive calculation 4,602 (612) (603)
-------------------------------- ------------- ------------- --------------
Basic weighted average number
of shares 35,766,774 35,439,009 35,439,009
-------------------------------- ------------- ------------- --------------
Dilutive potential ordinary
shares
-------------------------------- ------------- ------------- --------------
Shares related to convertible
notes 4,388,608 4,565,027 4,565,027
-------------------------------- ------------- ------------- --------------
Employee and Director share
option plans 3,621,862 2,945,196 3,651,862
-------------------------------- ------------- ------------- --------------
Diluted weighted average number
of shares 43,777,244 42,949,232 43,655,898
-------------------------------- ------------- ------------- --------------
The calculation of the diluted EPS assumes all criteria giving
rise to the dilution of the EPS are achieved and all outstanding
share options are exercised.
During the periods ended 30 June and 31 December 2010, the Group
reported a loss. Therefore, because the effect of the potentially
dilutive shares related to convertible loan notes and outstanding
share options would be anti-dilutive, a separate diluted loss per
share has not been calculated because it is deemed to equal the
basic loss per share.
5. Convertible loan notes
A balance of $5,798,000 in 2005 convertible notes and
$11,303,000 in 2006 convertible notes remains outstanding and
unless previously redeemed, converted or purchased and cancelled,
the notes are repayable in full on 30 October 2012 and on 8
December 2012, respectively.
6. Tax credit / (expense)
The Global Energy Development PLC Group is subject to UK and
Colombian taxation.
UK taxation
The Company does not expect to be liable for UK corporation tax
in the foreseeable future because Global had trading losses brought
forward of $25.6 million as at 31 December 2010 and $23.6 million
as at 31 December 2009 and these are expected to increase in the
future.
Colombian taxation
The Group pays taxes in Colombia through the branch office of
its wholly-owned subsidiary CEDCo.
The Colombian corporation tax is calculated as the higher of net
income tax or presumptive income tax which are determined as
follows:
-- Presumptive income tax. An alternative minimum tax calculated
on the prior year gross equity less liabilities at a rate of 3% to
determine the presumptive income. A rate of 33% is applied to the
presumptive income to arrive at the tax obligation; or
-- Net income tax. Calculated at a rate of 33% taking into
account revenues minus costs, standard deductions and special
deductions.
Currently, CEDCo, pays its Income Tax based on Presumptive
Income Tax methodology.
Additionally, the Group pays an Equity Tax calculated using a
taxable base of Net Equity as at 1 January 2011 and a rate of 6%.
The payment of the tax is over 4 years with payments made twice per
year.
The major components of income tax expense for the periods
ended 30 June 2011 and 2010 as disclosed in the consolidated
income statement are:
30 June 30 June 31 Dec
2011 2010 2010
$000 $000 $000
--------------------------------------------- -------- -------- --------
Current taxes:
--------------------------------------------- -------- -------- --------
Current income tax charge 139 382 789
--------------------------------------------- -------- -------- --------
Current equity tax charge 859 400 820
--------------------------------------------- -------- -------- --------
Other withholdings 40 17 107
--------------------------------------------- -------- -------- --------
Total current taxes 1,038 799 1,716
--------------------------------------------- -------- -------- --------
Deferred Tax:
--------------------------------------------- -------- -------- --------
Relating to origination and reversal
of temporary differences (2,270) (40) (2,841)
--------------------------------------------- -------- -------- --------
Tax credit reported in the income statement (1,232) 759 (1,125)
--------------------------------------------- -------- -------- --------
7. Deferred tax liabilities (net)
The Group offsets tax assets and liabilities if, and only if, it
has a legally enforceable right to offset current tax assets and
current tax liabilities and the deferred tax assets and deferred
tax liabilities related to corporation taxes levied by the same tax
authority. Deferred tax assets and liabilities listed, are related
to corporation tax levied by the Colombian tax authority with
jurisdiction over CEDCo.
Temporary differences between the tax bases and net book
carrying values arise in regard to the effect of inflation
adjustments, the differences in exchange rate of non-monetary
assets, differences between tax and accounting depreciation, the
balance of presumptive income tax excesses generated and tax losses
generated in 2010.
The amounts that are off-set in the statement of financial
position are analysed below:
30 June 30 June 31 Dec
2011 2010 2010
Deferred tax assets $000 $000 $000
------------------------------------- -------- -------- -------
Deferred tax assets to be recovered
after more than 12 months 14,135 1,239 12,837
------------------------------------- -------- -------- -------
Deferred tax assets to be recovered
within 12 months 3,778 - 3,540
------------------------------------- -------- -------- -------
Total 17,913 1,239 16,377
------------------------------------- -------- -------- -------
30 June 30 June 31 Dec
2011 2010 2010
Deferred tax liabilities $000 $000 $000
---------------------------------------- --------- --------- ---------
Deferred tax liability to be recovered
after more than 12 months (23,649) (12,073) (24,244)
---------------------------------------- --------- --------- ---------
Deferred tax liability to be recovered
within 12 months (28 ) - (167)
---------------------------------------- --------- --------- ---------
Total (23,677) (12,073) (24,411)
---------------------------------------- --------- --------- ---------
Deferred tax liabilities (net) (5,764) (10,834) (8,034)
-------------------------------- -------- --------- --------
The effect of this net deferred income tax ("DIT") movement on
the condensed consolidated statement of comprehensive income is a
benefit of $2.3 million resulting from a higher DIT asset of $1.5
million and lower DIT liability of $0.8 million.
-- DIT asset increased because of higher fiscal losses
recognition by $5 million after final 2010 income tax filing.
-- DIT liability decreased $0.5 million due to the peso-dollar
exchange rate effect and $0.3 million due to provisions
movement.
8. Long term loans payable
On 3 February 2011, the Company, as borrower, signed an
amendment (The "Loan Amendment") to the loan agreement entered into
with HKN Inc., as lender, on 14 September 2010. The Loan Amendment
extended the maturity date of the underlying repayment obligation
for one year to September 2012. In exchange for this extension, the
Company agreed to increase the interest rate from 10% per annum to
10.5% per annum.
9. Interim dividend
No interim dividend has been declared.
10. Cash generating units
Cash Generating Units ("CGU") are defined as the assets
representing the smallest identifiable segments generating cash
flows that are largely independent of cash flows from other assets
or groups of assets. CGUs are identified in accordance with IAS 36
"Impairment of Assets", significant asset groups are normally but
not always, single development or production areas.
Pipeline capacity issues in Colombia experienced in 2010 and
continuing in 2011 have required the Group to review the way in
which its crude is sold to third parties. All strategies adopted to
commercialise the Company's crude, reinforce the Group's
recognition of a single CGU for the Group at a country level. Those
strategies require that the Company retains flexibility to sell its
production in various combinations to various clients depending on
the respective client's shipping and marketing capacities.
11. Share capital
Six months Six months
ended 30 June 2011 ended 30 June 2010 Twelve months ended
(Unaudited) (Unaudited) 31 Dec 2010 Audited
Number of Number of Number of
shares $'000 shares $'000 shares $'000
------------ ----------- ------ ------------ ------ ----------- --------
Allotted,
called up
and fully
paid
------------ ----------- ------ ------------ ------ ----------- --------
Ordinary
shares of
1p each 35,766,774 546 35,439,009 540 35,439,009 540
------------ ----------- ------ ------------ ------ ----------- --------
The concept of authorised capital was removed by the Companies
Act 2006 and the new Articles of Association adopted by the Company
at the 2010 Annual General Meeting do not contain any references to
authorised share capital and unissued shares.
The ordinary shares confer the right to vote at general meetings
of the Company, to a repayment of capital in the event of
liquidation or winding up and certain other rights as set out in
the Company's articles of association.
The ordinary shares also confer the right to receive dividends
if declared by the Directors and approved by the Company.
On 14 January 2011, the Company issued 317,000 ordinary shares
of 1p each in consideration for the purchase and cancellation of
$600,000 variable coupon convertible notes due 2012 (the "Notes")
plus all accrued interest due under the Notes.
On 12 April 2011, following a notice exercise of options in
respect of 10,765 ordinary shares of 1p each in the Company, the
Company issued to Alan Henderson, a director of the Company, 10,765
ordinary shares.
12. Subsequent events
On 16 June 2011, HKN announced the terms of a mandatory cash
offer to be made by HKN for all the issued and to be issued
ordinary shares in Global ("Global Shares") not already held by HKN
and persons deemed to be acting in concert with it. As stated in
the announcement on 16 June 2011, the obligation to make the
mandatory offer arose as a result of Lyford, a concert party of
HKN, entering into a conditional agreement to acquire 3,565,936
Global Shares, representing an interest of approximately 9.97 per
cent. in Global, from the United States Marshals Service
("Acquisition").
On 15 July 2011, the Directors of HKN and the Independent
Directors of Global announced that they had agreed, with the
consent of the Takeover Panel, to postpone the posting of the Offer
Document until the conditions to the Acquisition are satisfied and
Lyford has completed the Acquisition. It was further announced that
completion of the Acquisition was subject to the satisfaction of a
number of conditions and was anticipated to take place on or before
13 September 2011, subject to agreement between the parties.
On 30 August 2011, Global was notified by Lyford that certain of
the conditions to the agreement in relation to the Acquisition had
been satisfied and 3,565,936 Global Shares, representing 9.97 per
cent. of the issued share capital of Global had been transferred to
Lyford on 29 August 2011 at a price of approximately 96 cents per
Global Share (equivalent to approximately 59p per Global Share
based on a closing mid exchange rate of US$1.64:GBP1 on 29 August
2011). In addition, the United States Marshals Service wished to
sell and Lyford purchased a further 223,000 Global Shares at a
price of 96 cents per Global Share (equivalent to approximately 59p
per Global Share based on a closing mid exchange rate of
US$1.64:GBP1 on 29 August 2011). Accordingly, HKN and its concert
parties now own or control shares representing 21,425,560 Global
Shares, equivalent to 59.90 per cent. of the issued share capital
of Global and Lyford now holds 9,120,236 Global Shares, equivalent
to 25.50 per cent. of the issued share capital of Global. Lyford
has also conditionally agreed to acquire a further 55,400 Global
Shares from the United States Marshals Service at a price of
US$1.05 per Global Share (equivalent to approximately 64p per
Global Share based on a closing mid exchange rate of US$1.64:GBP1
on 29 August 2011).
As the Concert Party now holds in excess of 50 per cent. of the
voting rights exercisable at a general meeting of Global, the
Offer, when made, will be unconditional in all respects. The Offer
Document will be posted to Global Shareholders as soon as
practicable and in any event by no later than 9 September 2011.
There were no other material subsequent events between 30 June
2011 and the date of this document.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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