TIDMGED
RNS Number : 1514N
Global Energy Development PLC
26 September 2012
Immediate Release 26 September 2012
GLOBAL ENERGY DEVELOPMENT PLC
("Global" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
Global Energy Development PLC, the South American focused
petroleum production and development company (AIM: GED), with
operations in Colombia, South America, announces its interim
results for the six month period ended 30 June 2012 (the
"Period").
HIGHLIGHTS:
-- Revenue increased by 18 per cent. to $20.2 million (H1 2011: $17.1 million);
-- Average gross production decreased 17 per cent. to 202,247
barrels of oil ("bbls") (H1 2011: 244,040 bbls) due to the
temporary downtime of the Tilodiran 2 well (126 days) during the
Period;
-- Gain of $810,000, net of taxes (H1 2011: nil) on sale of
remaining interest in Block 95 in Peru ;
-- Profit before taxation of $1.2 million (H1 2011; $2.6 million);
-- Net profit of $2.0 million (H1 2011: $3.9 million net profit
due to a significant non-cash tax benefit of $1.2 million
received); and
-- Capital expenditures of $6.0 million predominantly related to
the workover programmes of the Tilodiran 2 and the Torcaz 5 wells
and the conversion of the Rio Verde 2 well into a water injection
well.
Stephen Voss, Managing Director, commenting on the results,
said:
"We are in a strong financial position from recent improvements
in our on-going Llanos oil production and are focusing on
partnering efforts and our development plans in the Magdalena
Valley".
For further information please contact
Global Energy Development PLC
Anna Williams, Finance Director
awilliams@globalenergyplc.com
www.globalenergyplc.com +001 817 310 0240
Buchanan (Financial PR)
Tim Thompson
Ben Romney +44 (0)20 7466 5000
Northland Capital Partners Limited
Louis Castro
Lauren Kettle +44 (0)20 7796 8800
Westhouse Securities
Petre Norton
Andrew Matharu +44 (0) 20 7601 6100
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 comprises a base of production,
developmental drilling and workover opportunities and several
exploration projects in Colombia, South America.
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 the Society of Petroleum Engineers for 28
years.
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.
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
Operations
Middle Magdalena Oil Reserves:
Several major international companies such as Shell E&P -
Colombia and ExxonMobil Exploration Colombia Limited have recently
announced partnering efforts in block areas adjacent to the
Company's Bolivar Contract area in the Middle Magdalena valley. The
Company may also pursue partnering with highly-experienced
operators in order to accelerate the development of our substantial
undeveloped reserve base and increase shareholder value.
Regarding our second largest 2P reserve-based property, the
Bolivar Contract area, the Company is continuing its planning with
third-party service and equipment providers to hydraulically
fracture the La Luna formation in the existing Olivo 2 well during
late 2012 or early 2013 depending on the availability of equipment
within the country.
As part of our strategy to increase production from the large
reserve base in our Middle Magdalena properties, work began on the
Torcaz 5 well within our Bocachico Contract area in mid-July. A
progressive cavity pump was installed at a depth of approximately
7,900 feet which was below the perforations in the formation to
re-establish oil (and sand) production and lift from the wellbore.
During the testing phase of this pump, successful sanding and oil
shows were initiated. However, oil shows were interrupted due to
periodic significant sand movement into the wellbore which
eventually overwhelmed the capacity of the pump. As a result, it
became evident that a modified approach, combining the Cold Heavy
Oil Production with Sand (CHOPS) technology process and the partial
application of conventional sanding restraints, should be utilised
to moderate sand production and enhance oil production. The Company
hopes to commence this process in October and planning efforts are
currently underway.
Llanos Basin Oil Production:
The overwhelming majority of the Company's current oil
production comes from its contract areas located within the Llanos
Basin of Colombia, South America. The Company's focus for the
Llanos Basin production is to maximise production volumes, decrease
operating costs and utilise cash flow from operations to develop
projects within our Middle Magdalena Valley contract areas
(Bocachico and Bolivar Association Contracts). Our original targets
for the Period for the Llanos Basin properties were the
recompletion of the Tilodiran 1 well to re-establish oil production
and the conversion of the Rio Verde 2 well to a water injection
well in order to significantly reduce water transportation and
disposal costs within the Rio Verde Concession Contract area.
As previously announced, the original timing of these projects
was delayed because, during early 2012, the Company was forced to
perform workover operations to replace a failed pump within the
wellbore of its Tilodiran 2 well located within the Rio Verde
Concession Contract area. Shortly after this work was completed, in
May 2012, the electric submersible pump ("ESP") failed again. Upon
recovery of the failed pump, the well was stimulated and an ESP
from a different vendor was installed at a shallower depth of 8,800
feet. This subsequent workover operation was completed in mid-June.
The Tilodiran 2 well is now online and producing stable rates of
approximately 350 gross barrels of oil per day ("bopd"). Overall
gross production decreased by 17 per cent. from 244,040 bbls to
202,247 in the Period due to the more than 120 days of downtime of
the Tilodiran 2 well during the Period. Following completion of the
workover, the Company's average gross daily production has been
steadily averaging between 1,700 bopd and 1,800 bopd.
In July following the completion of the workover of the
Tilodiran 2 well, the Company commenced and completed the
conversion of the inactive Rio Verde 2 to a water disposal well.
The Company successfully concluded short-term water injection tests
at Rio Verde 2 and has submitted the test results to the Colombian
Ministry of Mines and Energy. Final approval from the Colombian
authorities to re-commence water injection at Rio Verde 2 is
expected in October 2012. As the Company transports and disposes of
more than 120,000 barrels of water each month from its Tilodiran
field, we anticipate that this disposal well will save an average
of $4.00 per barrel of water on transportation costs per month
translating into significant cost savings for the Company.
Peru:
In June 2012, the Company closed on the sale of its remaining 40
per cent. working interest of the Peruvian Block 95 License
Contract for cash consideration of $5.4 million with $2 million
received at closing and the remaining $3.4 million payable upon the
earlier of either approval of the assignment from Perupetro, Peru's
national agency for hydrocarbons, or one year from the closing
date. Based on the total proceeds from the sale, the Company was
able to record a net gain after tax on this transaction of
approximately $810,000. This sale allows the Company to remain
focused on our core value assets in Colombia.
Financials
During the Period, the Company experienced increased revenues
due to higher oil prices as compared to the prior year period.
Average realised sales prices increased from $93.59 per bbl for the
six months ended 30 June 2011 to an average of $101.60 per bbl in
the Period, while gross oil production decreased by 17 per cent.
from 244,040 bbls to 202,247 bbls due to the temporary downtime of
the Tilodiran 2 well during the Period.
Cost of sales increased 47% from $9.7 million to $14.3 million
during the Period. The major contributing factor of this increase
in operating expense was higher water volumes and associated
disposal costs from the Tilodiran field. As a reminder, water
production increased in mid-2011 along with increased oil
production from the Tilodiran field. Commencing water injection
into the recently converted Rio Verde 2 well will reduce future
water disposal costs. The Company also derecognised the cost of the
damaged ESP of $736,000 in the Tilodiran 2 well when it was
replaced during the Period.
The Company ended the Period with a cash balance of $7.8 million
with increased cash flow from operations of $5.9 million compared
to $4.1 million in the prior period. Capital expenditures of $6.0
million related primarily to the required workovers on the
Tilodiran 2 well, the workover operations on the Torcaz 5 well and
the conversion of the Rio Verde 2 well to a water disposal well. We
were able to repay and fully extinguish the remaining convertible
notes outstanding of $9.5 million which became due and payable in
2012 with the securing of new long-term financing of $12 million.
This allows the Company to focus its capital resources on
improvements of its on-going oil production and the continuation of
its development plans in the Magdalena Valley.
Mikel Faulkner
Chairman
Stephen Voss
Managing Director
25 September 2012
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 2012 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 13.
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 2012 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
25 September 2012
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2012 2011 2011
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
------------- ------------- --------------
Revenue 20,179 17,096 43,070
Cost of sales (14,300) (9,705) (28,075)
------------- ------------- --------------
Gross profit 5,879 7,391 14,995
Other income 39 9 12
Administrative expenses (3,282) (3,629) (6,669)
Finance income 15 10 34
Finance expense (1,416) (1,138) (2,438)
------------- ------------- --------------
Profit before taxation 1,235 2,643 5,934
Tax (expense)/credit (41) 1,232 (3,938)
------------- ------------- --------------
Profit from continuing operations,
net of tax 1,194 3,875 1,996
Profit from discontinued operations, 810 - -
net of tax
------------- ------------- --------------
Total comprehensive income attributable
to the equity holders of the parent 2,004 3,875 1,996
------------- ------------- --------------
Earnings per share for continuing
operations
* Basic $0.03 $0.11 $0.06
* Diluted $0.03 $0.10 $0.05
Earnings per share for discontinued
operations
$0.02 - -
* Basic and diluted
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 December
2012 2011 2011
$'000 $'000 $'000
(Unaudited)
(Unaudited) (Audited)
------------- -------------- ------------
Assets
Non-current assets
Intangible assets 828 5,746 3,427
Property, plant and equipment 101,146 101,780 99,845
------------- -------------- ------------
Total non-current assets 101,974 107,526 103,272
Current assets
Inventories 1,522 2,964 1,939
Trade and other receivables 11,144 8,276 5,452
Prepaids and other assets 2,423 1,718 1,299
Term deposits 1,384 1,728 1,718
Cash and cash equivalents 7,758 5,713 4,331
------------- -------------- ------------
Total current assets 24,231 20,399 14,739
------------- -------------- ------------
Total assets 126,205 127,925 118,011
Liabilities
Non-current liabilities
Convertible loan notes - (16,577) -
Deferred tax liabilities (net) (9,936) (5,764) (10,116)
Equity tax liability (646) (1,267) (968)
Long-term provisions (3,710) (3,278) (2,779)
Long-term loans payable (12,164) (5,000) (227)
------------- -------------- ------------
Total non-current liabilities (26,456) (31,886) (14,090)
Current liabilities
Convertible loan notes - - (9,372)
Trade and other payables (8,264) (10,107) (5,556)
Corporate and equity tax liability (1,628) (1,456) (1,184)
Provision (82) (96) (82)
Short-term loan payable and
financing leases (5,144) - (5,222)
------------- -------------- ------------
Total current liabilities (15,118) (11,659) (21,416)
------------- -------------- ------------
Total liabilities (41,574) (43,545) (35,506)
------------- -------------- ------------
Net assets 84,631 84,380 82,505
------------- -------------- ------------
Capital and reserves attributable
to equity holders of the company
Share capital 549 545 546
Share premium account 27,139 27,139 27,139
Other reserve - 1,767 927
Capital reserve 210,844 210,844 210,844
Retained deficit (153,901) (155,915) (156,951)
------------- -------------- ------------
Total equity 84,631 84,380 82,505
------------- -------------- ------------
The financial information contained in this announcement was
approved and authorised for issue by the Board of Directors on 25
September 2012 and is signed on its behalf by:
Mikel Faulkner Stephen Voss
Chairman Managing Director
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2012 2011 2011
$'000 (Unaudited) $'000 $'000
(Unaudited) (Audited)
------------------- ------------- --------------
Cash flows from operating activities
Operating profit before interest and taxation
from continuing operations 2,636 3,771 8,338
Operating profit before interest and taxation
from discontinued operations 1,157
Depreciation, depletion and amortisation 3,182 3,735 8,424
Gain on disposal of assets from discontinued
operations (1,157) - 5
Write-off of workover costs 736 - -
(Increase) in trade and other receivables (2,293) (3,698) (930)
Decrease/(increase) in inventories 417 (1,414) (389)
Increase in trade and other payables 2,708 1,828 437
(Decrease)/increase in long-term provisions (1) 213 (482)
Share-based payments and other non-cash
items 110 103 107
------------------- ------------- --------------
Cash generated from continuing operations 7,495 4,538 15,510
Taxes paid (1,571) (430) (1,344)
------------------- ------------- --------------
Net cash flows from operating activities 5,924 4,108 14,166
Investing activities
Capital expenditure
* Expenditure on property, plant and equipment (4,744) (2,619) (5,596)
* Expenditure on intangible assets (1,274) (712) (393)
Disposal of property, plant and equipment 2,000 - 65
Interest received 15 8 34
Increase/(decrease) in short-term investments 333 (262) (252)
------------------- ------------- --------------
Net cash flows from investing activities (3,670) (3,585) (6,142)
Financing activities
Proceeds from placement of note payable 11,938 - -
Short-term loans (paid)/drawn during the
period (78) (1,285) (9,124)
Convertible loan notes payments (9,561) - (95)
Interest paid (1,129) (869) (1,818)
Proceeds from exercise of share options 3 - -
------------------- ------------- --------------
Net cash flows from financing activities 1,173 (2,154) (11,037)
------------------- ------------- --------------
Increase/(decrease) in cash and cash equivalents 3,427 (1,631) (3,013)
------------------- ------------- --------------
Cash and cash equivalents at beginning
of period 4,331 7,344 7,344
------------------- ------------- --------------
Cash and cash equivalents at end of period 7,758 5,713 4,331
------------------- ------------- --------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2012
Share Share Other Capital Retained
Capital Premium Reserves Reserve deficit Total
$'000 $'000 $'000 $'000 $'000 $'000
--------- --------- ---------- --------- ---------- --------
At 1 January 2011 (Audited) 540 26,544 1,826 210,844 (159,928) 79,826
Total comprehensive loss
for the period - - - - 3,875 3,875
Share-based payments - - - - 103 103
Exercise of convertible
notes 5 595 (59) - 35 576
At 30 June 2011 (Unaudited) 545 27,139 1,767 210,844 (155,915) 84,380
Total comprehensive loss
for the period - - - - (1,879) (1,879)
Share-based payments 1 - - - 3 4
Redemption of convertible
notes - - (840) - 840 -
At 31 December 2011 (Audited) 546 27,139 927 210,844 (156,951) 82,505
Total comprehensive income
for the period - - - - 2,004 2,004
Share-based payments 3 - - - 119 122
Redemption of convertible
notes (Note 7) - - (927) - 927 -
--------- --------- ---------- --------- ---------- --------
At 30 June 2012 (Unaudited) 549 27,139 - 210,844 (153,901) 84,631
========= ========= ========== ========= ========== ========
UNAUDITED NOTES FORMING PART OF THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2012
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
2012.
2. Financial reporting period
The condensed interim financial information for the period 1
January 2012 to 30 June 2012 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 2011 to 30 June 2011 and
the audited financial year to 31 December 2011.
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 2011 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 Co. ("CEDCo"), a
wholly-owned subsidiary of the Group, located in Colombia, South
America.
4. Discontinued operations - Peru
In June 2012, the Company closed on the sale of its remaining 40
per cent working interest of the Peruvian Block 95 License Contract
("Block 95") through its wholly-owned subsidiary to Gran Tierra
Energy, Inc. ("GTE"). Block 95 was the Company's only Peruvian
asset, located in the Marañon Basin in the north-east area of the
country, with net 2P reserves of 8.4m barrels of oil as reported in
the Company's annual report and accounts for the year to 31
December 2011. The contract is in its third exploration phase
although it is currently under force majeure, pending approval of
certain environmental licensing requirements. Block 95 did not
generate any revenues or expenses in the year to 31 December
2011.
Under the terms of the purchase and sale agreement, the Company
sold its 40 per cent working interest to GTE for cash consideration
of $5.4 million with $2 million received upon closing and the
remaining $3.4 million payable upon the earlier of either approval
of the assignment from Perupetro, Peru's national agency of
hydrocarbons, or one (1) year from the closing date. The effective
date of the sale was 1 June 2012. The proceeds from the sale will
be used for working capital generally. This sale included all
intangible assets of the wholly-owned subsidiary. The Company
recognised a net gain after taxation on the sale of these assets of
approximately $810,000 as of 30 June 2012. Following the completion
of this divestiture, the Company holds no further interests in
Block 95 in Peru.
The following are the totals for the major classes of assets and
liabilities relating to our discontinued operations associated with
Block 95:
Six months ended
30 June
2012
$'000
(Unaudited)
----------------------------------------------- -----------------
Net Assets disposed of:
----------------------------------------------- -----------------
Intangible assets $4,600
----------------------------------------------- -----------------
Trade and other payables (357)
----------------------------------------------- -----------------
4,243
----------------------------------------------- -----------------
Proceeds on disposal of discontinued
operations
----------------------------------------------- -----------------
Cash and cash equivalents 2,000
----------------------------------------------- -----------------
Deferred consideration 3,400
----------------------------------------------- -----------------
5,400
----------------------------------------------- -----------------
Profit on disposal of discontinued operations
before taxation $1,157
----------------------------------------------- -----------------
The gain on discontinued operations on the Statement of
Comprehensive Income can be analysed as follows:
Six months ended
30 June
2012
$'000
(Unaudited)
------------------------------------------------ -----------------
Gain recognised on disposal of net assets
less costs to sell $1,157
------------------------------------------------ -----------------
Income tax payable (347)
------------------------------------------------ -----------------
Profit on disposal of discontinued operations,
net of tax 810
------------------------------------------------ -----------------
The Statement of Cash Flows contains the following elements
related to discontinued operations:
Twelve months
Six months Six months ended
ended ended 31 December
30 June 30 June 2011
2012 2011 $'000
$'000 (Unaudited) $'000 (Unaudited) (Audited)
--------------------------------- ------------------- ------------------- --------------
Net cash flows attributable
to investing activities:
--------------------------------- ------------------- ------------------- --------------
Expenditure on intangible
assets $(1,172) $(712) $(393)
--------------------------------- ------------------- ------------------- --------------
Proceeds on sale of non-current
assets 2,000 _ 2,000
--------------------------------- ------------------- ------------------- --------------
Net Cash flow attributable
to investing activities 828 (712) 1,670
--------------------------------- ------------------- ------------------- --------------
There were no cash flows from discontinued operations
attributable to operating or financing activities.
5. Earnings per share
Basic earnings per share amounts are calculated by dividing
profit 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 for the period attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares
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 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
2012 2011 2011
$'000 (Unaudited) $'000 (Unaudited) $'000 (Audited)
------------------- ------------------- -----------------
Profit from continuing operations
after taxation 1,194 3,875 1,996
Profit from discontinued operations 810 - -
after taxation
------------------- ------------------- -----------------
Net profit attributable to equity
holders used in dilutive calculation 2,004 3,875 1,996
Earnings per Share for continuing
operations
* Basic $0.03 $0.11 $0.06
* Diluted $0.03 $0.10 $0.05
Earnings per Share for discontinuing
operations
$0.02 $- $-
* Basic and Diluted
Total Earnings per Share
* Basic $0.05 $0.11 $0.06
* Diluted $0.05 $0.10 $0.05
Basic weighted average number
of shares 35,855,076 35,766,774 35,752,049
Dilutive potential ordinary shares
Employee and Director share option
plans 1,416,998 1,439,072 1,536,620
------------------- ------------------- -----------------
Diluted weighted average number
of shares 37,272,074 37,205,846 37,288,669
Figures in thousand except for per share information.
The calculation of the diluted EPS assumes all criteria giving
rise to the dilution of the EPS are achieved and all outstanding
share options with exercise prices lower than the average period
share price are exercised.
6. Intangible Assets
The remaining balance in intangible assets at 30 June 2012 is
primarily related to the costs of the upgrade in the Group's
accounting system to SAP-ERP.
7. Convertible loan notes
On 3 February 2012, the Group irrevocably exercised its option
to redeem all of the outstanding ($9,561,000) principal amount of
its remaining Variable Coupon Convertible Notes Due 2012 (the
"Convertible Notes") of the Company on 5 March 2012 (the
"Redemption Date"). The Notes were redeemed for cash at the
principal amount of the Notes together with interest accrued up to
(but excluding) the Redemption Date. The Convertible Notes have
been fully extinguished and are no longer outstanding.
8. Long-term and short-term loans payable
On 31 January 2012, the Group closed a Fixed Rate Note Payable
with HKN, Inc. ("HKN") for the principal amount of $12 million (the
"Note Payable"). The Note Payable is not convertible into shares
and allowed for the full principal amount to be available to the
Company from the date of closing. The Note Payable is subject to an
interest charge of 10.5 per cent per annum, payable quarterly in
arrears, with the principal amount being repayable in full on 30
September 2013. The Note Payable is currently unsecured, but HKN
can require Global to provide adequate collateral security in the
event of a material adverse effect. The Company also paid to HKN a
1.75 per cent transaction fee of approximately $210,000. The
Company used these proceeds to redeem and extinguish the remaining
$9.5 million principal amount (and accrued interest) of its
Convertible Notes and to accelerate development activities at its
existing properties within Colombia.
On 30 August 2012, the Group, as borrower, signed an amendment
(the "Loan Amendment") to the Senior Secured Note Payable for $5
million entered into with HKN, as lender, on 14 September 2010. The
Loan Amendment extended the maturity date of the underlying
repayment obligation from September 2012 to April 2013. In exchange
for this extension, the Company agreed to increase the interest
rate from 10.5 per cent per annum to 12.5 per cent per annum and to
pay a one-time 1 per cent transaction fee of $50,000 (see Note 13 -
Subsequent events).
9. 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 due to Global trading losses brought
forward of $28.5 million as at 31 December 2011. These trading
losses 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 per
cent to determine the presumptive income. A rate of 33 per cent is
applied to the presumptive income to arrive at the tax obligation;
or
-- Net income tax. Calculated at a rate of 33 per cent taking
into account revenues minus costs, standard deductions and special
deductions.
Currently, CEDCo pays its income tax based on Presumptive Income
Tax.
Additionally, the Group pays an Equity Tax calculated using a
taxable base of the Net Equity as at 1 January 2011 at a rate of 6
per cent. The payment of the tax is being made over four years with
payments made twice per year.
The major components of income tax expense for the periods ended
30 June 2012 and 2011 as disclosed in the Consolidated Statement of
Comprehensive Income are:
30 June 30 June 31 December
2012 2011 2011
$'000 $'000 $'000
------------------------------------------ -------- -------- ------------
Current taxes for continuing operations:
------------------------------------------ -------- -------- ------------
Current income tax charge for continuing
operations 164 139 256
------------------------------------------ -------- -------- ------------
Current equity tax - 859 1,549
------------------------------------------ -------- -------- ------------
Others withholdings 58 40 51
------------------------------------------ -------- -------- ------------
Total current taxes for continuing
operations 222 1,038 1,856
------------------------------------------ -------- -------- ------------
Deferred Tax:
------------------------------------------ -------- -------- ------------
Change in deferred tax related to
temporary differences and other (181) (2,270) 2,082
------------------------------------------ -------- -------- ------------
Tax expense/(credit) for continuing
operations 41 (1,232) 3,938
------------------------------------------ -------- -------- ------------
Tax expense for discontinued operations 347 - -
------------------------------------------ -------- -------- ------------
10. 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 relation 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 prior years.
The changes in net deferred tax liabilities are reported as
follows:
Deferred tax liabilities (net)
30 June 30 June 31 December
2012 2011 2011
$'000 $'000 $'000
-------------------------------------------- --------- -------- ------------
Opening balance of deferred tax
liabilities (net) (10,116) (8,034) (8,034)
-------------------------------------------- --------- -------- ------------
Change in deferred tax related to
temporary differences and other 180 2,270 (2,082)
-------------------------------------------- --------- -------- ------------
Ending balance of deferred tax liabilities
(net) (9,936) (5,764) (10,116)
-------------------------------------------- --------- -------- ------------
30 June 30 June 31 December
2012 2011 2011
$'000 $'000 $'000
-------------------------------- --------- --------- ------------
Deferred tax assets 14,061 17,913 14,274
-------------------------------- --------- --------- ------------
Deferred tax liabilities (23,997) (23,677) (24,390)
-------------------------------- --------- --------- ------------
Deferred tax liabilities (net) (9,936) (5,764) (10,116)
-------------------------------- --------- --------- ------------
The effect of this net deferred income tax ("DIT") movement on
the condensed consolidated statement of comprehensive income was a
tax benefit resulting from an overall decrease in the net deferred
tax liabilities due to the following:
-- DIT asset decreased due to the Colombian peso (COP) to US
dollar exchange rate effect (Dec 2011: COP$ 1,942 per $1 and June
2012: COP$1,784 per $1) and the estimated use of tax losses carried
forward into the 2011 income tax return.
-- DIT liability decreased due to the peso-dollar exchange rate
effect mentioned above causing on overall net decrease in deferred
taxes). Even though there was an important increase to the
decommissioning accrual (approx $835 thousand) in the first
semester, the impact of the exchange rate did not significantly
change the basis for DIT liability.
At the end of each reporting period, the temporary differences
(denominated in COP) must be translated to US dollars. A further
fluctuation in the exchange rate (COP vs. USD) as of 31 December
2012 could cause the calculation of the net deferred tax
liabilities to change significantly. If the Colombian peso
appreciates against the US dollar as of 31 December 2012 compared
to 30 June 2012, the Group may be required to recognise a
significant tax expense (i.e. net increase in deferred tax
liability) that is not reflected as of 30 June 2012.
11. Interim dividend
No interim dividend has been declared.
12. Share capital
Twelve months
Six months ended Six months ended ended
31 December
30 June 2012 30 June 2011 2011
(Unaudited) (Unaudited) (Audited)
-------------------- ------------------- ------------------- -------------------
Number Number Number
of shares $'000 of shares $'000 of shares $'000
-------------------- ----------- ------ ----------- ------ ----------- ------
Allotted, called
up and fully paid
-------------------- ----------- ------ ----------- ------ ----------- ------
Ordinary shares
of 1p each 36,044,657 549 35,766,774 545 35,752,049 546
-------------------- ----------- ------ ----------- ------ ----------- ------
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 4 January and 14 May 2012, following notices of exercise of
option in respect of 22,981 and 254,902 respectively, ordinary
shares of 1p each in the Company, the Company issued a total of
277,883 ordinary shares to ex-employees of the Company.
13. Subsequent events
On 30 August 2012, the Group agreed to an extension of the
maturity date of its Senior Secured Note Payable with HKN for the
principal amount of $5 million. The maturity date of the Note
Payable has been extended from 14 September 2012 to 14 April 2013.
In exchange for this extension, the Company agreed to increase the
interest charge by 2 per cent to 12.5 per cent per annum with
effect from the date the extension was granted. The Company also
paid to HKN a one-time 1 per cent transaction fee of $50,000.
Under the terms of the Fixed Rate Note Payable issued on 31
January 2012 for the principal amount of $12 million, the stated
interest charge of 10.5 per cent per annum, payable quarterly in
arrears, is contingent upon certain results reported in this
interim report. The interest rate terms of the Note Payable state
that in the event of a decrease in the Company's profit from
operations or cash flow from operations as of 30 June 2012 compared
to the prior period, the interest rate shall immediately be
adjusted from 10.5 per cent to 12.5 per cent per annum from the
date of publication of this interim report and through the maturity
date of the Note Payable. Based on the results of this period, the
interest rate shall be increased 2 per cent to 12.5 per cent
effective immediately.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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