TIDMGED
RNS Number : 3627O
Global Energy Development PLC
19 September 2013
lmmediate Release 19 September 2013
GLOBAL ENERGY DEVELOPMENT PLC
(the "Company" or "Global")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
Global Energy Development PLC, the Latin America focused
petroleum exploitation, development and production company (AIM:
GED) with operations in Colombia, is pleased to announce its
interim results for the six month period ended 30 September 2013
(the "Period").
Highlights
-- Gross production increased 16 per cent to 235,000 barrels of
oil ("bbls") (H1 2012: 202,000 bbls) during the Period;
-- Turnover of $19.7 million (H1 2012: $20.2 million) due to a
10 per cent decrease in oil pricing averaging $91 per bbl (H1 2012:
$102 per bbl);
-- Gross profit increased 22 per cent to $7.2 million (H1 2012:
$5.9 million) due to higher oil production and lower cost of
sales;
-- Profit before taxation of $4.1 million (H1 2012: $1.2 million);
-- Net profit of $1.2 million (H1 2012: $2.0 million net profit
including a gain of $810,000 on the sale of the remaining interest
in Block 95 in Peru, net of taxes); and
-- Capital expenditures of $8.1 million predominantly related to
the completion of the Tilodiran 1 well, the successful intervention
on the Torcaz 2 well and improvements to surface facilities at its
Tilodiran, Torcaz and Palo Blanco fields.
Stephen C. Voss, Global's Managing Director, indicated "The
Company's 2013 focus is on bringing in a strategic partner to
accelerate the development of its Middle Magdalena reserves and on
continuing with the improvement of its strong cash flow from
operations from its oil production in the Llanos Basin. This
combination should hasten the realisation of greater value to the
Company and its shareholders in 2013 and the future."
For further information please contact
Global Energy Development PLC
Anna Williams, Finance Director +001 817 310 0240
awilliams@globalenergyplc.com
www.globalenergyplc.com
Northland Capital Partners Limited
+44 (0)20 7796
Louis Castro 8800
Lauren Kettle
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 country of Colombia and
comprises a base of production, developmental drilling and
exploration opportunities. The Company currently holds five
operated contracts in Colombia.
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
During the Interim Period the Company made significant progress
in discussing the Bolivar Development Plan with several large
international E&P companies. The Company benefited from the
insights and technical information obtained from these discussions
which had not previously been available. Furthermore, these
insights led to a substantial revision in the Company's development
plans that at the end of the Period were advancing with technical
advisors as well as the Company's independent reserve engineers.
These revised plans are based upon the high natural fracture
permeability of the Bolivar area compared to other North American
formations such as the Eagleford Shale. The US Energy Information
Agency ("EIA") recently described the Magdalena Valley of Colombia
as a "World Class Stacked (vertical) Shale Oil Play" in its June
2013 report assessing global shale oil resources. The Company's
Bolivar Contract area is located in the northern section of the
Magdalena Valley. The Company has previously identified the Middle
La Luna formation as shale in its year-end 2012 reserve report. The
EIA also specifies the La Luna as a world class tight shale oil
formation along with other formations that the Company had selected
as exploitable. These formations include, in addition to the La
Luna, the Simiti, Salada, Rosa Blanca and Tablazo formations. All
five zones are located in a continuous vertical section of over
2,000 feet in the Company's Bolivar Contract area. Based upon this
multi-zone finding, the Company has revised its development plan in
order to provide for the most recoverable oil. Given the thickness
of the vertically stacked oil prospective zones and the very high
natural fracture permeability previously measured from cores, the
Company's development plan is to drill single vertical wells
through the five prospective pay zones instead of a separate
horizontal well in each of the five formations. The single vertical
wells would then be completed, hydraulically fractured and
simultaneously produced from all five formations.
The Company's independent reserve engineers estimate this new
plan to develop reserves through vertical wells in lieu of
horizontal wells should increase the Company's recoverable 3P
reserves and increase the net present value of the Bolivar project.
Following the completion of the updated Bolivar Development Plan,
as reviewed by the Company's independent reserve engineers, the
Company is resuming the partnering process focusing on independent
and mid-size companies with higher flexibility for deal terms.
Elsewhere during the Period, the Company made progress with
production development in its Torcaz field within the Bocachico
Contract Area. The Company performed a successful intervention of
its existing well, Torcaz 2, during the first half of 2013 by
changing the down-hole pump and making surface improvements to the
pumping unit. Gross oil production from this well has been
sustained at approximately 60 barrels of oil per day ("bopd").
Prior to the intervention, the Torcaz 2 well was not currently
producing. The Company did not modify its completion approach
during the intervention and left the existing gravel liner in place
to help moderate sand production.
The Company is planning to implement modified-sand-control
completion techniques on its existing Torcaz 3 vertical well with
an intervention planned for the late second half of 2013. The well
intervention would entail pulling the existing rod string, cleaning
the gravel pack and replacing the conventional downhole pump with a
newly acquired progressive cavity pump. Once a baseline of
production is established, a second stage procedure may be proposed
to perforate the production liner in a controlled approach. The
objective would be to pump out not only the fluids from the
formation but also the associated sand with the purpose to achieve
higher production levels.
Llanos Basin oil production
Cash flow from operations and profitability were enhanced from
the Company's production base in the Llanos region of Colombia,
South America. Gross production increased to 234,957 bbls of oil
during the Period; a 16% increase compared to the first half of
2012. The Company completed the sidetrack of the Tilodirán 1 well
in early 2013 to re-establish production which averaged
approximately 40 bopd after this successful completion. Production
from Tilodirán 1 was interrupted during the Period in order to move
the pumping unit to be utilized at Tilodirán 2. The Company
replaced the pumping unit and placed Tilodirán 1 back to production
in August 2013.
A key achievement in increasing operating profits was the
decrease in the overall cost of sales for the Company's Llanos
production base during the Period. Significant efforts were
undertaken during the Period on operational cost saving projects
targeting high diesel fuel and equipment rental costs. These
projects coupled with lower water transportation expenses
contributed to improved operating profitability during the Period
compared to the first half of 2012. Electrical grid stability has
improved in the country of Colombia, so the Company undertook the
electrification of its surface injection facilities at its Rio
Verde 2 water injection well. These efforts allowed the Company to
remove and release its rented generators at Rio Verde which
utilised high-cost diesel fuel. The Company also completed the
purchase of the surface plant facilities at its Rio Verde 2 water
injection well which resulted in monthly cash-savings for the
Company. Power supply for the Tilodirán 1 well pump was also
completed to the electrical grid which permitted the Company to
release other diesel generators. Additional surface enhancements at
the Tilodirán field include improved facilities installed during
the Period to allow for additional oil storage capacity. The
Company temporarily delayed its plans to complete the saltwater
transfer line from the Tilodirán field to the Rio Verde 2 water
injection well to focus on the cost saving projects discussed
above. The Company plans to proceed with the building of the
saltwater transfer line in late 2013 to help further reduce water
trucking and related road maintenance expenses. Estimated costs of
building the transfer line are approximately $1.5 million.
During the Period, the Company, partnering with Ecopetrol,
re-entered the non-producing Cajaro 1 well in an attempt to isolate
water production from the Mirador formation, to replace a
malfunctioning pump and to return the well to production. However,
after the well was returned to production, the water cut made the
well uneconomic to produce. For this reason, the Cajaro 1 well was
shut in while additional technical options are evaluated. The net
cost to the Company of the project was $440 thousand.
During the Period, the Company replaced the electric submersible
pump at its Tilodirán 2 well due to an electrical malfunction with
the pump. Based on the nature of the pump failure, the Company
elected to change the lift system on the Tilodirán 2 well from
electrical submersible to rod pump. The intention is to provide a
more reliable lift system and a less expensive pump replacement or
repair option. The Tilodirán 2 well was offline approximately three
weeks during the Period while the pump change took place. The cost
of the project was $590 thousand and was successfully completed in
April 2013.
Financials
During the Period, the Company recorded turnover of $19.7
million, 3 per cent lower than the first half of 2012. Sales of oil
volumes during the Period increased to 215, 804 bbls compared to
198,485 bbls during the first half of 2012, but average realised
sales prices decreased to $91.16 per bbl during the Period as
compared to $101.60 per bbl from the same prior year period.
Cost of sales decreased 13 per cent from $14.3 million to $12.5
million during the Period due to lower water transportation
expenses and other cost-saving projects discussed above. Higher
depreciation expense, due to increased oil production volumes,
offset some of the operational cost savings. The Company also
derecognised costs of $632 thousand during the Period primarily
related to the unsuccessful well intervention of the Cajaro 1 well
and the replacement of the damaged pump at the Tilodirán 2 well.
Based on the overall decrease in cost of sales, gross profit was
$7.2 million, an increase of 22 per cent over the first half of
2012. Administrative costs (including share-based expense and
exchange rate costs) decreased 39 per cent to $2.0 million during
the Period against $3.3 million during the first half of 2012.
Lower personnel costs and a non-cash decrease in share-based
payment liabilities were the primary contributors.
Profit from continuing operations before taxation increased to
$4.1 million during the Period compared to $1.2 million in the
first half of 2012. During the prior year period, the Company was
able to record a net gain after tax of $810 thousand from the sale
of its discontinued operations in Block 95 of Peru. The Company had
no similar gain on sales of assets during the Period.
During the Period, a significant increase in the exchange rate
of the COP to the US dollar caused an overall increase in the
Company's net deferred tax liabilities which primarily required the
Company to recognise a non-cash deferred tax expense of $2.4
million during the Period. During the first half of 2012, a
decrease in the exchange rate of the COP to the US dollar had the
opposite effect resulting in an overall decrease in the net
deferred tax liabilities and a tax benefit of $181 thousand.
Therefore, net profit for the Period was $1.2 million compared to
$2.0 million for the first half of 2012.
Cash flows from operations increased to $6.7 million compared to
$5.9 million in the prior year period, and the Company ended the
Period with a cash balance of $5.3 million. Capital expenditures of
$8.1 million relate primarily to the completion of the Tilodirán 1
well, the successful intervention on the Torcaz 2 well and
improvements to surface facilities at the Company's Tilodirán,
Torcaz and Palo Blanco fields. Final net proceeds of $3.3 million,
from the 2012 sale of the Company's remaining working interest in
the Peruvian Block 95 Contract, were received in February 2013
following the completion of the assignment from Perupetro, Peru's
national agency for hydrocarbons. The Company also repaid $2
million of its restructured Notes Payable during the Period.
Conclusion
The Company continues to show strength in its financial
position, its cash flows from operations and its operating profits
while proceeding with strategic efforts to accelerate the
development of its Middle Magdalena reserves. The timeframe of
these efforts has been lengthened from original expectations, but
the Company remains optimistic of the successful conclusion of
strategic partnering efforts in the near-term future. Until then,
the Company is confident in both its ability to optimise its
results of operations and to increase its overall net asset
value.
Mikel Faulkner
Chairman
Stephen Voss
Managing Director
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 2013 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 10.
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 set of financial statements.
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 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 set of financial information in the
half-yearly financial report for the six months ended 30 June 2013
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
18 September 2013
Consolidated Statement of Comprehensive Income
For the period ended 30 June 2013
Six months Six months Twelve
Note ended ended months
30 June 30 June ended
2013 2012 31 December
$'000 $'000 2012
(Unaudited) (Unaudited) $'000
(Audited)
------------------ ---------------- ----------------------
Revenue 3 19,672 20,179 44,038
Cost of sales (12,502) (14,300) (31,450)
------------------ ---------------- ----------------------
Gross profit 7,170 5,879 12,588
Other income 253 39 77
Administrative expenses (1,964) (3,282) (7,991)
Other expenses - - (1,421)
Finance income 18 15 61
Finance expense (1,402) (1,416) (2,554)
------------------ ---------------- ----------------------
Profit before taxation 4,075 1,235 760
Tax expense 7 (2,866) (41) (3,693)
------------------ ---------------- ----------------------
Profit /(loss) from continuing
operations, net of tax 1,209 1,194 (2,933)
------------------ ---------------- ----------------------
Profit from discontinued operations,
net of tax 4 - 810 810
------------------ ---------------- ----------------------
Profit /(loss) and total comprehensive
income attributable to the equity
holders of the parent 1,209 2,004 (2,123)
------------------ ---------------- ----------------------
Earnings /(loss) per share for
continuing operations
- Basic 5 $0.03 $0.03 ($0.08)
- Diluted 5 $0.03 $0.03 ($0.08)
------------------ ---------------- ----------------------
Total earning/(loss) per share
- Basic and diluted 5 $0.03 $0.05 ($0.06)
------------------ ---------------- ----------------------
Consolidated Statement of Financial Position
As at 30 June 2013
30 June 30 June 31 December
2013 2012 2012
$'000 $'000 $'000
Note (Unaudited) (Unaudited) (Audited)
------------------ ---------------- ---------------------
Assets
Non--current assets
Intangible assets 604 828 739
Property, plant and equipment 110,673 101,146 108,606
Trade receivables 1,387 - 1,388
------------------ ---------------- ---------------------
Total non--current assets 112,664 101,974 110,733
Current assets
Inventories 1,913 1,522 1,754
Trade and other receivables 5,259 11,144 9,346
Prepaids and other assets 1,335 2,423 1,628
Term deposits 713 1,384 1,608
Cash and cash equivalents 5,311 7,758 6,209
------------------ ---------------- ---------------------
Total current assets 14,531 24,231 20,545
Total assets 127,195 126,205 131,278
------------------ ---------------- ---------------------
Liabilities
Non--current liabilities
Deferred tax liabilities
(net) 8 (15,772) (9,936) (13,353)
Equity tax liability (662) (646) (434)
Long--term provisions (5,447) (3,792) (5,546)
Long--term loans payable 6 (9,926) (12,164) (551)
------------------ ---------------- ---------------------
Total non--current liabilities (31,807) (26,538) (19,884)
Current liabilities
Trade and other payables (5,596) (8,264) (12,126)
Corporate and equity tax
liability (1,688) (1,628) (1,478)
Short--term loan payable
and financing leases 6 (6,403) (5,144) (17,322)
------------------ ---------------- ---------------------
Total current liabilities (13,687) (15,036) (30,926)
------------------ ---------------- ---------------------
Total liabilities (45,494) (41,574) (50,810)
------------------ ---------------- ---------------------
Net assets 81,701 84,631 80,468
Capital and reserves attributable
to equity holders of the company
Share capital 10 608 549 608
Share premium account 27,139 27,139 27,139
Capital reserve 210,844 210,844 210,844
Retained deficit (156,890) (153,901) (158,123)
Total equity 81,701 84,631 80,468
------------------ ---------------- ---------------------
Consolidated Cash Flow Statement
For the period ended 30 June 2013
Six months Six months Twelve
ended ended months
30 June 30 June ended
2013 2012 31 December
$'000 $'000 2012
(Unaudited) (Unaudited) $'000
(Audited)
------------------- ------------------ ----------------------
Cash flows from operating activities
Operating profit before interest and
taxation from continuing operations 5,459 3,372 3,253
Operating profit before interest and
taxation from discontinued operations - 1,157 1,157
Depreciation, depletion and amortisation 4,121 3,182 8,108
Gain on disposal of assets from discontinued
operations - (1,157) (1,157)
Decrease (increase) in trade and other
receivables 1,388 (2,293) (1,882)
Increase (decrease) in inventories (159) 417 185
Increase (decrease) in trade and other
payables (3,007) 2,708 (436)
(Decrease) / increase in long-term
provisions (846) (1) 624
Share-based payments and other non-cash
items 9 110 24
Cash generated from operating activities 6,964 7,495 9,876
------------------- ------------------ ----------------------
Taxes paid (290) (1,571) (612)
------------------- ------------------ ----------------------
Net cash flows from operating activities 6,674 5,924 9,264
------------------- ------------------ ----------------------
Investing activities
Capital expenditure
- Expenditure on property, plant and
equipment (8,150) (4,744) (8,702)
- Expenditure on intangible assets - (1,274) (1,599)
- Disposal of Property, plant and equipment 4 3,283 2,000 2,000
Interest received 18 15 61
Decrease in term deposits 895 333 110
Net cash flows from investing activities (3,954) (3,670) (8,130)
------------------- ------------------ ----------------------
Financing activities
Short-term loans paid during the period (2,185) (9,639) (9,762)
Loans subscribed for during the period 6 - 11,938 12,625
Interest paid (1,433) (1,129) (2,181)
Proceeds from exercise of share options - 3 62
Net cash flows from financing activities (3,618) 1,173 744
------------------- ------------------ ----------------------
(Decrease) /increase in cash and cash
equivalents (898) 3,427 1,878
Cash and cash equivalents at beginning
period 6,209 4,331 4,331
Cash and cash equivalents at the end
of period 5,311 7,758 6,209
------------------- ------------------ ----------------------
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2013
Share Share Other Capital Retained
capital premium reserves reserve deficit Total
$'000 $'000 $'000 $'000 $'000 $'000
---------------- ----------------- ------------------- ------------- -------------- ----------
At 1 January
2012(Audited) 546 27,139 927 210,844 (156,951) 82,505
Total
comprehensive
income - - - - 2,004 2,004
Share--based
payments 3 - - - 119 122
Redemption of
convertible
notes - - (927) - 927 -
---------------- ----------------- ------------------- ------------- -------------- ----------
At 30 June 2012
(Unaudited) 549 27,139 - 210,844 (153,901) 84,631
Total
comprehensive
loss - - - - (4,127) (4,127)
Share--based
payments 59 - - - (95) (36)
---------------- ----------------- ------------------- ------------- -------------- ----------
At 31 December
2012 (Audited) 608 27,139 - 210,844 (158,123) 80,468
Total
comprehensive
income - - - - 1,209 1,209
Share--based
payments - - - - 24 24
---------------- ----------------- ------------------- ------------- -------------- ----------
At 30 June 2013
(Unaudited) 608 27,139 - 210,844 (156,890) 81,701
---------------- ----------------- ------------------- ------------- -------------- ----------
Unaudited Notes Forming Part of the Consolidated Interim
Financial Report
For the six months ended 30 June 2013
1. Accounting Policies
Basis of Preparation
The 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 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 2013. Of the new
international accounting standards issued with effective date of 1
January 2013, none have an impact on the Group.
2. Financial reporting period
The interim financial information for the period 1 January 2013
to 30 June 2013 is unaudited. In the opinion of the Directors the
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 interim financial information
incorporates comparative figures for the interim period 1 January
2012 to 30 June 2012 and the audited financial year to 31 December
2012.
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 2012 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 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. 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 in 2012 upon
closing of the transaction and the remaining $3.4 million received
in February 2013 following the completion of the assignment to GTE
from Perupetro, Peru's national agency of hydrocarbons. The
effective date of the sale was 1 June 2012. 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 thousand during the six months ended 30 June
2012. Following the completion of this divestiture, the Company
holds no further interests in Block 95 in Peru.
The net cash and cash equivalents received as deferred
consideration during 2013 as part of discontinued operations is as
follows,
Six months
ended
30 June
2013
$'000
(Unaudited)
------------------------
Deferred consideration at December
2012 $ 3,400
Balance of taxes payable to GTE (117)
Net Cash and cash equivalents received
during the period 3,283
------------------------
The Statement of Cash Flows contains the following elements
related to discontinued operations:
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2013 2012 2012
$'000 (Unaudited) $'000 $'000
(Unaudited) (Audited)
-------------------- ----------------- ------------------------
Net cash flows attributable to
investing activities:
Expenditure on intangible assets $ - $ (1,172) $ (1,172)
Proceeds on sale of non-current
assets 3,283 2,000 2,000
Net cash flow attributable to
investing activities 3,283 828 828
-------------------- ----------------- ------------------------
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
2013 2012 2012
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
------------------- ------------------ -------------------------
Profit from continuing operations after
taxation 1,209 1,194 (2,933)
Profit from discontinued operations
after taxation - 810 810
Net profit attributable to equity holders
used in dilutive calculation 1,209 2,004 (2,123)
------------------- ------------------ -------------------------
Earnings per share for continuing operations
- Basic $0.03 $0.03 $ (0.08)
- Diluted $0.03 $0.03 $ (0.08)
Earnings per share for discontinued
operations
- Basic and Diluted - $0.02 $0.02
Total Earnings per share
- Basic $0.03 $0.05 $ (0.06)
- Diluted $0.03 $0.05 $ (0.06)
Basic weighted average number of shares 36,111,964 35,855,076 35,950,888
Dilutive potential ordinary shares
Employee and Director share option plans 1,245,535 1,416,998 1,247,263
Diluted weighted average number of shares 37,357,500 37,272,074 37,198,151
------------------- ------------------ -------------------------
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. Amortising Note Payable
On 12 March 2013, the Group completed the restructuring of its
notes payable to HKN, Inc. ("HKN") of $5 million and $12 million,
respectively, which were both due and payable in 2013 into one new
Amortising Note Payable (the "Amortising Note Payable") for the
combined principal amount of $17 million. The Amortising Note
Payable is not convertible into shares and is subject to an
interest charge of 12.75 per cent per annum, payable quarterly in
arrears, with the following principal repayment amount amounts and
dates:
-- $500,000 - paid on 31 March 2013
-- $1.5 million - paid on 30 June 2013
-- $1.5 million - due quarterly through 31 March 2015
-- $4.5 million - due on 15 June 2015
The Amortising Note Payable is currently unsecured, but HKN can
require the Company to provide adequate collateral security in the
event of a material adverse effect. The Company also paid to HKN a
2 per cent transaction fee of approximately $340,000 during 2013.
As of 18 September 2013, the outstanding principal balance of the
Amortising Note Payable is $15 million.
Under the terms of the Amortising Note Payable, in the possible
event of a decrease in the Company's profit from operations or cash
flow from operations at each interim or annual period as compared
to the prior period, the interest rate shall immediately be
adjusted from 12.75 per cent per annum to 13.50 per cent per annum
from the date of publication of the applicable period report and
through the maturity date of the Amortising Note Payable.
In the Cash Flow Statement the financing activities reflect the
non-cash movement of the renegotiation of the loan with HKN
described above.
7. Tax expense
The Global Energy Development PLC Group is subject to UK and
Colombian taxation.
UK taxation
The Group does not expect to be liable for UK corporation tax in
the foreseeable future because, as of the date of the last UK tax
return, the Group had trading losses carried forward of $31.1
million as at 30 June 2013.
Colombian taxation
The Group pays taxes in Colombia through the branch office of
its wholly owned subsidiary, CEDCo. The Colombian corporation tax
was calculated in 2012 and in prior periods as the higher of net
income tax or presumptive income tax.
Beginning in 2013, as determined by the new Colombian Tax Law
1607, the corporate income tax rate applicable to Colombian
entities and branches of non-Colombian companies was reduced from
34 per cent to 25 per cent. However this rate reduction was
effectively offset by a new income tax, known as "CREE tax".
During 2013, the Colombian corporation tax will be calculated as
the CREE tax and the higher of net income tax or presumptive income
tax 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 25 per cent is
applied to the presumptive income to arrive at the tax obligation;
or
-- Net income tax. Calculated at a rate of 25 per cent taking
into account revenues minus costs, standard and special
deductions.
-- CREE tax. Calculated at a rate of 9 per cent from 2013
through 2015, and 8 per cent thereafter, as an income tax except
for certain limitations on the ability to claim costs and expenses.
Tax loss carryforwards are not eligible to offset the CREE taxable
amount. Lastly, the CREE tax may not be less than three per cent of
the taxpayer's net equity as of 31 December of the preceding
taxable year.
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 2013 and 2012 as disclosed in the Consolidated Statement of
Comprehensive Income are:
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2013 2012 2012
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
-------------------- ------------------- ---------------------------
Current taxes for continuing operations:
CREE income tax 292 - -
Current income tax charge for
continuing operations 132 164 333
Other withholdings 23 58 123
-------------------- ------------------- ---------------------------
Total current taxes for continuing
operations 447 222 456
-------------------- ------------------- ---------------------------
Deferred Tax:
Change in deferred tax related
to temporary differences and other 2,419 (181) 3,237
Tax expense for continuing operations 2,866 41 3,693
-------------------- ------------------- ---------------------------
Tax expense for discontinued operations - 347 -
-------------------- ------------------- ---------------------------
8. 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 nonmonetary
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:
30 June 30 June 31 December
2013 2012 2012
$'000
$'000 $'000
------------- ----------------- ------------------------
Opening balance of deferred tax
liabilities (net) (13,353) (10,116) (10,116)
Change in deferred tax related
to temporary differences and other (2,419) 180 (3,237)
Ending balance of deferred tax
liabilities (net) (15,772) (9,936) (13,353)
------------- ----------------- ------------------------
30 June 30 June 31 December
2013 2012 2012
$'000
$'000 $'000
------------- ----------------- ------------------------
Deferred tax assets 8,306 14,061 9,958
Deferred tax liabilities (24,078) (23,997) (23,311)
Deferred tax liabilities (net) (15,772) (9,936) (13,353)
------------- ----------------- ------------------------
The effect of this net deferred income tax ("DIT") movement on
the consolidated statement of comprehensive income was a tax charge
of $2.4 million during the period ended 30 June 2013 resulting from
an overall increase in the net deferred tax liabilities due to the
following:
-- DIT asset decrease due to the Colombian peso (COP) to US
dollar exchange rate effect (Dec 2012: COP$1,768 per $1 and June
2013: COP$1,929 per $1) and the estimated use of tax losses carried
forward into the 2013 income tax return.
-- DIT liability increase due to the COP-dollar exchange rate mentioned above.
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
2013 could cause the calculation of the net deferred tax
liabilities to change significantly.
There are certain expenses, primarily interest expense of the
Notes Payable, which are incurred by the Group which are not
currently deductible for Colombian income tax purposes. Therefore,
taxable income in Colombia is higher than the net profit recorded
by the Group in its consolidated financial statements. The
deductibility of these costs is currently under review in
Colombia.
9. Interim dividend
No interim dividend has been declared.
10. Share capital
Six months Six months ended Twelve months
ended ended
30 June 2013 30 June 2012 31 December
2012
(Unaudited) (Unaudited) (Audited)
-------------------- ------------------------ ----------------------
Number $'000 Number $'000 Number $'000
of shares of shares of shares
------------ ------ ---------------- ------ -------------- ------
Allotted, called
up and fully paid
Ordinary shares
of 1p each 36,112,187 608 36,044,657 549 36,107,180 608
------------ ------ ---------------- ------ -------------- ------
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 9 January 2013, following notice of exercise of option in
respect of 5,007 ordinary shares of 1p each in the Company, the
Company issued a total of 5,007 ordinary shares to ex-employees of
the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDCUXBBGXI
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