RNS Number:3111Q
Venture Production PLC
18 March 2008
Part 2
20. Trade and other payables
Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
-------------------- -------- -------- -------- --------
Amounts falling due within one year:
Trade payables 16,779 7,015 693 265
Accruals and deferred income 69,497 42,981 10,441 11,831
Other payables 28,651 25,491 4,692 9,571
Social security and other taxes 797 384 2 276
Deferred acquisition liability 3,100 5,718 - -
-------------------- -------- -------- -------- --------
118,824 81,589 15,828 21,943
-------------------- -------- -------- -------- --------
21. Financial liabilities - borrowings
Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
-------------------- -------- -------- -------- --------
Bank loan (secured) - 216,120 - 216,120
Convertible bond 167,612 29,801 167,612 29,801
USD and GBP loan notes 230,710 - 230,710 -
-------------------- -------- -------- -------- --------
398,322 245,921 398,322 245,921
-------------------- -------- -------- -------- --------
Bank Loan
During the year, the Group entered into new debt financing arrangements and the
existing bank loan was repaid and replaced with a �365,000,000 corporate debt
facility. There was no cash drawn down on this facility at 31 December 2007.
Borrowing facilities
The Group has the following undrawn borrowing facilities available at the
balance sheet date in respect of which all conditions precedent had been met at
that date:
2007 2006
�'000 �'000
--------------------------------- --------- -------
Expiring in more than two years 350,000 128,880
--------------------------------- --------- -------
This is stated after the issue of a letter of credit guarantee of $30,000,000
issued in the ordinary course of business.
The main purpose of the facilities is to finance the acquisition of new assets
and the development of new and existing assets.
Convertible bonds
The Company issued �29,000,000 4.25% convertible bonds at a nominal value of
�29,000,000 on 19 July 2005. The bonds mature on 26 October 2010 at 110% of par
or can be converted into shares at the holder's option at the rate of 1 share
per 446 pence.
A further �151,000,000 3.25% convertible bonds were issued at a nominal value of
�151,000,000 on 16 August 2007. The bonds mature on 16 August 2010 at par and
can be converted into shares at the rate of 1 share per 915 pence. The equity
component of the bond of �14,463,000 has been reclassified to equity.
The convertible bond recognised in the balance sheet is calculated as follows:
Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
------------------------- ------- ------- ------- ------
At 1 January 29,801 29,122 29,801 29,122
Net proceeds from convertible bond
issue 151,000 - 151,000 -
Accrued redemption premium 581 148 581 148
Unwinding of discount on liability
component (Note 7) 2,138 - 2,138 -
Reclassified as equity (Note 29) (14,463) - (14,463) -
Convertible loan expenses (1,445) - (1,445) -
Interest expense - 531 - 531
------------------------- ------- ------- ------- ------
Liability component at 31 December
2007 167,612 29,801 167,612 29,801
------------------------- ------- ------- ------- ------
USD and GBP loan notes
On 29 August 2007, Venture issued $414,000,000 of 6.41%, $10,000,000 of 6.64%
and �25,000,000 of 6.71% secured loan notes through a private placing with UK
and US institutional investors. These notes have maturities of between 10 and 15
years and are at fixed rates.
Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
------------------------- ------- ------- ------- ------
USD $414 million 6.41% notes with a 205,022 - 205,022 -
final maturity of 29 August 2017
USD $10 million 6.64% notes with a final 4,952 - 4,952 -
maturity of 29 August 2022
GBP �25 million 6.71% notes with a final 25,000 - 25,000 -
maturity of 29 August 2017
Loan notes expenses (4,264) - (4,264) -
------------------------- ------- ------- ------- ------
Total USD loan notes 230,710 - 230,710 -
------------------------- ------- ------- ------- ------
Breakdown by currency Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
------------------------- ------- ------- ------- ------
GBP 188,348 245,921 188,348 245,921
USD 209,974 - 209,974 -
------------------------- ------- ------- ------- ------
398,322 245,921 398,322 245,921
------------------------- ------- ------- ------- ------
21. Financial liabilities - borrowings (continued)
Breakdown by maturity Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
---------------------- -------- ------- -------- -------
2007 - - - -
2008 - - - -
2009 - - - -
2010 169,057 245,921 169,057 245,921
2011 - - - -
2012 - - - -
Thereafter 234,974 - 234,974 -
Loan expenses (5,709) - (5,709) -
---------------------- -------- ------- -------- -------
398,322 245,921 398,322 245,921
---------------------- -------- ------- -------- -------
22. Deferred tax liability/(asset)
Group Company
Restated
2007 2006 2007 2006
�'000 �'000 �'000 �'000
-------------------- -------- -------- -------- --------
At 1 January 193,435 46,953 (13,365) (6,520)
Profit and loss charge (Note 8) 39,919 78,472 1,510 308
Taken to equity:
- Employee share benefits 10,836 (8,398) 10,836 (8,398)
- Derivative financial liabilities (45,800) 26,160 - -
Deferred tax liability arising on
licence acquisitions - 1,516 - -
Deferred tax on business combination 4,400 48,016 - -
Deferred PRT 530 - - -
Other (2,875) 1,311 - 1,245
Liability classified as held for sale - (615) - -
-------------------- -------- -------- -------- --------
At 31 December 200,445 193,415 (1,019) (13,365)
-------------------- -------- -------- -------- --------
The total deferred tax liability at 31 December 2007 comprised accelerated
capital allowances of �323,418,000 (2006: �211,715,000), other deferred tax
liability of �71,355,000 (2006: �62,039,000), partially offset by tax losses of
�121,270,000 (2006: �63,451,000) and other deferred tax assets of �73,058,000
(2006: �18,029,000). The deferred tax assets have been recognised as the Group
is expected to have sufficient taxable profits in future years against which the
assets can be relieved.
Deferred tax arising on the acquisition of CH4 has been revisited during 2007,
resulting in an additional liability recognised of �3,589,000 and deferred PRT
of �1,141,000.
Deferred tax assets of �5,267,000 (2006: �1,164,000) have not been recognised.
Deferred tax assets and liabilities are only offset where there is a legally
enforceable right of offset and there is an intention to settle the balances
net.
23. Other non-current liabilities
Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
--------------------- -------- -------- -------- --------
Deferred acquisition liability 9,392 5,158 - -
--------------------- -------- -------- -------- --------
Deferred consideration relates to amounts payable in respect of the purchase of
various interests in oil and gas assets, the timing of which is dependent upon
the attainment of certain field development and production milestones. These
amounts are expected to be settled over the next 6 years.
24. Provisions
Provisions for decommissioning Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
---------------------- -------- -------- -------- --------
At 1 January 61,831 52,505 - -
Liability on acquisition of subsidiary - 4,860 - -
Increased provision on existing assets 3,958 614 - -
Liability classified as held for sale
(Note 14) - (139) - -
Unwinding charge for the year (Note 7) 4,636 3,991 - -
---------------------- -------- -------- -------- --------
At 31 December 70,425 61,831 - -
---------------------- -------- -------- -------- --------
These decommissioning costs are expected to be incurred in the period from 2008
to 2023. The provision has been based upon existing technology, current
legislation requirements and discounted using a rate of 7.5% (2006: 7.5%). The
estimated decommissioning costs and the pre-tax discount rate applied take into
account the effects of inflation and risks and uncertainties concerning amounts
to be settled in the future.
25. Financial instruments
The main risks arising from the Group's financial instruments are market risk,
liquidity risk and credit risk. The Board reviews and agrees policies for
managing each of these risks and they are summarised below.
Market risk
Venture is exposed to market risk, primarily related to foreign exchange and
commodity prices. The Group actively monitors these exposures. To manage the
volatility relating to these exposures, the Group enters into a variety of
derivative financial instruments.
The Group's objective is to reduce, where it deems appropriate to do so,
fluctuations in earnings and cash flows associated with changes in interest
rates, foreign currency rates and commodity prices. It is the Group's policy and
practice to use derivative financial instruments to manage exposures. The Group
expects that any loss in value for these instruments generally would be offset
by increases in the value of the underlying transactions.
Foreign exchange rate risk
The Group uses the pound Sterling as its reporting currency. As a result the
Group is exposed to foreign exchange movements, primarily in the US Dollar and
Euro. Consequently, it enters into various contracts that reflect the changes in
the value of foreign exchange rates to preserve the value of assets and
commitments. In general, the Group's revenues in crude oil sales are denominated
in US Dollars while its gas sales revenues are denominated in pounds Sterling.
Where possible, the Group's policy is to reduce significant exposures to
movements in foreign currency exchange rates through hedging foreign currency
exposure for up to 50% of forecast net US Dollar revenues. Venture also uses
forward contracts to hedge certain anticipated net revenues in foreign
currencies. The Group marks to market these forward contracts and thus changes
in the forward contract fair values are booked to the income statement and
reverse in the income statement over the term of the contracts.
Net investments in foreign countries are long-term investments. Their fair value
changes through movements of currency exchange rates. In the very long term,
however, the difference in the inflation rate should match the currency exchange
rate movement, so that the market value of the foreign non-monetary assets will
compensate for the change due to currency movements. For this reason, the Group
does not hedge the net investments in foreign subsidiaries.
If the average sterling/US dollar rate had been 10% higher during 2007, post-tax
profit and equity for the year would have been �9,450,000 higher (2006:
�6,954,000 higher). If the average sterling/US dollar rate had been 10% lower
during 2007, post-tax profit for the year and equity would have been �7,732,000
lower (2006: �5,690,000 lower).
If the closing sterling/US dollar rate was 10% higher at 31 December 2007, the
post-tax profit for the year end equity would have been �6,296,000 higher (2006:
�8,530,000). If the closing sterling/US dollar rate was 10% lower at 31 December
2007, the post-tax profit for the year end equity would have been �5,151,000
lower (2006: �6,979,000).
Commodity price risk
The Group has exposure to price risk related to anticipated revenues from crude
oil and natural gas. A change in those prices may alter the gross margin of the
Group. Accordingly, it enters into commodity futures, forward and option
contracts to manage fluctuations in prices of anticipated revenues.
To manage commodity price risk and deliver stability to the investment
programme, the Group's policy is to allow hedging of commodity price exposure up
to 50% of its oil and gas production. In exceptional circumstances and only with
the prior approval of the Board, up to 75% of such production may be hedged.
Hedges have been put in place with a variety of providers.
If the average gas price had been 10% higher or lower during 2007, post-tax
profit for the year and equity would have been �4,365,000 higher or lower (2006:
�5,670,000 higher or lower).
If the average oil price had been 10% higher or lower during 2007, post-tax
profit for the year and equity would have been �4,253,000 higher or lower (2006:
�3,130,000 higher or lower).
Interest rate risk
The Group manages its net exposure to interest rate risk through negotiating
fixed rate financial debt in its financial debt portfolio. The Group has no
exposure to variability in its cash flows due to interest rate risk as it
borrows at rates of interest which are fixed in advance. At 31 December 2007,
all of the Group's borrowings were at fixed rates (2006: 12%).
Credit risk
Credit risks arise from the possibility that customers may not be able to settle
their obligations as agreed. To manage this risk the Group periodically assesses
the financial reliability of customers. The Group's major customers are
typically large companies which have strong credit ratings assigned by
international credit rating agencies. The nominal value less impairment
provision of trade accounts receivables and payables are assumed to approximate
their fair value. The Group's policy is to deal with customers with an 'A'
rating or better where possible. At 31 December 2007, 100% (2006: 100%) of trade
receivables were such customers.
The Group also has credit risk relating to cash held on deposit. The Group's
policy is to deposit cash at institutions with an 'A' rating or better where
possible. 100% of cash held on deposit at 31 December 2007 (2006: 100%) was held
with such institutions.
Liquidity risk
Liquidity risk is defined as the risk that the Group will not be able to settle
or meet its obligations on time or at a reasonable price. Liquidity, funding
risks and related processes and policies are overseen by management. Venture
manages it liquidity risk on a consolidated basis based on business needs and
through numerous sources of finance in order to maintain flexibility.
Capital risk
The Group seeks to maintain an optimal capital structure with a diversified
range of funding including equity, convertible bonds, bank debt and privately
placed loan notes. The Group continually monitors its capital structure, to
ensure this is in line with business needs, ongoing asset development and to
fund potential future acquisitions. During the year its borrowing base banking
facility was replaced with a medium term committed corporate debt facility of
�365,000,000, �151,000,000 was raised through the issue of 3.25% unsecure
convertible bonds and a further $424,000,000 and �25,000,000 in a private
placement of notes was secured with US and UK institutional investors. As a
result, there are externally imposed covenant requirements with which the Group
is fully compliant. These covenants include the ratio of borrowings to EBITDA
and interest cover.
The following tables show the fair values of derivative financial instruments
analysed by type of contract at 31 December 2007 and 2006. The fair values are
determined by reference to market prices at 31 December 2007 and 2006.
Group Positive fair values Negative fair values
2007 2006 2007 2006
�'000 �'000 �'000 �'000
---------------------- -------- ------- -------- -------
Currency related instruments
Forward foreign exchange rate
contracts 498 772 - -
Interest rate related instruments
Interest rate swaps - 1,629 - -
Oil price related instruments
Collars - - (1,813) -
Commodity swaps - 9,676 (40,685) -
---------------------- -------- ------- -------- -------
Total of oil price related
instruments - 9,676 (42,498) -
Gas price related instruments
Commodity swaps - 13,932 (25,493) -
---------------------- -------- ------- -------- -------
Total derivative financial
instruments 498 26,009 (67,991) -
---------------------- -------- ------- -------- -------
Company Positive fair values Negative fair values
2007 2006 2007 2006
�'000 �'000 �'000 �'000
---------------------- -------- ------- -------- -------
Currency related instruments
Forward foreign exchange rate
contracts 498 772 - -
Interest rate related instruments
Interest rate swaps - 1,629 - -
---------------------- -------- ------- -------- -------
Total derivative financial
instruments 498 2,401 - -
---------------------- -------- ------- -------- -------
Derivative financial instruments include amounts denominated in the following
major currencies:
Currency Group Company
2007 2006 2007 2006
�'000 �'000 �'000 �'000
---------------------- -------- ------- -------- -------
USD (42,498) 9,676 - -
GBP (24,995) 16,333 498 2,401
---------------------- -------- ------- -------- -------
Total derivative financial instruments (67,493) 26,009 498 2,401
---------------------- -------- ------- -------- -------
Included in current assets 498 19,916 498 1,676
Included in current liabilities (36,992) - - -
Included in non-current assets - 6,093 - 725
Included in non-current liabilities (30,999) - - -
---------------------- -------- ------- -------- -------
Total (67,493) 26,009 498 2,401
---------------------- -------- ------- -------- -------
All of the derivative instruments used for the purposes of hedging the oil and
gas prices are effective for hedge accounting purposes.
All of the hedging instruments used for anticipated transactions mature during
2008 and 2009, and were contracted with the intention of hedging anticipated
transactions which are expected to occur in 2008 and 2009. The instruments are
intended to hedge the commodity price risk arising from the highly probable
forecast transactions with commodity price risk.
The gain or loss relating to the effective portion of the derivative
instruments, previously deferred in equity, is recognised in the income
statement within revenue when the hedged item affects profit or loss.
There has been no charge recognised in the year relating to the ineffectiveness
of derivatives that are hedge accounted (2006: nil).
The maximum exposure to credit risk at the reporting date is the fair value of
derivative financial instruments.
Forward oil price contracts
At 31 December 2007 the Group had a number of forward oil price contracts in
place to hedge cash flows from oil production in accordance with the Group's
hedging strategy. These contracts comprised forward swaps, put and call options
and forward sales.
The fair value liabilities of �42,498,000 relating to the forward oil price
contracts which are deferred in the cash flow reserve at 31 December 2007 will
reverse in the income statement over the term of the contracts. At 31 December
2007 the forward oil price contracts covered the period January 2008 to December
2009.
Forward gas price contracts
At 31 December 2007 the Group had a number of forward gas price contracts in
place. These contracts comprised forward swaps and forward sales.
The fair value liabilities of �25,493,000 relating to the forward gas price
contracts, which are deferred in the cash flow reserve at 31 December 2007, will
reverse in the income statement over the term of the contracts. At 31 December
2007 the forward gas price contracts covered the period January 2008 to December
2009.
Market values have been used to determine the fair value of derivative financial
instruments based on estimated amounts the Group would receive or pay to
terminate the agreements, taking into account the forward commodity prices and
forward foreign exchange rates at 31 December 2007.
Forward foreign currency contracts
The notional principal amount of the Group's outstanding forward foreign
currency contracts at 31 December 2007 was $228,000,000 (2006: $108,000,000).
These contracts hedge foreign exchange exposure of forecast net US Dollar income
by fixing the forward exchange rate on a monthly basis.
At 31 December 2007 the forward contracts covered the period January 2008 to
December 2008 at an exchange rate varying between $1.9475 and $2.0025 to �1.
The fair value assets of �498,000 relating to the forward foreign currency
contracts and which are marked to market in the income statement at 31 December
2007, will reverse in the income statement over the term of the forward currency
contracts.
Changes in the fair value of derivative financial instruments that do not
qualify for or are not designated in hedging relationships are recognised
immediately in the current period income statement when they occur as shown
below:
2007 2006
�'000 �'000
---------------------------------- -------- -------
(Loss)/Gain in the income statement (1,903) 2,401
---------------------------------- -------- -------
Fair value of non-derivative financial assets and financial liabilities
The following table provides a comparison by category of the book values and the
fair values of the Group's financial assets and financial liabilities at the
balance sheet date.
Group Book value Fair value Book Fair value
value
2007 2007 2006 2006
�'000 �'000 �'000 �'000
---------------------- -------- ------- -------- -------
Fair value of non-current
financial assets and financial
liabilities held or issued to
finance the Group's operations:
Bank loan (Note 21) - - (216,120) (216,120)
Convertible bonds (Note 21) (167,612) (170,150) (29,801) (29,801)
USD and GBP loan notes (Note 21) (230,710) (254,046) - -
Loan notes receivable (Note 18) 5,383 5,383 5,376 5,376
Deferred acquisition liability
(Note 23) (9,392) (9,392) (5,158) (5,158)
Fair value of other financial
assets and financial liabilities
held or issued to finance the
Group's operations:
Trade and other payables (Note
20) (115,724) (115,724) (75,871) (75,871)
Deferred consideration (Note 20) (3,100) (3,100) (5,718) (5,718)
Trade and other receivables
(Note 18) 107,324 107,324 90,427 90,427
Cash at bank and in hand (Note
19) 3,825 3,825 19,342 19,342
Cash on short term deposit (Note
19) 154,620 154,620 39,825 39,825
---------------------- -------- ------- -------- -------
Company Book value Fair value Book Fair value
value
2007 2007 2006 2006
�'000 �'000 �'000 �'000
---------------------- -------- ------- -------- -------
Fair value of non-current
financial assets and financial
liabilities held or issued to
finance the Company's
operations:
Bank loan (Note 21) - - (216,120) (216,120)
Convertible bonds (Note 21) (167,612) (170,150) (29,801) (29,801)
USD and GBP loan notes (Note 21) (230,710) (254,046) - -
Trade and other receivables
(Note 153,247 153,247 227,995 227,995
18)
Loan notes receivable (Note 18) - - 5,376 5,376
Fair value of other financial
assets and financial liabilities
held or issued to finance the
Company's operations:
Trade and other payables (Note (15,828) (15,828) (21,943) (21,943)
20)
Trade and other receivables
(Note 346 346 2,773 2,773
18)
Cash at bank and in hand (Note (50,486) (50,486) 7,608 7,608
19)
Cash on short term deposit (Note
19) 154,620 154,620 36,492 36,492
---------------------- -------- ------- -------- -------
Maturity of financial liabilities
The following table sets forth details of the financial liabilities which will
be settled on a net basis into relevant maturity groupings as at 31 December
2007 and 2006. The amounts disclosed in the table are the contractual
undiscounted cash flows including interest payments at the applicable fixed
rate. Non-GBP denominated balances have been translated at the year end closing
rates. The amounts payable in respect of derivative financial instruments have
been calculated based on price differentials at 31 December 2007.
As at 31 December Due in less Due in 1 Due in 2 to Due after 5 Total
2007: than 1 year to 2 years 5 years years
Group �'000 �'000 �'000 �'000 �'000
------------------ ------- ------- ------- ------- ----------
Current liabilities
Trade and
other payables (115,724) - - - (115,724)
Deferred
acquisition
liability (3,100) - - - (3,100)
Derivative
financial
instruments (36,992) - - - (36,992)
------------------ ------- ------- ------- ------- ----------
Total current
liabilities (155,816) - - - (155,816)
------------------ ------- ------- ------- ------- ----------
Non-current liabilities
Bank loan - - - - -
Convertible bond (4,908) (4,908) (184,908) - (194,724)
USD and GBP
loan notes (14,966) (14,966) (44,899) (306,547) (381,378)
Derivative
financial
instruments - (30,999) - - (30,999)
Deferred
acquisition
liability - (500) (8,892) - (9,392)
------------------ ------- ------- ------- ------- ----------
Total non-current
liabilities (19,874) (51,373) (238,699) (306,547) (616,493)
------------------ ------- ------- ------- ------- ----------
Total financial
liabilities (175,690) (51,373) (238,699) (306,547) (772,309)
------------------ ------- ------- ------- ------- ----------
25. Financial instruments (continued)
As at 31 December Due in less Due in 1 to Due in 2 to Due after Total
2007: than 1 year 2 years 5 years 5 years
Company �'000 �'000 �'000 �'000 �'000
------------------ ------- ------- ------- ------- ----------
Current liabilities
Trade and
other payables (15,828) - - - (15,828)
------------------ ------- ------- ------- ------- ----------
Total current
liabilities (15,828) - - - (15,828)
------------------ ------- ------- ------- ------- ----------
Non-current liabilities
Convertible
bond (4,908) (4,908) (184,908) - (194,724)
USD and GBP
loan notes (14,966) (14,966) (44,899) (306,547) (381,378)
------------------ ------- ------- ------- ------- ----------
Total non-current
liabilities (19,874) (19,874) (229,807) (306,547) (576,102)
------------------ ------- ------- ------- ------- ----------
Total financial
liabilities (35,702) (19,874) (229,807) (306,547) (591,930)
------------------ ------- ------- ------- ------- ----------
As at 31 December Due in less Due in 1 to Due in 2 to Due after Total
2006: than 1 year 2 years 5 years 5 years
Group �'000 �'000 �'000 �'000 �'000
------------------ ------- ------- ------- ------- ----------
Current liabilities
Trade and
other payables (75,871) - - - (75,871)
Deferred
acquisition
liability (5,718) - - - (5,718)
Derivative - - - - -
financial
instruments
------------------ ------- ------- ------- ------- ----------
Total current
liabilities (81,589) - - - (81,589)
------------------ ------- ------- ------- ------- ----------
Non-current
liabilities
Deferred
acquisition
liability - (1,750) (3,408) - (5,158)
Bank loan (12,961) (12,961) (235,562) - (261,484)
Convertible
bond (1,233) (1,233) (30,233) - (32,699)
------------------ ------- ------- ------- ------- ----------
Total non-current
liabilities (14,194) (15,944) (269,203) - (299,341)
------------------ ------- ------- ------- ------- ----------
Total financial
liabilities (95,783) (15,944) (269,203) - (380,930)
------------------ ------- ------- ------- ------- ----------
As at 31 December Due in less Due in 1 to Due in 2 to Due after Total
2006: than 1 year 2 years 5 years 5 years
Company �'000 �'000 �'000 �'000 �'000
------------------ ------- ------- ------- ------- ----------
Current liabilities
Trade and
other payables (21,943) - - - (21,943)
Deferred - - - - -
acquisition
liability
Derivative - - - - -
financial
instruments
------------------ ------- ------- ------- ------- ----------
Total current
liabilities (21,943) - - - (21,943)
------------------ ------- ------- ------- ------- ----------
Non-current liabilities
Bank loan (12,961) (12,961) (235,562) - (261,484)
Convertible
bond (1,233) (1,233) (30,233) - (32,699)
------------------ ------- ------- ------- ------- ----------
Total non-current
liabilities (14,194) (14,194) (265,795) - (294,183)
------------------ ------- ------- ------- ------- ----------
Total financial
liabilities (36,137) (14,194) (265,795) - (316,126)
------------------ ------- ------- ------- ------- ----------
The table below analyses the Group's derivative financial instruments which will
be settled on a gross basis into relevant maturity groupings based on the
remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
As at 31 December 2007: Less than Between 1 and Between 2 and Over 5
1 year 2 years 5 years years
�'000 �'000 �'000 �'000
--------------------- --------- --------- --------- --------
Forward foreign exchange
contracts - marked to market
Outflow 115,524 - - -
Inflow 116,022 - - -
--------------------- --------- --------- --------- --------
As at 31 December 2006:
--------------------- --------- --------- --------- --------
Forward foreign exchange
contracts - marked to market
Outflow 57,959 - - -
Inflow 58,732 - - -
--------------------- --------- --------- --------- --------
26. Called up share capital
--------------------------------- --------- -------
Number 2007 2006
000 000
--------------------------------- --------- -------
Authorised:
Ordinary shares of 0.4p each 165,000 165,000
Allotted, called up and fully paid:
Ordinary shares of 0.4p each 143,216 133,496
--------------------------------- --------- -------
2007 2006
Value �'000 �'000
--------------------------------- --------- -------
Authorised:
Ordinary shares of 0.4p each 660 660
Allotted, called up and fully paid:
Ordinary shares of 0.4p each 573 534
--------------------------------- --------- -------
During the year the Company issued 1,065,464 shares as part consideration for
the acquisition of WHAM, 6,033,906 shares as consideration for the remaining
66.7% of NSGP and 2,620,120 shares to honour share options exercised by
employees.
27. Share premium account
Group Company
�'000 �'000
--------------------------- ------------- ---------
At 1 January 2006 104,906 104,906
On exercise of share options 178 178
--------------------------- ------------- ---------
At 1 January 2007 105,084 105,084
On exercise of share options 2,123 2,123
--------------------------- ------------- ---------
At 31 December 2007 107,207 107,207
--------------------------- ------------- ---------
28. Retained earnings
Group Company
�'000 �'000
--------------------------- ------------- ---------
At 1 January 2006 43,170 9,816
Disposal of treasury shares 405 405
Purchase of treasury shares (12,033) (12,033)
Profit for the year 81,593 15,149
--------------------------- ------------- ---------
At 1 January 2007 113,135 13,337
Transfer of treasury shares to EBT 25,106 25,106
Purchase of treasury shares (15,817) (15,817)
Loss on disposal of shares to satisfy share schemes (34,693) (34,693)
Profit for the year 48,175 105,527
Dividends paid (67,566) (67,566)
--------------------------- ------------- ---------
At 31 December 2007 68,340 25,894
--------------------------- ------------- ---------
The Company acquired 2,173,250 of its own shares during the year for a
consideration of �15,817,000. As the shares were held as treasury shares, the
amount shown has been deducted from retained earnings.
The Company transferred 3,501,096 shares to the EBT and reissued 64,000 treasury
shares in respect of share options exercised for total consideration of
�25,106,000. There were no treasury shares held at 31 December 2007.
The Company issued 5,303,771 in respect of the LTIP 2003 share scheme from the
Employee Benefit Trust at a loss of �33,389,000.
29. Other Reserves
Group Convertible Merger Cash flow Employee EBT Total
Loan reserve reserve benefit reserve
Equity reserve
�'000 �'000 �'000 �'000 �'000 �'000
---------------- --------- ------- ------ ------- ------ ------
At 1 January 2007 - 69,905 11,804 20,141 (15,228) 86,622
Cash flow hedges: -
- Fair value gains
net of tax - - (42,453) - - (42,453)
- Reclassified and
reported in net
profit - - (3,427) - - (3,427)
Credit relating to
share based charges - - - (6,700) - (6,700)
Shares issued to
satisfy share schemes - - - (5,647) 39,036 33,389
Shares disposed
of by EBTs - - - - 1,673 1,673
Shares acquired
by EBTs - - - - (32,678) (32,678)
Convertible loan
classified as 14,463 - - - - 14,463
equity
Shares issued on
acquisition - 54,181 - - - 54,181
---------------- --------- ------- ------ ------- ------ ------
At 31 December
2007 14,463 124,086 (34,076) 7,794 (7,197) 105,070
---------------- --------- ------- ------ ------- ------ ------
The cash flow reserve relates to the accounting for derivative financial
instruments under IAS 39. Fair value gains and losses in respect of effective
cash flow hedges are recognised in the cash flow reserve.
The employee benefit reserve comprises the credit entry relating to share based
charges included in the income statement and calculated in accordance with IFRS
2.
The Company funds its Employee Share Ownership Trust and its Offshore Employee
Benefit Trust (together 'the EBTs') with funds being used to acquire shares
which will be granted to certain employees under the share option scheme. The
cost of shares acquired by the EBTs is recorded in the EBT reserve. Gains from
the disposal of such shares on exercising of the options are credited to the
share premium account when such options are exercised.
Shares acquired by the EBTs can either be allocated to the EBTs by the Company
or purchased in the open market by the EBTs. The costs of administering the
schemes are charged to the income statement in the period to which they relate.
The EBTs have waived their rights to the receipt of dividends.
During the year 5,538,587 (2006: 157,003) ordinary shares were disposed of by
the EBTs to satisfy the exercise of share options. During the year the Company
transferred �7,920,000 to the EBTs (2006: �14,100,000), which was used to
purchase 1,108,557 (2006: 1,844,739) ordinary shares in the market. Additionally
a further 3,501,096 ordinary shares were transferred from treasury for
�24,758,000.
At 31 December 2007, the EBTs held 1,125,119 ordinary shares (2006: 2,054,053),
which represented a market value of �8,911,000 (2006: �18,137,000) based on the
closing share price of �7.92 (2006: �8.83).
The merger reserve comprises the premium on shares issued as part of a business
combination. In 2006, this balance wholly related to the acquisition of CH4,
where 9,050,000 shares were issued at �7.78 a share, as part consideration for
the acquisition. During the year, the Company issued a further 6,033,906 shares
as consideration for the acquisition of NSGP at �7.72 a share (Note 3) and
1,065,464 shares as part consideration for the acquisition of WHAM at �7.16 a
share (Note 3).
The convertible loan balance of �14,463,000 represents the value placed on the
conversion option of the convertible bonds issued for �151,000,000 during the
year (Note 21).
Company Convertible Merger Employee EBT Total
Loan Reserve benefit reserve
Equity reserve
�'000 �'000 �'000 �'000
---------------------- -------- -------- -------- -------- --------
At 1 January 2007 - 69,905 20,141 (15,228) 74,818
Credit relating to share
based charges - - (6,700) - (6,700)
Shares disposed of by
EBTs - - - 1,673 1,673
Shares acquired by EBTs - - - (32,678) (32,678)
Shares issued to satisfy
share schemes - - (5,647) 39,036 33,389
Convertible loan classified
as equity 14,463 - - - 14,463
Shares issued
on acquisition - 54,181 - - 54,181
---------------------- -------- -------- -------- -------- --------
At 31 December 2007 14,463 124,086 7,794 (7,197) 139,146
---------------------- -------- -------- -------- -------- --------
30. Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating activities:
------------------------------- --------- ---------
Group 2007 2006
�'000 �'000
------------------------------- --------- ---------
Operating profit 116,639 181,920
Depreciation charge 82,463 88,242
Share-based transactions 4,981 10,072
Exploration costs written off 18,144 -
Development costs written off 11,207 -
Impairment of assets 33,463 -
Gain on disposal of subsidiary (251) -
Changes in working capital:
- Inventories 1,462 (1,063)
- Trade and other receivables (20,820) 3,778
- Trade and other payables 16,322 1,461
------------------------------- --------- ---------
Operating cash flow 263,610 284,410
------------------------------- --------- ---------
Company 2007 2006
�'000 �'000
------------------------------- --------- ---------
Operating loss (8,663) (598)
Depreciation charge 339 514
Fair value losses on other financial assets - 698
Share-based transactions 4,981 10,072
Changes in working capital:
- Trade and other receivables 6,499 1,970
- Trade and other payables (15,952) 4,863
------------------------------- --------- ---------
Operating cash (outflow)/inflow (12,796) 17,519
------------------------------- --------- ---------
31. Employees and directors
Employee benefit expenses for the Group during the year:
2007 2006
�'000 �'000
------------------------------- --------- ---------
Wages and salaries 11,767 6,402
Social security costs 1,539 1,263
Retirement benefit liabilities (Note 32) 969 617
-------------------------- --------- ---------
14,275 8,282
-------------------------- --------- ---------
The average number of employees during the year was:
Restated
2007 2006
-------------------------- --------- ---------
UK 108 76
Netherlands 35 14
-------------------------- --------- ---------
143 90
-------------------------- --------- ---------
2006 employee numbers for the Netherlands have been restated to show the average
for the year. Post acquisition of CH4, the average number of employees in the
Netherlands in 2006 was 33.
Key Management Compensation:
Group 2007 2006
�'000 �'000
-------------------------- --------- ---------
Salaries and short-term employee benefits 2,667 1,761
Share based payments 36 13
-------------------------- --------- ---------
2,703 1,774
-------------------------- --------- ---------
The LTIP 2003 matured at the end of the period 1 January 2003 to 31 December
2006 and resulted in an award of shares with a value of �32,730,000 to key
management. In addition, key management exercised share options of �16,771,000
(2006: �825,000).
In addition �2,452,000 (2006: �1,718,000) relating to the ADSBP (Note 16) has
been charged to the income statement.
The key management compensation figures above include Executive Directors.
Directors' Emoluments:
Group 2007 2006
�'000 �'000
-------------------------- --------- ---------
Aggregate emoluments 2,484 1,996
Company contributions to defined contribution
pension schemes 138 81
-------------------------- --------- ---------
2,622 2,077
-------------------------- --------- ---------
Included in aggregate emoluments is �1,022,000 (2006: �1,046,000) relating to
the ADSBP, which is being charged to the income statement over the vesting
period.
Further details of Directors' emoluments are provided in the Directors'
Remuneration Report.
32. Retirement benefit liabilities
The Group contributes to personal pension schemes on behalf of certain
employees. These schemes are administered independently of the Group. The total
pension cost which is charged against profit represents contributions payable by
the Group and amounted to �969,000 (2006: �617,000).
33. Operating lease commitments - minimum lease payments
The Group has commitments under operating leases to make payments as set out
below:
2007 2006
�'000 �'000
Plant and machinery and motor vehicles
-------------------------- --------- ---------
within 1 year 145 137
Land and buildings
within 1 year 733 729
within 2-5 years 2,227 1,864
in more than 5 years 3,603 -
-------------------------- --------- ---------
34. Capital commitments
At 31 December 2007 the Group has commitments of �173,000,000 (2006:
�355,900,000) relating to capital expenditure. 2006 has been restated to be
consistent with the commitments reported in 2007.
35. Guarantees
The Company has provided credit guarantees totalling �31,200,000 and Euro5,200,000
(2006: �21,400,000) for decommissioning security for assets in the North Sea.
36. Related party transactions
Group
Intra-group related party transactions, which are eliminated on consolidation,
are not required to be disclosed in accordance with IAS 24.
The financial statements include the financial statements of Venture Production
plc and the subsidiaries listed in Note 15.
The following table provides the total amount of transactions, which have been
entered into with related parties for the relevant financial year.
Sales/purchases from Sales to Purchases from Amounts owed by Amounts owed to
related party related related related related
parties parties parties parties
�'000 �'000 �'000 �'000
------------------------------- ------- -------- ------- -------
Joint Venture:
North Sea Gas Partners Limited 2007 - - - -
2006 17,701 - 3,843 (945)
Associates:
North Sea Infrastructure
Partners Limited 2007 68,130 - 3,498 -
2006 4,602 - 1,876 -
------------------------------- ------- -------- ------- -------
Sevan Production General
Partnership 2007 - - - -
2006 4,282 - 4,282 -
------------------------------- ------- -------- ------- -------
Loans from/to related party Interest Amounts owed by
received related parties
�'000 �'000
------------------------------- ------------- -------------
Associate:
Ten Degrees North
Energy Limited 2007 281 281
2006 269 269
------------------------------- ------------- -------------
Joint Venture
North Sea Gas Partners Limited
As shown in Note 3, the Company acquired the remaining 66.7% of NSGP during
2007. In 2007 this investment has been classified as a subsidiary and therefore
no disclosure of related party transactions in respect of 2007 is required.
Associate
North Sea Infrastructure Partners Limited
Venture Infrastructure Ltd has a 49.9% interest in North Sea Infrastructure
Partners Limited (2006: 49.9%)
Sevan Production General Partnership
Hummingbird Oil PTE Limited owns 20% of the ordinary shares of Sevan Production
General Partnership (2006: 20%).
Ten Degrees North Energy Limited
Venture Production plc owns 40% of the ordinary shares of Ten Degrees North
Energy Limited (2006: 40%)
Company
During the year the Company received income of �19,735,000 (2006: �18,597,000)
from wholly owned subsidiary undertakings in respect of interest receivable.
Amounts due to the Company by subsidiary undertakings are shown in Note 18.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JRMRTMMMBBPP
Venture Production (LSE:VPC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Venture Production (LSE:VPC)
Historical Stock Chart
From Jul 2023 to Jul 2024
