RNS Number:0024E
Wham Energy plc
18 September 2007
Interim Results for the six months ended 30 June 2007
Operating Highlights
* Takeover proposal from Venture Production recommended by the WHAM Board
of Directors
* Scheme of Arrangement document is expected to be posted to shareholders
on or around 25th September
* Processing of 3D seismic survey on blocks 48/3 and 48/4 well under way
* 22nd round licences yield attractive prospects ready for drilling
* 23rd round licences fully mapped yielding two quality prospects
* 24th round licences currently being mapped and two prospects and two
leads already identified.
Financial Highlights
* Interim loss before taxation was #260,120 (2006 #156,828)
* Loss per share for the interim period was 0.82p (2006: 0.49p)
* Liquid resources at 30 June 2007 amounted to #6.67 million, or 21.0p/
share
* IFRS adopted for 2007 and 2006 comparatives restated
Date: 18 September 2007
For further information contact:
Wham Energy plc cityPROFILE
Tom Windle, Chief Executive Simon Courtenay
Tel: 020-7924-4644; Tel: 020-7448-3244
Mob: 07968-162630
Alan Thomas, Finance Director
Mob: 07739-800093
WHAM Energy plc is an AIM listed company. Further details about the Company and
downloadable copies of this announcement are available on the Company's website:
www.whamenergy.com.
REVIEW OF OPERATIONS
Business environment
WHAM has diligently progressed its portfolio of exploration prospects to produce
several potentially attractive drillable prospects. However the market for
farm-outs has become increasingly harsh reflecting the very high exploration
drilling costs, volatility of gas prices, and the current 50% corporation tax
applicable to UK oil and gas production, all of which have raised the level at
which a gas discovery can be estimated to be commercial. In the face of these
considerable challenges the Board of Directors is recommending that WHAM
shareholders accept the offer from Venture Production, as set out in the Rule
2.5 announcement released on Thursday 23 August 2007.
Summary of progress on assets
Blocks 48/3a & 48/4 (WHAM 16%)
These 22nd round blocks were successfully farmed out to Tullow and Dana earlier
in the year with WHAM retaining a 16% working interest. The seismic survey shot
in September of last year has been integrated with additional data to provide
full 3D coverage over the licence. This dataset is currently being processed
prior to mapping and interpretation. It is anticipated the work will be
completed and that a well will be drilled in 2008.
Blocks 42/25b, 43/16, 43/21b (WHAM 40%)
These 22nd round blocks have yielded several potentially drillable prospects of
which the most attractive is Prospect Carna. A seismic and environmental site
survey has been acquired over Carna in preparation for drilling in 2008.
Block 53/3d (WHAM 100%)
This 23rd round block has been fully mapped and a very well defined prospect
identified adjacent to the giant Leman gas field. WHAM has been seeking
potential farminees and evaluating the economic viability of drilling the
prospect.
Blocks 43/11 and 43/12 (WHAM 100%)
This 23rd round licence containing two blocks has yielded two well defined
prospects at the prospective Carboniferous level directly on trend to the
Cavendish field. Currently WHAM is determining the resource potential of the
prospects and undertaking further mapping to assess any additional prospectivity
on the blocks.
Block 44/27c (WHAM 100%)
This block was acquired in the 24th licence round in January 2007 and following
the purchase of a 3D data set, mapping has indicated that there is a potential
extension of the Carboniferous producing Schooner gas field on to the licence.
Further mapping and specialist seismic depth conversion techniques are being
applied to the data set to confirm the structure.
Block 49/22b (WHAM 100%)
49/22b was acquired at 100% working interest in the 24th licence round in
January 2007. The purchase of 3D seismic data sets has been completed and
mapping is advanced. To date one prospect and two leads at the Permian Leman
sandstone level that are shared with adjacent licences have been identified on
the acreage.
The remaining licences in the portfolio are currently under evaluation and
further seismic acquisition and work will be required to determine their
prospectivity. It is anticipated that certain licences may be relinquished in
the near future in order to focus resources on the most prospective areas likely
to yield short term commercially viable prospects thus strengthening the
portfolio.
During the first six months of 2007, WHAM continued to evaluate additional
opportunities and potential acquisitions where management felt there was scope
to enhance shareholder value.
Outlook
Longer term, the Board remains positive about the potential for finding and
developing commercial gas fields in the southern North Sea. For the remainder of
2007, however, the challenges presented by the business environment described
above will most likely continue. Whilst the Board would expect the Company's
technical team to develop further prospects on its 24th round licences, new
farm-outs will remain difficult to achieve and some slippage in the currently
expected drilling time-tables on the Morpheus and Carna prospects cannot be
ruled out.
Tom Windle
Chief Executive Officer
18 September 2007
INCOME STATEMENT
For the 6 months ended 30 June 2007
Notes Six Months Six Months Year
Ended Ended Ended
30-Jun-07 30-Jun-06 31-Dec-06
Unaudited Unaudited Audited
# # #
Revenue - - -
Cost of sales - - -
--------------------------------------------------------------------------------
Gross profit/(loss) - - -
Exploration expenses (84,891) (14,908) (95,907)
Administrative expenses (353,489) (335,816) (754,588)
--------------------------------------------------------------------------------
Operating profit/(loss) (438,380) (350,724) (850,495)
Finance income 178,260 193,896 379,505
--------------------------------------------------------------------------------
Profit/(loss) before taxation (260,120) (156,828) (470,990)
Taxation 3 - - -
--------------------------------------------------------------------------------
Profit/(Loss) for the period (260,120) (156,828) (470,990)
Earnings/(loss) per share
Basic 4 (0.82)p (0.49)p (1.49)p
Diluted 4 (0.82)p (0.49)p (1.49)p
BALANCE SHEET
As at 30 June 2007
Notes 30-Jun-07 30-Jun-06 31-Dec-06
Unaudited Unaudited Audited
# # #
Non-current assets
Exploration and evaluation 2,189,928 594,128 1,817,924
assets
Plant and equipment 41,751 20,446 44,976
------------------------------------------------------------------------
Total non-current assets 2,231,679 614,574 1,862,900
------------------------------------------------------------------------
Current assets
Trade and other 221,040 166,578 498,004
receivables
Cash and cash equivalents 6,667,725 8,689,859 6,817,422
------------------------------------------------------------------------
Total current assets 6,888,765 8,856,437 7,315,426
------------------------------------------------------------------------
Current liabilities
Trade and other (214,776) (147,211) (86,388)
liabilities
Current tax liabilities - - -
------------------------------------------------------------------------
Total current liabilities (214,776) (147,211) (86,388)
------------------------------------------------------------------------
Net current assets/ 6,673,989 8,709,226 7,229,038
(liabilities)
Non-current liabilities
Deferred taxation - - -
------------------------------------------------------------------------
Total non-current - - -
liabilities
------------------------------------------------------------------------
NET ASSETS 8,905,668 9,323,800 9,091,938
------------------------------------------------------------------------
Equity
Share capital 6 31,746 31,696 31,696
Share premium account 9,580,987 9,568,287 9,568,287
Other reserves 201,850 58,450 140,750
Retained earnings/(losses) (908,915) (334,633) (648,795)
------------------------------------------------------------------------
8,905,668 9,323,800 9,091,938
------------------------------------------------------------------------
Cash Flow Statement
For the 6 months ended 30 June 2007
Notes Six Six Year
Months Months
Ended Ended Ended
30-Jun-07 30-Jun-06 31-Dec-06
Unaudited Unaudited Audited
# # #
Net cash generated from/(used in) 5 47,957 (636,293) (1,444,412)
operating activities
Investing activities
Interest received 182,313 215,209 399,006
Purchases of property, plant and (7,963) (4,438) (40,221)
equipment
Exploration and evaluation (372,004) (137,632) (1,349,964)
expenditures
--------------------------------------------------------------------------------
Net cash generated from/(used in) (197,654) 73,139 (991,179)
investing activities
--------------------------------------------------------------------------------
Financing activities
Proceeds from issue of ordinary shares - - -
Costs associated with share issue - - -
--------------------------------------------------------------------------------
Net cash generated from/(used in) - - -
financing activities
--------------------------------------------------------------------------------
Increase/(decrease) in cash and cash (149,697) (563,154) (2,435,591)
equivalents
Cash and cash equivalents at beginning 6,817,422 9,253,013 9,253,013
of period
--------------------------------------------------------------------------------
Cash and cash equivalents at end of 6,667,725 8,689,859 6,817,422
period
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2007
1 Accounting policies
Basis of preparation
The next annual financial statements of WHAM Energy plc ("Wham" or "the
Company") will be prepared in accordance with International Financial Reporting
Standards ("IFRS"), as adopted for use in the EU applied in accordance with the
provisions of the Companies Act 1985.
Accordingly, the interim financial information in this report has been prepared
using accounting policies consistent with IFRS. IFRS is subject to amendment and
interpretation by the International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee (IFRIC) and there is
an ongoing process of review and endorsement by the European Commission. The
financial information has been prepared on the basis of IFRS that the Directors
expect to be applicable as at 31 December 2007. The Company is not required to
comply with IAS 34 Interim Financial Reporting.
The financial information has been prepared under the historical cost
convention. The principal accounting policies set out below have been
consistently applied to all periods presented.
Non-statutory accounts
The financial information for the year ended 31 December 2006 set out in this
interim report does not comprise Wham's statutory accounts and does not
constitute full statutory accounts as defined in section 240 of the Companies
Act.
The statutory accounts for the year ended 31 December 2006, which were prepared
under UK Generally Accepted Accounting Practice (UK GAAP), have been delivered
to the Registrar of Companies. The auditors reported on those accounts and their
report was unqualified and did not contain a statement under either section 237
(2) or Section 237 (3) of the Companies Act 1985.
The financial information for the 6 months ended 30 June 2007 and 2006 is
unaudited.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors of the Company.
The Directors are responsible for preparing the interim report in accordance
with the Listing Rules of the Financial Services Authority which require that
the accounting policies and presentation applied to the interim figures are
consistent with those applied in preparing the preceding annual accounts except
where any changes, and the reasons for them, are disclosed.
Foreign currency
Transactions in foreign currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date. Exchange gains
and losses on short-term foreign currency borrowings and deposits are included
with net interest payable. Exchange differences on all other transactions,
except relevant foreign currency loans, are taken to operating profit.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred
tax.
The tax currently payable is based on the taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have been
enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries, except where the Company is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current assets and liabilities on a net basis.
Share based payments
The cost of share-based employee compensation arrangements, whereby employees
receive remuneration in the form of shares or share options, is recognised as an
employee benefit expense in the income statement.
The total expense to be apportioned over the vesting period of the benefit is
determined by reference to the fair value (excluding the effect of non
market-based vesting conditions) at the date of grant. The assumptions
underlying the number of awards expected to vest are subsequently adjusted for
the effects of non market-based vesting to reflect the conditions prevailing at
the balance sheet date. Fair value is measured by the use of a binomial model.
The expected life used in the model has been adjusted, based on management's
best estimate, for the effects of the non-transferability, exercise restrictions
and behavioural considerations.
Intangible Assets - exploration and evaluation assets
The Company uses the full cost method of accounting for exploration and
evaluation expenditure, whereby all expenditures incurred in connection with the
acquisition, exploration and evaluation of oil and gas assets, including
directly attributable overheads, are capitalised in geographical cost pools - to
date for Wham, just the single UKCS cost pool - except to the extent that they
fall outside the scope of
IFRS 6 Exploration for and Evaluation of Mineral Resources ("IFRS 6"), when they
are expensed as incurred. Upon successful conclusion of the exploration and
appraisal programme and determination that commercial reserves exist, the
related costs would be transferred to tangible non-current assets as property
plant and equipment. Exploration and evaluation assets at each balance sheet
date are assessed for possible impairment as described below. Proceeds from the
disposal of oil and gas assets are credited against the carrying value of the
cost pool. Any overall surplus of proceeds over cost pool carrying value would
be credited to the income statement.
Exploration and evaluation assets are tested for impairment when facts and
circumstances suggest that the carrying amount of an exploration and evaluation
asset may exceed its recoverable amount. The measurement, presentation and
dislosure of such impairment are in accordance with IAS 36 Impairment of Assets,
according to which the recoverable amount relates to the higher of the asset's
fair value less costs to sell and to its value in use.
Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss.
Depreciation is charged so as to write off the cost of assets, over their
estimated useful lives, using the straight-line method, on the following bases:
Computer equipment - 33.3%
Financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Company becomes a party to the contractual provisions of the
instrument.
Wham did not hold any investments during the periods for which financial
information is provided, nor has it raised any loans or issued any financial or
equity instruments, other than fully paid ordinary shares, during the periods
reported.
Trade and other receivables are measured at initial recognition at fair value,
and are subsequently measured at amortised cost using the effective interest
method. A provision is established when there is objective evidence that the
Company will not be able to collect all amounts due. The amount of any provision
is recognised in the income statement.
Cash and cash equivalents comprise cash held by the Company and short-term bank
deposits with an original maturity of three months or less.
Trade and other payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective interest rate
method.
2 Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted
accounting practice requires management to make estimates and judgements that
affect the reported amounts of assets and liabilities as well as the disclosure
of contingent assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the reporting period.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Impairment of exploration and evaluation assets
Determining whether the investment in exploration and evaluation assets is
impaired, if there are indications that this may be the case, requires
estimation of the value in use of the full cost pool to which expenditure has
been allocated (in Wham's case, the single UKCS cost pool). The value in use
calculation requires the Company to estimate the future cash flows expected to
arise from the cash-generating unit and a suitable discount rate in order to
calculate the present value. No provision for impairment has been made in the
periods now reported. The carrying value of exploration and evaluation assets at
30 June 2007 was #2,189,928.
Share based payments
In determining the fair value of equity settled share based payments and the
related charge to the income statement, the Company makes assumptions about
future events and market conditions. In particular, judgement must be made as to
the likely number of shares that will vest, and the fair value of each award
granted. The fair value is determined using a valuation model which is dependent
on further estimates, including the Company's future dividend policy, employee
turnover, the timing with which options will be exercised and the future
volatility in the price of the Company's shares. Such assumptions are based on
publicly available information and reflect market expectations and advice taken
from qualified personnel. Different assumptions about these factors to those
made by the Company could materially affect the reported value of share based
payments.
3 Taxation Six months Six months Year
ended ended ended
30-jun-07 30-jun-06 31-dec-06
# # #
Current tax - - -
Deferred tax - - -
--------------------------------------------------------------------------
Total tax expense for the period - - -
--------------------------------------------------------------------------
The Company has not made a taxable profit in the periods reported.
No benefit has been recognised in these interim accounts for a potential net
deferred tax asset.
4 (Loss)/earnings per share Six months Six months Year
ended ended ended
30-jun-07 30-jun-06 31-dec-06
(Loss)/earnings
Earnings for the purposes of #260,120 #156,828 #470,990
basic and diluted earnings per
share being net loss
attributable to equity
shareholders
---------------------------------------------------------------------
Number of shares
Weighted average number of 31,714,119 31,695,611 31,695,611
ordinary shares for the
purposes of basic loss per
share
---------------------------------------------------------------------
As the Company reported a loss for the year then, in accordance with IAS 33
Earnings per Share, the warrants and options in issue are not considered
dilutive.
5 Cash generated from/(used in) operations
Six months Six months Year
ended ended ended
30-jun-07 30-jun-06 31-dec-06
# # #
Operating profit/(loss) (438,380) (350,724) (850,495)
Non-cash share-based payments 73,850 - 82,300
Depreciation charge 11,188 4,336 11,263
(Increase)/decrease in debtors 272,911 (18,263) (346,275)
Increase/(decrease) in 128,388 (280,780) (341,205)
creditors
----------------------------------------------------------------------
Cash generated from/(used in) 47,957 (645,431) (1,444,412)
operations
Tax (paid)/recovered - 9,138 -
-----------------------------------------------------------------------
Net cash generated from/(used 47,957 (636,293) (1,444,412)
in) operations
-----------------------------------------------------------------------
6 Share Capital
On 25 April 2007, 50,000 ordinary shares of 0.1p were issued fully paid to
certain employees as a discretionary bonus. The closing share price for the
preceding day was 25.5p, which has been used for the purposes of accounting for
this share-based payment. There were no changes to share capital during the two
comparative periods.
7 Transition to IFRS
WHAM Energy plc reported under UK GAAP in its previously published financial
statements for the year ended 31 December 2006. The analysis below shows a
reconciliation of net assets and profit/(loss) as reported under UK GAAP as at
31 December 2006 to the revised net assets and profit under IFRS as reported in
these financial statements. In addition, there is a reconciliation of net assets
under UK GAAP to IFRS at the transition date for this company, being 1 January
2006. There is also a reconciliation of net assets under UK GAAP to IFRS at the
comparative interim date, being 30 June 2006.
Reconciliation of equity Previous Effect of IFRS
at 1 January 2006 GAAP transition to
IFRS
# # #
Share capital 31,696 - 31,696
Share premium account 9,568,287 - 9,568,287
Other reserves 58,450 - 58,450
Retained earnings/ (115,400) (62,405) (177,805)
(losses)
-----------------------------------------------------------------------
Total equity 9,543,033 (62,405) 9,480,628
-----------------------------------------------------------------------
Reconciliation of equity Previous Effect of IFRS
at 30 June 2006 GAAP transition to
IFRS
# # #
Share capital 31,696 - 31,696
Share premium account 9,568,287 - 9,568,287
Other reserves 58,450 - 58,450
Retained earnings/ (257,320) (77,313) (334,633)
(losses)
-----------------------------------------------------------------------
Total equity 9,401,113 (77,313) 9,323,800
-----------------------------------------------------------------------
Reconciliation of equity Previous Effect of IFRS
at 31 December 2006 GAAP transition to
IFRS
# # #
Share capital 31,696 - 31,696
Share premium account 9,568,287 - 9,568,287
Other reserves 140,750 - 140,750
Retained earnings/ (490,483) (158,312) (648,795)
(losses)
-----------------------------------------------------------------------
Total equity 9,250,250 (158,312) 9,091,938
-----------------------------------------------------------------------
Explanation of adjustments to equity
The only difference between IFRS and UK GAAP for the Company relates to the
treatment of pre-licence costs, which were capitalised as part of the Company's
single UKCS full cost pool in accordance with the applicable UK Statement of
Recommended Practice (SORP), but which fall outside the scope of IFRS 6 and are
accordingly expensed under IFRS. Pre-licence costs include all expenditures
incurred in evaluating possible purchases, acquisitions or applications for
exploration licences or rights prior to the actual purchase, acquisition or
application being made. Such costs typically include time and associated
overheads of technical specialists employed by the Company or by consultants and
any data acquired to facilitate the decision-making process.
Cash flow statement
The Company's cash flow statement is presented in accordance with IAS 7 Cash
Flow Statements ("IAS 7"). The statement presents substantially the same
information as that required under UK GAAP, with the following principal
exceptions:
1. Under UK GAAP, cashflows are presented under nine standard headings,
whereas IFRS requires the classification of cash flows resulting from
operating, investing and financing activities.
2. The cash flows reported under IAS 7 relate to movements in cash and cash
equivalents, which include cash and short term liquid investments. Under
UK GAAP, cash comprises cash in hand and deposits repayable on demand.
Reconciliation of profit/ Previous Effect of IFRS
(loss) for the year ended GAAP transition
31 December 2006 to IFRS
# # #
Gross profit/(loss) - - -
Exploration expenses - (95,907) (95,907)
Administrative expenses (754,588) - (754,588)
-----------------------------------------------------------------------
Operating profit/(loss) (754,588) (95,907) (850,495)
Finance income 379,505 - 379,505
-----------------------------------------------------------------------
Profit/(loss) before (375,083) (95,907) (470,990)
taxation
Taxation - - -
-----------------------------------------------------------------------
Net profit/(loss) (375,083) (95,907) (470,990)
-----------------------------------------------------------------------
Reconciliation of profit/ Previous Effect of IFRS
(loss) for the six months GAAP transition
ended 30 June 2006 to IFRS
# # #
Gross profit/(loss) - - -
Exploration expenses - (14,908) (14,908)
Administrative expenses (335,816) - (335,816)
------------------------------------------------------------------------
Operating profit/(loss) (335,816) (14,908) (350,724)
Finance income 193,896 - 193,896
------------------------------------------------------------------------
Profit/(loss) before (141,920) (14,908) (156,828)
taxation
Taxation - - -
------------------------------------------------------------------------
Net profit/(loss) (141,920) (14,908) (156,828)
------------------------------------------------------------------------
Explanation of adjustments to profit/(loss)
As indicated above, pre-licence costs were capitalised as part of the Company's
single UKCS full cost pool in accordance with the applicable UK Statement of
Recommended Practice ("SORP"), but fall outside the scope of IFRS 6 and are
accordingly charged against profit as exploration expense under IFRS.
8 Related parties transactions
There have been no changes in the related parties transactions described in the
last annual report, nor any related parties transactions that have taken place
in the first six months of the current financial year, that could have a material
effect on the financial position or performance of the Company in the six months
ended 30 June 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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