Interim Results

RNS Number : 5676Z

Borders & Southern Petroleum plc

24 September 2009

 



24 September 2009 

Borders & Southern Petroleum Plc

('Borders & Southern', 'the Company' or 'the Group')

Interim Results for the Six Months to 30 June 2009

Borders & Southern Petroleum Plc (AIM: BOR) is pleased to announce its interim results for the six months to 30 June 2009. The accounts contained within this report represent the consolidation of Borders & Southern Petroleum Plc and its subsidiary Borders & Southern Falkland Islands Limited.

Highlights

• Continued refinement of prospect inventory - large structures with high potential value have been defined
• Farmout process underway
• Technical work associated with the Environmental Impact Assessment nearing completion
• Cash balance as at 30 June 2009 was US$20.7 million

Chief Executive's Statement

Since our last report the Company has been actively seeking credible partners to help fund the drilling campaign. This farmout process is progressing but we do not intend to comment further until there is something substantial to report.

In parallel with our farmout activity we have continued to work both the 3D and regional seismic data in order to fine-tune our understanding of the main play fairways and prospects. Our prospects are large simple structural traps with good geological analogues and which possess strong geophysical attribute support. If they work then the volumes are likely to be significant and value high. We believe that when viewed against other global frontier opportunities these prospects are very competitive. And whilst we are unable to offer a time frame for securing a partner and drilling we are very confident that these prospects will attract a rig. 

On the 30 October of this year the first exploration term of the Production Licenses comes to a conclusion. All work programme obligations have been fulfilled, the main one being the acquisition and interpretation of 750 sq km of 3D seismic. This was exceeded, with the acquisition of 1,492 sq km of new 3D seismic. On the 1 November we have the option to extend the first exploration period for a further three years. This extension period has a one well commitment associated with it. It is our intention, with Falklands Islands Government approval, to take up the extension and thereby assume the well commitment. Following this three year period the Company has the option to enter a second five year exploration phase. This also comes with a one well commitment.

It has recently been announced that the drilling programme in the North Falkland Basin might commence in the first quarter of 2010. The rig highlighted to undertake this work would not be suitable for our prospects due to the greater water depths involved. However, we welcome this good news for the Falkland Islands Government as it raises the profile and interest in the region. From a technical perspective, the petroleum system in the South Falkland Basin is completely different to that in the North Falkland Basin. Therefore well results in the North Falkland Basin will have no impact on whether we succeed or fail in the South. 

The financial statements show that the Company has a strong balance sheet with cash or cash equivalents as at 30 June 2009 of US$20.7 million. This is slightly higher than that reported in the December 2008 financial statements (US$19.5 million) due to foreign exchange rate changes.  

For further information please visit www.bordersandsouthern.com or contact:

Howard Obee	Simon Hudson
Borders & Southern Petroleum plc	Tavistock Communications
Tel: [phone]	Tel: [phone]
	Mob: [phone]
Katherine Roe	Guy Wilkes
Panmure Gordon (UK) Limited	Ocean Equities
Tel: [phone]	Tel: [phone]

  CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2009

		6 months ended  30 June 2009 (unaudited)	6 months ended 30 June 2008 (unaudited)	12 months ended 31 December 2008 (audited)
Continuing operations	Notes	$	$	$
Administrative expenses		(437,211)	(593,872)	(1,287,544)
LOSS FROM OPERATIONS		(437,211)	(593,872)	(1,287,544)
Finance income	4	1,848,130	764,577	986,177
Finance expense - foreign exchange loss	4	-	-	(4,426,533)
PROFIT/ (LOSS BEFORE TAX)		1,410,919	170,705	(4,727,900)
Income tax expense		-	(80,966)	-
PROFIT/ (LOSS) FOR THE PERIOD		1,410,919	89,739	(4,727,900)
Profit/ (loss) per share - basic and diluted	3	0.73 cents	0.05 cents	(2.43) cents

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2009

	6 months ended 30 June 2009 (unaudited)	6 months ended 30 June 2008 (unaudited)	12 months ended 31 December 2008 (audited)
	$	$	$
PROFIT/ (LOSS) FOR THE PERIOD	1,410,919	89,739	(4,727,900)
Foreign exchange on change in presentation/functional currency	-	8,438	(20,115)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	1,410,919	98,177	(4,748,015)

  CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

At 30 June 2009

	At  30 June 2009 (unaudited) $	At  30 June 2008 (unaudited) $	At  31 December 2008 (audited) $
ASSETS NON-CURRENT ASSETS
Property, plant and equipment	13,756	4,968	14,929
Intangible assets	36,195,286	35,392,347	36,040,860
Total non-current assets	36,209,042	35,397,315	36,055,789
CURRENT ASSETS
Trade and other receivables	109,840	296,571	251,788
Other financial assets	-	-	9,950,668
Cash and cash equivalents	20,785,178	24,969,898	9,522,035
TOTAL CURRENT ASSETS	20,895,018	25,266,469	19,724,491
TOTAL ASSETS	57,104,060	60,663,784	55,780,280
LIABILITIES CURRENT LIABILITIES
Trade and other payables	(107,631)	(251,863)	(194,770)
Current tax payable	-	(81,596)	-
TOTAL NET ASSETS	56,996,429	60,330,325	55,585,510
CAPITAL AND RESERVES
Share capital	3,867,741	3,867,741	3,867,741
Share premium account Other reserve	57,906,686 209,409	57,906,686 108,032	57,906,686 209,409
Retained earnings	(4,971,011)	(1,564,291)	(6,381,930)
Foreign currency reserve	(16,396)	12,157	(16,396)
TOTAL EQUITY	56,996,429	60,330,325	55,585,510

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2009

	Share capital	Share premium reserve	Other reserves	Foreign currency reserve	Retained earnings	Total
	$	$	$	$	$	$
Unaudited
Balance at 1 January 2009	3,867,741	57,906,686	209,409	(16,396)	(6,381,930)	55,585,510
Loss for the period and total comprehensive income for the period	-	-	-	-	1,410,919	1,410,919
Balance at 30 June 2009	3,867,741	57,906,686	209,409	(16,396)	(4,971,011)	56,996,429

Unaudited
Balance at 1 January 2008	3,867,741	57,906,686	108,032	3,719	(1,654,030)	60,232,148
Profit for the period	-	-	-	-	89,739	89,739
Foreign exchange on change in presentation currency	-	-	-	8,438	-	8,438
Total comprehensive income for the period	-	-	-	8,438	89,739	98,177
Balance at 30 June 2008	3,867,741	57,906,686	108,032	12,157	(1,564,291)	60,330,325

Audited
Balance at 1 January 2008	3,867,741	57,906,686	108,032	3,719	(1,654,030)	60,232,148
Loss for the year	-	-	-	-	(4,727,900)	(4,727,900)
Foreign exchange on change in functional currency	-	-	-	(20,115)	-	(20,115)
Total comprehensive income for the period	-	-	-	(20,115)	(4,727,900)	(4,748,015)
Recognition of share based  payments	-	-	101,377	-	-	101,377
Balance at 31 December 2008	3,867,741	57,906,686	209,409	(16,396)	(6,381,930)	55,585,510

  CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2009

	6 months ended 30 June 2009 (unaudited)	6 months ended 30 June 2008 (unaudited)	12 months ended 31 December 2008 (audited)
Cash flow from operating activities	$	$	$
profit/ (loss) before tax	1,410,919	170,705	(4,727,900)
Adjustments for:
Depreciation	4,073	2,781	9,850
Share-based payment	-	-	101,377
Finance income - interest	(151,623)	(625,097)	(986,177)
Finance income - foreign exchange gains	(1,696,507)	(139,480)	-
Finance expense - foreign exchange losses			4,426,533
Foreign exchange differences	-	-	(20,116)
	(433,138)	(591,091)	(1,196,433)
Decrease in trade and other receivables	2,943	50,242	65,880
Decrease in trade and other payables	(87,139)	(2,057,878)	(2,114,973)
Net cash outflow from operating activities	(517,334)	(2,598,727)	(3,245,526)

Cash flows used in investing activities
Interest received	290,624	591,686	981,913
Sale/ (purchase) of investments	9,950,668	-	(9,950,668)
Exploration and evaluation expenditure	(154,425)	(12,236,545)	(12,885,059)
Purchase of property, plant and equipment	(2,897)	-	(17,030)
Net cash used in investing activities	10,083,970	(11,644,859)	(21,870,844)
Net increase/(decrease) in cash and cash equivalents	9,566,636	(14,243,586)	(25,116,370)
Cash and cash equivalents at the beginning of the period	9,522,035	39,064,938	39,064,938
Exchange gains/( losses) on cash and cash equivalents	1,696,507	148,546	(4,426,533)

Cash and cash equivalents at the end of the period	20,785,178	24,969,898	9,522,035

  NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the six months ended 30 June 2009

1. Basis of preparation

The unaudited condensed consolidated interim financial statements have been prepared using the recognition and measurement principles of International Accounting Standards, International Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRSs). The Group has not elected to comply with IAS 34 'Interim Financial Reporting' as permitted. The principal accounting policies used in preparing the interim results are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2008 and are expected to be consistent with those policies that will be in effect at the year end.

The condensed financial statements for the six months ended 30 June 2009 and 30 June 2008 are unreviewed and unaudited. The comparative financial information does not constitute statutory financial statements as defined by Section 240 of the Companies Act 1985. The comparative financial information for the year ended 31 December 2008 is not the company's full statutory accounts for that period. A copy of those statutory financial statements 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 237(2)-(3) of the Companies Act 1985. 

Effective 1 July 2008, the Company's functional currency changed from Pounds sterling ('£') to the US dollar ('$'). This change was made as, due to the $ being the currency that mainly influences significant transactions and balances, the directors considered the $ to most faithfully represent the economic effects of the underlying transactions, events and conditions in the Company. Concurrent with this change in functional currency, the Group adopted the $ as its presentation currency and consequently the financial information for the six months ended 30 June 2008 has been re-presented in $.

In accordance with International Accounting Standards, this change in functional currency has been accounted for prospectively by translating all items using the $:£ exchange spot rate on that date, being $1.9902:£1. In the parent company accounts the resulting translated amounts for non monetary items at this date have been treated as their historic cost.

For the purposes of changing the Group's presentation currency, the comparatives for the year ended 30 June 2008 were translated for the balance sheet using $:£ exchange spot rate on that date, being $1.9902:£1, for the income statement using the average $:£ exchange rate during the period being $1.9748:£1, and for the opening the balances as at 1 January 2008 using the $:£ spot rate on that date being $1.9796:£1. Resulting exchange differences have been taken to the Foreign currency reserve.

Changes in accounting policies

In the current financial year, the Group has adopted IAS 1, 'Presentation of Financial Statements' (Revised) and IFRS 8, 'Operating Segments'.

IAS 1 Presentation of Financial Statements (Revised) includes the requirement to present a Statement of Changes in Equity as a primary statement and introduces the possibility of either a single Statement of Comprehensive Income (combining the Income Statement and a Statement of Comprehensive Income) or to retain the Income Statement with a supplementary Statement of Comprehensive Income. The second option has been adopted by the Group. As this standard is concerned with presentation only it does not have any impact on the results or net assets of the Group.

2. SEGMENTAL ANALYSIS

For the purpose of segmental information the operations of the group consist of one operating segment, the exploration for hydrocarbon liquids and gas. 

Geographical information

During the period the group's exploration and evaluation activities took place outside the UK, substantially in the Falkland Islands. All of the exploration expenditure capitalised during the period took place in the Falkland Islands.

The loss from operations of the group is analysed as follows:

	6 months ended 30 June 2009 $	6 months ended 30 June 2008 $	12 months ended 31 December 2008 $
United Kingdom	437,211	588,024	1,287,544
Falkland Islands	-	5,848	-
	437,211	593,872	1,287,544

Non-current assets of the group are analysed as follows:

	At 30 June 2009 $	At 30 June 2008 $	At 31 December 2008 $
United Kingdom	13,756	4,968	14,929
Falkland Islands	36,195,286	35,392,347	36,040,860
	36,209,042	35,397,315	36,055,789

3. PROFIT/ (Loss) per share

The calculation of the basic earnings per share is based on the profit or loss after tax attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. Diluted earnings per share are not stated as the dilution would relate only to share options and would not be material.

	Profit/(loss) after tax for the period $	Weighted average number of shares	Profit/(loss) per share  cent
basic and diluted
Six months ended 30 June 2009 (unaudited)	1,410,919	194,344,170	0.73
Six months ended 30 June 2008 (unaudited)	89,739	194,344,170	0.05
12 months ended 31 December 2008 (audited)	(4,727,900)	194,344,170	(2.43)

  4. FINANCE INCOME AND EXPENSE

Finance income	6 months ended 30 June 2009 $	6 months ended 30 June 2008 $	12 months ended 31 December 2008 $
Bank interest receivable	101,963	625,097	951,024
Treasury stock interest	49,660	-	35,153
Exchange gain on cash and other financial assets	1,696,507	139,480	-
	1,848,130	764,577	986,177

Finance expense	6 months ended 30 June 2009 $	6 months ended 30 June 2008 $	12 months ended 31 December 2008 $
Exchange loss on cash and other financial assets	-	-	4,426,533

The foreign exchange gain in the six months ended 30 June 2009 arises on the treasury stock and cash balances held in £ due to the appreciation of the £ against the $ during the period.

 

END

 

 

IR SEMFMDSUSEFU