Final Results
Aminex PLC
27 April 2006
AMINEX PLC
("Aminex" or "the Company")
Preliminary results for the year ended 31 December 2005
Aminex, the oil and gas company listed on the London and Irish Stock Exchanges,
today announces its preliminary results for the year ended 31 December 2005.
Highlights
• New Production Sharing Agreement for Ruvuma Basin, Tanzania
• Onshore licence award in Madagascar
• Three East African farmout agreements signed
• Production Sharing Agreement in North Korea
• Technical Evaluation Agreement offshore Kenya
• Production Sharing Agreement for Block 2, West Esh el Mellahah, Egypt
• 1,000 kilometres of new seismic shot at Ruvuma and Nyuni, Tanzania
• Two new gas wells on stream at South Weslaco, Texas
• Loss before tax for period of $4.98 million (2004: loss $4.51 million)
Brian Hall, Chief Executive of Aminex said:
"2005 has been a very active year for Aminex, particularly in East Africa where
we have expanded our exploration acreage and acquired new seismic, as well as
forging relations with new governments and new partners. We have continued to
upgrade our US reserves bringing our leases in the South Weslaco Field on to
production for the first time.
Peter Elwes has decided to retire at the AGM in June after ten years service as
Chairman and I would like to record the major contribution he has made to Aminex
over this time. Derek Tughan, at present Senior Non-Executive Director, has
agreed to serve as Chairman."
27 April 2006
Enquiries:
Aminex PLC +44 (0) 20 7240 1600
Brian Hall - Chief Executive
Simon Butterfield - Finance Director
Pelham Public Relations +44 (0) 20 7743 6679
Archie Berens
OVERVIEW
The year saw intense activity for the Aminex Group with several issues from past
years satisfactorily resolved, good progress on existing ventures and a number
of new projects initiated. Satisfactory resolution of a long running joint
venture dispute in March and a placing and open offer to shareholders of new
shares in June put the Company in a position to move ahead strongly with its
exploration and development programmes. In North Korea old seismic data was
systematically reprocessed and an initial Production Sharing Agreement ("PSA")
negotiated covering all that country's prospective hydrocarbon-bearing basins.
In East Africa a farmout was achieved on part of the Tanzanian Nyuni block and
new seismic acquired over the entire Nyuni block. Also in Tanzania, a PSA was
executed in November for the onshore/near-shore Ruvuma block in the south of the
country following which a seismic survey was conducted in the marine area within
thirty days. In a similar geological setting in Madagascar a PSA for a large
onshore block was finalised in the fourth quarter. In the second half a company
which the Aminex group controls was awarded onshore acreage in Egypt close to
the Red Sea. Meanwhile, in the USA two successful gas wells were drilled in
Texas and one oil well recompleted for production in Louisiana. In operational
terms, by year end Aminex had acquired 1,000 kilometres of new marine seismic
and drilled two successful wells.
Since the year end farmouts have been finalised on the newly granted Ruvuma PSA
and over another part of the Nyuni PSA, both in Tanzania, while a Group company
has become party to a Technical Evaluation Agreement offshore Kenya. Further
seismic is planned over both Ruvuma and Nyuni during the summer of 2006 with a
view to finalising locations for a very active drilling programme in 2007.
In recent months most of the operational activity has been in Africa rather than
Korea but Korean activity is expected to accelerate during 2006.
FINANCIAL REVIEW
The 2005 financial statements are the first to be prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("EU IFRS"). Up until this year, Aminex's financial statements had been prepared
in accordance with Irish Generally Accepted Accounting Practice ("Irish GAAP").
To comply with EU IFRS, the comparative 2004 figures have been restated in
accordance with EU IFRS. Reconciliations of the 2004 figures showing the
movement from Irish GAAP to EU IFRS are set out in detail in the Appendix to
this announcement.
Following the adoption of EU IFRS and in light of the content of IFRS 6
"Exploration for and Evaluation of Mineral Resources", Aminex has reviewed its
accounting policies and has decided to change the policy for its oil and gas
assets from the "full cost" method to the "successful efforts" method. Under the
"successful efforts" method, the costs of unsuccessful wells initially
capitalised within the category of 'Exploration Assets' are written off to the
income statement in the period they are determined unsuccessful. Furthermore,
producing assets are depleted on a field by field basis rather than as a
geographical pool. Comparative figures for 2004 have been restated to reflect
the change in accounting policy.
For the year 2005, Aminex's turnover comprises revenues from sales of oil and
gas in the USA and also sales of goods and services by its oilfield service and
supply company. In December 2004, Aminex sold its Vinton Dome oilfield, a
consequence of which has been a reduction in 2005 Group turnover from US$5.4
million in 2004 to US$3 million for the current year. The average oil price
obtained in 2005 of US$50.30 per barrel is US$9.73 per barrel higher than that
of 2004 and oil production during the period is similar to that of 2004
(excluding Vinton Dome production). The average gas price achieved at US$7.81
per mcf is US$1.72 per mcf higher than 2004 although gas production decreased
from 102 mmcf in 2004 to 59 mmcf in the current year. Much of this gas reduction
is a consequence of having shut in the Alta Loma well which supplies BP's Texas
City refinery. This refinery has been out of commission since early 2005
following a major fire and extensive repairs. The oil services and supply
company's share of turnover amounts to US$1.2 million (2004: US$1.3 million).
Cost of sales at US$2 million is US$1.2 million lower than 2004 as a consequence
of reduced oil and gas turnover. After taking into account depletion and
decommissioning charges of US$0.9 million (2004: US$1.2 million) the resulting
gross profit of US$0.02 million compares with US$0.86 million for 2004.
Following major cost reductions in the USA, Group administrative expense at
US$4.95 million is US$0.49 million lower than 2004, leaving a current period
operating loss of US$4.93 million (2004: US$4.49 million). After taking into
account net interest costs of US$49,000 (2004: US$19,000) the net loss for the
Group after tax for the twelve months ended 31 December 2005 amounts to US$4.98
million (2004: US$4.51 million).
Balance sheet capital expenditures for exploration and evaluation assets show an
increase during the period of US$1.34 million and comprise mainly the cost of
seismic surveys over the Nyuni and Ruvuma licences as well as geological studies
and data evaluation in North Korea. Capital expenditures relating to property,
plant and equipment during the period amounts to a net US$2.9 million. This
increase in cost includes the recognition of a provision of US$2.2 million
relating to future decommissioning costs on Aminex's producing assets together
with additions to US oil and gas properties of US$1.6 million, offset by the
current year charge for depletion and decommissioning of US$0.9 million. Both
accounts payable and accounts receivable period end balances show a significant
reduction from the 2004 period end balances as a consequence of the settlement
in early 2005 of a dispute with a joint venture partner regarding amounts owed
to the Nyuni joint venture.
The cash flow statement reflects a net cash inflow of US$8 million, primarily
from a share placing in July 2005. During the period, US$119,000 of new bank
debt was drawn down to finance the purchase of oilfield equipment for the
Somerset field and US$82,000 of existing debt was repaid. As at 31 December
2005, Aminex's cash balance amounted to US$3.9 million offset by negligible bank
debt of US$135,000.
OPERATIONS REVIEW
Tanzania
Tanzania was the Group's main focus of exploration activity in 2005. In
September East Coast Energy Ltd., which operates the adjacent Songo Songo
producing gas field farmed into part of the Nyuni licence, provisionally
designated Nyuni "A", with a commitment to shoot new seismic and an option to
participate in an exploration well through paying a disproportionate share of
the drilling cost. Aminex took advantage of a seismic vessel in the area also to
acquire new seismic data over the remaining part of Nyuni, designated Nyuni "B".
Since the year end a further farmout has been agreed for Nyuni "B" with
privately-owned East Africa Exploration Ltd. of Dubai, which will earn into the
licence by acquiring 2D and possibly 3D transition zone seismic over the many
reefs and small islands which overlay Nyuni's numerous leads and prospects. This
will complement the shallow marine 2D seismic data already acquired in 2005 with
a view to firming up drilling locations for 2007. At present the government of
Tanzania has not approved the division of Nyuni into "A" and "B" and in the
event that it does not do so, the parties will discuss other ways of meeting
their objectives for the Nyuni licence.
To the south, Aminex was awarded a PSA over the 12,000 sq km Ruvuma onshore/
near-shore area in October 2005 and acquired approximately 330 kms of new marine
2D seismic in November. Ruvuma is divided into two separate licences, Lindi and
Mtwara. Since the year end Aminex has farmed out 50% of both licences to Hardman
Resources Ltd. on the basis that Hardman will be responsible for the more
extensive onshore seismic during 2006. The objective of the Aminex/Hardman 50-50
joint venture is to define firm locations during the remainder of 2006 for a
drilling campaign in 2007. The geology of the Ruvuma basin lies partly in
Tanzania and partly in Mozambique and the Ruvuma River divides the two
countries. On the Mozambique side to the south a successful licensing round has
just closed and all blocks on offer were awarded, some to large international
companies offering major work commitments. Aminex looks forward to working with
Hardman in the exploration of the Tanzanian side of this very interesting
region.
Madagascar
Aminex and partner Mocoh Ltd., through a 50-50 new company "Amicoh Resources
Ltd.", were awarded the exploration rights to the 10,750 sq kilometre onshore
Block 3108, known as "Manja", on the west coast of the country in the Morandava
Basin, with similar geology to the Company's Tanzanian licences. In the past
several wells have been drilled on Manja, firstly by the Madagascar state oil
company and later by Chevron and Amoco, some of which had good oil and gas
shows. With the benefit of modern exploration technology and strong markets for
both gas and oil, Aminex believes this to be a prime area for exploration.
Gravity, aeromagnetic and seismic reprocessing work is ongoing and new seismic
will be acquired as soon as possible with a view to firming up a first well
location.
U.S.A.
Towards the end of 2004 Aminex disposed of its declining Vinton Field producing
properties in Louisiana and consequently reduced overall production revenues and
reserves. However this also enabled the company to make material reductions in
its US overhead and to avoid a number of imminent remedial and abandonment
liabilities. With a reduced overhead burden, Aminex is working on replacing the
lost revenues with new and more profitable production. Aminex's properties,
which are all onshore, now consist of South Weslaco, Alta Loma and Somerset in
Texas, together with the Shoats Creek Field in Louisiana. Two successful wells
were drilled on South Weslaco in the first half of 2005 but not put on
production until December since when they have been performing satisfactorily.
Gas production from Alta Loma has been shut in for several months because its
sole customer, BP's Texas City Refinery, has been out of action for some time
following a major explosion and fire in 2005. Lack of production from this
important gas well has had an adverse impact on our US revenues in 2005. The
Somerset Field consists of a large number of stripper wells and produces a
relatively heavy crude which is sold as "Texas sour". High oil prices have
greatly increased the netback of Texas sour and the field is being actively
produced. Simultaneously a programme of abandonment of old and idle wells has
been accelerated. Shoats Creek is located in swampy forest in Louisiana and
operating costs are high. When Aminex still owned the nearby and more
straightforward Vinton Field, most of its efforts were directed there. However,
with the Vinton Field sold and crude from Shoats Creek attracting a premium over
the price of marker crudes, Aminex has begun a programme of engineering studies
and well workovers with a view to exploiting the latent potential of Shoats
Creek. In 2005 one well was successfully worked over and put on stream and at
the time of writing there is a rig in the field carrying out further workovers.
North Korea
In North Korea, officially known as the Democratic Peoples Republic of Korea or
"DPRK") a PSA was signed in August 2005 covering all that country's prospective
basins for oil and gas exploration, onshore and offshore. This followed on from
an earlier "Petroleum Agreement" signed in 2004 giving Aminex exclusive rights
to the whole country in return for performing certain technical services which
have been diligently carried out. There is, however, one complicating issue in
the west which is the lack of a finally determined oil and gas boundary between
DPRK and the Peoples Republic of China. This is a sensitive issue given the
proximity of the Bohai Bay oilfields, the most significant reserves in China.
Although Aminex has been assured in writing by the DPRK that its agreements
remain fully valid, prudence nevertheless dictates that its first field work
will concentrate on the undisputed East Sea area, which it believes to be highly
prospective, and on selected onshore basins. At the time of writing Aminex is
expecting imminently to sign a new agreement for the East Sea which will allow
it to introduce partners and commence a seismic acquisition programme, both
regionally and over specific prospects.
Egypt
In November 2005 Aminex Petroleum Egypt Ltd. (formerly Red Sea Petroleum Ltd.)
in which Aminex has a 51% interest was awarded the rights to Block 2 in the West
Esh el Mellahah concession on the Red Sea coast of Egypt close to important oil
production. Other shareholders are First Energy Ltd., Sinopex and FS
International Corporation. Sinopex is an Egyptian company which will support the
project with technical and administrative services. Formal presidential approval
of the licence is expected in the near future and exploration will begin during
2006.
Kenya
In March 2006 Aminex joined Upstream Petroleum Services Ltd. ("UPSL") and SomKen
Ltd. in a Technical Evaluation Agreement ("TEA") covering approximately 5,000 sq
kms offshore Kenya. This area comprises the near-shore parts of Kenya Blocks L9
and L10, the remainder of which are either licensed to other companies or under
negotiation for new licences. UPSL is a seismic operator and sister company of
East Africa Exploration Ltd., Aminex's farm-out partner in the Tanzanian Nyuni B
licence. Aminex has 25% of this TEA over which new seismic data has recently
been acquired. Further seismic, together with seabed coring as part of a
geochemical testing programme, is planned to be carried out in summer 2006 with
a view to applying for a full PSA and defining a drilling location.
BOARD CHANGES
Peter Elwes intends to relinquish the chairmanship of the Company at the AGM in
June and retire from the Board at that time. He has served as chairman for just
over ten years during a period of great change. Derek Tughan, at present Senior
Non-Executive Director, has agreed to serve as Chairman.
In early 2006 Michael Rego and Andrew Windham were invited to join the Company's
board, as executive director and non-executive director respectively. Their
names are being put forward for election at the AGM in June. Mr. Rego is a
Petroleum Geologist who has been with the Company since 1998, working initially
in Russia before becoming Group Exploration Manager in 2002. Mr. Windham is a
solicitor who has spent most of his career in the oil industry. He has served as
an executive director of Clyde Petroleum PLC and Energy Africa Ltd.
STRATEGY & PROSPECTS
Aminex's strategy is to acquire first class exploration prospects in relatively
new and under-explored areas, thereby gaining first mover advantage, introducing
industry partners where appropriate. The Company has greatly expanded its
portfolio during the last year. For an experienced company such as Aminex with a
good portfolio of exploration assets there is unprecedented scope for growth in
a market which has a strong appetite for exploration and new sources of
hydrocarbons.
27 April 2006
Group Income Statement
for the year ended 31 December 2005
2005 2004
Notes US$'000 US$'000
Revenue 2 3,000 5,384
Cost of sales (2,038) (3,182)
Unsuccessful exploration efforts - (103)
Depletion, depreciation and decommissioning (941) (1,239)
_______ _______
Gross profit 21 860
Administrative expenses (4,951) (5,436)
Profit on disposal of oil and gas properties - 618
Purchaser's share of Vinton Dome profit - (532)
_______ _______
Loss on operations (4,930) (4,490)
Financing income 3 123 15
Financing costs 4 (172) (34)
_______ _______
Loss before tax (4,979) (4,509)
Income tax expense - -
_______ _______
Net loss for the financial year 2 (4,979) (4,509)
_______ _______
Basic and diluted loss per Ordinary Share (in US 5 (3.85) (4.85)
cents)
Group Statement of Recognised Income and Expense
for the year ended 31 December 2005
2005 2004
US$'000 US$'000
Currency translation differences (18) (57)
______ ______
Net loss recognised directly in equity (18) (57)
Loss for the financial year (4,979) (4,509)
______ ______
Total recognised income and expense for the (4,997) (4,566)
year
______ ______
Attributable to the equity holders of the (4,997) (4,566)
Parent Company
______ ______
Group Balance Sheet
at 31 December 2005
2005 2004
Notes US$'000 US$'000
Assets
Exploration and evaluation assets 15,649 14,310
Property, plant and equipment 8,368 5,443
Other investments 418 -
______ ______
Total non current assets 24,435 19,753
______ ______
Trade and other receivables 1,179 6,102
Cash and cash equivalents 3,884 767
______ ______
Total current assets 5,063 6,869
______ ______
Total assets 29,498 26,622
______ ______
Equity
Issued capital 6 11,057 6,777
Share premium 6 40,289 36,222
Capital conversion reserve fund 234 234
Foreign currency reserve (75) (57)
Retained earnings (26,416) (21,437)
______ ______
Total equity 25,089 21,739
______ ______
Liabilities
Interest bearing loans and borrowings 93 51
Abandonment and site restoration provision 2,328 -
______ ______
Total non current liabilities 2,421 51
______ ______
Interest bearing loans and borrowings 42 47
Trade and other payables 1,946 4,785
______ ______
Total current liabilities 1,988 4,832
______ ______
Total liabilities 4,409 4,883
______ ______
Total equity and liabilities 29,498 26,622
Group Statement of Cashflows
for the year ended 31 December 2005
2005 2004
US$'000 US$'000
Operating activities
Loss for the financial year (4,979) (4,509)
Depletion, depreciation 997 1,289
and decommissioning
Unsuccessful exploration - 103
efforts
Foreign exchange losses (9) (68)
Financing income (123) (15)
Financing costs 172 34
Gain on disposal of oil - (618)
and gas properties
Loss/(gain) on sale of 15 (121)
plant and equipment
Loss on sale of other - 184
investments
Equity-settled 26 238
share-based payment charge
Decrease in trade and 4,923 -
other receivables
(Decrease)/increase in (3,149) 707
trade and other payables
______ ______
Net cash absorbed by (2,127) (2,776)
operations
Interest paid (15) (34)
Tax paid - -
______ ______
Net cash outflows from (2,142) (2,810)
operating activities
Investing activities
Acquisition of property, (1,379) (159)
plant and equipment
Expenditure on (1,429) (5,522)
exploration and
evaluation assets
Acquisition of investment (44) -
assets
Proceeds from sale of 37 5,276
property, plant and
equipment
Proceeds from sale of - 2,687
investments
Interest received 90 15
______ ______
Net cash (outflows)/ (2,725) 2,297
inflows from investing
activities
Financing activities
Proceeds from the issue 8,698 1,265
of share capital
Payment of transaction (751) (34)
costs
Loans repaid (82) (145)
Loans received 119 23
______ ______
Net cash inflows from 7,984 1,109
financing activities
______ ______
Net increase in cash and 3,117 596
cash equivalents
Cash and cash equivalents 767 171
at 1 January
______ ______
Cash and cash equivalents 3,884 767
at 31 December
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices
Aminex PLC (the "Company") is a company domiciled and incorporated in Ireland.
The Group financial statements for the year ended 31 December 2005 consolidate
the individual financial statements of the Company and its subsidiaries
(together referred to as "the Group").
Basis of preparation
The Group and Company financial statements (together the "financial statements")
have been prepared in accordance with International Financial Reporting
Standards (IFRS) that are adopted by the European Union (EU) that are effective
at 31 December 2005. These are our first Group Financial Statements prepared in
accordance with IFRS as adopted by the EU ("EU IFRS") and comparative
information, which was previously presented in accordance with Irish generally
accepted accounting principles (Irish GAAP) for the year ended 31 December 2004
has been restated under EU IFRS, with the exception of IAS 32 and 39 which were
adopted with effect from 1 January 2005.
An explanation of the effect of the transition to EU IFRS is provided in Note 7.
Where estimates had been made under Irish GAAP, consistent estimates (after
adjustments to reflect any difference in accounting policies) have been made on
transition to EU IFRS. Judgements affecting the balance sheets of the Company
and Group have not been revisited with the benefit of hindsight. The Group and
Company have taken advantage of the following exemptions as permitted under IFRS
1:
• IAS 21 requires that on disposal of a foreign operation, the cumulative amount
of currency translation differences previously recognised directly in reserves
for that operation be transferred to the income statement as part of the profit
or loss on disposal. Aminex PLC has deemed the cumulative currency translation
differences applicable to foreign operations to be zero as at the transition
date. The cumulative currency translation differences arising before the
transition date have been reclassified as part of retained earnings.
• In accordance with the exemption allowed on transition, the fair value
calculations in respect of share based payments under IFRS-2 "Share Based
Payment", have only been applied in respect of share options granted after 7
November 2002.
The financial statements are presented in US dollars, rounded to the nearest
thousand ($'000) except when otherwise indicated. The financial statements are
prepared on a historical cost basis except for the measurement at fair value of
share options. The preparation of financial statements requires management to
use judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets, liabilities, income and expenses.
Actual results may differ from those estimates.
The preparation of the financial statements under EU IFRS has resulted in
changes to the accounting policies from the most recent annual financial
statements prepared under Irish GAAP.
The accounting policies set out below have been applied consistently to all
periods presented in these financial statements and in preparing an opening EU
IFRS balance sheet at 1 January 2004 for the purposes of the transition to EU
IFRS.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Statement of compliance
The Group financial statements have been prepared and approved by the directors
in accordance with International Financial Reporting Standards as adopted by the
EU ("EU IFRSs"). The individual financial statements of the Company ("Company
financial statements") have been prepared and approved by the directors in
accordance with EU IFRSs and as applied in accordance with Companies Acts 1963
to 2005 which permits a company that publishes its company and group financial
statements together, to take advantage of the exemption in Section 148(8) of the
Companies Act 1963 from presenting to its members its company income statement
and related notes that form part of the approved company financial statements.
The IFRSs adopted by the EU applied by the Company and Group in the preparation
of these financial statements are those that were effective at 31 December 2005
together with the early adoption of IFRS 6 "Exploration for and Evaluation of
Mineral Resources". The following relevant IFRSs adopted by the EU which are not
yet effective and have therefore not been early adopted in these financial
statements are not expected to have a material impact on our financial position
or income statement on adoption:
• Amendment to IAS 1 - "Capital disclosures" (effective 1 January 2007)
• Amendment to IAS 39 - "The Fair Value Option" (effective 1 January 2006)
• Amendments to IAS 39 -"Cash Flow Hedge Accounting of Forecast Intragroup
Transactions" (effective 1 January 2006)
• Amendments to IAS 39 and IFRS 4: "Financial Guarantee Contracts" (effective 1
January 2006)
• IFRS 7 - "Financial Instruments: Disclosures" (effective 1 January 2007)
• IFRIC 4 - "Determining Whether an Arrangement Contains a Lease" (effective 1
January 2006)
Basis of consolidation
The Group financial statements consolidate the financial statements of Aminex
PLC and its subsidiaries. Subsidiaries are consolidated from the date on which
control is transferred to the Group and cease to be consolidated from the date
on which effective control is transferred out of the Group. Control exists when
the company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain economic benefits from its
activities. Financial statements of subsidiaries are prepared for the same
reporting year as the parent company.
The Group will continue to prepare the statutory individual financial statements
of subsidiary companies under the GAAP applicable in their country of
incorporation but adjustments have been made to the results and financial
position of such companies to bring their accounting policies into line with
those of the Group.
All inter-company balances and transactions, including unrealised profits
arising from inter-group transactions, have been eliminated in full. Unrealised
losses are eliminated in the same manner as unrealised gains except to the
extent that there is evidence of impairment.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group, that it can be reliably measured, that
performance has occurred under a service contract and that the significant risks
and rewards of ownership of the goods have passed to the buyer. Revenue
comprises the invoiced value of goods and services supplied by the Group and
excludes inter-company sales, trade discounts and value added tax. Services are
invoiced as they are performed and goods are invoiced when supplied.
Royalties
Royalties are charged to the income statement in the period in which the related
production is accounted for.
Employee benefits
(a) Pensions and other post-employment benefits
The Group contributes towards the cost of certain individual employee pension
plans. Annual contributions are based upon a percentage of gross annual salary.
Pension contributions are recognised as an expense in the income statement on an
accruals basis.
(b) Share-based payment
For equity-settled share-based payment transactions (i.e. the issuance of share
options), the Group measures the services received and the corresponding
increase in equity at fair value at the measurement date (which is the grant
date) using a recognised valuation methodology for the pricing of financial
instruments (i.e. the binomial model). Given the share options granted do not
vest until the completion of a specified period of service, the fair value
assessed at the grant date is recognised in the income statement over the
vesting period as the services are rendered by employees. For options granted to
Directors, there is no vesting period and the fair value is recognised in the
income statement at the date of the grant.
The share options issued by the Company are not subject to market-based vesting
conditions as defined in IFRS 2. Non-market vesting conditions are not taken
into account when estimating the fair value of share options as at the grant
date; such conditions are taken into account through adjusting the number of
equity instruments included in the measurement of the transaction amount so
that, ultimately, the amount recognised equates to the number of equity
instruments that actually vest. The expense in the income statement in relation
to share options represents the product of the total number of options
anticipated to vest and the fair value of these options. This amount is
allocated to accounting periods on a straight-line basis over the vesting
period. Given that the performance conditions underlying the Company's share
options are service-related and non-market in nature, the cumulative charge to
the income statement is reversed only where an employee in receipt of share
options leaves the company prior to completion of the service period. The
proceeds received by the Company on the exercise of share entitlements are
credited to share capital and share premium.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
In line with the transitional provisions applicable to a first-time adopter of
International Financial Reporting Standards, as contained in IFRS 2 "Share-based
Payment", the Group has elected to implement the measurement requirements of the
IFRS in respect of share options that were granted after 7 November 2002 that
had not vested as at the effective date of the standard (1 January 2005). In
accordance with the standard, the disclosure requirements of IFRS 2 have been
applied in relation to all outstanding share-based payments regardless of their
grant date.
The Group does not operate any cash-settled share-based payment schemes or
share-based payment transactions with cash alternatives as defined in IFRS 2.
Financing costs
Financing costs comprise interest payable on borrowings calculated using the
effective interest rate method, interest receivable on funds invested, the
imputed interest on the fair value of the abandonment and site restoration
provision and applicable foreign exchange gains and losses. The interest expense
component of finance lease payments is recognised in the income statement using
the effective interest rate method.
Financing income
Interest income is recognised in the income statement as it accrues, using the
effective interest method.
Leases
Finance leases, which transfer to the Group substantially all the risks and
benefits of ownership of the leased asset, are capitalised at the inception of
the lease at the fair value of the leased asset or if lower the present value of
the minimum lease payments. The corresponding liability to the lessor is
included in the balance sheet as a finance lease obligation. Lease payments are
apportioned between the finance charges and reduction of the lease obligation so
as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are charged to the income statement as part of
finance costs.
Capitalised leased assets are depreciated over the shorter of the estimated
useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and benefits of
ownership of the assets are classified as operating leases. Operating lease
payments are recognised as an expense in the income statement on a straight line
basis over the lease term.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Tax
The tax expense in the income statement represents the sum of the tax currently
payable and deferred tax.
Tax currently payable is based on 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 not taxable or deductible. The Group's liability
for current tax is calculated using rates that have been enacted or
substantially enacted at the balance sheet date.
Tax is recognised in the income statement except to the extent that it relates
to items recognised directly in equity.
Deferred income tax is provided, using the liability method, on all differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes except those arising from
non-deductible goodwill or on initial recognition of an asset or liability which
affects neither accounting nor taxable profit. Deferred tax assets and
liabilities are measured at the tax rates that are expected to apply in the year
when the asset is expected to be realised or the liability to be settled.
Deferred tax assets are recognised for all deductible differences, carry forward
of unused tax credits and unused tax losses, to the extent that it is probable
that taxable profit will be available against which the deductible temporary
differences and the carry forward of unused tax credits and unused tax losses
can be utilised.
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 profit would be available to allow all or part of the deferred tax asset
to be utilised.
Earnings per ordinary share
Basic earnings per share is computed by dividing the net profit for the
financial period attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue that ranked for dividend during the financial
period.
Diluted earnings per share is computed by dividing the profit for the financial
period attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue after adjusting for the effects of all potential
dilutive ordinary shares that were outstanding during the financial period.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Foreign currency translation
The presentation currency of the Group and the functional currency of Aminex PLC
is the US dollar (US$). Transactions in foreign currencies are recorded at the
rate of exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated into the
functional currency at the rate of exchange at the balance sheet date. All
translation differences are taken to the income statement with the exception of
differences on foreign currency borrowings that provide a hedge against a net
investment in a foreign operation. These are taken directly to equity together
with the exchange difference on the net investment in the foreign operation.
Results and cash flows of non-dollar subsidiary undertakings are translated into
dollars at average exchange rates for the year and the related balance sheets
are translated at the rates of exchange ruling at the balance sheet date.
Adjustments arising on translation of the results of non--dollar subsidiary
undertakings at average rates, and on the restatement of the opening net assets
at closing rates, are dealt with in a separate translation reserve within
equity, net of differences on related currency borrowings. All other translation
differences are taken to the income statement.
The principal exchange rates used for the translation of results, cash flows and
balance sheets into US dollars were as follows:
Average Year-end
US$ 1 equals 2005 2004 2005 2004
Pound sterling 0.5492 0.5456 0.5811 0.5190
Australian dollar 0.7620 0.7354 0.7298 0.7796
On disposal of a foreign entity, accumulated currency translation differences
are recognised in the income statement as part of the overall gain or loss on
disposal; the cumulative currency translation differences arising prior to the
transition date have been set to zero for the purposes of ascertaining the gain
or loss on disposal of a foreign operation subsequent to 1 January 2004.
Goodwill and fair value adjustments arising on acquisition of a foreign
operation are regarded as assets and liabilities of the foreign operation, are
expressed in the functional currency of the foreign operation and are recorded
at the exchange rate at the date of the transaction and subsequently
retranslated at the applicable closing rates.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Exploration and evaluation assets and property plant and equipment - developed
and producing assets
Subsequent to the publication of the Group's transition statement incorporated
in the interim results publication for the six months to 30 June 2005 the Group
made the decision to early adopt IFRS 6. In light of the content of IFRS 6, the
Group has also decided to change its accounting policy for oil and gas assets
from the full cost method to the successful efforts method.
Exploration and evaluation assets
Expenditure incurred prior to obtaining the legal rights to explore an area is
written off to the Income Statement. Expenditures incurred on the acquisition of
a licence interest are initially capitalised on a licence by licence basis.
Exploration and evaluation expenditure incurred in the process of determining
exploration targets on each licence is also capitalised. These expenditures are
held undepleted within the exploration licence asset until such time as the
exploration phase on the licence area is complete or commercial reserves have
been discovered.
Exploration and evaluation drilling costs are capitalised on a well by well
basis within each licence until the success or otherwise of the well has been
established. Unless further evaluation expenditures in the area of the well have
been planned and agreed or unless the drilling results indicate that hydrocarbon
reserves exist and there is a reasonable prospect that these reserves are
commercial, drilling costs are written off on completion of a well.
Property, plant and equipment - developed and producing oil and gas assets
Following appraisal of successful exploration wells and the establishment of
commercial reserves, the related capitalised exploration and evaluation
expenditures are transferred into a single field cost centre within developed
and producing properties after testing for impairment. Where results of
exploration drilling indicate the presence of hydrocarbons which are ultimately
not considered commercially viable, all related expenditures are written off to
the income statement.
Subsequent expenditure is capitalised only where it either enhances the economic
benefits of the developed and producing properties or replaces part of the
existing developed and producing properties. Any costs associated with the part
replaced are expensed to the income statement. Interest on borrowings for
development projects is capitalised by field up to the time of revenue
generation.
Disposal of exploration and evaluation assets and developed and producing oil
and gas assets
The net proceeds from any disposal of an exploration asset are initially
credited against the previously capitalised costs. Any surplus proceeds are
credited to the income statement. The net proceeds from any disposal of
developed and producing properties are compared with the previously capitalised
cost on a field by field basis. A gain or loss on disposal of the developed and
producing properties is recognised in the income statement to the extent that
the net proceeds exceed or are less than the appropriate portion of the net
capitalised costs of the assets.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Depletion
The Group depletes expenditure on developed and producing properties on a unit
of production basis, based on proved and probable reserves on a field by field
basis. In certain circumstances, fields within a single development may be
combined for depletion purposes.
Capitalised costs, together with anticipated future development costs calculated
at price levels ruling at the balance sheet date, are amortised on a unit of
production basis. Amortisation is calculated by reference to the proportion that
production for the period bears to the total of the estimated remaining
commercial reserves as at the beginning of the period. Changes in reserves
quantities and cost estimates are recognised prospectively.
Impairment
Exploration and evaluation assets are reviewed regularly for indicators of
impairment and costs are written off where circumstances indicate that the
carrying value might not be recoverable. In such circumstances, the exploration
and evaluation asset is allocated to developed and producing properties within
the same geographical segment and tested for impairment. Any such impairment
arising is recognised in the income statement for the period. Where there are no
developed and producing properties, the impaired costs of exploration and
evaluation are charged immediately to the income statement.
Impairment reviews on developed and producing properties are carried out on each
cash-generating unit identified in accordance with IAS 36 "Impairment of
Assets". The Group's cash-generating units are those assets which generate
largely independent cash flows and are normally, but not always, single
development areas or fields.
Where there has been a charge for impairment in an earlier period, that charge
will be reversed in a later period where there has been a change in
circumstances to the extent that the discounted future net cash flows are higher
than the net book value at the time. In reversing impairment losses, the
carrying amount of the asset will be increased to the lower of its original
carrying value or the carrying value that would have been determined (net of
depletion) had no impairment loss been recognised in prior periods.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Decommissioning costs
Provision is made for the decommissioning of oil and gas wells and other
oilfield facilities. The cost of decommissioning is determined through
discounting the amounts expected to be payable to their present value at the
date the provision is recorded and is reassessed at each balance sheet date.
This amount is included within developed and producing assets by field and the
liability is included in provisions. Such cost is depleted over the life of the
field on a unit of production basis and charged to the income statement. The
unwinding of the discount is reflected as a finance cost in the income statement
over the remaining life of the well.
Other Property, Plant and Equipment
Other property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses.
Depreciation is calculated to write off the original cost of property, plant and
equipment less its estimated residual value over its expected useful lives on a
straight line basis.
The estimated useful lives applied in determining the charge to depreciation are
as follows:
Leasehold property 2% - 4%
Plant and equipment 20% - 33.3%
Motor vehicles 25%
The useful lives and residual values are reassessed annually.
On disposal of property, plant and equipment the cost and related accumulated
depreciation and impairments are removed from the financial statements and the
net amount less any proceeds is taken to the income statement.
The carrying amounts of the Group's property, plant and equipment are reviewed
at each balance sheet date to determine whether there is any indication of
impairment. An impairment loss is recognised whenever the carrying amount of an
asset or its cash generation unit exceeds its recoverable amount. Impairment
losses are recognised in the income statement.
Subsequent costs are included in an asset's carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
replaced item can be measured reliably. All other repair and maintenance costs
are charged to the income statement during the financial period in which they
are incurred.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Business combinations
The purchase method of accounting is employed in accounting for the acquisition
of subsidiaries by the Group. The Group has availed itself of the exemption
under IFRS 1, "First-time Adoption of International Financial Reporting
Standards", whereby business combinations prior to the transition date of 1
January 2004 are not restated. IFRS 3, "Business Combinations", has been applied
with effect from the transition date of 1 January 2004 and goodwill amortisation
ceased from that date.
The costs of a business combination are measured as the aggregate of the fair
value at the date of exchange of assets given, liabilities incurred or assumed
and equity instruments issued in exchange for control together with any directly
attributable costs. Deferred expenditure arising on business combinations is
determined through discounting the amounts payable to their present value at the
date of exchange. The discount element is reflected as an interest charge in the
income statement over the life of the deferred payment. In the case of a
business combination the assets and liabilities are measured at their
provisional fair values at the date of acquisition. Adjustments to provisional
values allocated to assets and liabilities are made within twelve months of the
acquisition date and reflected as a restatement of the acquisition balance
sheet.
Joint Ventures - jointly controlled operations
Jointly controlled operations are those activities over which the Group
exercises joint control with other participants, established by contractual
agreement. The Group recognises, in respect of its interests in jointly
controlled operations, the assets that it controls, the liabilities that it
incurs, the expenses that it incurs and its share of the income that it earns
from the sale of goods or services by the joint venture.
Goodwill
Goodwill written off to reserves under Irish GAAP prior to 1998 has not been
reinstated and will not be included in determining any subsequent profit or loss
on disposal.
Goodwill on acquisitions is initially measured at cost, being the excess of the
cost of the business combination over the acquirer's interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses. Goodwill relating to acquisitions from 1 January 2004 and the
deemed cost of goodwill carried in the balance sheet at 1 January 2004 is not
amortised. Goodwill is reviewed for impairment annually or more frequently if
events or changes in circumstances indicate that the carrying value may be
impaired.
As at the acquisition date, any goodwill acquired is allocated to each of the
cash-generating units expected to benefit from the combination's synergies.
Impairment is determined by assessing the recoverable amount of the
cash-generating unit to which the goodwill relates.
Notes to the Financial Information
for the year ended 31 December 2005
1 Statement of Accounting Polices (continued)
Where goodwill forms part of a cash-generating unit and part of the operation
within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining
the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured on the basis of the relative values of the operation
disposed of and the proportion of the cash-generating unit retained.
Financial assets
Investments in subsidiary undertakings are stated at cost less provision for
impairment in the Company's balance sheet.
Investments in companies are stated at fair value. The fair value of investments
is their quoted market price at the balance sheet date. When market values for
investments are not readily available, investments are held at cost. Investments
are assessed for potential impairment at each balance sheet date. If any such
evidence exists, an impairment loss is recognised in the income statement.
Cash and cash equivalents
Cash and short term deposits in the balance sheet comprise cash at bank and in
hand and short term deposits with an original maturity of three months or less.
Bank overdrafts that are repayable on demand and form part of the Group's cash
management are included as a component of cash and cash equivalents for the
purposes of the statement of cashflows.
Trade and other receivables
Trade receivables, which generally have 30 to 90 day terms, are recognised and
carried at original invoice amount less an allowance for any potential shortfall
in receipt. An estimate of any shortfall in receipt is made when there is
objective evidence that a loss has been incurred. Bad debts are written off when
identified.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event and it is probable
that an outflow of economic benefits would be required to settle the obligation.
If the effect of the time value of money is material, provisions are determined
by discounting the expected future cash flows at a pre-tax rate that reflects
the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those other segments.
The Group has identified the geographical segments as the primary segments and
the business segments as the secondary segments.
Notes to the Financial Information
for the year ended 31 December 2005
2 Segmental Information
The Group's primary reporting format is geographical segments, being the USA,
Africa, Asia and Europe. The Group's other operations by geographical segment do
not currently represent 10% or more of the Group's revenue or assets and have
therefore not been separately disclosed. The Group's secondary reporting format
is by business segment, being exploration and evaluation, producing oil and gas
properties and the provision of oilfield goods and services.
The Group's revenues and profits arise from oil and gas production in the USA
and the provision of oilfield equipment and services included in the Europe
segment.
Inter-segment revenue is not material and has therefore not been disclosed
separately below.
Segment results, assets and liabilities include items directly attributable to
each segment as well as items that can be allocated on a reasonable basis.
Segment capital expenditure is the total amount of expenditure incurred during
the period to acquire segment assets that are expected to be used for more than
one period.
Segment revenue/segment result
Continuing Producing Exploration Provision of
operations Oil and gas and oilfield goods
properties evaluation and services
USA ROW Europe Total
2005 2004 2005 2004 2005 2004 2005 2004
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
America 1,833 4,048 - - 122 11 1,955 4,059
Africa - - - - 108 641 108 641
Asia - - - - 557 587 557 587
Europe - - - - 380 97 380 97
Revenue 1,833 4,048 - - 1,167 1,336 3,000 5,384
Group net loss
or the period (1,454) (903) (564) (479) (2,961) (3,127) (4,979) (4,509)
Segment assets 8,652 6,487 15,603 19,244 5,243 891 29,498 26,622
Segment (3,627) (941) (38) (2,949) (744) (993) (4,409) (4,883)
liabilities
Capital 1,722 159 940 4,533 427 - 3,089 4,692
expenditure
Depletion and
decommissioning
charge 906 1,145 - - - - 906 1,145
Unsuccessful
exploration
efforts - 103 - - - - - 103
Depreciation 35 94 - - 56 50 91 144
3 Financing income
2005 2004
US$'000 US$'000
Deposit interest income 123 2
Interest receivable from associate - 13
_____ _____
123 15
_____ _____
4 Financing costs
2005 2004
US$'000 US$'000
Bank loans and overdraft interest 11 28
Other finance charges 4 6
Other finance costs - unwinding of discount 157 -
_____ _____
172 34
_____ _____
5 Loss per Ordinary Share
The basic net loss per Ordinary Share is calculated using a numerator of the net
loss for the financial year and a denominator of the weighted average number of
Ordinary Shares in issue for the financial year. The diluted net loss per
Ordinary Share is calculated using a numerator of the net loss for the financial
year and a denominator of the weighted average number of Ordinary Shares
outstanding and adjusting for the effect of all potentially dilutive shares,
including share options, assuming that they had been converted.
The calculations for the basic net loss per share for the years ended 31
December 2005 and 2004 are as follows:
2005 2004
Net loss for the financial year (US$'000) (4,979) (4,509)
_____ _____
Weighted average number of Ordinary Shares ('000) 129,434 93,015
_____ _____
Basic loss per Ordinary Share (US cents) (3.85) (4.85)
There is no difference between the net loss per Ordinary Share and the diluted
net loss per Ordinary Share for the years 31 December 2005 and 2004 as all
potentially dilutive Ordinary Shares outstanding are anti-dilutive. There were
6,806,000 anti-dilutive share options in issue as 31 December 2005.
6 Issued capital
Number Value €
Authorised
Equity shares - Ordinary Shares of €0.06 each:
At 31 December 2005 289,630,632 17,377,838
___________ __________
At 31 December 2004 189,630,632 11,377,838
___________ __________
At an Extraordinary General Meeting held on 27 June 2005, shareholders approved
the increase in the authorised share capital of Aminex PLC from €11,377,837.92
to €17,377,837.92 by the creation of 100,000,000 new Ordinary Shares of €0.06
each ranking equally in all respects with the existing Ordinary Shares of €0.06
each in the capital of the Company.
Number US$
Allotted called up and fully paid
Ordinary Shares of €0.06 each:
At 1 January 2005 99,060,402 6,776,668
Issued during year 58,556,612 4,280,598
___________ __________
At 31 December 2005 157,617,014 11,057,266
The increase in the issued Ordinary Share capital of the Company and the share
premium during the year related to the following:
Price Issued Share
Stg Number capital premium Total
pence
Details Date of issue per US$'000 US$'000 US$'000
share
Investment in
Kobril Limited:
First instalment 5 January 2005 12 833,333 67 98 165
Second instalment 12 September 15.75 634,920 47 126 173
2005
Placing and open 28 June 2005 8.7 56,988,359 4,159 3,794 7,953
offer
Exercise of 1 December 2005 17.5 100,000 7 23 30
options
__________ ____ _____ _____
At 31 December 58,556,612 4,280 4,041 8,321
2005
The amounts shown under share premium are net of issue expenses.
7 Summary of transition to EU IFRS
See Appendix 1.
8 2005 Reports and Accounts
The 2005 Report and Accounts will be posted to shareholders shortly.
9 Statutory information
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2005 within the meaning of the
Companies (Amendment) Act, 1986. The statutory accounts will be finalised on the
basis of the financial information presented by the Directors in the preliminary
announcement and together with the independent auditor's report thereon will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
APPENDIX 1
Summary of transition to EU IFRS
As stated in the Accounting Policies, Aminex has prepared the 2005 Annual Report
comprising the Group and Parent Company financial statements in accordance with
EU IFRS. The Accounting Policies as set out on in Note 1 have been applied in
preparing the financial statements for the year ended 31 December 2004 and in
the preparation of the opening EU IFRS balance sheet at the transition date of 1
January 2004.
In preparing the opening balance sheet dated 1 January 2004, amounts previously
reported in the financial statements prepared in accordance with Irish GAAP have
been adjusted. The following reconciliations and explanations provide
information on the impact of the transition to EU IFRS on the reported financial
position, financial performance and cash flows for the year ended 31 December
2004.
In addition to the adjustments detailed in the Aminex unaudited interim
financial statements for the period ended 30 June 2005 prepared under EU IFRS
and published on 28 September 2005, Aminex has subsequently adopted the
successful efforts method of accounting for its exploration, developed and
producing oil and gas properties, as further explained below. As a consequence
of adopting successful efforts accounting, the net loss for the year ended 31
December 2004 has been increased by US$4,509,000 arising from a higher depletion
charge based on the restated cost of producing oil and gas assets and the
writing off of unsuccessful exploration costs.
Reconciliations
The effects of the transition to EU IFRS are shown in the following
reconciliations:
(i) Group Balance Sheet at 31 December 2003;
(ii) Group Income Statement for the year ended 31 December 2004; and
(iii) Group Balance Sheet at 31 December 2004;
Group Balance Sheet
At 31 December 2003
Reconciliation from Irish GAAP to EU IFRS
Depletion Foreign
Unsuccessful and decom- Currency
Irish exploration missioning Conversion EU IFRS
GAAP costs adjustments Reserve 2003
2003 b c d
Notes on reconciling items US$'000 US$'000 US$'000 US$'000 US$'000
Assets
Exploration and evaluation 11,068 - - - 11,068
assets
Property, plant and 12,834 (1,885) (1,038) - 9,911
equipment
Other investments 868 - - - 868
______ ______ _____ ______ ______
Total non current assets 24,770 (1,885) (1,038) - 21,847
______ ______ _____ ______ ______
Investment held for resale 2,003 - - - 2,003
Trade and other 6,102 - - - 6,102
receivables
Cash and cash equivalents 346 - - - 346
______ ______ _____ ______ ______
Total current assets 8,451 - - - 8,451
______ ______ _____ ______ ______
Total assets 33,221 (1,885) (1,038) - 30,298
______ ______ _____ ______ ______
Equity
Issued capital 6,172 - - - 6,172
Share premium 35,258 - - - 35,258
Capital conversion reserve 234 - - - 234
fund
Foreign currency reserve 316 - - (316) -
Retained earnings (14,321) (1,885) (1,038) 316 (16,928)
______ ______ _____ ______ ______
Total equity 27,659 (1,885) (1,038) - 24,736
______ ______ _____ ______ ______
Liabilities
Interest bearing loans and 88 - - - 88
borrowings
Abandonment and site - - - - -
restoration provision
______ ______ _____ ______ ______
Total non current 88 - - - 88
liabilities
Bank overdraft 175 - - - 175
Interest bearing loans and 132 - - - 132
borrowings
Trade and other payables 5,167 - - - 5,167
______ ______ _____ ______ ______
Total current liabilities 5,474 - - - 5,474
______ ______ _____ ______ ______
Total liabilities 5,562 - - - 5,562
______ ______ _____ ______ ______
Total equity and 33,221 (1,885) (1,038) - 30,298
liabilities
Group Income Statement
for the year ended 31 December 2004
Reconciliation from Irish GAAP to EU IFRS
Depletion
Irish Unsuccessful and decom- Disposal Share
GAAP exploration missioning of based Other EU IFRS
2004 costs adjustments assets payment adjustments 2004
Notes on reconciling items b c e f g
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 5,384 - - - - - 5,384
Cost of sales (3,182) - - - - - (3,182)
Unsuccessful exploration - (103) - - - - (103)
efforts
Depletion and (777) - (462) - - - (1,239)
decommissioning
______ ______ _____ ______ ______ ______ ______
Gross profit 1,425 (103) (462) - - - 860
Administrative expenses (5,094) - - - (161) (181) (5,436)
Profit on disposal of oil - - - 618 - - 618
and gas properties
Purchaser's share of (532) - - - - - (532)
Vinton Dome profit
Exceptional items:
Loss on disposal of fixed (46) - - - - 46 -
assets
Loss on disposal of listed (184) - - - - 184 -
investment
______ ______ _____ ______ ______ ______ ______
Loss on operations (4,431) (103) (462) 618 (161) 49 (4,490)
Financing income 64 - - - - (49) 15
Financing costs (34) - - - - - (34)
______ ______ _____ ______ ______ ______ ______
Loss before tax (4,401) (103) (462) 618 (161) - (4,509)
Income tax expense - - - - - - -
______ ______ _____ ______ ______ ______ ______
Net loss for the financial (4,401) (103) (462) 618 (161) - (4,509)
year
______ ______ _____ ______ ______ ______ ______
Group Statement of Recognised Income and Expense
for the year ended 31 December 2004
Reconciliation from Irish GAAP to EU IFRS
Depletion
Irish Unsuccessful and Share EU IFRS
GAAP exploration decommissioning Disposal based 2004
2004 costs adjustments assets payment
Notes on reconciling b c e f
items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Currency translation (57) - - - - (57)
differences
______ ______ _____ ______ ______ ______
Net loss recognised (57) - - - - (57)
directly in equity
Loss for the financial (4,401) (103) (462) 618 (161) (4,509)
year
______ ______ _____ ______ ______ ______
Total recognised income (4,458) (103) (462) 618 (161) (4,566)
and expense for the
year
Attributable to the (4,458) (103) (462) 618 (161) (4,566)
equity holders of the
Parent Company
Group Balance Sheet
at 31 December 2004
Reconciliation from Irish GAAP to EU IFRS
Depletion Disposal Foreign
Irish Unsuccessful and of oil Share Currency EU
GAAP exploration decommissioning and gas based Conversion IFRS
2004 costs adjustments properties payments Reserve 2004
Notes on b c e f d
reconciling US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
items
Assets
Exploration 14,310 - - - - - 14,310
and evaluation
assets
Property, 8,313 (2,266) (1,119) 515 - - 5,443
plant and
equipment
______ ______ _____ ______ ______ ______ ______
Total non 22,623 (2,266) (1,119) 515 - - 19,753
current assets
______ ______ _____ ______ ______ ______ ______
Trade and 6,102 - - - - - 6,102
other
receivables
Cash and cash 767 - - - - - 767
equivalents
______ ______ _____ ______ ______ ______ ______
Total current 6,869 - - - - - 6,869
assets
Total assets 29,492 (2,266) (1,119) 515 - - 26,622
______ ______ _____ ______ ______ ______ ______
Equity
Issued capital 6,777 - - - - - 6,777
Share premium 36,061 - - - 161 - 36,222
Capital 234 - - - - - 234
conversion
reserve fund
Foreign 259 - - - - (316) (57)
currency
reserve
Retained (18,722) (2,266) (1,119) 515 (161) 316 (21,437)
earnings
______ ______ _____ ______ ______ ______ ______
Total equity 24,609 (2,266) (1,119) 515 - - 21,739
______ ______ _____ ______ ______ ______ ______
Liabilities
Interest
bearing loans
and borrowings 51 - - - - - 51
Abandonment
and site
restoration - - - - - - -
provision
______ ______ _____ ______ ______ ______ ______
Total non 51 - - - - - 51
current
liabilities
______ ______ _____ ______ ______ ______ ______
Interest
bearing loans
and borrowings 47 - - - - - 47
Trade and 4,785 - - - - - 4,785
other payables
______ ______ _____ ______ ______ ______ ______
Total current 4,832 - - - - - 4,832
liabilities
______ ______ _____ ______ ______ ______ ______
Total 4,883 - - - - - 4,883
liabilities
______ ______ _____ ______ ______ ______ ______
Total equity 29,492 (2,266) (1,119) 515 - - 26,622
and
liabilities
(a) Exemptions under IFRS 1
In accordance with IFRS 1, which establishes the framework for the transition to
EU IFRS by a first-time adopter, Aminex has availed itself of the following
exemptions from the general principle of retrospective restatement:
(i) Share-based payments: IFRS 2 has been applied
retrospectively to those options that were issued after 7 November 2002 and had
not vested by 1 January 2005.
(ii) Financial instruments: Aminex has adopted IAS 32 and IAS 39
from 1 January 2005, with no restatement of comparative information. Therefore
financial instruments in the comparative 2004 period continue to be recorded on
an Irish GAAP basis.
(b) Successful efforts accounting
The Group has taken note of the guidance issued by IFRIC in November 2005 and
has decided to adopt the successful efforts method of accounting for its
exploration and developed and producing assets, in place of the full cost
accounting method previously followed. Previously incurred exploration costs
have therefore been written off in the period in which they were determined to
have been unsuccessful. Similarly, costs incurred that previously had been
included in the producing/developed cost pool but that do not relate to the
remaining producing fields, have also been written off in the period in which
either they were determined to be unsuccessful or, if a field, when they ceased
production. The accumulated successful efforts exploration charge at 31 December
2003 is US$1,885,000. The unsuccessful exploration efforts charge in 2004 is
US$103,000.
(c) Depletion and decommissioning
Under the successful efforts method of accounting, depletion is now charged on a
field by field basis with fields being combined where appropriate. The
additional accumulated depletion and decommissioning charge at 31 December 2003
is US$1,038,000. The additional accumulated depletion and decommissioning charge
in 2004 is US$462,000.
(d) Foreign currency conversion.
Under IAS 32 the Group has deemed the cumulative currency translation difference
applicable to foreign operations to be zero at the transition date. The
cumulative balance of the translation differences amounting to US$316,000
previously recognised directly in the foreign currency reserves has been
transferred to retained earnings.
(e) Disposal of developed and producing gas property
Following the adoption of the successful efforts method of accounting, the
disposal of oil and gas properties is now shown as a gain or loss on disposal
within the Income Statement. During 2004, the Group disposed of certain US
properties, in particular the Vinton Dome gas field. Under Irish GAAP and the
full cost method of accounting, the proceeds of sale were credited to the pool
of producing oil and gas assets. Under EU IFRS and the successful efforts method
of accounting, the cost and accumulated depletion are written off to the Income
Statement and the proceeds credited against the resulting charge. In 2004, this
gave rise to a gain on disposal of the assets of US$618,000.
(f) Share-based payments
IFRS 2 "Share-based Payment" requires that an expense for share-based payments,
which in the case of Aminex are share options, be recognised in the income
statement based on their fair value at the date of grant. Under Irish GAAP,
these share-based payments were accounted for at their intrinsic value and no
charge for any share options granted with an exercise price equal to the market
value of the Company's shares was made.
Under EU IFRS, the expense, which is primarily in relation to the Aminex PLC
share option scheme, is recognised over the vesting period of the schemes. Fair
value calculations have been applied in respect of share options granted after 7
November 2002 as permitted under the framework for transition to EU IFRS. The
fair value of the share options to be expensed is determined by using option
pricing models and the Group has used the binomial model in its evaluation. The
charge recognised in the Income Statement over the vesting period of three years
has been adjusted to reflect the expected and actual levels of vesting. Where
there is no vesting period and options are exercisable immediately, the value of
the options has been charged to the Income Statement at the date of grant. The
following inputs were used in determining the fair value of share entitlements:
• The exercise price which is the market price at the date the share
entitlements were granted.
• Future price volatility was based on historical volatility as a guide
and was assessed over the last three to four years
• The risk free interest rate used in the model is the rate applicable
to Irish Government Bonds with a remaining term equal to the expected term of
the share entitlements being valued
• Expected share purchase/dividend payments.
In both the Group retained earnings and the retained earnings of the Parent
Company, an expense of $161,000 has been charged for the year ended 31 December
2004 and this is based on share options granted in July 2004.
(g) Other adjustments
Under EU IFRS, an amount of US$49,000 for income received from the sub-lease of
a rented property has been netted against rental payments on that property.
Under Irish GAAP, it was shown as other income. This adjustment has no effect on
retained earnings.
An amount of US$230,000 arising on the loss on disposal of plant and equipment
has been reclassified from a separate line item before operating loss to
administration expenses. This adjustment has no effect on retained earnings.
(h) Cash flow statement
The transition from Irish GAAP to EU IFRS does not change the cash flow, other
than by changes to movements arising from adjustments to the balance sheets. The
EU IFRS cash flow format is similar to the Irish GAAP cash flow but cash flows
may be shown in different categories and in a different order.
This information is provided by RNS
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