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SeaEnergy PLC (SEA)

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Wednesday 16 September, 2015

SeaEnergy PLC

Half Yearly Report

RNS Number : 1703Z
SeaEnergy PLC
16 September 2015
 



 

 

16 September 2015                                                                                                     

                                                                       

 

SeaEnergy PLC

("SeaEnergy" or the "Company")

 

2015 Interim Results

 

 

SeaEnergy (LSE: "SEA"), the innovative energy services group, today announces half year results for the six months ended 30 June, 2015.

 

Main points

 

Operational

·    Low oil prices have impacted levels of work in R2S VAM and SE Innovation; R2S Forensic ahead of budget

·    Signs of recovery into 2016, based on Operators' intentions

·    Increased focus on R2S VAM

·    Internationalisation generating prospects in West Africa, Australia, Netherlands and others

·    Diversification leads to first R2S VAM work secured in nuclear sector

·    Exit from Ship Management close to completion

 

Financial

·    Turnover from continuing operations of £1.8 million (2014: £2.5 million) due to oil price weakness

·    Operating loss from continuing operations before non-recurring expenses of £653,000 (2014: £78,000 profit)

·    Working capital position being addressed

·    Impairments to legacy assets of £2.0 million, due to Lansdowne share price decline and reduction in royalty acreage

 

 

 

Commenting on today's announcement David Sigsworth, Chairman, said: "The business has been impacted by the decline in oil price and deferrals and reductions in Operators' budgets.  However, the steps it was already taking, to focus on R2S VAM, to reduce central costs and to internationalise and diversify, are positioning us well to benefit from the recovery expected in 2016 when we anticipate a return to profitability.            

 

 

 

 

 

For further information contact:

 

SeaEnergy PLC

 

 

John Aldersey-Williams, Chief Executive

 

+44 1224 748480

Steven Bertram, Finance & Commercial Director

 

 

 

 

 

Stifel Nicolaus Europe Limited (NOMAD & Broker)

 

+ 44 20 7710 7600

James Grace

 

 

Jessica Kalyanpur

 

 

 

www.seaenergy-plc.com

www.r2s.co.uk

www.maxandco.co.uk

www.lansdowneoilandgas.com

 

 

SeaEnergy PLC

 

Interim Results for the six months ended 30 June 2015

 

Chairman's Statement

 

 

 

Dear shareholder,

 

For the six months ended 30 June 2015 the company recorded revenues from continuing operations of £1.8 million (2014: £2.5 million) and a pre-tax operating loss of £881,000 (2014: £22,000 loss).  Impairments totalling £2.0 million (2014: nil) relating to the legacy assets have increased the loss for the period to £3.0 million.

 

As we reported on 30 June, the sustained low oil prices in the first half of 2015, following their fall in late 2014, has impacted business levels across the Group, reducing turnover and profitability in the first half of the year and affecting expectations for the full year. 

 

Following the decision, announced early this year, to exit Marine activities, SeaEnergy is focussing on R2S Visual Asset Management ("VAM"), the most profitable part of our business and where we see the greatest potential for growth.

 

The oil services sector is enduring a major slowdown in activity, as operators retrench in response to sustained lower oil prices.  The Company's core activity - the provision of R2S VAM software and services - has been affected by cost cutbacks and work deferrals, although there are emerging signs of recovery.  SE Innovation has also been affected by the oil industry downturn and is taking steps to restore profitability.  However the Forensic division is unaffected by lower oil prices, and is performing ahead of budget at this stage. 

 

The planned exit from Marine and Ship Management is almost complete with the team's employment having transferred to Go Offshore (UK) Limited as of 1 September and the formal handover of responsibilities expected to be completed in the next few weeks.  It remains our plan to realise the value of the legacy assets when market conditions are appropriate.

 

Central cost savings have been achieved by a reduction in the number of Executive Directors, by all of the main board Directors waiving part of their remuneration, and by renegotiation or cancellation of some third party contracts. These savings will become more evident in the second half of the year and further cost reductions are planned for 2016 as the Group structure is simplified for a more focussed business following the exit from Ship Management and the planned relinquishment of part of the lease on the head office.

The Company will be leaner and more tightly focussed on R2S going into 2016.

 

Current Trading

The final quarter of each year has historically been our busiest with new orders and new work, and the Company is currently seeing an increase in the number of new enquiries.  However, following a detailed review of the projects which may contribute to R2S VAM revenues in 2015, and the outlook for SE Innovation, we are now reducing our earlier expectations of performance.  While a number of opportunities for reducing this shortfall remain and are being very actively pursued, the exact timing of orders and the commencement dates for projects is uncertain and as a result, at the date of this report, the Company considers that it is no longer confident that it can meet its previous expectations of performance and now anticipates an operating loss for 2015 before a recovery into profitability in 2016. 

 

SeaEnergy began the year with a small overdraft.  At 30 June our overdraft stood at £461,000 of a facility of £650,000. The Company has an agreement in principle for additional working capital funding, to reinforce its financial position before the anticipated upturn in 2016, and expects to make further announcements on this in due course.

 

The expansion of our business development team and some signs of recovery in the market have resulted in the Company seeing an increase in the number of new enquiries for late 2015 and 2016.

 

Interim Results

Turnover from continuing operations in the first half of 2015 was £1.8 million, excluding revenues of £908,000 from Ship Management, which has been treated as a discontinued operation. 

 

Reduced activity levels combined with higher business development cost and international activity to reduce the first half gross profit from £1.1 million in 2014 to £183,000 in 2015.  After reflecting central costs and non-recurring expenses the Group recorded an operating loss from continuing operations of £881,000 compared with £22,000 in 2014. This is after reflecting non-recurring expenses of £228,000 in connection with the departure of the Operations Director.

 

The Company's planning for the early part of 2016 is already showing an upturn in expected activity levels and we anticipate a return to profitability in 2016.

 

A further fall in the share price of Lansdowne Oil & Gas plc, in which we now hold 18.67%, gave rise to an impairment in the carrying value of our investment of £1.1 million.  Our interest in Lansdowne fell below 20% in early March 2015 when our holding was diluted through an equity issue by Lansdowne in which we did not participate.  Up until that date, we accounted for Lansdowne as an Associate; since that date we have treated it as an investment.

 

Following the reduction in the acreage over which we hold royalty interests we have also recognised an impairment to the carrying value of our royalties through an impairment provision of £875,000.

 

Operational Review

 

R2S

Clients' budgets that were set in 2014 in the expectation of oil prices above $100 per barrel have been severely reduced or deferred and operators have reduced discretionary spending activities.  This has reduced volumes of work for R2S VAM.  Our internationalisation strategy, to which we committed in 2014, has been vindicated as the majority of work in the year to date has come from international markets, primarily Canada and the US Gulf of Mexico.  These efforts are continuing to generate leads in West Africa, the Netherlands, Australia, Indonesia, Thailand, Mexico and Iraq.  We expect to see more international activity in the second half and into 2016.

 

We are also pleased to announce our first work in the nuclear sector, as we have been awarded small contract for a proof of concept pilot project.  We will be starting work on this project in the next few weeks and see this as an opportunity to build a significant presence in this sector.  Diversification has also seen sales of software into non-oil sectors such as pharmaceuticals and chemicals, through our North American agents, which may also lead, in time, to full R2S VAM capture opportunities.

 

We have also achieved cost reductions within R2S, as the duties undertaken by the former senior management team, who left the business following completion of the earn-out last year, have been taken on by other existing employees, allowing for career development, cost savings and involving a greater day to day involvement in the business by the Executive Directors.

 

We are now entering the period of the year in which oil companies set their budgets for 2016, and this is being undertaken in the expectation of oil prices remaining at around current levels.  Despite this, we are already receiving strong indications from operators that R2S VAM projects are being built into these budgets and this supports our anticipation of a return to growth and profit in 2016.

 

Where markets are difficult to access, for example for reasons of health and safety of our staff, regulatory or tax complexity, risk of corruption or barriers to entry, we are investigating alternative models for monetising them, through franchising or other arrangements.

 

During 2016, we will continue to develop our suite of products.  We are continuing to invest in R2S VAM to deliver functionality and usability enhancements to the product.  This will help to maintain our strong client relationships and competitive position.

 

SE Innovation

SE Innovation, comprising Max and Co, Consulting and R2S Forensic, has also seen overall activity levels impacted by the oil price weakness in the first half of 2015.  Max and Co is performing well below budgeted levels.  We are addressing this by developing business outside the oil sector, improving contractual terms and by allowing staff turnover to contribute to cost reductions. Consulting activities are focussed on supporting the penetration and use of R2S VAM within our clients, to generate additional software licences and R2S VAM captures.  In the current climate, the consulting team is being kept to a minimum and also seeking other near term revenue opportunities.

 

Forensic has not been affected by the oil price fall and is expected to exceed its budget for the full year largely through the expansion of its network of agents in North America.  This expansion has generated a significant increase in sales of the R2S software and is a trend we expect to continue into 2016 as these new agents become more established. 

 

Ship Management

Following our decision, announced early this year, to cease tendering for the supply of offshore wind farm vessels, we have been investigating the possible exit routes for the associated Ship Management operation we had established in support of potential offshore wind farm vessels.

 

The Ship Management team had three vessels under management, all owned by Otto Marine Group's GO Offshore ("GO") subsidiary.  GO has been impressed with the team's performance and we are pleased to announce that on 1 September, the team's employment transferred to GO, and we expect to be able to transfer responsibility for all remaining aspects of the Ship Management business over the next few weeks.

This will lead to opportunities to simplify Group structure and help reduce central costs further.

 

 

Legacy assets

As a result in the decline of Lansdowne's share price between 1 January and 30 June, we have further impaired the carrying value of this holding in the balance sheet, resulting in an impairment provision in the first half of £1.1m. 

 

In August, Lansdowne Oil and Gas plc participated in a well on its Midleton prospect, having successfully farmed this out to Kinsale Energy.  Unfortunately, the well contained non-commercial quantities of gas, and was plugged and abandoned.  This has further impacted Lansdowne's share price, but it remains SeaEnergy's strategy to divest this investment at the best price possible, when there is acceptable liquidity in the stock. 

 

EnQuest, the Operator of the Scolty field, over which SeaEnergy holds a royalty interest, stated in its results for 2014 that it anticipated submitting a Field Development Plan for the field during 2015.  This should improve the value of this royalty interest.  In the meantime as a result of a reduction in potential reserves in that block, following a partial relinquishment of the acreage to which the royalty interest relates, the Company has impaired the carrying value of its royalties by £875,000.

 

Health, Safety and the Environment

The health and safety of our employees, contractors, clients and stakeholders is critical to our success, and we are pleased to report that the Group has had no reportable incidents in the Group in the six months to 30 June 2015.  SeaEnergy continues to manage its activities for minimal HSE exposure.

 

Outlook

Although business performance during the first half of the year has been significantly impacted by the oil price collapse, we have taken steps to minimise this impact and to position the business for recovery as activity levels pick up into 2016.  The focus of the business on R2S positions it well for growth, and internationalisation and diversification have near term potential to contribute strongly.

 

David Sigsworth

Chairman

 

 



 

Consolidated Interim Balance Sheet

 

 

 

30 June

31 December

  30 June

 

 

2015

(unaudited)

2014

(audited)

2014

(unaudited)

 

Note

£'000

£'000

£'000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Goodwill and other intangible assets

4

10,985

11,912

11,953

Property, plant & equipment

 

236

270

266

Investments

 

1,810

2,981

5,373

 

 

13,031

15,163

17,592

Current assets

 

 

 

 

Trade and other receivables

 

2,620

2,722

1,431

Deferred income tax asset

 

-

-

44

Current income tax asset

6

57

-

-

Cash and cash equivalents

 

-

-

676

 

 

2,677

2,722

2,151

 

 

 

 

 

Total assets

 

15,708

17,885

19,743


 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

5

(2,149)

(1,796)

(1,302)

Bank overdraft

 

(461)

(22)

-

Provisions

 

(13)

(12)

(11)

 

 

(2,623)

(1,830)

(1,313)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred income tax liabilities

 

(350)

(350)

(448)

Other non-current liabilities

 

-

(2)

(4)

 

 

(350)

(352)

(452)

 

 

 

 

 

Total liabilities

 

(2,973)

(2,182)

(1,765)

Net assets

 

12,735

15,703

17,978

 

 

 

 

 

EQUITY

 

 

 

 

Ordinary shares

 

5,636

5,636

5,636

Treasury shares

 

(500)

(500)

(500)

Share premium

 

1,225

1,225

1,225

Redemption reserve

 

1,920

1,920

1,920

Special reserve

 

1,404

1,404

1,404

Retained earnings

 

3,050

6,018

8,293

Total equity

 

12,735

15,703

17,978

 

 

 

 

 

 

 

 

 

Consolidated Interim Statement of Comprehensive Income

 

 

 

Half-year ended 30 June

 

 

2015

(unaudited)

2014

(unaudited)

 

 

 

 

 

Note

£'000

£'000

Continuing operations

 

 

 

Turnover

 

1,838

2,462

Rental income

 

37

49

Revenue

 

1,875

2,511

Cost of sales

 

(1,692)

(1,418)

Gross profit

 

183

1,093

Operating expenses

 

(836)

(1,015)

Non-recurring expenses

 

(228)

(100)

Operating loss

 

(881)

(22)

 

 

 

 

Finance income

 

7

7

Finance expense

 

(4)

(2)

Finance income - net

 

3

5

 

 

 

 

Impairment of investment in royalties

 

(875)

-

Impairment of investment

 

(1,130)

-

Share of loss of associate and other movements

 

(57)

(88)

Loss before taxation

 

(2,940)

(105)

Taxation

6

23

-

Loss from continuing operations

 

(2,917)

(105)

Discontinued operation

 

 

 

Loss from discontinued operations (net of tax)

 

(51)

(133)

Loss for the financial period

 

(2,968)

(238)

 

 

 

 

Loss  per share

 

 

 

Basic and diluted

2

(5.27)p

(0.43)p

 

 

 

 

Continuing operations

 

 

 

Basic and diluted

2

(5.18)p

(0.19)p

 

 

 

 

 

 



Consolidated Interim Statement of Cash Flows

 

 

 

       Half-year ended 30 June

 

 

2015

(unaudited)

2014

(unaudited)

 

Note

£'000

£'000

 

Cash flows (used in) / generated by operating activities:

7

(399)

417

 

 

 

 

Cash flows from investing activities:

 

 

 

Interest received

 

7

7

Acquisition of intangible assets

 

(34)

(83)

Acquisition of property, plant and equipment

 

(14)

(54)

Acquisition of subsidiary - deferred consideration

 

-

(4,284)

Net cash used in investing activities

 

(41)

(4,414)

 

 

 

 

Cash flows from financing activities:

 

 

 

Payment of finance lease liabilities

 

(2)

(2)

Interest paid

 

(4)

-

Net cash used in financing activities

 

(6)

(2)

 

 

 

 

Effect of exchange rate fluctuations on cash held

 

7

(2)

 

 

 

 

Net decrease in cash and cash equivalents

 

(439)

(4,001)

Cash and cash equivalents at start of period

 

(22)

4,677

Cash and cash equivalents at end of period

 

(461)

676

 



Consolidated Statement of Changes in Equity

 

 










Share

capital

 

£'000

 

 

Treasury

shares

 

£'000

Share   premium

 

£'000

 

 

Redemption

reserve

 

£'000

Special   reserve

 

£'000

Retained earnings

 

£'000

 

Total equity

 

£'000









At 1 January 2014

5,546

(500)

1,000

1,920

1,404

8,516

17,886

Loss for the financial year

-

-

-

-

-

(2,527)

(2,527)

Issue of new shares

90

-

225

-

-

-

315

Share based payment transactions

-

-

-

-

-

29

29

At 31 December 2014

5,636

(500)

1,225

1,920

1,404

6,018

15,703

















At 1 January 2015

5,636

(500)

1,225

1,920

1,404

6,018

15,703

Loss for the period

-

-

-

-

-

(2,968)

(2,968)

At 30 June 2015

5,636

(500)

1,225

1,920

1,404

3,050

12,735

















At 1 January 2014

5,546

(500)

1,000

1,920

1,404

8,516

17,886

Loss for the period

-

-

-

-

-

(237)

(237)

Issue of new shares

90

-

225

-

-

-

315

Share based payment transactions

-

-

-

-

-

14

14

At 30 June 2014

5,636

(500)

1,225

1,920

1,404

8,293

17,978









 



Notes to the Interim Statement

 

1. Basis of Presentation

 

Accounting Policies

 

The interim financial information for the six months ended 30 June 2015 has been prepared on the basis of the accounting policies which will be adopted in the 2015 Annual Report and Accounts, and IAS 34, "Interim Financial Reporting" as adopted by the European Union.

 

The interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The results for the six months to 30 June 2015 and the comparative results for six months to 30 June 2014 are unaudited.  The comparative figures for the year ended 31 December 2014 do not constitute the statutory financial statements for that year. The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2014, which have been prepared in accordance with IFRSs as adopted by the European Union. Those financial statements have been delivered to the Registrar of Companies and include the auditor's report which was unqualified and did not contain a statement under Section 498 of the Companies Act 2006.   

 

Going Concern

 

The Directors have prepared the interim financial information on the going concern basis which assumes that the Group and Company and its subsidiaries will continue in operational existence for the foreseeable future.

 

Principal Risks and Uncertainties

 

The management of the business and the execution of the Group's strategy are subject to a number of risks. Risks are reviewed by the Board and appropriate processes put in place to monitor and mitigate them. If more than one event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group. Further details of the Group's risk profile analysis can be found on pages 23 of our 2014 Annual Report, available from the website: www.seaenergy-plc.com

 

2. Loss per Ordinary Share

 

The calculation of the basic loss per share from continuing operations attributable to equity holders of the Company is based on the loss for the period of £2.9 million (6 months to 30 June 2014: loss £0.1 million) and 56,364,823 (6 months to 30 June 2014: 55,839,568) ordinary shares, being the weighted average number of shares in issue during the period. 

                                                                                                                                              

Continuing operations                                                                                                   Half year ended 30 June

     2015               2014

                                                                                                                                            Pence per share

 

Loss per share - basic and diluted

        (5.18)

(0.19)

 

Discontinued operations   

 

Loss per share - basic and diluted

        (0.09)

(0.24)

                                                                       

Continuing and discontinued operations   

 

Loss per share - basic and diluted

        (5.27)

(0.43)

 

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. At the reporting date the Company had one class of potential ordinary shares; share options. As a loss was recorded in the current period, the issue of potential ordinary shares would have been anti-dilutive.

 

 

3. Segmental Reporting

 

 

 

 

 

 

Group - continuing operations

 

R2S

£'000

Consulting

£'000

Corporate

£'000

Group

£'000

2015

 

 

 

 

Turnover

1,467

371

-

1,838

Rental Income

-

-

37

37

Revenue

1,467

371

37

1,875

Non-recurring expenses

-

-

(228)

(228)

Operating profit/(loss)

455

(233)

(875)

(653)

 

 

 

 

(881)

Finance income net

 

 

 

3

Impairment of royalties

 

 

 

(875)

Impairment of investment

 

 

 

(1,130)

Share of associates ( oil & gas)

 

 

 

(57)

Taxation

 

 

 

23

Loss for the period

 

 

 

(2,917)

 

 

 

 

 

2014

 

 

 

 

Turnover

1,740

722

-

2,462

Rental Income

-

-

49

49

Revenue

1,740

722

49

2,511

Non-recurring expenses

(98)

-

(2)

(100)

Operating profit/(loss)

863

151

(936)

78

 

 

 

 

(22)

Finance income net

 

 

 

5

Share of associates ( oil & gas)

 

 

 

(88)

Taxation

 

 

 

-

Loss for the period

 

 

 

(105)

 

 

 

 

 

 

 

 Non -recurring expenses of £228,000 relate to the departure of M B Comerford, a director who resigned on 6 February 2015.

 

 

A decision to cease the Marine activities of the Group was taken earlier in 2015 and cessation of our Ship Management operation agreed in August 2015 consequently it has been treated as a discontinued operation in these interim accounts. The figures for the discontinued business have been removed from the figures above and are disclosed separately here.

 

Discontinued operation

2015

 

2014 restated

Turnover

908

604

Revenue

908

604

Operating loss

(51)

(133)

 

 

 

Loss for the period

(51)

(133)

 

 

 

 

The comparative revenue figure above has been restated to remove flow through vessel costs, the cost of sales for the same period has likewise been reduced.

 

The Group's revenues and operating results of the three operating segments are highlighted in the above table. The Chief Operating Decision Maker (the Board) monitors the operating results of its operating segments separately for the purposes of making decisions and performance assessment.

 

4. Goodwill and Other Intangible Assets

 

 

 

 

 

 

 

 

 

 

 

Goodwill

£'000

 

Oil & Gas

£'000

Other

£'000

Total

£'000

 

 

 

 

 

 

At 1 January 2014

 

9,785

1,790

368

11,943

Additions

 

-

-

137

137

Amortisation

 

-

-

(168)

(168)

At 31 December 2014

 

9,785

1,790

337

11,912

 

 

 

 

 

 

At 1 January 2015

 

9,785

1,790

337

11,912

Additions

 

-

-

34

34

Impairment provision

 

-

(875)

-

(875)

Amortisation

 

-

-

(86)

(86)

At 30 June 2015

 

9,785

915

285

10,985

 

 

 

 

 

 

At 30 June 2014

 

9,785

1,790

378

11,953







 

  

5. Trade and Other Payables

 

30 June

31 December

  30 June

 

2015

(unaudited)

2014

(audited)

2014

(unaudited)

 

£'000

£'000

£'000

Trade payables

949

721

575

Overseas corporation tax

34

-

-

Other taxes and social security

219

220

249

Accruals

703

683

337

Amounts due under finance leases

4

4

4

Other payables

240

168

137

 

2,149

1,796

1,302

 

6. Taxation

 

It is anticipated that for the period, the UK Corporation tax payable by the Group's subsidiaries will be fully absorbed by group relief and credit for overseas taxes therefore no provision for UK tax payable has been made. The net tax credit of £23,000 represents Canadian and US taxes payable of £34,000 offset by a tax credit of £57,000 on the carry back of losses arising in R2S LLC during the period.

 

7. Reconciliation of Loss for the Period to Net Cash (Used In) / Generated by Operating Activities

 

 

 

Half year ended 30 June

 

 

2015

2014

 

 

£'000

£'000

Loss for period from continuing operations

 

(2,940)

(105)

Loss for period from discontinued operations

 

(51)

(133)

Loss before tax

 

(2,991)

(238)

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

 

44

42

Amortisation of intangible assets

 

86

73

Impairment of investment in royalties

 

875

-

Impairment of investment

 

1,130

-

Share of loss from associates

 

57

125

Loss on sale of property, plant and equipment

 

4

-

Other movements relating to associates

 

-

(37)

Equity settled share-based payment transactions

 

-

14

Operating cash flows before movements in working capital

 

(795)

(21)

 

 

 

 

Change in trade and other receivables

 

45

137

Change in trade and other payables

 

353

305

Change in provisions

 

1

1

Cash (used in) / generated  by operations

 

(396)

422

Net finance income

 

(3)

(5)

Net cash  (used in) generated / by  operating activities

 

(399)

417

 

 

 

 

 

  

8. Related Party Transactions

 

 

(a) Directors of Return To Scene Limited ("R2S")

 

In addition to her role as Director of wholly owned subsidiary R2S, S Khan is a partner in Nathan Maknight, Chartered Accountants, the Group incurred accountancy fees of £20,000 in the six months to 30 June 2015 (6 months to 30 June 2014: £7,700) for services provided by Nathan Maknight.

 

(b) Associates

 

During the period to 30 June 2015 the Group made payments for administrative expenses on behalf of its associate company Mesopotamia Petroleum Company Limited ("MPC"). The balance owed by MPC to the Group as at 30 June 2015 is £482,000 (30 June 2014: £450,000). In January 2011 the Company, along with all other MPC creditors, agreed to defer the amount owed by MPC until January 2013. The Company has subsequently extended the deferred period. No interest is charged and no guarantee has been given. The Company has made full provision against this debt.

 

9. Post Balance Sheet Events

 

(a). Discontinued operation

 

A decision to cease tendering for offshore wind farm support vessels was taken earlier in 2015 and ceased immediately. The related Ship Management business has continued until an appropriate exit was found.  The Ship Management team had been managing three vessels, all a part of the Otto Marine Group owned via GO Offshore ("GO"). During the second quarter it was agreed in principle that GO will take over the Ship Management team and the office from which they are operating.

 

On 1 September, the team's employment and the office lease transferred to GO, and we expect to be able to close all remaining aspects of the Ship Management business over the next few weeks. Consequently the Ship Management operation has been treated as a discontinued operation in these interim accounts.

 

                                                                                                                                                           

10. Contingent Liability

 

Under the terms of a joint venture ("JV") agreement dated 26 February 2009 between the Iraqi Drilling Company ("IDC") and the Company's associate Mesopotamia Petroleum Company Limited ("MPC"), MPC was required to confirm its share of the initial JV funding by a prescribed date and failure to do so was to result in liability for a penalty of US $2.2 million. MPC's liability for this penalty was guaranteed jointly and severally by the Company, another MPC shareholder and an associate of that shareholder.

 

In July 2009 IDC unilaterally purported to terminate the JV while MPC argued that it was entitled to an extension of the date by which its share of JV funding was to be confirmed.

 

In October 2011 IDC commenced an action against MPC in the Specialised Commercial Civil Court in Baghdad claiming payment of the penalty sum. A Power of Attorney has been provided to local Counsel to allow them to manage the Court proceedings as appropriate. On 28 August 2012 the Court upheld a ruling against MPC that it is liable to pay the penalty. MPC has appealed against this decision and its Directors are reviewing the Court's latest decision and the options available to it. As the date of the Interim Report, no further Court rulings have been announced since August 2012 and it is unclear when the next ruling will be made.

 

 

11. Copies of the Interim Report

 

Copies of the interim report can be obtained from the Company Secretary, SeaEnergy PLC, Britannia House, Endeavour Drive, Arnhall Business Park, Westhill, Aberdeenshire, AB32 6UF and from the Company's website www.seaenergy-plc.com.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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