TIDMRHEP
RNS Number : 8272R
Rheochem PLC
31 August 2010
31 August 2010
Rheochem Plc
("Rheochem" or the "Company")
2010 Full Year Statutory Accounts
Rheochem Plc,the oil and gas business with oil services, production, and
development and exploration assets, announces its final results for the year
ended 30 June 2010. The full year statutory accounts are required under the ASX
Listing Rules to be disclosed to the market accordingly the full year statutory
accounts are announced to the AIM Market of the London Stock Exchange.
Shareholders will be mailed the statutory accounts within the next 14 working
days and a copy of the accounts will be available on the Rheochem website.
Financial highlights
· Group revenue increased to A$20.4m (2009: A$10.1m)*
· Group EBITDA improved to a loss of A$0.1m (2009: loss A$51.3)
· Drilling fluids services revenue reduced to A$20.3m (2009: A$34.2m)
· Drilling fluids services EBITDA reduced to A$3.6m (2009: A$6.1m)
· Profit for the year improved to A$2.5m (2009: loss A$42.9m)
· Attributable profit to share holders improved to A$4.8m (2009: loss
A$33.4m)
*The prior period's revenue was adversely impacted by the loss on revaluation of
the venture capital investment.
Haydn Gardner, Chief Executive of Rheochem, said:
"The coming year looks very promising for both the fluids business and the E&P
business and we expect revenues to be significantly higher than the previous 12
months. Given its long standing relationship with some customers, the Company
expects to renew major contracts this year which will underpin the main revenue
stream. In addition the Company is waiting on the award of tenders with new and
previous customers and looks forward to updating the market in due course."
- Ends -
For further information please contact:
+----------------------------------------------+----------------+
| Haydn Gardner, CEO - Rheochem | +61 (0) 8 |
| | 9410 8200 |
+----------------------------------------------+----------------+
| Billy Clegg, Edward Westropp, Alex Beagley - | +44 (0) 20 |
| FD | 7269 7207 |
| | |
+----------------------------------------------+----------------+
| Shane Gallwey- Astaire Securities | +44 (0) 20 |
| | 7492 4750 |
+----------------------------------------------+----------------+
| McCall, Aitken, McKenzie - Andy Yeo | +44 (0) 20 |
| | 7464 4062 |
+----------------------------------------------+----------------+
CHIEF EXECUTIVE'S OVERVIEW
Group revenue increased to A$20.4m (2009: A$10.1m.) The 2009 group revenue was
adversely impacted by the loss on revaluation of the venture capital investment.
Revenue from the oilfield services division was A$20.3m (2009: A$34.2m). This
reduction in revenue was primarily due to severe flooding in Queensland and
South Australia which hampered drilling activity. Offshore revenues were also
lower than expected due to a deferral of drilling projects.
Group EBITDA improved to a minor loss of A$0.1m compared with a loss of A$51.3m
in the previous year which was due to the revaluation of the venture capital
investment. Oilfield services EBITDA reduced to A$3.6m (2009: A$6.1m) however
EBITDA margins remained consistent at 17.7% (2009:17.8%).
Group profit for the year improved to A$2.5m (2009: loss A$42.9m) and
attributable profit to share holders improved to A$4.8m (2009: loss A$33.4m) due
to a gain of A$6.6m on settlement of loans associated with the acquisition of
the remaining 50% interest in Zeus Petroleum Ltd.
OILFIELD SERVICES
Australia
Onshore
Rheochem Limited continues to be a major supplier of drilling fluid chemicals
and services for both onshore and offshore oil and gas drilling campaigns. This
year we experienced a marked reduction in onshore drilling activity in the
second half due to extensive flooding in Queensland and South Australia, with
some drilling rigs being out of action for up to five months. Rheochem Ltd has
tendered to renew its largest onshore contract for a further three years with a
possible further two year extension and we look forward to updating the market
when an award is made.
Coal Bed Methane
Drilling activity in the coal bed methane sector is increasing and we see the
potential for strong growth in this area. The Company has developed a range of
products for the Coal Bed Methane drilling industry and these are gaining
increased market acceptance. Further marketing is being undertaken to cement
the Company's position in this sector.
Geothermal
Rheochem is awaiting a decision on a significant tender to supply fluids to some
of the deepest and hottest wells to be drilled onshore in Australia. During the
year we invested in high temperature / high pressure testing equipment. With
this equipment in place our technical department has developed extreme
temperature drilling and completion fluids capable of withstanding 300 Celsius.
Offshore
The level of activity in offshore operations with existing customers for the
year was disappointing, however the Company added some large customers to its
list. The value of work bid in new tenders has improved significantly.
New Zealand
Rheochem Pacific Limited continues to provide drilling fluids and engineering
services to two major entities operating in the geothermal industry in New
Zealand. These contracts have been operating since 2004 and 2005 respectively
and continue into 2010/11.
India
Rheochem India (Private) Ltd (RIPL) is a 70% owned subsidiary and continues to
perform strongly, achieving its highest ever monthly revenue of A$0.52million in
October 2009.
During the year this division was awarded a contract for drilling fluid services
from Oil and Natural Gas Company India "ONGC" for its Tripura onshore asset in
Agartala, India. The contract was completed successfully and has a provision to
provide services for future locations depending on performance and operational
requirements of ONGC. We expect this option will be exercised thereby extending
the contract significantly and we will update the market as to the outcome of
this extension.
This division was awarded a contract for drilling fluid, engineering and
dewatering services from Hindustan Oil Exploration Company Limited "HOEC", a new
customer for Rheochem, for the appraisal of its Dirok gas discovery onshore on
Block AAP-ON-94/1 in the state of Assam, India. The contract was for one firm
well with a provision for a further two optional wells and we will update the
market as to the outcome of this extension.
The Company continues to tender and win work within the Indian market and has
established a reputation for technical competence and performance.
The HOEC contract also includes the supply of dewatering equipment. The supply
and operation of this equipment represents an extension of Rheochem's
traditional fluid and engineering services.
The Company also continues to seek opportunities for export of oilfield products
which can be manufactured cost effectively in India.
Indonesia
PT Rheochem Indonesia has received all the licences required to operate in the
Indonesian oil and gas industry.
As with India the directors believe Indonesia represents a potential growth
market in the oil and gas as well as geothermal industries. Post year end, on
the 29 July 2010, Rheochem has now moved to a 95% holding in this subsidiary.
OIL & GAS ASSETS
United Kingdom - Zeus
Zeus Licence interests as at 30 June 2010
+--------------+-------------------------+--------------------------+
| Licence | Blocks | Zeus Interest % |
+--------------+-------------------------+--------------------------+
| P 1289 | 14/11 | 100 |
+--------------+-------------------------+--------------------------+
| P 1293 | 14/18b ( Athena) | 10 |
+--------------+-------------------------+--------------------------+
| P 1611 | 14/26b | 90 |
+--------------+-------------------------+--------------------------+
LICENCE P1293 (Block 14/18b) Athena, Zeus 10%
Athena (Block 14/18b) Reserves
+--------------------------+----------+------------+
| Reserve Category | Athena | Athena |
| | Reserves | Reserves |
| | (Gross | (Net to |
| | 100%) | Zeus) |
| | MMstb | MMstb |
+--------------------------+----------+------------+
| Proved + Probable (2P) | 24.4 | 2.44 |
+--------------------------+----------+------------+
| Proved + Probable + | 43.88 | 4.39 |
| Possible (3P) | | |
+--------------------------+----------+------------+
LICENCE P1289 (Block 14/11) Zeus 100%
Zeus Prospective resources Block 14/11 UK North Sea
+--------------+------------+-----------+--------------------------+
| Block 14/11 | Prospective STOIIP (mmbbls) |
| UK North Sea | |
+--------------+---------------------------------------------------+
| Prospect | Low | Best | High |
| | Estimate | Estimate | Estimate |
+--------------+------------+-----------+--------------------------+
| Metis | 90 | 356 | 1400 |
+--------------+------------+-----------+--------------------------+
| Block 14/11 | Recoverable Prospective Resources (mmbbls) |
| UK North Sea | |
+--------------+---------------------------------------------------+
| Prospect | Low | Best | High |
| | Estimate | Estimate | Estimate |
+--------------+------------+-----------+--------------------------+
| Metis | 20 | 93 | 392 |
+--------------+------------+-----------+--------------------------+
The Directors reported last year that the Company would conduct a strategic
review of its E&P assets following the default by the other shareholder in the
main asset of the division. As part of the review the Company gave
consideration as to the best way of unlocking the value of the individual
businesses with a view to separating them.
The Company still believes the business groups should be separated however in
this challenging economic climate, selling or funding junior E&P companies is
difficult and the IPO route for Zeus would be very dependent on the Athena
project sanction which has not yet been completed although it is expected before
December 2010. Therefore the Company has taken the decision to continue with
the Athena development to full partner and Government sanction which is expected
before December 2010.
The Company continues to review funding options for the Athena Project which
include but are not limited to project development funding; other debt
instruments; farm out or trade sale of E&P assets; trade sale of the services
business; equity raising, and the demerger of the E&P subsidiary with
independent funding. Rheochem expects to be in a position to report on progress
in October 2010.
Where possible the funding of the Athena development should not dilute the
underlying value of the Fluids businesses. Securing the funding should allow
investors the opportunity to ascertain the inherent value in each business group
and allows the Company to work towards separating the two groups under the most
favourable conditions.
The Company believes, at project sanction, it will have access to sufficient
funding and other available resources to continue with this development and this
represents the most favourable economic outcome for the Company at the present
time. Should the Company not be able to secure total funding for the project
this may result in a sale or relinquishment of the Athena assets which may
result in an impairment in the value of that asset.
The main outcomes of the review were:
· Gain 100 % control of Zeus to clarify ownership and eliminate third
party non-bank loan relationships. Rheochem negotiated a final settlement of
third party loans between Zeus, Pacific International Management inc.("PIM") and
Rheochem. Zeus is now a 100% owned subsidiary which gives greater flexibility on
funding arrangements and reduces third party risk.
· Reduce exploration acreage to key assets.
· The assets retained in the subsidiary include 2.44m barrels of 2P oil
reserves through Zeus's stake in the Athena oil discovery which would be more
valuable once sanctioned for development. First oil is expected late 2011 and
would provide significant revenues to Zeus in the 2011/2012 financial year.
· Zeus has a 100% stake in North Sea Block 14/11 with mid case
recoverable prospective resources of 93 million barrels and is actively seeking
farm in partners. This block was written down to zero value in the previous
year but is still the subject of serious discussions to endeavour to get a well
drilled. If no farm in partner is found, or the licence is not extended, this
licence is expected to be revoked in December 2010.
· The 90% stake in Block 14/26b which contains the Thunderball discovery
had previously flowed 34mmscf on production test. Zeus is currently seeking
farm in partners and should have sufficient time left on the licence to do so.
· Rheochem is still working with UK Company Energy Venture Opportunities
International ("ENVOI") to provide project marketing services to identify and
assist with concluding a farm out of blocks 14/11 and 14/26b. ENVOI will also
help to determine potential interest in the Athena discovery should the Board
decide to sell it at a later date.
As previously announced, Zeus Petroleum has a legal dispute with Senergy
Limited; a UK based drilling company, claiming US$11.907m and GBP1.938m in
respect of contracted works not carried out in accordance with the terms of an
alleged contract with Zeus. Since initial contact was made by Senergy,
informing Zeus of Senergy's position, a claim has now been lodged in the High
Court and Zeus intends to rigorously defend this claim.
While the management of Zeus believe that Senergy's claim is unlikely to
succeed, it does give rise to a contingent liability in the Zeus and
consolidated group accounts as at 30 June 2010.
Whilst a contingent liability in a subsidiary is deemed to be a contingent
liability for group accounting purposes, there is no legal liability
attributable to Lochard Energy or Rheochem PLC.
America
Blackwell Project
Rheochem's 100% owned subsidiary, Lochard Energy Inc. ("Lochard") holds a 65%
working interest (48.75% revenue interest) in 22 wells on the Blackwell leases
in Caldwell County, Texas, USA.
The Company does not intend to participate in any further wells in this field.
Schuster Flats
Lochard holds an 18.75% working interest over approximately 34,400 acres in the
natural gas and oil leases in the Schuster Flats prospect which is located in
the central portion of the Big Horn Basin in the state of Wyoming, USA.
No further drilling is budgeted for 2010/2011 financial year and the leases are
being reviewed for potential sale or joint venture.
Bearcat Prospect
Lochard holds a 13.75% working interest (10.31% revenue interest) in the 960
acre Bearcat Prospect located in Park County at the north end of the Big Horn
Basin in the state of Wyoming, USA.
The Company does not intend to participate in any further wells in this field
until US gas prices improve and commercial flow rates can be proven from the Two
Dot #12-42 well.
Outlook
The coming year looks very promising for both the fluids business and the E&P
business and we expect revenues to be significantly higher than the previous 12
months. Given its long standing relationship with some customers, the Company
expects to renew major contracts this year which will underpin the main revenue
stream. In addition the Company is waiting on the award of tenders with new and
previous customers and looks forward to updating the market in due course.
Drilling activity in the coal bed methane sector should rise significantly in
the second half once these projects begin to be sanctioned for development.
Rheochem is well placed to take advantage of this increased activity as it
already supplies several customers in this area.
Offshore drilling activity is also expected to increase. Rheochem owns one of
the four fluids blending plants on the North West Shelf of Australia and
competes directly against the three major international oilfield service
companies.
On the E&P side, Zeus expects to get partner sanction and government production
consent before December 2010 to allow the Athena development to proceed. This
will be the first offshore oilfield development for the Company. First oil is
expected late 2011 and although it will not make a revenue contribution to our
financial year 2010/2011, it should have a major positive impact the following
year with Zeus's initial share of oil production expected to be around 2000
bbls/day. Should the Company not be able to secure total funding for the project
this may result in a sale or relinquishment of the Athena assets which may
result in an impairment in the value of that asset.
Zeus will actively pursue farm in partners for its large exploration prospect
Metis on North Sea block 14/11 and on its appraisal prospect Thunderball on
North Sea block 14/26b. Both of these have the potential to have a major impact
on the valuation of Zeus if successful.
Finally I would like to thank our management team and staff for their hard work
and dedication during a difficult year. On behalf of shareholders I would like
to thank them for their loyalty and commitment.
Haydn Gardner
Chief Executive
27 August 2010
KPMG Audit Plc
8 Salisbury Square
London
EC4Y 8BB
United Kingdom
Independent auditors' report to the members of Rheochem PLC
We have audited the financial statements of Rheochem Plc for the year ended 30
June 2010 set out on pages 29 to 88. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the EU and, as regards the parent
company financial statements, as applied in accordance with the provisions of
the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditors' report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members, as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out on
page 26 the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's (APB's)
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the APB's web-site at www.frc.org.uk/apb/scope/UKNP
Opinion on financial statements
In our opinion:
- the financial statements give a true and fair view of the state of the group's
and of the parent company's affairs as at 30 June 2010 and of the group's profit
for the year then ended;
- the group financial statements have been properly prepared in accordance with
IFRSs as adopted by the EU;
- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the EU and as applied in accordance with the
provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Emphasis of matter: contingent liability and oil and gas asset valuation
In forming our opinion on the financial statements, which is not qualified, we
have considered the adequacy of the disclosures in the financial statements
concerning both the possible outcome of legal proceedings which have been
brought against Zeus Petroleum Limited, one of the Group's subsidiaries, and the
valuation of the major oil and gas asset of that subsidiary. The ultimate
outcome of the contingent liability cannot currently be determined with
certainty. However, while no provision for any liability that may result has
been made in the financial statements, in the event that this claim fully
crystallises, as explained more fully in note 25, it would amount to
A$17,103,000 in the group accounts and up to A$7,831,000 in the Company accounts
against amounts receivable from subsidiaries. The uncertainty surrounding the
funding for the development of the oil and gas asset is also a matter that
cannot currently be determined. However as explained in note 1 were that
sufficient funding not to have been secured, the Board would not commit to
further capital expenditure and the Group would relinquish or sell its interest
in the asset, enabling the rest of the group to continue to trade, and this
would give rise to an impairment in the asset's carrying value of A$24m in the
group accounts and up to A$19m in the Company accounts against amounts
receivable from subsidiaries.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial
year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
- the parent company financial statements are not in agreement with the
accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made;
or
- we have not received all the information and explanations we require for our
audit.
Adrian John Wilcox
Senior Statutory Auditor
for and on behalf of KPMG Audit Plc, Statutory
Auditor
Chartered Accountants
8 Salisbury Square
London
EC4Y 8BB
Consolidated income statement
for the year ended 30 June 2010
+---------------------------+------+----------+----------+----------+----------+
| | Note | | | 2010 | 2009 |
+---------------------------+------+----------+----------+----------+----------+
| | | | | A$ 000's | A$ 000's |
+---------------------------+------+----------+----------+----------+----------+
| Continuing operations | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Revenue on trading | | | | 20,401 | 34,178 |
| operations | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Loss on revaluation of | | | | - | (24,054) |
| venture capital | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Revenue | 2 | | | 20,401 | 10,124 |
+---------------------------+------+----------+----------+----------+----------+
| Cost of sale on trading | | | | (12,411) | (22,797) |
| operations | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Foreign exchange gain on | | | | | |
| venture capital | | | | - | 4,924 |
| investments | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Impairment loss on oil & | | | | (119) | (30,021) |
| gas assets | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Cost of sales | | | | (12,530) | (47,894) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Gross profit/(loss) | | | | 7,871 | (37,770) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Other income | | | | - | 16 |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Administrative expense - | | | | - | (5,335) |
| Impairment of goodwill | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Administrative expenses | | | | (8,872) | (9,742) |
| - other | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Administrative expenses | | | | (8,872) | (15,077) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Operating loss | | | | (1,001) | (52,831) |
+---------------------------+------+----------+----------+----------+----------+
| Finance income - Gain on | | | | 6,595 | - |
| settlement of debt | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Finance income - Other | | | | 1,254 | 8,501 |
+---------------------------+------+----------+----------+----------+----------+
| Finance income | | | | 7,849 | 8,501 |
+---------------------------+------+----------+----------+----------+----------+
| Finance expense | | | | (4,237) | (2,132) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Profit/(loss) before tax | | | | 2,611 | (46,462) |
+---------------------------+------+----------+----------+----------+----------+
| Income tax | | | | (107) | 4,170 |
| (expense)/credit | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Profit/(loss) for the | | | | 2,504 | (42,292) |
| financial year | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Attributable to: | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Equity holders of the | | | | 4,824 | (33,439) |
| parent | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Non-controlling interests | | | | (2,320) | (8,853) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Profit/(loss) for the | | | | 2,504 | (42,292) |
| financial year | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Earnings per share | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Basic profit/(loss) per | 3 | | | 2.1 | (15.4) |
| share (cents per share) | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Diluted profit/(loss) per | 3 | | | 2.1 | (15.4) |
| share (cents per share) | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
Consolidated statement of comprehensive income
for the year ended 30 June 2010
+---------------------------+------+----------+----------+----------+----------+
| | | | | 2010 | 2009 |
+---------------------------+------+----------+----------+----------+----------+
| | | | | A$ 000's | A$ 000's |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Profit/(loss) for the | | | | 2,504 | (42,292) |
| year | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Other comprehensive | | | | | |
| income | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Asset revaluation on | | | | - | (2,047) |
| stepped acquisition | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Exchange differences | | | | | |
| arising on translation of | | | | 736 | (851) |
| foreign operations | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Other comprehensive | | | | 736 | (2,898) |
| income for the year | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Total comprehensive | | | | 3,240 | (45,190) |
| income for the year | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Attributable to: | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Equity holders of the | | | | 5,509 | (32,243) |
| parent | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| Non-controlling interests | | | | (2,269) | (8,853) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
| | | | | 3,240 | (41,096) |
+---------------------------+------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+------+----------+----------+----------+----------+
There are no tax affects on exchange differences arising on translation of
foreign operations.
Consolidated statement of changes in equity
for the year ended 30 June 2010
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| | Issued | Share | Other | Share | Translation | Retained | Total | Non-controlling | Total |
| | capital | premium | equity | based | reserve | earnings/ | | interests | equity |
| | | account | | payment | | accumulated | | | |
| | | | | reserve | | losses | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Group | A$ 000's | A$ | A$ 000's | A$ 000's | A$ 000's | A$ 000's | A$ | A$ | A$ 000's |
| | | 000's | | | | | 000's | 000's | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| 1 July 2008 | 26,439 | 32,035 | - | 411 | (474) | 10,901 | 69,312 | 179 | 69,491 |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Shares issued | - | - | - | - | - | - | - | 108 | 108 |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Stepped | - | - | (2,047) | - | - | 7,382 | 5,335 | 3,570 | 8,905 |
| acquisition | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Options granted | - | - | - | 60 | - | - | 60 | - | 60 |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Share based | - | - | - | 186 | - | - | 186 | - | 186 |
| payments | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Loss for the | - | - | - | - | - | (33,439) | (33,439) | (8,853) | (42,292) |
| year | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Translation | | | | | | | | | |
| adjustment for | - | - | - | - | (851) | - | (851) | - | (851) |
| the year | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| 30 June 2009 | 26,439 | 32,035 | (2,047) | 657 | (1,325) | (15,156) | 40,603 | (4,996) | 35,607 |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Shares issued | 2,669 | - | - | - | - | - | 2,669 | - | 2,669 |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Share issue | - | - | - | - | - | (258) | (258) | - | (258) |
| costs | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Share based | - | - | - | 176 | - | - | 176 | - | 176 |
| payments | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Acquisition of | - | - | - | - | - | (7,644) | (7,644) | 7,644 | - |
| non-controlling | | | | | | | | | |
| interest | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Profit/(loss) | - | - | - | - | - | 4,824 | 4,824 | (2,320) | 2,504 |
| for the year | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| Translation | | | | | | | | | |
| adjustment for | - | - | - | - | 749 | - | 749 | (14) | 735 |
| the year | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| 30 June 2010 | 29,108 | 32,035 | (2,047) | 833 | (576) | (18,234) | 41,119 | 314 | 41,433 |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
| | | | | | | | | | |
+-----------------+----------+---------+----------+----------+-------------+-------------+----------+-----------------+----------+
Statement of changes in equity
for the year ended 30 June 2010
+-----------------+----------+----------+----------+----------+----------+-------------+-----------+
| | | | Share | Retained | |
| | | Share | based | earnings/ | |
| | Issued | premium | payment | Accumulated | |
| | capital | account | reserve | losses | Total |
+-----------------+----------+---------------------+---------------------+-------------+-----------+
| Company | A$ 000's | A$ 000's | A$ 000's | A$ 000's | A$ 000's |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| 1 July 2008 | 26,439 | 32,035 | 411 | 967 | 59,852 |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Options granted | - | - | 60 | - | 60 |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Share based | - | - | 186 | - | 186 |
| payments | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Loss for the | - | - | - | (24,701) | (24,701) |
| year | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| 30 June 2009 | 26,439 | 32,035 | 657 | (23,734) | 35,397 |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Shares issued | 2,669 | - | - | - | 2,669 |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Share issue | - | - | - | (258) | (258) |
| costs | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Share based | - | - | 176 | - | 176 |
| payments | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| Loss for the | - | - | - | (2,554) | (2,554) |
| year | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| 30 June 2010 | 29,108 | 32,035 | 833 | (26,546) | 35,430 |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| | | | | | |
+-----------------+----------+----------+---------------------+------------------------+-----------+
| | | | | | | | |
+-----------------+----------+----------+----------+----------+----------+-------------+-----------+
Consolidated statement of financial position
at 30 June 2010
+------------------------+--------+----------+----------+----------+----------+
| | Note | 2010 | 2009 |
+------------------------+--------+---------------------+---------------------+
| | | A$ 000's | A$ | A$ | A$ |
| | | | 000's | 000's | 000's |
+------------------------+--------+----------+----------+----------+----------+
| Current assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Cash and cash | | | 5,800 | | 9,779 |
| equivalents | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Trade and other | | | 3,283 | | 7,878 |
| receivables | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Inventories | | | 8,288 | | 7,523 |
+------------------------+--------+----------+----------+----------+----------+
| Other financial | | | 11 | | 11 |
| assets-rental bonds | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non interest bearing | | | 88 | | 109 |
| loans receivable | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Interest bearing loans | | | - | | 9,025 |
| receivable | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Current tax assets | | | - | | 108 |
+------------------------+--------+----------+----------+----------+----------+
| Prepayments | | | 205 | | 264 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total current assets | | | 17,675 | | 34,697 |
+------------------------+--------+----------+----------+----------+----------+
| Non-current assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Property, plant and | | 8,907 | | 9,264 | |
| equipment | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Oil and gas intangible | | 24,127 | | 26,273 | |
| assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Other financial assets | | 1 | | - | |
+------------------------+--------+----------+----------+----------+----------+
| Deferred tax assets | | 493 | | 564 | |
+------------------------+--------+----------+----------+----------+----------+
| Prepayments | | 26 | | 41 | |
+------------------------+--------+----------+----------+----------+----------+
| Other intangible | | 2,940 | | 3,003 | |
| assets and goodwill | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total non-current | | | 36,494 | | 39,145 |
| assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total assets | | | 54,169 | | 73,842 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Current liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Trade and other | | 2,861 | | 5,890 | |
| payables | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Interest bearing loans | | 8,055 | | 9,787 | |
| and borrowings | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non interest bearing | | - | | 19,029 | |
| loans and borrowings | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Income tax payable | | 149 | | 459 | |
+------------------------+--------+----------+----------+----------+----------+
| Employee benefits | | 758 | | 388 | |
+------------------------+--------+----------+----------+----------+----------+
| Provisions | | 150 | | 148 | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total current | | | 11,973 | | 35,701 |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non-current | | | | | |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Interest bearing loans | | 505 | | 1,653 | |
| and borrowings | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Employee benefits | | 71 | | 297 | |
+------------------------+--------+----------+----------+----------+----------+
| Provisions | | 167 | | 155 | |
+------------------------+--------+----------+----------+----------+----------+
| Deferred tax | | 20 | | 429 | |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total Non-current | | | 763 | | 2,534 |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total liabilities | | | 12,736 | | 38,235 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Net assets | | | 41,433 | | 35,607 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Equity | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Equity attributable to equity | | | | |
| holders of the parent | | | | |
+---------------------------------+----------+----------+----------+----------+
| Issued capital | | | 29,108 | | 26,439 |
+------------------------+--------+----------+----------+----------+----------+
| Share premium | | | 32,035 | | 32,035 |
+------------------------+--------+----------+----------+----------+----------+
| Other equity | | | (2,047) | | (2,047) |
+------------------------+--------+----------+----------+----------+----------+
| Other reserves | | | 257 | | (668) |
+------------------------+--------+----------+----------+----------+----------+
| Accumulated losses | | | (18,234) | | (15,156) |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | 41,119 | | 40,603 |
+------------------------+--------+----------+----------+----------+----------+
| Non-controlling | | | 314 | | (4,996) |
| interests | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total equity | | | 41,433 | | 35,607 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
These financial statements were approved by the Board of Directors on 27 August
2010 and were signed on its behalf by:
Haydn Gardner
Director
Company statement of financial position
at 30 June 2010
+------------------------+--------+----------+----------+----------+----------+
| | Note | 2010 | 2009 |
+------------------------+--------+---------------------+---------------------+
| | | A$ 000's | A$ | A$ | A$ |
| | | | 000's | 000's | 000's |
+------------------------+--------+----------+----------+----------+----------+
| Current assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Cash and cash | | | 1,282 | | 232 |
| equivalents | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Trade and other | | | 308 | | 1,437 |
| receivables | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Interest bearing loans | | | 27,709 | | 25,405 |
| receivable | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non-interest bearing | | | 88 | | 109 |
| loans receivable | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Current tax asset | | | - | | 51 |
+------------------------+--------+----------+----------+----------+----------+
| Prepayments | | | 54 | | 56 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total current assets | | | 29,441 | | 27,290 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non-current assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Investments | 4 | 8,602 | | 8,901 | |
+------------------------+--------+----------+----------+----------+----------+
| Prepayments | | 26 | | 37 | |
+------------------------+--------+----------+----------+----------+----------+
| Deferred tax assets | | 210 | | 290 | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total non-current | | | 8,838 | | 9,228 |
| assets | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total assets | | | 38,279 | | 36,518 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Current liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Trade and other | | 2,268 | | 240 | |
| payables | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non-interest bearing | | 141 | | - | |
| loans and borrowings | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Employee benefits | | 436 | | 159 | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total current | | | 2,845 | | 399 |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Non-current | | | | | |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Employee benefits | | - | | 291 | |
+------------------------+--------+----------+----------+----------+----------+
| Deferred tax | | 4 | | 431 | |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total Non-current | | | 4 | | 722 |
| liabilities | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total liabilities | | | 2,849 | | 1,121 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Net assets | | | 35,430 | | 35,397 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Equity | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Issued capital | | | 29,108 | | 26,439 |
+------------------------+--------+----------+----------+----------+----------+
| Share premium | | | 32,035 | | 32,035 |
+------------------------+--------+----------+----------+----------+----------+
| Other reserves | | | 833 | | 657 |
+------------------------+--------+----------+----------+----------+----------+
| Accumulated losses | | | (26,546) | | (23,734) |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
| Total equity | | | 35,430 | | 35,397 |
+------------------------+--------+----------+----------+----------+----------+
| | | | | | |
+------------------------+--------+----------+----------+----------+----------+
These financial statements were approved by the Board of Directors on 27 August
2010 and were signed on its behalf by:
Haydn Gardner
Director
Consolidated statement of cash flows
for the year ended 30 June 2010
+--------------------------+------+----------+---------+----------+----------+
| | Note | 2010 | 2009 |
+--------------------------+------+--------------------+---------------------+
| | | A$ 000's | A$ | A$ | A$ |
| | | | 000's | 000's | 000's |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Profit/(loss) for the | | | 2,504 | | (42,292) |
| financial year | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Adjustments for: | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Depreciation and | | | 862 | | 915 |
| amortisation of plant | | | | | |
| and equipment | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Impairment of property | | | - | | 523 |
| plant and equipment | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Amortisation of | | | 63 | | 69 |
| development and | | | | | |
| abandonment costs | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net unrealised foreign | | | 3,598 | | (5,259) |
| exchange losses/(gains) | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Impairment of goodwill | | | - | | 5,335 |
+--------------------------+------+----------+---------+----------+----------+
| Impairment of oil & gas | | | 119 | | 30,021 |
| assets | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Foreign exchange gain on | | | - | | (4,924) |
| venture capital | | | | | |
| investment | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Revaluation of | 4 | | - | | 24,054 |
| investment | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Employee share option | | | 176 | | 246 |
| costs | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Gain on settlement of | | | (6,595) | | - |
| debt | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net finance income | | | (616) | | (1,110) |
+--------------------------+------+----------+---------+----------+----------+
| Income tax credit | | | 107 | | (4,170) |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | 218 | | 3,408 |
+--------------------------+------+----------+---------+----------+----------+
| Changes in assets and | | | | | |
| liabilities: | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease/(increase) in | | 3,089 | | (2,752) | |
| receivables | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| (Increase)/decrease in | | (764) | | 2,964 | |
| inventory | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease in other | | - | | 47 | |
| financial assets-rental | | | | | |
| bonds | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease in prepayments | | 75 | | 262 | |
+--------------------------+------+----------+---------+----------+----------+
| (Decrease)/increase in | | (2,698) | | 985 | |
| payables | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Increase in provisions | | 2 | | 159 | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | (296) | | 1,665 | |
+--------------------------+------+----------+---------+----------+----------+
| Interest paid | | (619) | | (785) | |
+--------------------------+------+----------+---------+----------+----------+
| Income tax paid | | (688) | | (545) | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | (1,603) | | 335 |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net cash flows (used | | | | | |
| in)/from operating | | | (1,385) | | 3,743 |
| Activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash flows from | | | | | |
| investing activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Interest received | | | 122 | | 596 |
+--------------------------+------+----------+---------+----------+----------+
| Acquisition of | | | - | | 85 |
| subsidiary net of cash | | | | | |
| acquired | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Development expenditure | | | (1,194) | | (3,918) |
+--------------------------+------+----------+---------+----------+----------+
| Provision of loans to | | | - | | (7,450) |
| third parties | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Loan to joint venture | | | - | | (5,216) |
| company | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Purchase of property, | | | (240) | | (189) |
| plant and equipment | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Payment of cash bonds | | | (1) | | - |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net cash flows used in | | | (1,313) | | (16,092) |
| investment activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash flow from financing | | | | | |
| activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Proceeds from issue of | | | 2,411 | | - |
| share capital | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Proceeds from borrowings | | | - | | 10,000 |
+--------------------------+------+----------+---------+----------+----------+
| Repayment of borrowings | | | (3,083) | | (3,300) |
+--------------------------+------+----------+---------+----------+----------+
| Payment of finance lease | | | (270) | | (232) |
| liabilities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net cash flows (used | | | (942) | | 6,468 |
| in)/from financing | | | | | |
| activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net decrease in cash and | | | (3,640) | | (5,881) |
| cash equivalents | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash and cash | | | | | |
| equivalents at beginning | | | 9,779 | | 15,009 |
| of the year | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Effect of exchange rate | | | (339) | | 651 |
| fluctuations on cash | | | | | |
| held | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash and cash | | | 5,800 | | 9,779 |
| equivalents at end of | | | | | |
| year | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
Company statement of cash flows
for the year ended 30 June 2010
+--------------------------+------+----------+---------+----------+----------+
| | Note | 2010 | 2009 |
+--------------------------+------+--------------------+---------------------+
| | | A$ 000's | A$ | A$ | A$ |
| | | | 000's | 000's | 000's |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Loss for the financial | | | (2,554) | | (24,701) |
| year | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Adjustments for: | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net unrealised foreign | | | 1,350 | | (440) |
| exchange losses/(gains) | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Share option costs | | | 176 | | 246 |
+--------------------------+------+----------+---------+----------+----------+
| Impairment of loan to | | | 1,229 | | 26,101 |
| subsidiary company | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Impairment of investment | | | 1,931 | | - |
+--------------------------+------+----------+---------+----------+----------+
| Management fees | | | - | | (615) |
+--------------------------+------+----------+---------+----------+----------+
| Net finance income | | | (4,262) | | (3,682) |
+--------------------------+------+----------+---------+----------+----------+
| Income tax | | | (347) | | 368 |
| (credits)/expense | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | (2,477) | | (2,723) |
+--------------------------+------+----------+---------+----------+----------+
| Changes in assets and | | | | | |
| liabilities: | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease in receivables | | (308) | | 31 | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease in other | | - | | 33 | |
| financial assets | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease in prepayments | | 14 | | 25 | |
+--------------------------+------+----------+---------+----------+----------+
| Increase in payables | | 2,012 | | 78 | |
+--------------------------+------+----------+---------+----------+----------+
| Decrease in current tax | | - | | - | |
| liability | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| (Decrease)/Increase in | | (14) | | 111 | |
| provisions | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | 1,704 | | 278 | |
+--------------------------+------+----------+---------+----------+----------+
| Interest paid | | - | | (17) | |
+--------------------------+------+----------+---------+----------+----------+
| Income tax received | | 51 | | - | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net cash flows used in | | | | | |
| operating | | | (722) | | (2,462) |
| Activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash flows used in | | | | | |
| investing activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Interest received | | | 18 | | 218 |
+--------------------------+------+----------+---------+----------+----------+
| Dividend received | | | 483 | | - |
+--------------------------+------+----------+---------+----------+----------+
| Provision of loan to | | | (2,685) | | (5,573) |
| subsidiaries | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Receipt of loan | | | 1,532 | | - |
| repayments | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Provision of loans to | | | - | | (7,559) |
| third parties | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Purchase of investment | | | - | | (435) |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net cash flows used in | | | (651) | | (13,349) |
| investing activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash flows from | | | | | |
| financing activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Proceeds from issue of | | | 2,411 | | - |
| share capital | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | - | | - |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net cash flows from | | | 2,411 | | - |
| financing activities | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Net increase/(decrease) | | | | | |
| in cash and cash | | | 1,038 | | (15,811) |
| Equivalents | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash and cash | | | 232 | | 15,198 |
| equivalents at beginning | | | | | |
| of the year | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Effect of exchange rate | | | 12 | | 845 |
| fluctuations on cash | | | | | |
| held | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| Cash and cash | | | 1,282 | | 232 |
| equivalents at end of | | | | | |
| year | | | | | |
+--------------------------+------+----------+---------+----------+----------+
| | | | | | |
+--------------------------+------+----------+---------+----------+----------+
Notes
(forming part of the financial statements)
Authorisation of financial statements and statement of compliance with IFRS
The Group's and Company's financial statements for the year ended 30 June 2010
were authorised for issue by the Board of Directors on 27 August 2010 and the
Statements of financial positions were signed on the Board's behalf by H
Gardner. Rheochem Plc is a public limited company incorporated in England and
Wales and domiciled in Australia, it principal place of business is 11 Alacrity
Place Henderson, Western Australia. The Company's ordinary shares are traded on
the Alternative Investment Market (AIM) of the London Stock Exchange and the
Australian Securities Exchange (ASX).
The principal accounting policies adopted by the Group and Company are set out
in note 1.
1 Accounting policies
Basis of preparation
The group financial statements comprise the Company and its subsidiaries
(together referred to as the "Group"). The parent company financial statements
present information about the Company as a separate entity and not about its
group.
The Group financial statements have been prepared and approved by the Directors
in accordance with International Financial Reporting Standards as adopted by the
EU ('Adopted IFRSs'). The parent company financial statements have been
prepared and approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU ('Adopted IFRSs') as applied
in accordance with the provisions of the Companies Act 2006.
On publishing the parent company financial statements here together with the
group financial statements, the Company is taking advantage of the exemption in
s408 of the Companies Act 2006 not to present its individual income statement
and related notes which form a part of these approved financial statements.
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements
Going Concern
The financial statements have been prepared on a going concern basis, which the
Directors believe to be appropriate for the following reasons.
The Directors acknowledge that, at present, it is the Oil Services division of
the group that supports the oil and gas exploration division through provision
of working capital funding, albeit it, as described below, external funding
would be required to fund development of the Athena field, which is a
significant decision about the future direction of the group that needs to be
taken in the coming months. Management have prepared cash flow forecasts for
the trading oil services business, for the period to 31 December 2011 based on
management's assessment of the prospects of the group's operations, and, taking
into account possible adverse variances from forecasts or trading conditions
that might reasonably occur, have satisfied themselves that the Group will be
able to meet its external liabilities as they fall due, including for example,
scheduled repayments on the group's bank debt. Within these forecasts,
management have assumed that the remaining bank loan will be rolled over at its
annual review.
Further information regarding the company's business activities, together with
the factors likely to affect its future development, performance and position is
set out in the Chief Executive's Overview and Directors' Report on pages 1 to
17. In addition note 2 to the financial statements includes the company's
objectives, policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments; and its exposures
to credit risk and liquidity risk.
As disclosed in note 25 a contingent liability of $A17.3m has been disclosed but
no adjustment has been made in respect of this. The directors believe no
outflow is probable. The directors acknowledge that the ultimate outcome of
these legal proceedings, against Zeus Petroleum Limited ("Zeus"), cannot
currently be determined with any certainty. Whilst no provision for any
liability that may result has been made in the
financial statements, in the event that the claim fully crystallises, it would
amount to A$17.3m in the group accounts and up to A$13.3m in the Company
accounts against amounts receivable from subsidiaries. Zeus's liabilities are
not guaranteed by any group member.
The Directors are expecting that approval for the development plan for the
Athena field, the principal asset of Zeus, will be obtained prior to the end of
December 2010 from the Boards of the respective field partners and from the UK
Government. The Directors have arranged, subject to Government Production
Consent, funding in principle for the Athena field for half of the required
development funds subject to conditions (being a repayment by a percentage of
operating revenue), and they continue to review funding options for the Athena
Project which include but are not limited to project development funding; other
debt instruments; farm out or trade sale of E&P assets; trade sale of the
services business; equity raising, and the demerger of the E&P subsidiary with
independent funding. The Directors expect to be in a position to report on
progress in October 2010. There is, however, no guarantee that funding will be
secured on acceptable terms especially in the context of the legal proceedings
referred to above.
The Directors recognise that, should Zeus at any time fail to secure the
required project funding for the Athena development, then the Directors would
not commit to further capital expenditure on the project. In the event that
this decision was taken the Directors recognise that the existing interest in
Athena would be impaired. The current carrying value of oil and gas assets in
these financial statements of A$24.1m. In the event of such an impairment the
Directors estimate that a significant portion of the A$19.3m carrying amount of
Rheochem Plc's loans due from Zeus and its immediate parent entity, Lochard
Energy Limited, to whom it also has loans payable (note 14), may be impaired.
Such an eventuality would not affect the ability of the rest of the group to
continue trading.
Further, in the event that the group were to provide the required funding for
the Athena development through the funding options for the Athena Project, which
include but are not limited to, project development funding, other debt
instruments, farm out or trade sale of E&P assets, trade sale of the services
business, equity raising, and the demerger of the E&P subsidiary with
independent funding, the funding (referred to above) would be required to be
sufficient not only to meet the anticipated cash calls for the development but
to meet the on-going working capital and other requirements of Rheochem Plc and
its remaining subsidiaries and the litigation claim (referred to above) in the
event that it fully crystallised.
Taking the above into account the directors have a reasonable expectation that
the company has adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis in
preparing the annual financial statements.
Adoption of IFRSs in issue but not yet effective
Certain new standards, interpretations and amendments to existing standards have
been published and are mandatory for the Group's accounting periods beginning on
1 July 2010 or later periods but which the Group has not adopted early. Those
that may be applicable to the Group are as follows:
International Accounting Standards (IAS / IFRSs)
· IFRS 9 Financial Instruments (not yet endorsed)
· Revised IAS 24 Related Party Disclosures (endorsed 19 July 2010)
· Amended IAS 32 Classification of Rights Issues-Amendment to IAS 32
Financial Instruments: Presentation (endorsed 23 December 2009)
· Various Improvements to International Financial Reporting Standards
2010
International Financial Reporting Interpretations Committee (IFRIC)
· IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
(endorsed 23 July 2010)
The impact on the Group's financial statements of the future standards,
amendments and interpretations is still under review, but the Group does not
currently expect any of these changes to have a material impact on the results
or the net assets of the Company or the Group.
Measurement convention
The financial statements are prepared on the historical cost basis except the
following assets and liabilities which are stated at their fair value:
· derivative financial instruments,
· financial instruments classified as fair value through the profit or loss
or as available-for-sale.
These consolidated financial statements are presented in Australian Dollars
(A$), which is the Company's functional currency. All financial information
presented in A$ has been rounded to the nearest thousand.
Changes in accounting policies
Starting as of 1 July 2009 the group has changed its accounting policies in the
following areas:
Accounting for acquisitions of non-controlling interests IFRS 3
Presentation of financial statements IAS 1
Consolidated and separate financial statements IAS 27
Determination and presentation of operating segments IFRS 8
Accounting for Acquisitions of non-controlling interests
The Group has adopted early IFRS 3 business combinations (2008) and IAS 27
consolidated and separate financial statements 2008 for acquisitions of non
controlling interests occurring in financial year starting 1st July 2009. The
group has applied IAS 27 (2008) for the acquisitions of non controlling
interests as explained in note 11.
Under the new accounting policy, acquisitions of non controlling interests are
accounted for as transactions with equity holders in their capacity as equity
holders and therefore no goodwill is recognised as a result of such
transactions. Previously, good will was recognised arising on the acquisition
of a non controlling interest in a subsidiary; and that represented the excess
of the cost of the additional investment over the carrying amount of the
interest in the net assets acquired at the date of exchange.
The change in accounting policy was applied prospectively and had no material
impact on earnings per share.
Presentation of financial statements
The group applies revised IAS1 presentation of financial statements 2007, which
became effective as of 1st July 2009. As a result the group presents in the
consolidated statement of changes in equity all owner changes in equity, whereas
all non owner changes in equity are presented in the consolidated statement of
comprehensive income.
Comparative information has been represented so that it also is in conformity
with the revised standard. Since the change in accounting policy only impacts
presentation aspects, there is no impact on earnings per share.
Determination and presentation of operating segments
As of 1st of July 2009 the group determines and presents operating segments
based on the information that internally is provided to the CEO, who is the
Group's chief operating decision maker ('CODM'). This change in accounting
policy is due to the adoption of IFRS 8 Operating Segments. Previously
operating segments were determined and presented in accordance with IAS 14
Segment Reporting. The new accounting policy in respect of segment operating
disclosures is present as follows.
Comparative segment information has been re-presented in conformity with the
transitional requirements of the standard. Since the change in accounting
policy only impacts presentation and disclosure aspects, there is no impact on
earnings per share.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's other
components. An operating segment's operating results are reviewed regularly by
the CODM to make decisions about resources to be allocated to the segment as
assess its performance and for which discrete financial information is
available.
Segment results that are reported to the CODM include items directly
attributable to a segment as well as those that can be allocated on a reasonable
basis. Unallocated items comprise mainly corporate assets (primarily the
Company's headquarters), head office expenses, and income tax assets and
liabilities.
Segment capital expenditure is the total cost incurred during the period to
acquire property, plant and equipment, and intangible assets other than
goodwill.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
30 June each year. Control is achieved where the Company has the power to govern
the financial and operating policies of an entity so as to obtain benefits from
its activities.
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to profit and loss in the period of
acquisition. The interest of minority shareholders is stated at the minority's
proportion of the fair values of the assets and liabilities recognised.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the date control commences until the
date that control ceases.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Where there is a change in the proportion of a minority shareholder's interest,
without a change in control arising, the transaction affects equity only.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement. Non-monetary
assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated at foreign exchange
rates ruling at the dates the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to the Group's
reporting currency at foreign exchange rates ruling at the balance sheet date.
The revenues and expenses of foreign operations are translated at an average
rate for the period where this rate approximates to the foreign exchange rates
ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations, and of
related qualifying hedges are taken directly to the translation reserve. They
are released into the income statement upon disposal.
The Group has taken advantage of the relief available in IFRS 1 to deem the
cumulative translation differences for all foreign operations to be zero at the
date of transition to Adopted IFRSs (1 July 2005).
Significant accounting judgments, estimates and assumptions
In applying the Group's accounting policies, management continually evaluates
judgements, estimates and assumptions based on experience and other factors,
including expectations of future events may have an impact on the Group. All
judgments, estimates and assumptions made are believed to be reasonable based on
the most current set of circumstances available to management. Actual results
may differ from the judgements, estimates and assumptions. Significant
judgments, estimates and assumptions made by management in the preparation of
these financial statements are outlined below:
Significant accounting estimates
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences if
management considers that it is probable future taxable profits will be
available to utilise these temporary differences.
Contingent liabilities
Note 25 discloses the contingent liabilities of the Group and Company.
Carrying value of certain assets and liabilities
The carrying amounts of certain assets and liabilities are often determined
based on estimates and assumptions of future events. The key estimates and
assumptions which have a significant risk of causing a material adjustment to
the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
Oil and gas assets
Exploration and evaluation costs are initially classified and held as intangible
fixed assets rather than being expensed. The carrying value of intangible
exploration and evaluation assets are then determined. Management considers
these assets for impairment at least annually based on an estimation of the
recoverability of the cost pool from future revenues of the related oil and gas
reserves. The carrying of value of the North Sea assets included within note 12
is A$23.768million at 30 June 2010 (2009: A$25.894million). If that asset were
to be fully impaired the impact of this on the Group financial statements would
be significant.
Critical accounting estimates and assumptions
The estimates and underlying assumptions are reviewed on an ongoing basis.
Changes in accounting estimates may be necessary, if there are changes in the
circumstances on which the estimate was based or as a result of new information.
Such changes are recognised in the period in which the estimate is revised.
Critical judgements in applying the Group's accounting policies
The application of the Group's accounting policies may require management to
make judgements, apart from those involving estimates, which can have a
significant effect on the amounts recognised in the financial statements.
Management judgement is particularly required when assessing the substance of
transactions which have a complicated structure or legal form.
Impairment of goodwill and intangibles with indefinite useful lives
The Group determines whether goodwill is impaired at least on an annual basis.
This requires an estimation of the recoverable amount of the cash-generating
units to which the goodwill and intangibles with indefinite useful lives are
allocated.
Allowance for impairment loss on trade receivables and other receivables
Where receivables are outstanding beyond normal trading terms, the likelihood of
the recovery of these receivables is assessed by management.
Estimate of useful lives of assets
The estimation of the useful lives of assets has been based on historical
experience. In addition, the condition of the assets is assessed at least once a
year and considered against the remaining useful life. Adjustments to useful
life are made when considered necessary.
Revenue recognition
Revenue is recognised to the extent it is probable the economic benefits will
flow to the entity and the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised:
(i) Sale of goods
Revenue on the sale of drilling fluids is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer and the costs
incurred or to be incurred in respect of the transaction can be measured
reliably. Risks and rewards of ownership are considered passed to the buyer at
the time of delivery of the goods to the customer.
(ii) Rendering of engineering services
Contract revenue is recognised by reference to the stage of completion of a
contract. Stage of completion is measured by reference to the labour hours
incurred to date as a percentage of total estimated labour hours for each
contract. When contract revenue cannot be estimated reliably, revenue is
recognised only to the extent of the expenses recognised that are recoverable.
(iii) Oil and gas revenue
Oil and gas sales revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for the Group's share
of oil and gas supplied in the period.
Oil and Gas Exploration Assets
The Group follows the "successful efforts" method of accounting for exploration
and evaluation costs. All licence/project acquisitions, exploration and
appraisal costs incurred or acquired on the acquisition of subsidiary, are
accumulated in respect of each identifiable project area. Rheochem defines a
'successful exploration well' as a well which discovers probable commercial
reserves and where development may go ahead in the near term These costs, which
are classified as intangible fixed assets are only carried forward to the extent
they are expected to be recouped through the successful development of the area
or where activities in the area have not yet reached a stage which permits
reasonable assessment of the existence of economically recoverable reserves.
Pre-licence/project costs are written off immediately. Other costs are also
written off unless commercial reserves have been established or the
determination process has not been completed. Thus accumulated cost in relation
to an abandoned area are written off in full against profit in the year in which
the decision to abandon the area is made.
When production commences the accumulated costs for the relevant area of
interest are transferred from intangible fixed assets to tangible fixed assets
as 'Developed oil and gas assets'.
Impairment
Exploration/appraisal assets are reviewed regularly for indicators of impairment
following the guidance in IFRS 6 'Exploration for and Evaluation of Mineral
Resources' and tested for impairment where such indicators exist. Any
impairment arising is recognised in the Income Statement for the year.
Impairment reviews on development/producing assets are carried out on each
cash-generating unit identified in accordance with IAS 36 'Impairment of
Assets'. Rheochem's cash generating units are those assets which generate
largely independent cash flows and are normally, but not always, single
development areas.
At each reporting date where there are indicators of impairment, the net book
value of the cash generating unit is compared with the measurable recoverable
amount. If the net book value is higher, then the difference is written off to
the Income Statement as impairment. Forecast production profiles are determined
on an asset-by-asset basis using appropriate petroleum engineering techniques.
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.
Depletion of developed oil and gas assets
Costs carried in each well are depreciated on a unit of production basis using
the ratio of oil and gas production in the period to the estimated quantity of
commercial reserves at the end of the period plus production in the period.
Costs in the unit of production calculation include the net book value of
capitalised costs plus estimated future development costs. Changes in estimates
of commercial reserves or future development costs are dealt with prospectively.
Decommissioning costs
Where a material liability for the removal of production facilities and site
restoration at the end of the field life exists, a provision for decommissioning
is recognised. The amount recognised is the net present value of estimated
future expenditure determined in accordance with local conditions and
requirements. An asset of an amount equivalent to the provision is also added
to oil and gas exploration assets and depreciated on a unit of production basis.
Changes in estimates are recognised prospectively, with corresponding
adjustments to the provision and the associated asset.
Oil & gas trading and venture capital investment
In the prior year, venture capital investment (VCI) were recognised at fair
value at the Statement of financial positions date and the unrealised gain was
included in revenue until such time as the investment was sold, when the
proceeds of sale in excess of previously unrealised gain was recognised as
revenue and the carrying value of the assets sold was taken to cost of sales.
Venture capital investments were recognised and derecognised on a date where the
purchase or sale of an investment was under a binding contract whose terms
require the delivery or settlement of the investments. The Group managed its
venture capital investments with a view to profiting from the receipt of
dividends and changes in fair value of equity investments. Therefore, all
quoted investments and unquoted equity investments held for venture capital
activity were designated at fair value through profit or loss and subsequently
carried in the Statement of financial positions at fair value.
There were no venture capital investments during the year ended 30 June 2010.
Borrowing costs
Borrowing costs are recognised as an expense when incurred.
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a) they include no contractual obligations upon the group to deliver
cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the group; and
(b) where the instrument will or may be settled in the company's own
equity instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the company's own equity instruments or is a
derivative that will be settled by the company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity instruments.
To the extent this definition is not met, the proceeds of issue are classified
as a financial liability. Where the instrument so classified takes the legal
form of the company's own shares, the amounts presented in these financial
statements for called up share capital and share premium account exclude amounts
in relation to those shares.
Where a financial instrument contains both equity and financial liability
components exists these components are separated and accounted for individually
under the above policy. The finance cost on the financial liability component
is correspondingly higher over the life of the instrument.
Finance payments associated with financial liabilities are dealt with as part of
finance expenses. Finance payments associated with financial instruments that
are classified in equity are treated as distributions and are recorded directly
in equity.
Leases
Leases are classified at their inception as either operating or finance leases
based on the economic substance of the agreement so as to reflect the risks and
benefits incidental to ownership.
Operating Leases
The minimum lease payments of operating leases, where the lessor effectively
retains substantially all of the risks and benefits of ownership of the leased
item, are recognised as an expense on a straight-line basis over the term of the
lease.
Finance leases
Leases which effectively transfer substantially the entire risks and benefits
incidental to ownership of the leased item to the Group are capitalised at the
present value of the minimum lease payments and disclosed as property, plant and
equipment under lease. A lease liability of equal value is also recognised.
Capitalised lease assets are depreciated over the shorter of the estimated
useful life of the assets and the lease term.
Minimum lease payments are allocated between interest expense and reduction of
the lease liability with the interest expense calculated using the interest rate
implicit in the lease and charged directly to the Income Statement.
The cost of improvements to or on leasehold property is capitalised, disclosed
as leasehold improvements, and amortised over the period of the lease or the
estimated useful lives of the improvements, whichever is the shorter.
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.
For the purposes of the Consolidated Cash Flow Statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised at fair
value and subsequently measured at amortised cost less an allowance for any
uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that
the Group will not be able to collect the debts. Bad debts are written off when
identified.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Cost is determined on a weighted average basis and includes:
(i) The direct purchase cost of inventory; and
(ii) An allocation of warehouse overheads specifically attributable to bringing
the inventory into:
- a saleable condition
- its present location and condition
- a finished goods state.
Net realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary
to make the sale.
Intra-group financial instruments
Where the Company enters into financial guarantee contracts to guarantee the
indebtedness of other companies within its group, the Company considers these to
be insurance arrangements and accounts for them as such. In this respect, the
Company treats the guarantee contract as a contingent liability until such time
as it becomes probable that the Company will be required to make a payment under
the guarantee.
Income tax
Tax on the profit or loss for the year comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the statement of financial
position date, and any adjustments to the tax payable in respect of previous
years.
Deferred income tax is provided on all temporary differences at the statement of
financial position date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary
differences except:
- when the deferred income tax liability arises from the initial recognition of
goodwill or of an asset or liability in a transaction is not a business
combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
- when the taxable temporary difference is associated with investments in
subsidiaries and the timing of the reversal of the temporary difference can be
controlled and it is probable the temporary difference will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax assets and unused tax losses, to the
extent it is probable 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, except:
- when the deferred income tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction which is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss;
or
- when the deductible temporary difference is associated with investments in
subsidiaries in which case a deferred tax asset is only recognised to the extent
it is probable the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can
be utilised.
The carrying amount of deferred income tax assets is reviewed at each statement
of financial position date and reduced to the extent it is no longer probable
sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each statement of
financial position date and are recognised to the extent it has become probable
future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in
equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally
enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any
accumulated impairment losses. Such cost includes the cost of replacing parts
that are eligible for capitalisation when the cost of replacing the parts is
incurred. Similarly, when each major inspection is performed, its cost is
recognised in the carrying amount of the plant and equipment as a replacement
only if it is eligible for capitalisation.
Depreciation is calculated on a straight line basis over the estimated useful
life of the assets as follows:
+--------------------+-------------------+-------------------------+
| | Life | Method |
+--------------------+-------------------+-------------------------+
| Freehold buildings | 50 years | Straight line |
+--------------------+-------------------+-------------------------+
| Plant and | 2 ½ - 10 years | Straight line |
| equipment | | |
+--------------------+-------------------+-------------------------+
| Motor vehicles | 5 years | Straight line |
+--------------------+-------------------+-------------------------+
| Liquid drilling | 10-20 years | Straight line |
| fluid plant | | |
+--------------------+-------------------+-------------------------+
| | | |
+--------------------+-------------------+-------------------------+
Land is not depreciated.
The assets' residual values, useful lives and amortisation methods are reviewed,
and adjusted if appropriate, at each financial year-end.
Land and buildings are measured at cost less accumulated depreciation on
buildings.
The carrying values of plant and equipment are reviewed for impairment at each
reporting date, with recoverable amount being estimated when events or changes
in circumstances indicate the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less
costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the
risks specific to the asset.
For an asset which does not generate largely independent cash flows, recoverable
amount is determined for the cash-generating unit to which the asset belongs,
unless the asset's value in use can be estimated to be close to its fair value.
Impairment exists when the carrying amount of an asset or cash-generating unit
exceeds its estimated recoverable amount. The asset or cash-generating unit is
then written down to its recoverable amount. Plant and equipment impairment
losses are recognised in the Consolidated Income Statement.
Goodwill
Goodwill acquired in a business combination is initially measured at cost being
the excess of the cost of the business combination over the Company's interest
in the net fair value of the acquiree's identifiable assets, liabilities and
contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
Impairment excluding deferred tax
Assets which have an indefinite useful life are not subject to amortisation and
are tested at each balance sheet date for impairment. Assets subject to
amortisation or depreciation are reviewed for impairment whenever there is an
indication of impairment to determine whether events or changes in circumstances
indicate the carrying amount may not be recoverable. If any such conditions
exist, the recoverable amount of the asset is estimated in order top determine
the extent, if any, of the impairment loss. Where the asset does not generate
cash flows that are independent from other assets, estimates are made of the
cash flows of the cash generating unit to which the asset belongs.
The recoverable amount is the higher of an asset's fair value less costs to sell
and value in use. In assessing value in use, estimated future cash flows are
discounted to their present value using a discount rate appropriate to the
specific asset or cash generating unit.
If the recoverable amount of an asset or cash generating unit is estimated to be
less than its carrying amount, the carrying amount of the asset or cash
generating unit is reduced to its recoverable amount. Impairment losses are
recognised immediately in the income statement.
Impairment losses in respect of goodwill are not reversed.
Intangible Assets
Development expenditure
Development costs are expensed as incurred, except where future benefits are
expected, beyond any reasonable doubt, to exceed those costs. Where development
costs are deferred such costs are amortised over future periods on a basis
related to expected future benefits, being the life of the contract
The carrying value of an intangible asset arising from development expenditure
is tested annually for impairment. If it is determined that the amount is no
longer recoverable, this amount identified is written off.
Trade and other Payables
Trade payables and other payables are recognised at fair value and subsequently
measured at amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year which are unpaid
and arise when the Group becomes obliged to make future payments in respect of
the purchase of these goods and services.
Loans and Borrowings
All loans and borrowings are initially recognised at the fair value of the
consideration received less directly attributable transaction costs.
Subsequent to initial recognition, borrowings are stated at amortised cost using
the effective interest method less any impairment losses.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
A provision for dividends is not recognised as a liability unless the dividends
are declared, determined or publicly recommended on or before the reporting
date.
Under UK Company Law interim dividends could not be considered obligations until
paid
Provision for restoration of leasehold land
The agreement with the lessor in respect of the leasehold land requires the
premises to be restored to the condition which existed prior to the installation
of the Group's fixtures, fittings and mud plant.
The provision recognised is based upon the Group's assessment of the cost of the
removal of these items. The provision has been discounted to its present value,
and will be accreted to its estimated cost over the life of the lease.
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the
company pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an expense in the
Statement of Comprehensive Income as incurred.
Provision is made for employee benefits accumulated as a result of employees
rendering services up to the reporting date. These benefits include wages and
salaries, annual leave and long service leave.
Liabilities arising in respect of wages and salaries, annual leave, sick leave
and any other employee entitlements are measured at their nominal amounts based
on remuneration rates which are expected to be paid when the liability is
settled.
Share-based payment transactions
The grant date fair value of options granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period in
which the employees become unconditionally entitled to the options. The fair
value of the options granted is measured using an option valuation model, taking
into account the terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual number of
share options which vest except where forfeiture is due only to share prices not
achieving the threshold for vesting.
The Group and Company took advantage of the option available in IFRS 1 to apply
IFRS 2 only to equity instruments that were granted after 7 November 2002 and
which had not vested by 1 July 2005.
Where the Company grants options over its own shares to the employees of its
subsidiaries it recognises, in its individual financial statements, an increase
in the cost of investment in its subsidiaries equivalent to the equity-settled
share-based payment charge recognised in its consolidated financial statements
with the corresponding credit being recognised directly in equity.
Where equity instruments are granted to persons other than directors or
employees the consolidated income statement is charged with the fair value of
any goods or services received.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Earnings per share
Basic EPS is calculated as net profit attributable to members, adjusted to
exclude costs of servicing equity (other than dividends) divided by the weighted
average number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
· costs of servicing equity (other than dividends) and preference share
dividends;
· the after tax effect of dividends and interest associated with dilutive
potential ordinary shares that have been recognised as expenses; and
· other non-discretionary changes in revenues or expenses during the period
that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
Investments and other financial assets
Financial assets are classified as either financial assets at fair value through
profit or loss, loans and receivables, held-to-maturity investments, or
available-for-sale investments, as appropriate.
When financial assets are recognised initially, they are measured at fair value,
plus, in the case of investments not at fair value through profit or loss,
directly attributable transactions costs. The Group determines the
classification of its financial assets after initial recognition and, when
allowed and appropriate, re-evaluates this designation at each financial
year-end.
Purchases and sales of financial assets are recognised on the trade date i.e.
the date that the Group commits to purchase or sell the asset. Purchases or
sales are purchases or sales of financial assets under contracts that require
delivery of the assets within the period established generally by regulation or
convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category
'financial assets at fair value through profit or loss'. Financial assets are
classified as held for trading if they are acquired for the purpose of selling
in the near term. Derivatives are also classified as held for trading unless
they are designated as effective hedging instruments. Gains or losses on
investments held for trading are recognised in profit or loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed
maturity are classified as held-to-maturity when the Group has the positive
intention and ability to hold to maturity. Investments intended to be held for
an undefined period are not included in this classification. Investments that
are intended to be held-to-maturity, such as bonds, are subsequently measured at
amortised cost. This cost is computed as the amount initially recognised minus
principal repayments, plus or minus the cumulative amortisation using the
effective interest method of any difference between the initially recognised
amount and the maturity amount. This calculation includes all fees paid or
received between parties to the contract that are an integral part of the
effective interest rate, transaction costs and all other premiums and discounts.
For investments carried at amortised cost, gains and losses are recognised in
profit or loss when the investments are derecognised or impaired, as well as
through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments which are not quoted in an active market. Such assets are
carried at amortised cost using the effective interest method. Gains and losses
are recognised in profit or loss when the loans and receivables are derecognised
or impaired, as well as through the amortisation process.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that
are designated as available-for-sale or are not classified as any of the three
preceding categories. After initial recognition available-for sale investments
are measured at fair value with gains or losses being recognised as a separate
component of equity until the investment is derecognised or until the investment
is determined to be impaired, at which time the cumulative gain or loss
previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial
markets is determined by reference to quoted market bid prices at the close of
business on the balance sheet date. For investments with no active market, fair
value is determined using valuation techniques. Such techniques include using
recent arms length market transactions; reference to the current market value of
another instrument that is substantially the same; discounted cash flow analysis
and option pricing models.
Recoverable amount
Non-current financial assets measured using the cost basis were not carried at
an amount above their recoverable amount, and when a carrying value exceeded
this recoverable amount, the financial asset was written down to its recoverable
amount. In determining recoverable amount, the expected net cash flows were
discounted to their present value using a market determined risk adjusted
discount rate.
2 Operating segments
The Group has adopted IFRS 8 Operating Segments with effect from 1 July 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group which are regularly reviewed by the chief
operating decision maker in order to allocate resources and to assess its
performance. As a result, following adoption of IFRS 8, the identification of
the Group's reportable segments has not changed.
The reporting of external segmental information continues to be the same as in
prior years, segment information is analysed on three principle activities being
Drilling fluid operations, Oil & gas assets and Corporate services.
The information reported to the chief operating decision maker is focused on the
three principle activities. A separate statement of comprehensive income is
prepared for the three principle activities, being Drilling fluid services, Oil
and gas assets and Corporate services, the three activities are then summarised
into a consolidated statement of comprehensive income.
The Group's reportable segments under IFRS 8 consist of the following Group
entities:
Corporate services Rheochem Plc
Drilling fluid operations Rheochem Limited, Rheochem Pacific Limited,
Rheochem India Pvt Ltd and PT Rheochem Indonesia.
Oil and gas assets Lochard Energy Limited, Zeus Petroleum Limited
and
Lochard Energy Inc.
There are varying amounts of transactions between the group entities, all
intersegment pricing is determined on an arms length basis.
Comparative segment information has been re-presented to provide conformity with
the revised standard.
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Business | Drilling | | Oil and | | Corporate | | Total |
| Segment | fluid | | gas assets | | services | | |
| | services | | | | | | |
+-------------------+------------------------------------------------+----------+----------------------------------------------+----------+-------------------------------------+----------+-------------------------------------+
| | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| | 2010 | 2009 | | 2010 | 2009 | | 2010 | 2009 | | 2010 | 2009 |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| | A$000's | A$000's | | A$000's | A$000's | | A$000's | A$000's | | A$000's | A$000's |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Revenue | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Revenue from | 20,318 | 34,161 | | 18 | 17 | | 65 | | | 20,401 | 34,178 |
| external | | | | | | | | - | | | |
| customers | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Inter | 1,133 | 984 | | | (103) | | 397 | 615 | | 1,530 | 1,496 |
| -segment | | | | - | | | | | | | |
| revenues | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Unrealised | | | | | (24,054) | | | | | | (24,054) |
| VCI | - | - | | - | | | - | - | | - | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Total | | | | | | | | | | 21,931 | 11,620 |
| segment | | | | | | | | | | | |
| revenues | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Eliminate | | | | | | | | | | (1,530) | (1,496) |
| Inter-segment | | | | | | | | | | | |
| sales | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Consolidated | | | | | | | | | | 20,401 | 10,124 |
| revenue | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Profit / | | | | | | | | | | | |
| (loss) | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Operating | 3,629 | 6,062 | | 3,300 | (45,303) | | (5,934) | (28,455) | | 995 | (67,696) |
| profit/(loss) | | | | | | | | | | | |
| from | | | | | | | | | | | |
| continuing | | | | | | | | | | | |
| operations | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Depreciation | (918) | (1,499) | | (7) | (8) | | | | | (925) | (1,507) |
| & | | | | | | | - | - | | | |
| amortization | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Net interest | (637) | (1,035) | | (320) | (8,512) | | 4,262 | 4,123 | | 3,305 | (5,424) |
| (expense)/income | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Foreign | (527) | 335 | | (6,373) | 4,924 | | (1,350) | | | (8,250) | 5,259 |
| exchange | | | | | | | | - | | | |
| (losses)/gains | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Income tax | (454) | (1,258) | | | 2,959 | | 347 | (368) | | (107) | 1,333 |
| expense/(credits) | | | | - | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Segment | 1,093 | 2,605 | | (3,400) | (45,940) | | (2,675) | (24,700) | | (4,982) | (68,035) |
| profit / | | | | | | | | | | | |
| (loss) | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Eliminate | | | | | | | | | | 7,486 | 25,743 |
| adjustments | | | | | | | | | | | |
| on | | | | | | | | | | | |
| consolidation | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Consolidated | | | | | | | | | | 2,504 | (42,292) |
| losses | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Segment | 110 | 375 | | 8,678 | 574 | | 4,258 | 3,699 | | 13,046 | 4,648 |
| finance | | | | | | | | | | | |
| income | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Foreign | 8 | | | 1,690 | 6,379 | | - | 441 | | 1,698 | 6,820 |
| exchange | | - | | | | | | | | | |
| gains | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Finance | 118 | 375 | | 10,368 | 6,953 | | 4,258 | 4,140 | | 14,744 | 11,468 |
| income | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Eliminate | | | | | | | | | | (6,895) | (2,967) |
| adjustments | | | | | | | | | | | |
| on | | | | | | | | | | | |
| consolidation | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| Consolidated | | | | | | | | | | 7,849 | 8,501 |
| finance | | | | | | | | | | | |
| income | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
| | | | | | | | | | | | |
+-------------------+--------------------------+---------------------+----------+---------------------------+------------------+----------+--------------------+----------------+----------+---------------------+---------------+
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+----------+------+-----------------+
| Business | Drilling | | Oil and gas | | Corporate | | Total |
| Segment | fluid | | assets | | services | | |
| | services | | | | | | |
+------------------+-------------------------------------------------------+----------+------------------------------------------------+----------+--------------------------------------------+----------+-----------------------------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | 2010 | 2009 | | 2010 | 2009 | | 2010 | 2009 | | 2010 | 2009 |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | A$000's | A$000's | | A$000's | A$000's | | A$000's | A$000's | | A$000's | A$000's |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Segment | (741) | (1,329) | | (2,678) | (2,726) | | - | (17) | | (3,419) | (4,072) |
| finance | | | | | | | | | | | |
| expense | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Foreign | (535) | (81) | | (8,064) | (12,739) | | (1,345) | | | (9,944) | (12,820) |
| exchange | | | | | | | | - | | | |
| (losses)/gains | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Finance | (1,276) | (1,410) | | (10,742) | (15,465) | | (1,345) | (17) | | (13,363) | (16,892) |
| expense | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Eliminate | | | | | | | | | | 9,126 | 14,760 |
| adjustments | | | | | | | | | | | |
| on | | | | | | | | | | | |
| consolidation | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Consolidated | | | | | | | | | | (4,237) | (2,132) |
| finance | | | | | | | | | | | |
| expense | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Consolidated | (454) | (1,258) | | | 2,959 | | 347 | (368) | | (107) | 1,333 |
| income tax | | | | - | | | | | | | |
| (credit)/expense | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Acquisition | | 189 | | | | | | | | - | 189 |
| of plant and | - | | | - | - | | - | - | | | |
| equipment | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Depreciation | 918 | 976 | | 7 | 8 | | | | | 925 | 984 |
| and | | | | | | | - | - | | | |
| amortization | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Impairment | | 523 | | | | | | | | - | 523 |
| of plant and | - | | | - | - | | - | - | | | |
| equipment | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Impairment | | | | 119 | 30,021 | | | | | 119 | 30,021 |
| of oil and | - | - | | | | | - | - | | | |
| gas assets | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Segment | 28,166 | 34,491 | | 37,212 | 33,092 | | 34,187 | 36,467 | | 99,565 | 104,050 |
| assets | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Eliminate | | | | | | | | | | (45,396) | (30,208) |
| adjustments | | | | | | | | | | | |
| on | | | | | | | | | | | |
| consolidation | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Total | | | | | | | | | | 54,169 | 73,842 |
| consolidated | | | | | | | | | | | |
| assets | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Segment | 15,492 | 22,053 | | 81,297 | 77,106 | | 2,706 | 1,070 | | 99,495 | 100,229 |
| liabilities | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Eliminate | | | | | | | | | | (86,759) | (61,994) |
| adjustments | | | | | | | | | | | |
| on | | | | | | | | | | | |
| consolidation | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| Total | | | | | | | | | | 12,736 | 38,235 |
| consolidated | | | | | | | | | | | |
| liabilities | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+-----------------+-----------------+
| | | | | | | | | | |
+------------------+-------------------------------------------------------+----------+------------------------------------------------+----------+------------------------+-------------------+---------------------+------+-----------------+
| | | | | | | | | | | | | |
+------------------+------------------------------+------------------------+----------+-----------------------------+------------------+----------+------------------------+-------------------+----------+----------+------+-----------------+
Geographical areas
In presenting the information on the basis of geographical areas, segment
revenue is based on the geographical
location of customers. Segment assets are based on the
geographical location of the assets.
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| | 2010 | | 2009 | |
+---------------+-------------------------------------------------------+--+-------------------------------------+--+
| Geographical | Revenue | Total | | Revenue | Total | |
| segments | | assets | | | assets | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| Australia | 15,645 | 58,520 | | 27,308 | 65,665 | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| New | 3,395 | 1,855 | | 5,229 | 2,699 | |
| Zealand | | | | | | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| India | 2,873 | 1,959 | | 3,223 | 2,122 | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| Indonesia | | 19 | | | 472 | |
| | - | | | - | | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| United | | 36,684 | | (24,157) | 32,524 | |
| Kingdom | - | | | | | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| United | 18 | 528 | | 17 | 568 | |
| States | | | | | | |
| of | | | | | | |
| America | | | | | | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| | 21,931 | 99,565 | | 11,620 | 104,050 | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| Eliminate | (1,530) | (45,396) | | (1,496) | (30,208) | |
| adjustments | | | | | | |
| on | | | | | | |
| consolidation | | | | | | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
| Total | 20,401 | 54,169 | | 10,124 | 73,842 | |
+---------------+-----------------------+-------------------------------+--+--------------------+----------------+--+
Major customer
Revenues from one customer of the Drilling fluids segment
represents approximately $8.274million
(2009: $22.423million) of the Group's total revenues.
3 Earnings per share
+-------------------------------------------+----------+----------+
| | 2010 | 2009 |
+-------------------------------------------+----------+----------+
| | A$ 000's | A$ 000's |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Net profit/(loss): Earnings used in | 4,824 | (33,439) |
| calculating basic earnings per share | | |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Net profit/(loss): Earnings used in | 4,824 | (33,439) |
| calculating diluted earnings per share | | |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| | Number | Number |
| | of | of |
| | shares | shares |
+-------------------------------------------+----------+----------+
| In thousands of shares | | |
+-------------------------------------------+----------+----------+
| Weighted average ordinary shares used in | 226,658 | 217,026 |
| calculating basic earnings per share | | |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Weighted average ordinary shares used in | 226,658 | 217,026 |
| calculating diluted earnings per share | | |
+-------------------------------------------+----------+----------+
| | | |
+-------------------------------------------+----------+----------+
| Basis earnings per share (cents per | 2.1 | (15.4) |
| share) | | |
+-------------------------------------------+----------+----------+
| Diluted earnings per share (cents per | 2.1 | (15.4) |
| share) | | |
+-------------------------------------------+----------+----------+
| | | |
| | | |
| | | |
+-------------------------------------------+----------+----------+
4 Investments
+------------------------------+---------+----------+----------+----------+
| | Group | Company |
+------------------------------+--------------------+---------------------+
| | 2010 | 2009 | 2010 | 2009 |
+------------------------------+---------+----------+----------+----------+
| | A$ | A$ 000's | A$ 000's | A$ 000's |
| | 000's | | | |
+------------------------------+---------+----------+----------+----------+
| Current | | | | |
+------------------------------+---------+----------+----------+----------+
| Brought forward balance | - | 27,624 | - | - |
+------------------------------+---------+----------+----------+----------+
| Revaluation of investment | - | (24,054) | - | - |
+------------------------------+---------+----------+----------+----------+
| Elimination of VCI on | - | (3,570) | - | - |
| stepped acquisition | | | | |
+------------------------------+---------+----------+----------+----------+
| | | | | |
+------------------------------+---------+----------+----------+----------+
| Total investments (current) | - | - | - | - |
+------------------------------+---------+----------+----------+----------+
| | | | | |
+------------------------------+---------+----------+----------+----------+
| Non-current investments in | | | | |
| subsidiaries | | | | |
+------------------------------+---------+----------+----------+----------+
| Brought forward balance | - | - | 8,901 | 8,466 |
+------------------------------+---------+----------+----------+----------+
| Purchase of shares in PT | - | - | - | 435 |
| Rheochem Indonesia | | | | |
+------------------------------+---------+----------+----------+----------+
| Reclassification as non | - | - | (299) | - |
| interest bearing loan | | | | |
+------------------------------+---------+----------+----------+----------+
| | | | | |
+------------------------------+---------+----------+----------+----------+
| Investments at cost | - | - | 8,602 | 8,901 |
+------------------------------+---------+----------+----------+----------+
| | | | | |
+------------------------------+---------+----------+----------+----------+
The principal Group companies at 30 June 2010 are set out below:
+----------------+---------------+------+------+----------+---------------+
| | Principal | Proportion | Class | Place |
| Subsidiaries | activity | of voting | of | of |
| | in the year | rights and | share | incorporation |
| | | shares | held | |
| | | held | | |
+----------------+---------------+-------------+----------+---------------+
| | | 2010 | 2009 | | |
+----------------+---------------+------+------+----------+---------------+
| Rheochem | Drilling | 100% | 100% | Ordinary | Australia |
| Limited | fluid | | | | |
| | services | | | | |
+----------------+---------------+------+------+----------+---------------+
| Rheochem | Drilling | 100% | 100% | Ordinary | New |
| Pacific | fluid | | | | Zealand |
| Limited | services | | | | |
+----------------+---------------+------+------+----------+---------------+
| VRMT Well | Dormant | 51% | 51% | Ordinary | Nigeria |
| Services | | | | | |
| Limited | | | | | |
+----------------+---------------+------+------+----------+---------------+
| Rheochem India | Drilling | 70% | 70% | Ordinary | India |
| Private | fluid | | | | |
| Limited | services | | | | |
+----------------+---------------+------+------+----------+---------------+
| Lochard Energy | Holding | 100% | 100% | Ordinary | United |
| Limited | company | | | | Kingdom |
+----------------+---------------+------+------+----------+---------------+
| Lochard Energy | Oil field | 100% | 100% | Ordinary | United |
| Incorporated | developments | | | | States |
| | | | | | of |
| | | | | | America |
+----------------+---------------+------+------+----------+---------------+
| PT Rheochem | Drilling | 80% | 80% | Ordinary | Indonesia |
| Indonesia | fluid | | | | |
| | services | | | | |
+----------------+---------------+------+------+----------+---------------+
| Zeus Petroleum | Oil field | 100% | 50% | Ordinary | United |
| Limited | developments | | | | Kingdom |
+----------------+---------------+------+------+----------+---------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DBLFXBVFZBBE
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