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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Subsea Res. | LSE:SUB | London | Ordinary Share | GB00B03CKQ88 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.26 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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RNS Number:7160K
SubSea Resources PLC
27 December 2007
Interim Results for the 6 months ended 30 September 2007
and Update on Funding and Approaches
SubSea Resources plc ('SubSea' or 'the Company' or 'the Group') today announces
its Interim Results for 6 months ended 30 September 2007 and provides an Update
on Funding and Approaches
Key Features
This is the first set of financial statements that the Company is required to
prepare in accordance with International Financial Reporting Standards ('IFRS').
The transition to IFRS is explained in Note 2 to these interim financial
statements. All comparatives have been re-stated in accordance with IFRS.
Interim Loss before tax £3.7m (Interim 2006 re-stated: loss £ 6.5m).
As at 30 November 2007 cash was £2.9m and outstanding creditors (including the
interest payment accrual for the Bond to 30 November 2007 of £0.75m including
recoverable withholding tax) were approximately £1.5m, leaving free cash
(excluding the bond liabilities of £ 5.0m repayable in 2011) of around £ 1.4m.
An interest payment to the bondholder of £0.81m (including £0.16m recoverable
withholding tax) is due on 31 December 2007.
The bonds liabilities are secured by a debenture and all monies chattels
mortgage and a first preferred Panamanian ship mortgage on the 'John Lethbridge'
in favour of the Bondholder. The Group has a covenant with its Bondholder to
advise it if at any time it has less than £1,000,000 freely available cash. If
such a situation should arise, the Company may not make or enter into any
obligation whether by payment, contract or otherwise having a value in excess of
£75,000 and /or make any decision that may have a material impact on its
business without giving the Bondholder at least 2 Business Days notification of
such proposed event.
The Company has bid for a five month survey, starting in May 2008, of seafloor
massive sulphide deposits utilising the John Lethbridge and its associated
equipment. The Company understands that this contract will be awarded early in
2008.
The Directors are of the opinion that the Group will require debt, equity or an
alternative source of financing within the first few weeks of Calendar 2008.
Subject to the terms of the contract, if the survey bid referred to above is
successful, the Board believes it could make a positive impact to the Company's
cash flows in the short term.
Emphasis of matter - going concern
The Company's Independent Auditors in their review of the Interim Results for
the 6 months ended 30 September 2007 report:
"In forming our review conclusion, we have considered the adequacy of the
disclosures made in Note 1 of the financial statements concerning the ability of
the Group to continue as a going concern. In addition to the cash currently
available, the Group will require additional financing to remain operational for
the following 12 months. As set forth in Note 1 and the Chairman's statement,
the Directors continue to pursue a number of potential opportunities, however
should none of these opportunities prove viable and the group is liquidated, the
sale of assets may well fail to generate sufficient funds to settle the secured
creditors.
These conditions indicate the existence of a material uncertainty which may cast
significant doubt on the ability of the Group to continue as a going concern.
This financial statement does not include the adjustments that would result if
the Group was unable to continue as a going concern."
On 2 October 2007 the Company announced that it had "received approaches
regarding a possible change of control arising from a placing of new ordinary
shares of the Company, or sale of the business of the Company. One of the
approaches received by the Company also contemplated the possibility of an offer
for the entire issued share capital of the Company."
Since 2 October 2007 the Board has been in discussions with a number of parties,
including ones who approached the Company after the announcement made on that
date. Discussions, including with the Company's Bondholder, have been
extensive.
Indicative proposals currently being considered include the injection of equity
into the Company by a new trade investor. Other proposals are for the sale of
all or substantially all of the Company's assets and/or business, the proceeds
from which would be used to repay the bond. The intention of this proposal would
be to leave the Company with inter alia an AIM listing, cash and tax losses
which could be a basis for a new business to be reversed into the Company.
The Board continues to work with a number of parties on approaches to providing
finance and it remains possible that a transaction or transactions could be
completed. However, the Board must alert shareholders that, even if such a
completion occurred, it may well be that the sale of assets may well fail to
generate sufficient funds to settle the bond in full or otherwise that the
Company may have insufficient funds to continue trading. A further announcement
will be made in due course as appropriate.
Ric Piper, Chairman, commented:
"It was Ross Perot who said: "Most people give up just when they're about to
achieve success. They quit on the one yard line. They give up at the last minute
of the game one foot from a winning touchdown."
Whilst the Challenges, as set out under Key Features and in the Interim Results
announcement, for SubSea in the coming weeks are severe, the Board believes that
there are Opportunities to be grasped for the benefit of shareholders and other
stakeholders. Together with the Major Shareholders, the whole Board will
continue to actively engage with all those who have proposals which would
benefit SubSea.
We may be on the one yard line, but there is plenty to play for."
27 December 2007
ENQUIRIES:
SubSea Resources plc Tel: 020 7495 8696
Ric Piper, Chairman
Edward Cox, Chief Financial Officer
HB Corporate Tel: 020 7510 8600
Rod Venables
College Hill Tel: 020 7457 2020
Gareth David
Chairman's Statement
The Chairman's Statement reviews the operational and financial performance for
the 6 months ending 30 September 2007, together with an update on operational
activities in Autumn 2007 as well as an update on Funding and Approaches.
Cautionary Statement
This half-yearly financial report has been prepared for the shareholders of the
Company, as a whole, and its sole purpose and use is to assist shareholders to
exercise their governance rights. In particular, this announcement has not been
audited or otherwise independently verified. The Company and its directors and
employees are not responsible for any other purpose or use or to any other
person in relation to this announcement.
The report contains indications of likely future developments and other
forward-looking statements that are subject to risk factors associated with,
among other things, the economic and business circumstances occurring from time
to time in the countries, sectors and business segments in which the Group
operates. These and other factors could adversely affect the Group's results,
strategy and prospects. Forward-looking statements involve risks, uncertainties
and assumptions. They relate to events and/or depend on circumstances in the
future which could cause actual results and outcomes to differ. No obligation is
assumed to update any forward-looking statements, whether as a result of new
information, future events or otherwise.
Risk
The Group considers strategic, financial and operational risks and identifies
actions to mitigate those risks. Key risks and their mitigation are disclosed in
the 2007 Annual Report and no significant new risks have been identified in the
period.
Specific attention of shareholders is drawn to Funding requirements below.
Statement of Directors' Responsibilities
The Directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34, as adopted by the European Union, and that
the half-yearly management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8.
There has been no change to the Directors of SubSea Resources plc listed in the
Annual Report for 31 March 2007.
Operational performance for the 6 months ending 30 September 2007 ('FY2007/08
H1')
In the announcement dated 25 September 2007 SubSea reported on its operations
for the period 1 April to 24 September 2007, effectively the whole of FY2007/08
H1.The relevant text is repeated below:
In May 2007 the Board announced its planned operations for Summer 2007,"focussed
on the John Lethbridge, with three projects and third party work currently
planned for this summer, of which the principal short-term economic objectives
are firstly revenue from third party survey projects and secondly the search for
and the potential salvage of an historic wreck.
Performance has been disappointing.
The primary short-term economic objective was for certain third party survey
projects to be conducted by the John Lethbridge during the Summer 2007 season to
provide essential short term cash flow. Preliminary discussions did not result
in signed contracts. The Board took mitigating action with a Placing approved by
shareholders in July which raised approximately £4.4 million before expenses.
Following a complete overhaul by contractors of both engines on the John
Lethbridge, unexpected engine problems caused the vessel to be unavailable for
the second half of July and the whole of August, resulting in an inability to
search for an historic wreck which had been one of the principal economic
objectives for Summer 2007. A review is currently underway to establish the
reasons for such issues arising with the main engines. The John Lethbridge and
its equipment has performed generally satisfactorily during September to date.
The John Lethbridge did return to the site of Celia. Based on a further review
of likely recovery rates per day and operating costs the Board decided it was
uneconomic to undertake the light salvage which had been previously planned. The
Board is continuing discussions to seek to re-establish the Group's contractual
position with the cargo's insurer.
Miranda is a freight ship sunk in the North Atlantic carrying a cargo of nickel,
with an estimated gross value in the region of US$ 73 million, based on the
nickel prices on 31 August 2007 (US $ 120 million based on the price on 8 May
2007, the day immediately prior to the Group's announcement on 9 May 2007 ). As
planned in the May 2007 announcement, the John Lethbridge returned to the
Miranda target search area initially visited in October 2006, and at that time
around 40% of the search area was surveyed. The visits in June, July and
September completed the survey which was unsuccessful.
A total of approximately 460 square miles were searched at depths of
approximately 4,000 metres. The sonar performed extremely well and was able to
detect small targets at great range. One 20 metres long wooden shipwreck, about
1-2 metres high was detected at 920 metres range and subsequently videoed by the
ROV. The wreck of Miranda - at 150 metres long and some 15 to 20 metres high-
was not found in the area searched by the John Lethbridge. This is very
disappointing given the significant amount of research work that was conducted
by the research team.
This team will continue during Winter 2007 to review existing data and search
for new evidence as to the location of the wreck. This may result in resuming
the search in Summer 2008."
Since the announcement of 25 September 2007, the review referred to above has
been undertaken to establish the reasons for unexpected engine problems in July
and August. This review has resulted in an insurance claim being prepared.
Financial Performance FY2007/08 H1
The Group has adopted International Financial Reporting Standards ('IFRS') for
the first time; further information is provided under Impact of Adopting IFRS
below. All comparatives have been re-stated.
The Financial Statements have been prepared on a going concern basis. However,
the Group currently does not have sufficient cash resources to continue to meet
Bond covenants or to continue to operate for a 12 month period. Further
information is provided under Funding Requirements below and in note 1 of the
financial statements.
Financial Performance for the 6 months ending 30 September 2007
The operational performance resulted in a loss for the 6 months ended 30
September 2007 before and after tax of £3.7 million (2006: £6.5 million loss
restated), as set out in the Financial Statements. Performance may be analysed
as follows:
Restated
6 months ended 6 months ended
30 September 30 September
2007 2006
(unaudited) (unaudited)
£m £m
Loss before and after tax
Performance from operations (Before depreciation,
impairment and interest) (3.0) (6.0)
Analysed:
Loss on salvage of Celia (4.1)
Development and research (0.1) (0.6)
Survey (1.2)
John Lethbridge 'alongside' and upgrades (1.0) (0.8)
Administrative expenses (0.7) (0.5)
Depreciation (0.4) (0.4)
Operating loss (3.4) (6.4)
Interest payable (0.3) (0.1)
Loss as reported/restated (3.7) (6.5)
Note: included above within the Loss as reported administrative expenses are non
cash charges for share based payments relating to the grant of share options of
£0.20 million (2006: £Nil), of which £0.16 million has been charged to
administrative expenses within operating loss as share based payments made to
directors and £0.05 million to interest payable in respect share options charges
to certain arms length advisers
The Group's cash flow, as set out in the Financial Statements, may be analysed
as follows:
Cash flow 30 September 2007 30 September 2006
£m £m
Operating loss (3.4) (6.4)
Depreciation 0.4 0.4
Share option charges 0.2 -
Decrease in working capital (1.4) (0.2)
Cash outflow from operating activities (4.2) (6.2)
Interest received / (paid) 0.1 (0.1)
Capital expenditure - (2.1)
Net cash outflow (4.1) (8.4)
Issue of ordinary shares 4.2
Loans - 4.3
Increase/(decrease) in cash 0.1 (4.1)
The impact of adopting IFRS and the movement in net assets as set out in the
Financial Statements may be analysed as follows:
Movement in net assets 30 September 2007 30 September 2006
£m £m
Opening net assets at 1 April as previously reported 1.9 10.3
Prior year adjustment re: change of accounting policy for
development and research costs
(0.7)
Effect of transition to IFRS: goodwill subject to impairment test;
negative goodwill recognised in income statement at acquisition
date - 0.1
Opening net assets as restated 1.9 9.7
Loss after tax (3.7) (6.6)
Issue of ordinary share capital 4.2
Equity reserve - 0.6
Employee share option reserve 0.2 -
Net assets as at 30 September 2.6 3.7
Further important financial information is provided under Finances and Funding
requirements below
Operations for the period 1 October to 26 December 2007
In the 25 September 2007 announcement the Board reported that it was "currently
considering its plans to deploy the John Lethbridge over Winter 2007/08. By
comparison, the John Lethbridge was not deployed in either Winter 2005/06 or
Winter 2006/07. The Board is currently reviewing opportunities for a possible
survey in the Eastern Atlantic, before the weather materially impacts
operations.
There may also be opportunities in the Western Atlantic, where the Group has not
surveyed hitherto, including for Vanilla, with an estimated cargo of almost
10,000 tonnes of mainly copper and tungsten.
Commencement of certain other surveys would require the successful conclusion of
permission to survey and the receipt of funds from project farm-ins, as set out
in Funding requirements below."
As noted below under Funding requirements, since the September announcement the
Board has sought to balance undertaking operations with the potential to
generate longer term value to shareholders while preserving cash resources.
Because of the need for cash preservation, the Board has decided to defer
commencing any operations in the Western Atlantic until the Group's funding
requirements are resolved.
In 25 September 2007 announcement the Board reported that 'the John Lethbridge
and its equipment has performed generally satisfactorily during September to
date.' Whilst further engine problems were experienced in early October 2007,
these have now been resolved. As reported above, an insurance claim is being
prepared in connection with these issues.
The result of the survey in the Eastern Atlantic was announced on 9 October
2007. By way of background, on 8 September 2005, SubSea announced that its
survey team had succeeded in locating a 19th century bullion wreck code-named
Ella. On 12 February 2007 the Board announced it believed that the wreck located
has not definitively been proven to be the Ella". The 9 October 2007
announcement was that "the Company's Remote Operating Vehicle ('ROV') had found
the ship's bell, proving definitively that the wreck is not Ella. Given the
project's potential economic value, the Board plans to seek permission from the
relevant authorities to visit other sites and, if necessary, extend the area of
the search in due course."
A very welcome success was the announcement of 13 November 2007 that "the
Company's survey vessel "John Lethbridge" had located and positively identified
a wreck, code-named Audrey. This ship is located in deep water in the Eastern
Atlantic, close to project Miranda, and at the time of sinking was carrying a
cargo of non ferrous metals which are estimated to have a gross value of
approximately $28m at today's prices. The target was only a few nautical miles
from the theoretical sinking position, as established from contemporary records
which are held in the Company's archives, and is lying at a depth of more than
4500 metres. The Remote Operating Vehicle ("ROV") provided very clear video and
stills images, which will be required to plan future salvage operations."
John Kingsford, the Operations Director, has reported to the Board that the
sonar results confirmed that this unit - designed to SubSea's specifications -
is an extremely powerful wreck location system both in terms of its great range
and in its accuracy. The difference between the position given by the sonar for
Audrey and the actual dive position was measured at less than 45 metres. The ROV
also performed very well, returning high quality video and other data from more
than 4500 metres depth.
No further work on the planning of future salvage operations has taken place
since the announcement of 13 November 2007.
As a result of reviewing existing data relating to Miranda, the search zone was
extended and the John Lethbridge revisited the area in November 2007.
Unfortunately adverse weather conditions have so far curtailed operations.
Finances
The Group's net debt, on a cash basis, may be analysed as follows:
Net Debt 30 September 2007 30 November 2007
£m £m
Cash at bank 4.2 2.9
Bond proceeds repayable in 2011 (5.0) (5.0)
(0.8) (2.1)
As at 30 November 2007 cash was £2.9m and outstanding creditors (including the
interest payment accrual for the Bond to 30 November 2007 of £0.75m including
recoverable withholding tax) were approximately £1.5m, leaving free cash
(excluding the bond liabilities of £ 5.0m repayable in 2011) of around £ 1.4m.
An interest payment to the bondholder of £0.81m (including £0.16m recoverable
withholding tax) is due on 31 December 2007.
The Group has a covenant with its Bondholder to advise it if at any time it has
less than £1,000,000 freely available cash. If such a situation should arise,
the Company may not make or enter into any obligation whether by payment,
contract or otherwise having a value in excess of £75,000 and /or make any
decision that may have a material impact on its business without giving the
Bondholder at least 2 Business Days notification of such proposed event.
Section 142 of the Companies Act 1985 states that where the net assets of a
public company are half or less of its called up share capital, the directors
shall not later than 28 days from the earliest day on which the fact is known,
duly convene an Extraordinary General Meeting for the purpose of considering
what action should be taken.
On approving the Group's Financial Statements to 31 March 2007, including new
accounting policies and updated asset valuations, the Directors became aware
that the Group's net assets were 18% of the issued share capital. At the
Extraordinary General Meeting ('EGM') on 30 October 2007 the Board and
shareholders discussed potential plans to deal with this deficiency, including
the necessity for further funding, as set out under Funding requirements below.
These discussions were held in the context of the announcement of 2 October 2007
that the Company announced that it had "received approaches regarding a possible
change of control arising from a placing of new ordinary shares of the Company,
or sale of the business of the Company. One of the approaches received by the
Company also contemplated the possibility of an offer for the entire issued
share capital of the Company. These discussions have only been very preliminary
and a further announcement will be made in due course as appropriate." Further
information is provided under Update on Approaches below
Funding requirements
As announced following shareholders' approval of the Placing in July 2007 "The
proceeds of the Placing will be used to strengthen the Company's financial
position and operational resilience over the coming year, which the Board
believes is a necessary, but not sufficient, critical element in successfully
achieving the Company's strategic objective of identifying and subsequently
undertaking the salvage of deep water commercial cargoes. In addition, funding
will assist the Company in continuing to comply with the financial covenants
contained in its bond arrangements".
The Independent Auditors' report to Shareholders for the year ended 31 March
2007 drew the attention of shareholders to the following Emphasis of Matter:
"In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosures made in Note 1 of the financial statements concerning the
ability of the Group to continue as a going concern. In addition to the
financing currently available, the Group will require additional financing to
remain operational for the following 12 months. As set forth in Note 1, although
these additional funds have yet to be committed, the Directors are confident of
being able to raise them through a combination of "project farm-in agreements"
and further financing in the form of debt or equity.
These conditions indicate the existence of a material uncertainty which may cast
significant doubt on the ability of the Group to continue as a going concern.
These financial statements do not include the adjustments that would result if
the Group was unable to continue as a going concern."
The Company's Independent Auditors in their review of the Interim Results for
the 6 months ended 30 September 2007 report under Emphasis of Matter - Going
Concern:
"In forming our review conclusion, we have considered the adequacy of the
disclosures made in Note 1 of the financial statements concerning the ability of
the Group to continue as a going concern. In addition to the cash currently
available, the Group will require additional financing to remain operational for
the following 12 months. As set forth in Note 1 and the Chairman's statement,
the Directors continue to pursue a number of potential opportunities, however
should none of these opportunities prove viable and the group is liquidated, the
sale of assets may well fail to generate sufficient funds to settle the secured
creditors.
These conditions indicate the existence of a material uncertainty which may cast
significant doubt on the ability of the Group to continue as a going concern.
This financial statements does not include the adjustments that would result if
the Group was unable to continue as a going concern."
As announced on 9 May 2007, the Board has been actively and urgently considering
new potential business models and associated funding opportunities, particularly
project farm-ins for one or more wrecks. On 25 September 2007 the Board reported
that "since May some progress on funding from project farm-ins for a potential
historic target has been made." Since the 25 September 2007 announcement it has
become clear that securing financing through a project farm-in agreement is
virtually certain to require a satisfactory outcome to the Group's overall
funding requirements from equity and/or debt finance.
In the 25 September 2007 announcement the Board reported that:
"if a satisfactory outcome to the current negotiations for a project farm-in
agreement is not achieved, the Directors are of the opinion that the Group would
require debt, equity or an alternative source of financing before the end of
Calendar 2007.
The Directors recognise that there is currently no certainty to the outcome of
the current project farm-in negotiations and they further recognise that there
is a material uncertainty over the Group's ability to raise additional debt or
equity finance. Such ability is dependent upon delivering the strategy set out
in this statement. There is therefore a material uncertainty related to the
above events and conditions which casts significant doubt on the entity's
ability to continue as a going concern and it maybe unable to realise its assets
and discharge its liabilities in the normal course of business."
Since the 25 September 2007 announcement the Board has sought to balance
undertaking operations with the potential to generate longer term value to
shareholders (such as the successful search for the wreck code-named Audrey, as
announced on 13 November 2007) while preserving cash resources.
The Company has submitted a bid for a five month survey, starting in May 2008,
of seafloor massive sulphide deposits utilising the John Lethbridge and its
associated equipment. The Company understands that this contract will be awarded
early in 2008.
Notwithstanding this policy of balance and the survey opportunity, the Directors
are of the opinion that the Group will require debt, equity or an alternative
source of financing within the first few weeks of Calendar 2008. Subject to the
terms of the contract, if the survey bid referred to above is successful, the
Board believes it could make a positive impact to the Company's cash flows in
the short term.
Update on Approaches
On 2 October 2007 the Company announced that it had: "received approaches
regarding a possible change of control arising from a placing of new ordinary
shares of the Company, or sale of the business of the Company. One of the
approaches received by the Company also contemplated the possibility of an offer
for the entire issued share capital of the Company.
These discussions have only been very preliminary and a further announcement
will be made in due course as appropriate."
Since 2 October 2007 the Board has been in discussions with a number of parties,
including ones who approached the Company after the announcement made on that
date.
Indicative proposals currently being considered include the injection of equity
into the Company by a new trade investor. Other proposals are for the sale of
all or substantially all of the Company's assets and/or business, the proceeds
from which would be used to repay the bond. The intention of this proposal would
be to leave the Company with inter alia an AIM listing, cash and tax losses
which could be a basis for a new business to be reversed into the Company.
Tangible asset valuation
Recently commissioned independent valuations of the John Lethbridge and the
Remote Operating Vehicle have confirmed that the valuations of each asset are
above their carrying values in the Group's balance sheet as at 30 September
2007.
Immediate future
As noted above, the Directors are of the opinion that the Group requires debt,
equity or an alternative source of financing within the first few weeks of
Calendar 2008.
The Board continues to work with a number of parties on approaches to providing
finance and it remains possible that a transaction or transactions could be
completed. However, the Board must alert shareholders that, even if such a
completion occurred, it may well be that the sale of assets may well fail to
generate sufficient funds to settle the bond in full or otherwise that the
Company may have insufficient funds to continue trading.
A further announcement will be made in due course as appropriate.
It was Ross Perot who said: "Most people give up just when they're about to
achieve success. They quit on the one yard line. They give up at the last minute
of the game one foot from a winning touchdown."
Whilst the Challenges, as set out under Key Features and in the Interim Results
announcement, for SubSea in the coming weeks are severe, the Board believes that
there are Opportunities to be grasped for the benefit of shareholders and other
stakeholders. Together with the Major Shareholders, the whole Board will
continue to actively engage with all those who have proposals which would
benefit SubSea.
We may be on the one yard line, but there is plenty to play for
Ric Piper
Chairman
27 December 2007
Independent review report to SubSea Resources Plc
Introduction
We have been instructed by the Company to review the condensed financial
statements in the half-yearly financial report for the six months ended 30
September 2007 which comprises the unaudited consolidated balance sheet and the
related unaudited consolidated income statement, the unaudited consolidated
statement of changes in equity, the unaudited consolidated cash flow statement
and the related notes 1 to 14
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of and has been approved by the Directors. The Directors are
responsible for preparing the interim report in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'', issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Review conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2007 is not prepared, in all
material respects, in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market.
Emphasis of matter - going concern
In forming our review conclusion, we have considered the adequacy of the
disclosures made in Note 1 of the financial statements concerning the ability of
the Group to continue as a going concern. In addition to the cash currently
available, the Group will require additional financing in the first few weeks of
2008 to remain operational for the following 12 months. As set forth in Note 1
and the Chairman's statement, the Directors continue to pursue a number of
potential opportunities, however should none of these opportunities prove viable
and the Group is liquidated, the sale of assets may well fail to generate
sufficient funds to settle the secured creditors.
These conditions indicate the existence of a material uncertainty which may cast
significant doubt on the ability of the Group to continue as a going concern.
These financial statements do not include the adjustments that would result if
the Group was unable to continue as a going concern.
BDO STOY HAYWARD LLP
Chartered Accountants
London
27 December 2007
SubSea Resources Plc
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2007
Notes
6 months ended Restated Restated
30 September 6 months 12 months
2007 ended ended
(unaudited) 30 September 31 March
2006 2007
(unaudited) (audited)
£ £ £
- 809,636 1,692,401
TURNOVER
Cost of sales (2,596,506) (6,766,978) (17,958,180)
GROSS LOSS (2,596,506) (5,957,342) (16,265,779)
Administrative expenses (769,991) (503,813) (1,273,451)
Foreign exchange (losses)/gains (6,949) 36,397 49,921
LOSS FROM OPERATIONS (3,373,446) (6,424,758) (17,489,309)
Finance Income 3 104,856 20,745 96,866
Finance Cost 3 (440,057) (150,191) (608,063)
LOSS BEFORE TAX (3,708,647) (6,554,204) (18,000,506)
Taxation 4 - - -
LOSS FOR THE PERIOD (3,708,647) (6,554,204) (18,000,506)
LOSS PER ORDINARY SHARE
Basic and diluted 5 (1.31)p (5.77)p (12.35)p
SubSea Resources Plc
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
30 September 2007
Notes
30 September Restated Restated
2007 30 September 31 March
(unaudited) 2006 2007
(unaudited) (audited)
£ £ £
NON-CURRENT ASSETS
Property, plant and equipment 3,373,570 6,624,717 3,748,402
Intangible assets -
development costs - 2,456,709 -
TOTAL NON-CURRENT ASSETS 3,373,570 9,081,426 3,748,402
CURRENT ASSETS
Work in progress - 2,456,255 -
Trade and other receivables 6 133,384 1,002,997 76,108
Cash and cash equivalents 4,251,062 - 4,092,943
TOTAL CURRENT ASSETS 4,384,446 3,459,252 4,169,051
CURRENT LIABILITIES
Trade and other payable 7 (1,528,618) (6,552,340) (2,462,479)
TOTAL CURRENT LIABILITIES (1,528,618) (6,552,340) (2,462,479)
NET CURRENT ASSETS/ 2,855,828 (3,093,088) 1,706,572
(LIABILITIES)
NON-CURRENT LIABILITIES
Bonds 8 (3,563,611) (2,317,430) (3,530,520)
NET ASSETS 2,665,787 3,670,908 1,924,454
EQUITY
Called up share capital 11 11,960,593 5,680,310 10,505,910
Share premium 12 14,656,769 7,888,758 11,876,499
Equity reserve 12 1,387,192 600,713 1,387,192
Share based payments reserve 12 304,189 - 90,277
Profit and loss account 12 (25,642,956) (10,498,873) (21,935,424)
TOTAL EQUITY 2,665,787 3,670,908 1,924,454
SubSea Resources Plc
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2007
Notes 6 months ended Restated Restated
30 September 6 months 12 months
2007 ended ended
(unaudited) 30 September 31 March
2006 2007
(unaudited) (audited)
£ £ £
OPERATING ACTIVITIES
Net cash outflow from operating activities 10 (4,181,762) (6,227,765) (10,627,939)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (4,181,762) (6,227,765) (10,627,939)
INVESTMENT ACTIVITIES
Purchase of property, plant and equipment - (2,103,415) (2,224,777)
Interest received 3 104,856 20,745 96,866
NET CASH INFLOW FROM INVESTING ACTIVITIES 104,856 (2,082,670) (2,127,911)
FINANCING ACTIVITIES
Proceeds from issue of share capital 4,234,953 - 7,013,341
Proceeds from long-term borrowings - 2,893,556 4,746,570
Proceeds from related party borrowings - 1,357,055 1,800,000
Interest paid and other finance costs - (68,924) (278,400)
NET CASH INFLOW FROM FINANCING ACTIVITIES 4,234,953 4,181,687 13,281,511
NET INCREASE/(DECREASE) IN CASH AND CASH 158,047 (4,128,748) 525,661
EQUIVALENTS
Cash and equivalents at beginning of period 4,092,943 3,567,813 3,567,813
Foreign exchange differences 72 - (531)
CASH AND CASH EQUIVALENTS AT END OF PERIOD 4,251,062 (560,935) 4,092,943
SubSea Resources Plc
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSES
for the six months ended 30 September 2007
Notes Restated Restated
6 months ended 6 months 12 months
30 September ended ended
2007 30 September 31 March
(unaudited) 2006 2007
(unaudited) (audited)
£ £ £
Foreign exchange differences 1,115 (10,282) (531)
Net gain/(expense) recognised directly in 1,115 (10,282) (531)
equity
Loss for the period (3,708,647) (6,554,204) (18,000,506)
Total recognised income and expense for the (3,707,532) (6,564,486) (18,001,037)
period
1 BASIS OF PREPARATION
The financial information contained in this interim report does not constitute
statutory financial statements within the meaning of section 240 of the
Companies Act 1985. The figures for the period ended 31 March 2007 have been
extracted from the audited statutory financial statements. The interim results,
which have been reviewed but not audited by the company's auditors, have been
prepared on a basis that is consistent with International Accounting Standards
(IAS) and International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB). These standards are also
collectively referred to as "IFRS".
Statutory financial statements for year ending 31 March 2007 (prepared in
accordance with UK GAAP) were prepared and filed with the Registrar of Companies
and received an unqualified audit report with an emphasis of matter (see Going
Concern below).
Going Concern
The Financial Statements have been prepared on a going concern basis. However,
the Group
currently does not have sufficient cash resources to continue to meet bond
covenants or to continue to operate for a 12 month period.
As detailed in the Chairman's statement the Group is actively and urgently
considering new potential business models and associated funding opportunities.
Even if a satisfactory outcome to the current negotiations is achieved, the
Directors are of the opinion that the Group would require debt, equity or an
alternative source of financing in the first few weeks of 2008.
The Directors recognise that there is currently no certainty to the outcome of
the current negotiations and they further recognise that there is a material
uncertainty over the Group's ability to raise additional debt or equity finance.
In the event of the Group being liquidated the funds raised from the disposal
of the Group's assets may not be sufficient to settle the secured bonds in full.
There is therefore a material uncertainty related to the above events and
conditions which casts significant doubt on the entity's ability to continue as
a going concern and it maybe unable to realise its assets and discharge its
liabilities in the normal course of business.
Segmental reporting
The Directors of the Group are of the opinion that the group operates one class
of business and does not operate in any separately identifiable geographical
segments. The primary statements are therefore considered to reflect the
primary operating segments of the Group and no separate segmental information is
provided.
The interim report was approved by the Board of Directors on 27 December 2007.
2 TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
All listed companies in the EU are required to present their consolidated
financial statements for accounting periods beginning on or after 1 January 2007
in accordance with IFRS as adopted by the EU. Therefore, the Group's
consolidated financial statements for the year ending 31 March 2008 will be
presented on this basis with IFRS comparatives. These interim financial
statements have been prepared on the basis of the IFRS accounting policies
expected to be adopted in the year end consolidated financial statements.
Reconciliations have been provided to UK GAAP and these, together with an
explanation of the resulting changes in accounting policies, are set out in note
14.
Although there is a now a fairly stable platform, standards continue to evolve
and those currently in issue and endorsed by the EU are subject to
interpretation by the International Financial Reporting Interpretations
Committee (IFRIC) and further standards may be issued and endorsed by the EU
before 31 March 2008. These uncertainties could result in the need to change the
basis of accounting or presentation of financial information from that applied
in the preparation of this document.
The Group is required to apply its IFRS accounting policies retrospectively to
determine the opening IFRS balance sheet at the transition date of 1 April 2006
and the comparative information for the year ended 31 March 2007.
The preparation of financial statements in conformity with IFRS requires the use
of estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or actions, actual
results may ultimately differ from those estimates.
Further information is provided in notes 13 and 14 below.
3 FINANCE INCOME AND FINANCE COSTS
6 months ended Restated Restated
30 September 6 months 12 months
2007 ended ended
(unaudited) 30 September 31 March
2006 2007
(unaudited) (audited)
£ £ £
Finance Income
Bank interest receivable 104,856 20,745 96,866
Finance Cost
Bank and other interest paid - (68,924) (279,113)
Interest accrued on bonds (355,283) (81,267) (171,142)
Bank and other interest accrued (84,774) (157,808)
(440,057) (150,191) (608,063)
An interest payment is due to the Bondholder on 31 December 2007 and thereafter
at six monthly intervals
4 TAXATION
Interim period corporation tax is accrued based on the estimated
average annual effective rate of nil% (6 months ended 30 September 2006: nil%)
(12 months ended 31 March 2007: nil%). There have not been any taxable profits
in the prior periods nor are there expected to be any in the current period.
5 LOSS PER SHARE
The loss per share for the period is calculated based upon the following
information:
6 months ended 12 months
6 months ended 30 September ended
30 September 2006 31 March
2007 (unaudited) 2007
(unaudited) £ (audited)
£ £
Weighted average number of 282,852,421 113,606,201 145,776,868
shares in issue during the
period
As there is a loss for all periods presented there is no difference between the
basic and diluted loss per share.
6 TRADE AND OTHER RECEIVABLES
6 months ended 6 months ended 12 months
30 September 30 September ended
2007 2006 31 March
(unaudited) (unaudited) 2007
(audited)
£ £ £
Trade Receivables - 799,470 -
Prepayments and other receivables 81,735 90,681 40,499
VAT recoverable 51,649 112,846 35,609
133,384 1,002,997 76,108
7 TRADE AND OTHER PAYABLES DUE WITHIN ONE YEAR
Restated
6 months ended 6 months ended 12 months
30 September 30 September ended
2007 2006 31 March
(unaudited) (unaudited) 2007
(audited)
£ £ £
Bank overdraft - 560,935 -
Trade payables and accruals 1,404,823 4,634,350 2,352,414
Related party loans - 1,357,055 -
Taxation and social security payables 98,410 - 78,777
Other payables 25,385 - 31,288
1,528,618 6,552,340 2,462,479
8 NON-CURRENT LIABILITIES
6 months ended Restated 12 months
30 September 6 months ended ended
2007 30 September 31 March
(unaudited) 2006 2007
(unaudited) (audited)
£ £ £
Bonds 3,563,611 2,317,430 3,530,520
Analysis of debt:
Debt can be analysed as falling due:
Between two and five years 3,563,611 2,317,430 3,530,520
3,563,611 2,317,430 3,530,520
Creditors due after more than one year comprise £5m bonds issued under two bonds
agreements. £3m bonds were issued in the period to 30 September 2006 and £2m
bonds were issued in the six months ended 31 March 2007.
June 2006 £3m bonds
In June 2006 the Company issued £3m in bonds. The bonds are repayable on 30
June 2011. The interest payable on the bonds was originally agreed as 7.5% per
annum.
6,000,000 options to buy shares in the Company were issued to the Bondholder
under a supplemental agreement to the bonds at an exercise price of 45p. A
further 150,000 share options were issued to a third party adviser, with the
same terms as the 6,000,000 share options.
The proceeds from the bonds were split between a liability component and an
equity component that represents the fair value attributable to the options
granted. The liability component is stated net of £106,444 of issue costs. The
equity component was valued at £600,713 for which an equity reserve has been
created.
On 5 December 2006 the terms of the bonds were modified so that with effect from
30 December 2006 interest is payable at 12% per annum. The share options issued
under the supplemental agreement were also modified to a new exercise price of
12.5p per share.
Following the modification to the exercise price of the share options, an
additional amount was attributed to the equity reserve of £139,863 and deducted
from the financial liability.
An effective interest rate of 14.02% was calculated in respect of the £3m bonds,
but was revised to 20.97% following the modifications discussed above. The
effective interest rate charge is incurred on the bonds to increase the
financial liability to the nominal value of bonds as at the repayment date.
January 2007 £2m bonds
In January 2007 the Group entered into a further £2m bond agreement. The
interest payable on the £2m bonds is 14% per annum and they are redeemable on 30
June 2011.
16,000,000 options to buy shares in the Company were issued to the Bondholder
under a supplemental agreement to the bonds. 8,000,000 were at an exercise
price of 15p and 8,000,000 at an exercise price of 10p.
The proceeds from the bonds were split between a liability component and an
equity component that represents the fair value attributable to the options
granted. The liability component is stated net of £146,986 of issue costs. The
equity component was valued at £646,617, which has been attributed to the equity
reserve.
An effective interest rate of 29.79% has been calculated in respect of the £2m
bonds. The effective interest rate charge is incurred on the bonds to increase
the financial liability to the nominal value of bonds as at the repayment date.
The fair value of the options on both bond issues were valued as at the date of
grant, using a Binomial valuation model and taking into account the terms and
conditions upon which the options were granted.
The allocation of the bond proceeds is set out in the table below:
Restated
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2007 2006 2007
(unaudited) (unaudited) (audited)
£ £ £
Proceeds 5,000,000 3,000,000 5,000,000
Equity component (1,387,192) (600,713) (1,387,192)
Issue costs (253,430) (106,444) (253,430)
Liability component 3,359,378 2,292,843 3,359,378
at date of issue
Interest charged 204,233 24,587 171,142
during the year
Liability component 3,563,611 2,317,430 3,530,520
at 30 September
The bonds are secured by a debenture and all monies chattels mortgage and a
first preferred Panamanian ship mortgage on the John Lethbridge in favour of the
Bondholder.
The Group has a covenant with its Bondholder to advise it if at any time it has
less than £1,000,000 freely available cash. If such a situation should arise,
the Company may not make or enter into any obligation whether by payment,
contract or otherwise having a value in excess of £75,000 and /or make any
decision that may have a material impact on its business without giving the
Bondholder at least 2 Business Days notification of such proposed event.
9 DEFERRED TAXATION
No deferred tax asset has been recognised for the tax losses and the difference
between accumulated depreciation and capital allowances, because the future
profits required to fully utilise the deferred tax asset are not sufficiently
certain at this time.
10 RECONCILIATION OF LOSS BEFORE TAX TO
NET CASH FLOW FROM OPERATING ACTIVITIES Restated Restated
6 months ended 6 months ended 12 months
30 September 30 September ended
2007 2006 31 March
(unaudited) (unaudited) 2007
(audited)
£ £ £
Loss before tax (3,708,647) (6,554,204) (18,000,506)
Add Finance costs 440,057 150,191 608,063
Less Finance Income (104,856) (20,745) (96,866)
Loss From Operations (3,373,446) (6,424,758) (17,489,309)
Changes in working capital:
(Increase)/decrease in receivables (57,297) (790,816) 136,073
(Decrease)/increase in payables (1,339,763) 2,857,543 594,113
(Increase)/decrease in work in progress - (2,271,868) 184,387
Adjustments for:
Depreciation of tangible fixed assets 374,832 380,074 1,121,777
Impairment of fixed assets - - 2,255,974
Impairment of development and research costs - 22,060 2,478,769
Share option charge 213,912 - 90,277
Net cash flow from operating activities (4,181,762) (6,227,765) (10,627,939)
11 SHARE CAPITAL
The share capital of the Company is shown below:
Number of Ordinary New Ordinary Deferred Total
shares Shares of 5p Shares of 1p Ordinary
Shares of 4p
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
£ £ £ £
Authorised
Balance brought
forward 1
April 2006 250,000,000 12,500,000 - - 12,500,000
Changes in period
to 30 September 2006 - - - - -
Balance carried
forward 30
September 2006 250,000,000 12,500,000 - - 12,500,000
Changes in period
to 31 March 2007 - - - - -
Balance
carried
forward 31
March 2007 250,000,000 12,500,000 - - 12,500,000
Reorganisation
in period to
30 September 2007 - (12,500,000) 2,500,000 10,000,000 -
Increase in
authorised
share capital 1,250,000,000 - 15,000,000 - 15,000,000
Balance carried
forward 30
September 2007 1,500,000,000 - 17,500,000 10,000,000 27,500,000
Allotted, called up
and fully paid
Balance bought
forward 1
April 2006 113,606,200 5,680,310 - - 5,680,310
Changes in period
to 30 September 2006 - - - - -
Balance carried
forward 30
September 2006 113,606,200 5,680,310 - - 5,680,310
Changes in
period to 31
March 2007 96,512,000 4,825,600 - - 4,825,600
Balance carried
forward 31
March 2007 210,118,200 10,505,910 - - 10,505,910
Reorganisation
in period to
30 September
2007 - (10,505,910) 2,101,182 8,404,728 -
Issued in
period to 30
September 2007 145,468,441 - 1,454,683 - 1,454,683
Balance carried
forward 30
September 2007 355,586,641 - 3,555,865 8,404,728 11,960,593
On 6 July 2007 the Company's share capital was reorganised by the sub-division
of each Ordinary Share into one New Ordinary Share and one Deferred Share. The
New Ordinary Shares have the same rights including as to voting, dividends and
return of capital as the Ordinary Shares. The rights attaching to the Deferred
Shares are minimal and are set out in the Company's Articles of Association. The
Deferred Shares are effectively valueless as they do not carry any rights to
vote or dividend rights and they are only entitled to a payment on return of
capital on the winding up of the Company when each New Ordinary Share has
received a payment of £1,000,000. The Deferred Shares will not be listed or
traded on AIM and will not be transferable without the written consent of the
Company. No certificates have been issued in respect of the Deferred Shares.
The Warrants and the rights of the holders of the Warrants (the "Warrantholders
") are affected by the sub-division. The Warrantholders are still able to
exercise their rights under the Warrants to subscribe for Ordinary Shares, save
that such subscription shall be for the equivalent number of New Ordinary
Shares.
On 6 July 2007 the Company placed a total of 145,468,441 New Ordinary shares of
1p each at a price of 3 pence per placing share ("the placing") and admission to
trading on the Alternative Investment Market was approved.
Share option schemes and warrant options
The Company operates an unapproved share option scheme as a means of encouraging
ownership and aligning interests of staff and external shareholders.
In addition share options were issued with the bonds, as set out in note 8 and
to certain arms length advisers concerned in the Placing that took place on 6
July 2007. At 30 September 2007 the following options over the New Ordinary
shares in the Company were outstanding:
Date of grant Number of options Option price Exercise period
28 Oct.2004 8,564,000 20p 05/11/04 - 05/11/09
14 Dec.2005 775,000 22p 15/12/05 - 12/12/10
01 July 2006 6,000,000 12.5p 01/07/06 - 30/06/11
01 July 2006 150,000 12.5p 15/01/07 - 30/06/11
20 Dec.2006 10,505,910 10p See Note 1 below
15 Jan 2007 8,000,000 15p 15/01/07 - 30/06/11
15 Jan 2007 8,000,000 10p 15/01/07 - 30/06/11
6 July 2007 11,637,467 3p See Note 2 below
Note 1:- The option shares shall vest in the event that the mid market price of
the ordinary shares increases to 20 pence following completion of the share
placing that took place on 20 December 2006 and remains at such price or higher
for a minimum of 10 consecutive business days. The option shares are exercisable
after 12 months of the option shares vesting. In the event that the mid market
price of the ordinary shares increases to 40 pence and remains at such price or
higher for a minimum of 10 consecutive business days, then provided the holders
of the options remain as Directors of the Company and they have not exercised
their options in whole or in part, the number of option shares granted shall
automatically double, but are only exercisable after 12 months of such doubling.
Note 2:- In connection with the Placing, the Company will grant options to
subscribe for New Ordinary Shares to certain arms length advisers concerned in
the Placing. The options shares shall vest from the earlier of: (i) the
publication of the Company's 2008 preliminary results; (ii) the mid-market price
of the New Ordinary Shares closing at least 10 pence for 10 consecutive trading
days; and (iii) 30 September 2008.
The 21,011,820 options subject to the 20p and 40p share price performance
condition are valued at 3.88p per option assuming a share price requirement of
40p. The Directors have assumed that these options subject to the 20p
condition will not be exercised until a 40p share price is achieved, as if
exercised earlier the 40p bonus options will lapse. If these options are valued
assuming a share price requirement of 20p the value per option amounts to 5.04p.
The 11,637,467 options granted on 13 June 2007 are valued at 1.45p per option
assuming a vesting period of 1 year.
The fair value charge for options for the Period to 30 September 2007 was as
follows : (a) £163,571 in respect of employee share options and charged to
employee costs and (b) £50,341 in respect of the options described above in Note
2 and charged to finance costs. The options in issue at 31 March 2006 all vested
prior to 1 January 2006 and do not require valuation under IFRS 2.
The fair value of granted share options is estimated as at the date of grant
using a Binomial valuation model, taking into account the terms and conditions
upon which the options were granted. The following table lists the inputs to
the model used to value the share options issued in the period ended 30
September 2007
Date of grant
13 June 2007
Number of shares under option 11,637,467
Expected share price volatility 73%
Risk-free interest rate 5.65%
Exercise price 3p
Share price at the date of grant 3p
The actual life of the options may differ from the expected life assumed. The
expected volatility is based on the historical volatility of the Group and
reflects the assumption that this volatility is indicative of future trends,
which may also not necessarily be the actual outcome.
Warrants
The Company has issued warrants to subscribe for ordinary shares at an exercise
price of 40p per ordinary share, exercisable at any time up to or on the date
which is five years from 4 November 2004 and on the terms of the warrant
instrument.
Financial Year of Number of warrants Exercise price Exercise period
issue
31.03.05 26,761,568 40p 05/11/04-05/11/10
12 STATEMENT OF MOVEMENTS ON RESERVES
Share Capital Share Equity Share Profit Total
premium reserve based and loss
account payments account
reserves
£ £ £ £ £ £
Balance
brought
forward 1
April 2006
(Restated) 5,680,310 7,888,758 - - (3,934,387) 9,634,681
Equity
component of
hybrid bonds
(Restated) - - 600,713 - - 600,713
Exchange
translation
differences
on consolidation - - - - (10,282) (10,282)
Retained loss
for the
period
(Restated) - - - - (6,554,204) (6,554,204)
Balance
carried
forward 30
September
2006
(Restated) 5,680,310 7,888,758 600,713 - (10,498,873) 3,670,908
Shares issued
in year 4,825,600 4,825,600 - - - 9,651,200
Share issue
costs - (837,859) - - - (837,859)
Equity
component of
hybrid bonds - - 786,479 - - 786,479
Employee
share based
payments
(Note 11) - - - 90,277 - 90,277
Exchange
translation
differences
on consolidation - - - - (531) (531)
Retained loss
for the period - - - - (11,436,020) (11,436,020)
Balance
carried
forward 31
March 2007 10,505,910 11,876,499 1,387,192 90,277 (21,935,424) 1,924,454
Shares issued
in year 1,454,683 2,909,367 - - - 4,364,050
Share issue
costs - (129,097) - - - (129,097)
Non-employee
share based
payments
(Note 11) - - - 50,341 - 50,341
Employee
share
based
payments
(Note 11) - - - 163,571 - 163,571
Exchange
translation
differences
on consolidation - - - - 1,115 1,115
Retained loss
for the period - - - - (3,708,647) (3,708,647)
Balance
carried
forward 30
September
2007 11,960,593 14,656,769 1,387,192 304,189 (25,642,956) 2,665,787
13 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UNDER IFRS
Basis of accounting
Prior to the introduction of IFRS, the group had prepared its financial
statements under United Kingdom accounting standards. As a result of adopting
IFRS it has been necessary to change some of the Group's accounting policies and
these are detailed below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
SubSea Resources plc and its subsidiaries accounted for on a basis of full
consolidation under IAS 27, up to 30 September 2007.
Changes to the Groups accounting policies as a result of adopting IFRS
(a) IFRS 3 - Goodwill is subject to at least an annual impairment test.
Since no economic benefit could be associated with the goodwill carried in
the balance sheet as at 1 April 06, the value of the goodwill (£23,541) has
been expensed through the income statement,
(b) IFRS 3 - Negative goodwill (excess of net fair value of assets acquired
over cost - £126,894) is recognised in the income statement on the date of
the acquisition. Under UK GAAP, negative goodwill was capitalised and
amortised to the profit and loss account.
14 Explanation of transition to International Financial Reporting Standards
This is the Group's first interim report prepared in accordance with IFRS. The
reconciliations of balance sheets and equity at 1 April 2006 (date of transition
to IFRS), 31 March 2007 (date of last UK GAAP financial statements) and 30
September 2006 (date of last UK GAAP interim report) are set out below. In
addition, there is a reconciliation of the loss for the six month period to 30
September 2006 and the year ended 31 March 2007.
These reconciliations will enable comparison of the 2007 interim figures under
IFRS with those published under UK GAAP in the 2006 interim report and the
annual report for the year ended 31 March 2007.
There have been no adjustments to the cash flow statement other than
presentational changes, all content remains the same.
BALANCE SHEET AS AT 1 APRIL 2006
Notes
Effect of
Restated transition to
UK GAAP IFRS IFRS
£ £ £
NON-CURRENT ASSETS
Property, plant and equipment 4,901,376 - 4,901,376
Intangible assets
- Development and research 2,478,769 - 2,478,769
costs
Goodwill (a) 23,541 (23,541) -
Negative goodwill (b) (126,894) 126,894 -
TOTAL NON-CURRENT ASSETS 7,276,792 103,353 7,380,145
CURRENT ASSETS
Work in progress 184,387 - 184,387
Trade and other receivables 212,181 - 212,181
Cash and cash equivalents 3,567,813 - 3,567,813
TOTAL CURRENT ASSETS 3,964,381 - 3,964,381
CURRENT LIABILITIES
Trade and other payable (1,709,845) - (1,709,845)
TOTAL CURRENT LIABILITIES (1,709,845) - (1,709,845)
NET CURRENT ASSETS/ 2,254,536 - 2,254,536
(LIABILITIES)
NON-CURRENT LIABILITIES
Bonds - - -
NET ASSETS 9,531,328 103,353 9,634,681
EQUITY
Called up share capital 5,680,310 - 5,680,310
Share premium 7,888,758 - 7,888,758
Equity reserve - - -
Share based payment reserves - - -
Profit and loss account (a)(b) (4,037,740) 103,353 (3,934,387)
TOTAL EQUITY 9,531,328 103,353 9,634,681
BALANCE SHEET AS AT 30 SEPTEMBER 2006
Notes
Effect of
Restated transition to
UK GAAP IFRS IFRS
£ £ £
NON-CURRENT ASSETS
Property, plant and equipment 6,624,717 - 6,624,717
Intangible assets
- Development and research 2,478,769 -
costs
2,478,769
Goodwill (a) 23,541 (23,541) -
Negative goodwill (b) (126,894) 126,894 -
TOTAL NON-CURRENT ASSETS 9,000,133 103,353 9,103,486
CURRENT ASSETS
Work in progress 2,456,255 - 2,456,255
Trade and other receivables 1,002,997 - 1,002,997
Cash and cash equivalents - - -
TOTAL CURRENT ASSETS 3,459,252 - 3,459,252
CURRENT LIABILITIES
Trade and other payable (6,552,340) - (6,552,340)
TOTAL CURRENT LIABILITIES (6,552,340) - (6,552,340)
NET CURRENT ASSETS/ (3,093,088) -
(LIABILITIES)
(3,093,088)
NON-CURRENT LIABILITIES
Bonds (2,317,430) - (2,317,430)
NET ASSETS 3,589,615 103,353 3,692,968
EQUITY
Called up share capital 5,680,310 - 5,680,310
Share premium 7,888,758 - 7,888,758
Equity reserve 600,713 - 600,713
Share based payment reserves - - -
Profit and loss account (a)(b) (10,580,166) 103,353 (10,476,813)
TOTAL EQUITY 3,589,615 103,353 3,692,968
BALANCE SHEET AS AT 31 MARCH 2007
Notes
Effect of
transition to
UK GAAP IFRS IFRS
£ £ £
NON-CURRENT ASSETS
Property, plant and equipment 3,748,402 - 3,748,402
Intangible assets
- Development and research - - -
costs
Goodwill (a) - - -
Negative goodwill (b) - - -
TOTAL NON-CURRENT ASSETS 3,748,402 - 3,748,402
CURRENT ASSETS
Work in progress - - -
Trade and other receivables 76,108 - 76,108
Cash and cash equivalents 4,092,943 - 4,092,943
TOTAL CURRENT ASSETS 4,169,051 - 4,169,051
CURRENT LIABILITIES
Trade and other payable (2,462,479) - (2,462,479)
TOTAL CURRENT LIABILITIES (2,462,479) - (2,462,479)
NET CURRENT ASSETS/ 1,706,572 - 1,706,572
(LIABILITIES)
NON-CURRENT LIABILITIES
Bonds (3,530,520) - (3,530,520)
NET ASSETS 1,924,454 - 1,924,454
EQUITY
Called up share capital 10,505,910 - 10,505,910
Share premium 11,876,499 - 11,876,499
Equity reserve 1,387,192 - 1,387,192
Share based payment reserves 90,277 - 90,277
Profit and loss account (a)(b) (21,935,424) - (21,935,424)
TOTAL EQUITY 1,924,454 - 1,924,454
INCOME STATEMENT FOR THE SIX MONTHS ENDING 30 September 2006
Notes
Effect of
Restated transition to
UK GAAP IFRS IFRS
£ £ £
TURNOVER 809,636 - 809,636
Group and share of joint venture's
Cost of sales (6,766,978) - (6,766,978)
GROSS LOSS (5,957,342) - (5,957,342)
Administrative expenses (503,813) - (503,813)
Foreign exchange gains/(losses) 36,397 - 36,397
LOSS FROM OPERATIONS (6,424,758) - (6,424,758)
Finance Income 20,745 - 20,745
Finance Cost (150,191) - (150,191)
LOSS BEFORE TAX (6,554,204) - (6,554,204)
Taxation - - -
LOSS FOR THE PERIOD (6,554,204) - (6,554,204)
EARNINGS/(LOSS) PER ORDINARY SHARE
Basic and diluted (5.77)p - (5.77)p
INCOME STATEMENT FOR THE YEAR ENDING 31 March 2007
Notes
Effect of
transition to
UK GAAP IFRS IFRS
£ £ £
TURNOVER 1,692,401 - 1,692,401
Group and share of joint venture's
Cost of sales (17,958,180) - (17,958,180)
GROSS LOSS (16,265,779) - (16,265,779)
Administrative expenses (a)(b) (1,170,098) (103,353) (1,273,451)
Foreign exchange gains/(losses) 49,921 - 49,921
LOSS FROM OPERATIONS (17,385,956) (103,353) (17,489,309)
Finance Income 96,866 - 96,866
Finance Cost (608,063) - (608,063)
LOSS BEFORE TAX (17,897,153) (103,353) (18,000,506)
Taxation - - -
LOSS FOR THE PERIOD (17,897,153) (103,353) (18,000,506)
EARNINGS/(LOSS) PER ORDINARY SHARE
Basic and diluted (12.28)p (0.07)p (12.35)p
Notes to reconciliations explaining the translation to IFRS
(a) IFRS 3 - Goodwill is subject to at least an annual impairment test.
Since no economic benefit could be associated with the goodwill carried in
the balance sheet as at 1 April 06, the value of the goodwill was expensed
through the income statement,
(b) IFRS 3 - Negative goodwill (excess of net fair value of assets acquired
over cost) is recognised in the income statement on the date of the
acquisition. Under UK GAAP, negative goodwill was capitalised and amortised
to the profit and loss account.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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