United Energy PLC - Final Results, etc

RNS Number:6238K
United Energy PLC
15 May 2000


            Posting of circular on proposed web-angel acquisition             
                                     and                                      
                   Preliminary results of United Energy plc                   
                       for year ended 31 December 1999                        
                                                                              
United Energy to become an internet accelerator following sale of oil and gas 
                                    assets                                    


The sale of the US oil and gas interests to Castle Energy Corporation was
completed to plan and the US operations closed down.  Following this disposal
the Group had liquid assets of approximately #4 million and no remaining
trading activities.  Since the completion of this disposal, a considerable
number of potential investment opportunities, principally in the e-commerce
sector, have been evaluated before the Web Angel Limited Partnership
("web-angel") opportunity was identified.

On 27 April 2000, United Energy entered into an agreement to acquire web-angel
at a valuation of #23.1 million.  Web-angel invests in and provides a range of
integrated support services to developing e-commerce businesses, its
investment objective is long term capital growth from a portfolio of
investments in the UK and Europe.        

John F Billington, Chairman of United Energy plc said:

"Although web-angel is only in the early stages of implementing its business
plan, your Board is excited by its potential.  Its accelerator approach to
earning investments based on the extensive skills base within its own
management and founders should help deliver long term improvements in
shareholder value."

An explanatory circular incorporating an AIM admission document, relating to
the proposed acquisition of web-angel announced on 28 April 2000, is being
mailed to shareholders today.

Contact:        Nick Tamblyn, Chief Executive - 01242 253773

1999 was a year of transition with the disposal of the Group's oil and gas
interests to Castle Energy Corporation.  Following this disposal the Company
had net liquid assets of approximately #4 million and no remaining trading
activities.  In accordance with the strategy outlined in the circular relating
to the disposal, the Board has reviewed a wide range of alternative business
opportunities, principally in the e-commerce sector, with a view to
identifying a business to "reverse" into United Energy.

US Oil and Gas Operations
The disposal of AmBrit's oil and gas interests was completed smoothly in
accordance with the timetable envisaged at the time of the 1998 Annual Report
and Accounts.

The earnings generated by AmBrit up to the completion of the disposal on 1
June 1999 were severely impacted by the collapse in oil prices and weakening
gas prices.  Despite strong production and lower operating costs the gross
profit for the five months was inadequate to cover administrative costs and
interest charges during that period.

The US staff showed a high level of professionalism in the way that they
handled the work associated with both the disposal and the closing down of the
US operations and I wish them all well in their new careers.

Agrigen
Following the decision to dismiss Agrigen's planning appeal for the Nunn Mills
Biomass Power Station, Northampton in February 1999, attempts were made to
extract value from the various assets held by the Group.  In particular, the
Group's interest in the Nunn Mills site was sold and an agreement was entered
into in connection with the Thermie Grant.  Expressions of interest in the
NFFO licence have been received but as yet no transaction has been completed.

Group Results
The results for 1999 reflect the impact of the disposal of the Group's US oil
and gas interests and the subsequent closure of the US operations.  The net
asset position at the end of the year is in line with that expected at the
time the decision was made to dispose of the US interests.

Turnover reflects only five months production up to the completion of the sale
on 1 June 1999.  The average oil and gas prices received for sales showed
continued weakness with oil prices at US$12.61 bbl compared to an average of
US$12.47 in 1998 and gas prices at US$1.77 mcf compared to US$1.99.

Production costs fell in line with the reduced turnover, with average costs of
US$4.40 per boe (1998: US$4.57).  However, the continued reduction in average
operating costs per boe had little impact compared to the substantial falls in
average product prices since 1997.  Depletion costs also fell in line with the
reduced production.

Administrative costs reflect the savings achieved from the closure of the US
office part way through the year, however, they continued to exceed the gross
profit resulting in an operating loss for the year of #0.23 million (1998:
#0.79 million).  At the end of 1999, the Group only had one employee other
than the directors.

Net interest costs reflect the repayment of all borrowings on the completion
of sale on 1 June 1999.  However, interest expenses of #0.34 million up to
that date compared to the gross profit of #0.42 million reflect the pressure
that low prices was placing on the Group's finances.

The Group incurred an exceptional loss of #3.23 million on the disposal of the
US assets during the year.  The loss was primarily as a result of charging the
profit and loss account with #3.10 million of goodwill arising on the
acquisition of AmBrit International Plc in 1992, the goodwill having not
previously been separately recognised.  This charging of goodwill to the
profit and loss account does not impact on the net assets of the Group.  In
arriving at the exceptional gain of #0.03 million on the closure of a former
associate, a further #0.21 million of goodwill was charged to the profit and
loss account which had previously been written off to reserves.  This goodwill
charge was offset by the release of provisions against loans to the former
associate and an estimate of contributions due against previously incurred
costs as a result of the assignment of both the Company's and the former
associates interest in a Thermie Grant amounting to #0.24 million in total.

The net cash inflow from operating activities of #1.06 million benefited from
a #0.27 million reduction in working capital requirements following the
disposal of the US interests.  The year end cash at bank of #3.52 million was
in line with expectations subject to the SW Speaks revenues of #0.31 million
remaining unpaid.

web-angel
As announced on 28 April 2000, United Energy has entered into an agreement,
conditional, inter alia, on the approval by United Energy shareholders and
admission to the Alternative Investment Market ("AIM"), to acquire the entire
issued share capital of each of the partners of Web Angel Limited Partnership
(together "web-angel").  As more fully described in the circular of the
Company which is being sent to shareholders, the initial consideration of
#23.1 million for the acquisition will be satisfied by the issue of 90,747,755
new ordinary shares in the capital of United Energy, representing 70 per cent
of the enlarged ordinary share capital of United Energy following the
acquisition of web-angel.  Further consideration of up to16% of the Company's
share capital may also become payable conditional upon the achievement by the
enlarged Group of certain performance related criteria over a three year
period.

The web-angel concept was initiated in the first half of 1999 as a response to
the increasing business opportunities provided by the development of the
Internet.  It invests in, and provides a range of integrated support services
to developing e-commerce businesses.  These businesses are mainly, but not
exclusively, private companies.  web-angel believes that its business
acceleration strategy differs from that offered by other providers of such
services in that it is able to offer an integrated package of strategy
consulting, corporate finance advice, access to funding and investment
expertise in return for earning equity.

Web Angel Limited Partnership was formed on 28 March 2000 and at 31 March 2000
had audited net assets of #0.3 million including equity interests in four
e-commerce businesses.  Subsequent to 31 March 2000, Web Angel Limited
Partnership has entered into agreements to earn four further equity interests
in e-commerce businesses, and in addition further capital subscriptions of
approximately #3.2 million have been received by Web Angel Limited
Partnership.  On completion United Energy's cash balances will also become
available for investment. 

Web Angel Limited Partnership's investment objective is long term capital
growth from a portfolio of investments in the UK and Europe.  Opportunities
for investment are expected to be identified by OC&C Strategy Consultants
Limited, Ermgassen & Co Limited and Brait International Limited, the three
principal Founders of web-angel, under the terms of a services agreement.  The
circular details the considerable benefits to web-angel from the ongoing
relationship with the Founders and provides background information on each of
these companies.

Prospective investments will be considered by an Investment Committee which
will include board and non-board members with skills in investment management,
e-commerce and corporate finance.  web-angel aims to expand its portfolio,
subject to finding suitable opportunities, by around ten to twenty investments
a year.

An explanatory circular providing further information on the proposed
acquisition is being mailed to shareholders today.  The Circular also provides
details of the implications of the City Code on Takeovers and Mergers and of
the capital reorganisation and capital reduction which is being proposed in
order to eliminate the accumulated deficit on the Company's profit and loss
account.

Transfer to AIM
The Directors believe that it is now appropriate for the Company to apply to
the UK Listing Authority to cancel the listing of its shares on the Official
List and to move to AIM, as AIM offers a degree of regulation which is more
appropriate given the size of the Company.  In addition, AIM will offer a
greater degree of flexibility than is available on the Official List.

The cancellation of the Company's listing and the transfer to AIM, which are
conditional upon completion of the acquisition of web-angel, is expected to
become effective the day following the extraordinary general meeting to be
held on 7 June 2000.  In the event that shareholders do not approve the
acquisition, the Company's application for admission to AIM will lapse and its
listing will be restored.

Board of Directors
Following completion of the acquisition, all of the existing United Energy
directors, except for Nick Tamblyn who will remain in the role of finance
director, will be stepping down from the Board.  Penny Hughes, who is
currently a non-executive director of Vodafone Airtouch plc and a number of
other listed companies, will become chairman.  Christopher Eyles, who has a
background in consulting and has advised a number of major South African
commercial organisations on e-commerce projects, will become chief executive. 
Five other non-executives will also be appointed, four of whom are directly
connected to the Founders of web-angel and will not draw directors fees.

Outlook
Although web-angel's business is only in the early stages of implementing its
business plan, the Board is excited by its potential.  Its accelerator
approach to earning investments based on the extensive skills base within its
own management and Founders should help deliver long term improvements in
shareholder value.  Whilst investment in early stage e-commerce businesses can
be very rewarding, it also carries a higher degree of risk.  The portfolio
approach to investment adopted by the web-angel business helps to mitigate the
risks associated with any single investment.  In the event that shareholders
do not approve the proposed acquisition, the Company will resume its search
for a new business venture.

The Board is very pleased that Penny Hughes has agreed to become Chairman when
Mr Billington steps down.  She brings with her a team of experienced and
knowledgeable professional investors and advisors which should enable
web-angel to take full advantage of the opportunities provided by the
e-commerce sector as this expands.

Following completion of the acquisition, the name of the Company will be
changed to web-angel plc.



Consolidated Profit and Loss Account
for the Year Ended 31 December 1999

                                                    1999       1998
                                                   #'000      #'000

Turnover                                           2,346      5,471 
                                 
Cost of sales:
  Production costs                                  (931)    (2,186)
  Depletion of oil and gas interests                (992)    (2,414)
  Exceptional impairment oil and gas interests         -       (750)
                                  

                                                  (1,923)    (5,350)
                                 

Gross profit                                         423        121 
              

Administrative expenses                             (654)      (910)

                                 

Operating loss                                      (231)      (789)

Loss from interests in associated undertaking          -        (20)
Exceptional gain/(loss) on closure of former 
 associate                                            30       (870)
Exceptional loss on disposal of discontinued
 operations                                       (3,227)         - 
Interest receivable and similar income               142          6 
Interest payable and other charges                  (345)      (729)
                                 

Loss on ordinary activities              
before taxation                                   (3,631)     (2,402)

Taxation                                             (82)          -   
                                 
Loss on ordinary activities after                 (3,713)     (2,402)
taxation and retained loss for the year                                 

Loss per share and diluted loss
per share                                           (9.5)p      (6.2)p
                                 
 
All items dealt with in arriving at the operating loss for 1999 and 1998
relate to discontinued operations.
As noted above, the directors are now considering a new commercial opportunity
for the Group.

Consolidated Balance Sheet at 31 December 1999
       
                                31 December 1999            31 December1998
                                           #'000                      #'000
Fixed assets

Intangible exploration assets                  -                        111 
Oil and gas interests                          -                     12,009  
Other tangible assets                         17                        322  
                           
                                              17                     12,442  
Current assets

Debtors                                      466                      1,453   
Investments                                   75                          - 
Cash at bank                               3,523                        458   
                           
                                           4,064                      1,911   
Creditors: amounts falling due             
within one year                             (401)                    (3,223)
                           

Net current assets/(liabilities)           3,663                     (1,312) 
                          

Total assets less current liabilities      3,680                     11,130  

Creditors: amounts falling due
after more than one year                       -                     (7,175)

                            
Net assets                                 3,680                      3,955 
                                              

Capital and reserves
Called up share capital                    3,889                      3,889  
Share premium account                        272                        272  
Other reserves: capital reserve              608                        717  
Profit and loss account                   (1,089)                      (923) 
                         
Shareholders' funds-equity                 3,680                      3,955  
                                              



Consolidated Cash Flow Statement
for the Year Ended 31 December 1999


                                                    1999        1998
                                                   #'000       #'000


Net cash inflow from operating activities          1,060       2,160 
Returns on investments and servicing of finance     (307)       (704)
Taxation                                               -          20 
Capital expenditure and financial investment      11,585      (5,134)
Acquisitions                                           -          (2)
              
Net cash inflow/(outflow) before financing        12,338      (3,660)

Management of liquid resources                    (2,950)          - 

Net cash inflow from financing                    (9,322)      3,432 
       
Increase/(decrease) in cash in the period             66        (228)
       

Notes:

1.       The financial information set out in this statement does not
constitute the Company's statutory accounts for the years ended 31 December
1998 or 1999 but is derived from those accounts.  Statutory accounts for 1998
have been delivered to the Registrar of Companies, whereas those for 1999 are
being posted to shareholders today.  The auditor has reported on those
accounts; its reports were unqualified and did not contain a statement under
Section 237(2) or (3) of the Companies Act 1985.

2.       The Annual General Meeting will be held at the offices of Nabarro
Nathanson, Lacon House, Theobald's Road, London  WC1X 8RW  on 7 June 2000 at
11.15 am (or as soon thereafter as the Extraordinary General Meeting of the
Company convened for the same day has been concluded or adjourned).


END

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