TIDMHDY
RNS Number : 5918W
Hardy Oil & Gas plc
12 December 2019
12 December 2019
Hardy Oil and Gas plc
("Hardy", the "Company")
Half Year Results for the six months ended 30 September 2019
Hardy Oil and Gas plc (LSE: HDY), the oil and gas exploration
and production company, reports its results for the six months
ended 30 September 2019 (H1FY20).
All financial amounts are stated in US dollars unless otherwise
indicated.
SUMMARY
Activity during the six months ended 30 September 2019
-- CY-OS/2 - The Supreme Court of India allowed the Government
of India's ("GOI") appeal of an arbitration award to be appealed in
the Delhi High Court. The appeal is projected to take several more
years to conclude. Actions to enforce the award in foreign
jurisdictions were unsuccessful.
-- PY-3 - the GOI did not agree to convene a Management
Committee meeting to discuss and ratify an application to a
development plan and extension to the production sharing contract.
An arbitration with the PY-3 non-operating partners had concluded
but the ruling of the tribunal had been continuously delayed.
Financial
-- The Group's total comprehensive loss was $0.3 million for the
H1FY20 compared to a loss of $54.1 million for first half of FY19
(H1FY19) wherein CY-OS/2 was written down by $51.1 million.
-- Cash and short-term investments at 30 September 2019
excluding discontinued operations was $3.1 million; Hardy has no
debt.
-- Discontinued operations - current assets and current
liabilities of the discontinued operations were $12.9 million and
$14.7 million respectively.
Post half year end highlights
-- 2 October 2019, the Company disposed of its oil and gas
assets via the sale of wholly owned subsidiary Hardy Exploration
& Production (India) Inc. (HEPI) to Invenire Energy Private
Limited for gross consideration of $8.75 million.
-- 18 October 2019, Richard Galvin was appointed Executive
Director of the Company and Ian MacKenzie resigned as Chief
Executive Officer.
-- 25 November 2019, Blake Holdings Limited announced a
Mandatory Offer of 5 pence per share for the shares of the Company
valuing the Company at approximately $4.8 million. The Board
recommended shareholders take no action pending the publication of
the offer document.
-- As at 30 November 2019 the Company had $10.5 million in cash and short-term investments.
OUTLOOK
-- Focus on acquiring or establishing a company, business or
asset that operates in the resources sector or other
industries.
-- The Board intends to seek shareholder approval regarding
investment opportunities prior to action being taken
Alasdair Locke, Chairman of Hardy, commented: "Hardy's board of
directors (the "Board") will be writing to shareholders as soon as
practicable with its formal response to the Mandatory Offer once
Blake has posted the offer document. Further announcements will be
made as and when appropriate. In the meantime, the Board recommends
that shareholders should take no action."
For further information please visit www.hardyoil.com or
contact:
Hardy Oil and Gas plc 01224 612900
Richard Galvin, Executive Director
Arden Partners plc
Ciaran Walsh
Paul Shackleton 02076 145900
Tavistock 02079 203150
Simon Hudson
Nick Ewes
OVERVIEW
The Group's strategy has been to be an active participant in the
upstream oil and gas industry, realise value from an India focused
portfolio and pursue new opportunities as they arise. The events
surrounding Hardy Exploration & Production (India) Inc's (HEPI)
attempts to enforce the CY-OS/2 Award has led the Board to conclude
that contracts entered into with the GOI do not provide basic
protection from unilateral amendment to, deviation from, and
termination of agreements. These circumstances prompted the Board
to initiate a strategic review which culminated with the sale of
all Indian assets and a shift in focus to identify a suitable
investment for the Company's resources which remains ongoing.
Activity Review - Recommended sale of HEPI
As reported in the 2019 Preliminary Final Results Announcement,
as part of the conclusion of the initial phase of its strategic
review, the Board had explored numerous options to find a solution
to the issues surrounding the Company's Portfolio in India and the
Directors concluded that the sale of HEPI was the best option for
the Company and its Shareholders for the following reasons:
-- the development work on each asset had been suspended for an
extended period of time and so the Group had earned no revenue from
any of the Assets since 2011 due to ongoing litigation and disputes
and consequently, in recent years, the Group had been unable to
commercialise or realise any value from the assets;
-- given the status of the ongoing litigation and disputes, the
Group could not predict when, or if, such matters would be resolved
or monetised in favour of the Group. Therefore, the Board was
unable to determine when development work in respect of each asset
would recommence (if at all);
-- the transaction would eliminate the need to fund the ongoing
litigation and disputes going forward; and ongoing operational
losses, indebtedness and associated cash outflows which would have
arisen if HEPI had remand within the Group.
-- As a result of discussions with the FCA and in accordance
with the requirements of the Listing Rules, the Company was
required to transfer its listing on the London Stock Exchange from
the current Premium Listing segment to the Standard Listing segment
of the Official List. Accordingly, the Board sought authority from
Shareholders at the EGM for the Transfer of Listing, which was
inter-conditional on the disposal of HEPI.
As a result, for the reasons set out above, the Board
recommended that the sale of HEPI was in the best interests of the
Company and Shareholders voted in favour of the Transaction and
Transfer of Listing at the Extraordinary General Meeting.
On 2 October 2019, the Company completed the sale of HEPI to
Invenire Energy Private Limited (Invenire) for gross proceeds of
$8.75 million. As part of the sale process the FCA required that
shareholders simultaneously agree to the Company transferring its
listing from a Premium listing to a Standard listing on the Main
Market of the London Stock Exchange which took effect on 30 October
2019. A summary of the differences of the two listings was
summarised in section IV (pages 26 and 27) of the Circular to
shareholders dated 22 August 2019.
Mandatory Offer
On 24 November 2019, Blake Holdings Limited (Blake) announced
that it will make a Mandatory offer of 5 pence in cash per share,
valuing the Company at approximately $4.8 million. The Offer
Document and relevant Forms of Acceptance are required to be posted
to Hardy shareholders (or made available electronically in
accordance with the Takeover Code) as soon as practicable and not
later than 28 days after the date of the Mandatory offer
announcement. The Offer Document will contain the formal terms of
the Offer. The Board recommended that shareholders take no action
until it had issued its response which is expected to be issued
within 14 days of the publication of Blake's offer document.
Financial
The sale of HEPI took place on 2 October 2019 and as a result
this segment of the Group has been classified as a discontinued
operation.
The Group realised a pre-tax loss from continuing operations of
$0.6 million and a pre-tax profit from discontinued operations of
$0.4 million resulting in a total comprehensive loss of $0.3
million.
On 30 September 2019, assets for disposal were $12.9 million and
liabilities directly associated with assets for disposal amounted
to $14.7 million. Excluding assets for disposal the Group's assets
and liabilities amounted to $3.2 million and $0.2 million
respectively.
As at 30 September 2019, excluding assets for disposal the Group
had over $3.1 million of cash and short-term investments with no
debt. The Company maintains robust internal control and risk
management systems appropriate for a Company of our size and
resources. As at 30 November 2019 the Company had $10.5 million of
cash and short-term investments.
Board Changes
Further to shareholders' vote in favour of the two resolutions
at the Company's Extraordinary General Meeting on 1 October 2019,
which resulted in the sale of substantially all of Hardy's assets
and which constituted a change of control under the terms of his
employment contract, the Company's Chief Executive Officer, Mr Ian
MacKenzie, agreed with the Company that his employment would
terminate effective 18 October 2019.
On 18 October 2019, Richard Galvin was appointed to the board of
directors as the Executive Director. Mr Galvin has over 20 years of
commercial and financial industry experience and has served Hardy
for 14 years holding various management and executive roles
latterly as Treasurer and Corporate Affairs Executive. Most
recently, Mr Galvin was instrumental in the Company's successful
sale of HEPI.
On 2 October 2019, Mr MacKenzie and Richard Galvin resigned from
their directorships of Hardy Exploration & Production (India)
Inc..
Objectives and outlook
Hardy's board of directors will be writing to shareholders as
soon as practicable with its formal response to the Mandatory Offer
once Blake has posted the offer document. Further announcements
will be made as and when appropriate. In the meantime, the Board
recommends that shareholders should take no action.
The Directors intend to use the Company's existing cash
resources and short-term investments with the net proceeds of the
cash consideration received from the HEPI sale for the purposes of
acquiring or establishing a company, business or asset that
operates in the resources sector or other industries should an
appropriate investment opportunity present itself. The Board of
Directors will continue to carry out its assessment of various
identified and yet to be identified investments opportunities. The
Board will not take any further steps in relation to any
investments it plans to make without first consulting with
shareholders.
FINANCIAL REVIEW
The Group's accounts ended 31 March 2019 contained a material
uncertainty relating to the going concern of the Group. The details
and circumstances carefully considered, by the Board, in coming to
this conclusion were fully disclosed in notes 1b and 2 of the
Consolidated Financial Statements. The subsequent sale of HEPI has
resulted in those circumstances no longer being present, namely
significant current liabilities to Samson Maritime Limited and
other professional service providers. Furthermore the proceeds of
the sale of HEPI significantly increased the resources of the
Company and reduced the projected expenditures.
In the six months ended 30 September 2019, the Group recorded a
total comprehensive loss of $0.3 million. As at 30 September 2019
the Company held total cash and short-term investments of $3.1
million with no debt.
Consolidated Statement of Comprehensive H1 FY20 H1 FY19 FY19
Income
(unaudited) (unaudited) (audited)
US$ million US$ million US$ million
--------------------------------------------- ------------ ------------ ------------
Revenue - - -
--------------------------------------------- ------------ ------------ ------------
Operating Expense - - -
--------------------------------------------- ------------ ------------ ------------
Administrative expense
Includes the running cost of an office
in the UK and other basic publicly listed
company expenditures. The reduction in
administrative expenditure was primarily
due to the reduction of Employee and
Directors fees of over $0.2 million which
was partially offset by a $0.2 million
increase in legal fees. (0.7) (0.8) (1.4)
--------------------------------------------- ------------ ------------ ------------
Interest and investment income
Interest from cash deposits and dividends
from short term investments in a liquidity
fund was $0.05 million. 0.0 0.1 0.1
--------------------------------------------- ------------ ------------ ------------
Gain (Loss) from discontinued operation
The current period gain is attributable
to the receipt of a service tax refund
amounting to $0.3 million and $0.2 million
interest accrued in the site restoration
fund and the profit was offset partially
by $0.1 million of administrative expenses.
In FY19 the Group wrote down $51.1 million
of intangible assets associated with
the CY-OS/2 block. 0.4 (53.4) (55)
--------------------------------------------- ------------ ------------ ------------
Total comprehensive loss
The Group's total comprehensive loss
in FY19 was attributable to the write-down
of CY-OS/2. (0.3) (54.1) (56.3)
--------------------------------------------- ------------ ------------ ------------
Group Statement of financial position H1 FY20 FY19
(unaudited) (audited)
US$ million US$ million
------------------------------------------------------- ------------ ------------
Non-current assets - -
------------------------------------------------------- ------------ ------------
Current assets
Current assets included $3.0 million of short-term
investments in a liquidity fund and $0.1 million
of trade and other receivables associated with
a VAT claim and various prepaid services 3.2 4.1
------------------------------------------------------- ------------ ------------
Assets for disposal
HEPI's cash and short-term investments increased
by $0.9 million. This increase was due to receipt
of a service tax refund of $1.9 million associated
with HEPI operated PY-3 field. Trade and other
receivables of $5.7 million represents amounts
due to be recovered from joint arrangements operated
by HEPI regarding PY-3 and CY-OS/2. 12.9 10.6
------------------------------------------------------- ------------ ------------
Current liabilities
Comprises of payables and certain accruals associated
with the running of a small listed company 0.2 0.1
------------------------------------------------------- ------------ ------------
Liabilities directly associated with the assets
for disposal
Trade and other accounts payable comprise amounts
due to vendors and other provisions associated
with various joint arrangements including the
award of $5.1 million due to Samson Maritime
plus interest accruing thereon. 14.7 13.1
------------------------------------------------------- ------------ ------------
Group Statement of cash flows H1 FY20 H1 FY19 FY19
(unaudited) (unaudited) (audited)
US$ million US$ million US$ million
---------------------------------------------- ------------ ------------ ------------
Cash flow from (used in) operating activities
Cash flow from operating activities amounted
to $0.9 million. The discontinued operation
realised net cash flow of $1.7 million
due to a service tax return in India.
From continuing operations cash used
was $0.8 million. 0.9 (4.0) (5.4)
---------------------------------------------- ------------ ------------ ------------
Capital expenditure
The Company did not incur any material
capital expenditures in the year. A $0.2
million charge is associated with the
reinvestment of interest accrued on a
deposit committed to site restoration
of the PY-3 field. (0.2) (0.2) (0.3)
---------------------------------------------- ------------ ------------ ------------
Financing activity
The financing activity of $0.2 million
is entirely attributable to interest
and investment income, realised from
the PY-3 site restoration fund which
is an asset of the discontinued operations. 0.2 0.2 0.5
---------------------------------------------- ------------ ------------ ------------
Cash and short-term investments (including
amounts held by HEPI)
The Company held $3.1 million of cash
and short-term investments. HEPI held
$2.0 million of cash which was primarily
held in bank accounts frozen by a Madras
High Court order. 5.3 11.9 9.2
---------------------------------------------- ------------ ------------ ------------
The proceeds from the sale of HEPI and payment of various fees
associated with sale have left the Company with a cash and
short-term investment balance of $10.5 million as at 30 November
2019
Discontinued operations - The Group held interests in the
following three assets, all of which are in India:
-- CY-OS/2: HEPI has a 75 per cent. participating interest
("PI") in CY-OS/2 with the remaining 25 per cent. PI being held by
GAIL (together, the "CY-OS/2 uJV partners") under the terms of the
CY-OS/2 Production Sharing Contract;
-- CY-OS-90/1 (PY-3): HEPI has an 18 per cent. PI in PY-3 with
the remainder being held by TATA (21 per cent. PI), HOEC (21 per
cent. PI) and ONGC (40 per cent. PI) (together, the "PY-3 uJV
partners") under the terms of the PY-3 Production Sharing Contract;
and
-- GS-OSN-2000/1 (GS-01): HEPI has a 10 per cent. PI in GS-01
with the remaining 90 per cent. PI held by Reliance (together, the
"GS-01 uJV partners") which also acts as operator under the terms
of the GS-01 Production Sharing Contract.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company has in place processes to the identification and
management of risk by combining the Board's assessment of risk with
risk factors originating from, and identified by, the Group's
senior management team. Risks are identified, assessed for
materiality, documented, and monitored through a risk register with
senior management involved in the process. Risks that are
identified as high and/or trending upwards are noted and assigned
to the Executive Director to monitor and, if possible, proactively
mitigate.
FY20 & FY21 Principal Risks and Uncertainties
The material risks and uncertainties previously identified were
directly attributable to the operating activities of Hardy
Exploration & Production (India) Inc. (HEPI). Following the
sale of HEPI the Group's principal risks and uncertainties
previously identified were eliminated or significantly mitigated.
The underlying risks and uncertainties inherent in Hardy's current
business are strategic and financial. The Board has identified
principal risks and uncertainties through to FY21 and established
policies and assigned responsibilities to mitigate their possible
negative impact on the business, a summary of which is provided
below:
Risk or uncertainty Mitigation action
Strategic - Company intends to use the net proceeds from the sale
of HEPI for the purpose of acquiring or establishing a company,
business or asset that has operations in the resources sector
or other industries should an appropriate investment opportunity
present itself.
Identifying an appropriate investment Maintain open dialog with shareholders
- no assurance can be given that to ensure support of proposed investments.
an investment in a target company Engage with multiple brokers and
or business will be successful specialists to source appropriate
or that any investment will be targets. Undertake comprehensive
made. due diligence exercises.
-------------------------------------------
Financial - the significant financial risks that may face the
Company are failure of internal controls and investment losses
Override of internal controls Maintain robust controls of all
- the assets of the Company are banking functions. Management to
highly liquid. provide regular reporting of balances
with supporting documentation.
-------------------------------------------
Investment risk - the Company's The fund has a AAA rating and as
excess resources are invested a result the likelihood of the fund
in a single liquidity fund and not being able to meet redemption
may be exposed to redemption restrictions demand is considered very low. The
in the event of constraints on Company is evaluating other practices
liquidity or failure of the fund and investments that provide market
or devaluation. competitive yields considering minimal
underlying institutional risk.
-------------------------------------------
RESPONSIBILITY STATEMENT
Each of the directors of the company confirms that to the best
of his or her knowledge:
a. the condensed set of financial statements has been prepared
in accordance with IAS 34 "Interim Financial Reporting";
b. the half year report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year);
c. the half year report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein);
On behalf of the Board
Richard Galvin,
Executive Director
11 December 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 September 2019
6 months 6 months 12 months
ended ended ended
30 September 30 September 31 March
2019 2018 2019
US$ US$ US$
(Unaudited) (Unaudited) (Audited)
====================================== ============== ============== =============
Continuing Operations
Revenue - - -
Cost of Sales - - -
Gross (loss) /profit - - -
Administrative expenses (690,838) (788,847) (1,429,754)
====================================== ============== ============== =============
Operating loss (690,838) (788,847) (1,429,754)
Interest and investment income 45,951 71,375 123,972
Loss before taxation and exceptional
items (644,887) (717,472) (1,305,782)
(Loss) / gain from discontinued
operations 361,169 (53,341,614) (54,993,968)
Taxation - - -
Total comprehensive loss for
the period attributable to owners
of the parent (283,718) (54,059,086) (56,299,750)
-------------------------------------- -------------- -------------- -------------
Loss per share
Basic & diluted (0.01) (1.47) (0.76)
-------------------------------------- -------------- -------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 6 months ended 30 September 2019
Share capital Share Premium Shares Retained Total
US$ US$ to be issued earnings
US$ / (loss) US$
US$
---------------------- -------------- -------------- -------------- -------------- --------------
At 1 April 2018 737,641 120,936,441 764,488 (64,578,481) 57,860,089
Total Comprehensive
loss for the period - - - (54,059,086) (54,059,086)
Adjustment of lapsed
vested options - - (545,708) 545,708 -
At 30 September
2018 (Unaudited) 737,641 120,936,441 218,780 (118,091,859) 3,801,003
---------------------- -------------- -------------- -------------- -------------- --------------
At 1 April 2018 737,641 120,936,441 764,488 (64,578,481) 57,860,089
---------------------- -------------- -------------- -------------- -------------- --------------
Total Comprehensive
loss for the period - - - (56,299,750) (56,299,750)
---------------------- -------------- -------------- -------------- -------------- --------------
Adjustment of lapsed
vested options - - (659,545) 659,545 -
---------------------- -------------- -------------- -------------- -------------- --------------
At 31 March 2019
(Audited) 737,641 120,936,441 104,943 (120,218,686) 1,560,339
---------------------- -------------- -------------- -------------- -------------- --------------
At 1 April 2019 737,641 120,936,441 104,943 (120,218,686) 1,560,339
Total Comprehensive
loss for the period - - - (283,718) (283,708)
At 30 September
2019 (Unaudited) 737,641 120,936,441 104,943 (120,502,404) 1,276,621
---------------------- -------------- -------------- -------------- -------------- --------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the 6 months ended 30 September 2019
30 September 30 September 31 March
2019 2018 2019
US$ US$ US$
(Unaudited) (Unaudited) (Audited)
--------------------------------- -------------- -------------- --------------
Assets
Non-Current assets
Property, plant and equipment 4,721 21,841 16,811
Site restoration deposits - 5,215,647 5,076,807
--------------------------------- -------------- -------------- --------------
Total non-current assets 4,721 5,237,488 5,093,618
Total non-current assets
Current assets
Inventories - 659,656 20,000
Trade and other receivables 100,341 5,519,524 5,486,731
Short-term investments 3,022,270 4,759,481 3,957,079
Cash and cash equivalents 95,369 501,513 204,160
--------------------------------- -------------- -------------- --------------
Total current assets 3,217,980 11,440,174 9,667,970
--------------------------------- -------------- -------------- --------------
Assets held for disposal 12,912,122 - -
--------------------------------- -------------- -------------- --------------
Total assets 16,134,823 16,677,662 14,761,588
--------------------------------- -------------- -------------- --------------
Equity and Liabilities
Equity attributable to owners
of the parent
Share capital 737,641 737,641 737,641
Share premium 120,936,441 120,936,441 120,936,441
Shares to be issued 104,943 218,780 104,943
Retained loss (120,502,404) (118,091,859) (120,218,686)
--------------------------------- -------------- -------------- --------------
Total equity 1,276,621 3,801,003 1,560,339
Non-current liabilities
Provision for decommissioning - 3,854,995 3,854,995
Current liabilities
Trade and other payables 155,459 9,021,664 9,346,254
--------------------------------- -------------- -------------- --------------
Total current liabilities 155,459 9,021,664 9,346,254
--------------------------------- -------------- -------------- --------------
Liabilities directly associated 14,702,743 - -
with the assets for disposal
--------------------------------- -------------- -------------- --------------
Total liabilities 14,858,202 12,876,659 13,201,249
--------------------------------- -------------- -------------- --------------
Total equity and liabilities 16,134,823 16,677,662 14,761,588
--------------------------------- -------------- -------------- --------------
Approved and authorised for issue by the Board of Directors on
11 December 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months ended 30 September 2019
12 months
6 months 6 months ended
ended ended
30 September 30 September 31 March
2019 2018 2019
US$ US$ US$
(Unaudited) (Unaudited) (Audited)
------------------------------------------- -------------- -------------- -------------
Operating activities
Operating loss of continuing operations (690,838) (788,848) (1,429,754)
Operating profit / (loss) of discontinued
operations 189,019 (53,499,373) (55,326,687)
-------------- -------------- -------------
(501,819) (54,288,221) (56,756,441)
Depletion and depreciation 4,526 5,817 10,846
Provision of Block CY-OS/2 - 51,128,272 51,128,272
Decrease in inventory - - 639,656
Decrease / (increase) in trade
and other receivables (229,636) (779,376) (744,864)
(Decrease) / increase in trade
and other payables 1,656,945 (50,291) 274,299
-------------- -------------- -------------
Cash flow from (used in) operating
activities 930,016 (3,983,799) (5,448,232)
Taxation refund (451) - (1,719)
------------------------------------------- -------------- -------------- -------------
Net Cash from (used in) operating
activities 929,565 (3,983,799) (5,449,951)
Investing activities
Expenditure on other fixed assets - (4,293) (4,292)
Site restoration deposit (172,115) (156,125) (17,284)
Realised from short term investments 934,809 4,174,642 4,977,044
-------------
Net cash from investing activities 762,694 4,014,225 4,955,468
Financing activities
Interest and investment income 218,111 229,135 456,691
Net cash from financing activities 218,111 229,135 456,691
-------------- -------------- -------------
Net increase / (decrease) in cash
and cash equivalents 1,910,370 259,561 (37,792)
-------------- -------------- -------------
Cash and cash equivalents at the
beginning of the period 204,160 241,952 241,952
------------------------------------------- -------------- -------------- -------------
Cash and cash equivalents at the
end of the period 2,114,530 501,513 204,160
------------------------------------------- -------------- -------------- -------------
1. Accounting Policies
These financial statements are for the six months ending 30
September 2019.
i) Basis of measurement
Hardy prepares its financial statements on a historical cost
basis except as otherwise stated.
ii) Going Concern
The Group's accounts ended 31 March 2019 contained a material
uncertainty relating to the going concern of the Group. The details
and circumstances carefully considered, by the Board, in coming to
this conclusion were fully disclosed in notes 1b and 2 of the
Consolidated Financial Statements.
On 15 July 2019, Hardy Oil and Gas Plc ("Company") entered into
a Share Purchase Agreement with Invenire Energy Private Limited
("Invenire") for selling its entire stake in its wholly owned
subsidiary, Hardy Exploration & Production (India) Inc.
("HEPI") on an as-is basis, for a consideration of USD 8,750,000
("Transaction"). The Transaction was approved by shareholders on 1
October 2019 and completed on 2 October 2019.
Following the completion of the Transaction the circumstances
identified in note 1b and 2 of the Consolidated Financial Statement
are no longer present, namely significant current liabilities to
Samson Maritime Limited and other professional service providers.
Further the proceeds of the sale of HEPI have significantly
increased the resources of the Company and reduced the projected
expenditures.
The Directors intend to use the Company's existing cash
resources and short-term investments with the net proceeds of the
cash consideration received from the HEPI sale for the purposes of
acquiring or establishing a company, business or asset that
operates in the resources sector or other industries should an
appropriate investment opportunity present itself. The Directors
have reviewed the Company's ongoing activities and having regard to
the Company's existing working capital position, the Directors are
of the opinion that the Company has adequate resources to enable it
to undertake its planned activities over the next 12 months from
the date of these financial statements.
iii) Basis of preparation
These interim consolidated financial statements are for the six
months ended 30 September 2019 and have been prepared in accordance
with International Accounting Standard 34 "Interim Financial
Statements". The accounting policies applied are consistent with
International Financial Reporting Standards (IFRS) adopted for use
by the European Union.
The accounting policies and methods of computation used in the
interim consolidated financial statements are consistent with those
used in the Company's Annual Report for 2019 and are expected to be
applied for the year ending 31 March 2020.
The Financial information has not been audited or reviewed by
the auditors.
iv) Cyclicality
The interim results for the six months ended 30 September 2019
are not necessarily indicative of the results to be expected for
the financial year 2020. The operations of Hardy Oil and Gas plc
(HOGL) are not affected by seasonal variations.
v) Full year comparative information in interim results
The financial information for the year ended 31 March 2019 does
not constitute the Company's statutory accounts for that year but
is derived from those accounts. Statutory accounts for 2019 are
available at the Company's website. The auditors reported on those
accounts and whilst their report was unqualified it highlighted a
material uncertainty in relation to going concern.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual financial statements as at 31 March 2019.
2. Critical Accounting Estimates and Judgments
The preparation of the Group's financial statements requires the
use of estimates and judgements that affect the carrying value of
assets and liabilities at the balance sheet date and the reported
amounts of revenue and expenditure for the year. These estimates
and judgements are made based on management's knowledge of the
facts, taking into account historical experiences and expectations
of future events that are believed to be reasonable under the
particular circumstances. By definition the actual results will
most likely differ from the estimates made.
3. Segment analysis
Post-acquisition of HEPI by Invenire Energy Private Limited, the
Company operates in a single geographical segment. There are no
reportable segments for the Company.
4. Taxation
Considering the current uncertainty over the future of the
operations and the ongoing review of the strategic objectives of
the Group, a deferred tax asset on the losses carried forward has
not been recognised.
5. Loss per share
Loss per share is calculated on a loss of US$ 283,708 for the
six months ended 30 September 2019 (September 2018: US$54,059,086)
on a weighted average of 36,882,018 Ordinary Shares for the six
months ended 30 September 2019 (September 2018: 36,882,018). No
diluted loss per share is calculated.
6. Discontinued Operations
On 2 October 2019 the Group sold the wholly owned subsidiary
Hardy Exploration & Production (India) Inc and as a result has
been classified as discontinued operation and is no longer
presented in the segment note. The results of Hardy Exploration
& Production (India) Inc incorporating consolidation
adjustments, are presented below:
12 months
6 months 6 months ended
ended ended
30 September 30 September 31 March
2019 2018 2019
US$ US$ US$
(Unaudited) (Unaudited) (Audited)
------------------------------------- -------------- -------------- -------------
Revenue - - -
Production cost (40,983) (149,621) (867,363)
Administrative expenses 230,004 (2,221,481) (3,331,052)
Impairment - (51,128,272) (51,128,272)
------------------------------------- -------------- -------------- -------------
Operating (loss)/ gain 189,021 (53,499,374) (55,326,687)
Financial income 172,148 157,760 332,719
Financial expense - (1,530,993) (3,332,366)
------------------------------------- -------------- -------------- -------------
(Loss)/ gain on ordinary activities
before taxation 361,169 (54,872,607) (58,326,334)
Taxation - - -
------------------------------------- -------------- -------------- -------------
(Loss)/ gain from discontinued
operations 361,169 (54,872,607) (58,326,334)
------------------------------------- -------------- -------------- -------------
The major classes of assets and liabilities of discontinued
operations classified as held for distribution to equity holders of
the parent as at 30 September 2019 are as follows:
As at 30 As at 30 As at 31
September September March 2019
2019 2018
------------------------------- ------------- ------------- -------------
Assets
Property, plant and equipment 7,565 13,030 10,046
Inventories 20,000 659,656 20,000
Trade & other receivables 5,616,475 5,447,271 5,415,692
Site restoration fund 5,248,921 5,215,647 5,076,807
Cash and cash equivalents 2,019,161 306,695 121,372
=============================== ============= ============= =============
12,912,122 11,642,299 10,643,917
Liabilities
Trade and other payables (10,847,748) (8,919,022) (9,217,487)
Decommissioning provision (3,854,995) (3,854,995) (3,854,995)
=============================== ============= ============= =============
(14,702,743) (12,774,017) (13,072,482)
Net assets/ (liabilities) (1,790,621) (1,131,718) (2,428,565)
=============================== ============= ============= =============
The net cash flows incurred by discontinued operations are as
follows:
12 months
6 months 6 months ended
ended ended
30 September 30 September 31 March
2019 2018 2019
US$ US$ US$
(Unaudited) (Unaudited) (Audited)
------------------------------------ -------------- -------------- ------------
Operating cash inflows/ (outflows) 1,620,978 (3,120,695) (3,975,315)
Investing cash inflows/ (outflows) (172,115) (158,946) (20,106)
Financing cash inflows/ (outflows) 172,148 157,759 332,719
==================================== ============== ============== ============
Net cash inflows/ (outflows) 1,621,011 (3,121,881) (3,662,701)
==================================== ============== ============== ============
Loss per share ($)
12 months
6 months 6 months ended
ended ended
30 September 30 September 31 March
2019 2018 2019
US$ US$ US$
(Unaudited) (Unaudited) (Audited)
================================= ============== ============== ===========
Basic, loss for the half year
from discontinued operations (0.04) (1.49) (1.58)
Diluted, loss for the year from
discontinued operations (0.04) (1.49) (1.58)
================================= ============== ============== ===========
7. Share capital
The Company has authorised share capital of 200 million US$ 0.01
ordinary shares. Changes in issued and fully paid ordinary shares
during the six months ended 30 September 2019 are as follows:
Number US$
0.01 Ordinary
shares US$
--------------------------------- --------------- --------
At 1 April 2019 73,764,035 737,641
Share options exercised during
the period - -
Restricted shares issued during
the period - -
At 30 September 2019 73,764,035 737,641
---------------------------------- --------------- --------
8. Share Options
Changes in outstanding share options during the six months ended
30 September 2019 are summarised below:
Weighted
average
Number of options price GBP
---------------------------------- ------------------ -----------
Outstanding at beginning of the
period 250,000 0.65
Lapsed during the period 250,000 0.65
Outstanding at the end of the
period
Exercisable at the end of period - -
----------------------------------- ------------------ -----------
9. Contingent liabilities
Litigation
In the normal course of business, the Group may be involved in
legal disputes which may give rise to claims. Provision is made in
the financial statements for all claims where a cash outflow is
considered probable. No separate disclosure is made of the detail
of claims as to do so could seriously prejudice the position of the
Group.
Others
Disputed claims amounting to approximately $0.4 million by the
suppliers to discontinued operations has not been acknowledged as
debt.
10. Dividends
The Board of Directors do not recommend the payment of an
interim dividend for the period ended 30 September 2019.
11. Approval of interim Consolidated Financial Statements
These interim consolidated financial statements have been
approved by the Board of Directors on 11 December 2019.
GLOSSARY OF TERMS
$ United States Dollar
Board the directors of Hardy Oil and Gas plc
the Company Hardy Oil and Gas plc
CY-OS/2 Offshore exploration licence CY-OS/2 located
on the east coast of India
FCA Financial Conduct Authority
FY financial year ended 31 March
GAIL Gas Authority of India Limited
GOI Government of India
the Group Hardy Oil and Gas plc and Hardy Exploration
& Production (India) Inc.
GS-01 Exploration Licence GS-OSN-2000/1
H1 Six months ended 30 September
Hardy Hardy Oil and Gas plc
HEPI Hardy Exploration & Production (India) Inc
HOEC Hindustan Oil Exploration Company
HSE Health Safety and Environment
KPI key performance indicator
Km Kilometre
km(2) square kilometre
LSE London Stock Exchange
M Metre
ONGC Oil & Natural Gas Corporation
PI Participating Interest
PY-3 licence CY-OS-90/1
Reliance Reliance Industries Limited
Tata Tata Petrodyne Limited
UK United Kingdom
uJV unincorporated joint venture
Hardy Oil and Gas plc
16 North Silver Street
Aberdeen, UK AB10 1RL
Tel: +44 (0) 1224 61 2900
Fax: +44 (0) 1224 63 3995
Investors Relations Contact Richard Galvin
IR@hardyoil.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UAVRRKSAUAUA
(END) Dow Jones Newswires
December 12, 2019 02:01 ET (07:01 GMT)
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