TIDMNAUT
RNS Number : 6235Y
Nautilus Marine Services PLC
23 August 2018
For Immediate Release 23 August 2018
NAUTILUS MARINE SERVICES PLC
("Nautilus" or the "Company")
INTERIM RESULTS FOR THE SIX-MONTH PERIODED 30 JUNE 2018
Nautilus Marine Services PLC (AIM: NAUT) today announces its
unaudited interim results for the six months ended 30 June 2018
(the "Period").
Financial Highlights:
- Cash balance at 30 June 2018 of US$14.1 million
- Positive working capital of US$17.6 million
- Decreased cost of sales to US$1.7 million (1H2017: US$2.7
million) and administrative expenses to US$2.4 million (1H2017:
US$3.7 million)
- Sales of non-strategic vessels and equipment for cash proceeds
of US$722 thousand, resulting in a gain on disposals of US$565
thousand
Enquiries:
Nautilus Marine Services PLC
nautilusirinfo@nmsplc.com
www.nautilusmarineplc.com
finnCap Ltd
Christopher Raggett/ Kate Bannatyne 020 7220 0500
Yellow Jersey
+44 (0) 7710 718
Tim Thompson/ Henry Wilkinson 649
Forward-looking statements
This annual report may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
annual report and include, but are not limited to, statements
regarding the Group's intentions, beliefs or current expectations
concerning, among other things, the Group's results of operations,
financial position, liquidity, prospects, growth, strategies and
expectations of the industry. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. Forward-looking statements are not
guarantees of future performance and the development of the markets
and the industries in which the Group operates may differ
materially from those described in, or suggested by, any
forward-looking statements contained in this annual report. In
addition, even if the development of the markets and the industries
in which the Group operates are consistent with the forward-looking
statements contained in this annual report, those developments may
not be indicative of developments in subsequent periods. A number
of factors could cause developments to differ materially from those
expressed or implied by the forward-looking statements including,
without limitation, general economic and business conditions,
industry trends, competition, commodity prices, changes in law or
regulation, currency fluctuations (including the US dollar),
changes in its business strategy, political and economic
uncertainty. Save as required by law, the Company is under no
obligation to update the information contained in this annual
report.
Past performance cannot be relied on as a guide to future
performance.
Chairman's Statement and Review of Operations
Strategy and Outlook
The Group continues with its strategy to acquire, preserve, and
deploy distressed energy assets which exhibit potential for
near-term recovery. The Group's primary growth objective remains to
seek strategic acquisitions which will serve as a platform for
growth in the offshore service industry, and our principal
activities during the first half of this year focused on the
identification, assessment, and pursuit of investment opportunities
in established offshore service and technology groups. The Group
also continues to be presented with opportunities to invest in
related industries and has begun to consider these as an
alternative strategy should it be unable to identify and complete
acceptable investments in the offshore service industry.
Offshore Gulf of Mexico Service Assets
The Group continued to focus on preserving the condition of its
offshore service vessels and dive equipment which remained laid up
at its facility in Berwick, Louisiana during the period. The Group
also continued to assess opportunities to operate these assets in
the Gulf of Mexico. While the offshore industry has begun to
recover somewhat due to sustained oil pricing recovery, conditions
have not yet recovered sufficiently to allow the Group's offshore
assets to be operated at a profit.
In spite of the industry conditions, the Group responded to
multiple inquiries on these assets during the period and was able
to divest of certain of its offshore service vessels and dive
equipment at significant premiums to their purchase price during
the first half of 2018. The Group will continue to monitor industry
conditions in the Gulf of Mexico to identify opportunities to
resume profitable operations and/or divest of its assets as the
related economic factors improve.
Colombian Oil and Gas Assets
The Group also continued to focus on maintaining compliance with
the contractual, environmental, and social obligations of its
Bolivar and Bocachico oil and gas contracts in Colombia during the
period. In accordance with the terms of these oil and gas
contracts, the Group is currently developing reactivation plans for
both of its Colombian oil and gas fields to ensure the contracts
remain in good standing.
As the oil industry continues to recover from a prolonged period
of low pricing, market conditions for the company's oil and gas
properties in Colombia have begun to improve. The Group has
received multiple expressions of interest related to its Colombian
oil and gas contracts and, while the Group has not committed to any
formal plan, it is currently evaluating potential divestment and/or
strategic partnerships at both fields.
Business and Operational Review
Financial Position
The Group had a positive working capital position of $17.6
million at 30 June 2018. The decrease in the Group's working
capital position of $2.4 million from 31 December 2017 is due to
funding operating and administrative costs during the period while
its asset base remains inactive. As the Group continues to hold
significant cash balances, the Company amended its $4 million note
receivable from Everest Hill Group, Inc. subsequent to the
reporting period on 2 August 2018. The amendment extended the
maturity date from 15 September 2018 to 30 April 2019. Interest
continues to be received quarterly at a rate of 8 per cent per
annum, and the Group has the right to call for repayment of $2
million with thirty days' notice.
The Group has $10.4 million recorded for its offshore assets
within property, plant and equipment on its statement of financial
position, and it recorded $980 thousand in depreciation against
these assets during the current period. The Group sold certain of
its non-strategic vessels and dive equipment for cash proceeds of
$722 thousand during the current period which resulted in a
substantial gain of $566 thousand over the assets' cost base of
$156 thousand. The Group continues to receive inquiries about its
offshore vessels and equipment and will consider opportunities to
sell its vessels and equipment at amounts which would result in
gains over its underlying cost basis.
The Group currently has $3.9 million in value for its oil and
gas contracts within property, plant and equipment on its statement
of financial position and did not record any depletion against
these assets during the period as both fields remained shut in.
The Group currently has $16.8 million in non-current convertible
debt and accrued interest which is comprised of $31.6 million of
face value and $2.7 million of accrued interest, less $17.5 million
of unamortized discount. These notes are due in 2027, 2029, and
2032, and accrued interest is not payable until conversion or
maturity.
Results of Operations
Operating expenses decreased from $1.8 million during the prior
year period to $685 thousand during the current period. Offshore
vessel and equipment operating costs were reduced by $1.1 million
due to approximately $482 thousand in one-time transition and
assessment costs during the prior year period, as well as a
reduction of $609 thousand in crewing, utilities, and staff costs
due to the Group's decision to move the entire fleet to a laid-up
status during the end of the financial year 2017. The Group expects
to maintain its fleet in a laid-up status until market conditions
in the Gulf of Mexico improve sufficiently to allow the vessels to
be profitably operated.
Oil and gas operating costs decreased slightly during the year
primarily due to the Group's decision to shut in production at its
Bocachico field during late 2017 due to uneconomic pricing
conditions. While both of the contract areas remained shut in
during the period, the Group continues to incur security,
environmental, and maintenance costs at both of these locations to
ensure the contracts remain secure, compliant and in good standing
with the local authorities and communities.
Due to sustained increases in oil pricing during 2018, the Group
is currently developing and evaluating reactivation plans at both
of its contract areas.
Administrative expenses decreased significantly to $2.4 million
compared to $3.7 million for the prior period. The decrease was
primarily due to staff reductions and other payroll reductions
which were implemented to curtail costs while the Group's assets
remain inactive. These cost savings were partially offset by
approximately $204 thousand of travel, legal and diligence costs
which were incurred while evaluating potential projects. The Group
seeks to continue reducing its administrative costs until
operations are re-established through reactivation of its current
asset base and/or strategic acquisitions.
The Group recorded $993 thousand in charges for accrued interest
and accretion of discount on its Series A, B, and C convertible
notes during the period.
Conclusion
The Group took significant actions during late 2017 and early
2018 to reduce its cost base as it continues to consider various
strategic options for its current asset base and to identify and
evaluate strategic acquisition opportunities. This preservation of
its liquidity and capital resources should continue to attract
acquisition and merger opportunities that will benefit from its
current asset base along with its established management team and
business processes. Careful evaluation of these opportunities will
allow the Group to identify the prospects which offer operating
activities which can be combined with our existing assets and
management team to create revenue growth potential and lead to
increased value for our shareholders.
Mikel Faulkner
Chairman
22 August 2018
INDEPENT REVIEW REPORT TO NAUTILUS MARINE SERVICES PLC
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2018 which comprises the Unaudited
Condensed Consolidated Statement of Comprehensive Income, Unaudited
Condensed Consolidated Statement of Financial Position, Unaudited
Condensed Consolidated Cash Flow Statement, Unaudited Condensed
Consolidated Statement of Changes of Equity and the related
explanatory notes.
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 AIM 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 AIM 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) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity", issued by the Financial Reporting Council 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 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.
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
June 2018 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies trading
securities on AIM.
BDO LLP
Chartered Accountants and Registered Auditors
55 Baker Street
London
W1U 7EU
United Kingdom
22 August 2018
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Unaudited Condensed Consolidated Statement of Comprehensive
Income
For the period ended 30 June 2018
Six months Six months
ended ended
Note 30 June 2018 30 June 2017
$'000 (Unaudited) $'000 (Unaudited)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Continuing operations
Revenue 4 - 140
Cost of sales 5 (1,690) (2,683)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Gross loss (1,690) (2,543)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Gain on disposal of assets 565 54
Administrative expenses (2,442) (3,663)
Impairment charge - (2)
Operating loss from continuing
operations (3,567) (6,154)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Finance income and other 6 232 597
Finance expense and other 7 (1,207) (1,040)
Loss before taxation from
continuing
operations (4,542) (6,597)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Tax expense (123) (88)
Loss from continuing operations,
net of tax (4,665) (6,685)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Loss from discontinued
operations,
net of tax (12) (8)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Total loss attributable to the
equity holders of the parent (4,677) (6,693)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Other comprehensive income/(loss) - -
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Total comprehensive loss
attributable
to the equity holders of the
parent (4,677) (6,693)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Loss per share for continuing
operations
- Basic and diluted 3 $ (0.13) $ (0.19)
Loss per share for discontinued
operations
- Basic and diluted 3 $ - $ -
Total loss per share
- Basic and diluted 3 $ (0.13) $ (0.19)
----------------------------------- ------ --- ----------------------------- --- ------------------------------
Figures in thousands except for per share information which is
stated in $.
Unaudited Condensed Consolidated Statement of Financial
Position
As at 30 June 2018
31 December
30 June 2018 2017
Note $'000 $'000
(Unaudited) (Audited)
--------------------------------------- ------- ----------------------------- -----------------------------
Assets
Non--current assets
Intangible assets 123 130
Other non-current assets 990 946
Property, plant and equipment 9 14,282 15,427
Total non--current assets 15,395 16,503
--------------------------------------- ------- ----------------------------- -----------------------------
Current assets
Materials and supplies inventories 143 146
Note receivable and accrued interest 8 4,013 4,013
Trade and other receivables 2 7
Prepayments and other assets 372 303
Cash and cash equivalents 14,137 16,758
Total current assets 18,667 21,227
--------------------------------------- ------- ----------------------------- -----------------------------
Total assets 34,062 37,730
--------------------------------------- ------- ----------------------------- -----------------------------
Liabilities
Non--current liabilities
Convertible loan notes and accrued
interest 10 (16,802) (15,809)
Long--term provisions (2,900) (2,712)
Total non--current liabilities (19,702) (18,521)
--------------------------------------- ------- ----------------------------- -----------------------------
Current liabilities
Trade and other payables (473) (533)
Short-term provisions (361) (361)
Corporate and equity tax liabilities (18) (55)
Derivative financial liabilities 10,12 (178) (262)
Total current liabilities (1,030) (1,211)
--------------------------------------- ------- ----------------------------- -----------------------------
Total liabilities (20,732) (19,732)
--------------------------------------- ------- ----------------------------- -----------------------------
Net assets 13,330 17,998
--------------------------------------- ------- ----------------------------- -----------------------------
Capital and reserves attributable to
equity holders of the parent
Share capital 11 608 608
Share premium 27,139 27,139
Capital reserve 30,435 30,435
Other reserves 10 1,307 1,307
Accumulated losses (46,159) (41,491)
Total equity 13,330 17,998
--------------------------------------- ------- ----------------------------- -----------------------------
Unaudited Condensed Consolidated Cash Flow Statement
For the period ended 30 June 2018
Six months Six months
ended ended
Note 30 June 2018 30 June 2017
$'000 (Unaudited) $'000 (Unaudited)
------------------------------------------ ------ ----------------------------- -----------------------------
Cash flows from operating activities
Cash used by operations 2 (3,300) (6,835)
Taxes paid (continuing and discontinued
operations) (203) (178)
------------------------------------------ ----------------------------- -----------------------------
Net cash used in operating activities (3,503) (7,013)
------------------------------------------ ------ ----------------------------- -----------------------------
Cash flows from investing activities
Interest on note receivable 160 206
Proceeds from disposal of assets 722 61
Purchase of intangible assets
and property, plant and equipment - (94)
Net cash provided by investing
activities 882 173
------------------------------------------ ------ ----------------------------- -----------------------------
Cash flows from financing activities
Issuance of convertible loan notes - 10,500
Net cash provided by financing
activities - 10,500
------------------------------------------ ------ ----------------------------- -----------------------------
(Decrease) increase in cash and
cash equivalents for the period (2,621) 3,660
Cash and cash equivalents at beginning
of period 16,758 16,446
------------------------------------------
Cash and cash equivalents at end
of period 14,137 20,106
------------------------------------------ ------ ----------------------------- -----------------------------
Unaudited Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2018
Share Share Capital Other Accumulated Total
capital premium reserve reserves losses equity
Note $'000 $'000 $'000 $'000 $'000 $'000
---------------- ------ --------------------- --------------------- --------------------- --------------------- ---------------------- ---------------------
At 31 December
2017
(Audited) 608 27,139 30,435 1,307 (41,491) 17,998
Comprehensive
loss for
the period:
Total loss for
the period - - - - (4,677) (4,677)
Other
comprehensive
income/(loss) - - - - - -
Total
comprehensive
loss
for the
period
attributable
to equity
owners of the
parent - - - - (4,677) (4,677)
Transaction
with owners:
Share--based
payment -
options
equity
settled - - - - 9 9
Other
movements
within
equity - - - - 9 9
---------------- ------ --------------------- --------------------- --------------------- --------------------- ---------------------- ---------------------
At 30 June
2018
(Unaudited) 608 27,139 30,435 1,307 (46,159) 13,330
---------------- ------ --------------------- --------------------- --------------------- --------------------- ---------------------- ---------------------
At 31 December
2016
(Audited) 608 27,139 51,855 - (53,966) 25,636
Comprehensive
loss for
the period:
Total loss for
the period - - - - (6,693) (6,693)
Other
comprehensive
income/(loss) - - - - - -
Total
comprehensive
loss
for the
period
attributable
to equity
owners of the
parent - - - - (6,693) (6,693)
Transaction
with owners:
Share--based
payment -
options
equity
settled - - - - 7 7
Capital
reserve
transfer - - (21,420) - 21,420 -
Equity
proportion of
convertible
loan note 10 - - - 1,307 - 1,307
Other
movements
within
equity - - (21,420) 1,307 21,427 1,314
---------------- ------ --------------------- --------------------- --------------------- --------------------- ---------------------- ---------------------
At 30 June
2017
(Unaudited) 608 27,139 30,435 1,307 (39,232) 20,257
---------------- ------ --------------------- --------------------- --------------------- --------------------- ---------------------- ---------------------
Notes to the Interim Condensed Consolidated Financial
Statements
For the six months ended 30 June 2018
1. Significant accounting policies
General information
The interim condensed consolidated financial statements of
Nautilus Marine Services PLC (the "Company") and its subsidiaries
(together the "Group") for the six months ended 30 June 2018 have
been reviewed, but are unaudited. The interim financial information
also incorporates unaudited comparative figures for the six months
ended 30 June 2017. In the opinion of the Directors, the interim
condensed consolidated financial statements for the period presents
fairly the financial position, results from operations and cash
flows for the period in conformity with the generally accepted
accounting principles consistently applied.
The preparation of financial statements in accordance with
International Financial Reporting Standards as adopted by the
European Union ("IFRS") requires the use of estimates and
assumptions that affect the reported amounts of assets and
liabilities and income and expense. Actual results may differ from
estimates.
Basis of preparation
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
full annual report for the year ended 31 December 2017.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 31 December 2017 except for
the effect of new standards effective from 1 January 2018 as
explained below. These are expected to be consistent with the
financial statements of the Group as at 31 December 2018 that
are/will be prepared in accordance with IFRS and their
interpretations issued by the International Accounting Standards
Board ("IASB") as adopted by the European Union ("EU").
The financial information contained in this interim report does
not constitute statutory accounts as defined by section 435 of the
Companies Act 2006. The comparatives for the full year ended 31
December 2017 are not the Company's full statutory accounts for
that year. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement
under section 498(2)-(3) of the Companies Act 2006.
New and amended standards and interpretations
During the period, several new and revised Standards and
Interpretations issued by the IASB became effective. IFRS 2 -
Classification and Measurement of Share-based Payment Transactions,
IFRS 9 - Financial Instruments, IFRS 15 - Revenue Recognition as
well as IFRIC 22 - Foreign Currency Transactions and Advance
Consideration took effect on 1 January 2018. The Group has adopted
these standards, however given the Group's current operations and
corporate structure, these did not have a material impact on the
Group's condensed consolidated financial statements for the six
months ended 30 June 2018.
Another new Standard, IFRS 16 - Leases takes effect on 1 January
2019. The Group has identified its lease arrangements as at 30 June
2018 and the impact of this new Standard is not considered to be
material. Management will continue to assess the impact of this
Standard if new leases are added during the remainder of the
year.
Going concern
In forming its opinion as to going concern, the Board prepares a
working capital forecast based upon its assumptions. The Board also
prepares a number of alternative scenarios modeling the business
variables and key risks and uncertainties. Based upon these, the
Board remains confident that the Group's current cash on hand and
current cash flow from operations will enable the Group to fully
finance its future working capital discretionary expenditures
beyond the period of 12 months of the date of this report.
2. Notes to the Condensed Consolidated Statement of Cash
Flows
Reconciliation of loss before taxation to net cash flow used in
operations:
Six months Six months
ended ended
30 June 2018 30 June 2017
$'000 $'000
(Unaudited) (Unaudited)
------------------------------------------------ ------------------------------- -------------------------------
Continuing operations
Loss before tax (4,542) (6,597)
Adjustments for:
Depreciation, amortisation and impairment 1,005 847
Gain on derivative financial instruments (72) (428)
Gain on sale of assets (565) (54)
Share based payment expense 9 7
Finance income (160) (206)
Interest and accretion expense on convertible
loan notes 993 901
Unwinding of discount on decommissioning
provision 142 111
Operating cash flow before movements
in working capital (3,190) (5,419)
------------------------------------------------ ------------------------------- -------------------------------
Decrease in inventories 1 14
Increase in trade and other receivables (107) (507)
Increase/(decrease) in trade and other
payables 12 (913)
Cash used in continuing operations (3,284) (6,825)
------------------------------------------------ ------------------------------- -------------------------------
Cash used in discontinued operations (16) (10)
------------------------------------------------ ------------------------------- -------------------------------
Cash used in operations (3,300) (6,835)
------------------------------------------------ ------------------------------- -------------------------------
3. Loss per share
Basic loss per share amounts are calculated by dividing loss for
the period attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding for the
period.
Diluted loss per share amounts are calculated by adjusting the
loss attributable to ordinary equity holders and the weighted
average number of ordinary shares outstanding for the effects of
all dilutive potential ordinary shares, comprised of those related
to convertible loan notes and share options. The convertible loan
notes are assumed to have been converted into ordinary shares and
the net loss is adjusted to eliminate the related finance costs,
including interest and accretion, and any gain or loss recognized
on the derivative financial liability related to the convertible
loan notes. The calculation of the dilutive potential ordinary
shares related to employee and Director share option plans includes
only those options with exercise prices below the average share
trading price for each period.
The following table reflects the loss and share data used in the
basic and diluted loss per share calculations:
(Figures in thousands except for share and per share information
which is disclosed in $)
Six months Six months
ended ended
30 June 2018 30 June 2017
$'000 $'000
(Unaudited) (Unaudited)
-------------------------------------- ------ ----------------------------- ----- ------------------------------
Loss from continuing operations after
taxation (4,665) (6,685)
Loss from discontinued operations after
taxation (12) (8)
Net loss attributable to equity holders (4,677) (6,693)
---------------------------------------------- ----------------------------- ----- ------------------------------
Loss per share for continuing
operations
- Basic and diluted $ (0.13) $ (0.19)
Loss per share for discontinued
operations
- Basic and diluted $ - $ -
Total loss per share
- Basic and diluted $ (0.13) $ (0.19)
Basic weighted average number of shares 36,112,187 36,112,187
Dilutive potential ordinary shares:
Employee and Director share option
plans - -
Shares on conversion of loan notes - -
Diluted weighted average number of
shares 36,112,187 36,112,187
---------------------------------------------- ----------------------------- ----- ------------------------------
Basic and diluted loss per share are the same because the
following potentially dilutive shares were considered to be
anti-dilutive due to the loss arising in the periods:
Six months Six months
ended ended
30 June 2018 30 June 2017
--------------------------------------- ------------------------ ------------------------
Employee and Director share option
plans 2,670,000 3,550,000
Shares on conversion of loan notes 25,802,596 25,802,596
---------------------------------------- ------------------------ ------------------------
4. Segmental analysis
For management purposes, the Group is comprised of three
operating segments as defined below:
-- Offshore (comprised of offshore services equipment, currently located in the Gulf of Mexico)
-- Oil and Gas (comprised of the Bolivar and Bocachico Contracts in the Magdalena Valley)
-- Corporate (comprised of the Group's corporate overhead and
investing activities which were not allocated to the Offshore or
Oil and Gas segments)
Corporate overhead expenses are allocated to the segments based
on the estimated split of personnel services delivered to each
segment. Group financing (including finance costs and finance
income) is allocated among the segments based upon the segment
receiving the benefit of the financing activities. However, the
related financing assets and liabilities are held within the
Corporate segment and not allocated to the operation segments as
these facilities are managed on a Group basis.
Summarized selected financial information concerning each
operating segment is as follows:
For the six
months ended
30 June 2018
(in $'000) Offshore Oil and Gas Corporate Total
--------------- --------------------------- --------------------------- --------------------------- ---------------------------
Revenue - - - -
Operating
expenses (440) (245) - (685)
Depreciation
and
amortisation (980) (1) (24) (1,005)
Finance
expense and
other (994) (209) (4) (1,207)
Loss from
continuing
operations
before tax (2,300) (778) (1,464) (4,542)
--------------- --------------------------- --------------------------- --------------------------- ---------------------------
For the six
months ended
30 June 2017
(in $'000) Offshore Oil and Gas Corporate Total
--------------- --------------------------- --------------------------- --------------------------- ---------------------------
Revenue - 140 - 140
Operating
expenses (1,531) (307) - (1,838)
Depreciation
and
amortisation (824) - (21) (845)
Impairment
charge - (2) - (2)
Finance
expense and
other (901) (80) (59) (1,040)
Loss from
continuing
operations
before tax (3,137) (608) (2,852) (6,597)
--------------- --------------------------- --------------------------- --------------------------- ---------------------------
For the six
months ended
30 June 2018
(in $'000) Offshore Oil and Gas Corporate Total
-------------- --------------------------- ------------------------- -------------------------- ------------------------
Total
non-current
assets 10,375 4,954 66 15,395
Total
non-current
liabilities - (2,900) (16,802) (19,702)
-------------- --------------------------- ------------------------- -------------------------- ------------------------
For the year
ended 31
December
2017
(in $'000) Offshore Oil and Gas Corporate Total
-------------- --------------------------- ------------------------- -------------------------- ------------------------
Total
non-current
assets 11,505 4,908 90 16,503
Total
non-current
liabilities - (2,712) (15,809) (18,521)
-------------- --------------------------- ------------------------- -------------------------- ------------------------
The Group's business units did not generate any revenues during
the six months ended 30 June 2018. During 2017, all revenues from
the Group's business units were generated from oil liftings from
the Group's Bocachico field located in Colombia. This activity
resulted in sales of crude oil to one Colombia-based customer which
amounted to $140 thousand for the six months ended 30 June 2017.
The Bocachico field was shut-in during late 2017 in order to
decrease operating costs and environmental risk while the contract
area remains uneconomic and remained shut-in during the 2018
period.
Operating expenses for the offshore segment during the six
months ended 30 June 2018 consisted of $167 thousand in dock and
facility costs, $86 thousand in vessel costs, and $187 thousand in
allocated labour and management costs. Operating expenses for the
offshore segment during the six months ended 30 June 2017 were
comprised of non-recurring costs to transition the offshore service
vessel ownership and technical management and to complete an
initial assessment of the vessels and equipment of approximately
$482 thousand, with the remaining costs consisting of $267 thousand
in dock and facility costs, $152 thousand in vessel costs, $177
thousand in vessel crewing and technical management fees, and $453
thousand in allocated labour and management costs.
5. Cost of sales
A reconciliation of cost of sales by nature is as follows:
Six months Six months
ended ended
30 June 2018 30 June 2017
$'000 $'000
(Unaudited) (Unaudited)
-------------------------------- ----------------------------- -----------------------------
Operating expenses 685 1,838
Depreciation and amortisation 1,005 845
Total cost of sales 1,690 2,683
-------------------------------- ----------------------------- -----------------------------
6. Finance income and other
Six months Six months
ended ended
30 June 2018 30 June 2017
$'000 $'000
(Unaudited) (Unaudited)
------------------------------------------ ------------------------------ -----------------------------
Income on note receivable and other 160 169
Unrealized gain on derivative financial
liabilities 72 428
Total finance income and other 232 597
------------------------------------------ ------------------------------ -----------------------------
7. Finance expense and other
Six months Six months
ended ended
30 June 2018 30 June 2017
$'000 $'000
(Unaudited) (Unaudited)
------------------------------------------- ------------------------------- ------------------------------
Unwinding of discount on decommissioning
provision 142 111
Accretion expense on convertible loan
notes (65) 318
Interest expense on convertible loan
notes 1,058 583
Net loss on foreign currency exchange 72 28
Total finance expense and other 1,207 1,040
------------------------------------------- ------------------------------- ------------------------------
8. Note receivable
The Group continues to hold a Note Receivable from Everest Hill
Group, Inc. ("Everest"). The outstanding principal balance of $4
million and accrued interest of $13 thousand on the Note Receivable
was classified as current as at 30 June 2018.
Please see note 14 for information on the post reporting date
amendment to the Note Receivable.
9. Property, plant and equipment
Offshore
equipment Facilities Office
and site Oil and equipment
Vessels improvements properties pipelines and other Total
$'000 $'000 $'000 $'000 $'000 $'000
------------------ ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------
Cost:
At 1 January
2018 12,025 1,341 45,101 2,956 545 61,968
Disposals (133) (41) - - (2) (176)
Change in
decommissioning
and
environmental
provision - - 5 - - 5
At 30 June 2018
(Unaudited) 11,892 1,300 45,106 2,956 543 61,797
------------------ ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------
Accumulated
Depreciation
and Impairment:
At 1 January
2018 (1,565) (296) (41,243) (2,956) (481) (46,541)
Provided during
the period (820) (160) - - (18) (998)
Disposals 14 10 - - - 24
At 30 June 2018
(Unaudited) (2,371) (446) (41,243) (2,956) (499) (47,515)
------------------ ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------
Net book value
at 30 June
2018
(Unaudited) 9,521 854 3,863 - 44 14,282
------------------ ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------
Net book value
at 31 December
2017 (Audited) 10,460 1,045 3,858 - 64 15,427
------------------ ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------
During the six months ended 30 June 2018, the Group closed on
the sale of two of its offshore service vessels and certain
offshore equipment for proceeds of $722 thousand. These disposals
resulted in a gain on disposal of assets of $566 thousand,
partially offset by a negligible amount of loss on the sales of
certain office equipment.
10. Convertible loan notes and interest payable
The Group determined the convertible loan notes issued to be
compound financial liabilities. The Group classified the conversion
features of the Series A Loan Notes as equity due to the fixed
settlement terms. Accordingly, the proceeds received on issuance
were allocated into their liability and equity components. The
Group classified the conversion features of the Series B Loan Notes
and Series C Loan Notes as derivative financial liabilities.
Accordingly, the proceeds received on issuance were allocated into
their host debt liability and embedded derivative components. The
following table details the movements of the convertible loan note
issuances during the period:
Six months
ended Year ended
31 December
30 June 2018 2017
$'000 $'000
(Unaudited) (Audited)
-------------------------------------- ------------------------------- ------------------------------
Balance at beginning of period 15,809 -
Issuance of convertible loan notes - 16,140
Proportion classified as equity - (1,307)
Proportion classified as derivative
financial liabilities - (780)
Interest payable 1,058 1,663
Accretion expense (65) 93
Convertible loan notes and accrued
interest 16,802 15,809
-------------------------------------- ------------------------------- ------------------------------
11. Share capital
Six months ended Year ended
30 June 2018 31 December 2017
(Unaudited) (Audited)
------------------------ --------------------------------------- -----------------------------------
Number of shares $'000 Number of shares $'000
------------------------ -------------------------- ----------- -------------------------- -------
Allotted, called up
and fully paid
Ordinary shares of 1p
each 36,112,187 608 36,112,187 608
------------------------ -------------------------- ----------- -------------------------- -------
The ordinary shares confer the right to vote at general meetings
of the Company, to a repayment of capital in the event of
liquidation or winding up and certain other rights as set out in
the Company's articles of association. The ordinary shares also
confer the right to receive dividends if declared by the Directors
and approved by the Company. Pursuant to the terms of the
convertible loan notes issued during 2017, the Company is precluded
from declaring or paying any dividends for three years following
the issuance date.
12. Financial instruments - fair value measurement
Financial instruments evaluated at fair value can be classified
according to the following valuation hierarchy, which reflects the
extent to which the inputs used in the valuation technique utilised
are observable:
-- Level 1: Quoted prices in active markets (not adjusted) for
identical items.
-- Level 2: Observable direct or indirect inputs other than
Level 1 inputs.
-- Level 3: Unobservable inputs (not derived from market
data).
The classification of an item into the above levels is based on
the lowest level of the inputs used that has a significant effect
on the fair value measurement of the item. Transfers of items
between levels are recognised in the period in which they
occur.
During 2017, the Group issued financial instruments measured at
fair value. The Group has assessed the different levels in the fair
value hierarchy, for its financial instruments, based on the inputs
used in the valuation techniques. The following tables show the
valuation techniques used in measuring level 3 fair values, as well
as the significant unobservable inputs used.
Significant unobservable
Type Level Measurement Valuation technique inputs
-------------------------- ------- ------------- ---------------------- --------------------------
Derivative financial 3 Recurring Binomial lattice Share price volatility
liabilities (derivative model
component of
convertible loan
notes)
-------------------------- ------- ------------- ---------------------- --------------------------
Contingent consideration 3 Recurring Probability weighted Operating and cash
cash forecasts flow projections
-------------------------- ------- ------------- ---------------------- --------------------------
During the six months ended 30 June 2018 and 2017, gains of $72
thousand and $428 thousand, respectively, were recognised on the
revaluation of the derivative financial liabilities within finance
income and other in the Condensed Consolidated Statement of
Comprehensive Income. The contingent consideration relates to the
acquisition of offshore service vessel-owning companies which own
three vessels. The fair value of the contingent consideration
related to the future net cash inflows through August 2018 of the
three vessels was determined to be $nil as at 30 June 2018 and as
at 31 December 2017. Changes to the Group's key assumptions
regarding the projected net cash inflows generated by the vessels
and the expected timing of potential revenues could impact the fair
value of the contingent consideration, which will be assessed at
each reporting period for the duration of the 18-month contingency
measurement period.
13. Related party disclosures
The Group continues to hold a Note Receivable from Everest, a
related party. Please see note 14 for information on the post
reporting date amendment to the Note Receivable.
The Group entered into agreements with Oil and Advisors LTD, in
which Zac Phillips, a non-executive director, performed independent
consulting services. The Group paid $15 thousand and $17 thousand
for contract services during the six months ended 30 June 2018 and
2017, respectively.
14. Post reporting date events
On 2 August 2018, the Group (the "Lender") amended the Note
Receivable with Everest. Under the amendment, the Group extended
the maturity date from 15 September 2018 to 30 April 2019. In
addition, the amendment provides for a Lender's Call Option which
requires Everest to pay $2 million of the outstanding principal
amount no later than thirty days after the Group provides written
notice of the exercise of the Lender's Call Option to Everest. The
Note Receivable continues to be subject to an interest charge of 8
per cent per annum, payable quarterly in arrears, and the existing
collateral remains in place. The change in maturity date does not
impact the classification of the Note Receivable on the Condensed
Consolidated Statement of Financial Position as it will continue to
be a Current Asset.
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 PTMLTMBBTBAP
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August 23, 2018 02:00 ET (06:00 GMT)
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