REG - Argos Resources Ltd - Interim Results

Argos ResourcesAnnouncement

21/08/2018 07:05

RNS Number : 3555Y
Argos Resources Ltd
21 August 2018
 


 
21 August 2018
 
ARGOS RESOURCES LIMITED
("Argos" or "the Company")
 
2018 Interim Financial Results
 
Argos Resources Limited (AIM: ARG.L), the Falkland Islands based company focused on the North Falkland Basin, is pleased to announce its interim financial results for the six months ended 30 June 2018.
 
Highlights
·     $37 thousand profit for the period (H1 2017: $81 thousand);
·     $0.88 million cash reserves at 30 June 2018 (YE 2017: $0.76 million);
·    Funding continues under the Participation Agreement between the Company, Noble and Edison.
 
For further information:
 
Argos Resources Limited (+500 22685)                           Cenkos Securities plc (Nomad & Broker)
www.argosresources.com                                                  Derrick Lee (+44 131 220 9100)
Ian Thomson, Chairman                                                      Neil McDonald (+44 131 220 6939)
John Hogan, Managing Director
 
Chairman's Statement
 
The Company continues to hold a 5% Overriding Royalty Interest in Licence PL001, where Noble Energy is the Operator, in the North Falkland Basin. The Licence is adjacent to Licences PL032 and PL004 containing the large Sea Lion oil field and the Zebedee and Isobel-Elaine discoveries.
 
We believe that Licence PL001 is well-positioned in a proven oil basin and contains a large inventory of attractive prospects.
 
Under the terms of a Participation Agreement between the Company, Noble and Licence partner Edison, the Company continues to receive quarterly cash payments from Noble and Edison totalling £300,000 per annum, which are sufficient to meet the Company's ongoing costs.
 
Financial overview
The Group profit for the six months to 30 June 2018 was $37 thousand (2017: $81 thousand) giving an undiluted profit per share of 0.02 cents (2017: 0.04 cents per share).
 
Administrative expenses were $0.16 million compared to $0.14 million for the same period in 2017.
 
Net assets of $29.5 million reflect an increase of $37 thousand since December 2017 as a result of the profit for the period.
 
Financial outlook
Cash proceeds being received under the Participation Agreement continue to fully fund the Group overhead.
 
 
 
Ian Thomson OBE
Chairman
 


 
Consolidated statement of comprehensive income
Period ended 30 June 2018
                                                                                                                                          




 










Note



 




6 months

ended

30 June

2018

unaudited

$'000




6 months

ended

30 June

2017

unaudited

$'000


Year

ended

31 December

2017

audited

$'000




 


 


 


 


 




Other income


 


209


185


380




Administrative expenses


 


(155)


(142)


(329)




Finance income


 


2


1


1




Foreign exchange (losses)/gains


 


(19)


37


66




 


 


 


 


 




Profit from operations attributable to owners of the parent


 


37


81


118




 


 


 


 


 




Total comprehensive income for the period


 


 


 


 




attributable to owners of the parent


 


37


81


118




 


 


 


 


 




 


 


 


 


 




 


 


 


 


 




Earnings per share (cents):


 


 


 


 




Basic and diluted


2


0.02


0.04


0.05




 
 
Consolidated statement of financial position
As at 30 June 2018
                                                                                                                                          




 






Note



 


As at
30 June

2018

unaudited

$'000


As at

30 June

2017

unaudited

$'000


As at

31 December

2017

audited

$'000




Assets


 


 


 


 




Non-current assets


 


 


 


 




Capitalised exploration expenditure


 


28,749


28,749


28,749




Current assets


 


 


 


 




Other receivables


 


13


12


14




Cash and cash equivalents


 


884


678


758




 


 


 


 


 




Total current assets


 


897


690


772




 


 


 


 


 




Total assets


 


29,646


29,439


29,521




 


 


 


 


 




Liabilities


 


 


 


 




Total and current liabilities


 


 


 


 




Other payables


 


(147)


(41)


(59)




 


 


 


 


 




Total net assets


 


29,499


29,398


29,462




 


 


 


 


 




 


 


 


 


 




Capital and reserves attributable to


 


 


 


 




equity holders of the company


 


 


 


 




 


 


 


 


 




Share capital


 


6,696


6,669


6,696




Share premium


 


30,071


30,071


30,071




Retained losses


 


(7,268)


(7,342)


(7,305)




 


 


 


 


 




Total shareholders' equity


 


29,499


29,398


29,462




 
 
 
Consolidated statement of cash flows
Period ended 30 June 2018
                                                                                                                                          




 


6 months

ended

30 June

2018

unaudited
$'000


6 months

ended

30 June

2017

unaudited

$'000


Year

ended

31 December

2017

audited

$'000


 




Cash flows from operating activities


 


 


 


 




Profit for period


37


81


118


 




Adjustments for:


 


 


 


 




Finance income


(2)


(1)


(1)


 




Foreign exchange


21


(39)


(67)


 




Depreciation


-


1


-


 




 


 


 


 


 




Net cash inflow from operating activities


 


 


 


 




before changes in working capital


56


42


50


 




 


 


 


 


 




Decrease in other receivables


-


3


1


 




Increase/(decrease)/ in other payables


89


(108)


(89)


 




 


 


 


 


 




Net cash inflow/(outflow)
from operating activities


145


(63)


(38)


 




 


 


 


 


 




Investing activities


 


 


 


 




Interest received


2


1


1


 




 


 


 


 


 




Net cash inflow
from investment activities


2


1


1


 




 


 


 


 


 




Financing activities


 


 


 


 




Issue of ordinary shares (share options exercised)


-


                 -


                 27




 


 


 


 


 




Net cash inflow from financing activities


-


-


27


 




 


 


 


 


 




Net increase/(decrease) in cash and cash equivalents


147


(62)


(10)


 




Cash and cash equivalents at beginning of period


758


701


701


 




Exchange (losses)/gains on cash and cash equivalents


(21)


39


67


 




 


 


 


 


 




Cash and cash equivalents at end of period


884


678


758


 



 
 
 
 
 
 



 
 
Consolidated statement of changes in equity - unaudited
Period ended 30 June 2018
 




 


 




Share

capital

$'000




Share premium

$'000


Retained

earnings/

(deficit)

$'000




Total

equity

$'000




At 1 January 2017


 


6,669


30,071


(7,423)


29,317




Total comprehensive income for period to 30 June 2017


 


-


 
-


81


81




 


 


 


 


 


 




At 30 June 2017


 


6,669


30,071


(7,342)


29,398




 


 


 


 


 


 




Total comprehensive income for period to 31 December 2017


 


-


 
-


37


37




Shares issued (share options exercised)


 


27


 
-


-


27




 


 


 


 


 


 




At 31 December 2017


 


6,696


30,071


(7,305)


29,462




 


 


 


 


 


 




Total comprehensive income for period to 30 June 2018


 


-


 
-


37


37




 


 


 


 


 


 




At 30 June 2018


 


6,696


30,071


(7,268)


29,499




 
 
 
Notes to the interim report - unaudited
Period ended 30 June 2018
 
1      Accounting policies
 
General information
Argos Resources Limited is a limited liability company incorporated and domiciled in the Falkland Islands under registration number 10605.  The address of its registered office is Argos House, H Jones Road, Stanley, Falkland Islands.
 
This consolidated interim report was approved for issue by the directors on 20 August 2018.
 
Basis of preparation
The financial information included within this interim report has not been reviewed nor audited and is based on the consolidated financial statements of Argos Resources Limited and its subsidiary Argos Exploration Limited ("the Group").  The consolidated financial statements are prepared in compliance with the recognition and measurement requirements of International Financial Reporting Standards as adopted by the European Union (IFRSs) and interpretations of those standards as issued by the International Accounting Standards Board (IASB).  They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2017 annual report.  These accounts have been prepared in accordance with the accounting policies that are expected to be applied in the report and accounts of Argos Resources Limited for the year ending 31 December 2018.
 
The comparative financial information for the year ended 31 December 2017 has been derived from the full statutory financial statements for that period which were prepared in compliance with IFRSs.  The Independent Auditors' Report on the annual report and financial statements for 2017 was unqualified and did not draw attention to any matters by way of emphasis.
 
The IASB has issued some new and revised standards, amendments and interpretations to existing standards, which are effective for the financial year ending 31 December 2018, principally IFRS 15 and IFRS 9.  The directors have made an assessment of the impact of these standards and they are not expected to have a material impact on the financial statements.
 
Going concern
There is a risk that Noble and Edison withdraw from the Participation Agreement. In such circumstances the licence would revert back to Argos, subject to government approval, but funding would need to be found to cover overheads.
 
The directors consider that the Group's available financial resources are adequate to provide working capital for at least 12 months from the date on which the financial statements were signed.  The financial statements have therefore been prepared on a going concern basis.
 
 
Notes to the interim report - unaudited
Period ended 30 June 2018
 
1      Accounting policies (continued)
 
Significant accounting judgements, estimates and assumptions
The Group makes certain estimates and assumptions regarding the future in relation to intangible assets and impairment of these assets.  Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.  The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed as follows:
 
Overriding royalty interest (ORRI)
The Group's principle asset is an ORRI which entitles the Group to 5% of gross revenues from all hydrocarbon discoveries developed within Licence PL001, situated in the North Falkland Basin.
 
The Group considers that the ORRI is similar in economic terms to holding a direct interest in the underlying licence as there is only a right to receive benefit from the ORRI on production and many of the risks faced by the Group are the same as those faced by the owner of the licence.  These risks are seen as:
 
Existence risk - whether oil is found in commercially extractable quantities;
Production risk - whether the operator is able to get any discovery to commercial production;
Timing risk - commencement and quantity as determined by the operator;
Price risk - determined by future commodity supply and demand.
 
The Group believes therefore that the most appropriate method of accounting for the retained ORRI is to classify it as an intangible asset in accordance with IAS 38.
 
The ORRI intangible is carried at cost less accumulated amortisation and any impairment provision.
 
Income receivable under the Participation Agreement
The quarterly income receivable under the participation agreement has been credited to the income statement on the basis that the purpose is to cover overhead.
 
Impairment
The ORRI is assessed for indicators of impairment at each period end under IAS 36. If such an indication is identified, the recoverable amount of the asset is estimated in order to determine the extent of any impairment. The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate. If the recoverable amount of the asset is estimated to be less than its carrying value, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is also recognised in the income statement.
 
 
Notes to the interim report - unaudited
Period ended 30 June 2018
 
1      Accounting policies (continued)
 
Should an impairment loss subsequently reverse, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognised. A reversal of an impairment loss is also recognised in the income statement.
 
On production the income generated by the ORRI will be recognised as revenue in the income statement and the intangible asset will be amortised on a systematic basis.
 
2      Earnings/(loss) per share




 


6 months

ended

30 June

2018

unaudited

Number


6 months

ended

30 June

2017

unaudited

Number


Year

ended

31 December

2017

audited

Number
 




Shares in issue brought forward  (2 pence shares)


 
220,713,205


 
219,713,205


 
219,713,205




Options exercised


-


-


1,000,000




 


 


 


 




Shares in issue carried forward  (2 pence shares)


 
220,713,205


 
219,713,205


 
220,713,205




 


 


 


 




Options not exercised


8,080,818


9,080,818


8,080,818




 


 


 


 




Weighted average number of ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares


 
 
 
220,713,205


 
 
 
228,794,023


 
 
 
220,036,493




 


 


 


 




 


6 months

ended

30 June

2018

unaudited


6 months

ended

30 June

2017

unaudited


Year

ended

31 December

2017

audited




 


 


 


 




Profit for the period ($'000)


37


81


118




 


 


 


 




Earnings per ordinary share (cents)


 


 


 




Basic and diluted


0.02


0.04


0.05




 
Basic earnings per share has been computed by dividing the earnings by the weighted average number of shares in issue during the period.  Diluted earnings per share is calculated by dividing the earnings by the weighted average number of shares, plus the weighted average number of dilutive securities in issue during the period but not converted.

 
Notes to the interim report - unaudited
Period ended 30 June 2018
 
3       Events after the reporting date
 
There were no reportable events occurring after the balance sheet date.




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