TIDMSOGP
RNS Number : 5850Y
Sovereign Oilfield Group plc
07 September 2009
+---------------------------------------+---------------------------------------+
| FOR IMMEDIATE RELEASE | 7 September 2009 |
+---------------------------------------+---------------------------------------+
SOVEREIGN OILFIELD GROUP Plc
("Sovereign" or "the Company" or "the Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2009
Sovereign Oilfield Group Plc (AIM: SOGP), the Aberdeen-based diversified
oilfield services group, is today pleased to announce its preliminary results
for the year ended 31 March 2009.
Financial Highlights: - Continuing Operations
+--------------------------------------------------+---------------------+
| * Turnover up 3.24% to GBP82.8m | (2008 - GBP80.2m) |
+--------------------------------------------------+---------------------+
| * EBITDA* of GBP(2.0)m | (2008 - Profit |
| | GBP3.0m) |
+--------------------------------------------------+---------------------+
| * Operating Loss** of GBP(3.7)m | (2008 - Profit |
| | GBP1.3m) |
+--------------------------------------------------+---------------------+
| * Loss before tax # of GBP(9.1)m | (2008 - GBP(3.9)m) |
+--------------------------------------------------+---------------------+
| * Adjusted Loss per share (53.85)p # | (2008 - (22.61)p) |
+--------------------------------------------------+---------------------+
* excluding exceptional items of GBP0.2m
** excluding exceptional items of GBP2.8m
# excluding exceptional items of GBP3.5m
Operational Highlights
* Sale of Diamant Drilling Services SA, the Company's loss making drill bit design
and manufacturing subsidiary in March 2009
* Renegotiation of banking facilities with existing Lenders removing both short
and medium term financing concerns
Post Period End Highlights
* Sale of Vertec Engineering Limited and Labtech Services Limited for a total
consideration GBP5.45m
* Sale of Prodrill Engineering Limited for GBP2.25m, expected to complete in
September 2009
* Sale of Sovereign House, the Company's corporate headquarters, for GBP1.58m and
leaseback Agreement, completed 1st September 2009
Graham Burgess, Chief Executive Officer of Sovereign, said:
"Our Fabrication companies have shown sustained profitability for many years and
with the disposal of our Drilling businesses, our focus on the Fabrication
division, reduced corporate overhead, reduced cost of debt and oil prices over
$50/barrel, the Board is confident of an improved trading performance in the
current financial year.
"With new funding in place and the proactive support of Lenders going forward,
the Board believes that steps taken in 2008 and 2009 will establish a stronger
platform for the Group's future growth and profitability."
For further information, please contact:
+----------------------------------------------+-------------------------------+
| Sovereign Oilfield Group Plc | Tel: 01224 261900 |
+----------------------------------------------+-------------------------------+
| Graham Burgess, Chief Executive Officer | |
+----------------------------------------------+-------------------------------+
| Julie Cowie, Finance Director | |
+----------------------------------------------+-------------------------------+
| | |
+----------------------------------------------+-------------------------------+
| Buchanan Communications | Tel: 0207 466 5000 |
+----------------------------------------------+-------------------------------+
| Tim Thompson / Catherine Breen / Christian | |
| Goodbody | |
+----------------------------------------------+-------------------------------+
| | |
+----------------------------------------------+-------------------------------+
| Charles Stanley Securities - Nominated | Tel: 0207 149 6000 |
| Advisor | |
+----------------------------------------------+-------------------------------+
| Mark Taylor/Freddy Crossley | |
+----------------------------------------------+-------------------------------+
The Executive Chairman's Statement
The year to March 2009 was a difficult one for Sovereign.
Very high interest rates and one off adviser charges imposed by our Lenders
during the year led to cash outflows of over GBP6m and resulted in cash flow
challenges at times during the year. Very tight control and management of Group
cash flow by our finance team and subsidiary company management teams assured
the Board that the Company could meet its financing needs through the period.
The Board continued to pursue refinancing throughout the year and was finally
able to re-negotiate the terms of existing loans with our existing Lenders in
May 2009, resulting in significantly reduced interest charges and deferral of
cash interest payment on our Mezzanine loan until June 2010, and these revised
terms and the support of Lenders will greatly improve working capital and cash
flow.
The sale and leaseback of some of our buildings, the sale of DDS and the sale of
Vertec Engineering and the rental cabin assets of Labtech Services Ltd
subsequent to the period end, allowed us to repay GBP8.4m to Lenders and thus
reduce our loans and introduce further working capital into the business.
The recently announced sale of Prodrill and sale and leaseback of our
Headquarters building, as approved by shareholders on 26 August 2009, will allow
us to further deleverage and also increase working capital when these
transactions complete in September 2009.
We will continue to pursue further strategic disposals to refocus the Group as a
fabrication business. In line with that policy, and after a review of subsidiary
valuations, the Board decided to write down the values of some Drilling
subsidiaries through exceptional charges of GBP3.7m.
As a result, profit performance for the period, after taking all these charges,
was disappointing, with a loss after taxation of GBP13.1m in 2009 (2008:
GBP7.4m).
In the light of our overall performance, the Board are not recommending the
payment of an ordinary dividend.
Group turnover for the year, however, grew to GBP96.5m (2008: GBP94.6m) of which
GBP82.8m (2008: GBP80.2m) is from continuing operations.
Diamant Drilling Services S.A., which was sold on 5 March 2009, and Vertec
Engineering Ltd and Labtech's cabin rental fleet, which were sold effective on
31 March 2009, contributed GBP13.7m to turnover, but they are now discontinued
operations.
Our Fabrication Division performed well again with turnover at GBP67.9m (2008:
GBP68.6m) prior to the sale of Vertec and the Labtech cabin rental assets.
Continuing operations accounted for GBP59.6m (2008: GBP61.0m) of this turnover
and an EBIDTA of GBP2.9m (2008: GBP5.4m).
During the financial year sales leveled off as the oil price fell from over $147
per barrel in July 2008 to below $40 by end December 2008, which resulted in a
number of our customers postponing their projects and developments as they
adjusted to the much lower oil price.This resulted in a leveling out of
enquiries and orders in the second half of the year which has continued into the
current year.
The Drilling Division increased turnover to GBP28.6m (2008: GBP26.0m) although
DDS was sold in March 2009. Continuing operations therefore accounted for
GBP23.2m (2008: GBP19.2m) of that turnover and had an EBIDTA loss of GBP0.6m
(2008: profit of GBP1.4m).
Our shares were suspended from AIM in September 2008 pending completion of the
2008 Report and Accounts. I am pleased to report that both our 2008 Annual
Accounts and the 2008 Interim Report were published in May 2009 and as a result
the Company's Ordinary Shares were restored to trading on AIM on 18 May 2009.
We appreciate the support and loyalty we have received from Shareholders during
this difficult period and hope for your continued loyalty. We recognise this
has also been challenging for our suppliers and customers and we appreciate
their continuity of business.
Despite the extra pressures on our Directors and staff at all levels over the
last few months, they have remained highly focused and professional and deserve
special mention and thanks.
I would also like to thank Dr Peter Felter, who stepped down from the Board in
May, for his significant contribution to the Board and the Company since it was
founded, and to wish him the best for the future.
Throughout 2009, the oil and gas industry experienced a slowdown driven by
weakening oil and gas prices and demand. As a result demand for the services
provided by our companies generally leveled out in the second half of the year
to 31 March 2009.
A return to sustained oil prices of over $55 per barrel at the end of May 2009,
from a low of approximately $40 per barrel in December 2008, heralded an
increase in enquiries and we anticipate that this will result in increased
fabrication contracts over the next months.
Our clients are oil and gas and engineering companies who develop new oil and
gas fields including many previously uneconomic smaller oil and gas fields, as
well as rehabilitating older fields and adjoining facilities. These activities
require the fabrication and manufacturing skills and services and personnel that
Sovereign supplies to the oil and gas industry.
At August 2009, the Group has fabrication facilities in the UK and Abu Dhabi and
the Group's subsidiary companies are organised into two Divisions - Sovereign
Fabrication Services Limited (the Fabrication Division) and Sovereign Oilfield
Services Limited (the Drilling Division). At 31 August 2009 these comprised:
* Sovereign Fabrication Services Limited includes Caledonian Petroleum Services
Limited ("CPS"), OIL Engineering Limited ("OIL"), Forfab Limited ("Forfab"),
Labtech Services Limited ("Labtech"), Cooltime Engineering Services Limited
("Cooltime"), Sovereign Dimensional Survey Limited ("SDS") and OIL Engineering
Middle East LLC ("OIL ME") in Abu Dhabi. Vertec Engineering Ltd ("Vertec") was
sold effective 31 March 2009.
* Sovereign Oilfield Services Limited includes Serco SA ("Serco") in France,
MaxWell Downhole Technology Limited ("MaxWell"), RDT Precision Engineers Limited
("RDT") and Prodrill Engineering Limited ("Prodrill"), although Prodrill is in
the process of being sold with completion expected in September 2009.
Diamant Drilling Services SA ("DDS") of Belgium was sold in March 2009;
Sovereign Fishing and Remedial Services LLC ("SFRS") of Abu Dhabi is in the
process of being closed down and its assets sold.
Sales
Through organic growth, albeit in a flattening market, the Group has experienced
some growth with Group sales, pre disposals, for the year ended 31 March 2009
increasing 2% to GBP96.5m (2008: GBP94.6m).
Sovereign Fabrication Services Limited accounted for GBP67.9m (2008: GBP68.6m)
of this turnover, pre disposals, with Sovereign Oilfield Services Limited
accounting for GBP28.6m (2008: GBP26.0m) with growth mostly attributable to
Prodrill.
The Group's diverse range of customers continue to be the international (e.g.
Total) and national (e.g. Dubai Petroleum) oil and gas companies, the major
(e.g. Wood Group) and smaller oilfield engineering companies and other oilfield
specialised service companies (e.g. FMC) to whom we supply our products and
services over a wide geographical area and with whom we have good repeat
business.
The Group continued to take advantage of its fabrication supply chain management
during the year by maximising intra-group co-operation.
Review of Subsidiaries
Sovereign Fabrication Services Limited
Turnover across the Fabrication Division has been very similar to the previous
year.
This comprised:
* CPS, turnover of GBP14.4m for the year (2008: GBP14.3m)
* OIL, turnover of GBP14.1m (2008: GBP11.7m)
* Forfab, turnover of GBP14.9m (2008: GBP19.2m)
* Labtech, turnover was GBP9.9m (2008: 11 months, GBP11.8m)*
* Vertec, turnover was GBP7.4m (2008: 11 months, GBP6.5m)**
* Cooltime, turnover was GBP1.3m (2008: 11 months, GBP1.5m)
* SDS, turnover at GBP1.7m (2008: GBP2.6m)
* OIL ME, turnover was GBP4.2m (2008: 11 months, GBP1.0m)
EBITDA for the Fabrication Division for the period, pre disposals, was GBP5.1m
(2008: GBP7.1m).
*Labtech's cabin rental assets were sold in March 2009.
**Vertec excluding its subsidiary Cooltime was sold at the end of March 2009 in
conjunction with the cabin rental assets of Labtech for GBP5.45m.
We believe that the Fabrication Division will continue to grow during the coming
year in the UK and internationally now that the oil price has recovered.
Sovereign Oilfield Services Limited (the Drilling Division)
This comprised:
* Prodrill, turnover increased to GBP15.2m (2008: GBP11.6m)
* DDS, turnover of GBP5.4m (2008: GBP6.8m)
* SFRS, turnover of GBP0.9m (2008: GBP1.1m)
* Serco, turnover of GBP2.2m (2008: GBP2.4m)
* MaxWell, turnover of GBP1.8m (2008: GBP0.6m)
* RDT, turnover of GBP3.1m (2008: GBP3.5m)
EBITDA loss for the Drilling Division for the period was GBP2.0m (2008: profit
of GBP1.6m) before exceptional items.
DDS was subsequently sold on 5 March 2009 to Logan Oil Tools Inc for EUR250,000
plus up to $350,000 based on performance. The Board do not expect to receive
the performance based element, although it is subject to audit in September
2009.
Review and Outlook
Subsequent to negotiations with a number of potential new lenders, in July 2009,
Sovereign agreed revised terms with its current Lender group, effective for 18
May 2009, subject to certain conditions.
The new terms agreed provide for a deferral of all outstanding defaults until 31
May 2010, a reduction in margin payable on both senior and mezzanine facilities
and a revised covenant package. No restructuring or arrangement fees were
payable.
The conditions subsequent included completing the disposal of Vertec and the
cabin rental assets of Labtech, and the Group announced on 11 May 2009 that it
had completed the sale of these assets for GBP5.45m in cash, subject to
shareholder approval, which was duly received. All proceeds were used to pay
down existing debt levels.
Our Fabrication companies have shown sustained profitability for many years and
with the disposal of our Drilling businesses, our focus on the Fabrication
division, reduced corporate overhead, reduced cost of debt and oil prices over
$50/barrel, the Board is confident of an improved trading performance in the
current financial year.
With new funding in place and the proactive support of Lenders going forward,
the Board has confidence that steps taken in 2008 and 2009 will establish a
stronger platform for the Group's future growth and profitability.
Graham Burgess
Executive Chairman
Finance Directors Review
Operational Performance
+------------------+------------+--------------+--------+------------+--------------+-------+
| Pre-exceptionals | Continuing | Discontinued | Total | Continuing | Discontinued | Total |
| | activities | activities | 2009 | activities | activities | 2008 |
| | 2009 | 2009 | | 2008 | 2008 | |
+------------------+------------+--------------+--------+------------+--------------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------------+------------+--------------+--------+------------+--------------+-------+
| Turnover | 82.8 | 13.7 | 96.5 | 80.2 | 14.4 | 94.6 |
+------------------+------------+--------------+--------+------------+--------------+-------+
| Gross profit | 16.8 | 5.7 | 22.5 | 18.8 | 6.4 | 25.2 |
+------------------+------------+--------------+--------+------------+--------------+-------+
| Operating | (3.7) | 0.4 | (3.3) | 1.3 | 1.5 | 2.8 |
| (loss)/profit | | | | | | |
+------------------+------------+--------------+--------+------------+--------------+-------+
| EBITDA | (2.0) | 0.8 | (1.2) | 3.1 | 2.6 | 5.7 |
+------------------+------------+--------------+--------+------------+--------------+-------+
| Net | (9.1) | (1.0) | (10.1) | (3.9) | 1.4 | (2.5) |
| (loss)/profit | | | | | | |
+------------------+------------+--------------+--------+------------+--------------+-------+
+-------------------+------------+--------------+--------+------------+--------------+-------+
| Post-exceptionals | Continuing | Discontinued | Total | Continuing | Discontinued | Total |
| | activities | activities | 2009 | activities | activities | 2008 |
| | 2009 | 2009 | | 2008 | 2008 | |
+-------------------+------------+--------------+--------+------------+--------------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------------+------------+--------------+--------+------------+--------------+-------+
| Turnover | 82.8 | 13.7 | 96.5 | 80.2 | 14.4 | 94.6 |
+-------------------+------------+--------------+--------+------------+--------------+-------+
| Gross profit | 16.8 | 5.7 | 22.5 | 18.8 | 4.8 | 23.6 |
+-------------------+------------+--------------+--------+------------+--------------+-------+
| Operating | (6.5) | 0.4 | (6.1) | 1.2 | (1.1) | 0.1 |
| (loss)/profit | | | | | | |
+-------------------+------------+--------------+--------+------------+--------------+-------+
| EBITDA | (2.2) | 0.8 | (1.4) | 3.0 | - | 3.0 |
+-------------------+------------+--------------+--------+------------+--------------+-------+
| Net loss | (12.1) | (1.0) | (13.1) | (6.2) | (1.2) | (7.4) |
+-------------------+------------+--------------+--------+------------+--------------+-------+
Table 1
At 31 March 2009 the Group made an operating loss, including discontinued
activities but pre-exceptional items, for the year ended 31 March 2009 of
GBP3.3m (2008: operating profit GBP2.8m). This was below expectations due to the
combined effects of the under performance of the Drilling Division, in
particular that of DDS, and the impact of accounting for large construction
contracts being carried out by Labtech and Forfab which were not sufficiently
complete to recognise either turnover or profit.
Turnover for the second half of 2009 was GBP48.8m, consistent with 2008,
resulting in a total for the year of GBP96.5m (2008: GBP94.6m), an increase of
GBP1.9m. The Fabrication Division accounted for GBP67.9m (70%), the Drilling
Division GBP28.6m (30%).
With OIL Middle East operations increased turnover to GBP4.2m (2008:
GBP1.0m) and turnover of OIL increased by 20.8% to GBP14.1m due to the
completion of some large projects within the year, the impact of the results of
Labtech and Forfab was limited, with an overall decrease in turnover from the
previous year of GBP0.7m.
Turnover relating to the Drilling Division was up GBP2.6m due in the main to
31.5% growth in Prodrill revenues to GBP15.2m as drilling activity increased,
driven by a high oil price. MaxWell also recorded high sales in the year to 31
March 2009 - most of which were deferred from the 2008 financial year.
The gross profit margin for the Group for the year was 23.3% (2008: 26.6%). The
gross profit margin for the Fabrication Division was 24.6 % (2008: 25.6%) and
the Drilling Division 20.4% (2008: 29.3%). The reduction in gross margin of the
Fabrication Division is due to the growth of the Middle East arm of the
Fabrication Division which is attracting lower margin, labour intensive, work.
Within the Drilling Division, a restructuring of the fishing business saw Middle
East revenues fall with a resulting drop in gross profit margin. In addition,
our machine shop in Cambuslang, RDT, experienced reduced margins as it strove to
extend its customer base following a reduction in orders from a key customer as
a result of the current economic environment.
EBITDA loss for the Group, including discontinued activities, pre-exceptional
items was GBP1.2m, (2008: Profit GBP5.7m), with the Fabrication Division
contributing positive EBITDA of GBP5.1m (2008: GBP7.1m) and the
Drilling Division a loss of GBP2.0m (2008: GBP1.6m) with corporate overheads of
GBP4.3m (2008: GBP3.0m).
Discontinued Activities
As previously reported, on 5 March 2009, the Group sold DDS, which was
consistently loss making, to Logan Oil Tools Inc for consideration of up to
approximately EUR527,000. Consideration of EUR250,000 was paid on 22 June 2009.
Further contingent consideration of up to $350,000 may become payable on 5
September 2009.
During the period to 31 March 2009 DDS achieved sales of GBP5.4m, with a gross
profit margin of 45.0%. At an operating profit level the Company made a loss of
GBP1.6m. Last year's financial statements included an impairment write down in
relation to DDS of GBP2.6m. Subsequent to this write down, the loss on disposal
of DDS is GBP1.4m.
In April 2009, the Group sold Vertec and the assets of Labtech's hire fleet to
Offshore Containers Holdings Limited for GBP5.45m. These disposals formed part
of the conditions subsequent on the restructuring of financing arrangements with
our Lenders. All proceeds received were used to pay down existing debt.
During the period to 31 March 2009 Vertec Engineering Limited and the Labtech
assets achieved sales of GBP8.3m, with a gross profit margin of 39.5%. At an
operating profit level the Company contributed GBP2.0m. The proceeds of disposal
are expected to substantially exceed the book value of the related net assets
and accordingly no impairment losses have been recognised on classification of
these operations as held for sale.
Pre exceptional items, revenue on continuing activities was up GBP2.6m or 3.0%,
whilst Group operating profit was down GBP5.0m. (Refer Table 1).
The Board indicated in its last report that following a strategic review we were
planning to dispose of certain non-core assets. On 10 August 2009 we announced
the proposed disposal of Prodrill Engineering Limited for GBP2.25m and the sale
and leaseback of Sovereign House, the Group's headquarters in Aberdeen for
GBP1.575m, subject to shareholder approval, which has now been received. These
disposals will be used to partially reduce debt and partially as working capital
for the business.
Exceptional Items
Exceptional items before tax for the year to 31 March 2009 amount to GBP3.5m.
Of this amount GBP3.7m relates to impairment write downs taken in relation to
MaxWell and RDT. In last year's report we noted that a key area of uncertainty
for the Group was the assumptions underlying the carrying value of certain Group
assets, in particular goodwill, and that any changes in these assumptions could
result in impairment.
Sovereign reviews the carrying value of assets and liabilities annually, or more
frequently if there are indications of impairment. At 31 March 2009, the Board
deemed it necessary to revisit the assumptions used in calculating the value of
future cash flows forecast to be derived from RDT and MaxWell.
Following a detailed review of the assets and liabilities of MaxWell, we have
written down the full amount of the goodwill attributed to the acquisition of
MaxWell (GBP2.5m) and part of the value of intangible assets (GBP0.2m).
Following a similar review of the assets and liabilities of RDT, we have written
down part of the value of property, plant and equipment (GBP0.3m), and of that
of intangible assets (GBP0.7m). The latter write down was in relation to the
value that had been attributed to client relationships on acquisition.
In addition to the above, exceptional finance charges of GBP0.7m were
incurred relating to the refinancing of the Group.
Abortive deal costs account for GBP0.2m of the exceptional charge.
Offsetting the charges above was a profit recognised on the sale and leaseback
of two properties during the year amounting to GBP1.1m.
Operating loss after exceptional items, including discontinued activities, is
GBP6.1m (2008: profit GBP0.1m). Operating loss after exceptional items in
respect of continuing activities, is GBP6.5m (2008: profit GBP1.2m).
The net loss, pre-exceptional items, for the Group for the 12 months to 31 March
2009 was GBP10.1m compared to a net loss of GBP2.5m for the corresponding period
last year. Basic loss per share was (59.76) pence (2008: 14.62 pence).
Post exceptional items the net loss was GBP13.1m (2008: GBP7.4m) and basic loss
per share was (71.60) pence (2008: 35.98 pence).
The larger loss for this period is due in part to an increased interest charge
as a result of increased borrowings and an increased cost of finance.
Balance Sheet
Largely as a result of significant impairment write downs and other exceptional
costs, e.g. costs associated with refinancing, the Balance Sheet has weakened
from a positive net asset position of GBP5.2m at the end of 2008 to a net
liability position of GBP6.4m at the end of 2009.
However since the year end, following the disposal of Vertec Engineering Limited
and the assets of Labtech's hire fleet to Offshore Containers Limited which
generated a gain on disposal of GBP2.4m, and with the subsequent planned
disposals of Sovereign House and Prodrill, both of which will realise gains on
disposal, the Board expects that Group will return to a positive net worth
position during the financial year to 31 March 2010.
Funding
At 31 March 2008 the net debt was GBP32.8m, of which cash and short-term
deposits were GBP1.4m. In the 12 months to 31 March 2009, loans increased from
GBP32.9m to GBP33.4m and cash and short-term deposits decreased by GBP0.3m,
which, combined with foreign exchange movements and movements on finance leases,
resulted in a decreased net debt position at 31 March 2009 of GBP32.5m.
The Group repaid GBP2.9m of senior debt during the year out of proceeds from the
sale and leaseback of two buildings, but overall loans increased due to
additional working capital facilities and PIK interest accruing throughout the
year at 6% to 7%. At the end of the year loans payable included an amount of
GBP1.9m payable in January 2012 relative to PIK interest.
Subsequent to the year end, the Group has repaid further debt of GBP5.45m
received from the sale of Vertec Engineering Limited. In June 2009, proceeds
from the sale of DDS of EUR250,000 were used to augment available working capital
balances, as were proceeds from the the sale of a property in East Kilbride for
GBP420,000, of which GBP350,000 was paid at completion, with GBP70,000 deferred.
At 31 August total borrowings were GBP28.6m comprising GBP11.7m senior debt and
GBP16.9m mezzanine debt.
The above sales, as part of the debt reduction programme implemented by the
Board over the last twelve months, have realised in excess of GBP10m. The
planned disposals of Sovereign House and Prodrill will bring this total to
GBP13.9m, reducing debt substantially.
With regard to the revised banking terms, and as disclosed in last year's
report, the Group commenced refinancing activities in May 2008. However this
took much longer than anticipated largely due to the unprecedented global
financial downturn. Pending the conclusion of our refinancing the Directors
delayed the publication of the Annual Report and Accounts which led to a
suspension of the trading of our shares on AIM on 30 September 2008.
The restructure of the existing debt, which was completed effective 18 May 2009,
provided for a standstill on all outstanding defaults and the repayment of debt
until 31 May 2010, a reduction in the cost of finance through lower interest
rate margins and a revised covenant package, all of which removed short to
medium funding concerns.
Following the publication of our audited results for the year ended 31 March
2008 and the unaudited interim results for the 6 months ended 30 September 2008
on 18 May 2009, trading in Sovereign's Ordinary Shares on AIM was restored on 19
May 2009.
The revised covenant package incorporated financial covenants with regard to
quarterly revenue and EBITDA. Although the key financial covenants set by our
lending group in late April 2009 were stretched we firmly believed that with the
oil price moving above $60 per barrel in May 2009 (and now averaging around $70
per barrel) our client base would return to normal trading after the typical
3 - 6 month lag. This lag is clearly not yet over with 90% of capex driven
projects still postponed. Our business units are flexible enough to take on a
higher a percentage of opex based projects to maintain sales volume although
this is a very competitive area.Although the Group has successfully achieved its
covenants in the first quarter, there is a likelihood of breaching the 31
December 2009 EBITDA covenant. The failure of covenant tests renders the entire
facilities repayable on demand at the option of the Lenders.
The feedback from our customer base is that we can expect to see larger capex
driven projects being approved October to December 2009. We can substantiate
this information based on the large volume of live enquiries our business units
have responded to and are consistently updating at our customers request. With
this knowledge we are confident that we will achieve covenants in subsequent
periods.
The Company is in dialogue with the Lenders regarding the projected covenant
breach at December 2009 and what actions they will take at that time, and whilst
these discussions have not yet concluded the Directors are confident of
achieving a positive outcome. In the meantime, the Directors continue to
actively monitor the trading position in relation to the continued volatility in
the financial markets and will take action as appropriate.
Despite exceptionally difficult market conditions many of our businesses
continued to expand, whilst others were resilient in the face of lower demand.
Throughout the Group we continued to take action to implement cost reduction
strategies, without comprising efficiency, and to improve our focus on the areas
with greatest opportunity for growth.
Julie Cowie
Group Finance Director
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2009
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| | Before | Exceptional | Total | Before | Exceptional | Total |
| | Exceptional | Items | 2009 | exceptional | Items | 2008 |
| | | 2009 | GBPm | Items | 2008 | GBPm |
| | Items | GBPm | | 2008 | GBPm | |
| | 2009 | | | GBPm | | |
| | GBPm | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| REVENUE | 82.8 | - | 82.8 | 80.2 | - | 80.2 |
| Cost of sales | (66.0) | - | (66.0) | (61.4) | - | (61.4) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| GROSS PROFIT | 16.8 | - | 16.8 | 18.8 | - | 18.8 |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Administrative expenses | (20.5) | (3.9) | (24.4) | (17.5) | (0.1) | (17.6) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| GROUP TRADING (LOSS)/ | (3.7) | (3.9) | (7.6) | 1.3 | (0.1) | 1.2 |
| PROFIT | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Profit on disposal of | - | 1.1 | 1.1 | - | - | - |
| property, plant and | | | | | | |
| equipment | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| GROUP OPERATING (LOSS)/ | (3.7) | (2.8) | (6.5) | 1.3 | (0.1) | 1.2 |
| PROFIT | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Finance revenue | - | - | - | 0.2 | - | 0.2 |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Finance costs | (5.4) | (0.7) | (6.1) | (4.9) | (2.9) | (7.8) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| | (5.4) | (0.7) | (6.1) | (4.7) | (2.9) | (7.6) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| (LOSS) BEFORE TAXATION | (9.1) | (3.5) | (12.6) | (3.4) | (3.0) | (6.4) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Tax income/(expense) | - | 0.5 | 0.5 | (0.5) | 0.7 | 0.2 |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| (LOSS) FOR THE YEAR | (9.1) | (3.0) | (12.1) | (3.9) | (2.3) | (6.2) |
| FROM CONTINUING | | | | | | |
| OPERATIONS | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| (LOSS) FOR THE YEAR | | | (1.0) | | | (1.2) |
| FROM DISCONTINUED | | | | | | |
| OPERATIONS | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| (LOSS) FOR THE YEAR | | | (13.1) | | | (7.4) |
| ATTRIBUTABLE TO EQUITY | | | | | | |
| HOLDERS OF THE PARENT | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Earnings per ordinary | | | | | | |
| 1p share:# | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Basic (p) | | | (71.60) | | | (35.98) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Diluted (p) | | | (71.60) | | | (35.98) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Adjusted earnings per | | | | | | |
| ordinary share 1p | | | | | | |
| share: # | | | | | | |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Basic (p) | | | (53.85) | | | (22.61) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
| Diluted (p) | | | (53.85) | | | (22.61) |
+-------------------------+-------------+-------------+---------+-------------+-------------+----------+
Group Statement of Recognised Income and Expense
For the Year Ended 31 March 2009
+------------------------------------------------------+-------------+-------------+
| | | 2008 |
| | 2009 | GBPm |
| | GBPm | |
+------------------------------------------------------+-------------+-------------+
| INCOME AND EXPENSE RECOGNISED DIRECTLY IN EQUITY | | |
+------------------------------------------------------+-------------+-------------+
| Exchange differences on retranslation of foreign | 1.5 | 0.8 |
| operations | | |
+------------------------------------------------------+-------------+-------------+
| NET INCOME RECOGNISED DIRECTLY IN EQUITY | 1.5 | 0.8 |
+------------------------------------------------------+-------------+-------------+
| (LOSS) FOR THE YEAR | (13.1) | (7.4) |
+------------------------------------------------------+-------------+-------------+
| TOTAL RECOGNISED INCOME AND EXPENSE FOR THE YEAR | (11.6) | (6.6) |
+------------------------------------------------------+-------------+-------------+
| ATTRIBUTABLE TO: | | |
+------------------------------------------------------+-------------+-------------+
| Equity holders of the parent | (11.6) | (6.6) |
+------------------------------------------------------+-------------+-------------+
GROUP Balance Sheet
AS AT 31 March 2009
+---------------------------------------------------+-------------+-------------+
| | 2009 | 2008 |
| | GBPm | GBPm |
+---------------------------------------------------+-------------+-------------+
| NON-CURRENT ASSETS | | |
+---------------------------------------------------+-------------+-------------+
| Property, plant and equipment | 8.1 | 14.2 |
+---------------------------------------------------+-------------+-------------+
| Intangible assets | 9.4 | 14.2 |
+---------------------------------------------------+-------------+-------------+
| Financial assets | - | 0.1 |
+---------------------------------------------------+-------------+-------------+
| | 17.5 | 28.5 |
+---------------------------------------------------+-------------+-------------+
| CURRENT ASSETS | | |
+---------------------------------------------------+-------------+-------------+
| Trade and other receivables | 20.5 | 25.7 |
+---------------------------------------------------+-------------+-------------+
| Inventories | 4.1 | 6.2 |
+---------------------------------------------------+-------------+-------------+
| Cash at bank and in hand | 1.1 | 1.4 |
+---------------------------------------------------+-------------+-------------+
| Assets held for sale | 5.2 | - |
+---------------------------------------------------+-------------+-------------+
| | 30.9 | 33.3 |
+---------------------------------------------------+-------------+-------------+
| TOTAL ASSETS | 48.4 | 61.8 |
+---------------------------------------------------+-------------+-------------+
| CURRENT LIABILITIES | | |
+---------------------------------------------------+-------------+-------------+
| Trade and other payables | 17.9 | 19.7 |
+---------------------------------------------------+-------------+-------------+
| Interest-bearing loans and borrowings | 33.5 | 33.2 |
+---------------------------------------------------+-------------+-------------+
| Income tax payable | 0.2 | 0.2 |
+---------------------------------------------------+-------------+-------------+
| Liabilities directly associated with assets | 1.6 | - |
| classified as held for sale | | |
+---------------------------------------------------+-------------+-------------+
| | 53.2 | 53.1 |
+---------------------------------------------------+-------------+-------------+
| NON-CURRENT LIABILITIES | | |
+---------------------------------------------------+-------------+-------------+
| Interest-bearing loans and borrowings | 0.1 | 1.0 |
+---------------------------------------------------+-------------+-------------+
| Deferred tax liabilities | 1.4 | 2.4 |
+---------------------------------------------------+-------------+-------------+
| Provisions | 0.1 | 0.1 |
+---------------------------------------------------+-------------+-------------+
| | 1.6 | 3.5 |
+---------------------------------------------------+-------------+-------------+
| TOTAL LIABILITIES | 54.8 | 56.6 |
+---------------------------------------------------+-------------+-------------+
| NET (LIABILITIES)/ASSETS | (6.4) | 5.2 |
+---------------------------------------------------+-------------+-------------+
| CAPITAL AND RESERVES | | |
+---------------------------------------------------+-------------+-------------+
| Equity share capital | 11.7 | 11.7 |
+---------------------------------------------------+-------------+-------------+
| Treasury shares | (0.3) | (0.3) |
+---------------------------------------------------+-------------+-------------+
| Currency translation reserve | 2.2 | 0.7 |
+---------------------------------------------------+-------------+-------------+
| Retained earning | (20.0) | (6.9) |
+---------------------------------------------------+-------------+-------------+
| TOTAL EQUITY | (6.4) | 5.2 |
+---------------------------------------------------+-------------+-------------+
Approved by the Board on 7 September 2009
Mr Burgess
Ms Cowie
Directors
Group Cash Flow Statement
For the Year Ended 31 March 2009
+------------------------------------------------------------+----------+----------+
| | 2009 | 2008 |
| | GBPm | GBPm |
+------------------------------------------------------------+----------+----------+
| | | |
+------------------------------------------------------------+----------+----------+
| OPERATING ACTIVITIES | | |
+------------------------------------------------------------+----------+----------+
| (Loss) for the year | (13.1) | (7.4) |
+------------------------------------------------------------+----------+----------+
| Adjustments to reconcile (loss) for the year to net cash | | |
| flow | | |
+------------------------------------------------------------+----------+----------+
| from operating activities: | | |
+------------------------------------------------------------+----------+----------+
| Tax on continuing operations | (0.5) | (0.1) |
+------------------------------------------------------------+----------+----------+
| Net finance costs | 6.1 | 7.6 |
+------------------------------------------------------------+----------+----------+
| Loss on disposal of discontinued operations | 1.4 | - |
+------------------------------------------------------------+----------+----------+
| Gain on sale of property, plant and equipment | (1.1) | - |
+------------------------------------------------------------+----------+----------+
| Loss of financial assets at fair value through profit and | - | - |
| loss | | |
+------------------------------------------------------------+----------+----------+
| Depreciation and impairment of property, plant and | 1.9 | 1.5 |
| equipment | | |
+------------------------------------------------------------+----------+----------+
| Amortisation and impairment of intangible assets | 4.0 | 1.4 |
+------------------------------------------------------------+----------+----------+
| Share-based payments | 0.1 | 0.1 |
+------------------------------------------------------------+----------+----------+
| Exchange differences on interest-bearing loans | 0.5 | - |
+------------------------------------------------------------+----------+----------+
| Non-cash compensation received | - | (0.3) |
+------------------------------------------------------------+----------+----------+
| Decrease in inventories | 0.3 | 0.7 |
+------------------------------------------------------------+----------+----------+
| Decrease/(Increase) in trade and other receivables | 0.2 | (1.9) |
+------------------------------------------------------------+----------+----------+
| Increase in trade and other payables | 4.5 | 1.0 |
+------------------------------------------------------------+----------+----------+
| Cash generated from operations | 4.3 | 2.6 |
+------------------------------------------------------------+----------+----------+
| Income taxes paid | (0.2) | (1.1) |
+------------------------------------------------------------+----------+----------+
| NET CASH FLOW FROM OPERATING ACTIVITIES | 4.1 | 1.5 |
+------------------------------------------------------------+----------+----------+
| INVESTING ACTIVITIES | | |
+------------------------------------------------------------+----------+----------+
| Sale of property, plant and equipment | 4.8 | 0.8 |
+------------------------------------------------------------+----------+----------+
| Outflow on acquisition of subsidiary undertakings | - | (8.3) |
+------------------------------------------------------------+----------+----------+
| Payments to acquire property, plant and equipment | (2.3) | (4.1) |
+------------------------------------------------------------+----------+----------+
| Payments to acquire intangible assets | (0.1) | (0.3) |
+------------------------------------------------------------+----------+----------+
| NET CASH FLOW FROM INVESTING ACTIVITIES | 2.4 | (11.9) |
+------------------------------------------------------------+----------+----------+
| FINANCING ACTIVITIES | | |
+------------------------------------------------------------+----------+----------+
| Purchase of own shares | - | (0.3) |
+------------------------------------------------------------+----------+----------+
| Interest paid | (4.8) | (3.2) |
+------------------------------------------------------------+----------+----------+
| Refinancing costs | (0.7) | (0.4) |
+------------------------------------------------------------+----------+----------+
| Repayment of factored debt | - | (0.9) |
+------------------------------------------------------------+----------+----------+
| New borrowings | 2.0 | 14.5 |
+------------------------------------------------------------+----------+----------+
| Repayment of borrowings | (2.9) | (2.4) |
+------------------------------------------------------------+----------+----------+
| New finance leases and hire purchase contracts | - | 0.2 |
+------------------------------------------------------------+----------+----------+
| Repayment of capital element of finance leases and hire | (0.4) | (0.3) |
| purchase contracts | | |
+------------------------------------------------------------+----------+----------+
| NET CASH FLOW FROM FINANCING ACTIVITIES | (6.8) | 7.2 |
+------------------------------------------------------------+----------+----------+
| DECREASE IN CASH AND CASH EQUIVALENTS | (0.3) | (3.2) |
+------------------------------------------------------------+----------+----------+
| Effect of exchange rates on cash and cash equivalents | - | - |
+------------------------------------------------------------+----------+----------+
| Cash and cash equivalents at 1 April | 1.4 | 4.6 |
+------------------------------------------------------------+----------+----------+
| CASH AND CASH EQUIVALENTS AT 31 MARCH | 1.1 | 1.4 |
+------------------------------------------------------------+----------+----------+
BASIS OF PREPARATION AND ACCOUNTING POLICIES
1. Basis of preparation
The Directors have prepared the financial statements on the going concern basis
which assumes that the Group and Company will continue in operational existence
for the foreseeable future.
The Company and the Group meet their day to day working capital requirements and
medium-term funding requirements through banking facilities.At 31 March 2009 the
Group owed GBP33.4m to its Lenders and was in breach of its banking covenants.
Subsequent to the year end, the Group had obtained a standstill from its Lenders
in the form of a deferral letter regarding the defaults at 31 March 2009 and had
agreed to an amendment of terms in respect of debt facilities in place at 31
March 2009.
The new banking terms provide for a deferral of all outstanding defaults and a
standstill regarding the repayment of debt until 31 May 2010, a reduction in the
margin payable on both Senior and Mezzanine facilities and the revised covenant
package that incorporates financial covenants with regards to quarterly revenue
EBITDA.
As part of the revised banking terms and conditions subsequent to the
refinancing, the Group agreed to the disposal of one of its subsidiaries Vertec
Engineering Limited and to dispose of certain assets of Labtech Services
Limited. This transaction completed on 4 June 2009.
The Directors have prepared trading and cash flow forecasts for a period in
excess of one year from the date of approval of these financial statements.
These forecasts make certain assumptions regarding the progression of the
Group's restructuring programme and indicate improved cash flow projections over
this period. However, due to challenging trading conditions that have impacted
the performance of certain businesses within the Group, there is the likelihood
of breaching the 31 December 2009 EBITDA covenant. In the event of a breach of
this covenant, the outstanding debt becomes immediately payable unless the
Lenders agree alternative arrangements with the Company.
The Company is in dialogue with the Lenders regarding this projected covenant
breach and what actions they will take at that time, and whilst these
discussions have not yet concluded the Directors are confident of achieving a
positive outcome. In the meantime, the Directors continue to actively monitor
the trading position in relation to the continued volatility in the financial
markets and will take action as appropriate.
In the view of the Directors, the combination of circumstances describes above
represents a material uncertainty that may cast significant doubt upon the
Company and the Groups ability to continue as a going concern. However, having
considered this uncertainty, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue in operational
existence for the foreseeable future and have therefore concluded that it is
appropriate to adopt the going concern basis in preparing these financial
statements. The financial statements do not include the adjustments that would
result if the Company were unable to continue as a going concern.
2. Segmental Analysis
+-------------------------------------+----------+-------------+----+---------+----+-------+--------------+--------+
| | | | Discontinued | |
| | Continuing operations | | | |
+-------------------------------------+--------------------------------------------+-------+--------------+--------+
| | Drilling | Fabrication | Corporate | Total | operations | Total |
| | | | | | | |
+-------------------------------------+----------+-------------+-------------------+-------+--------------+--------+
| Year ended 31 March 2009 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Revenue | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Sales from external customers | 23.2 | 59.6 | - | 82.8 | 13.7 | 96.5 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Segment revenue | 23.2 | 59.6 | - | 82.8 | 13.7 | 96.5 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Results | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Segment result | (2.2) | 2.2 | - | - | 0.4 | 0.4 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Unallocated expenses | - | - | (7.6) | (7.6) | - | (7.6) |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| TRADING (loss)/profit | (2.2) | 2.2 | (7.6) | (7.6) | 0.4 | (7.2) |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Profit on disposal of property, | | | | 1.1 | - | 1.1 |
| plant and equipment | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Net finance costs | | | | (6.1) | - | (6.1) |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Los/profit before taxation | | | | (12.6) | 0.4 | (12.2) |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Tax income | | | | 0.5 | - | 0.5 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Loss for the year from discontinued | | | | - | (1.4) | (1.4) |
| operations | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| LOSS AFTER TAX AND DISCONTINUED | | | | (12.1) | (1.0) | (13.1) |
| OPERATIONS | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Assets and liabilities | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Segment assets | 11.1 | 22.2 | - | 33.3 | 5.2 | 38.5 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Unallocated assets | - | - | 10.2 | 10.2 | - | 10.2 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Total assets | 11.1 | 22.2 | 10.2 | 43.5 | 5.2 | 48.7 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Segment liabilities | 4.5 | 12.7 | - | 17.2 | 1.6 | 18.8 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Unallocated liabilities | - | - | 36.0 | 36.0 | - | 36.0 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Total liabilities | 4.5 | 12.7 | 36.0 | 53.2 | 1.6 | 54.8 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Other segment information | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Capital expenditure: | | | | | | |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Property, plant and equipment | 1.8 | 0.5 | - | 2.3 | 0.1 | 2.4 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Intangible assets | 0.1 | - | - | 0.1 | - | 0.1 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Depreciation | 0.3 | 0.7 | 0.1 | 1.1 | 0.4 | 1.5 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Amortisation | 0.1 | - | 0.5 | 0.6 | - | 0.6 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Share-based payment expense | - | - | 0.1 | 0.1 | - | 0.1 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Impairment losses recognised | 0.9 | - | 2.5 | 3.4 | - | 3.4 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Write-off of inventories | 0.1 | - | - | 0.1 | - | 0.1 |
+-------------------------------------+----------+------------------+---------+------------+--------------+--------+
| Impairment of receivables | 0.3 | - | - | 0.3 | - | 0.3 |
+-------------------------------------+----------+-------------+----+---------+----+-------+--------------+--------+
Unallocated assets and liabilities comprise certain property, plant and
equipment, interest-bearing loans and borrowings and taxation.
Unallocated expenses are principally corporate overheads including staff costs,
travel costs and professional fees. 2.Segmental Analysis (continued)
+-------------------------------------+----------+-------------+-----------+--------+-----+--------------+---------+
| | | | Discontinued | |
| | Continuing operations | | | |
+-------------------------------------+---------------------------------------------+-----+--------------+---------+
| | Drilling | Fabrication | Corporate | Total | operations | Total |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Year ended 31 March 2008 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Revenue | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Sales from external customers | 19.2 | 61.0 | - | 80.2 | 14.4 | 94.6 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Segment revenue | 19.2 | 61.0 | - | 80.2 | 14.4 | 94.6 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Results | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Segment result | 0.8 | 4.7 | - | 5.5 | (0.5) | 5.0 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Unallocated expenses | - | - | (4.3) | (4.3) | - | (4.3) |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| TRADING (LOSS)/PROFIT | 0.8 | 4.7 | (4.3) | 1.2 | (0.5) | 0.7 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Profit on disposal of property, | | | | - | - | - |
| plant and equipment | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Net finance costs | | | | (7.6) | - | (7.6) |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Loss before taxation | | | | (6.4) | (0.5) | (6.9) |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Tax income | | | | 0.2 | - | 0.2 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Loss for the year from discontinued | | | | - | (0.7) | (0.7) |
| operations | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| LOSS AFTER TAX AND DISCONTINUED | | | | (6.2) | (1.2) | (7.4) |
| OPERATIONS | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Assets and liabilities | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Segment assets | 14.9 | 33.3 | - | 48.2 | 9.4 | 57.6 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Unallocated assets | - | - | 4.2 | 4.2 | - | 4.2 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Total assets | 14.9 | 33.3 | 4.2 | 52.4 | 9.4 | 61.8 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Segment liabilities | 4.0 | 11.1 | - | 15.1 | 4.6 | 19.7 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Unallocated liabilities | - | - | 36.9 | 36.9 | - | 36.9 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Total liabilities | 4.0 | 11.1 | 36.9 | 52.0 | 4.6 | 56.6 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Other segment information | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Capital expenditure: | | | | | | |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Property, plant and equipment | 2.5 | 4.8 | 0.2 | 7.5 | - | 7.5 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Intangible assets | - | 5.2 | - | 5.2 | 0.3 | 5.5 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Depreciation | 0.5 | 0.6 | 0.1 | 1.2 | 0.3 | 1.5 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Amortisation | - | - | 0.6 | 0.6 | 0.1 | 0.7 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Share-based payment expense | - | - | 0.1 | 0.1 | - | 0.1 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Impairment losses recognised | - | - | - | - | 0.7 | 0.7 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Write-off of inventories | - | - | - | - | 1.6 | 1.6 |
+-------------------------------------+----------+-------------+-----------+--------------+--------------+---------+
| Impairment of receivables | - | 0.2 | - | 0.2 | 0.3 | 0.5 |
+-------------------------------------+----------+-------------+-----------+--------+-----+--------------+---------+
3. EARNINGS PER ORDINARY SHARE
Basic (loss) per share amounts are calculated by dividing (loss) for the year
attributable to ordinary equity holders of the parent by the weighted average
number of Ordinary Shares outstanding during the year.
Diluted (loss) per share amounts are calculated by dividing the
(loss) attributable to ordinary equity holders of the parent by the weighted
average number of Ordinary Shares outstanding during the year plus the weighted
average number of Ordinary Shares that would be issued on the conversion of all
the dilutive potential Ordinary Shares into Ordinary Shares.
The following reflects income and share data used in the basic and diluted
earnings per share computations:
+----------------------------------------------------------+-----------+----------+
| | 2009 | 2008 |
+----------------------------------------------------------+-----------+----------+
| | GBPm | GBPm |
+----------------------------------------------------------+-----------+----------+
| (Loss) for the year from continuing operations | (12.1) | (6.2) |
+----------------------------------------------------------+-----------+----------+
| (Loss) for the year from discontinued operations | (1.0) | (1.2) |
+----------------------------------------------------------+-----------+----------+
| Basic and diluted loss attributable to equity holders of | (13.1) | (7.4) |
| the parent | | |
+----------------------------------------------------------+-----------+----------+
+----------------------------------------------------------+-----------+----------+
| | 2009 | 2008 |
+----------------------------------------------------------+-----------+----------+
| Basic weighted average number of Shares | 16.9 | 17.1 |
+----------------------------------------------------------+-----------+----------+
| Diluted weighted average number of Shares | 16.9 | 17.1 |
+----------------------------------------------------------+-----------+----------+
There have been no other transactions involving Ordinary Shares or potential
Ordinary Shares between the reporting date and the date of completion of these
financial statements.
4. Discontinued Operations
(Loss) per share for the discontinued operations is derived from the net loss
attributable to equity holders of the parent from discontinuing operations of
GBP(1.0)m: (2008: loss of GBP(1.2)m), divided by the weighted average number of
Ordinary Shares for both basic and diluted amounts as per the table above.
5. (Loss) per share from continuing operations before exceptional items
The Group presents as exceptional items on the face of the Income Statement,
those material items of income and expense which, because of the nature and
expected frequency of the events giving rise to them, merit separate
presentation to allow shareholders to understand better the elements of
financial performance in the year, so as to facilitate comparison with prior
periods and to assess better trends in financial performance.
To this end, basic and diluted earnings from continuing operations per share is
also presented on this basis and using the weighted average number of Ordinary
Shares for both basic and diluted amounts as per the table above. The amounts
for earnings per share from continuing operations before exceptional items are
as follows:
+----------------------------------------------------------+-----------+-----------+
| | 2009 | 2008 |
+----------------------------------------------------------+-----------+-----------+
| Basic (loss) per share from continuing operations | (53.85) | (22.61) |
| (pence) | | |
+----------------------------------------------------------+-----------+-----------+
| Diluted (loss) per share from continuing operations | (53.85) | (22.61) |
| (pence) | | |
+----------------------------------------------------------+-----------+-----------+
Net (loss) from continuing operations before exceptional items and
attributable to equity holders of the parent is derived as follows:
+-----------------------------------------------------------+----------+-----------+
| | 2009 | 2008 |
+-----------------------------------------------------------+----------+-----------+
| | GBPm | GBPm |
+-----------------------------------------------------------+----------+-----------+
| (Loss) attributable to equity holders of the parent - | (12.1) | (6.2) |
| continuing operations | | |
+-----------------------------------------------------------+----------+-----------+
| Exceptional items after tax - attributable to equity | 3.0 | 2.3 |
| holders of the parent | | |
+-----------------------------------------------------------+----------+-----------+
| Basic and diluted (loss) from continuing operations | (9.1) | (3.9) |
| before exceptional items attributable to equity holders | | |
| of the parent | | |
+-----------------------------------------------------------+----------+-----------+
6. (i) Additional Cash Flow Information
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| | 1 | Cash | Debt on | Exchange | Non-cash | 31 March |
| | April | | | | | |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| | 2008 | flow | acquisition | differences | movements | 2009 |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| ANALYSIS OF GROUP NET DEBT | | | | | | |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| Cash and cash equivalents | 1.4 | (0.3) | - | - | - | 1.1 |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| Loans | (32.9) | 0.9 | - | (0.5) | (0.9) | (33.4) |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| Finance leases | (1.3) | 0.4 | - | (0.1) | 0.8 | (0.2) |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
| | (32.8) | 1.0 | - | (0.6) | (0.1) | (32.5) |
+-----------------------------+--------+--------+-------------+-------------+-----------+----------+
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| | 1 | Cash | Debt on | Exchange | Non-cash | 31 |
| | April | | | | | March |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| | 2007 | flow | acquisition | differences | movements | 2008 |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| ANALYSIS OF GROUP NET DEBT | | | | | | |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| Cash and cash equivalents | 4.6 | (3.2) | - | - | - | 1.4 |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| Loans | (20.0) | (12.1) | - | - | (0.8) | (32.9) |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| Finance leases | (0.8) | (0.1) | (0.5) | 0.1 | - | (1.3) |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
| | (16.2) | (15.4) | (0.5) | 0.1 | (0.8) | (32.8) |
+----------------------------+--------+--------+-------------+-------------+-----------+---------+
6. (ii) Non-Cash Movements
Non-cash movements include GBP(0.9)m representing non-cash interest in the form
of payments in kind.
Further non-cash movements include GBP0.8m representing finance leases held by
Diamant Drilling Services SA, a subsidiary sold in 2009.
7. (i) Reconciliation of Movements in Equity
+----------------------+---------+----------+--------+-------------+----------+--------+
| | Equity | Treasury | Other | Currency | Retained | Total |
| | share | share | equity | translation | earnings | equity |
| | capital | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+---------+----------+--------+-------------+----------+--------+
| At 1 April 2007 | 10.7 | - | 0.9 | (0.1) | 0.8 | 12.3 |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Total recognised | - | - | - | 0.8 | (7.4) | (6.6) |
| income and expense | | | | | | |
| for the year | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Shares issued on | 1.0 | - | (0.9) | - | - | 0.1 |
| acquisition | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Purchase of Treasury | - | (0.3) | - | - | - | (0.3) |
| shares | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Share buyback | - | - | - | - | (0.3) | (0.3) |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Share-based payment | - | - | - | - | - | - |
| reserve credit | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| At 31 March 2008 and | 11.7 | (0.3) | - | 0.7 | (6.9) | 5.2 |
| 1 April 2008 | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Total recognised | - | - | - | 1.5 | (13.1) | (11.6) |
| income and expense | | | | | | |
| for the year | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| Share-based payment | - | - | - | - | - | - |
| reserve credit | | | | | | |
+----------------------+---------+----------+--------+-------------+----------+--------+
| AT 31 MARCH 2009 | 11.7 | (0.3) | - | 2.2 | (20.0) | (6.4) |
+----------------------+---------+----------+--------+-------------+----------+--------+
7. (ii) Equity Share Capital
The balance classified as share capital includes the total net proceeds (both
nominal value share premium) on issue of the Company's equity share capital,
comprising - 1 pence Ordinary Shares.
8. Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences
arising from the translation of the financial statements of foreign
subsidiaries. It is also used to record the effect of hedging net investments in
foreign operations.
9. The statutory accounts for the year ended 31 March 2008 have been delivered
to the Registrar of Companies. Statutory accounts for the year ended 31 March
2009 are expected to be posted to shareholders today will be delivered to the
Registrar of Companies after they have been laid before the Company at the
annual general meeting on 29 September 2009. Copies will also be available from
Sovereign Oilfield Group Plc's Registered Office: 4 Queens Terrace, Aberdeen,
AB10 1XL and on its website www.sovereign-oil.eu.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MGGGLKDNGLZM
Sovereign Oilfield (LSE:SOGP)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Sovereign Oilfield (LSE:SOGP)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
