RNS Number:8126Y
Urals Energy Public Company Limited
23 February 2006
Urals Energy Public Company Limited
Adjustments to Interim Results to 30 June 2005
Following the announcement of 2 February 2006, regarding minor adjustments to
the Company's previously reported results for the period ended 30 June 2005
resulting in a modest reduction of the loss reported for the period, Urals is
publishing restated results for the period ending 30 June 2005. These restated
results have been approved by the Company's Directors and Auditors.
In line with announcement of 2 February 2006 the restated results give a net
loss of $800,000 compared with the originally announced net loss of $1.145m for
the six months ended 30 June 2005.
23 February 2006
Enquiries
Pelham PR
James Henderson 020 7743 6673
Archie Berens 020 7743 6679
About the Company:
Urals Energy is an independent exploration and production (E&P) company with its
principal assets and operations in Sakhalin Island, Timan Pechora (including
areas in the Nenets Autonomous Okrug and Komi Republic) and the Republic of
Udmurtia, Russia. The Company listed on AIM in August 2005.
The Company is focused on the integration of its five recently acquired
subsidiaries and the exploitation of their assets. In addition, it is actively
seeking to continue to grow and diversify its reserve and production portfolio
through exploration activities and the acquisition of additional E&P companies
or assets by taking advantage of the ongoing rationalisation of E&P assets in
Russia.
Based on a preliminary 2005 year-end report by DeGolyer & MacNaughton, the
Company's six E&P subsidiaries have Proved and Probable reserves of
approximately 118 million barrels of oil equivalent (MMBOE). During the second
six months of 2005, the Company produced approximately 6,237 barrels of oil per
day (BOPD).
The Company's two largest subsidiaries by reserves and production, Petrosakh and
Arcticneft, own and operate refining assets with a total refining capacity of
5,300 BOPD, which provide the Company with the ability to maximise the value of
the oil produced by choosing between the sale of oil or of refined products
depending on market conditions, tax considerations and other factors.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET AT (unaudited)
in $ thousands 30 June 2005 31 December
(restated) 2004
(restated)
Cash and cash equivalents 8,897 1,421
Accounts receivable and prepayments 15,563 3,706
Inventories 3,587 2,773
TOTAL CURRENT ASSETS 28,047 7,900
Property, plant and equipment 112,906 100,096
Other non-current assets 4,254 292
TOTAL NON-CURRENT ASSETS 117,160 100,388
TOTAL ASSETS 145,207 108,288
Accounts payable and accrued expenses 2,020 3,019
Taxes payable 2,502 1,917
Short-term borrowings and current portion 20,776 38,815
of finance lease obligations
Advances from customers 135 5,102
Amounts due for acquisition of subsidiaries 12,460 9,899
TOTAL CURRENT LIABILITIES 37,893 58,752
Long-term finance lease obligations and 25,446 1,556
borrowing
Dismantlement provision 920 950
Deferred tax liability 18,251 17,751
TOTAL LONG TERM LIABILITIES 44,617 20,257
TOTAL LIABILITIES 82,510 79,009
TOTAL EQUITY 62,697 29,279
TOTAL EQUITY AND LIABILITIES 145,207 108,288
Approved on behalf of the Board of Directors on 8 February 2006
William R. Thomas Stephen M. Buscher
Chief Executive Officer Chief Financial Officer
INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
in $ thousands 1 January to 30 June
2005 (restated)
Revenues
Gross revenues 27,279
Less: excise taxes and export duties (6,047)
Net revenues 21,232
Operating Cost
Cost of production (12,732)
Selling expenses (922)
General and administration expenses (4,238)
Operating result 3,340
Finance costs (3,217)
Foreign currency losses, net (192)
Other non-operating gains, net 23
Result before tax and minority interests (46)
Income tax (charge)/benefit (754)
Net result (800)
Attributable to minority shareholders 86
Attributable to Group shareholders (886)
Earnings per share (USD)- basic (0.02)
Diluted earnings per share (USD) (0.02)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (unaudited)
in $ thousands 1 January to 30 June
2005 (restated)
Cash flow from operating activities
Result before tax and minority interest (46)
Total Adjustments 3,944
Operating cash flow before changes in 3,898
working capital
Changes in working capital (17,894)
Cash flow from/(used in) operations (13,996)
Interest paid (1,377)
Income tax paid (297)
Net Cash flow used in operating activities (15,670)
Cash flow used for investments
Acquisition of subsidiaries (4,500)
Purchase of property, plant and equipment (4,348)
Net Cash Inflow/ (Outflow) from Investing (8,848)
Activities
Cash flow from financing activities
Proceeds from loans 35,001
Repayment of loans (30,053)
Proceeds from issuance of ordinary shares 26,215
Contributions from shareholders 881
Net Cash Inflow from Financing Activities 32,044
Effect of exchange rate changes (50)
Net increase in cash and cash equivalents 7,476
Cash and cash equivalents at beginning of 1,421
the period
Cash and cash equivalents at end of the 8,897
period
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited)
Attributable to shareholders of the Group
in $ thousands Note Share Share Unpaid Translation Accumulated Minority Total
capital premium capital difference deficit interest equity
At 31 December 209 42,172 (11,324) 1,236 (4,341) 1,327 29,279
2004
Issue of shares 6 50 24,950 25,000
Contribution from 11,324 11,324
shareholders
Translation (2,061) (45) (2,106)
difference for the
period (restated)
Net result for the (886) 86 (800)
period 1 January
2005-30 June 2005
(restated)
At 30 June 2005 259 67,122 0 (825) (5,227) 1,368 62,697
NOTES TO THE INTERIM CONDENCED FINANCIAL INFORMATION (unaudited)
Note 1 Activities
Urals Energy Public Company Limited (''Urals Energy'', or the ''Company'') was
incorporated as a limited liability company in Cyprus on 9 November 2003. The
Company was formed to act as a holding company for the shareholders' investments
in the Russian oil and gas exploration and production sector. Pursuant to a
Shareholder Agreement dated 28 July 2004, the Shareholders contributed certain
assets including ZAO Chepetskoye NGDU to the Company. On 26 October 2004, the
Company acquired OOO CNPSEI and on 19 November 2004, acquired ZAO Petrosakh. In
April 2005, the Company acquired the remaining 50 percent of OOO Urals Nord. In
July 2005, the Company completed the acquisition of ZAO Arcticneft. In November
2005, the Company completed the acquisition of OOO Dinyu (see Note 14,
Subsequent Events).
On 9 August 2005, the Company completed an initial public offering on the London
Alternative Investment Market (AIM).
Urals Energy and its subsidiaries (the ''Group'') are primarily engaged in oil
and gas exploration and production in the Russian Federation and processing of
crude oil for distribution on both the Russian and international markets. At 30
June 2005, the Group employed approximately 622 people.
The Group comprises of the following subsidiaries:
Entity Nature Jurisdiction Economic interest
at 30 June 2005
ZAO Petrosakh Exploration & production Sakhalin 97.2percent
OOO CNPSEI Exploration & production Komi 100.0percent
ZAO Chepetskoye NGDU Exploration & production Udmurtia 100.0percent
OOO Urals Energy Management Moscow 100.0percent
OOO Urals-Nord Exploration Nenetsky 100.0percent
Urals Energy (UK) Limited Corporate Services UK 100.0percent
Note 2 Restatement
This interim condensed consolidated financial information has been restated to
give effect to certain items which were inaccurately reflected in the interim
condensed consolidated financial information as originally issued on 23
September 2005. The restatements arise from additional eliminations of
intercompany activities, correction of a depletion calculation and certain other
items. The effect of restatement on the interim condensed consolidated
financial information is summarised below (all amounts in US dollar thousand):
Period ended 31 Six months ended 30
December 2004 June 2005
(Decrease) in gross revenues - (723)
Decrease in cost of production - 812
Decrease in selling expenses - 1,044
(Increase) in finance cost - (490)
(Increase) in income tax expense - (298)
Decrease in net loss - 345
Increase in net income attributable to minority shareholders - 9
Decrease in net loss attributable to Group shareholders - 336
Change in translation difference - (1,550)
31 December 2004 30 June 2005
Increase in inventories 526 76
(Decrease) in property, plant and equipment (526) (1,304)
Decrease in accounts payable and accrued expenses - 369
(Increase) in taxes payable - (56)
(Increase) in deferred tax liability - (290)
(Decrease) in total equity - (1,205)
Note 3 The nature of business operations
The Group's largest producing subsidiary, ZAO Petrosakh, operates on Sakhalin
Island and is not connected to the State owned pipeline monopoly - Transneft,
and accordingly, the majority of its production is exported by tanker. Due to
severe weather conditions, shipping tankers can only load during the period of
June through early November. Outside this period, oil is either stored or
processed and sold on the local market. During the period under review
Petrosakh had produced 56 thousand tons of crude oil and sold only 29 thousand
tons of crude oil in late June 2005. The remaining crude oil was shipped during
the second half of the year.
Note 4 Basis of presentation
The consolidated interim condensed financial information has been prepared in
accordance with International Accounting Standard No. 34, Interim Financial
Reporting ("IAS 34"). This consolidated interim condensed financial information
should be read in conjunction with the Company's consolidated financial
statements as of and for the year ended 31 December 2004 prepared in accordance
with International Financial Reporting Standards ("IFRS"). The 31 December 2004
consolidated balance sheet data has been derived from audited financial
statements.
Use of estimates. The preparation of consolidated interim condensed financial
information in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements preparation and the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of contingent assets and
liabilities during the reporting period. Estimates have principally been made in
respect to fair values of assets and liabilities, impairment provisions and
deferred income taxes. Actual results may differ from such estimates.
Note 4 Basis of presentation (continuation)
Exchange rates, restrictions and controls. The United States Dollar (''US dollar
or $'') is the presentation currency for the Company's operations as the
majority of the Company's operations is conducted in US dollars and management
have used the US dollar accounts to manage the Company's financial risks and
exposures, and to measure its performance. Financial statements of the Russian
subsidiaries are measured in Russian Roubles and presented in US dollars in
accordance with SIC 30 ''Reporting currency-Translation of Measurement Currency
to Presentation Currency''. Balance sheet items denominated in foreign
currencies have been remeasured using the exchange rate at the respective
balance sheet date. Exchange gains and losses resulting from foreign currency
translation are included in the determination of net income or loss. The US
dollar to Russian Rouble exchange rates were 28.67 and 27.75 as of 30 June 2005
and 31 December 2004, respectively.
Comparative information for the first half of 2004 was not provided as the
Company was not operating at that time.
Note 5 Accounting policies
Except as discussed below, the principal accounting policies followed by the
Company are consistent with those disclosed in the financial statements for the
year ended 31 December 2004.
New accounting developments. In December 2003, the International Accounting
Standards Board ("IASB") released 15 revised International Accounting Standards
("IAS"s) and withdrew one IAS standard. In 2004, the IASB published five new
standards, two revisions and two amendments to existing standards. In addition,
the IFRIC issued six new interpretations in 2004. Significant changes relevant
to the Group are discussed below.
The revisions to IAS 1, Presentation of Financial Statements, clarify certain
presentation requirements. Most significantly, the revised standard requires
that minority interest be presented within equity. The Company has
retroactively reflected the revised presentation standard for equity in the
consolidated interim condensed financial information.
IAS 24, Related Party Disclosures, as revised, requires the disclosure of
compensation of key management personnel and clarifies that such personnel
include non-executive directors.
Other revised and amended standards effective on 1 January 2005 are as follows:
IAS 2, Inventories; IAS 8, Accounting Policies, Changes in Accounting Estimates
and Errors; IAS 10, Events after the Balance Sheet Date; IAS 16, Property, Plant
and Equipment; IAS 17, Leases; IAS 19, Employee Benefits; IAS 21, The Effects of
Changes in Foreign Exchange Rates; IAS 27, Consolidated and Separate Financial
Statements; IAS 28, Investments in Associates; IAS 31, Investments in Joint
Ventures; IAS 32, Financial Instruments: Disclosure and Presentation; IAS 33,
Earnings per Share; IAS 36, Impairment of Assets; IAS 38, Intangible Assets: and
IAS 39, Financial Instruments: Recognition and Measurement. The adoption of
these revised and amended standards has not had a material effect on the Group's
financial position, statements of income or of cash flows.
Accounting policies significant to the Group that were adopted or modified on 1
January 2005 are discussed below.
Business combinations. The Company accounts for business combinations in
accordance with the provisions of IFRS 3, Business Combinations ("IFRS 3").
IFRS 3 applies to accounting for business combinations where the agreement date
is on or after 31 March 2004. Upon acquisition, the Group initially measures
both its share and the share of any minority shareholders in the acquiree's
identifiable assets, liabilities and contingent liabilities at their fair values
as at the acquisition date. For business combinations where the agreement date
is on or after 31 March 2004, goodwill is not amortized but rather tested for
impairment annually at the cash generating unit level unless an event occurs
during the year which requires the goodwill to be tested more frequently.
Intangibles with indefinite useful lives acquired in those business combinations
are not amortized and are tested annually for impairment to ensure the carrying
value does not exceed the recoverable amount regardless of whether an indicator
of impairment is present.
Note 5 Accounting policies (continuation)
Non-current assets held for sale and discontinued operations. The Group
accounts for non-current assets held for sale and discontinued operations in
accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued
Operations. IFRS 5 replaced IAS 35, Discontinuing Operations. Assets or
disposal groups that are classified as held for sale are presented separately on
the balance sheet and are carried at the lower of the carrying amount and fair
value less costs to sell. Additionally, the results of discontinued operations
are shown separately on the face of statement of income.
On 1 January 2005, the Group early-adopted IFRS 6, Exploration for and
Evaluation of Mineral Resources. This standard provides guidance on accounting
for costs incurred in the exploration for and evaluation of mineral resources.
Adoption of the standard did not have a material effect on the Group and did not
result in changes of the Group's accounting policies.
Note 6 Issue of shares
Number of shares Share capital Share premium
$ thousands $ thousands
At 31 December 2004 40,000,000 209 42,172
Issuance of shares to Nafta B - 15 June 9,434,000 50 24,950
2005
At 30 June 2005 49,434,000 259 67,122
Subsequent to 30 June 2005
Conversion of shareholder loans to equity 3,650,480 19 9,654
- 2 August 2005
Placement by initial public offering - 9 26,667,000 143 113,636
August 2005
Placement to RP Explorer Master Fund - 9 2,929,653 16 9,984
August 2005
Placement by over-allotment - 17 August 4,000,050 22 17,305
2005
At 23 September 2005 86,681,183 459 217,701
All share numbers are presented after the effect of a 1 for 400 share split
approved on 18 July 2005. In June 2005, the Company issued 9,434,000 ordinary
shares to Nafta (B) NV, a company owned by one of the shareholders for total
consideration of $25.0 million. The share issuance was settled with a cash
contribution of $18.4 million and conversion of $6.6 million in existing debt of
Nafta B.
In July 2005, the Company entered into a convertible preferred note agreement
with RP Explorer Master Fund for up to $15.0 million. The Company has issued
$10.0 million, 10.0 percent subordinated, unsecured ''A'' notes. The notes are
issued at 100.0 percent and accrete daily up to 117.0 percent on maturity. On 9
August 2005 these notes were converted into 2,929,653 ordinary shares at a 20.0
percent discount to the IPO issue price.
On 2 August 2005, the Company converted its loans with Radwood Business Inc.,
Polaris Business Limited, Citara International Limited, Fantin Finance Limited
and Texas Oceanic Petroleum LLC (who collectively at 31 December 2004, provided
$9.3 million, Libor plus 2.0 percent unsecured notes to the Company) to
3,650,480 ordinary shares.
On 9 August 2005 the Company placed 26,667,000 new ordinary shares at an issue
price of 240 pence per share on an Alternative Investment Market operated by the
London Stock Exchange ("AIM").
On 17 August 2005 Morgan Stanley Securities Limited, the Company's stabilising
manager fully exercised the over-allotment option in the amount of 4,000,050 new
shares. As a result of the exercise, the free float of shares in the Company has
increased from 32 percent to 35 percent (upon the expiration of RP Capital's
lock-up and orderly markets restriction, 39 percent) and the issued share
capital of the Company has increased to a total of 86,681,183 shares. The gross
proceeds of the placing now total approximately $131 million.
Note 7 Segment information
The Group operates in one business segment which is crude oil exploration and
production. The Group assesses its results of operations and makes its strategic
and investment decisions based on the analysis of its profitability as a whole.
The Group operates within one geographical segment, which is the Russian
Federation.
Note 8 Acquisition of subsidiaries
On 25 April 2005, the Company acquired the remaining 50.0 percent interest in
OOO Urals Nord ("Urals Nord") for the total consideration of $14.84 million. On
that date $1.5 million was paid immediately in cash and $12.5 million was paid
in October 2005. The Group incurred $0.84 million of additional cost related to
seismic review of the license areas. Urals Nord holds 5 exploration licenses
for Beluginisky, Zapadno-Sorokinskiy, Fakelniy, Nadezhdinskiy and Alfinskiy oil
fields. Urals Nord has been consolidated from the date of acquisition, the
purchase price being assigned to unproved oil and gas property included in
property, plant and equipment.
Note 9 Pledged assets and changes in contingent liabilities
The dismantlement provision represents the net present value of the estimated
future obligation for dismantlement, abandonment and site restoration costs
which are expected to be incurred at the end of the production lives of the oil
and gas fields. The discount rate used to calculate the net present value of the
dismantling liability was 13.0 percent.
Environmental regulations and their enforcement are under development by
governmental authorities. Consequently, the ultimate dismantlement, abandonment
and site restoration obligation may differ from the estimated amounts and this
difference could be significant.
Note 10 Cost of sales
1 January 2005 to 30 June 2005
Unified production tax 5,588
Depreciation and depletion 2,706
Wages and salaries including payroll taxes 2,270
Materials 1,088
Other taxes 416
Other 664
Total cost of sales 12,732
Note 11 Borrowings and loans
Short term loans
Name of bank Borrower Interest rate Currency 30 June 2005 31 December 2004
Related party loans UEPCL LIBOR +2% $ 12,300 27,493
Current portion of long Petrosakh
term debt 8.16% fixed 8,000 -
Alfa Eco M Petrosakh 9.5% fixed RR - 10,993
Current portion of
finance lease liability Petrosakh 13.0% fixed RR 111 105
Accrued interest 365 224
Total short term loans 20,776 38,815
Note 11 Borrowings and loans (continuation)
Long term debt
Name of bank Borrower Interest rate Maturity date Currency 30 June 31 December
2005 2004
BNP Paribas December 2006 20,000 -
Petrosakh 8.16% fixed $
Less current portion of (8,000) -
BNP Paribas
Zenit Chepetskoye -
NGDU 11.0% fixed March 2010 $ 10,000
Zenit CNPSEI 11.0% fixed March 2010 $ 2,000 -
Long term finance lease
liability Petrosakh 13.0% fixed 1,557 1,661
Less current portion of
lease liability Petrosakh (111) (105)
Total long term debt 25,446 1,556
In June 2005, Petrosakh entered into an 18-month credit facility for $20.0
million with ZAO BNP Paribas Bank to finance Petrosakh for certain repayment of
loans from Alfa-Eco M and fund working capital and various capital projects of
Petrosakh. This variable interest debt facility bore interest at LIBOR plus 5.0
percent and was repayable through December 2006. The loan was collateralised by
a pledge of Petrosakh shares to ZAO BNP Paribas Bank, assignment of crude oil
export contract and a floating pledge over Petrosakh's crude oil inventories. In
November 2005, this $20.0 million credit facility was repaid from the proceeds
of a $100.0 million, 5-year Reserve Based Loan facility underwritten by BNP
Paribas S.A.
In March 2005, Chepetskoye NGDU obtained a $10.0 million, 5-year, 11.0 percent
fixed interest loan from OAO Bank Zenit and CNPSEI obtained a $2.0 million,
5-year, 11.0 percent fixed loan from OAO Bank Zenit. The bank loans funded
working capital and certain capital projects. The loans were secured by liens on
various assets of these subsidiaries. In January 2006, the Bank Zenit loan
facilities were repaid from the proceeds of a $12.0 million, 5-year bullet
amortization subordinated loan facility provided by BNP Paribas S.A.
Note 12 Capital commitments
Exploration licenses-investment commitments
In January 2006, the Russian Federal Agency for Natural Resources granted an
extension of the Pogranichnoye off-shore license to 1 February 2011. The terms
of the license require a total of five exploration wells to be drilled during
the period 2005-2010. The Company drilled to total depth the first of these
wells in January 2006.
Other capital commitments
At 30 June 2005, the Company had no other significant contractual commitments
for capital expenditures.
Note 13 Related party transactions
At 30 June 2005 the Group has received unsecured borrowings from shareholders
and companies controlled by shareholders at market rates. The loans form
shareholders were received to purchase Petrosakh.
Name of party Relationship 30 June 31 December 2004 Currency Interest rate Date of
2005 repayment
Nafta B NV Controlled by - 6,822 EURO 10% February 2005
shareholder
Nafta B NV Controlled by 3,000 - $ 10% August
shareholder 2005
Radwood Business Inc. Shareholder 500 500 $ LIBOR plus 2% August
2005
Polaris Business Shareholder 300 300 $ LIBOR plus 2% August
Limited 2005
Citara International Shareholder 5,000 5,000 $ LIBOR plus 2% August
Limited 2005
Fantin Finance Limited Shareholder 3,000 3,000 $ LIBOR plus 2% August
2005
Texas Oceanic Petroleum Shareholder 500 1,500 $ LIBOR plus 2% August
LLC 2005
Hillsilk Limited Shareholder - 330 $ LIBOR plus 2% March 2005
UEN Trading Ltd Controlled by - 8,660 $ 10-15% March-December
shareholder 2005
Other accounts payable Controlled by 848 1,381 $
shareholder
Loans payable 13,148 27,493
Interest payable 365 117
Total related party
borrowings 13,513 27,610
Nafta B NV loan at 30 June 2005 was repaid on 17 August 2005 and other loans
from shareholders were converted into equity on 2 August 2005. The Nafta B NV
loan at 31 December 2004 was converted to equity (see Note 6).
Other transactions and balances with companies controlled by shareholders are as
follows:
30 June 2005 31 December 2004
Balances with related parties
Accounts receivable
Loans receivable 1,230 723
Accounts payable
Other payable and accrued expenses 61 61
Note 13 Related party transactions (continuation)
Operations with related parties 1 January 2005 to
30 June 2005
Oil sales
Sales of crude oil 4,399
Associated volumes, tons 13,580
Selling, general and admin expenses
Interest expense - net 559
Management fees received 214
Rental fees paid included in selling, general and administrative 172
expense
Note 14 Subsequent events
On 29 July 2005 the Company made a deposit of $5.25 million to KCA Deutag to
secure the services of the T-2000 rig.
On 11 July 2005, the Company concluded the acquisition of a 100.0 percent equity
interest in ZAO Arcticneft from OAO LUKoil for approximately $32.5 million. An
advance of $3.0 million was paid on 24 May 2005, the remaining $16.5 million was
paid on completion in July. As part of this acquisition, $6.8 million in
payables of Arcticneft to LUKoil was repaid on 11 July 2005 and the remaining
$13.3 million was paid on 30 August 2005. In addition, the Company reached an
agreement to settle a dispute between ZAO Arcticneft and OOO Start, whereby the
Company acquired certain operating assets from Start for $3.0 million, and Start
withdrew all litigation against Arcticneft.
Management are currently reviewing their fair value allocations for this
transaction, and consequently believe it is not practicable to disclose such
balances at this time.
On 6 September 2005 the Company paid Petraco $10.0 million plus accrued interest
to settle an outstanding loan.
On 15 November the Company closed the $70.0 million acquisition of OOO Dinyu.
This follows completion of all due diligence and approval from FAS (Russian
Federal Antimonopoly Service). The Company acquired 100 percent ownership of OOO
Dinyu and its assets from Lonsdacks Investments Limited.
The acquisition was satisfied through a cash consideration of $62.0 million
funded through a combination of existing cash resources and debt, following
completion of a new senior debt facility referred to below. As part of the
transaction, Urals Energy also assumed $8.0 million in debt which was paid off
shortly after closing.
Subsequent to its purchase of Dinyu, the Company reached an agreement to
purchase the 35 percent stake owned by third parties in the 65 percent-owned
subsidiary of Dinyu, OOO Michayu for $0.2 million. This purchase is in the
process of legal documentation.
In November 2006, the Company closed a five year, revolving Reserve Based Loan
Facility with BNP Paribas S.A., underwritten to a maximum commitment of $100.0
million. The current available amount of $69.0 million was drawn. The facility
is divided into a senior conforming tranche of $59.0 million bearing interest at
LIBOR plus 5.0 percent, and a junior non-conforming tranche of $10.0 million
priced at LIBOR plus 6.25 percent.
In January 2006, the Company obtained a $12.0 million subordinated loan from BNP
Paribas. The subordinated loan bears interest at LIBOR plus 5.0 percent and is
repayable over five years in one payment on 10 November 2010. Attached to the
subordinated loan were warrants to purchase up to two million of the Company's
common stock for #3.03 per share. The warrants are exerciseable at any time and
expire in Feburary 2011. The Company used the proceeds from the subordinated
loan to repay its debt to Bank Zenit of $12.0 million.
REVIEW REPORT OF THE AUDITORS
To the Shareholders and Board of Directors of Urals Energy Public Company
Limited
1. We have reviewed the accompanying condensed consolidated interim balance
sheet of Urals Energy Public Company Limited and its subsidiaries (the
"Group") as at 30 June 2005, and the related condensed consolidated interim
statements of operations, cash flows and changes in equity for the six
months then ended presented on pages 1 through 12. This condensed
consolidated interim financial information is the responsibility of the
Group's management. Our responsibility is to issue a report on this
condensed consolidated interim financial information based on our review.
2. We conducted our review in accordance with the International Standard on
Review Engagements 2400. This Standard requires that we plan and perform
the review to obtain moderate assurance about whether the condensed
consolidated interim financial information is free of material
misstatement. A review is limited primarily to inquiries of company
personnel and analytical procedures applied to financial data and thus
provides less assurance than an audit. We have not performed an audit and,
accordingly, we do not express an audit opinion.
3. Based on our review, nothing has come to our attention that causes us to
believe that the accompanying condensed consolidated interim financial
information has not been properly prepared, in all material respects, in
accordance with International Accounting Standard 34 "Interim Financial
Reporting".
4. As described in Note 2, this interim condensed consolidated financial
information has been restated to give effect to certain items which were
improperly reflected in the interim condensed consolidated financial
information as originally issued, our report on which was dated 23
September 2005.
Moscow, Russian Federation
8 February 2006
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PUUAAPUPQGMP
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