FOR IMMEDIATE RELEASE                                                                                                          

JKX Oil & Gas plc

('JKX' or the 'Company')

HALF-YEARLY RESULTS

 FOR

THE SIX MONTHS ENDED 30 JUNE 2016

 

Operational Highlights

·      Average production increased by 21% at 10,393 boepd (2015: 8,611 boepd)

·      Nearing finalisation of the updated Field Development Plans across the group

·      Monetization process of our Russian and Hungarian assets ongoing

·      Bond liabilities reduced by $2.2m through bond repurchase program

·      Significant efficiencies and costs savings implemented at London headquarters

·      Two highly experienced independent Non Executive Directors appointed

 

Key Financials

·      Loss from operations before tax and exceptional costs $2.8m (2015: $7.3m loss)

·      Exceptional costs $3.1m (2015: nil)

·      Revenue: $35.4m (2015: $44.4m)

·      Operating costs down 20% at $9.7m (2015: $12.1m)

·      Loss for the period: $10.1m (2015: $13.8m loss)

·      Loss per share: 5.86 cents (2015: loss 8.01 cents)

·      Operating cash flow: $7.8m (2015: $3.5m)

·      Capital expenditure: $2.2m (2015: $4.2m)

·      Total cash: $18.6m (31 December 2015: $25.9m)

           

Outlook

·      Implementation of the updated Field Development Plan in Ukraine

·      Potential resumption of development drilling in Ukraine in second half of 2016

·      Resolution of inherited legal battles

·      Two exploration wells scheduled in Slovakia in second half of 2016

 

JKX Chief Executive, Tom Reed, commented:

"In our first five months as a Board, we have made significant progress on several fronts. Production is up 21% due to the reinstatement of well-27 in Russia and an enhancement program in Ukraine using existing well stock. Updated Field Development Plans to use best-in-class development know-how, equipment and technology are under final review. We have partially mitigated the legal risks that we inherited in Ukraine and we have re-established a positive working relationship with the Ukrainian Government. Significant efficiencies and costs savings have been implemented, including at our London headquarters, and the process of monetizing our Russian and Hungarian assets is on track. 

We continue to believe that JKX has great potential."

For further information please contact EM:

Stuart Leasor

leasor@em-comms.com

T: +44 20 3709 5711

M: +44 7703 537721

 

Jeroen van de Crommenacker

crommenacker@em-comms.com

T: +44 20 3709 5713

M: +44 7887 946719

 

Chairman's Statement

In the first five months as the new Board of JKX, we have made significant progress with our plan to restore shareholder value to JKX. Our overriding commitment to shareholders is to do this through transparent communication, by increasing efficiency and production and by reducing needless costs.

Performance
In the first half of the year, average production increased by 21% to 10,393 boepd, despite the suspension of all development drilling in early 2015, which was put in place by the previous Board. The Company has remained focused on maintaining cash generative operations in both Ukraine and Russia with a reduced capital expenditure program.

There has been some recovery in international oil and gas prices, however they remain low. Despite the 21% increase in production, there has been a 20% fall in half-year revenue to $35.4 million which is due to a sharp fall in both oil and gas realisations resulting from a depreciation of local currencies against the US Dollar compared with the prior period and the lower international oil and gas prices. This is addressed more fully in the Financial Review.

 

The Company's cash balances have also been significantly reduced by the scheduled $12.3 million repayment to Bondholders in February, $1.7 million used to repurchase 11 Bonds at a discount to their par value and $3.1 million of exceptional costs settled in the period mainly relating to the replacement of the previous Board. The exceptional costs are detailed further in Note 13 to the financial information and discussed in the Financial Review.

 

Despite the low oil and gas prices and the exceptional costs I am pleased to report that your Company has maintained a positive operating cash flow for the period.

 

Ukrainian legal cases

As reported in previous announcements, in 2014 the Company commenced arbitration proceedings against Ukraine on the basis of overpayment of production taxes ('Rental Fees'), as explained more fully in Note 14 to the financial information.

 

During 2015 an international arbitration tribunal issued an Interim Award requiring the Government of Ukraine to limit the collection of Rental Fees on gas produced by our Ukrainian subsidiary, Poltava Petroleum Company ('PPC'), to a rate of 28%. This Interim Award remains in effect until final judgement is rendered on the main case or it is otherwise settled. The main arbitration case, which relates to the overpayment of approximately $180 million in Rental Fees plus damages to the business, was heard in London in early July and we expect the tribunal's decision by the end of 2016.

 

As reported at the 2015 year end, PPC recognised a provision and had two near-term contingent liabilities arising from three separate Ukrainian court proceedings over the amount of Rental Fees paid in Ukraine for certain periods since 2007. At current Hryvnia exchange rates these potential liabilities total approximately $40 million, including interest and penalties.

 

For claims relating to 2007 and amounting to $6 million, the Supreme Court of Ukraine ruled in favour of the Company and this case is now considered closed. For claims relating to 2010, amounting to $10.5 million following revaluation at the period end, PPC lost an appeal to the High Administrative Court of Ukraine and the Supreme Court of Ukraine refused to consider the case. The Company is in the process of filing a second appeal to the Supreme Court. In the case of 2015 claims of approximately $23 million at period end exchange rates, PPC is in the process of court hearings, although the Company considers such claims to be in violation of the interim award received from the arbitration tribunal as noted above.

 

As previously announced the Ukrainian police visited the office of PPC and the homes of two of our employees on 14 June 2016 and have continued to request additional documentary information, most recently on 11 July.  The searches undertaken were the result of an investigation of claims of alleged underpayment of taxes which have been made against PPC by a local prosecutor.  PPC continues to fully cooperate with the authorities and believes that it is in full legal compliance with the matters outlined in the police requests and that this action is completely unjustified. We have referred the matter to the British and US Embassies in Kyiv to ask for their assistance in engaging with the relevant authorities to resolve the situation.

 

Also as previously reported, following action initiated in late 2015, in January 2016, the State Geology and Mineral Resources Survey of Ukraine suspended four of PPC's subsoil use permits, initially with effect from 1 February 2016, but then with an extension period until 1 March 2016. PPC has now renewed all four of these licenses until 2024 and also received a ruling from the Kharkiv Administration Court of Appeal which deemed the original suspensions to have been illegal.

 

Your Board
Following the replacement of the entire Board on 28 January 2016, the composition of the Board did not comply with the UK Corporate Governance Code in respect of the number of independent Non Executive Directors.  To address this, in April, two new independent Non Executive Directors were appointed.   

Alan Bigman and Bernie Sucher both bring extensive knowledge of working at the highest levels in the region combined with directly relevant experience both of which will be of great benefit to the Company. As independent directors, Alan and Bernie have strengthened the corporate governance credentials of the Company which ensures that the interests of all shareholders are protected.

 

At the Company's AGM on 28 June 2016, the resolutions to accept the appointment of Alan and Bernie were rejected by a small number of shareholders but with enough votes to reject the resolutions. Given the very low turnout of voting shareholders, the fact that the vast majority of voting shareholders were in favour of the appointments and the need for value-adding independent directors, the Board re-appointed both Alan and Bernie at a subsequent Board Meeting and the shareholders will be asked to approve these appointments at the next General Meeting.

 

Staff

Following a detailed review of London head office costs the Board has made reductions to staff numbers and we are planning to move the remaining staff on to one floor of the building where we previously occupied four floors. Negotiations with the landlord to extract the Company from the long-term lease agreements are ongoing, although the impact of the referendum in which the United Kingdom voted to leave the European Union has created uncertainty in the UK commercial property market which has made finding new tenants and negotiations with the landlord more difficult.

 

In May we appointed Daniel Valk as the new General Director of PPC, our Ukrainian operating subsidiary. Daniel has over 20 years of industrial management experience in Ukraine and Russia.

 

Outlook

There remain risks in respect of the $27.6 million bond payment which may become due in February 2017, the contingent liabilities in respect of Ukrainian production taxes and the continued low oil and gas prices, which, if realised, may impact the going concern status of the Company. These risks are fully addressed in Note 2 to the financial information.  However the Directors believe that there is a reasonable basis to mitigate the effects of such eventualities through negotiation with the Ukrainian Government, further operational and cash management measures and Bond restructuring or refinancing options, which are currently being assessed.

 

In Ukraine, the investment climate has improved following the reduction of gas production tax rates to 29% for 2016 and the easing of restrictions on payments of dividends to overseas shareholders, which enables the Company to repatriate dividends from PPC for the years 2014 and 2015.

 

We've also stabilized our legal risks in Ukraine, for now, and re-established a positive working relationship with the Ukrainian Government. We look forward to completing our inherited legal battles as early as this summer, allowing the Company to resume its focus on investing in oil and gas production through drilling and/or acquisition.

 

The process of monetization of our Russian and Hungarian assets is underway, which includes maximising cash generation and cost-cutting in Russia and the repatriation of surplus funds. We will update shareholders as soon as appropriate with specific progress.

 

The Board continues to believe that the Company has great potential given its current physical and human resource assets. I wish to thank all the JKX staff for their support and for continuing to perform professionally over this difficult period of change, and thank our shareholders for their ongoing support.

 

 

 

Chief Executive's Statement

Performance highlights

The performance highlights for the period are:

·      Average production increased 21% 10,393 boepd (2015: 8,611 boepd)

·      Production increases achieved through an enhancement program targeting the technical potential of existing well stock

·      Nearing finalisation of the updated Field Development Plans

·      Monetization process of our Russian and Hungarian assets ongoing

·      Significant efficiencies and costs savings implemented, including at London headquarters

 

For the six months to 30 June 2016, the Company increased production by 21% from the same period as last year to 10,393 boepd.

 

Gas production in Russia was higher by 40% due to well-27 coming on line in late 2015 and undergoing several successful acid stimulations in the period.

 

Despite the cancellation of all development expenditure since early 2015, gas production in Ukraine declined by only 4% period-on-period and oil production has increased by 15%.  Both results are due to the implementation of an enhancement program targeting the technical potential of existing well stock.

 

International oil and gas prices were considerably lower than recent historical levels which has decreased our US$-based revenues and which is analysed in more detail in the Financial Review.

Ukraine

Average production in Ukraine in the first half of 2016 was stable period-on period at 4,137 boepd (2015: 4,140 boped). The suspension of development drilling in Ukraine in 2015 required a step-up of work-over activities on the existing well stock in order to minimise the natural production decline.

 

Through the period, the Company has continued to systematically calculate the technical potential of existing well stock and close gaps between actual and potential production using best practices. This approach stabilized gas production and increased oil production during the period. The success of this enhancement program for the first half of the year is detailed in the following Operational Review.

 

Production optimization operations continue with the TW-100 workover rig and rigless interventions.

Russia

Average production from the Koshekhablskoye field in the first half of 2016 was 6,256 boepd, a 40% increase on the average for the first half of 2015 due mainly to the completion of repairs on well-27. Periodic acid treatments have been performed during the period to maintain production rates in the four producing wells. 

The production figures remain lower than plant capacity of 60 MMcfd as well-05 has remained suspended throughout the period as plans to replace damaged tubing have been postponed pending the outcome of a strategic review of our Russian assets by the new Board.

Hungary

Following the sale of a 50% interest in a small, early stage gas discovery in June, JKX operates six Mining Plots (production licences) in Hungary covering 200 sq km in which it has a 100% equity interest. JKX will seek to develop these licences, and is currently seeking a farm-in partner, or partners, to participate in their development.

 

Slovakia 

In Slovakia, two exploration wells are scheduled to be drilled on our exploration licences in the second half of the year.

Current and future activity

In the first five months as a Board, we have made progress on several fronts, including production optimization in the field, partial mitigation of inherited legal risks in Ukraine and the re-establishment of a positive working relationship with the Ukrainian Government.

 

The Field Development Plan for our Ukrainian assets is nearing completion, and will provide a framework for future business and capital planning, as well as a baseline for investment decisions. Best in class development know-how, equipment and technology is being sourced, primarily in the United States, to support the execution of the Field Development Plan.

Group production in the second half of the year is anticipated to be maintained. Gas realisations are anticipated to be slightly lower in Ukraine in the second half of the year and oil realisations are expected to remain at current levels. The regulated maximum industrial gas price in Russia was increased by 1.95% from 1 July 2016 however, following a renegotiation of our gas sales contract, we have agreed a temporary reduction of 9.5% to the price at which we sell our gas in Russia in return for a long-term "take or pay" agreement whereby the customer will pay for gas even if they do not take delivery of it. The Company is seeking to engage other buyers of its gas in southern Russia to improve gas realisations there and broaden its customer base.

Dividend restrictions in Ukraine have been eased which improves the Group's internal liquidity however there remain risks in respect of the $27.6 million bond payment which may become due in February 2017, the potential liabilities in respect of Ukrainian production taxes and the continued low oil and gas prices, which, if all realised, may impact the going concern status of the Company. These risks are fully addressed in Note 2 to the financial information. 

Ukraine remains the engine of the Group. Once we have mitigated the Group's short-term liquidity risks noted above and the Field Development Plan is approved, development drilling in Ukraine will recommence and we will seek sources of capital to expand the drilling campaign.

 

I thank all management and staff for their hard work and our stakeholders for their continued support.

 

 

Operational Review

Group production

For the six months to 30 June 2016, the Company produced 10,393 boepd, comprised of 56.4 MMcfd of gas and 993 bpd of oil and condensate, an increase of 21% on the same period in 2015.

Ukraine

Novo-Nikolaevskoye licences

Production

Average production from the Novo-Nikolaevskoye group of fields in the first half of 2016 was 2,574 boepd comprising 10.0 MMcfd of gas and 903 bpd of oil and condensate, a 1% increase on the average for the first half of 2015. 

Development drilling and other well activity

No drilling took place in the first half of 2016 as the new board focused on rebuilding Field Development Plans using global best practices, including drilling and fracturing techniques from North America. Drilling will commence when these plans are completed, technology and equipment sourced, and financing secured. Production optimisation operations continue with the TW-100 workover rig and rigless interventions.

·      Attempts to reduce the water production from IG-138, with a cement plug were unsuccessful and the well is being reviewed for further intervention work. Tubing replacement resulted in an increase in gas production from IG-106. A cement plug over the T2 and Devonian Sands was drilled out in IG-132, which resulted in a significant increase in production. Initial rates were over 1,100 bbls/d and production remains above 200 bbl/d. On the Molchanovskoye North Field, M-163 was worked over to restore production from the Devonian sandstone. Work is on-going to obtain enhanced production from the Devonian.

·      Rigless interventions included velocity string installations in M155, M157 and M159. These installations at M155 and M157 resulted in an increase in production and stabilisation. The results at M159 are still being evaluated. 

·      Wireline operations have focussed on the clearance of wax and salt build up in the production tubing of a number of wells. A sustained programme of wax clearance has stabilised oil production. Additional activities included wireline perforations in NN73 and IG141, neither of which was successful.

·      An extensive production logging tool programme has been ongoing during 2016 in order to optimize production from existing intervals, where possible.

·      The Novo Nikolavskoye seismic inversion study is complete and has provided a fresh insight for new well locations.

Production facilities

Routine operations at the main processing facility, the LPG plant and the oil loading facility continued smoothly throughout the period. At the main processing facility, modifications to the water treatment unit were completed to improve the quality of produced water prior to re-injection and minor flowline and piping modifications continue to enhance production.

Improvements at the oil loading terminal included an upgrade of the fire protection system and an additional loading point was installed to enable loading of road tankers in addition to rail cars.

 

Elizavetovskoye Production Licence

 

Production

Average production from the Elizavetovskoye field in the first half of 2016 was 1,563 boepd comprising 9.2 MMcfd of gas and 25 bpd of condensate, a 2% decrease on the average for the first half of 2015. 

Drilling and development activity

There was no drilling activity on the Elizavetovskoye field during the period although additional development drilling plans on the Elizavetovskoye field and West Mashivske licence are currently being reviewed.

Production facilities

The Elizavetovskoye production facility continues to operate efficiently and there have been no further changes following the upgrade at the end of 2014 and the addition of compression in 2015. The plant now has sufficient capacity to accommodate future production from additional wells that are currently being planned and no further modifications are expected.

Russia

Koshekhablskoye licence

Production

Average production from the Koshekhablskoye field in the first half of 2016 was 6,256 boepd comprising 37.1 MMcfd of gas and 66 bpd of condensate, a 40% increase on the average for the first half of 2015. 

 

Workover and well stimulation activity

After completion of the well-27 workover at the end of 2015, there have been no additional workover activities in 2016. Routine acid treatment has been carried out using coiled tubing on the main producing wells. Production from crestal well-20 has ranged from 15-18 MMcfd during the period with a single acid treatment. The north flank well-25 has been producing 9-12 MMcfd with two acid treatments in the period. Well-27 has been producing 7-16 MMcfd having required three acid treatments this period. The deep east-flank well-15 continues to cycle between 0.9 MMcfd and 1.5 MMcfd, with fluid build-up being cleared periodically.

Facilities

Following the completion of plant modifications in Q3 2015, the plant inlet capacity increased to 60 MMcfd. The annual plant shut down, primarily for maintenance requirements, was performed in Q2 2016 and the introduction of a new maintenance system has further increased operational efficiency.      

Licence obligations

The obligation to assess the Callovian reservoir through sidetracking well-09 has been deferred until 2017 however a new well location is being reviewed to meet this obligation.

Hungary

Following applications made in 2015, JKX now operates the following six new Mining Plots (production licences) in Hungary covering 200 sq km and which are 100% owned by Riverside Energy Kft, the Company's wholly-owned Hungarian subsidiary:

 

Hajdunanas IV	28 sq km
Hajdunanas V	7 sq km
Tiszavasvari IV	41 sq km
Emod V	100 sq km
Pely I	18 sq km
Jaszkiser II	6 sq km

 

The licence terms will enable JKX to carry out appraisal and development activity over a 30 year period and JKX is currently seeking a farm-in partner, or partners, to participate in the development of these assets.

Hajdunanas field

Production from the Hajdunanas and Gorbehaza Fields in north east Hungary, which form the Hajdunanas IV Mining Plot, was suspended by the previous operator in 2013. 

JKX is currently reviewing plans for both well intervention and sidetrack of the Hn-2 well and, following the award of the extended Hajdunanas V Mining Plot in Q1 2016, is seeking a farm-in partner to participate in the further development of the Hajdunanas field and nearby prospective features.

Turkeve IV Mining Plot

During the period, JKX sold its 50% beneficial interest in the Ny-7 discovery (within the Turkeve IV Mining Plot) to the operator.

 

Slovakia

 

Exploration

JKX holds a 25% equity interest in the Svidnik, Medzilaborce, Snina and Pakostov exploration licences in the Carpathian fold belt in north east Slovakia. A programme of magneto-telluric geophysical surveys combined with seismic re-interpretation has led to the identification of a number of shallow prospects across the licences.

The 128 sq km Pakostov licence was applied for and approved in 2015 as protection acreage around material prospects identified in the Medzilaborce licence.  The Operator (DiscoveryGeo) had planned to drill two of these prospects in the fourth quarter of 2015 but a combination of revised permitting procedures and local activist opposition has delayed well location permitting and construction. The Operator now hopes to spud the first well of a larger three well programme in 2H 2016.

 

Financial performance

 

PRODUCTION SUMMARY	First half 2016	Second half 2015	First half 2015
Production
Oil (Mbbl)	180	164	154
Gas (Bcf)	10.2	9.4	8.4
Oil equivalent (Mboe)	1,881	1,724	1,559
Daily production
Oil (bopd)	993	890	851
Gas (MMcfd)	56	51	47
Oil equivalent (boepd)	10,393	9,374	8,611
OPERATING RESULTS	First half 2016	Second half 2015	First half 2015
	$m	$m	$m
Revenue
Oil	6.2	7.3	7.3
Gas	27.9	34.5	34.2
Liquefied petroleum gas	1.3	2.4	2.2
Other	-	-	0.7
	35.4	44.2	44.4
Cost of sales
Exceptional item - production based taxes	-	(10.9)	-
Exceptional item - provision for impairment of oil and gas assets	-	(51.1)	-
Other operating costs	(9.7)	(12.3)	(12.1)
Depreciation, depletion and amortisation - oil and gas assets	(10.7)	(13.5)	(12.6)
Other production based taxes	(8.6)	(5.4)	(20.8)
Total cost of sales	(29.0)	(93.2)	(45.5)
Gross profit/(loss) before exceptional items	6.4	13.0	(1.1)
Gross profit/(loss) after exceptional items	6.4	(49.0)	(1.1)
Operating expenses
Exceptional item - legal costs	-	(3.0)	-
Exceptional item - remuneration and severance costs	(3.1)	-	-
Administrative expenses	(9.6)	(10.9)	(6.6)
Gain/(loss) on foreign exchange	0.5	(5.4)	0.5
Loss from operations before exceptional items	(2.8)	(3.4)	(7.3)
Loss from operations after exceptional items	(5.8)	(68.3)	(7.3)

 

Earnings	First half 2016	Second half 2015	First half 2015
Net loss ($m)	(10.1)	(67.7)	(13.8)
Net loss before exceptional items ($m)	(7.0)	(12.0)	(13.8)
Basic weighted average number of shares in issue (m)	172	172	172
Loss per share before exceptional items (basic, cents)	(4.09)	(6.96)	(8.01)
Loss per share after exceptional items (basic, cents)	(5.86)	(39.31)	(8.01)
Pre-exceptional earnings before interest, corporation tax, depreciation and amortisation1 ($m)	8.4	10.8	6.1
Realisations	First half 2016	Second half 2015	First half 2015
Oil (per bbl)	$39.92	$47.49	$49.87
Gas (per Mcf)	$2.96	$3.97	$4.46
LPG (per tonne)	$254	$437	$448
Cost of production ($/boe)	First half 2016	Second half 2015	First half 2015
Production costs (excluding exceptional item)	$5.18	$7.17	$7.75
Depreciation, depletion and amortisation	$5.67	$7.78	$8.11
Production based taxes	$4.57	$3.15	$13.36
Cash flow	First half 2016	Second half 2015	First half 2015
Cash generated from operations ($m)	7.8	9.3	3.5
Operating cash flow per share (cents)	4.5	5.4	2.0
Statement of Financial Position	First half 2016	Second half 2015	First half 2015
Total cash2 ($m)	18.6	26.3	22.4
Borrowings ($m)	23.8	34.4	32.8
Net debt3 ($m)	(5.2)	(8.1)	(10.4)
Net debt to equity (%)	(2.9)	(4.6)	(3.8)
Return on average capital employed4 (%)	(11.4)	(25.8)	(10.0)
Increase in property, plant and equipment/intangible assets ($m)
- Ukraine	1.5	1.1	1.7
- Russia	0.6	2.9	2.3
- Other	0.1	0.5	0.2
Total	2.2	4.5	4.2

 

¹Pre-exceptional earnings before interest, tax, depreciation and amortisation ('EBITDA') is a non-IFRS measure and calculated using loss from operations of $5.8m (2015: $7.3m) and adding back depreciation, depletion and amortisation and exceptional items of $14.2m (2015: $13.4m). EBITDA is an indicator of the Group's ability to generate operating cash flow that can fund its working capital needs, service debt obligations and fund capital expenditures.

²Total cash is Cash and cash equivalents plus Restricted Cash.

³Net cash/(debt) is Total cash less Borrowings.

⁴ Return on average capital employed is the annualised profit/loss for the period divided by average capital employed.

 

Financial Review

Results for the period

The Group recorded a loss for the year of $10.1m (after exceptional charges of $3.1m, mainly relating to the replacement of the Board in January 2016) which is significantly lower than the loss of $13.8m recorded for the same period last year.  The Company's financial performance for the first half of 2016 has been impacted by the decline in oil and gas prices and the further deterioration of local currencies where the Group operates.

 

Revenue

Despite the 21% production gains across the Group, the significantly lower commodity prices and the weakening of local currencies resulted in a 20.3% fall in half-year revenues to $35.4m (2015: $44.4m).

 

Group revenues	2016 $m	2015 $m	Change $m	% Change
Ukraine	25.6	36.7	(11.1)	(30.2)
Russia	9.7	7.7	2.0	26.0
Total	35.4	44.4	(9.0)	(20.3)

 

 

Realisations	2016	2015	% Change
Ukraine
Gas ($/Mcf)	5.77	8.25	(30.1)
Oil ($/bbl)	39.92	51.06	(21.8)
LPG ($/tonne)	254	448	(43.3)
Russia
Gas ($/Mcf)	1.47	1.68	(12.5)
Group
Gas ($/Mcf)	2.96	4.46	(33.6)
Oil ($/bbl)	39.92	49.87	(20.0)
LPG ($/tonne)	254	448	(43.3)

 

 

Average exchange rates	2016	2015	Change	% Change
Russia (RUB/$)	71.32	58.38	(12.9)	(22.1)
Ukraine (UAH/$)	25.65	21.27	(4.38)	(20.6)

 

Ukrainian revenues

Gas sales volumes in Ukraine were only 1.3% lower at 3,703 boepd (2015: 3,752 boepd) as a result of slightly reduced gas production to 3,209 boepd (2015: 3,336 boepd), despite the suspension of all drilling activity in Ukraine. The natural decline in production was efficiently managed by well-intervention treatments. 

 

Whilst the gas price decreased by 16% from an average of 6,218 UAH per Mcm in 2015 to 5,208 UAH per Mcm in 2016, US Dollar gas realisations in Ukraine declined by 30.1% from $8.25/Mcf to $5.77/Mcf in part due to the 21% devaluation of the Hryvnia. Before the introduction of a new law affecting the Ukrainian gas market on 1 October 2015, the state regulator made periodic adjustments for Hryvnia/$ exchange rate fluctuations which impacted gas realisations. From 1 October 2015, these periodic adjustments ceased and gas prices have followed market trends. The remaining decline in realisations is explained by excessive quantities of imported gas from Europe which has depressed prices, large quantities of locally produced gas accumulated during 2016 and generally reduced demand from industrial customers.

 

 

Ukrainian revenues	2016 $m	2015 $m	Change $m	% Change
Gas	18.4	26.8	(8.4)	(31.3)
Oil	5.9	7.0	(1.1)	(15.7)
Liquefied Petroleum Gas ('LPG')	1.3	2.2	(0.9)	(40.9)
Other	-	0.7	(0.7)	N/A
Total	25.6	36.7	(11.1)	(30.2)

 

Ukrainian revenues bridge

 

To see a chart illustrating this please download release from JKX website

 

As the revenue bridge chart demonstrates, the single largest factor affecting revenues from our Ukrainian business was the devaluation of the Hryvnia. The increase in oil production was particularly pronounced due to a successful workover of well IG-132, which has high oil content and insignificant gas content. However, oil realisations reduced from $51.06/bbl in 2015 to $39.92/bbl in 2016 (a fall of 22%) due to the weakening of Brent prices from an average of $57.80/bbl during the 1H 2015 to $41.21/bbl during the 1H 2016 (a fall of 29%).

 

Russia revenues

Russian gas sales made up 56% of the Group's volumes sold (2015: 52%). However, this increased proportion of lower-priced Russian gas, in addition to the weakening of the Ukrainian Hryvnia and Russian Rouble against the US Dollar (when compared with the prior period), resulted in an overall reduction in Group gas realisations of  33.6% to $2.96/Mcf (2015: $4.46/Mcf).

 

Gas production in Russia was higher by 40% to 6,256 boepd (2015: 4,470 boepd) due to well-27 coming on line in late 2015. However this was not sufficient to compensate for price reductions. Gas prices in Russia dropped by 14% to $51/Mcm (2015: $59/Mcm) entirely due to an 18% devaluation of the Russian Rouble partly compensated by a 7.5% price increase in July 2015. 

 

Despite an increase in the regulated maximum industrial prices of 1.95% on 1 July 2016, our Russian subsidiary Yuzhgazenergie LLC ('YGE') received a request from its sole gas customer for a 14% discount on all of their gas purchases due to the poor prevailing economic environment in Russia. Following negotiation, YGE has agreed a temporary 9.5% reduction to the gas sales price from 1 July 2016, in order to maintain cash flow in the short term. In addition, alternative customers, including industrial end-users, have been approached in an attempt to secure higher prices and to broaden the customer base. 

 

Loss from operations 

Loss from operations before exceptional charges for the period was $2.8m (2015: loss $7.3m) representing a $4.5m improvement. This was the result of a decrease of $16.0m in cost of sales compensating for a $9.0m decrease in Group revenues and a $2.5m increase in the Group's administrative expenses and foreign exchange effects.    

 

Cost of sales

The $16.5m decrease in cost of sales (before exceptional charges), to $29.0m (2014: $45.5m), comprises the following savings:

·      Russian operating costs of $0.4m (a decrease of 6.9% from 2015)

·      Ukrainian operating costs of $0.6m (a decrease of 11.9% from 2015)

·      a reduction in the depreciation, depletion and amortisation ('DD&A') charge of $1.9m

·      production based taxes lower by $12.2m, predominantly related to Ukraine

·      a decrease in Rest of World costs of $1.4m.

 

The decrease in Russian operating costs of $0.4m is largely due to the Rouble devaluation from an average of RR58.38/$ to an average of RR71.32/$ reduced the US Dollar reported cost base for Russia throughout the year. Russian property tax charges have decreased by approximately $0.3m to $0.4m (2015: $0.7m) due to the reduced value of the Russian assets subject to property tax. We incurred one-off rig standby costs of $0.5m during the period.

 

Ukrainian operating costs decreased by $0.6m, again mainly due to the effects of Hryvnia devaluation from an average of UAH21.27/$ to an average of UAH25.65/$ (a depreciation of 21%) partly offset by an increase in many local salaries of up to 50% in January 2016 after two years of no pay rises within a high-inflation environment. We have completed a review of staffing requirements in Ukraine and have commenced some reductions in many technical departments for which the financial benefits will be felt in the second half of 2016.

 

Operating costs in Rest of World decreased by $1.4m mainly due to staff reductions in technical team in London and a reduced allocation of administrative staff costs to operating activities (see below).

 

The DD&A charge reduced by $1.9m, largely as a result of a lower asset carrying values resulting from impairments recognised in Ukraine. For the purposes of testing for impairment of the Group's non-current assets in 2016, the Company has taken account of developments since the tests for impairment at the 2015 year end and no impairment triggers were noted.  

 

Production based taxes decreased by $12.2m, which are considered further below. 

 

Exceptional charges

Exceptional charges of $3.1million comprised the following:

·      $2.5 million of severance costs and additional remuneration which the previous board approved and paid prior to the General Meeting in January 2016; 

·      $0.5 million of professional services incurred in relation to the General Meeting and the replacement of the Board on 28 January 2016;

·      $0.1 million severance costs incurred as a result of staff reduction at the Group's London headquarters.

There were no exceptional items in 1H 2015.

 

Administrative expenses

Excluding exceptional costs of $3.1 million explained above, administrative expenses have increased by $3.0m to $9.6m (2015: $6.6m) mainly due to:

·      An increase in legal and professional fees of $1.7 million

- An increase in arbitration legal fees of $1.0m is largely due to the timing of services: most of the work for the Hague arbitration took place in the 1H 2016. On annual run-rate basis we expect lower legal fees compared with 2015. In the 1H2015 we incurred the legal fees relating to the Stockholm arbitration comprising legal fees of $0.9m and court of arbitration fees of $0.7m. In 1H2016 we incurred legal fees associated with the Hague arbitration comprising legal fees of $2.3m and court of arbitration fees of $0.3m.

- Legal fees of $0.5m were incurred in connection with the restrictions imposed on the exercise of voting and other rights of two shareholders, Eclairs Group Limited ('Eclairs') and Glengary Overseas Limited ('Glengary'), in January 2016;

- Legal fees of $0.5m related to the court cases in Ukraine in respect of 2007, 2010 and 2015 rental fees;

- On an annual run-rate basis we expect lower legal fees going forward as compared with 2015 and 2016;

- Professional services of $0.2m in respect of the updating of the Field Development Plans, compensated by savings of $0.5m in professional fees due to greater scrutiny over the hiring of new advisors.

·      An increase in other costs of $1.3 million mainly due to a reduced allocation of administrative staff costs to operating activities (the reverse side of the $1.4 million decrease in operating costs noted above).

We committed ourselves to perform a detailed review and eliminate unnecessary expense at the London headquarters. We continue to identify cost efficiency possibilities and a number of steps have been implemented since appointment of the new Board to significantly reduce the costs of the Company's London headquarters. Head office headcount has been reduced by 45%. Benefits resulting from these reductions will be more clearly seen when we report on 2016 full year results. We estimate that the annual run-rate for London staff cost savings will be approximately $1.9m due to more appropriate Board composition and staff reductions.

Net finance charges

Finance costs remained constant at $2.4m (2015: $2.4m) comprising convertible bond interest.

 

The $1.3m charge (2015: $4.0m) of the fair value movement on the derivative liability represents the change in fair value of the conversion option associated with the convertible bond.

 

Finance income of $0.9m comprises income from bank deposits of $0.4m (2015: $0.6m) and a gain on the repurchase of convertible bonds of $0.5m.

 

Taxation

The total tax charge for the period was $1.5m (2015: $0.8m) comprising a current tax charge of $1.4m (2015: $2.2m) and a deferred tax charge of $0.1m (2015: credit $1.4m). 

 

The fall in current tax charge to $1.4m reflects lower profitability in Ukraine. In Ukraine, the corporate tax rate for 2015 and 2016 was 18%.

Production taxes

Production based tax expense for the period was $8.6m (2015: $20.8m), representing a 58.7% decrease which has been recognised in cost of sales.

 

As part of the JKX's international arbitration against Ukraine in respect of overpaid production taxes (see Note 14 to the financial information), the Group applied for interim measures under the bilateral investment treaties that exist between Ukraine and the United Kingdom and the Netherlands, respectively, to reduce the rate of production tax applicable to our Ukrainian subsidiary, Poltava Petroleum Company ('PPC'). On 23 July 2015, an international arbitration tribunal issued an Interim Award requiring the Government of Ukraine to limit the collection of rental fees on gas produced by PPC, to a rate of 28%. The Interim Award, which is binding on Ukraine as a matter of international law, will remain in effect until the final ruling which will be issued following the arbitration hearing which took place in the beginning of July 2016. In December 2015 the Ukrainian Government passed legislation to reduce the gas production tax in Ukraine from 55% to 29% with effect from 1 January 2016. Therefore, in the period from January to June 2015 production taxes were recorded at 55% rate but for the full year 2015 the average rate will be 28% as PPC have re-submitted their tax returns for 2015 using 28%. From January 2016, the rate of 29% is used for calculating production taxes. 

 

In Russia, the gas and condensate mineral extraction tax ('MET') rate applicable in 1H 2016 was 350 Roubles/Mcm (1H 2015: 292 Roubles/Mcm). The formula for MET is based on gas prices, gas production as a share of total hydrocarbon output and complexity of gas reservoirs (depletion rates, depth of the producing horizons and geographical location of producing fields). Our Russian subsidiary, YGE, is entitled to a 50% discount based on the depth of our gas reservoirs.

 

In addition to production taxes, YGE is subject to a 2.2% property tax which is based on the net book value of its Russian assets as calculated for property tax purposes.  This amounted to $0.4m in 2016 (2015: $0.7m) and is included in other cost of sales.

 

Loss for the period

Loss for the period before exceptional charges was $7.0m (2015: $13.8m). Basic loss per share before exceptional items was 4.09 cents (2015: 8.01 cents).  Basic loss per share after exceptional items was 5.86 cents (2015: 8.01 cents). 

 

Cash flows

Cash generated from operations was $7.8m (2015: $3.5m). The increase is as a result of the $0.5m reduction in loss from operations for the reasons described above adjusted for a $2.2m decrease in non-cash DD&A and other charges for the year and a $5.9m cash inflow due to changes in working capital.

 

Income tax paid in the period decreased to $0.01m (2015: $0.6m), due to lower profits earned by our Ukrainian subsidiary. Interest paid during the period comprised $1.4m (2015: $1.6m), in respect of financing charges on the convertible bond.  

 

Following a full review of operations and capital projects by the new Board and in anticipation of the Field Development Plan, group capital spend for the first half-year remained low at $2.2m (2015: $3.6m).

 

Net cash outflow from financing activities in the period mainly relates to the $10.9m repayment of the bond in February 2016 in addition to $1.7m used to repurchase 11 convertible bonds.  

 

No dividends were paid to shareholders in the period (2015: nil).

 

Cash and cash equivalents

The resultant decrease in cash and cash equivalents in the period before adjusting for foreign exchange effects was $7.6m (2015: $4.2m). Cash movements explained above allowed liquidity to be maintained with only a small reduction in period-end cash balances at $18.4m (31 December 2015: $25.9m).  This is despite the exceptional Board replacement costs of $3.1m, a Bond Put and interest payment of $12.3m, bond repurchases of $1.7m (explained below) and $0.7million of legal fees reimbursed to Eclairs and Glengary and their nominees as a result of the judgement of the Supreme Court.  

 

Liquidity

The Group employs a number of financial instruments to manage the liquidity associated with the Group's operations. These include cash and cash equivalents, together with receivables and payables that arise directly from our operations.

 

Separate from these, the main financial instrument of the Group is the $40 million guaranteed unsubordinated convertible bond which was placed in Q1 2013 with institutional investors which matures in 2018.  The bonds have an annual coupon of 8 per cent per annum payable semi-annually in arrears. The bonds terms and conditions contain an annual put option each February until maturity. Bonds with a principal amount of $10m were redeemed on 19 February 2016 in addition to an early redemption premium of $0.9m, in accordance with the terms and conditions of the bond. This followed redemption of $4m in February 2015, together with an early redemption premium of $0.2m. In June 2016 bonds with a par value of $2.2m were repurchased by the Company and subsequently cancelled. In addition to being able to acquire these bonds at a discount, the Company has also been able to avoid associated interest and redemption costs amounting to $0.4m that would have been incurred over the next 8 months. As a result of this transaction, the liability facing the Company in February 2017 has fallen from $30.1m to $27.6m. Further information on the terms and conditions of the bonds is included in Notes 8 and 9 to the financial information. 

 

Outlook

Liquidity remains a key risk for the Group, as noted below in the principal risks section below. As detailed in Note 2 to the financial information, there remain a number of material uncertainties that may cast significant doubt about the Group's ability to continue as a going concern.

 

The financial position of the Company continues to suffer from the adverse economic conditions in Russia and Ukraine and the generally low oil and gas prices affecting similar companies around the world. 

 

The new Board, which was appointed on 28 January 2016, has assessed all possible options to optimise operations and financial returns and reduce costs. We have identified non-core costs that have been removed and we have re-allocated resources toward our Ukrainian business where we see the most upside for shareholders.

 

We have seen positive movements in the Ukrainian investment climate, namely the reduction of gas production tax rates to 29% and the lifting of restrictions on dividends payments for 2014 and 2015. The Company is in the process of restarting repatriation of dividends for these periods. 

 

We committed ourselves to resolve the inherited legal battles and most of them are now nearing completion. We also started building more positive relationships with our stakeholders in Ukraine. The Company is firmly committed to Ukraine having been present there for more than 20 years with a highly experienced and committed workforce and we will endeavour to increase the cash generation capabilities of our resources in the country.

 

The operations in Russia are cash flow positive in 2016 and we will utilise these cash resources for allocation throughout the Group. The new Board is evaluating further monetisation options of the Russian assets including additional cost efficiencies to increase cash flow.

 

When we announced our 2015 annual results, we said that our priority would be the restoration shareholders value in JKX. We continue working towards this goal. We focused on reducing costs and implementing a robust capital allocation policy which will ensure maximised cash flows from our assets and improvements to the Company's profitability and liquidity. We will resume our focus on investing in oil and gas projects in Ukraine which remains our main asset.  

 

Risks and uncertainties

The Group continuously monitors the major strategic, operational, financial and external risks it faces and determines the appropriate course of action to manage these risks. The key risks and uncertainties which may impact the Group's performance have not changed materially from those stated on pages 44 to 53 of the Group's 2015 Annual Report.

 

Financial risk management

The main financial risk faced by the Group relate to the availability of funds to meet business needs and debt servicing requirements (liquidity risk). The significant factors which are outside the control of management and which could adversely impact cash flows, profits and liquidity of the Group remain the international oil and gas prices and the risks associated with operating in Ukraine as the near term economic outlook for the country remains uncertain.

 

These are the critical factors to consider when addressing the issue of whether the Group is a going concern (see Note 2).

 

The principal risks and uncertainties for the remaining six months of 2016 are identified as being:

 

Liquidity

All of the Group's revenues and cash flow arise from its oil, gas, condensate and LPG sales in Ukraine and Russia. Changes in commodity prices have a direct effect on the Group's liquidity position (see Commodity prices risk below).

 

In addition, the Board in place in 2015 suspended all capital investment in Ukraine as a result of the actions of the Ukrainian Government to restrict gas sales, increase production taxes and implement currency restrictions. Suspending investment in appraisal and development activities in Ukraine has had a significant adverse impact on the Group's current and future oil and gas production and therefore also on the Group's sales, profits, cash flow, liquidity and cash balances.

 

The Group has a significant obligation of up to $27.6 million which may become payable pursuant to its $40 million Convertible Bond in February 2017 if all of the Bondholders exercise their put option at that time (see Notes 8 and 9 to the condensed consolidated interim financial information).

 

However the Directors believe that there is a reasonable basis to mitigate the effects of such eventualities through a combination of operational and cash management measures and bond restructuring options which are currently being assessed.

 

Tax legislation

The Company's Ukrainian subsidiary, Poltava Petroleum Company ('PPC') has recognised a provision of $10.5 million and has a contingent liability of approximately $24 million in relation to court proceedings over the amount of production taxes ('Rental Fees') paid in Ukraine for certain periods since 2010 (see Note 14 to the condensed consolidated interim financial information). The Board believes that these claims are without merit under Ukrainian law and will continue to contest them vigorously.

 

In addition, the Company continues to pursue a final award under its arbitration claim against Ukraine, for the overpayment of $180 million of Rental Fees plus damages to the business (see Note 14 to the condensed consolidated interim financial information). The claim was heard by the international arbitration tribunal in July 2016 and the Board expect the tribunal's decision by the end of 2016.

 

Commodity prices - Russia and Ukraine

Our policy is not to hedge commodity price exposure on oil, gas, LPG or condensate and therefore any change in prices will have a direct effect on the Group's trading results. We are exposed to international oil and gas price movements which can be affected by political developments in Russia and Ukraine. In Russia the government sets the gas prices at which the Company's Russian subsidiary, Yuzhgazenergie LLC ('YGE') can sell its gas. 

 

Ukraine has the ability to purchase gas from Europe, which has more closely aligned Ukrainian gas prices with those across Europe, which have almost halved since the beginning of 2015. A prolonged period of low gas prices in Ukraine would impact the Group's liquidity.

 

In Russia, from 1 July 2016 the regulated maximum industrial price has increased by 1.95% however, following a renegotiation of its gas sales contract, YGE has agreed a temporary reduction of 9.5% to the price at which it sells its gas to its sole buyer. The Company continues to seek to engage other buyers of its gas in southern Russia to improve its gas realisations.

 

Health, Safety and Environment
As we continue with the development and monetisation of our oil and gas reserves, we are exposed to a wide range of significant health, safety, security and environmental risks influenced by the geographic range, operational diversity and technical complexity of our exploration and production activities.

There are risks of technical failure, accidents, natural disasters and other adverse conditions where we operate, which could lead to injury, loss of life, damage to the environment, loss of containment of hydrocarbons and other hazardous material, as well as the risk of fires and explosions.

 

Statement of Directors' responsibilities

 

The Directors confirm that, to the best of their knowledge, this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7R and 4.2.8R, namely:

 

·      an indication of important events that have occurred in the first six months of 2016 and their impact on the condensed set of financial information, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

 

·      material related party transactions in the first six months of 2016 and any material changes in related party transactions described in the last Annual Report.

 

A list of current Directors is maintained on the JKX Oil & Gas plc website www.jkx.co.uk.

 

On behalf of the Board

 

 

 

 

Russell Hoare                                                               

Chief Financial Officer

 

28 July 2016

 

Independent review report to JKX Oil & Gas plc

Report on the condensed consolidated interim financial information

We have reviewed JKX Oil & Gas plc's condensed consolidated interim financial information (the "interim financial statements") in the half-yearly report of JKX Oil & Gas plc for the 6 month period ended 30 June 2016. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Without modifying our conclusion on the interim financial statements, we would like to draw your attention to the disclosure made in note 2 to the condensed consolidated interim financial information concerning the Group's ability to continue as a going concern. A number of potential conditions exist that may impact this assumption: (i) gas and/or oil net realisations remain at current levels for the foreseeable future or deteriorate materially, (ii) the full $27.6 million obligation pursuant to the $40 million Convertible Bond becomes payable in February 2017, and (iii) the Group becomes liable for additional Rental Fees in Ukraine as a result of unfavourable outcomes in one or more of the ongoing court proceedings. These conditions indicate the existence of material uncertainties which may cast significant doubt about the group's ability to continue as a going concern. The interim financial information does not include the adjustments that would result if the group was unable to continue as a going concern.

The interim financial statements comprise:

the Condensed Consolidated Statement of Financial Position as at 30 June 2016;

the Condensed Consolidated Income Statement and Condensed Consolidated Statement of Comprehensive Income for the period then ended;

the Condensed Consolidated Statement of Cash Flows for the period then ended;

the Condensed Consolidated Statement of Changes in Equity (unaudited) for the period then ended; and

the explanatory notes to the interim financial statements.

The interim financial statements included in the half-yearly report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The half-yearly report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the half-yearly report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

28 July 2016

a)    The maintenance and integrity of the JKX Oil & Gas plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

b)    Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Condensed Consolidated Income Statement

	Note	Six months to 30 June 2016 (unaudited)	Six months to 30 June 2015 (unaudited)	Year to 31 December 2015 (audited)
		$000	$000	$000
Revenue	4	35,361	44,380	88,535
Cost of sales
Exceptional item -production based taxes	12	-	-	(10,854)
Exceptional item - provision for impairment of  oil and gas assets		-	-	(51,055)
Production based taxes		(8,595)	(20,826)	(26,255)
Depreciation, depletion and amortisation		(10,669)	(12,632)	(26,068)
Other cost of sales		(9,747)	(12,086)	(24,449)
Total cost of sales		(29,011)	(45,544)	(138,681)
Gross profit/(loss)		6,350	(1,164)	(50,146)
Exceptional item- legal costs	13	-	-	(2,988)
Exceptional item- remuneration and severance costs	13	(3,055)	-	-
Administrative expenses		(9,566)	(6,572)	(17,525)
Gain/(loss) on foreign exchange		451	471	(4,919)
Loss from operations before exceptional items		(2,765)	(7,265)	(10,681)
Loss from operations after exceptional items		(5,820)	(7,265)	(75,578)
Finance income		898	644	1,289
Finance cost		(2,376)	(2,400)	(6,500)
Fair value movement on derivative liability	9	(1,289)	(3,969)	(1,921)
Loss before tax		(8,587)	(12,990)	(82,710)
Taxation - current		(1,385)	(2,203)	(4,827)
Taxation - deferred
- before the exceptional items		(117)	1,406	(3,132)
- on the exceptional items		-	-	9,206
Total taxation		(1,502)	(797)	1,247
Loss for the period/year attributable to equity shareholders of the parent company		(10,089)	(13,787)	(81,463)
Basic loss per 10p ordinary share (in cents)
-before exceptional items	15	(4.09)	(8.01)	(14.97)
-after exceptional items		(5.86)	(8.01)	(47.32)
Diluted loss per 10p ordinary share (in cents)
-before exceptional items	15	(4.09)	(8.01)	(14.97)
-after exceptional items		(5.86)	(8.01)	(47.32)

 

Condensed Consolidated Statement of Comprehensive Income

		Six months to 30 June 2016 (unaudited))	Six months to 30 June 2015 (unaudited)	Year to 31 December 2015 (audited)
		$'000	$'000	$'000
Loss for the period/year		(10,089)	(13,787)	(81,463)
Comprehensive income to be reclassified to loss or profit in subsequent periods when specific conditions are met
Currency translation differences		14,128	2,985	(26,277)
Other comprehensive income/(loss) for the year, net of tax		14,128	2,985	(26,277)
Total comprehensive income/(loss) for the period/year attributable to equity shareholders of the parent company		4,039	(10,802)	(107,740)

 

Condensed Consolidated Statement of Financial Position

 

	Note	As at 30 June 2016 (unaudited)	As at 30 June 2015 (unaudited)	As at 31 December 2015 (audited)
		$000	$000	$000
Assets
Non-current assets
Property, plant and equipment	5	196,635	284,737	194,649
Intangible assets	5	7,918	7,436	7,812
Other receivable	6	3,471	4,241	3,534
Deferred tax assets		15,876	19,302	15,603
		223,900	315,716	221,598
Current assets
Inventories		5,075	4,512	3,689
Trade and other receivables		6,761	9,312	11,695
Restricted cash	7	259	319	312
Cash and cash equivalents	7	18,365	22,091	25,943
		30,460	36,234	41,639
Total assets		254,360	351,950	263,237
Liabilities
Current liabilities
Trade and other payables		(17,288)	(13,637)	(18,977)
Borrowings	8	(23,816)	(10,068)	(10,856)
Provisions	12	(10,481)	-	(10,854)
Derivatives		(1,995)	-	-
		(53,580)	(23,705)	(40,687)
Non-current liabilities
Provisions	12	(4,310)	(4,008)	(4,135)
Other payable		(3,471)	(4,241)	(3,534)
Borrowings	8	-	(22,719)	(23,494)
Derivatives	9	-	(4,219)	(2,171)
Deferred tax liabilities		(14,671)	(22,204)	(14,950)
		(22,452)	(57,391)	(48,284)
Total liabilities		(76,032)	(81,096)	(88,971)
Net assets		178,328	270,854	174,266
Equity
Share capital	11	26,666	26,666	26,666
Share premium		97,476	97,476	97,476
Other reserves		(165,417)	(150,283)	(179,545)
Retained earnings		219,603	296,995	229,669
Total equity		178,328	270,854	174,266