Annual Report & Accounts 2013

 

REPORT OF THE DIRECTORS

The Directors present their annual report together with the audited financial statements of Petroceltic International plc (the “Company”) and its subsidiaries (collectively “the Group”), for the year ended 31 December 2013.

Directors+-

The following are the Directors of Petroceltic International plc – all of whom were in office for the full year except as stated:

Robert Adair, Non-executive Chairman

Brian O’Cathain, Chief Executive Officer.

Tom Hickey, Chief Financial Officer

David Thomas, Chief Operating Officer

James Agnew, Senior Independent Director

Hugh McCutcheon, Non-executive Director and Deputy Chairman

Rob Arnott, Non-executive Director

Alan Parsley, Non-executive Director

Ian Craig, Non-executive Director (appointed 16 September 2013)

Con Casey, Non-executive Director (resigned 7 June 2013)


Please refer to this page for biographical details of the Directors.

Directors’ responsibility statement+-

The Directors are responsible for preparing the Annual Report and the Group and Company financial statements, in accordance with applicable Irish law and regulations.

Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. As required by AIM and ESM rules and as permitted by company law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the EU (‘EU IFRS’) and have elected to prepare the Company financial statements in accordance with EU IFRS, as applied in accordance with the provisions of the Irish Companies Acts, 1963 to 2013 (the ‘Companies Acts’).

The Group and Company financial statements are required by law and IFRS to present the financial position, performance and prospects of the Group. The Companies Acts provide, in relation to such financial statements, that references in the relevant part of the Acts to financial statements giving a true and fair view are references to their achieving a fair presentation.

In preparing each of the Group and Company financial statements, the Directors are required to:

  • select suitable accounting policies and then apply them consistently;
  • make judgements and estimates that are reasonable and prudent; and
  • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

Under applicable law, the Directors are also responsible for preparing a Directors’ Report. The Directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that its financial statements comply with the Companies Acts. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and Company and to prevent and detect fraud and other irregularities.

The Directors have decided to voluntarily prepare a Corporate Governance Statement although the Company is not required to comply with the UK Corporate Governance Code which is applicable to companies with full listings on the main markets of the Irish and London Stock Exchanges. The Corporate Governance Statement is set out on this page, which forms part of this Report of the Directors. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Group activities and results+-

The Group is involved in oil and gas exploration and production and it has a portfolio of producing and high impact development and exploration assets. A detailed business review is included in the Chairman’s Statement, the Chief Executive’s Review and the Financial Review.

A loss of $18.8m was recorded for the year (2012: loss of $20m). Net assets of the Group at 31 December 2013 amounted to $510.9m (2012: $524.7m). No dividends are proposed (2012: no dividend).

Details of the state of the Group’s affairs, the development of its various activities, key performance indicators during the year and details of the Group’s plans for 2013 are provided here, here, here and here.

The Group’s policy in relation to managing financial and related risks is set out in note 23 of the financial statements and on this page of the Corporate Governance Statement.

Share consolidation +-

At the Annual General Meeting of the Company held on 30 May 2013, shareholders approved, inter alia, a consolidation of the Share Capital of the Company, with one new share issued in replacement of every 25 old shares. The share consolidation became effective on 10 June 2013.

Going concern+-

The Directors have considered carefully the financial position of the Group and, in that context, have reviewed cash flow forecasts for the period to 30 June 2015. These forecasts show that a combination of cash resources on hand, committed availability under Senior Bank facilities and the proceeds of portfolio management and equity fundraising will enable the Company to discharge its debts as they fall due and to continue to develop its business in accordance with its strategy.

On this basis, the Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis. A further summary of funding and liquidity, including the principal assumptions to the cash flow forecasts, is included in the Statement of Accounting Policies (note 1 to the financial statements).

Future developments+-

A review of future developments of the business is included in the Chairman’s Statement and Chief Executive’s Review this page.

Update on legal proceedings+-

In July 2013, the Group issued legal proceedings in the Irish High Court against two former consultants to the Group, Mr Seghir Maza and Mr Samir Abdelly (“the Consultants”), and against a Tunisian company owned and controlled by Mr Abdelly (“AAIC”), seeking to set aside a number of consultancy agreements entered into in 2004 and 2005 with respect to the Group’s North African business activities. The proceedings also seek the return of payments that were made to the Consultants under those agreements during 2005 and 2006.

Petroceltic’s action followed the receipt of correspondence during 2013 threatening legal proceedings against the Group on behalf of one of the consultants seeking payment of sums totalling $3.4m pursuant to these agreements. The agreements contain provisions under which the parties could make claims for further material payments from the Group.

In November 2013, the High Court of Ireland granted the Company judgment, in default of appearance, against Mr Maza and granted all reliefs sought by the Company in the proceedings, including judgment in the amount of $4.7m, being amounts previously paid under one of the consultancy agreements, plus interest from the date of judgment. The proceedings against Mr Abdelly and AAIC are on-going and the ultimate outcome of these proceedings, by their nature, remain subject to inherent uncertainty.

Principal risks and uncertainties+-

The Group has a risk management structure in place which is designed to identify, manage and mitigate business risk, details of which are as set out in the Corporate Governance Statement. Risk assessment and evaluation is an essential part of the Group’s internal control system.

Share price+-

The share price movement in the year ranged from a low of Stg133.0p to a high of Stg196.5p (2012: Stg140.0p* to Stg247.5p*). The share price at year end was 175.0p (2012: Stg175.0p*).

* The actual amount of these share prices has been multiplied by 25 to reflect the effect of the share consolidation completed on 10 June 2013.

 


Directors’ interests+-

The beneficial interests of the Directors and their families who held office at the date of approval of the Annual Report and at 31 December 2013 in the share capital of the Company are as follows:

15 May 2014

31 Dec 2013

31 Dec 2012*+

 

 

 

 

Robert Adair

41,136,078

41,136,078

41,136,078

Rob Arnott

-

-

-

Brian O’Cathain

171,073

171,073

171,073

David Thomas

125,780

125,780

125,780

Tom Hickey

249,314

249,314

249,314

Ian Craig

-

-

-

Hugh McCutcheon

58,000

58,000

58,000

James Agnew

5,600

5,600

5,600

Alan Parsley

5,760

5,760

5,760

* Or date of appointment if later.

+ These shareholdings reflect the position after the 25 for 1 consolidation in June 2013.

 

The above shareholdings are exclusive of any additional shares to be purchased as part of the share placing to be announced on 16 May 2014.

The beneficial interest of Robert Adair at 15 May 2014 includes 40,445,802 ordinary shares held by Skye Investments Limited, a company in which he has a controlling interest.

All the above shareholdings are beneficially held. No Director or any member of their immediate families had an interest in any subsidiary.

Details of the share options held by the Directors are contained in the Directors’ Remuneration Report.

Significant shareholdings+-

The Company has been informed that as at 15 May 2014, the following shareholders own 3% or more of the issued share capital of the Company:

15 May 2014

31 Dec 2013

 

 

 

Robert Adair/Skye Investments Ltd

23.40%

23.44%

Worldview Capital Management SA

12.12%

5.07%

Caledonia Investments plc

3.47%

4.73%

Henderson Global Investors Ltd

4.06%

4.07%

Aberforth Partners LLP

3.89%

3.90%

Aviva plc & subsidiaries

3.15%

3.16%


The Directors are not aware of any other holding of 3% or more of the issued share capital of the Company.

Political and charitable donations+-

No political donations were made by the Group during the year (2012: nil). Charitable donations made by the Group during the year amounted to $262,000 (2012: $45,000).

Subsidiary undertakings+-

Details of principal subsidiary undertakings are given in note 24 to the financial statements.

Additional information+-

The rights and obligations attaching to the Company’s Ordinary Shares, in addition to those conferred on their holders by law, are set out in the Company’s Articles of Association, a copy of which can be obtained from the Company’s website, Companies Registration Office or by writing to the Company Secretary. The holders of Ordinary Shares are entitled to receive the Company’s Annual Report and Accounts, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights. The Company may amend its Articles of Association by special resolution at a general meeting.

Annual General Meeting+-

Your attention is drawn to the Notice of Meeting enclosed with this Annual Report which sets out the resolutions to be proposed at the forthcoming AGM.

Books and accounting records+-

The Directors are responsible for ensuring proper books and accounting records, as outlined in Section 202 of the Companies Act 1990, are kept by the Company. The Directors, through the use of appropriate procedures and systems and the employment of competent persons, have ensured that measures are in place to secure compliance with these requirements. These books and accounting records are maintained at 75 St. Stephen’s Green, Dublin 2.

Auditor+-

The auditors, KPMG, Chartered Accountants, will continue in office in accordance with Section 160(2) of the Companies Act, 1963.

On behalf of the Board
Tom Hickey Brian O’Cathain
Director Director
 
15 May 2014