TXO PLC

("TXO" or the "Company")

 

Preliminary Results for the Year ended 30 September 2012

 

TXO plc, the AIM-listed oil and gas investment company, is pleased to announce its results for the year ended 30 September 2012.  TXO has investments in two principal assets, Grand Bahama Group Ltd ("GBG") and more recently in Tasmanian Oil and Gas Ltd ("TOG"). GBG is developing a waste oil and hydrocarbon recovery facility at Freeport, Grand Bahama and TOG was established to fund and develop an oil and gas exploration licence in Tasmania, Australia.  TXO currently have a 23.64% holding in GBG, rising shortly to 30.2% following the exercise of an option, and a 43% holding in TOG, reducing to 25% upon completion of the JV arrangements.   Further details of the option and the JV arrangements can be found below.

 

Highlights:

 

·     GBG - site secured; licence agreed with Port Authority; distribution agreement with BP Castrol; Kentucky oil wells producing

 

·     Holding in GBG increased

 

·     TOG - SPV formed to exploit the Tasmanian opportunity

 

·     The loss on ordinary activities after taxation amounted to US$936,985 (2011: US$709,301), in line with forecasts

 

Highlights post year end:

 

·     GBG - Freeport construction work begun; contracts with shipping agents signed; trading commenced

 

·     TOG  - CPR completed

 

·     £1.043 million equity raising

 

 

Timothy Baldwin, Chairman of TXO Plc, commented:

 

"The year has been one of change.  The investment policy introduced towards the end of the last financial year is beginning to bear fruit. We have increased our holding in GBG, which has become operational, post year end, and established an SPV, TOG, to develop the potential asset in Tasmania.  In the current year we intend to progress both of these significant opportunities."

 

For further information please contact:

               

TXO Plc                  

Timothy Baldwin, Chairman                                                                               +44 (0) 207 508 4300

 

Fox-Davies Capital Limited

Simon Leathers / Daniel Fox-Davies / Richard Hail                                         +44 (0) 203 463 5000

               

Lothbury Financial Services                

Michael Padley / Chris Roberts                                                                          +44 (0) 203 440 7622

 

CHAIRMAN'S STATEMENT

 

The accounts represent the first full year of results; following the change of investing policy and the sale of the company's assets in Texas in 2011. The loss for the year of $872,224 reflects the Company's investment into projects that are not yet in profitability and it is the objective of the Board to achieve aggregate profitability in 2014.

    
TXO has continued to focus on its two principal investments Grand Bahama Group Ltd ("GBG") and more recently its investment in Tasmania Oil and Gas Ltd ("TOG"). We have also looked at opportunities in Africa but for the moment no further action is being pursued until financial resources permit.

 

Under the current investment policy, TXO has the mandate to invest in a wide range of hydrocarbon investment opportunities. The Board's strategy is to consider relatively distressed situations where the risks are warranted by substantial potential value upside. We then seek to mitigate the risks and look to play an active part where necessary or where requested in order to assist its investee companies at the operational and financial level.

 
To date the Company has taken minority stakes in its investee companies but this does not rule out taking majority control through further investment if it is in shareholders' interests. However, we are mindful of working within the constraints of the "AIM Rules for Companies" particularly bearing in mind our status as an Investing Company.

 
The Company has remained in cash funds throughout the period. During the year the Company raised circa $1.9m through equity and convertible loan notes. Post year end the Company raised additional capital from its convertible loan stock holders who also extended their repayment/conversion date from April 2013 to December 2013 and who received as compensation a reduction of the conversion price to 0.23p, the then prevailing share price.

 

In January 2013 the Company raised a further £1.04m in an equity placing, through its brokers Fox-Davies Capital, at 0.2p. This introduced a number of new institutional investors to the Company. Following the equity placing there has been a substantial increase in average daily number of shares traded with TXO with the 30 day average traded volume being c. 26.5 million at the date of signing the accounts. 

The funds raised in January 2013 will provide sufficient funding to support GBG in its initial start-up development in the Bahamas and helping the joint venture company TOG to achieve its next stage of development alongside our partners.

 

GRAND BAHAMA GROUP LIMITED

 

MORGAN OIL MARINE

 

TXO at the year-end increased its investment to 23.64% of GBG and has the option to take this to 43.3%. At the time of writing the Company is expecting to lift its shareholding to over 30% of GBG with the option to extend to 43.3% available until the end of 2013. 

GBG's priority is investment in the Bahamas and they have made significant progress since our Annual Report last year. The licence was obtained, the land lease agreed, the environmental impact study completed, contracts signed with major shipping agents, a barge and tug boat commissioned ready to collect waste oil, commercial operations commenced and the foundations and civil engineering for construction of the Hydrocarbon Recovery Plant is nearing completion. We expect the first phase of the Hydrocarbon Recovery Plant to be operational by mid-2013. 

 

MORGAN OIL USA

 

GBG have completed the overhaul programme and so we expect steady but sure increases in productivity over the coming months as the wells come back on line. The Morgan Oil USA business is profitable and has excellent reserves as evidenced by the recent Competent Persons Report. GBG wants to focus all its efforts on the Bahamas for the next six months and then subject to further investment being available, revisit the possibility of drilling some horizontal wells or taking some of the existing wells deeper.

 
TASMANIA OIL AND GAS LIMITED

 

As at the year-end TOG was a 100% owned by TXO. Post year end TOG established a joint venture agreement with Alpha Prospects plc, Hill Street Investments plc and Empire Energy to take on and continue with the Tasmania onshore exploration activities. TXO currently has a 43% interest in TOG. On completion of the joint venture arrangements TXO will have a 25% interest in TOG.

As part of the joint venture agreement; Empire will receive shares in TOG in exchange for the debenture over the licence EL 14/2009 held by its subsidiary Great South Land Minerals ("GSLM") (currently in administration). The loans to Empire will be extinguished as part of a restructuring process if the appeal against the revocation of licence extension by Mineral Resources Tasmania is successful, the winding-up order against GSLM is withdrawn and GSLM becomes a wholly owned subsidiary of TOG. The debenture has been assigned, a receiver is in place and a Deed of Company Arrangement ("DOCA") is being discussed.

Post year end TOG commissioned and received a Competent Persons Report ("CPR") on the licence area, the results of which the Board believe to be positive.  A summary of the CPR was announced on 29 January 2013 and the final report is available on our website.  The report is an important part of TOG and GSLM's preparations for a meeting with the Director of Mines in respect of its retention of the exploration licence, ahead of an appeal scheduled for late April 2013.  At this time TXO has limited its investment in TOG as the plan is for TOG to raise future funding in its own right following a successful outcome to the appeal process.

In addition TOG has secured 50% of any counterclaim award Empire receives in its case against Smartwin. We expect trial or settlement of this during 2013. TOG has $25,000 contracted exposure to this case.

 

Clarification with regards to TXO's holding in TOG

 

The announcements made on 23 January 2013, 29 January 2013 and 3 December 2012 referred to TXO having a 25% holding in TOG.  For the purposes of clarification TXO currently has a 43% equity interest in TOG, although on completion of the joint venture arrangements this interest will be diluted down to a 25% interest.  The completion of the JV arrangements will be the subject of further announcements.

 

BOARD

The Company strengthened its Board in October 2012 with the appointment of Christopher Foster as Non-executive Director. Christopher brings a wealth of management experience across a number of sectors and has also been a director of a number of listed companies. Collectively the board has in-depth experience that will aid in the development of our business.

 

OUTLOOK
The Company remains open to reviewing other opportunities for investment, subject to available funding. However, in the interim our focus is on supporting and progressing the activities of our current investments which provide significant opportunity for value growth.  GBG is believed to be a low-risk, cash-generative business and, subject to the appeal, TOG has the potential to provide TXO with exposure to a highly prospective asset.

 

Timothy Baldwin

12 February 2013

Executive Chairman

 

 

TXO PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2012

 

	Notes				Year ended 30 September 2012		Year ended 30 September 2011
Continuing operations					$		$
Administrative expenses					(906,638)		(465,601)
Operating loss					(906,638)		(465,601)
Finance costs	5				(189,499)		(4,405)
Finance income	4				159,152		7,915
Loss from continuing operations					(936,985)		(462,091)
Taxation on ordinary activities					-		1,710
Loss on continuing activities after taxation					(936,985)		(460,381)
Loss on discontinued operations					-		(248,920)
Loss for the financial year					(936,985)		(709,301)
Currency translation differences					64,763		(81,962)
Other comprehensive income					64,763		(81,962)
Total comprehensive income for the year					(872,222)		(791,263)
Total comprehensive income attributable to: Owners of the parent Non-controlling interests					(872,222) -   (872,222)		(791,263) -   (791,263)
Loss per share relating to continuing and total operations
Basic (cents)	6				(0.20)		(0.34)
Fully diluted (cents)	6				(0.20)		(0.34)

 

 

 

 

CONSOLIDATED BALANCE SHEET (Company No. 2398784)

As at 30 September 2012

									2012					2011
									$					$
Non-current assets
Intangible assets									107,818					-
Property, plant and equipment									-					-
Investments in associates									2,040,756					-
Investments									-					781,400
									2,148,574					781,400
Current assets
Trade and other receivables									211,624					67,716
Investments						1,560,613									677,699
Cash and cash equivalents									186,524					408,862
									1,958,761					1,154,277
Total assets									4,107,335					1,935,677
Equity
Shareholders Equity
Share capital									9,439,788					9,139,110
Share premium									12,610,381					11,232,267
Options and warrants reserve									1,166,237					963,442
Retained earnings									(21,213,491)					(20,341,269)
									2,002,915					993,550
Non-controlling interests									(23,309)					-
Total equity attributable to owners of the parent									1,979,606					993,550
Current liabilities
Trade and other payables									255,949					181,727
Current portion of long term borrowings									616,780					-
									872,729					181,727
Non-current liabilities
Long term borrowings							1,255,000					760,400
									1,255,000					760,400
Total liabilities									2,127,729					942,127
Total equity and liabilities									4,107,335					1,935,677

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2012

		2012		2011
		$		$
Operating cash flows from continuing operations		(583,570)		(611,233)
Operating cash flows from discontinued operations		-		(44,926)
Net cash outflow from operating activities		(583,570)		(656,159)
Investing cash flows from continuing operations
Purchase of fixed asset investments		(695,702)		(781,400)
Purchase of current asset investments		(565,876)		(1,148,999)
Proceeds from current asset investments		-		471,300
Acquisitions, net of cash acquired		(79,464)		-
Interest received		71,560		-
Cash used in investing activities of continuing operations		(1,269,482)		(1,459,099)
Investing cash flows from discontinued operations
Purchase of intangible fixed assets		-		(8,425)
Proceeds from disposal of intangible fixed assets		-		200,000
Net cash outflow from disposal of subsidiary		-		(244,042)
Interest received		-		388
Cash used from investing activities of discontinued operations		-		(52,079)
Net cash outflow from investing activities		(1,269,482)		(1,511,178)
Financing cash flows from continuing operations
Share capital issue		897,509		1,907,789
Expenses of share issue		(87,746)		(174,161)
Proceeds from long term borrowing		1,106,126		781,400
Long term borrowing repayments		(161,600)		-
Interest paid		(123,575)		(177)
Net cash generated from financing activities of continuing operations		1,630,714		2,514,851
Financing cash flows from discontinued operations
Repayment of long term borrowing		-		(185,283)
Interest paid		-		(231)
Net cash used in financing activities of discontinued operations		-		(185,514)
Net cash inflow from financing activities		1,630,714		2,329,337
Net (decrease)/increase in cash and cash equivalents		(222,338)		162,000
Cash and cash equivalents at beginning of year		408,862		246,862
Cash and cash equivalents at end of year		186,524		408,862

 

 

NOTES TO THE ACCOUNTS

 

1.  General information

 

TXO Plc is a public company incorporated in England and Wales and its shares are quoted on the Alternative Investment Market ("AIM") of the London Stock Exchange Plc.  The principal activities of the Company and its subsidiaries (the "Group") are described on page 7 of the Directors' Report.

 

2.  Significant accounting policies

 

The accounts have been prepared in accordance with International Financial Reporting Standards (IFRSs). The accounts fall within the scope of the Statement of Recommended Practice, "Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities", issued by the Oil Industry Accounting Committee ("SORP"). The accounts, including disclosures, have been prepared in accordance with the provisions of the SORP currently in effect.

 

3.    Revenue

 

All revenue for the year ended 30 September 2011 arose in the United States of America and is included within discontinued operations as detailed in note 8. There was no revenue in 2012.

 

4.    Finance income

	2012		2011
	$		$
Interest receivable on loan notes	159,152		7,915
	159,152		7,915

 

5.    Finance costs

	2012		2011
	$		$
Bank overdraft interest	-		153
Interest payable on convertible loan stock	189,499		4,252
	189,499		4,405

 

6.  Loss per share

 

The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the parent company is based on the following data:

 

Earnings	2012		2011
	$		$
Loss from continuing operations	(936,985)		(460,381)
Loss from discontinued operations	-		(248,920)
Loss for the year attributable to equity holders of the parent	(936,985)		(709,301)

 

Numbers of shares	2012 Number		2011 Number
Weighted average number of ordinary shares for the purposes
of basic and diluted earnings per share	461,984,546		206,037,545

 

Potentially dilutive instruments	2012 Number		2011 Number
Potentially dilutive instruments not included in the calculation because they are antidilutive
Potential ordinary shares	122,006,797		5,638,219
Warrants	253,032,876		1160,739,726
Options	6,666,666		6,666,666

 

 

Copies of the Annual Report and Accounts are available from www.txoplc.co.uk and the registered office at 2nd Floor Suite - 30 Clarendon Road - Watford - Hertfordshire - WD17 1JJ