PETROGRAND AB: INTERIM REPORT JANUARY-JUNE 2010
(Thomson Reuters ONE) -
* Operating income for the 2nd quarter amounted to TSEK 238 (TSEK 38,525 ) of
which TSEK 238 (TSEK 38,525) attributable to the discontinued operations
* Net result after tax for the 2nd quarter amounted to TSEK -6,228 (TSEK
-268,593) of which TSEK -2,057 (TSEK -262,994) attributable to the
discontinued operations
* Operating income for the January-June period amounted to TSEK 12,499 (TSEK
60,014) of which TSEK 12,499 (TSEK 60,014) attributable to the discontinued
operations
* Net result after tax for the January-June period amounted to TSEK -15,327
(TSEK -387,041) of which TSEK -5,388 (TSEK -378,084) attributable to the
discontinued operations
* Earnings Per Share for the January-June period amounted to SEK -0.0038 (SEK
-0.23) of which SEK -0.0013 (SEK -0.23) attributable to the discontinued
operations. Earnings Per Share is calculated using the average number of
shares outstanding for the period.
MD's report
Dear Shareholders,
In the first quarter of 2010, we reported the completion of the sale of our
production subsidiary STS-Service in the Tomsk region to Gazprom Neft Vostok.
Our shareholders resolved to accept the board's proposal of the sale at an
extraordinary general meeting of shareholders on 17 December 2009. A period of
hard work to investigate the company's strategic options for the future preceded
the proposal to sell. The transaction was completed on 5 February 2010 with the
registration of the change of ownership by the Russian authorities.
During the past half year, we have received and investigated a large number of
proposals concerning companies and licensing areas and have selected the most
interesting of these to begin due diligence work. We have started negotiations
with the owners of these companies and it is my opinion that it will be possible
to report our first acquisition before the end of the year. Pending our
acquisitions, we have invested our excess liquidity with Sberbank and LLC
Renaissance Credit on market conditions.
At this time, we are working hard to strengthen our Russian organization, which
unfortunately has suffered from a major loss when our highly valued long time
colleague, Sergey Sedunov, passed away. Sergey during several years held the
position as Managing Director of Petrogrand's Russian subsidiary and during the
recent period, he held the position as our Chief geologist.
I want to use this opportunity to welcome our new board member Arne Helland.
Arne lives in Norway and has more than 25 years experience from a number of
positions in the financial area with assignments in Norway, Germany and France.
Today, he works as CFO in a Norwegian oil company.
I am convinced that there are exciting developments to come and that our
business is well equipped to meet the challenges ahead of us. I also greatly
appreciate your continued trust and support.
Maks Grinfeld
Managing Director
Petrogrand AB
Comment on the Group's result and financial position
Turnover and result
In early February 2010, the sale of the subsidiary STS-Service to Gazprom Neft
Vostok was completed. As a consequence of the sale, discontinued and continuing
operations are separated in the Group income statement and in 'Turnover and
result' discontinued and continuing operations are therefore described
separately.
Discontinued operations during January-June 2010
Operating income for the period amounted to TSEK 12,499 (TSEK 60,014), of which
revenues from oil sales were TSEK 12,485 (TSEK 59,995). Production costs
amounted to TSEK -9,602 (TSEK -51,036) during the period. Income as well as
costs reflect the fact that the sale of the production subsidiary STS-Service
was completed in early February.
Gross profit amounted to TSEK 2,721 (TSEK -137). This amount includes an
amortization charge of TSEK -176 (TSEK -9,115).
Selling and distribution expenses amounted to TSEK -96 (TSEK -2,605).
Administration costs and other operating expenses amounted to a total of TSEK
-4,493 (TSEK -44,904).
Operating profit for the period amounted to TSEK -1,868 (TSEK -47,646).
Net financial items amounted to TSEK -3,419 (TSEK -305,256). Result after
financial investments amounted to TSEK -5,287 (TSEK -352,902).
The tax item for the period amounted to TSEK -101 (TSEK -25,182).
The net result after tax for the discontinued operations during the report
period amounted to TSEK -5,388 (TSEK -378,084), equivalent to an Earnings Per
Share of SEK -0.0013 (SEK -0.23).
Continuing operations during January-June 2010
As a result of the sale of the production subsidiary, the continuing operations
did not have any revenues during the period.
The administration costs amounted to TSEK -11,667 (TSEK -8,957) during the
report period.
The operating profit amounted to TSEK -11,667 (TSEK -8,957).
Net financial items amounted to TSEK 1,727 ( - ). Result after financial
investments amounted to TSEK -9,939 (TSEK -8,957).
The continuing operations were not charged with any tax during the period and
consequently, the net result amounted to TSEK -9,939 (TSEK -8,957).
The Group in total during January-June 2010
For the report period, the Group in total reports a net result after tax of TSEK
-15,327 (TSEK -387,041) equivalent to an earnings per share of SEK -0.0038 (SEK
-0.23).
Investments
The Group's investments in tangible and intangible fixed assets during the
January-June period amounted to TSEK 1,726 (TSEK 9,181), of which investments in
intangible fixed assets in the discontinued operations represented TSEK 1,670
(TSEK 8,389).
Financing and liquidity
Cash balances in the Group amounted to TSEK 676,541 (TSEK 11,266) as of 30 June
2010.
The company in the fourth quarter of 2009 used a commitment from one of the
major shareholders concerning short-term bridge financing at market conditions
in order to meet its liquidity needs until receipt of payment from the buyer of
STS-Service. After receiving payment from the buyer in early February 2010, the
short-term credit including interest was repaid.
The excess liquidity has, pending investment decisions, been invested on market
conditions.
Legal disputes
Petrogrand's divested Russian subsidiary, STS-Service, was as of the end of
2009 involved in legal disputes with two local suppliers: OOO Kupir concerning
construction work and OOO EERB concerning drilling work.
As a result of the sale of STS-Service to Gazprom Neft Vostok in February 2010,
the disputes with OOO EERB and OOO Kupir have been transferred to Gazprom Neft
Vostok.
Since the end of 2009, Petrogrand was involved in a legal dispute with Central
Asia Gold AB's Russian subsidiary OOO Tardan Gold concerning a bill of exchange
receivable. In its annual accounts for 2009, Petrogrand AB made a provision
concerning this receivable amounting to TSEK 14,046. In the second quarter of
2010, an agreement with an installment plan was made with OOO Tardan Gold. As of
30 June, Petrogrand AB had received payments according to the installment plan
amounting to TSEK 2,173 which have had a positive impact on the Group's result.
Employees
The number of employees in Group companies at the end of the report period was
28 (222), of which 17 (47) were women and 11 (175) were men.
Comments on the Parent Company
Financial income in the income statement includes the above mentioned amount of
TSEK 2,173 received from Tardan Gold in line with the agreed installment plan.
The result of the parent company has been charged with a write-down of loans
given to the Russian subsidiaries 'STS-Management' and 'USL' amounting to a
total of TSEK 10,663. These loans have been given during the report period in
order to cover expenses linked to these subsidiaries' liquidation which is still
not completed. The amount is included in the Financial costs in the income
statement.
Major events during the report period
EGM approved the new business plan including change of company name
On 27 April at an extraordinary general meeting of shareholders, the board's
proposal of a new business plan and change in the description of company
activities were approved. The plan included a change of company name from
previous Malka Oil AB (publ) to Petrogrand AB (publ).
Change of name on First North
As of 25 May 2010, the company's share is trading under its new name Petrogrand
on First North. The short name of the share is "PETRO".
Observation status removed
On 10 June, NASDAQ OMX published its decision to remove as of 11 June 2010 the
observation status for the shares of Petrogrand on First North in Stockholm. The
observation status had been in place since early 2009 because of uncertainty in
respect of the financial situation and future business of the company. Following
a stabilization of the financial situation and the approval of a new business
plan, the conditions for a removal of the observation status had been met.
Change of Certified Adviser
On 14 June, Petrogrand published its decision to appoint Mangold Fondkommission
AB as its new Certified Adviser. The engagement would begin on 1 July 2010.
Annual General Meeting of shareholders
The AGM of Petrogrand took place on 21 June. The AGM resolved to adopt the Group
accounts and annual report for 2009, and resolved to pay a dividend to
shareholders of SEK 0.02 (2 öre) per share and to set the record date for
the dividends on 24 June 2010. The AGM furthermore resolved to implement an
incentive programme for the employees and board members of the company who will
be offered to acquire subscription warrants issued as part of the programme. The
AGM also resolved on a consolidation of shares (reverse share split) by which
100 old shares will be combined into 1 new share. It was decided that the record
date for the consolidation of shares would be latest on 31 August 2010. The AGM
also resolved to authorize the Board, during the period until the next AGM, to
decide on new issue of shares, subscription warrants and/or convertible bonds
that if exercised in full at the most may correspond to 30 per cent of the
company's share capital.
Operations
Petrogrand AB is an independent Swedish oil company within exploration and
production previously active in oil production in the Tomsk region in western
Siberia in Russia through its subsidiary STS-Service.
On 5 February 2010, Russian Authorities registered the transfer of ownership of
the production subsidiary STS-Service to Gazprom Neft Vostok in line with the
resolution by the extraordinary general shareholders' meeting on 17 December
2009 to sell STS-Service to Gazprom Neft Vostok.
Following the transaction, the board of Petrogrand AB has developed a new
business plan for future operations. The business plan was approved by the
shareholders at an extraordinary general shareholders' meeting on 27 April.
Petrogrand's general business concept is to carry on oil production through
acquired Russian oil companies and oil licenses. Petrogrand will also manage,
enhance the value of and sell Russian oil assets. The goal is to become one of
Sweden's leading oil companies on the Russian market by means of investments in
the Russian oil sector.
Since the approval of the business plan, Petrogrand's organization has actively
worked to evaluate a large number of acquisition proposals received from
potential partners.
Production during the report period
Petrogrand's production of oil and gas condensate during January-June 2010
amounted to 63,998 barrels. The total production took place in January. As a
result of the completion of the sale of STS-Service to Gazprom Neft Vostok in
early February, the company did not produce any oil during the remainder of the
report period.
Major events following the end of the report period
New Certified Adviser
On 1 July, Mangold Fondkommission began its engagement as new Certified Adviser
for Petrogrand AB.
Consolidation of shares
On 10 August, the Board decided that the record date for the consolidation of
shares, in line with the decision at the AGM, would be August 20. The last day
of trading with the company's old shares before the consolidation would thus be
August 17 and the first day of trading with the consolidated shares would be
August 18. In the consolidation, 100 old shares were consolidated into 1 new
share
Result of the Incentive Programme
On 11 August, the company reported that 87 per cent equal to 113 million of the
subscription warrants of series A had been subscribed for by employees and board
members. According to the rules of the incentive programme which was approved by
the AGM, the application period with regards to the subscription warrants of
series A was from 23 June to 9 July 2010.
Claim from Gazprom Neft Vostok
In August, the company has received claims relating to alleged violations of
warranties defined in the agreement concerning the sale of STS-Service.
Petrogrand is of the opinion that the claims are not justified and intends to
dismiss the claims and therefore no provisions have been made in the balance
sheet.
Share data
There were no changes in the share capital or number of shares during the report
period.
Since the time of the rights issue and the conversion of the convertible bonds
in April 2009, the share capital of Petrogrand as of 30 June amounted to SEK
268,410,272 divided into 4,026,589,880 outstanding shares, each with a par value
of SEK 0.0667.
At the AGM on 21 June, it was resolved in favour of a consolidation of shares
1:100 by which one hundred (100) old shares would be consolidated into one (1)
new share. The Board of the company then decided on 10 August that the record
date for the consolidation of shares would be Friday 20 August 2010.
As a result of the consolidation, the share capital of Petrogrand AB at the time
of the publishing of this report amounts to SEK 268,410,272 divided into
40,265,898 outstanding shares, each with a par value of SEK 6.67.
Accounting policy
Basis for the preparation of the interim report
This interim report has been prepared in accordance with IAS 34, Interim
reporting. The consolidated group accounting has been prepared in accordance
with International Financial Reporting Standards (IFRS) as approved by EU and
the Annual Accounts Act.
Discontinued operations
In December 2009, Petrogrand AB and Gazprom Neft Vostok signed a sale and
purchase agreement concerning the sale of Petrogrand's subsidiary STS-Service.
Consequently, Petrogrand has based this interim report according to IFRS 5,
Non-current Assets Held for Sale and Discontinued Operations. In the Group
income statement, continued and discontinued operations are thus reported
separately and in the balance sheet, assets and liabilities held for sale are
reported as separate items. In the income statement for discontinued operations,
all income and costs, including financial items that are directly attributable
to the divested subsidiary are included.
Parent company
The interim report for the parent company has been prepared in accordance with
the Annual Accounts Act and the Securities Market Act, which is in accordance
with the rules in RFR 2.3
Accounting for Legal Entities.
Future reporting dates
January - September interim report: To be published 30 November 2010
Company information
The full name of the parent company is Petrogrand AB (publ). It is a public
limited company with head offices in Stockholm and the corporate registration
number 556615-2350. The address of the parent company is Birger Jarlsgatan
41A, 111 45 Stockholm. Its telephone number is +46 8 5000 7810 and fax number is
+46 8 5000 7815. Internet web site:www.petrogrand.se
Certified Adviser
Certified Adviser First North: Mangold Fondkommission
This report has not been subject to review by the company's auditors.
Stockholm, 31 August 2010
The Board of Petrogrand AB (publ)
For further information, please contact:
Maks Grinfeld, MD, tel; +46 768 077 614
Sven-Erik Zachrisson, Chairman of the Board of Directors, tel: +46 8 41 05 45 96
For further information on Petrogrand AB, see the websitewww.petrogrand.se
Reasonable caution notice: The statement and assumptions made in the company's
information regarding Petrogrand AB's ("Petrogrand") current plans, prognoses,
strategies, concepts and other statements that are not historical facts are
estimations or "forward looking statements" concerning Petrogrand's future
activities. Such future estimations comprise but are not limited to statements
that include words such as "may occur", "concerning", "plans", "expects",
"estimates", "believes", "evaluates", "prognosticates" or similar expressions.
Such expressions reflect the management of Petrogrand's expectations and
assumptions made on the basis of information available at that time. These
statements and assumptions are subject to a large number of risks and
uncertainties. These, in their turn, comprise but are not limited to i) changes
in the financial, legal and political environment of the countries in which
Petrogrand conducts business, ii) changes in the available geological
information concerning the company's projects in operation, iii) Petrogrand's
capacity to continuously guarantee sufficient financing to perform their
activities as a "going concern", iv) the success of all participants in the
group, or of the various interested companies, joint ventures or secondary
alliances, v) changes in currency exchange rates, in particular those relating
to the RUR/USD rate. Due to the background of the many risks and uncertainties
that exist for any oil-prospecting venture and oil production company in its
initial stage, Petrogrand's actual future development may significantly deviate
from that indicated in the company's informative statements. Petrogrand assumes
no implicit liability to immediately update any such future evaluations.
[HUG#1441738]
INTERIM REPORT JANUARY JUNE 2010:
http://hugin.info/138739/R/1441738/386071.pdf
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other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Petrogrand AB via Thomson Reuters ONE
Unternehmensinformation / Kurzprofil:
Datum: 31.08.2010 - 18:11 Uhr
Sprache: Deutsch
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