TIDMGDL
RNS Number : 3239L
Greka Drilling Limited
03 September 2012
3 September 2012
Greka Drilling Limited
("Greka Drilling" or "the Company")
Interim Results - Revenues increase by 65%
Greka Drilling Limited (AIM: GDL), the largest independent and
specialized unconventional gas driller in China is pleased to
announce its unaudited interim results for the half year ended 30
June 2012.
FINANCIAL HIGHLIGHTS
-- Revenue increased to US$28.3m in H1 2012, compared with
US$17.1m in the same period of 2011, a 65.5% increase over the same
period last year
-- US$0.7m net profit in H1 2012, compared with US$0.4m net
profit in the same period last year, a 75% increase
-- US$0.002 earnings per share in H1 2012; unchanged from the same period last year
-- Capital Expenditureincreased to US$89.9m for H1 2012 versus
US$43.2m to December 2011 (US$17.6m for H1 2011)
-- Raised US$21.2m in working capital from loans
-- US$7.3m cash in hand at 30 June 2012
OPERATIONAL HIGHLIGHTS
-- 57,997 meters drilled in H1 2012 compared with 26,435 meters
drilled in the same period last year, an increase of 119%
year-on-year
-- LiFaBriC wells averaged 3,897 total meters in H1 2012
compared with 3,691 total meters during the same period
year-on-year (H1 2011)
-- The longest LiFaBriC lateral section was 5,454 meters in H1
2012 (5,297 meters in H1 2011), a 3% increase
-- The longest measured depth ("MD") of a single LiFaBriC
section, surface to intersect, was 1,809 meters in H1 2012 (1,668
meters in H1 2011), an 8% increase
-- The longest total vertical depth ("TVD") of a single vertical
well was 1,414 meters in H1 2012 (1,233 meters in HI 2011), a 15%
increase
CORPORATE HIGHLIGHTS
-- All new rigs have now arrived at our Shanxi Base Camp as
planned, increasing the fleet from 7 rigs to 32 rigs, with ISO 9001
certification on all 25 new GD75 rigs being attained
-- The Company has completed the commissioning and integration
of what is currently the single largest fleet of Electromagnetic
MWD (Measurement While Drilling) tools available within the
People's Republic of China ("PRC")
-- The first of the new fleet of rigs was fitted with equipment
that allowed the rig to be monitored remotely via the Supervised
Control and Data Acquisition system ("SCADA") from a centralized
Zhengzhou control facility. This control system will be added to
all the other rigs in the fleet
-- Company personnel increased to 715 at end of H1 2012 versus
520 in December 2011 (325 at end of H1 2011)
-- 639 personnel received internal training for a total of 73,684 man hours in H1 2012
-- In line with improving overall efficiency and reacting to
operational events, the Operational Control Centre ("OOC") saw the
creation of positions for both Well Planning/Modeling and
Production Planning Engineers. These positions give a 24/7 coverage
of our operations, providing decisions into the field within 1-2
hours up to 8 hours
-- Construction of the Shanxi Base Camp was completed in H1 2012
with a total resident headcount of over 450 personnel
-- The Company website provides photographs of the site which is a first of its kind in China
OUTLOOK
-- Drilling meterage expected to accelerate substantially in second half of this year
-- Maintain technological lead in unconventional gas drilling
-- Committing to third party drilling contracts
-- Establishing Singapore as the regional headquarters
-- Evaluating expansion beyond China
CHAIRMAN'S STATEMENT
I am delighted to report that we have grown the business on time
and within plan. In this half year we have completed our first
phase of rig fleet growth by adding the 25 specialized rigs. The
first phase involved the design, construction and commissioning of
a fleet of 25 rigs. These rigs, purpose built for unconventional
gas drilling, were co-designed with the manufacturer, made in Italy
and are the first of its kind imported in to China and have all
been successfully commissioned. The single rig type provides a wide
range of benefits within our daily operations such as a single rig
skilled workforce and common spare parts to name a couple.
This entire business plan was conceived and executed within a
year, a material milestone for a young company. This timely
execution provides a credible insight into our capabilities.
The Company, which prides itself in many technological firsts
within our niche, believes it has one of the largest directional
drilling teams in China of any independent. In coping with the
geological difficulties that exist in unconventional gas
production, the Company looks forward to providing our customers
with the necessary skill sets to enable successful unconventional
gas drilling. The number of interested clients within China and
other Asian countries is an indication of the demand for such
skilled expertise.
Today the Company is drilling at greater depths and successfully
geo-steer more precisely farther. The directional wells are
reaching a measured depth of 1,800 meters while the vertical wells
targeting unconventional gas reservoirs at depths over 1,400
meters. A clear demonstration of the continued capability expansion
meeting the customers demand to explore farther.
In addition to the significant increase in operations, the
management team was concurrently expanded. The current management
includes career veterans from Haliburton and Weatherford and bring
with them the skill sets to enable the transition into a dedicated
third party service provider to clients within China and thereafter
other Asian countries.
The rig fleet is in place, manpower hired and skilled, base camp
constructed, and now with the appropriate operational management at
the helm, we are fully prepared to accept third party contracts and
increase the clientele of the business. I look forward to
announcing the signing of third party contracts in the latter part
of this year.
Randeep S. Grewal
Chairman & CEO
Condensed Consolidated Statement of Comprehensive Income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2012 2011 2011
Note US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Revenue 3 28,255 17,076 43,834
Cost of sales 3 (21,986) (14,099) (34,235)
Gross profit 6,269 2,977 9,599
Foreign exchange (losses)/gains (183) 117 671
Other administrative expenses (4,100) (2,027) (5,581)
Total administrative expenses (4,283) (1,910) (4,910)
Profit from operations 1,986 1,067 4,689
Finance income 4 4 5 12
Finance costs 5 (631) (50) (85)
Profit before income tax 1,359 1,022 4,616
Income tax 6 (689) (617) (1,812)
Profit for the year from continuing
operations 670 405 2,804
Other comprehensive income:
Exchange differences on translation
foreign operations 68 524 825
Total comprehensive income for
the year 738 929 3,629
(Loss)/profit for the year
attributable to:
--Owners of the company 670 736 2,790
--Non-controlling interests -- (331) 14
670 405 2,804
Total comprehensive income attributable
to:
--Owners of the company 738 1,269 3,627
--Non -controlling interests -- (340) 2
738 929 3,629
Basic and diluted
Profit per share attributable
to equity
holders of the parent (US$) 7 0.002 0.002 0.007
Condensed Consolidated Statement of Financial Position
As at As at As at
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
Assets
Non-current assets
Property, plant and equipment 8 89,924 17,595 43,219
Intangible assets 595 181 524
Deferred tax asset 9 -- 241 --
90,519 18,017 43,743
Current assets
Inventories 10 11,159 5,963 9,155
Trade and other receivables 11 14,045 20,238 28,930
Cash and cash equivalents 7,290 38,545 6,559
----------- ----------- --------------
32,494 64,746 44,644
Total assets 123,013 82,763 88,387
Liabilities
Current liabilities
Trade and other payables 12 17,065 5,592 8,994
Loans and borrowings 13 10,672 1,514 1,984
Notes payable 14 2,617 -- --
Current tax liabilities 580 1,231 283
30,934 8,337 11,261
Noncurrent liabilities
Long term payable 15 1,284 -- --
Working facility 16 12,931 -- --
14,215 -- --
Total net assets 77,864 74,426 77,126
Capital and reserves
Share capital 4 -- 4
Capital reserve 77,186 77,190 77,186
Merger reserve (1,533) (1,533) (1,533)
Reserve fund 595 102 595
Foreign exchange reserve 1,667 1,052 1,599
Retained earnings 334 259 -336
Total equity attributable to
equity holders of the parent 78,253 77,070 77,515
Non-controlling interests (389) (2,644) (389)
77,864 74,426 77,126
Condensed Consolidated Statement of Changes in Equity
Equity
attributable
Foreign to owners
Share Share Invested Reserve exchange Retained of the Non-controlling
capital premium capital* fund reserve deficit Company interests Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 31 December
2010 -- -- (1,533) 102 519 (477) (1,389) (2,304) (3,693)
Total
comprehensive
income for
the period -- -- -- -- 533 736 1,269 (340) 929
New issue
of ordinary
shares 4 49,996 -- -- -- -- 50,000 -- 50,000
Capital
contribution -- 27,190 -- -- -- -- 27,190 -- 27,190
-------- -------- --------- -------- --------- --------- ------------- ---------------- --------
At 30 June
2011 4 77,186 (1,533) 102 1,052 259 77,070 (2,644) 74,426
Profit for
the year -- -- -- -- -- 2,054 2,054 354 2,408
Other
comprehensive
income:
- Exchange
difference
on
translation
of foreign
operations -- -- -- -- 304 -- 304 (12) 292
Total
comprehensive
income for
the year -- -- -- 0 304 2,054 2,358 342 2,700
Adjustments
arising upon
acquisition
of additional
interests
in
subsidiaries -- -- -- -- 243 (2,156) (1,913) 1,913 0
Transfer
of reserve
fund -- -- -- 493 -- (493) 0 0 0
-------- -------- --------- -------- --------- --------- ------------- ---------------- --------
At 31 December
2011 4 77,186 (1,533) 595 1,599 (336) 77,515 (389) 77,126
Profit for
the year -- -- -- -- -- 670 670 -- 670
Other
comprehensive
income:
- Exchange
difference
on
translation
of foreign
operations -- -- -- -- 68 -- 68 -- 68
-------- -------- --------- -------- --------- --------- ------------- ---------------- --------
Total
comprehensive
income for
the year 0 68 670 738 0 738
At 30 June
2012 4 77,186 (1,533) 595 1,667 334 78,253 (389) 77,864
======== ======== ========= ======== ========= ========= ============= ================ ========
Condensed Consolidated Statement of Cash Flow
Six months Sic months
ended ended Year ended
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Operating activities:
Profit before income tax 1,359 1,022 4,616
Adjustments for:
Depreciation 3,533 1,383 2,941
Amortization of other intangible
assets 32 11 37
Loss on disposal of property,
plant and equipment -- -- 10
Finance income (4) (5) (12)
Finance costs 631 50 85
Cash flows before changes in
working capital 5,551 2,461 7,677
Increase in inventories (2,039) (1,609) (4,801)
Increase in accounts receivable (6,036) -- --
Decrease/(increase) in other
receivables 20,979 5,319 (3,396)
Decrease/(increase) in trade
and other payables 11,989 (21,728) (18,783)
Cash generated from operations 30,444 (15,557) (19,303)
Income tax payment (387) (617) (1,976)
Net cash from operating activities 30,057 (16,174) (21,279)
Investing activities:
Payments for purchase of property,
plant and equipment (50,392) (2,165) (28,671)
Payments for intangible assets (105) (12) (363)
Cash acquired with subsidiary
undertaking -- -- 16
Interest received 4 5 12
Net cash used in investing activities (50,493) (2,172) (29,006)
Financing activities
Proceeds from the issue of share
capital (0) 50,000 50,000
Proceeds of loan 21,196 -- 1,984
Repayment of short term loan -- -- (1,555)
Finance costs paid (158) (50) (85)
Net cash from financing activities 21,038 49,950 50,344
Net increase in cash and cash
equivalents 602 31,604 59
Cash and cash equivalents at
the beginning of the year 6,559 6,383 6,383
7,161 37,987 6,442
Effect of foreign exchange rate
changes 129 558 117
Cash and cash equivalents at
end of year 7,290 38,545 6,559
Notes to Condensed Interim Financial Statements
1. GENERAL INFORMATION
The consolidated unaudited interim financial information set out
in this report is based on the consolidated financial statements of
Greka Drilling and its subsidiary companies (together referred to
as the "Group"). The condensed consolidated financial information
should be read in conjunction with the annual financial statements
for the year ended 31 December 2011, which have been prepared in
accordance with International Financial Reporting Standards (IFRS
and IFRIC interpretations) issued by the International Accounting
Standards Board except for IAS 34. The financial statements of the
Group for the 6 months ended 30 June 2012 were approved and
authorized for issue by the Audit Committee and the Board on 31
August 2012.
2. ACCOUNTING POLICIES
The condensed financial information for the six months ended 30
June 2012 and 30 June 2011 is unaudited and does not constitute the
Group's statutory financial statements for those periods. The
condensed consolidated financial information should be read in
conjunction with the annual financial statements for the year ended
31 December 2011, which have been prepared in accordance with IFRSs
as adopted by the European Union.
Basis of preparation
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly condensed financial statements.
The financial information is presented in United States dollars
and all values are rounded to the nearest thousand dollars
(US$'000) except when otherwise indicated.
International Financial Reporting Standards as adopted by the
European Union ("IFRSs") do not provide for the preparation of
combined financial information and accordingly in preparing the
combined financial information certain accounting conventions
commonly used for the preparation of historical financial
information for inclusion in investment circulars as described in
the Annexure to SIR 2000 (Investment Reporting Standard applicable
to public reporting engagements on historical financial
information) issued by the UK Auditing Practices Board have been
applied. The application of these conventions results in the
following material departures from IFRSs. In other respects IFRSs
have been applied.
The combined financial information has been prepared by
aggregating the assets, liabilities, results share capital and
reserves of the relevant entities, after eliminating intercompany
transactions, balances and unrealized gains on transactions between
the combined entities. Consequently it is not meaningful for the
Company to present share capital. Instead "Capital reserve" is
presented which represents the aggregated share capital and share
premiums and capital reserves of the companies making up the
Group.
The combined financial information has been prepared in
accordance with the requirements of the AIM Rules for Companies and
in accordance with this basis of preparation. The basis of
preparation describes how the financial information has been
prepared in accordance with IFRSs except as described above.
Except as described above, the financial information has been
prepared in accordance with IFRSs as adopted by the European Union,
that are effective for accounting periods beginning on or after 1
January 2012. The principal accounting policies adopted in the
preparation of the financial information are set out below. The
policies have been consistently applied to all the years presented,
unless otherwise stated.
The preparation of financial information in conformity with
IFRSs requires the use of certain critical accounting estimates. It
also requires management to exercise its judgment in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgment or complexity or areas where assumptions
and estimates are significant to the financial information are
disclosed in note 2 to the financial information. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in
the period in which the estimate is revised if the revision only
affects that period or in the period of revision and future periods
if the revision affects both current and future periods.
3. REVENUE AND SEGMENTAL INFORMATION
The Group has one reportable segment as set out below. The
operating results are regularly reviewed by the Group's chief
operating decision-makers ("CODMs") that are used to make strategic
decisions.
Drilling services revenue represents the net invoiced value of
contract drilling services provided to one customer. The amounts of
each significant category of revenue recognized during the periods
ended 30 June 2012, 31 December 2011 and 30 June 2011 are as
follows:
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Segment revenue 28,255 17,076 43,834
Cost of sales (21,986) (14,099) (34,235)
--------------- --------------- -------------
Gross profit 6,269 2,977 9,599
4. FINANCE INCOME
Six months Six months Year ended
ended 30 ended 30 31 December
June 2012 June 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Bank interest 4 5 12
5. FINANCE COSTS
Six months Six months Year ended
ended 30 ended 30 31 December
June 2012 June 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Interest expense on short
term loans 198 50 85
Interest expense on loans 433 -- --
from GDG
631 50 85
6. TAXATION
Taxation for the Group's operations in the PRC is provided at
the applicable current tax rate of 25% on the estimated assessable
profits for the period.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2012 June 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Current tax
Charges for current period 607 328 1,812
Under provision in prior
year 82 289 --
Deferred tax -- -- --
(Credit)/charge for the -- -- --
period
Total tax charge 689 617 1,812
The reasons for the difference between the actual tax charge for
the periods and the standard rate of corporation tax in the Cayman
Islands applied to the profit for the periods are as follows:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2012 June 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Profit before income tax 1,359 1,022 4,616
Expected tax charge based
on the standard rate of
corporation tax in the Cayman
Islands of 0% -- -- --
Effect of:
Different tax rates applied
in overseas jurisdictions 340 256 1,154
Tax effect of revenue not
taxable for tax purposes -- (21) (71)
Tax effect of expenses not
deductible for tax purposes 267 93 56
Tax losses not recognized -- -- 574
Over provision in respect
of prior year 82 289 99
Income tax charge 689 617 1,812
7. EARNINGS PER SHARE
Six months Six months Year ended
ended 30 ended 30 31 December
June 2012 June 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Earnings for the purpose
of basic profit per share 670 736 2,790
Weighted average number
of ordinary shares 398,245,758 398,245,758 398,245,758
Basic earnings per share is based on the profit for the period
US$670,649 (first half 2011: profit for the period, US$405,000) and
the weighted average number of 398,245,758 ordinary shares in issue
during each period.
In accordance with IAS 33 the weighted average number of shares
for prior periods has been adjusted as if the Group reconstruction
occurred at 1 January 2010.
8. PROPERTY, PLANT AND EQUIPMENT
During the period, the Group incurred costs of approximately
US$51,661,809 in relation to additions to plant and equipment (30
June 2011- US$2,165,663, 31 December 2011 - US$29,704,086).
9. DEFERRED TAXATION
As at As at As at
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Deferred tax assets
at the beginning of the
year -- -- 301
Additional temporary differences -- 241 --
Reversal of temporary differences -- -- -301
At the end of the period -- 241 --
There were no unrecognized deferred tax assets or liabilities in
the period.
10. INVENTORIES
As at As at As at
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Raw materials and consumables 11,046 5,963 9,122
Work-in-progress 113 -- 33
11,159 5,963 9,155
11. TRADE AND OTHER RECEIVABLES
As at As at As at
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Amount due from related
parties 9,031 7,506 2,975
Prepayments 4,590 12,490 25,755
Other receivables 424 242 200
14,045 20,238 28,930
12. TRADE AND OTHER PAYABLES
As at As at As at
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Trade payables 14,954 4,844 8,015
Other payables 2,111 748 979
Amount due to related parties -- -- --
17,065 5,592 8,994
13. LOANS AND BORROWINGS
As at As at As at
30 June 30 June 31 December
2012 2011 2011
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Bank loans - secured 10,672 1,514 1,984
Bank loans breakdown for 2012 as below:
Amount Interest Repayment
Loan bank Period US$'000 rate date Mortgage
----------- ---------- ---------- --------- ---------- ---------
Loan A One year 1,976 7.54% 8-Dec-12 Building
----------- ---------- ---------- --------- ---------- ---------
Loan B One year 2,372 7.54% 14-Mar-13 Building
----------- ---------- ---------- --------- ---------- ---------
Loan C 6 months 3,162 7.54% 24-Nov-12 5 rigs
----------- ---------- ---------- --------- ---------- ---------
Loan D 6 months 3,162 7.54% 10-Dec-12 5 rigs
----------- ---------- ---------- --------- ---------- ---------
Total 10,672
----------------------- ---------- --------- ---------- ---------
14. NOTES PAYABLE
The company issued US$2,617,252 of seven pages 6-months period
of bank notes to suppliers for purchasing drilling equipment with
same money security.
15. LONG TERM PAYABLE
US$1,284,440 has been recorded into long term payable, it
belongs to the warranty to DRILLMEC for the over 1-year term's rig
purchasing.
16. WORKING FACILITIES
On 27 January 2012, GDL borrowed US$12,500,000 working facility
loan with two years' period and 8% yearly interest rate from Greka
China Limited under the agreement signed on 11 February 2011.
17. RELATED PARTY TRANSACTIONS
Save as disclosed in notes 11, 12 and 16, there were no other
related party transactions that are required to be disclosed.
Transactions between the Company and its subsidiary undertakings
which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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