Annual Report 2007 - Global Energy Development

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12 Directors’ reportGlobal Energy Development PLCAnnual report 2007Directors’ reportThe directors present their Annual Report and the audited financial statements for the year ended 31 December 2007.Principal activitiesThe principal activities of the Group are oil and gas exploration and production in Latin America.Business reviewA full review of the Group’s activities during the year, recent events, and expected future developments is contained within theExecutive Chairman’s Statement on page 4 and within the Vice Chairman’s and Managing Director’s Review on pages 5 to 7. Thesepages form part of this Directors’ Report. The Group’s primary key performance indicators for 2007 are shown below.•••••••Turnover up 29.6% to $27.3 million (year ended 31 December 2006: $21.1 million);Gross profit up 45.4% to $13.8 million (year ended 31 December 2006: $9.5 million);Profit before tax (excluding correction of miscellaneous income) up 61.7% to $7.6 million (year ended 31 December 2006:$4.7 million);Gross production for the 2007 totalled 478,030 barrels of oil (2006: 466,099 barrels) with production net to the Company of413,775 barrels (2006: 401,298 barrels);Average operating cash netback per barrel (excluding miscellaneous income and income relating to a quality adjustment) of $30.44during 2007 against an average price for West Texas Intermediate (“WTI”) crude oil of $72.48 (2006: average operating cashnetback per barrel $23.86, average price for WTI $66.23);Proved plus probable (“2P”) reserves totalling 15.2 million barrels of oil equivalent (“BOE”) as at 31 December 2007 giving a netpresent value at a 10% discount (“NPV10”) of $641.2 million (2006: $427.0 million); andProved plus probable plus possible (“3P”) reserves totalling 64.9 million BOE as at 31 December 2007 giving a NPV10 of$2.5 billion (2006: $1.7 billion).Results and dividendsThe Group’s profit on ordinary activities after taxation for the year amounted to $6,993,000 (year ended 2006 restated $3,481,000).The Directors do not recommend the payment of a dividend due to the Company’s strategy of re-investing in capital assets.Subsequent eventsIn March 2008, the Luna Llena exploration and production contract with the Colombian Agencia Nacional de Hidrocarburos wasterminated after a period of negotiations for modifications to the contract, which were deemed necessary to enable continuedeconomic investment in exploration activities in the contract area. The related reserves were eliminated from the commercial reservesestimates prepared by Ryder Scott Company, LP detailed above.Financial instrumentsNote 23 below details the risk factors affecting the Group and summarises the Group’s policies for mitigating such risks throughholding and issuing financial instruments. These policies have been followed during the year 2007.International Financial Reporting Standards (IFRS) and adoption of accounting standardsIn accordance with the mandatory requirement for AIM companies, the Group has adopted IFRS with effect from 1 January 2007. Thefirst results to be prepared under IFRS were the 2007 interim results. The Group has published on the Global Energy DevelopmentPLC website (www.globalenergyplc.com) a re-statement of the 2006 UK GAAP financials, together with a reconciliation of theadjustments between UK GAAP to IFRS. The key differences between UK GAAP and IFRS which have been identified as impacting theaccounting practices relating to capitalised exploration and development costs, related depreciation, depletion and amortisation,financial instruments and deferred taxes.A summary of standards effective at year end and their adoption status by the Group is included in note 1 to the financial statements.DirectorsThe Directors of the Company who served during the year and subsequent to the year end were as follows:Mikel Faulkner – Executive ChairmanStephen Voss – Vice Chairman (Previously Managing Director appointed Vice Chairman 7 March 2008)Stephen Newton – Managing Director (Appointed 7 March 2008)Guillermo Sanchez – Executive Director (Resigned 17 August 2007)Alan Henderson – Non-executive DirectorDavid Quint – Non-executive DirectorLord Freeman – Non-executive Director
13 Directors’ reportGlobal Energy Development PLCAnnual report 2007Mikel Faulkner and Stephen Voss stood for re-election and were re-elected at the Annual General Meeting of the Company which tookplace on 7 June 2007.Details of the Directors’ interests in the ordinary shares of the Company and options over ordinary shares are set out below:As at 31 December 2007 As at 1 January 2007ordinaryordinaryshares Options shares OptionsMikel Faulkner 150,000 1,580,000 105,504 1,580,000Stephen Voss 24,349 990,000 21,849 990,000Stephen Newton – – – –Guillermo Sanchez 1 12,483 590,000 12,483 590,000Alan Henderson 9,421 80,000 – 80,000David Quint 47,428 50,000 52,232 50,000Lord Freeman 5,000 40,000 – 40,0001Guillermo Sanchez, an Executive Director, resigned as a Director on 17 August 2007.All the holdings are beneficially held.No Director exercised any options during the year.No Director had any interest in the shares of the subsidiary undertakings or any other Group undertakings.There are no warrants in the Company outstanding.There were no contracts existing during, or at the end of the year, in which a Director was or is materially interested.A summary of the number of meetings attended by the Directors of the Company during 2007 is provided below.board Audit Remunerationmeetings Committee 1 Committee 1 TotalMikel Faulkner 9 – – 9Stephen Voss 9 – – 9Stephen Newton – – – –Guillermo Sanchez 2 – – – –Alan Henderson 7 2 1 10David Quint 9 1 1 11Lord Freeman 9 2 1 121 Only Non-executive Directors are entitled to attend the meetings of the Audit Committee and Remuneration Committee.2 Guillermo Sanchez, an Executive Director, resigned as a Director on 17 August 2007 and was eligible to attend two of the nine Board Meetings held in 2007.Corporate social responsibilityThe Group is fully committed to high standards of environment, health and safety management.Charitable and political donationsDuring the year, the Group made charitable contributions to The Children’s Vision International, a non-profit foundation in Colombia of$10,000 (2006: $23,500), to the Youth Development Center, a non-profit organisation in Houston, Texas of $8,000 (2006: $6,000),and to Raft International, Ltd, a non-profit organisation in the United Kingdom of $14,400 (2006: $nil).Supplier payment policyIt is Company and Group policy to settle all debts with creditors on a timely basis and in accordance with the terms of credit agreedwith each supplier.Trade creditors of the Group as at 31 December 2007 were equivalent to 31 (2006: 27) days’ purchases, based on the average dailyamount invoiced by suppliers to the Group during the year.
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Page 3 and 4: 01 Highlights 2007Global Energy Dev
Page 5 and 6: 03 At a glanceGlobal Energy Develop
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Page 19 and 20: 17 Consolidated income statementGlo
Page 21 and 22: 19 Consolidated balance sheetGlobal
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Corporate directoryDirectorsMikel F
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