ANNUAL REPORT 2004 ACTIVA RESOURCES AG

Transcription

1 ANNUAL REPORT 2004 ACTIVA RESOURCES AG

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3 MANAGEMENT REPORT 4 BALANCE SHEET 10 INCOME STATEMENT 11 NOTES FOR THE BUSINESS YEAR AUDITOR S REPORT 17 SUPERVISORY BOARD S REPORT 18 3

4 MA N A G E M E N T R E P O R T F O R T H E B U S I NE S S Y E A R S UM MA R Y The year 2004 was a year of dramatic changes for Activa Resources AG (formerly TNG Capital Invest AG). A complete reorientation of the company was achieved through a change of the majority shareholders as well as a replacement of the Board of Directors and Supervisory Board in September, transforming Activa Resources AG from a holding company to an oil and gas exploration and production company. T H E R E P O S IT IO N I N G Energy is becoming one of the most important sociopolitical and economic topics of this century. According to the International Energy Agency in Paris, global energy demand will increase by 60% over the next 25 years. The global economy presently requires around 82 million barrels of oil a day. The global oil industry, however, is hardly in a position to increase oil production in a sustainable manner. Important oil producing areas, such as the North Sea, are already past their production peaks. New oil field discoveries, on the other hand, have been on the decrease since the sixties. The situation is similar in the gas industry. While the topic of alternatives to fossil fuel sources has logically moved to the forefront, it primarily concentrates on renewable energy sources and overlooks one important factor: The potential to efficiently and profitably exploit remaining oil and gas reserves. This especially applies to the United States of America. The large US oil companies have focused on the internationalization of their businesses over the past 30 years. This has resulted in today s search and recovery of remaining reserves in North America s recognized oil areas being dominated by a large number of small and midsized companies. Technical advances in the search for deposits and in the efficient exploiting of these reserves enable these companies to operate successfully and to generate substantial profits. The increase in market prices for oil and gas creates ideal conditions for building Activa Resources AG into a significant exploration and production company. Prerequisite is the appropriate know-how and experienced employees. Activa Resources AG is presently well-positioned in this environment with the appropriate, proven competence of our management and our geologists. 4

5 B U SI N E S S DE V E L O P ME NT Until the change in the majority stakeholders, the former Board of Directors (until September 21, 2004) reduced the participation activities as in the previous year by selling participations. It also listed the company's stock on the Regulated Unofficial Market at the Frankfurt Stock Exchange in June The new Board of Directors, subsequent to its election, continued the sale of the company's legacy investments and made a radical and necessary write-off of the residual participations at year-end. There were no noteworthy participations of value on the balance sheet at year-end. This adjustment was an essential step towards completing the company s repositioning. This became tangible on November 18, 2004 through the signing of the contract to purchase 100% of Activa Resources, LLC, San Antonio, Texas, USA. Activa Resources, LLC, an oil and gas company founded in 2003, which specializes in the exploration and production of oil and gas deposits in known oil and gas fields in the United States. The purchase contract became effective on January 1, Moreover, at the Annual General Meeting of December 17, 2004, in addition to relocating the company s headquarters to Bad Homburg v. d. Höhe, a resolution was passed changing the name from TNG Capital Invest AG to Activa Resources AG. The new company Activa Resources AG now acts solely as an oil and gas company with a 100% American subsidiary active in this business. This repositioning paved the way to a capital increase in December 2004, excluding the subscription rights pertaining to the approved capital. This transaction led to an inflow of funds to the company in the amount of EUR 861,000. The Board of Directors assesses the business development as favorable on the basis of yields to be attained in the production of oil and gas in North America. 5

6 P R O FI T A B I L I T Y The company s profitability was affected by the repositioning of its activities. The revenue from the sale of securities amounting to EUR 149,900 was offset by book value adjustments in the amount of EUR 404,300 as well as sales losses amounting to of EUR 18,100. The shortfall for the year amounting to EUR 556,400 was the result of the required restructuring. Through the above-mentioned repositioning, the company will be in a position to generate profits in the future. INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, Euro Euro 1. Securities sold 149, , Book value of the securities sold -168, , Realized capital losses (previous year profits) -18, , Other operating income 6, , Personnel expenses -18, External services -46, , Depreciation and amortization -404, , Other operating expenses -75, , Other interest and similar income , Interest and similar expenses Result from ordinary business activities -556, , Taxes on income and profit Net loss for the year 556, ,

7 A S S E T A N A LY S IS The company s assets essentially consist of cash and cash equivalents. This situation arose primarily through the capital increase implemented and paid in at yearend. Current assets consist of six insignificant participations in other companies. BALANCE SHEET AS OF DECEMBER 31, 2004 A S S E T S 12/31/ /31/2003 Euro Euro A. FI X E D AS SE T S I. Property and equipment , II. Financial assets , , B. C U R RE N T A SS E TS I. Accounts receivable and other assets 7, , II. Securities 7, , III. Cash assets 1,028, , ,043, , C. AC C RU A LS AN D D E F E RR AL S ,043, , L I A B I L I T I E S A. SH A RE H O L D E R S E Q U I T Y I. Capital stock 603, , II. Capital reserves 387, , III. Retained earnings , , B. R E SE R VE S 24, , C. L I AB I L I T I E S 1. Payables to financial institutions , Payables from goods and services 23, Payables to related companies 5, Other liabilities , , ,043, , F IN A N C IA L PO S I T I O N At year-end, cash and cash equivalents amounted to EUR 1,028,000. EUR 861,000 accrued to the company as a result of the capital increase in December The company s capital structure thus consists nearly exclusively of equity capital, which primarily accrued through capital reserves. Further reserves and other liabilities exist to a negligible extent. The Board of Directors was authorized by a resolution made at the Annual General 7

8 Meeting of August 28, 2002, with approval of the Supervisory Board, to increase the nominal capital through August 27, 2007, by up to EUR 287, against cash or contributions in kind once or several times, whereby the subscription rights of the stockholders can be excluded (authorized capital). In accordance with the resolution of the Annual General Meeting of August 28, 2002, the remaining authorized capital amounts to EUR 230, S IG NI FI CA NT E V E NT S A F T E R T HE B A LA N CE SH E E T D A T E Effective January 1, 2005, Activa Resources AG purchased 100% of the shares in Activa Resources LLC, in San Antonio, Texas, USA. On the date of acquisition Activa Resources LLC held a portfolio of drilling rights to ten oil and gas projects located in Texas and Louisiana. Prior to the audit date and thus after the end of the business year, a further successful capital increase resulted in an additional cash inflow of EUR 401,200 to the company. R IS K S By abandoning general investment activities and through the 100% participation in a company active in the oil and gas sector as the sole operative asset (from January 1, 2005 onwards), the company s business activities are subject to the general risks of the oil and gas industry. These risks include the costs of the planned exploration and development drilling, as well as the estimations of oil and gas production and cash flow. Important factors that could lead to a deviation of the actual results from those forecasted include technical and mechanical problems or geological conditions which could hinder commercial exploitation of the reserves. Product prices also may have a significant influence on profitability. The Board of Directors currently believes these risks to be manageable since on the one hand, prices in the oil and gas sector are at historic highs, while on the other hand, the company's business model and its participations consist of undertaking new drilling in known oil and gas fields. The company is regularly informed by its subsidiary about the course of business; therefore, inherent risks in the participation can be detected at an early stage. 8

9 O U T LO O K The Board of Directors expects a significant increase in revenues from the production of oil and gas through successful new drilling in the coming months. The first well was completed successfully and put into production in March An additional well is currently being tested, while two further wells are currently being drilled. Additional drilling will be undertaken in the summer months. Participations in two additional projects were secured in May. There are plans for further participations in projects. Investments amounting to EUR 1,379,000 were made in the American subsidiary Activa Resources LLC through the end of May As a result of the company s investments in the oil and gas sector, the Board of Directors generally anticipates a positive development for the company. Bad Homburg v. d. Höhe, May 30, 2005 Leigh A. Hooper, Chairman of the Board of Directors 9

10 B A L A N C E S H E E T BALANCE SHEET ON DECEMBER 31, 2004 A S S E T S 12/31/ / Euro Euro A. FIXED ASSETS I. Property and equipment 1. Other assets, business equipment and furnishings , II. Financial assets 1. Participations , Non-current securities , , B. CURRENT ASSETS i. Accounts receivable and other assets 7, , II. Securities 7, , III. Cash assets, credit at financial institutions 1,028, , ,043, , C. ACCRUED AND DEFERRED ITEMS ,043, , L I A B I L I T I E S A. SHAREHOLDER S EQUITY I. Capital stock 603, , II. Capital reserves 387, , III. Retained earnings , , B. RESERVES 24, , Other reserves C. LIABILITIES 1. Liabilities to financial institutions , Liabilities arising from goods and services 23, Liabilities towards affiliated companies 5, with which there is a participation relationship 4. Other liabilities ,043, ,

11 I NC O M E S T A T E M E N T INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, Euro Euro 1. Revenues from the sales of securities 149, , Book value of the securities sold -168, , Realized capital losses (previous year profits) -18, , Other operating income 6, , Personnel expenses a) Salaries and wages -18, b) Social costs , External services -46, , Depreciation a) on intangible fixed assets , and property and equipment b) on financial assets -363, , c) on current securities , , , Other operating expenses -75, , Other interest and similar income , Interest and similar expenses, of which to affiliated companies 11. Result from ordinary business activities -556, , Taxes on income and profit Net loss for the year 556, , Transfer from the capital reserves 556, , Retained earnings

12 N O T E S FO R T H E B U S IN E S S Y E A R GENERAL INFORMATION ABOUT THE CONTENTS AND STRUCTURE OF THE ANNUAL FINANCIAL STATEMENT The balance sheet and the income statement have been prepared from the company s accounting in accordance with the principles of commercial law and company law. Activa Resources AG is a small limited liability company in the sense of 267, clause 1, of the German Commercial Code. Besides the Board of Directors, the company does not have any employees ( 285, clause 7, of the German Commercial Code). To account for the particularities of a holding company, the income statement includes the items "sales of securities" and "book value of the securities sold to account for "realized capital gains". Because they involve ordinary business operations, all write-ups and write-downs to the financial assets and current securities are reported under other operational revenues or amortization and depreciation and are not shown in the financial result. 02. ACCOUNTING AND REPORTING METHODS Property and equipment is valued at acquisition or manufacturing costs, minus the lower of either systematic depreciation or the tax-permissible value. Assets are written off on a straight-line basis. Development of the disposal of assets can be viewed in the assets analysis. Financial assets were disposed of in the case of two securities. Before the sale, one security was written off to its market value. The remaining securities were reclassified as current assets in accordance with a resolution by the Board of Directors. They were written off according to the principle of the lower of cost or market value. Accounts receivable and other assets were valued at acquisition cost (nominal value). Current securities as well as the reclassified fixed asset securities were depreciated according to the lower of cost or market principle according to 253, clause 3, of the German Commercial Code for a total amount of EUR 403,

13 Write-ups were not required. Reserves were formed for uncertain liabilities and anticipated losses from pending transactions as well as for neglecting maintenance. The valuation was made according to the principles of generally accepted commercial practice in the appropriate amount. Liabilities are accounted for at redemption amount; all liabilities have a remaining life to maturity of less than one year. Expenses and income are shown according to the principles of accrual accounting. 03. NOTES ON THE BALANCE SHEET Development of the individual fixed assets can be viewed in the assets analysis, which includes the full acquisition and manufacturing costs, acquisitions, disposals, reclassifications and write-ups for the business year as well as the development of the cumulated depreciation charges. Included in the assets are options rights on treasury shares amounting to EUR 5,000, a security deposit amounting to EUR , as well as interest income tax and solidarity tax credits totaling EUR 1, Securities consist of stocks valued at EUR 7, Reserves are calculated according to the principle of reasonable commercial practice, are necessary on their merits and have been made in an appropriate amount. Other reserves refer to remuneration of the Supervisory Board (EUR 5,000), legal and consultation fees (EUR 5,200) and costs for preparing the financial statements (EUR 13,800). Liabilities from deliveries of goods and services are listed individually in detail. Liabilities to related companies refer to the outstanding options price payment for the option rights granted to purchase treasury shares. The subscribed capital has been fully paid in. The amount of EUR 556,400 was taken from the capital reserves to cover the loss for the year in the same amount. 13

14 ASSETS ANALYSIS 2004 A C Q U I S I T I O N A N D M A N U F A C T U R I N G C O S T S As of Acquisitions Disposals Reclassification As of Euro Euro Euro Euro Euro I. FIXED ASSETS 1. Other assets 6, , Operating equipments and furnishings 6, , II. FINANCIAL ASSETS 1. Participations 107, , Fixed asset 1,133, , , securities 1,240, , ,247, , , C U M U L A T E D D E P R E C I A T I O N C H A R G E S As of Acquisitions Disposals Reclassification As of Euro Euro Euro Euro Euro I. FIXED ASSETS 1. Other assets 4, , Operating equipment and furnishings 4, , Die Position Erlöse aus dem Verkauf von Wertpapieren beinhaltet den gesamten II. FINANCIAL ASSETS 1. Participations , , Fixed assets 786, , , , securities 786, , , , , , , , B O O K V A L U E As of As of Euro Euro I. FIXED ASSETS 1. Other assets Operating equipment and furnishings II. FINANCIAL ASSETS 1. Participations 107, Fixed assets securities 454, ,

15 04. NOTES TO THE PROFIT AND LOSS STATEMENT The item sale of securities includes the entire sales revenue from securities sold. The book value of securities sold was valued at acquisition cost including supplemental acquisition costs minus necessary value adjustments. Listed under other operating income is the current income from stock in corporations (EUR 6,300) as well as income from the sales of property and equipment(eur 500). 05. OTHER NOTES Maturity of liabilities There are no liabilities with a remaining life to maturity beyond one year. Contingent liabilities There are no contingent liabilities to be shown on the balance sheet. Information in accordance with 160 of the Stock Corporation Law The Board of Directors was authorized in a resolution made at the Annual General Meeting of August 28, 2002, with approval of the Supervisory Board, to increase the nominal capital through August 27, 2007 by up to EUR 287,500 against cash or investment in kind once or several times, whereby the subscription rights of the stockholders can be excluded. With the Board of Directors resolution of December 10, 2004, the company s authorized capital was increased by EUR 28, from EUR 575, to EUR 603, through the issue of 28,700 new bearer shares against cash payment. The company s Board decided on November 18, 2004 to purchase 100% of the stock of Activa Resources LLC, San Antonio, Texas, USA. Personnel No employees were on staff in the reporting year. Board of Directors The company s Board of Directors is comprised as follows: Herr Leigh A. Hooper, Baden-Baden (as of September 21, 2004) Herr Nico Obert, Veitshöchheim (until September 21, 2004) 15

16 The Board of Director s remuneration for the business year 2004 amounted to EUR 18, Supervisory Board In the business year the Supervisory Board was comprised of the following members: Herr Bernard Tubeileh, M.B.A., Frankfurt/Main (Chairman) (as of October 13, 2004) Herr Axel Vedder, Certified Public Accountant and Tax Consultant, Frankfurt/Main (as of October 13, 2004) Herr Walter Blumenthal, Attorney and Notary Public, Friedrichsdorf (as of October 13, 2004) Herr Guido Schmitt (Chairman) (until October 13, 2004) Herr Dr. Christian Klein (until October 13, 2004) Herr Wolfram Hirt (until October 13, 2004) The emoluments due to the existing Supervisory Board in 2004 amount to EUR 5, Share capital information The fully paid-in, recorded nominal capital registered in the commercial register on December 31, 2004 amounted to EUR 603, (603,700 bearer shares each worth EUR 1.00). The capital reserves developed as follows: EUR/as of January 1, ,03 Revenue resulting from the increase in capital ,00 decided upon on December 10, 2004 (entered in the commercial register on December 21, 2004) Use of the capital reserves to compensate ,63 for the losses experienced in As of December 31, ,40 Bad Homburg v. d. Höhe, May 30, 2005 Leigh A. Hooper, Chairman of the Board of Directors 16

17 A U DI T O R S R E PO R T Auditor s certification We audited the financial statements, including the company s accounting and management report, of Activa Resources AG (formerly T.N.G. Capital Invest AG), Bad Homburg v. d. Höhe, for the business year from January 1 to December 31, The accounting and the preparation of the annual result and the management report in accordance with accounting principles generally accepted in Germany and the supplementary regulations in the company s articles of association are the responsibility of the company s legal representative. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit of the consolidated financial statements in accordance with 317 of the German Commercial Code and the auditing standards of the Institut der Wirtschaftsprüfer IDW (German Institute of Auditors). Those standards require that we plan and perform the audit such that it can be assessed with reasonable assurance whether the consolidated financial statements are free of material misstatements. The evidence supporting the amounts and disclosures in the consolidated financial statements is examined on a test basis within the framework of the audit. The audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, the financial statements provide an accurate presentation of the company s position and suitably present the risks of future development, in accordance with the principles of proper accounting. Königstein/Ts., May 30, 2005 MITTREU Revisions- und Treuhandgesellschaft m.b.h. Auditing company/tax consultancy Hans-Jörg Weck, Auditor 17

18 S U PE R IS O R Y B O A R D S R E P O R T Dear Sir or Madam, The Supervisory Board carefully monitored, accompanied and supported the activities of the Activa Resources AG Board of Directors in the business year In three meetings and in numerous discussions, the Supervisory Board also discussed in detail all important proceedings as well as questions regarding the company s development, policies and future strategies. Also between meetings, the Chairman of the Supervisory Board and other Members remained in close contact with the Board of Directors. The Supervisory Board made no use of its legal right to set up committees. The selected independent auditor, Mittreu G.m.b.H., Königstein, audited Activa Resources AG s annual financial statement and management report for the year 2004 and certified it without reservations. After detailed review and consultation, the Supervisory Board approved and ratified the annual financial statement and management report in its joint meeting of July 6, The Supervisory Board commends the Board of Directors of Activa Resources AG for the services it has rendered. Bad Homburg v. d. Höhe, July 6, 2005 For the Supervisory Board Bernard Tubeileh, Chairman 18

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20 ACTIVA RESOURCES AG, Hessenring 107, D Bad Homburg, phone +49(0) fax +49(0) ,