EXHIBIT 99.4
ALLIANCE RESOURCES PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
CONSOLIDATED PROFIT AND LOSS ACCOUNT
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31 APRIL 30,
1996 1995 1996
UNAUDITED UNAUDITED AUDITED
------------ ----------- -----------
$ 000 $ 000 $ 000
REVENUES 1,998 1,551 3,686
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COSTS AND EXPENSES:
Exceptional costs arising from irregularities (120) (499) (589)
Other operating costs (2,952) (3,672) (6,559)
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(3,072) (4,171) (7,148)
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OPERATING LOSS (1,074) (2,620) (3,462)
Other income and deductions:
Interest (net) 31 232 229
Exceptional amounts written off investments - - (201)
Foreign exchange 56 - (159)
NET LOSS (987) (2,388) (3,593)
LOSS PER SHARE (CENTS) (0.3) (0.8) (1.1)
CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, APRIL 30,
1996 1995 1996
UNAUDITED UNAUDITED AUDITED
------------ ------------ -----------
$ 000 $ 000 $ 000
Loss for the financial period (987) (2,388) (3,593)
Foreign exchange translation 35 (31) -
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Total recognized gains and losses for the period (952) (2,419) (3,593)
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ALLIANCE RESOURCES PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
CONSOLIDATED BALANCE SHEET
AS AT AS AT
OCTOBER 31, 1996 APRIL 30, 1996
UNAUDITED AUDITED
$ 000 $ 000
-------- --------
ASSETS
Current assets
Cash and cash equivalents 2,515 1,177
Receivables 1,911 1,357
-------- --------
Total current assets 4,426 2,534
Net property, plant and equipment 4,368 7,311
-------- --------
Total assets 8,794 9,845
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 1,903 1,998
Long term debt, excluding current installments 88 92
-------- --------
Total liabilities 1,991 2,090
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Stockholders' equity
Ordinary shares 5,105 5,105
Share premiums 20,157 20,157
Merge reserve 401 401
Retained earnings (18,860) (17,908)
-------- --------
Total stockholders' equity 6,803 7,755
-------- --------
8,794 9,845
======== ========
F-37
ALLIANCE RESOURCES PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
CONSOLIDATED CASH FLOW STATEMENT
SIX MONTHS ENDED YEAR ENDED
ENDED SIX MONTHS ENDED APRIL 30,
OCTOBER 31, 1996 OCTOBER 31, 1995 1996
UNAUDITED UNAUDITED AUDITED
----------------- ----------------- -----------
US $000S US $000S US $000S
NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES (529) (4,766) (5,399)
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RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 35 232 236
Interest paid (4) (31) (28)
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NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE 31 201 208
----- ------ ------
INVESTING ACTIVITIES
Payments to acquire tangible fixed assets (114) (1,500) (3,270)
Payments to acquire investments - - (59)
Payments associated with Merger expenses (246) - -
Receipts from sale of investments - - 77
Receipts from sales of tangible fixed assets 2,227 696 740
----- ------ ------
NET CASH INFLOW / (OUTFLOW) FROM INVESTING ACTIVITIES 1,867 (804) (2,512)
----- ------ ------
NET CASH / INFLOW (OUTFLOW) BEFORE FINANCING 1,369 (5,369) (7,703)
----- ------ ------
FINANCING
Proceeds from issue of shares - 12,087 12,087
Share issue costs - (439) (443)
(Decrease) in bank borrowings (27) (941) (904)
(Repayment) of development loans - (1,351) (1,351)
(Repayment) of other loans (4) (525) (528)
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NET CASH (OUTFLOW) / INFLOW FROM FINANCING (31) 8,831 8,861
----- ------ ------
INCREASE IN CASH AND CASH EQUIVALENTS 1,338 3,462 1,158
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NOTES
1. The comparative figures for the financial year ended April 30, 1996 are not
the Group's statutory accounts for that year. Those accounts have been
reported on by the Group's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified but included a
statement regarding the adequacy of the Group's accounting records pending
completion of the investigations into the activities of Mr. O'Brien, the
former Chief Executive.
2. The interim financial information for the six months ended October 31, 1996
is unaudited and has been prepared in accordance with the accounting
policies adopted in the statutory financial statements for the year ended
April 30, 1996. The interim results reflect all adjustments which are, in
the opinion of the directors, necessary for a fair presentation of the
results for the interim periods presented and should be read in conjunction
with the Consolidated Financial Statements presented elsewhere in this
Proxy Statement. The interim results have been prepared in accordance with
UK GAAP which differ in certain significant respects from US GAAP (see
below).
F-38
ALLIANCE RESOURCES PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
3. The comparative figures for the six months ended October 31, 1995 have been
extracted from the unaudited interim financial information dated on
February 28, 1996.
4. During the six months to October 31, 1996, the Group completed its review
of non-core assets and disposed of the non-operated properties owned by the
wholly-owned subsidiary ARNO Inc. After depletion, the gross profit
attributable to the properties disposed of in the period to October 31,
1996 was insignificant.
5. The exceptional costs arising from irregularities of $120,000 charged in
the six month period ended October 31, 1996 relate largely to legal fees
incurred in connection with the earlier proceedings against Mr. O'Brien and
the subsequent settlement announced on August 13, 1996.
6. Included in debtors of $1,911,000 is an amount of $650,000 relating to
professional fees incurred to date on the LaTex merger. It should be noted
that this is an interim accounting treatment only and that on completion of
the proposed transaction, the expenses relating to the merger itself will
be capitalized as part of the cost of acquisition and the expenses relating
to the issue of shares will be offset against the share premium account in
accordance with the requirements of companies legislation.
7. Loss per share is based on the loss for the six months ended October 31,
1996 and on the weighted average of 324,152,633 ordinary shares of 1p each
in issue during the period.
8. The directors do not propose to recommend the payment of an interim
dividend.
SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED KINGDOM AND THE UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
The Company's accounting policies conform with United Kingdom generally accepted
accounting principles ("UK GAAP") which differ in certain respects from United
States generally accepted accounting principles ("US GAAP"). Differences which
have a significant effect on the consolidated profit after tax (net income) and
shareholders' equity of the Group are set out below.
(a) Ceiling tests
A ceiling test has been carried out, in accordance with UK GAAP on an annual
basis, to determine the maximum net book amount of expenditure within the cost
pool of oil and gas assets which may be recognized. The ceiling test is based
on the Company's best estimate of the future cash flows from the underlying
properties. Under US GAAP, SEC regulations require ceiling tests to be computed
at current prices discounted to present value at 10%.
Under UK GAAP a ceiling test deficit should be written off to expense only if it
indicated a permanent diminution in value. Under US GAAP any deficit should be
charged immediately to the profit and loss account.
(b) Goodwill
Under UK GAAP goodwill arising on acquisitions has been set off directly against
reserves. Under US GAAP, goodwill arising from acquisitions is capitalized and
amortized over its estimated useful life. However, following irregularities
mentioned above, US GAAP requires the balance to be written off in 1995.
(c) Estimated proceeds of Alliance shares
As set out in note 4, the Company has recognized an exceptional credit of
$272,000 relating to the right to receive the proceeds of the sale of Alliance
shares resulting from the settlement with Mr. O'Brien under UK GAAP. Under US
GAAP, such proceeds are recognized only on receipt.
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ALLIANCE RESOURCES PLC
UNAUDITED INTERIM STATEMENT FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(d) Statements of cash flows
The Company has adopted United Kingdom Financial Reporting Standard No. 1 "Cash
Flow Statements" ("FRS 1"). Its objectives and principles are similar to those
set out in the US Statement of Financial Standards No. 95 "Statement of Cash
Flows" ("SFAS 95"). The principal difference between the standards relates to
classification. Under FRS 1, the Company presents its cash flows from (a)
operating activities; (b) returns on investments and servicing of finance; (c)
taxation; (d) investing activities; and (e) financing activities. SFAS 95
requires only three categories of cash flow activity: (a) operating; (b)
investing; and (c) financing. Cash flows and taxation and returns on investments
and servicing of finance shown under FRS 1 would, with the exception of
dividends paid, be included as operating activities under SFAS 95. The payment
of dividends would be included as a financing activity under SFAS 95.
For purposes of reporting cash flows, all cash at bank and in hand and bank
overdrafts repayable on demand are considered cash equivalents.
EFFECT OF PROFIT AFTER TAX OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM
GAAP AND UNITED STATES GAAP:
REFERENCE TO
NOTE ABOVE SIX MONTHS ENDED OCTOBER 31
------------ -----------------------------
1996 1995
---- ----
$000 $000
(Loss) after tax under UK GAAP (987) (2,388)
Adjustment to depletion consequent upon ceiling
test adjustment a) 308 270
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Approximate (loss) after tax adjusted for US GAAP (679) (2,118)
===== =======
Approximate (loss) per Ordinary Share (primary)
adjusted for US GAAP (cents) (0.2) (0.7)
(Loss) per Ordinary Share, UK GAAP (cents) (0.3) (0.8)
EFFECT ON STOCKHOLDERS' EQUITY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM
GAAP AND UNITED STATES GAAP:
REFERENCE TO
NOTE ABOVE AS AT OCTOBER
------------ -----------------------------
1996 1995
---- ----
$000 $000
Stockholders' equity under UK GAAP 6,803 8,933
Ceiling test and consequent depletion adjustment a) (1,683) (2,158)
Estimated proceeds of Alliance shares c) (295) -
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Approximate stockholders' equity in accordance with
US GAAP 4,825 6,775
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