TIDMWTE
RNS Number : 9592E
Westmount Energy Limited
24 October 2018
24 October 2018
Westmount Energy Limited
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the
year ended 30 June 2018, and hereby gives notice that the Annual
General Meeting of Westmount Energy Limited will be held at No 2
The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel
Islands at 10.00 a.m. on 10 December 2018.
Copies of the Company's results and Notice of AGM are available
on the Company's website, www.westmountenergy.com, and will be
posted to shareholders on 24 October 2018.
2018 Highlights
-- Focus on emerging Guyana-Suriname Basin where opportunities remain
-- Operating profit of GBP561,080 for the year to 30 June 2018
-- GBP471,922 raised during the year from existing shareholders
by way of exercises of warrants for 7.5p per share
-- Strategic investment in Eco (Atlantic) Oil & Gas Limited
continues to show strong performance
-- New investments in Ratio Petroleum and JHI Associates increase exposure to offshore Guyana
-- Post year end acquisition of Net Profits Interests in three Offshore UK Petroleum Licences
-- Continued focus on evaluation of exploration and production
opportunities with potential for a substantial transaction
Chairman's Statement
The year under review was a successful one for your Company with
a strong financial performance resulting from our strategy of
increased exposure to the offshore Guyana-Suriname Basin.
The financial results show an operating profit of GBP561,080 for
the year. As reported at the time of the Company's interim results,
the main driver of the operating profit was the strong share price
performance of your Company's strategic investment in Eco
(Atlantic) Oil & Gas Ltd. ('EOG'). The EOG investment has
almost trebled in value since our investment in February 2017 while
the Company's holding in Ratio Petroleum Energy Limited Partnership
('Ratio Petroleum') which was acquired during the year has also
more than doubled in value. Both these investments continue to
perform well and provide Westmount's shareholders with exposure to
offshore exploration activity in Guyana. The total gross profit on
our financial assets amounted to GBP722,333 for the year, while the
corporate administrative expenses for the year were reduced by
approximately 20% to GBP150,166.
In conjunction with the funding raised from shareholders, the
Directors have continued to exercise strict cost controls, given
the Company's low market capitalisation and level of cash resources
and mixed investment sentiment in the sector. As in previous years,
those Directors who are major shareholders, did not receive a
salary for their time or services. This continues to be the case
and Directors' remuneration will be kept under review as the
Company moves forward.
The year under review has been a year of continued improvement
and rising optimism for the sector with a sustained Brent oil price
above $60/bbl from the beginning of 2018. In addition, the
Company's focus on investing to gain exposure to the emerging
Guyana-Suriname oil province has proven to be the key driver of the
recent financial performance, with the investment prospects having
continued to improve following Westmount's first engagement with
the region in 2016.
Since the initial Liza-1 discovery well in May 2015 and
successful appraisal in 2016, ExxonMobil (and partners CNOOC &
Hess) has continued with an aggressive exploration program, with
nine very large oil discoveries to date (Liza, Payara, Snoek, Liza
Deep, Turbot, Ranger, Pacora, Longtail and Hammerhead), with
reported discovered resources in excess of 4bn boe and a greater
than 80% exploration drilling success rate. Guyana is well on its
way to becoming a significant oil producer, with Phase I (120,000
BOPD) Liza Field development drilling underway and first oil
expected in March 2020; with planning for Phase II (220,000 BOPD)
and Phase III already well advanced.
Guyana-Suriname Focused Assets
During the year our largest asset remained the Company's stake
in EOG.
EOG has recently been recognised as a 2018 TSX Venture 50(TM)
company - an annual ranking of top-performing companies on the TSX
Venture Exchange (the 'TSX-V') over the last year- achieving a 'top
10' status in the oil and gas sector, one of the five main sectors
on the TSX-V. This accolade reflects, inter alia, the achievement
of the Orinduik Farm-in option agreement with Total E&P
Activités Pétrolières ("Total"), announced 26 September 2017, which
granted Total the option to acquire a 25% Working Interest in the
Orinduik Block; and the Strategic Alliance and Share Subscription
Agreement with Africa Oil Corporation, announced on 13 November
2017, which raised gross proceeds of CAD 14 million. More recently,
on 11 September 2018, EOG issued an AIM CPR and TSX Compliant
NI-51-101 Report on the Orinduik License which identified a P50
(Best Estimate) of 2,913 MMBOE Gross Prospective Resources for the
block. Two days later Total announced that it was exercising its
option early to acquire the 25% working interest in the Orinduik
Block for a consideration of USD 12.5 million.
The share price performance of EOG was further enhanced by the
announcement in late August 2018 of ExxonMobil's 9th oil discovery
(Hammerhead-1), which is reported to be a new play opening
discovery (Tertiary) and is located approximately 6 kms from the
Orinduik block boundary. EOG and its partners are now expecting to
focus on preparations for drilling with block operator Tullow
anticipating the spudding of the first well on the Orinduik licence
in Q3 2019.
On 1 June 2018 your Company reported that it had built up a
circa 1% equity position in Ratio Petroleum. Ratio Petroleum is an
oil and gas exploration company focused on the development and
production of international hydrocarbon assets. These assets
include a 25% carried interest in the Kaieteur block, offshore
Guyana where ExxonMobil as the operator acquired a 5,700 km(2) 3D
seismic survey in 2016. This dataset is currently undergoing
processing and interpretation with a view to evaluation of a future
drilling program.
After the accounting year end, your Company announced that it
had increased its equity position in JHI Associates Inc. ('JHI').
JHI is a private, Ontario registered, company established in 2014
and focused on oil exploration opportunities in the emerging
Guyana-Suriname Basin. JHI's main asset is a 40% carried interest
(17.5% carried interest, subject to approval of Total Farm-in
transaction announced in February 2018) in the Canje Block covering
over 6,000 square kilometres, offshore Guyana. This block is
located adjacent to and in the same geologic basin as the
ExxonMobil operated Stabroek Block which has delivered nine
substantial oil discoveries since 2015, with reported discovered
recoverable resources in excess of 4 billion oil-equivalent barrels
to date. ExxonMobil, which is also the operator of the Canje block,
acquired in excess of 6,100 km2 of 3D seismic on the block in 2016
and this dataset is currently undergoing processing and
interpretation with a view to evaluation of a future drilling
program.
Combined, these three investments in EOG, Ratio Petroleum and
JHI offer Westmount shareholders exposure to potential carried
drilling programs across 3 highly prospective blocks, offshore
Guyana, where success rates in excess of 80% have been achieved by
ExxonMobil to date in the Upper Cretaceous Liza play fairway,
indicating low exploration risk.
Other Assets
Post year end, the Company reported that it had acquired Net
Profit Interests ("NPI") in three Offshore UK blocks - being a 0.5%
NPI in licence P1918 (Colter Prospect), a 0.5% NPI in licence P2222
(Oulton Discovery) and a 1.0% NPI in licence P2235 (Wick Prospect).
The Board believe that this investment offers low-cost exposure to
near-term exploration and appraisal drilling targets, with
independent prospect risks and potential for substantial value
uplift, in the success case, without requiring further investment
by the Company.
The Wick and Colter wells are expected to be drilled in the
coming months.
This investment is consistent with Westmount's strategy of
seeking opportunistic investments with potential for value
creation, alongside the Company's current focus on the prolific
Guyana-Suriname Basin.
In keeping with this strategy, the Company recently disposed of
our legacy investments in Rockhopper and Pancontinental Oil &
Gas, though we still hold an investment in Argos Resources, which
is under review.
Outlook
In the short term, the Company will continue to seek to capture
value for shareholders within the constraints of an AIM-quoted
company with a modest market capitalisation. Our Guyana focused
assets provide exposure to three offshore blocks, all offering near
term carried or pre-funded drilling opportunities with the
potential for transformational value changes in their success
cases. We are investigating ways to increase our exposure to these
and other opportunities while seeking to moderate the level of
short-term dilution for shareholders.
In the longer term, the Company continues to seek international
investment opportunities with potential for significant value
creation, including a transformational transaction that would
provide increased exposure to exploration opportunities in the
Guyana-Suriname basin. While competition and valuations have
increased in this space, we believe that significant opportunities
remain and that Westmount presents an opportunity to create a
substantial, London-quoted vehicle with exploration exposure to an
emerging prolific offshore region.
The Directors wish to thank shareholders for their continued
patience and support, and we will update investors on any
significant developments at the earliest opportunity.
GERARD WALSH
Chairman
23 October 2018
Enquiries: -
David King / Jane Vlahopoulou
Westmount Energy Limited Tel: 01534 823133
Nicholas Wells / Harry Hargreaves
Nomad and Broker
Cenkos Securities plc Tel: 020 7397 8900
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2018
Year ended Year ended
30 June 2018 30 June
2017
Notes GBP GBP
Net profit / (loss) on financial
assets held at fair value through
profit or loss 722,333 (8,682)
Administrative expenses 4 (150,166) (188,818)
Share options expensed 11 (11,087) (3,000)
Operating profit / (loss) 561,080 (200,500)
Profit / (loss) before and after
tax 561,080 (200,500)
Total comprehensive profit / (loss)
for the year 561,080 (200,500)
============== ===========
Basic profit / (loss) per share
(pence) 5 1.34 (0.79)
-------------- -----------
Diluted profit / (loss) per share
(pence) 5 1.34 (0.79)
-------------- -----------
All results are derived from continuing
operations.
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
As at As at
30 June 2018 30 June
2017
Notes GBP GBP
ASSETS
Non-current assets
Financial assets at fair value
through profit or loss 6 1,727,539 720,591
--------------- ------------------
Current assets
Other receivables 7 8,213 10,778
Cash 8 557,182 548,042
--------------- ------------------
565,395 558,820
--------------- ------------------
Total assets 2,292,934 1,279,411
=============== ==================
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 9 43,170 73,736
--------------- ------------------
EQUITY
Stated capital 10 4,244,166 3,772,244
Share option account 11 363,993 352,906
Deficit (2,358,395) (2,919,475)
--------------- ------------------
Total equity 2,249,764 1,205,675
--------------- ------------------
Total liabilities and equity 2,292,934 1,279,411
=============== ==================
These financial statements were approved and authorised for issue
by the Board of Directors on 23 October 2018 and were signed on
its behalf by:
D R King
Director
23 October 2018
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2018
Share option
Stated Total
Note capital account Deficit equity
GBP GBP GBP GBP
As at 1 July 2016 2,966,720 349,906 (2,718,975) 597,651
Comprehensive loss
Loss for the year ended
30 June 2017 - - (200,500) (200,500)
Transactions with owners
Subscription and open offer
at 5p per nil par value
ordinary share 10 805,524 - - 805,524
Share options expensed 11 - 3,000 - 3,000
As at 30 June 2017 3,772,244 352,906 (2,919,475) 1,205,675
---------- ------------- ------------ ----------
Comprehensive profit
Profit for the year ended
30 June 2018 - - 561,080 561,080
Transactions with owners
Warrants converted at 7.5p
per nil par value ordinary
share 10 471,922 - - 471,922
Share options expensed 11 - 11,087 - 11,087
As at 30 June 2018 4,244,166 363,993 (2,358,395) 2,249,764
---------- ------------- ------------ ----------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2018
Year ended Year ended
30 June 30 June 2017
2018
Notes GBP GBP
Cash flows from operating activities
Total comprehensive profit / (loss)
for the year 561,080 (200,500)
Adjustment for net (profit) / loss
on financial assets at fair value
through profit or loss (722,333) 8,682
Adjustment for share options expensed 11,087 3,000
Movement in other receivables 2,565 (755)
Movement in trade and other payables (30,566) 42,349
Proceeds from sale of investments - 48,300
Purchase of investments (284,615) (561,274)
----------- --------------
Net cash used in operating activities (462,782) (660,198)
----------- --------------
Cash flows from financing activities
Receipt of loan from Director - 300,000
Repayment of loan from Director - (300,000)
Proceeds from issue of ordinary shares 10 471,922 805,524
Net cash generated from financing
activities 471,922 805,524
Net increase in cash and cash equivalents 9,140 145,326
----------- --------------
Cash and cash equivalents at beginning
of year 548,042 402,716
Cash and cash equivalents at end
of year 8 557,182 548,042
----------- --------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2018
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH INTERNATIONAL
FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an energy
investment company. The investment strategy of the Company is to
provide seed capital to small companies that are identified as having
significant growth possibilities.
The Company was incorporated in Jersey on 1 October 1992 under the
Companies (Jersey) Law 1991, as amended, and is a public company
with registered number 53623. The Company is listed on the London
Stock Exchange Alternative Investment Market ("AIM").
Basis of Preparation
The financial statements are prepared on a going concern basis in
accordance with International Financial Reporting Standards as adopted
by the European Union ("IFRS") and applicable legal and regulatory
requirements of the Companies (Jersey) Law 1991. The financial statements
have been prepared under the historical cost convention as modified
by the valuation of financial assets held at fair value through
profit or loss.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in the
preparation of these financial statements are summarised below.
These accounting policies have been used throughout all periods
presented in the financial statements.
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been adopted early by the
Company
At the date of authorisation of these financial statements, certain
new standards, amendments and interpretations to existing standards
have been published by the IASB but are not yet effective, and have
not been adopted early by the Company.
Management anticipates that all of the relevant pronouncements will
be adopted in the Company's accounting policies for the first period
beginning after the effective date of the pronouncement. The new
standards and interpretations that have been issued are not expected
to have a material impact on the Company's financial statements.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and exercise of judgement
by the management while applying the Company's accounting policies
in relation to the value of options issued, as set out in note 11.
These estimates are based on the management's best knowledge of
the events which existed at the date of issue of the financial statements
and at the Statement of Financial Position date however, the actual
results may differ from these estimates.
Financial assets at fair value through profit and loss that are
not listed have been valued in accordance with IFRS using the International
Private Equity and Venture Capital ("IPEVC") Guidelines and information
received from the investment entity. The inputs to value these assets
require significant estimates and judgements to be made by the Directors.
Functional and presentation currency
The functional currency of the Company is United Kingdom Sterling
("Sterling"), the currency of the primary economic environment in
which the Company operates. The presentation currency of the Company
for accounting purposes is also Sterling.
Foreign currency
Foreign currency monetary assets and liabilities are translated
into Sterling at the rate of exchange ruling on the last day of
the Company's financial year. Foreign currency non-monetary items
that are measured at fair value in a foreign currency are translated
into Sterling using the exchange rates at the date when the fair
value was determined. Foreign currency transactions are translated
at the exchange rate ruling on the date of the transaction. Gains
and losses arising on the currency translation are included in administrative
expenses in the Statement of Comprehensive Income in the year in
which they arise.
Financial assets
The Company classifies its investments at fair value through profit
or loss.
Financial assets at fair value through profit or loss
The Company designates its financial assets as at fair value through
profit or loss as the financial assets are managed and their performance
is evaluated on a fair value basis. Financial assets carried at
fair value through profit or loss are initially recognised at fair
value and any transactions costs are recognised in the Statement
of Comprehensive Income. Regular purchases and sales of financial
assets are recognised on the trade date, the date on which the Company
commits to purchase or sell the investment.
For listed investments, fair value is determined by reference to
stock exchange quoted market bid prices at the close of business
at the end of the reporting year, without deduction for transaction
costs necessary to realise the asset. For non-listed investments
fair value is determined by using recognised valuation methodologies,
in accordance with the IPEVC Guidelines. One investment held at
the year-end required valuation using the IPEVC guidelines, JHI
Associates Inc, which has been valued based on the price paid to
purchase JHI Associates Inc shares from other investors.
Financial assets are derecognised when the rights to receive cash
flows from the investments have expired or the Company has transferred
substantially all the risks and rewards of ownership. Financial
assets at fair value through profit or loss are subsequently carried
at fair value. Any gains or losses on derecognition of financial
assets is calculated after setting the proceeds against the fair
value and, in respect of a part disposal, against the fair value
at the date of sale. The surplus or loss on realisation is transferred
to the Statement of Comprehensive Income.
Gains or losses arising from changes in the fair value of the 'financial
assets at fair value through profit or loss' are presented in the
Statement of Comprehensive Income in the period in which they arise.
Financial liabilities
Financial liabilities are trade and other payables with fixed or
determinable payment amounts that are not quoted in an active market.
They arise when the Company either receives services from another
entity or purchases securities, the settlement of which, remains
outstanding as at the reporting date. Payables are recognised initially
at fair value less transaction costs, if any. These are subsequently
measured at amortised cost using the effective interest method.
Given the short term nature of payables, (period between their origination
and settlement), their amortised cost is considered a reasonable
estimate of their fair value.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on
call with banks and cash with broker. For the purpose of the Statement
of Cash Flows, cash and cash equivalents are considered to be all
highly liquid investments with maturity of three months or less
at inception.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Transaction costs associated
with the issuing of shares are deducted from stated capital. Retained
earnings include all current and prior period retained profits.
Shares are classified as equity when there is no obligation to transfer
cash or other assets.
Expenditure
The expenses of the Company are recognised on an accruals basis
in the Statement of Comprehensive Income.
Share options
Equity-settled share based payment transactions are measured at
the fair value of the goods and services received unless that cannot
be reliably estimated, in which case they are measured at the fair
value of the equity instruments granted. Fair value is measured
at the grant date and is estimated using valuation techniques as
set out in note 11. The fair value is recognised in the Statement
of Comprehensive Income, with a corresponding increase in equity
via the share option account. When options are exercised, the relevant
amount in the share option account is transferred to stated capital.
3. TAXATION
The Company is subject to income tax at a rate of 0%. The Company
is registered as an International Services Entity under the Goods
and Services Tax (Jersey) Law 2007 and a fee of GBP200 has been
paid, which has been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES 2018 2017 2016
GBP GBP GBP
Administration and consultancy fees 34,094 34,718 34,792
Advisory fees 25,000 38,220 12,500
Audit fees 13,880 12,074 10,851
Directors' fees 12,000 20,000 20,000
Foreign exchange losses - 7,587 -
Legal and professional fees 6,277 23,700 7,870
Printing and stationary 9,086 14,950 5,031
Registered agent's fees 16,902 17,752 6,744
Other expenses 32,927 19,817 14,823
150,166 188,818 112,611
-------- -------- --------
5. PROFIT / (LOSS) PER SHARE
The calculation of basic profit / (loss) per ordinary share is
based on the comprehensive profit for the year of GBP561,080 (2017:
GBP200,500 loss). The weighted average number of shares in issue
during the year was 41,760,211 (2017: 25,354,209). As explained
in note 11 there are share options in issue over the Company's
ordinary shares. The option exercise price is above the average
share price during the period, therefore the options do not have
any impact on diluted earnings per share.
6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2018 2017
GBP GBP
Argos Resources Ltd ("Argos") 63,000 30,000
Rockhopper Exploration plc ("Rockhopper") 146,838 80,582
Pancontinental Oil & Gas NL ("Pancontinental") 6,716 1,772
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 987,500 531,250
JHI Associates Inc ("JHI") 110,555 76,987
Ratio Petroleum Energy Limited Partnership 412,930 -
("Ratio")
Total investments 1,727,539 720,591
---------- --------
On 30 June 2018, the fair value of the Company's holding of 1,000,000
(2017: 1,000,000) ordinary fully paid shares in Argos, representing
0.46% (2017: 0.46%) of the issued share capital of the company,
was GBP63,000 (2017: GBP30,000) (6.30p per share (2017: 3.00p per
share)). No shares were disposed of in the current or prior year.
On 30 June 2018, the fair value of the Company's holding of 358,142
(2017: 358,142) ordinary fully paid shares in Rockhopper, representing
0.08% (2017: 0.08%) of the issued share capital of the company,
was GBP146,838 (2017: GBP80,582) (41.00p per share (2017: 22.50p)).
No shares were disposed of in the current or prior year. On 20
September 2018, the Company's entire holding of 358,142 shares
in Rockhopper was sold for GBP129,816.
On 30 June 2018, the fair value of the Company's holding of 3,000,000
(2017: 3,000,000) ordinary fully paid shares in Pancontinental,
representing 0.06% (2017: 0.06%) of the issued share capital of
the company, was GBP6,716 (2017: GBP1,772) (0.22p per share (2017:
0.06p per share)). No shares were disposed of in the current or
prior year. On 19 September 2018, the Company's entire holding
of 3,000,000 shares in Pancontinental was sold for GBP11,289.
On 30 June 2018, the fair value of the Company's holding of 3,125,000
(2017: 3,125,000) ordinary fully paid shares in Eco Atlantic, representing
1.98% (2017: 2.63%) of the issued share capital of the company,
was GBP987,500 (2017: GBP531,250) (31.60p per share (2017: 17.00p
per share)). No shares were disposed of in the current or prior
year.
On 24 April 2018, the Company purchased 60,000 ordinary fully paid
shares in JHI for GBP39,567 (65.94p per share). On 30 June 2018,
the Directors' estimate of the fair value of the Company's holding
of 100,000 units (each unit comprising one common share plus one
half of one common share purchase warrant) plus 60,000 shares (2017:
100,000 units) in JHI was GBP110,555 (2017: GBP76,987) (69.10p
per share (2017: 76.99p per unit)). No shares were disposed of
in the current or prior year.
Between 29 January 2018 and 6 February 2018, the Company purchased
600,000 ordinary fully paid shares in Ratio for GBP118,662 (19.78p
per share). Between 30 May 2018 and 1 June 2018, the Company purchased
600,000 ordinary fully paid shares in Ratio for GBP126,386 (21.06p
per share). On 30 June 2018, the fair value of the Company's holding
of 1,200,000 ordinary fully paid shares in Ratio, representing
1.05% of the issued share capital of the company, was GBP412,930
(34.41p per share). No shares were disposed of in the current year.
7. OTHER RECEIVABLES 2018 2017
GBP GBP
Prepayments and accounts receivable 8,213 10,778
------ -------
8. CASH 2018 2017
GBP GBP
Cash at bank 303,204 548,042
Cash at broker 253,978 -
557,182 548,042
-------- --------
9. TRADE AND OTHER PAYABLES 2018 2017
GBP GBP
Accrued expenses 43,170 73,736
------- -------
10. STATED CAPITAL
Allotted, called up and fully Ordinary shares Ordinary
paid: shares
No. GBP
1 July 2016 22,570,335 2,966,720
Additions 18,285,167 805,524
---------------- ----------
1 July 2017 40,855,502 3,772,244
Additions 6,292,294 471,922
At 30 June 2018 47,147,796 4,244,166
---------------- ----------
On 18 April 2017, the Company raised further capital in the form
of a subscription in conjunction with an open offer. The subscription
raised GBP200,000 before expenses with 4,000,000 ordinary shares
issued at 5.00 pence per share. The open offer on 8 May 2017 raised
GBP564,258 before expenses with 11,285,167 ordinary shares issued
at 5.00 pence per share. A further subscription on 19 May 2017
raised GBP150,000 before expenses with 3,000,000 ordinary shares
issued at 5.00 pence per share. In total, additional capital of
GBP914,258 was raised and transaction costs of GBP108,734 have
been deducted from stated capital.
Between 26 February 2018 and 31 May 2018, a total of 6,292,294
warrants were exercised at 7.5 pence each, resulting in the issue
of 6,292,294 new nil par value ordinary shares with total proceeds
of GBP471,922.
There were no share redemptions during the year ended 30 June 2018
(2017: Nil).
11. SHARE OPTION ACCOUNT
2018 2017
GBP GBP
At 1 July 352,906 349,906
Share options expensed 11,087 3,000
At 30 June 363,993 352,906
-------- --------
On 4 January 2018, the Company granted 500,000 share options at
a weighted average exercise price of 7.5p per share. The options
vested in the current financial year and are exercisable at the
option of the option holder, expiring 31 December 2019. The fair
value of the options granted was GBP5,088 using the Black Scholes
valuation model.
The following assumptions were used to determine the fair value
of the options: Black Scholes
Weighted average share price at grant date (pence) 6.75
Exercise price (pence) 7.5
Expected volatility (%) 48%
Average option life (years) 2.0
Risk free interest rate (%) 0.713%
The expected volatility is based on the historic volatility of
the Company's share price.
The number and weighted average exercise price of share options
are as follows:
2018 2018 2017 2017
Weighted Weighted
average average
exercise Number exercise Number
price of options price of
(p) (p) options
Outstanding at start
of the year 7.5 1,750,000 20.0 1,650,000
Granted during the
year 7.5 500,000 7.5 1,750,000
Exercised during the - - - -
year
Lapsed during the
year - - 20.0 (1,650,000)
---------- ------------ ---------- ------------
Outstanding at end
of the year 7.5 2,250,000 7.5 1,750,000
---------- ------------ ---------- ------------
Exercisable at end
of the year 7.5 2,250,000 7.5 1,750,000
---------- ------------ ---------- ------------
12. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial
risks: market risk (including foreign exchange risk, price risk
and interest rate risk), credit risk and liquidity risk. The Company's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects
on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling.
The Company is exposed to currency risk through its investments
in Pancontinental, JHI and Ratio. The directors have not hedged
this exposure.
Currency exposure as at 30 June: Assets and Assets and
net exposure net exposure
2018 2017
GBP GBP
Currency
US Dollars 110,555 76,987
Australian Dollars 6,716 1,772
Israeli Shekel 412,930 -
Total 530,201 78,759
------------------------- -------------------------
If the value of sterling had strengthened by 5% against all of
the currencies, with all other variables held constant at the reporting
date, the equity attributable to equity holders and the profit
for the period would have decreased by GBP25,250 (2017: GBP3,750).
The weakening of sterling by 5% would have an equal but opposite
effect. The calculations are based on the foreign currency denominated
financial assets as at year end and are not representative of the
period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows
of a financial instrument will fluctuate due to changes in market
prices. The Company is exposed to price risk on the investments
held by the Company and classified by the Company on the Statement
of Financial Position as at fair value through profit or loss.
To manage its price risk, management closely monitor the activities
of the underlying investments.
The Company's exposure to price risk is as
follows: Fair value
Fair Value Through Profit or Loss,
as at 30 June 2018 1,727,539
Fair Value Through Profit or Loss,
as at 30 June 2017 720,591
With the exception of JHI, the Company's investments are all publicly
traded and listed on either the AIM, the Australian Stock Exchange
or the Tel Aviv Stock Exchange. A 30% increase in market price
would increase the pre-tax profit for the year and the net assets
attributable to ordinary shareholders by GBP485,095 (2017: GBP193,081).
A 30% reduction in market price would have decreased the pre-tax
profit for the year and reduced the net assets attributable to
shareholders by an equal but opposite amount. 30% represents management's
assessment of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI would increase the pre-tax
profit for the year and the net assets attributable to ordinary
shareholders by GBP33,166 (2017: GBP23,096). A 30% reduction in
market price would have decreased the pre-tax profit for the year
and reduced the net assets attributable to shareholders by an equal
but opposite amount. 30% represents management's assessment of
a reasonably possible change in the market price of JHI based on
the price of share purchases over the last two years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is not exposed to interest
rate risk as it does not have any borrowings and the Company's
cash deposits do not currently earn interest.
a) Credit Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet commitments it has entered into with
the Company. The Directors do not believe the Company is subject
to any significant credit risk exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets
exposed to credit risk amounted to the following:
2018 2017
GBP GBP
Cash and cash equivalents 557,182 548,042
-------- --------
The Company considers that all the above financial assets are not
impaired or past due for each of the reporting dates under review
and are of good credit quality.
c) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities
as they fall due. The Company's primary source of liquidity consists
of cash and cash equivalents and financial assets held at fair value
through profit or loss. The Company's financial assets at fair value
through profit or loss are primarily publicly traded and are deemed
highly liquid.
The following table details the contractual, undiscounted cash flows
of the Company's financial liabilities:
As at 30 June 2018 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 43,170 - - 43,170
As at 30 June 2017 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Trade and other payables 73,736 - - 73,736
Capital Management
The Company's objective when managing capital is to safeguard the
Company's ability to continue as a going concern in order to provide
optimum returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce cost of capital.
In order to maintain or adjust the capital structure, the Company
may issue new shares, return capital to shareholders or sell assets.
The Company does not have any debt nor is the Company subject to
any external capital requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through
profit or loss and fair value is determined via one of the following
categories:
Level I - An unadjusted quoted price in an active market provides
the most reliable evidence of fair value and is used to measure fair
value whenever available. As required by IFRS 7, the Company will
not adjust the quoted price for these investments, (even in situations
where it holds a large position and a sale could reasonably impact
the quoted price).
Level II - Inputs are other than unadjusted quoted prices in active
markets, which are either directly or indirectly observable as of
the reporting date, and fair value is determined through the use
of models or other valuation methodologies.
Level III - Inputs are unobservable for the investment and include
situations where there is little, if any, market activity for the
investment. The inputs into the determination of fair value require
significant management judgment or estimation.
The following table shows the classification of the Company's financial
assets:
Level I Level II Level III Total
GBP GBP GBP GBP
At 30 June 2018 1,616,984 - 110,555 1,727,539
At 30 June 2017 643,604 - 76,987 720,591
The level III investment is at an early stage of development and
therefore has been valued based on the price paid to purchase JHI
shares from other investors. The directors have considered market
expectations of future performance of the entity's industry sector,
in particular known interest in the area of current exploration.
As such, the directors consider that the cost of JHI fairly reflects
the value of the investments as at 30 June 2018.
A reconciliation of the movements in Level III investments is shown
below:
2018 2017
GBP GBP
At start of the year 76,987 -
Purchases 39,567 61,275
Change in fair value (5,999) 15,712
At end of the year 110,555 76,987
-------- -------
13. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2018 2017 2018 2017
Directors' Directors' Options Options
fees fees outstanding outstanding
GBP GBP GBP GBP
D R King 12,000 12,000 250,000 250,000
M Bradlow
(resigned 11 April
2017) - 8,000 500,000 500,000
D Corcoran - - 500,000 -
G Walsh - - 500,000 500,000
T O'Gorman - - 500,000 500,000
----------- ----------- ------------- -------------
12,000 20,000 2,250,000 1,750,000
----------- ----------- ------------- -------------
At the year end the Company owed GBPnil (2017: GBPnil) in outstanding
directors' fees.
500,000 share options were issued during the year ended 30 June 2018
(2017: 1,750,000) and nil (2017: nil) options were exercised during
the year. All outstanding options are due to expire 31 December 2019.
The Company does not employ any staff except for its Board of Directors.
The Company does not contribute to the pensions or any other long-term
incentive schemes on behalf of its Directors.
14. RELATED PARTIES
Fees paid to the Directors are disclosed in note 13.
15. CONTROLLING PARTY
In the opinion of the Directors, the Company does not have a controlling
party.
16. SUBSEQUENT EVENTS
On 22 August 2018, G Walsh, a director of the Company, loaned GBP200,000
to the Company, on an interest free basis. This is due to be repaid
between 23 October 2018 and 31 December 2018.
The Company purchased a further 100,000 and 850,000 ordinary fully
paid shares in JHI in July and August 2018, respectively.
Investments sold since the year end are detailed in Note 6.
On 1 October 2018, the Company acquired the Net Profit Interests
in three offshore UK petroleum licences previously held by Infrastrata
Plc.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PGGCWUUPRGMW
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October 24, 2018 02:00 ET (06:00 GMT)
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