TIDMPXOG
RNS Number : 0394C
Prospex Oil and Gas PLC
13 June 2019
Prospex Oil and Gas Plc / Index: AIM / Epic: PXOG / Sector: Oil
and Gas
13 June 2019
Prospex Oil and Gas Plc ('Prospex' or the 'Company')
Final Results
Prospex Oil and Gas Plc, the AIM quoted investment company, is
pleased to announce its Final Results for the year ended 31
December 2018. The Company also gives notice that its Annual
General Meeting ('AGM') will be held at the offices of Charles
Russell Speechlys, 5 Fleet Place, London, EC4M 7RD at 9 a.m. on 4
July 2019. The Financial Results for the year ended 31 December
2018 ('Accounts') together with the Notice of AGM will be available
to download today from the Company's website and will also be
posted to shareholders on or around 14 June 2019.
HIGHLIGHTS
-- Significant progress made across portfolio of late stage
onshore European projects focused on the European foredeep play
-- EIV-1 Suceava Concession, onshore Romania:
o Commencement of first gas production at Bainet-1 well within
10 months of drilling - completion of permitting process and
installation of connection to existing production facility
o Anticipated average flow rate of 15,000 m3/day for budgeting
purposes based on more than six months of production
o Post period end enlargement of the concession area includes
new high priority Bainet lookalike gas prospect - preparations
underway to drill an exploration well in June/July 2019
-- Podere Gallina Exploration Permit, onshore Italy:
o Commercial gas discovery confirmed following testing of Podere
Maiar-1d well - peak flow rates of 148,136 scm/day (5.2mmscf/d) and
129,658 scm/day (4.6 mmscf/d) from two gas-bearing reservoirs
achieved
o Post period end preliminary award of production concession
keeps first gas on track to commence at Selva in 2020
o Post period end Competent Person's Reports assign 2P reserves
/ 2C resources / prospective resources of 2.26 bcf / 2.40 bcf /
15.56 bcf respectively net to Prospex's 17% interest
-- Tesorillo Gas Project, onshore Spain:
o Increase in interest to 15% from 2.5% as part of staged
earn-in option to acquire 49.9% interest following 2018 field
programme centred on de-risking up to 830 billion cubic feet of gas
(Best Estimate) of gross unrisked Prospective Resources
o Results of ongoing work programmes to determine well location
and an updated Competent Person's Report
o Strong local and regional support garnered through community
engagement programmes
FINANCIAL HIGHLIGHTS
-- GBP779,904 maiden net profit after taxation from continuing
operations (2017: loss - GBP3,161,241)
-- 77% increase in the net book value of investments to GBP4,307,617 (2017: GBP2,426,789)
-- GBP1,710,418 unrealised gains on financial assets (2017: loss - GBP613,723)
-- GBP1,061,451 administrative expenses, before bad debt
provisions, broadly in line with 2017's GBP1,003,630
-- GBP1.2 million raised via placing of 200,000,000 new ordinary
shares to fund 2018 work programmes
-- GBP480,000 raised via the issue of loan notes, primarily to
fund the Company's share of the budgeted early stage development
costs (including environmental monitoring) at the Selva gas
discovery
-- Post period end GBP800,000 raised via placing of 400,000,000
new ordinary shares, primarily to fund the Company's share of costs
for the 2019 Suceava work programme, including drilling the Bainet
West prospect
Edward Dawson, Managing Director of Prospex, said, "A maiden net
profit of GBP779,000 is testament to the progress made on the
ground across our portfolio of late stage European projects during
the year under review. This includes first gas production in
Romania, confirmation of a commercial gas discovery in Italy and an
increase in our interest in the up to 830bcf Tesorillo gas project
in Spain to 15% from 2.5%, following completion of 2018 work
programmes. Our objective remains to expose our shareholders to a
continuous stream of high impact activity, and in line with this we
are focused on ensuring 2019 builds on the success we have had over
the past two years. 2019 is expected to see us participate in the
drilling of a second well in Romania targeting a prospect that is a
lookalike to the producing Bainet field, and further advance our
work programmes in Spain and Italy. I look forward to providing
further updates on our progress as we focus on ensuring the
underlying value of our assets is more fully reflected in our share
price."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* *S * *
For further information visit www.prospexoilandgas.com or
contact the following:
Edward Dawson Prospex Oil and Gas Plc Tel: +44 (0) 20 3948
1619
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Jack Botros
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
John Belliss 9427
Duncan Vasey Peterhouse Corporate Finance Tel: +44 (0) 20 7469
0932
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
Priit Piip 1177
CHAIRMAN'S STATEMENT
The discovery of commercial hydrocarbon accumulations, the
commencement of production, the generation of first revenues, the
acquisition of an interest in a high impact project - all are key
objectives for any oil and gas company, let alone a junior
investment company such as Prospex Oil & Gas. It is therefore
noteworthy that Prospex's 2018 report card includes all the above:
a commercial gas discovery at the Selva field on the Podere Gallina
permit, Italy; the commencement of gas production and first
revenues at the Bainet field on the Suceava Concession, Romania;
and the acquisition of a further 12.5% interest in the large
Tesorillo gas project, Spain, on which there is a historic
discovery and 830bcf of gross unrisked prospective resources.
Success on the ground has been reflected in the Company's full
year financial results which include a maiden net profit after
taxation from continuing operations of GBP779,904, compared to
2017's loss of GBP3,161,241, and a 77% increase in the net book
value of our investments to GBP4,307,617 as at 31 December 2018
(2017: GBP2,426,789). Comparing this last figure to the Company's
current sub GBP3million market capitalisation highlights how
Prospex is not only a fast-growing junior oil and gas investment
company, but also a value play trading at a significant discount to
net assets. Due to the progress made to date in de-risking two of
our three projects via the drill bit and the considerable run room
they offer, we would argue there is a strong case for our shares to
trade at a premium to net book value rather than a discount.
One of these substantially de-risked projects is the Podere
Gallina Exploration Permit in Italy. Here we have reported (post
period end) maiden gas 2P reserves of 2.26Bcf net to Prospex's 17%
interest, as contingent resources previously assigned to the Selva
gas field were reclassified as reserves following the successful
testing of the Podere Maiar well ('PM-1') in January 2018. This
represents the first time that reserves have been assigned to one
of our projects by an independent third party, in this case via a
Competent Person's Report produced by geophysical services
consultancy, CGG Services (UK) Limited ('CGG'). Being assigned
first reserves is a major milestone. Not only does it provide
Prospex with significant asset backing, particularly when compared
to our current market valuation, it also opens up new channels of
non-dilutive funding, such as reserves-based lending. Additionally,
production from these reserves will lead to a step up in our
internally generated revenues which in turn will provide another
source of funding for investment in late stage onshore European
opportunities both inside and outside our existing portfolio.
January 2019's preliminary award of a production concession for
Podere Gallina keeps first production at Selva on course to
commence in 2020 at a gross rate of up to 150,000m3/day. At this
level and at current gas prices, Selva alone promises to generate
significant cash flow for reinvestment across our asset base. This
includes Podere Gallina where multiple follow-up targets, many
larger than Selva, have already been identified. The scale of the
additional run room at Podere Gallina was quantified by the
substantial resource upgrade we reported post period end. In
addition to 13.3Bcf of gross 2P reserves, Selva's two historic gas
producing North Flank and South Flank reservoirs are estimated by
CGG to have a 60% - 70% chance of holding 14.1Bcf of gross
contingent resources ('2C'). At the same time, aggregate gross
prospective resources (best estimate) for four large prospects
(East Selva, Fondo Perino, Cembalina, and Riccardina) have
increased by 74% to 91.5Bcf from 52.7Bcf. Following the upgrade,
our 17% interest in Podere Gallina now translates into net 2P
reserves / 2C resources / prospective resources of 2.26Bcf /
2.40Bcf / 15.56Bcf respectively. The joint venture partners are
keen to prove up Podere Gallina's potential and bring Selva
online.
This is what we are doing in Romania where our wholly-owned
subsidiary PXOG Massey Limited has a 50% non-operated interest in
the EIV-1 Suceava Concession, onshore Romania. A proven hydrocarbon
basin, multiple targets, access to existing infrastructure, and a
supportive regulatory environment - we recognised from the outset
that Suceava has the potential to deliver fast track, low cost
exploration and development opportunities. The successful Bainet-1
well, in which we participated in late 2017, provides proof of
concept. In less than 12 months of the discovery being made in
November 2017, the field was brought into production in September
2018. Between discovery and first production, a 2.2km flowline was
successfully laid connecting Bainet-1 to the existing Bilca
production facility, which in turn indirectly connected the field
to Romania's Transgaz-owned national gas grid. At the same time,
the relevant Government approvals required to commence production
were sought and subsequently secured. In all Bainet-1 was drilled
and tied into production in line with the original EUR800,000 gross
cost estimate (EUR400,000 net to Prospex).
Production at Bainet-1 commenced in September 2018 and averaged
18,000m3/day during the period to the end of the year. Moving
forward the Joint Venture is assuming an average production rate of
15,000m3/day for 2019 budgeting purposes.
In terms of production, Bainet-1 is relatively small. However,
when the low costs and short timelines are considered alongside the
presence of multiple copycat structures, the potential to rapidly
build Suceava into a highly cash flow generative platform becomes
clear. We are looking to do just this, and post period end we
announced the enlargement of the Exploration Area of the
Concession, which automatically added a new Bainet-1 lookalike gas
prospect to our inventory of targets. The new gas prospect,
Bainet-West, is well defined on 2D seismic and has similar seismic
attributes to Bainet-1 which was drilled to a total depth of 600m
and encountered 9m of reservoir with 8m of net gas pay consisting
of a good quality Sarmatian sandstone reservoir also found in
producing fields in and around the Concession. Lying at a similar
depth to Bainet-1, the new gas prospect, which is similarly
positioned in relation to a fault, is a priority target and the
operator has commenced work on securing the relevant permits in
order to drill an exploration well. Based on our experience with
Bainet-1, we are confident that drilling operations will be able to
commence later this year.
Drilling is also a priority at the 38,000ha Tesorillo Project in
southern Spain. Tesorillo lies in a proven hydrocarbon region and
comprises two petroleum exploration permits, Tesorillo and
Ruedalabola. Tesorillo holds the 1956 Almarchal-1 discovery well
and has multi-Tcf potential over a thick section of possible gas
pay, including zones which flowed gas to surface on testing. Drill
stem tests and log analysis also confirmed 48m of gas play from two
Miocene Aljibe Formation sandstone intervals, whilst a further 492m
of potential gas play has been interpreted from logs but
unconfirmed by testing. Ruedalabola contains the 1957 Puerto de
Ojen-1 well, which is located 15km to the east of Almarchal and has
displayed similar gas reservoir zones to Almarchal-1 but could not
be tested for mechanical reasons.
As with Podere Gallina and Suceava, Tesorillo has excellent
access to infrastructure being located 3.9km from the European
landing point of the North African Maghreb gas pipeline, providing
access to high priced European gas markets. Unlike Podere Gallina
and Suceava, Prospex is acquiring an up to 49.9% interest in the
project via an to earn-in option based on the results of work
programmes centred on de-risking targets ahead of drilling to test
a historic gas discovery and prove up the potentially significant
resources. A report undertaken by Netherland Sewell and Associates
in 2015 estimated that Tesorillo could hold gross unrisked
Prospective Resources of 830Bcf of gas (Best Estimate), with upside
in excess of 2Tcf. Following favourable progress on the 2018 work
programme, in December 2018 the Company decided to increase its
interest in the project from 2.5% to 15% for a net consideration of
EUR153,250.
There were three strands to the 2018 work programme, the first
of which was general field studies to populate the Environmental
and Social Impact Assessment ('ESIA') report on Tesorillo, which is
required for the permitting of two new wells, the first of which is
likely to twin the Almarchal-1 discovery. As at the end of the
reporting period, ca.70% of the overall fieldwork required for the
ESIA had been completed with the remaining work to be carried out
once a well location has been decided. The second strand was
centred on a detailed surface structural geology mapping exercise
by a leading expert from Granada University. The new map and
related cross-sections show that the structural subsurface geometry
of the exploration target, the Aljibe sandstone in the Lowermost
Miocene, is possibly formed by several folds and thrust ramps of 3
to 5km length which are inferred to be potential gas traps. The
third strand involved an Audio Magneto Telluric survey to help
evaluate the subsurface geology of the permit area and test for
resistivity as a further indication of the presence of
hydrocarbons. This has been completed over key areas of interest
and the raw field data acquired is currently being processed.
The results of strands two and three will increase our
geological and geophysical understanding of the permit area and
will be used to decide the location of the new exploration wells.
The final results will also likely be fed into an updated Competent
Person's Report. A further work stream is underway to reprocess raw
2D seismic data acquired by Repsol in 1991 using modern depth
migration techniques. This data includes a line that intersects the
Almarchal-1 well.
Financial Review
For the year ended 31 December 2018, the Company is reporting a
net profit after taxation from continuing operations of GBP779,904
(2017: loss - GBP3,161,241). Unrealised gains arising on financial
assets at fair value totalled GBP1,710,418 (2017: loss -
GBP613,723). Administrative expenses of GBP1,064,151 for the year,
before bad debt provisions for continuing operations, remained in
line with those incurred during the previous year (2017:
GBP1,003,630). No bad debt provisions were taken against amounts
due from subsidiary undertakings during the year (2017:
GBP1,543,888).
During the year, the Company raised GBP1.2m via an
oversubscribed placing of 200,000,000 ordinary shares to fund the
Company's share of costs of work programmes across its portfolio.
This included the successful flow testing of the Podere Maiar well
in Italy in Q1 2018; the tie in at the Bainet-1 gas discovery in
Romania in Q2 2018; and work to further delineate the gas discovery
at Tesorillo in Spain.
In October the Company raised GBP480,000 of debt capital through
the issue of loan notes. These funds were raised primarily to fund
the Company's share of the budgeted early stage development costs
(including environmental monitoring) at the Selva gas discovery
('Selva') on the Podere Gallina Permit in Italy ('Podere Gallina').
The loan notes bear interest at 10% per annum, capitalised to 30
June 2019, with the first biannual cash payment on 31 December
2019. Capital repayments start in December 2020 with final
repayment on 30 June 2022 (four equal payments).
As at 31 December 2018, the Company held cash and cash
equivalents of GBP233,138 (2017: GBP850,060). Subsequent to the
reporting period, in March 2019, the Company raised GBP800,000
gross via an oversubscribed placing of 400,000,000 new ordinary
shares primarily to fund the Company's share of costs for the 2019
work programme at Suceava which includes plans to drill the
Bainet-West prospect.
Outlook
In little more than 18 months, we have acquired material
interests in three European onshore projects, drilled two wells,
resulting in two commercial gas discoveries, brought one of these
onto production, booked maiden gas reserves for the other, and now
we have reported our first net profit. The rapid progress we have
made is testament to the quality of our asset base and the rigorous
screening process we apply to all potential new ventures. Our focus
on late stage projects in proven hydrocarbon regions with
drill-ready prospects, multiple follow-up targets, access to
existing infrastructure and short timelines to activity has served
us well. We intend to build on this success going forward and while
there is still much to go for with our existing assets, we continue
to evaluate potential new projects to grow our portfolio
further.
Key to delivering shareholder value is hitting the milestones we
set ourselves. Drilling success, first production and acquisitions
do not happen overnight. An investment of considerable time and
resources lie behind all these achievements. The seeds of the
successes disclosed over the course of 2018 were very much planted
in prior reporting periods. With an eye on future value generating
activity, the year under review has been no different. Much work
has taken place to ensure that 2018's success is no one-off and
that, importantly, our shareholders continue to be exposed to the
consistent flow of high impact, activity that we set out to
deliver. Thanks to the work carried out over the course of the
year, shareholders can expect more of the same in 2019 and
beyond.
Finally, I would like to take this opportunity to thank the
Board and the management team for their continued hard work and
support over the course of the year. I look forward to working with
them all in the year ahead, as we focus on delivering on our
overriding objective which remains to generate value for all our
shareholders.
Bill Smith
Non-Executive Chairman
June 2019
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2018
Notes 2018 2017
GBP GBP
CONTINUING OPERATIONS
Revenue 4 - -
Other operating income 5 60,601 -
Administrative expenses (1,064,151) (2,547,518)
---------------------- ----------------------
OPERATING LOSS (1,003,550) (2,547,518)
Gain/(loss) on revaluation
of investments 1,710,418 (613,723)
Loss on disposal of investments (8,407) -
---------------------- ----------------------
698,461 (3,161,241)
Finance costs (10,840) -
Finance income 7 92,283 -
---------------------- ----------------------
PROFIT/(LOSS) BEFORE INCOME
TAX 8 779,904 (3,161,241)
Income tax 9 - -
---------------------- ----------------------
PROFIT/(LOSS) FOR THE YEAR 779,904 (3,161,241)
Other comprehensive income - -
---------------------- ----------------------
TOTAL COMPREHENSIVE INCOME/(LOSS)
FOR THE YEAR 779,904 (3,161,241)
====================== ======================
Earnings per share expressed
in pence per share: 10
Basic 0.065p (0.580)p
====================== ======================
Consolidated Statement of Financial Position
31 December 2018
Note 2018 2017
GBP GBP
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11 - 429
Investments 12 4,307,617 2,426,789
Loans and other financial assets 13 1,013,129 1,062,587
Trade and other receivables 14 897,371 -
---------------------- ----------------------
6,218,117 3,489,805
---------------------- ----------------------
CURRENT ASSETS
Trade and other receivables 396,626 149,231
Cash and cash equivalents 16 233,138 850,060
---------------------- ----------------------
629,764 999,291
---------------------- ----------------------
TOTAL ASSETS 6,847,881 4,489,096
====================== ======================
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 6,035,587 5,835,587
Share premium 9,756,759 8,862,779
Merger reserve 2,416,667 2,416,667
Capital redemption reserve 43,333 43,333
Retained earnings (11,955,212) (12,735,116)
---------------------- ----------------------
TOTAL EQUITY 6,297,134 4,423,250
---------------------- ----------------------
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities - borrowings
Interest bearing loans and
borrowings 360,000 -
---------------------- ----------------------
CURRENT LIABILITIES
Trade and other payables 17
Financial liabilities - borrowings 18 70,747 65,846
Interest bearing loans and
borrowings 120,000 -
---------------------- ----------------------
190,747 65,846
---------------------- ----------------------
TOTAL LIABILITIES 550,747 65,846
---------------------- ----------------------
TOTAL EQUITY AND LIABILITIES 6,847,881 4,489,096
====================== ======================
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2018
Capital
Share Share Merger redemption Retained
capital premium reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Balance at 1
January 2017 5,107,779 6,740,144 2,416,667 43,333 (9,754,371) 4,553,552
Changes in
equity -
Loss for the year - - - - (3,161,241) (3,161,241)
Issue of shares 727,808 2,372,193 - - - 3,100,001
Costs of share
issue - (239,416) - - - (239,416)
Equity-settled
share-based
payments - (10,142) - - 180,496 170,354
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Balance at 31
December 2017 5,835,587 8,862,779 2,416,667 43,333 (12,735,116) 4,423,250
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Changes in
equity
Profit for the
year - - - - 779,904 779,904
Issue of shares 200,000 1,000,000 - - - 1,200,000
Costs of share
issue - (106,020) - - - (106,020)
Equity-settled
share-based
payments - - - - - -
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Balance at 31
December 2018 6,035,587 9,756,759 2,416,667 43,333 (11,955,212) 6,297,134
====================== ====================== ====================== ====================== ====================== ======================
Share capital
Represents the nominal value of the issued share capital.
Share premium account
Represents amounts received in excess of the nominal value on
the issue of share capital less any costs associated with the issue
of shares.
Merger reserve
Represents the difference between the nominal value of the share
capital issued by the Company and the fair value of the subsidiary
at the date of acquisition.
Capital redemption reserve
A reserve into which amounts are transferred following the
redemption or purchase of the company's own shares.
Retained earnings
Represents accumulated comprehensive income for the year and
prior periods.
Consolidated Statement of Cash Flows
for the year ended 31 December 2018
2018 2017
GBP GBP
Cash flows from operating activities
Cash generated from operations (2,062,306) (972,151)
-------------------- ----------------------
Net cash used in operating
activities (2,062,306) (972,151)
-------------------- ----------------------
Cash flows from investing activities
Purchase of fixed asset investments (246,040) (1,504,787)
Sale of fixed asset investments 67,223 -
Interest received 2 -
Dividends received 5,261 -
-------------------- ----------------------
Net cash used in investing
activities (173,554) (1,504,787)
-------------------- ----------------------
Cash flows from financing activities
New loans in year 480,000 -
Loan repayments in year 44,958 -
Share issue 1,200,000 3,100,001
Costs of shares issued (106,020) (239,416)
-------------------- ----------------------
Net cash from financing activities 1,618,938 2,860,585
-------------------- ----------------------
(Decrease)/increase in cash
and cash equivalents (616,922) 383,647
Cash and cash equivalents at
beginning of year 850,060 466,413
-------------------- ----------------------
Cash and cash equivalents at
end of year 233,138 850,060
==================== ======================
Reconciliation of operating loss to cash generated from
operating activities
2018 2017
GBP GBP
Profit/(loss) before income
tax 779,904 (3,161,241)
Depreciation charges 429 420
Loss on disposal of fixed assets 8,407 -
(Gain)/loss on revaluation
of fixed assets (1,797,438) 613,723
Equity-settled share-based
payments - 170,354
Bad debt provision - 1,543,888
Finance costs 10,840 -
Finance income (5,263) -
---------------------- ----------------------
(1,003,121) (832,856)
Increase in trade and other
receivables (1,057,746) (117,465)
Decrease in trade and other
payables (1,439) (21,830)
---------------------- ----------------------
Cash used in operations (2,062,306) (972,151)
====================== ======================
Notes to the Consolidated Financial Statements
for the year ended 31 December 2018
1. STATUTORY INFORMATION
Prospex Oil and Gas Plc is registered in England and Wales and
is quoted on the AIM Market of the London Stock Exchange Plc. The
Company's registered number and registered office address can be
found on the Company Information page.
The presentation currency of the financial statements is the
Pound Sterling (GBP).
2. ACCOUNTING POLICIES
Basis of preparation
The Company financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union, (IFRSs) and International Financial
Reporting Interpretations Committee ('IFRIC') interpretations
issued by the International Accounting Standards Board (IASB) as
adopted by the European Union and with those parts of the Companies
Act 2006 applicable to companies reporting under IFRS.
The Company financial statements have been prepared under the
historical cost convention or fair value where appropriate.
Preparation of consolidated financial statements
Subsidiaries include all entities over which the Company has the
power to govern financial and operating policies. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Company
controls another entity. Subsidiaries are consolidated from the
date on which control commences until the date that control ceases.
Intra-group balances and any unrealised gains and losses on income
or expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
The Company is an investment entity and, as such, does not
consolidate the investment entities it controls. The Company's
interests in subsidiaries are recognised at fair value through
profit and loss.
Going concern
The current economic environment is challenging, and the Company
has reported an operating loss for the year of GBP1,003,550. These
operating losses are expected to continue in the current accounting
year to 31 December 2019.
The Company regularly carries out fund-raising exercises in
order that it can provide the necessary working capital and
investment funds for the Company. As detailed in note 21, since the
year end, the Company has raised GBP800,000 before expenses,
through the issue of new ordinary shares. The board expects to
continue to raise additional funding as and when required to cover
the Group's development, primarily from the issue of further
shares.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of the approval
of these financial statements. In developing these forecasts, the
Directors have made assumptions based upon their view of the
current and future economic conditions that are expected to prevail
over the forecast period. The Directors estimate that the cash held
by the Company together with known receivables will be sufficient
to support the current level of activities into the second quarter
of 2020. The Directors are continuing to explore sources of finance
available to the Company and based upon initial discussions with a
number of existing and potential investors they have a reasonable
expectation that they will be able to secure sufficient cash
inflows for the Company to continue its activities for not less
than 12 months from the date of approval of these financial
statements; they have therefore prepared the financial statements
on a going concern basis.
Property, plant and equipment
Depreciation is provided at the following annual rates in order
to write off the cost less estimated residual value of each asset
over its estimated useful life.
Computer equipment - 25% per annum on reducing balance
Financial instruments
Financial assets and financial liabilities are recognised on the
balance sheet when the Company becomes a party to the contractual
provisions of the instrument.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The
principal financial assets of the company are loans and
receivables, which arise principally through the provision of goods
and services to customers (e.g. trade receivables) but also
incorporate other types of contractual monetary asset. They are
included in current assets, except for maturities greater than 12
months after the balance sheet date. These are classified as
non-current assets.
The Company's loans and receivables are recognised and carried
at the lower of their original amount less an allowance for any
doubtful amounts. An allowance is made when collection of the full
amount is no longer considered possible.
The Company's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the entity after deducting all
of its financial liabilities.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the
balance sheet. Finance costs and gains or losses relating to
financial liabilities are included in the profit and loss account.
Finance costs are calculated so as to produce a constant rate of
return on the outstanding liability.
Where the contractual terms of share capital do not have any
terms meeting the definition of a financial liability then this is
classed as an equity instrument. Dividends and distributions
relating to equity instruments are debited direct to equity.
Equity comprises the following:
- Share capital represents the nominal value of equity
shares;
- Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue;
- Profit and loss reserve represents retained deficit;
- Other reserve represents the capital redemption reserve
arising on redemption of shares in previous years and own share
reserve.
Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted by the statement of
financial position date.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. Deferred tax is determined using tax rates that have been
enacted or substantially enacted at the balance sheet date and are
expected to apply when the related deferred income tax asset is
realised, or the deferred tax liability is settled. Deferred tax is
charged or credited in the income statement, except when it relates
to items charged or credited to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax assets are only
recognised to the extent that it is probable that future taxable
profit will be available against which the asset can be
utilised.
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and
short-term deposits with an original maturity of three months or
less.
Trade and other payables
Trade and other payables are initially measured at fair value
and subsequently measured at amortised cost using the effective
interest rate method.
Hire purchase and leasing commitments
Rentals paid under operating leases are charged to the statement
of comprehensive income on a straight-line basis over the period of
the lease.
Employee benefit costs
The company operates a defined contribution pension scheme.
Contributions payable to the company's pension scheme are charged
to the income statement in the period to which they relate.
Equity-settled share-based payment
The Company makes equity-settled share-based payments. The fair
value of options granted is recognised as an expense, with a
corresponding increase in equity. The fair value is measured at
grant date and spread over the vesting period, which is the period
over which all of the specified vesting conditions are to be
satisfied. The fair value of the options granted is measured based
on the Black-Scholes framework, taking into account the terms and
conditions upon which the instruments were granted. At each balance
sheet date, the Company revises its estimate of the number of
options that are expected to become exercisable. It recognises the
impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
Accounting standards issued but not yet effective and/or
adopted
As at the date of approval of these financial statements, the
following standards were in issue but not yet effective. These
standards have not been adopted early by the company as they are
not expected to have a material impact on the company's financial
statements.
Effective
date (period
beginning
on or after)
--------- ---------------------------------------- ----------------
IFRS 3, Amendments resulting from Annual 01/01/2019
IFRS 11 Improvements 2015-17 cycle
IAS 12,
IAS 23
IFRS 3 Amendments - Definition of a Business 01/01/2020
Amendment - Prepayment features
IFRS 9 with negative compensation 01/01/2019
Leases - recognition, measurement,
IFRS 16 presentation and disclosure 01/01/2019
IFRS 17 Insurance contracts 01/01/2021
IAS 1
and IAS
8 Amendments - Definition of Material 01/01/2020
Amendment - Plan Amendment, Curtailment
IAS 19 or Settlement 01/01/2019
Amendment - Long term interests
IAS 28 in Associates and Joint Ventures 01/01/2019
----------- ---------------------------------------------------- --------------
The International Financial Reporting Interpretations Committee
has also issued interpretations which the company does not consider
will have a significant impact on the financial statements.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the financial information in conformity with
IFRS requires the use of certain critical accounting estimates that
affect the reported amounts of assets and liabilities at the date
of the financial information and the reported amounts of revenue
and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amounts, events or
actions, actual results ultimately may differ from these estimates.
The estimates and underlying assumptions are as follows:
Investment entities
The judgements, assumptions and estimates involved in the
Company's accounting policies that are considered by the Board to
be the most important to the portrayal of its financial condition
are the fair valuation of the investment and the assessment
regarding investment entities. The investment portfolio is held at
fair value. The Directors review the valuations policies, process
and application to individual investments.
Entities that meet the definition of an investment entity within
IFRS 10 are required to account for most investments in controlled
entities, as well as investments in associates and joint ventures,
at fair value through profit and loss. The Board has concluded that
the Company continues to meet the definition of an investment
entity as its strategic objective of investing in portfolio
investments for the purpose of generating returns in the form of
investment income and capital appreciation remains unchanged.
Fair value is the underlying principle and is defined as "the
price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date".
Fair value is therefore an estimate and, as such, determining fair
value requires the use of judgement. The quoted assets in our
portfolio are valued at their closing bid price at the balance
sheet date. The largest investment in the portfolio, however, is
represented by an unquoted investment.
Impairment of assets
The Company's principal investments are in wholly owned unquoted
subsidiaries which each have a minority interest in overseas
entities with oil and gas assets.
The Company is required to test, on an annual basis, whether its
non-current assets have suffered any impairment. Determining
whether these assets are impaired requires an estimation of the
value in use of the cash-generating units to which the assets have
been allocated. The value in use calculation requires the Directors
to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate to calculate the
present value. Subsequent changes to the cash generating unit
allocation or to the timing of cash flows could impact on the
carrying value of the respective assets.
The calculation of value-in-use for oil and gas assets under
development or in production is most sensitive to the following
assumptions:
- Commercial reserves
- production volumes;
- commodity prices;
- fixed and variable operating costs;
- capital expenditure; and
- discount rates.
A potential change in any of the above assumptions may cause the
estimated recoverable value to be lower than the carrying value,
resulting in an impairment loss. The assumptions which would have
the greatest impact on the recoverable amounts of the fields are
production volumes and commodity prices
Recoverability of other financial assets
The majority of the Company's financial assets represent loans
provided to its subsidiaries, which are associated with funding of
mineral exploration and development projects. The recoverability of
such loans is dependent upon the discovery of economically
recoverable reserves, the ability of the Company to maintain
necessary financing to complete the development of the reserves and
future profitable production or proceeds from the disposition
thereof.
Share based payments
The estimates of share-based payments requires that management
selects an appropriate valuation model and make decisions on
various inputs into the model including the volatility of its own
share price, the probable life of the options before exercise, and
behavioural consideration of employees.
Deferred tax assets
Deferred taxation is provided for using the liability method.
Deferred tax assets are recognised in respect of tax losses where
the Directors believe that it is probable that future profits will
be relieved by the benefit of tax losses brought forward. The Board
considers the likely utilisation of such losses by reviewing
budgets and medium-term plans for the Company. The Directors have
decided that no deferred tax asset should be recognised at 31
December 2018. If the actual profits earned by the Company differs
from the budgets and forecasts used then the value of such deferred
tax assets may differ from that shown in these financial
statements.
4. REVENUE
Segmental reporting
The Company is an Investing Company. The results for this
continuing operation, all of which were carried out in the UK, are
disclosed in the Income Statement. The net assets as at 31 December
2018 as shown on the Statement of Financial Position all relate to
the Investment activity.
5. OTHER OPERATING INCOME
2018 2017
GBP GBP
Sundry receipts 60,601 -
================== ======================
6. EMPLOYEES AND DIRECTORS
2018 2017
GBP GBP
Wages and salaries 406,603 283,879
Social security costs 42,293 30,088
Other pension costs 20,892 13,500
---------------- ----------------
469,788 327,467
================ ================
Under the Pensions Act 2008, every UK employer must put certain
staff into a pension scheme and contribute to it. The Company
auto-enrolled its eligible employees in a defined contribution
scheme. The charge to the Statement of Profit or Loss represents
the amounts paid to the scheme. At the year end, the amount due to
the pension scheme was GBPnil (2017: GBPnil)
The average number of employees during the year was as
follows:
2018 2017
Directors 4 4
Staff 3 -
-------------------- ----------------------
7 4
==================== ======================
2018 2017
GBP GBP
Directors' remuneration 183,400 147,133
Directors' pension contributions 13,083 12,350
--------------- ---------------
196,483 159,483
=============== ===============
Details of Directors' remuneration can be found in note 24.
7. NET FINANCE INCOME
2018 2017
GBP GBP
Finance income:
Dividend received 5,261 -
Interest receivable on group
loan 87,020 -
Deposit account interest 2 -
-------------------- ----------------------
92,283 -
==================== ======================
Finance costs:
Loan interest payable 10,840 -
==================== ======================
Net finance income 81,443 -
==================== ======================
8. PROFIT/(LOSS) BEFORE INCOME TAX
The profit before income tax (2017 - loss before income tax) is
stated after charging/(crediting):
2018 2017
GBP GBP
Other operating leases 42,841 31,927
Depreciation - owned assets 429 420
Auditors' remuneration 20,000 16,250
Foreign exchange differences (4,315) (10,572)
Bad debt provision against amounts
due from subsidiaries - 1,543,888
====================== ==================
9. INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose for the year ended 31
December 2018 nor for the year ended 31 December 2017.
Factors affecting the tax expense
The tax assessed for the year is lower (2017 - higher) than the
standard rate of corporation tax in the UK. The difference is
explained below:
2018 2017
GBP GBP
Profit/(loss) before income
tax 779,904 (3,161,241)
====================== ======================
Profit/(loss) multiplied by the standard
rate of corporation tax in the UK of
19.00% (2017 - 19.25%) 148,182 (608,539)
Effects of:
Non-deductible expenses 2,222 330,280
Depreciation add back 82 81
Losses used for group relief 5,124 -
Tax losses not utilised 168,772 164,720
Unrealised chargeable (gains)/losses (324,979) 113,458
Loss on sale of investments 1,597 -
Other tax adjustments (1,000) -
---------------------- ----------------------
- -
====================== ======================
There is no provision for UK Corporation Tax due to adjusted
losses for tax purposes, subject to agreement with HM Revenue and
Customs. The deferred asset of approximately GBP0.98m (2017:
GBP0.93m) arising from the accumulated tax losses of approximately
GBP5.7m (2017: GBP4.8m) carried forward has not been recognised but
may become recoverable against future trading profits.
Changes in the applicable tax rates
The main rate of UK corporation tax is 19% effective from 1
April 2017. The main rate will reduce from 19% to 17% from 1 April
2020.
10. EARNINGS PER SHARE
The loss and number of shares used in the calculation of
earnings per ordinary share are set out below:
2018 2017
GBP GBP
Basic:
Profit/(loss)for the financial
period 779,904 (3,161,241)
=================== ============
Weighted average number of
ordinary shares 1,202,086,287 544,580,539
=================== ============
The loss and the weighted average number of shares used for
calculating the diluted loss per share are identical to those for
the basic profit/loss per share. The outstanding share options and
share warrants (note 23) exercise prices are above the average
market price of the shares and would therefore not be dilutive
under IAS 33 'Earnings per Share'.
11. PROPERTY, PLANT AND EQUIPMENT
Computer
equipment
GBP
COST
At 1 January 2018 and 31
December 2018 1,699
----------------------
DEPRECIATION
At 1 January 2018 1,270
Charge for year 429
----------------------
At 31 December 2018 1,699
----------------------
NET BOOK VALUE
At 31 December 2018 -
======================
At 31 December 2017 429
======================
Computer
12. INVESTMENTS
Shares in group
undertakings Listed investments Unlisted investments Total
GBP GBP GBP GBP
COST OR VALUATION
At 1 January 2017 2,308,600 131,712 100,000 2,540,312
Additions 500,200 - - 500,200
Revaluations (665,553) 51,830 - (613,723)
----------------------- ---------------------- ---------------------- -------------
At 1 January 2018 2,143,247 183,542 100,000 2,426,789
Additions 246,040 - - 246,040
Disposals - (75,630) - (75,630)
Revaluations 1,764,778 (29,360) (25,000) 1,710,418
----------------------- ---------------------- ---------------------- -------------
At 31 December 2018 4,154,065 78,552 75,000 4,307,617
----------------------- ---------------------- ---------------------- -------------
NET BOOK VALUE
At 31 December 2018 4,154,065 78,552 75,000 4,307,617
======================= ====================== ====================== =============
At 31 December 2017 2,143,247 183,542 100,000 2,426,789
======================= ====================== ====================== =============
The company's investments at the Statement of Financial Position
date in the share capital of companies include the following:
PXOG County Limited
Registered office: England
& Wales
Nature of business: Investment
entity
Class of shares: % holding
Ordinary 100.00
2018 2017
GBP GBP
Aggregate capital and reserves (26) (13)
Loss for the year (13) (3,852,501)
========== ======================
PXOG Massey Limited
Registered office: England
& Wales
Nature of business: Investment
entity
Class of shares: % holding
Ordinary 100.00
2018 2017
GBP GBP
Aggregate capital and reserves 585,094 (48,323)
Profit/(loss) for the year 633,417 (48,423)
========== ======================
PXOG Marshall Limited
Registered office: England
& Wales
Nature of business: Investment
entity
Class of shares: % holding
Ordinary 100.00
2018 2017
GBP GBP
Aggregate capital and reserves 3,568,671 2,142,947
Profit for the year 1,179,684 1,642,947
========== ======================
PXOG Muirhill Limited
Registered office: England
& Wales
Nature of business: Investment
entity
Class of shares: % holding
Ordinary 100.00
2018 2017
GBP GBP
Aggregate capital and reserves (413) 100
Loss for the year (513) -
========== ======================
Investments are recognised and de-recognised on the date when
their purchase or sale is subject to a relevant contract and the
associated risks and rewards have been transferred. The Company
manages its investments with a view to profiting from the receipt
of investment income and capital appreciation from changes in the
fair value of investments.
All investments are initially recognised at the fair value of
the consideration given and are subsequently measured at fair value
through profit and loss.
Unquoted investments, including both equity and loans are
designated at fair value through profit and loss and are
subsequently carried in the statement of financial position at fair
value. Fair value is determined in line with the fair value
guidelines under IFRS.
In accordance with IFRS 10, the proportion of the investment
portfolio held by the Company's unconsolidated subsidiaries is
presented as part of the fair value of investment entity
subsidiaries, along with the fair value of their other assets and
liabilities.
The holding period of the Company's investment portfolio is on
average greater than one year. For this reason, the portfolio is
classified as non-current. It is not possible to identify with
certainty investments that will be sold within one year.
Investments in investment entity subsidiaries are accounted for
as financial instruments at fair value through profit and loss and
are not consolidated in accordance with IFRS10.
These entities hold the Company's interests in investments in
portfolio companies. The fair value can increase or reduce from
either cash flows to/from the investment entities or valuation
movements in line with the Company's valuation policy. The fair
value of these entities is their net asset values.
The Directors determine that in the ordinary course of business,
the net asset values of an investment entity subsidiary are
considered to be the most appropriate to determine fair value. At
each reporting period, they consider whether any additional fair
value adjustments need to be made to the net asset values of the
investment entity subsidiaries. These adjustments may be required
to reflect market participants' considerations about fair value
that may include, but are not limited to, liquidity and the
portfolio effect of holding multiple investments within the
investment entity subsidiary.
13. LOANS AND OTHER FINANCIAL ASSETS
Loans to group undertakings
GBP
At 1 January 2018 1,062,587
New in year (49,458)
--------------------------------
At 31 December 2018 1,013,129
================================
14. TRADE AND OTHER RECEIVABLES
2018 2017
GBP GBP
Current:
Amounts owed by group undertakings 338,398 113,364
Other debtors 36,035 -
Rent deposit 10,242 2,026
VAT 9,121 28,408
Prepayments and accrued income 2,830 5,433
---------------- ----------------------
396,626 149,231
================ ======================
Non-current:
Amounts owed by group undertakings 897,373 -
================ ======================
Aggregate amounts 1,293,999 149,231
================ ======================
The loss and the weighted average number of shares used for
calculating the diluted loss per share are identical to those for
the basic profit/loss per share. The outstanding share options and
share warrants (note 23) exercise prices are above the average
market price of the shares and would therefore not be dilutive
under IAS 33 'Earnings per Share'.
15. CASH AND CASH EQUIVALENTS
2018 2017
GBP GBP
Bank accounts 233,138 850,060
============= =============
The Directors consider that the carrying amount of cash and cash
equivalents approximates to their fair value. All of the Company's
cash and cash equivalents are at floating rates of interest.
16. CALLED UP SHARE CAPITAL
2018 2017 2018 2017
Number Number GBP GBP
Allotted, issued and fully
paid
Ordinary shares of 0.1p each 1,213,593,136 1,013,593,136 1,213,593 1,013,593
Deferred shares of 0.1p each 942,462,000 942,462,000 942,462 942,462
Deferred shares of GBP24
each 54,477 54,477 1,307,459 1,307,459
Deferred shares of 0.9p each 285,785,836 285,785,836 2,572,073 2,572,073
===================== ====================== -------------- --------------
6,035,587 5,835,587
============== ==============
On 22 January 2018, the Company raised GBP1,200,000 gross via a
placing of 200,000,000 ordinary shares of GBP0.001 each at a price
of 0.6 pence per ordinary share. The net proceeds of the Placing
ensured that the Company was fully funded for its 2018 work
programmes across its portfolio of investments in late stage
European onshore oil and gas projects.
The deferred shares have no rights to vote, attend or speak at
general meetings of the Company or to receive any dividend or other
distribution and have limited rights to participate in any return
of capital on a winding-up or liquidation of the Company.
17. TRADE AND OTHER PAYABLES
2018 2017
GBP GBP
Current:
Trade creditors 20,513 28,681
Amounts owed to group undertakings - 3
Social security and other
taxes 15,394 11,362
Accruals and deferred income 34,840 25,800
--------------------- ---------------------
70,747 65,846
===================== =====================
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
18. FINANCIAL LIABILITIES - BORROWINGS
2018 2017
GBP GBP
Current:
Unsecured loan notes 120,000 -
=============== ======================
Non-current:
Unsecured loan notes 360,000 -
=============== ======================
1 year or less 1-2 years Totals
GBP GBP GBP
Unsecured loan notes 120,000 360,000 480,000
===================== ============== ==============
Terms and debt repayment schedule
The Company raised GBP480,000 via the issue of unsecured Loan
Notes ('the Loan Notes') to new and existing investors ('the
Subscribers'). In addition, the Subscribers have been issued with
55 warrants ('the Warrants') for each GBP1 of Loan Note subscribed.
Each Warrant confers to the Subscriber the right to acquire one
Ordinary Share at 0.6p (note 23).
The proceeds of the Loan Notes will be used to fund the
Company's share of the budgeted early stage development costs
(including environmental monitoring) at the Selva gas discovery on
the Podere Gallina Permit in Italy in 2019 and cover the Company's
general expenditure in 2019. The Company anticipates being able to
fund the full development of the gas discovery and further
exploration in the proposed production concession from this and
further non-equity funding as the project progresses.
The Loan Notes will pay 10% interest per annum, every six
months, capitalised to 30 June 2019, with the first cash payment to
be made on 31 December 2019. Repayments start in December 2020 with
final repayment on 30 June 2022 (four equal payments) and fit
conservatively with expected first production at Selva in
mid-2020.
19. FINANCIAL INSTRUMENTS
The principal financial instruments used by the Company, from
which financial instrument risk arises are as follows:
- Trade and other receivables
2018 2017
GBP GBP
Financial assets
Loans and receivables:
Trade and other receivables 58,225 5,433
Cash and cash equivalents 233,622 850,060
---------------- -----------------
291,847 855,493
================ =================
Other assets at amortised
costs:
Amounts owed to group
undertakings 2,253,420 1,175,951
================ =================
Financial liabilities
Trade and other payables 70,747 65,846
================ =================
- Cash and cash equivalents
- Trade and other payables
A summary of the financial instruments held by category is
provided below:
Financial assets at fair value through profit or loss
Fair value measurement
-----------------------------------------------------------
Level Level Level
1 2 3
GBP GBP GBP
At 31 December 2018 78,552 - 4,229,065
================== ====================== ===============
At 31 December 2017 183,542 - 2,243,247
================== ====================== ===============
The financial assets at fair value through profit and loss are
the Company's holdings in subsidiary undertakings, quoted
securities and one unquoted security. The quoted security falls
within Level 1 of the fair value hierarchy as defined by IFRS 13
whereas the investments in subsidiary undertakings and unquoted
security fall within Level 3.
Financial risk management
The Company's activities expose it to a variety of risks
including market risk (foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Company manages these
risks through an effective risk management programme and through
this programme, the Board seeks to minimise potential adverse
effects on the Company's financial performance.
The Board provides written objectives, policies and procedures
with regards to managing currency and interest risk exposures,
liquidity and credit risk including guidance on the use of certain
derivative and non-derivative financial instruments
Credit risk
Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Company's credit risk is primarily
attributable to its receivables and its cash deposits. It is
Company policy to assess the credit risk of new customers before
entering contracts. The credit risk on liquid funds is limited
because the counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
Liquidity risk and interest rate risk
Liquidity risk arises from the Company's management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due. The Board
regularly receives cash flow projections for a minimum period of 12
months, together with information regarding cash balances
monthly.
The Company is principally funded by equity and invests in
short-term deposits, having access to these funds at short notice.
The Company's policy throughout the period has been to minimise
interest rate risk by placing funds in risk free cash deposits but
also to maximise the return on funds placed on deposit.
All cash deposits attract a floating rate of interest. The
benchmark rate for determining interest receivable and floating
rate assets is linked to the UK base rate.
Foreign currency exposure
At 31 December 2018, the Company's monetary assets and
liabilities are denominated in GBP Sterling, the functional
currency of the Company, other than EUR76,034 (GBP68,015) of cash
at bank. This exposure gives rise to net currency gains and losses
recognised in the Statement of Comprehensive Income. A 10%
fluctuation in the GBP sterling rate compared to the Euro would
give rise to a GBP6,802 gain or loss in the Company's Statement of
Comprehensive Income.
Although the Company has a Euro bank account it has no formal
policies in place to hedge the Company's activities to the exposure
to currency risk. It is the Company's policy to ensure that it
enters into transactions its functional currency wherever
possible.
Management regularly monitor the currency profile and obtain
informal advice to ensure that the cash balances are held in
currencies which minimise the impact on the results and position of
the Company from foreign exchange movements.
20. RELATED PARTY DISCLOSURES
Included in loans to group undertakings is an amount of
GBP1,543,888 (2017: GBP1,543,888) due from PXOG County Limited, the
company's wholly owned subsidiary. At the year end, a provision of
GBP1,543,888 (2017: GBP1,543,888) was made against this balance.
Included in trade and other receivables is an amount of GBP14,526
(2017: GBP13) due from PXOG County Limited.
Included in loans to group undertakings is an amount of
GBP1,013,129 (2017: GBP1,062,587) due from PXOG Massey Limited, the
company's wholly owned subsidiary. Included in trade and other
payables is an amount of GBP4,500 (2017: GBPnil) due to PXOG Massey
Limited.
Included in trade and other receivables - non-current - is an
amount of GBP897,371 (2017: current - GBP113,350) due from PXOG
Marshall Limited, the company's wholly owned subsidiary. Interest
receivable of GBP87,020 (2017: GBPnil) has been accounted for
through the Statement of Profit or Loss.
Included in trade and other receivables is an amount of GBP
323,872 (2017: payable - GBP3) due from PXOG Muirhill Limited, the
company's wholly owned subsidiary.
During the year, there were consultancy fees of GBP15,000 (2017:
GBP12,000) and GBP7,800 (2017: GBP16,000) charged by Sallork
Limited and Sallork Legal and Commercial Consulting Limited
("Sallork") respectively. Included in trade payables at the year
end is GBP1,500 (2017: GBP6,674) and GBP800 (2017: GBPnil) owing to
Sallork Limited and Sallork Legal and Commercial Consulting Limited
respectively. Richard Mays is a director and shareholder of of both
these companies.
Included in trade and other payables are the following balances
due to Directors as at 31 December 2018.
2018 2017
GBP GBP
William Smith 7,745 -
================= ======================
The following Directors subscribed to the unsecured loan notes
(note 18):
2018 2017
GBP GBP
Richard Mays 50,000 -
William Smith 50,000 -
James Smith 25,000 -
=============== ======================
21. EVENTS AFTER THE REPORTING PERIOD
In March 2019, the Company raised GBP800,000 before expenses by
way of a placing of 400,000,000 new ordinary shares of GBP0.001
each in the Company at a price of 0.2 pence per share (the "Placing
Price") (the "Placing"). The Placing was undertaken with new and
existing investors.
The net proceeds of the Placing should ensure Prospex is fully
funded for its basic 2019 work programmes across its portfolio of
investments in late stage European onshore oil and gas
projects.
The Placing was completed by Novum Securities Limited ("Novum"),
which was issued with 8,125,000 warrants to subscribe for, in
aggregate, 8,125,000 new Ordinary Shares at an exercise price of
0.4 pence per new Ordinary Share for a period of 3 years from
Admission.
22. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, there is no ultimate
controlling party.
23. SHARE-BASED PAYMENT TRANSACTIONS
Share options
At 31 December 2017 and 31 December 2018 outstanding awards to
subscribe for ordinary shares of 1p each in the Company, granted in
accordance with the rules of the share option scheme, were as
follows:
Weighted Weighted
average average
remaining exercise
Shares contractual price
under option life (years) (pence)
31 December 2018
Brought forward 95,653,810 2.80 0.78
Granted - - -
Lapsed (812,000) (3.05)
---------------------- ------------------ ------------------
Carried forward 94,841,810 1.76 0.76
====================== ================== ==================
Weighted Weighted
average average
remaining exercise
Shares contractual price
under option life (years) (pence)
31 December 2017
Brought forward 24,632,061 3.59 2.74
Granted 71,226,149 3.00 0.52
Lapsed (204,400)
---------------------- ------------------ ------------------
Carried forward 95,653,810 1.76 0.78
====================== ================== ==================
All options were exercisable at the year end. No options were
exercised during the year.
The following share-based payment arrangements were in existence
at the year-end.
Fair
value
Expiry Exercise at grant
Options Number date price date
1. Granted 30 April
2012 40,000 30/04/2022 125.00p 47.50p
2. Granted 16 April
2015 2,847,116 15/04/2025 3.05p 1.94p
3. Granted 22 September
2016 1,434,209 22/09/2019 1.00p 0.53p
4. Granted 22 September
2016 13,694,336 22/09/2019 1.00p 0.31p
5. Granted 22 September
2016 4,164,000 22/09/2019 1.10p 0.29p
6. Granted 23 December
2016 1,436,000 23/12/2019 1.10p 0.53p
7. Granted 13 November
2017 71,226,149 13/11/2020 0.52p 0.29p
==================== =========== ========= ==========
The fair value of remaining share options has been calculated
using the Black Scholes model. The assumptions used in the
calculation of the fair value of the share options outstanding
during the year are as follows:
Grant
date Expected Risk-free
share Exercise Expected option interest
Options price price volatility life rate
1. Granted 30 0.24%
April 2012 175.00p 125.00p 32.00% 3.5 years - 0.43%
2. Granted 16
April 2015 4.00p 3.05p 71.50% 3 years 0.71%
3. Granted 22
September 2016 1.70p 1.00p 71.00% 3 years 0.10%
4. Granted 22
September 2016
* 1.70p 1.00p 71.00% 3 years 0.10%
5. Granted 22
September 2016
* 1.70p 1.10p 71.00% 3 years 0.10%
6. Granted 23
December 2016
* 2.50p 1.10p 79.00% 3 years 0.28%
7. Granted 13
November 2017 0.51p 0.52p 96.80% 3 years 0.56%
======== ========= ============ ========== ==========
* These options vest once the share price of the Company has
closed at 5p or higher for 5 consecutive trading days.
The fair value has been calculated assuming that there will be
no dividend yield.
Volatility was determined by reference to the standard deviation
of expected share price returns based on a statistical analysis of
daily share prices over a 3 year period to grant date. All of the
above options are equity settled and the charge for the year is
GBPnil (2017: GBP170,354).
Warrants
At 31 December 2018, outstanding warrants to subscribe for
ordinary shares of 0.1p each in the Company, granted in accordance
with the warrant instruments issued by Prospex, were as follows.
There are no comparatives as no warrants were in existence prior to
this year. Following the year end, the company which was granted
these warrants entered Administration, at which point the warrants
lapsed.
Weighted
average Weighted
remaining average
Shares contractual exercise
under life price
warrant (years) (pence)
31 December 2018
Brought forward 8,500,000 1.14 1.25
Granted 26,400,000 2.00 0.60
Lapsed -
---------------------- ----------------- -----------------
Carried forward 34,900,000 1.38 0.76
====================== ================= =================
Weighted
average Weighted
remaining average
Shares contractual exercise
under life price
warrant (years) (pence)
31 December 2017
Brought forward -
Granted 8,500,000 2.00 1.25
Lapsed -
---------------------- ----------------- -----------------
Carried forward 8,500,000 1.14 0.78
====================== ================= =================
All warrants were exercisable at the year end.
The following warrants were in existence at the year end.
Fair
value
Expiry Exercise at grant
Warrants Number date price date
1. Granted 20 February
2017 8,500,000 21/02/2019 1.25p 0.22p
2. Granted 12 October 2018 26,400,000 12/10/2021 0.60p N/A
============ =========== ========= ==========
The fair value of the remaining warrants has been calculated
using the Black-Scholes model. The assumptions used in the
calculation of the fair value of the share options outstanding
during the year are as follows:
Grant
date Expected Risk-free
share Exercise Expected option interest
Options price price volatility life rate
1. Granted 20 February
2017 0.52p 1.25p 98.00% 2 years 0.13%
2. Granted 12 October
2018 0.32p 0.60p N/A N/A N/A
======= ========= ============ ========= ==========
The warrants granted on 12 October 2018 fall outside the scope
of IFRS and as such no charge is made.
The fair value has been calculated assuming that there will be
no dividend yield.
Volatility was determined by reference to the standard deviation
of expected share price returns based on a statistical analysis of
daily share prices over a 3-year period to grant date.
All of the warrants are equity settled and the charge for the
year is GBPnil (2017: GBP10,142). As the warrants relating to the
charge for 2017 were all in consideration of shares issued during
that year, it was taken directly to equity and charged against the
share premium as costs in respect of the issue of shares.
24. DIRECTORS' EMOLUMENTS
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling activities
of the Company, including all directors of the Company.
2018 2017
GBP GBP
Directors' emoluments 183,400 147,333
Benefit in kind 4,200 4,200
Pension contributions 13,083 12,350
---------------- ----------------
200,683 163,883
================ ================
Salaries Benefit Pension
and fees in kind contributions 2018 2017
GBP GBP GBP GBP GBP
Edward
Dawson 130,000 4,200 13,083 147,283 127,883
William
Smith 18,000 - - 18,000 12,000
Richard
Mays 15,000 - - 15,000 12,000
James
Smith 20,400 - - 20,400 12,000
--------------- ---------------------- ---------------------- --------------- ----------------
183,400 4,200 13,083 200,683 163,883
=============== ====================== ====================== =============== ================
The number of directors for whom retirement benefits are
accruing under money purchase pension schemes amounted to 1 (2017:
1).
The Directors interests in share options as at 31 December 2018
are as follows:
Options
at 31 First Final
December Exercise Date of date of date of
Director 2018 price grant exercise exercise
Edward Dawson 680,212 3.05p 14/04/2015 14/04/2015 14/04/2025
Edward Dawson 971,663 1.00p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson
* 4,438,000 1.00p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson
* 1,292,000 1.10p 22/09/2016 22/09/2016 22/09/2019
Edward Dawson 16,940,273 0.52p 13/11/2017 13/11/2017 13/11/2020
Richard Mays 541,726 3.05p 14/04/2015 14/04/2015 14/04/2025
Richard Mays 20,196 1.00p 22/09/2016 22/09/2016 22/09/2019
Richard Mays
* 2,327,418 1.00p 22/09/2016 22/09/2016 22/09/2019
Richard Mays
* 1,436,000 1.10p 22/09/2016 22/09/2016 22/09/2019
Richard Mays 10,395,168 0.52p 13/11/2017 13/11/2017 13/11/2020
William Smith 541,726 3.05p 14/04/2015 14/04/2015 14/04/2025
William Smith 20,196 1.00p 22/09/2016 22/09/2016 22/09/2019
William Smith
* 2,327,418 1.00p 22/09/2016 22/09/2016 22/09/2019
William Smith
* 1,436,000 1.10p 22/09/2016 22/09/2016 22/09/2019
William Smith 10,395,168 0.52p 13/11/2017 13/11/2017 13/11/2020
James Smith * 1,436,000 1.10p 23/12/2016 23/12/2016 23/12/2019
James Smith 10,395,168 0.52p 13/11/2017 13/11/2017 13/11/2020
=============== ========= =========== =========== ===========
* These options vest once the share price of the Company has
closed at 5p or higher for 5 consecutive trading days.
The options awarded to Richard Mays are held in the name of
Sallork Limited, a company he owns and controls.
The Directors interests in share warrants as at 31 December 2018
are as follows:
Warrants Final
at 31 December Exercise Date date
2018 price of grant of exercise
Richard Mays 2,750,000 0.60p 22/10/2018 22/10/2020
William Smith 2,750,000 0.60p 03/10/2018 03/10/2020
James Smith 1,375,000 0.60p 12/10/2018 12/10/2020
================ ========= =========== =============
25. PUBLICATION OF REPORT AND ACCOUNTS
The report and accounts for the year ended 31 December 2018 will
be posted to shareholders shortly and will be available from the
Company's website: http://www.prospexoilandgas.com .
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 CKBDQBBKBDAD
(END) Dow Jones Newswires
June 13, 2019 02:01 ET (06:01 GMT)
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