TIDMWTE
RNS Number : 6941D
Westmount Energy Limited
30 October 2020
30 October 2020
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 2020, 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 on 11 December 2020 at 11.00.
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 today.
CHAIRMAN'S REVIEW
2020 Highlights
-- Supplementary investments made in the prolific
Guyana-Suriname Basin where 24 discoveries have been reported since
2015
-- Commencement of multi-well, ExxonMobil operated, drilling
campaign on the Kaieteur and Canje Blocks - with spud of Tanager-1
in August 2020
-- Fundraising (at 13 pence per share) yields GBP5.57M
facilitating additional investment in Cataleya Energy
Corporation
-- Two 'JHI-WTE share swap' transactions executed at implied
Westmount share price of 14.745 pence per share
-- Partial repayment of the 2021 10% Convertible Loan Notes
capital and interest by way of the issue of new shares at 14.93P
per share
-- Strong cash balances of GBP2.4M at year end.
-- Focus remains on opportunistic deployment of capital in the Guyana-Suriname Basin
The year under review was another year of progress for your
Company as we continued to build our indirect investment exposure
to the Guyana-Suriname Basin. After four years of patiently scaling
up our investment positions we have now reached the point where the
Exxon Mobil drilling programme on the Kaieteur and Canje blocks,
offshore Guyana, has commenced, with the Tanager 1 well on the
Kaieteur block currently drilling and a further two wells expected
on the Canje Block over the next six to nine months. With
independent geological risks across 2 different blocks, these 3
ExxonMobil operated wells provide some risk diversification and a
portfolio effect. The spudding of an additional exploration well,
operated by Tullow Oil, is anticipated in Block 47, Suriname,
during Q1 2021. The outcome of these initial 4 wells is likely to
determine the follow-on drilling programs and ultimately the value
of our investments in JHI Associates Inc., Cataleya Energy Corp.
and Ratio Petroleum.
GUYANA-SURINAME BASIN
As reported at the interim stage, Guyana became South America's
newest oil producing nation with first oil from the Liza Phase I
development being delivered, in December 2019, less than 5 years
after discovery. Field production is currently ramping up to its
plateau rate of 120,000 barrels of oil per day. Further field
developments are underway at Liza Phase II and Payara, where
government approval and Final Investment Decision have recently
been achieved, with follow-on anticipated projects at Yellowtail
and Hammerhead, at various stages of design, engineering and
project sanction. In aggregate this pipeline of development
projects is reported to offer the potential for Guyana to be
producing circa 750,000 BOD by 2026.
Notwithstanding the global economic backdrop, and some COVID-19
related disruption, exploration drilling has also continued apace
in the basin. The discovered and potential resource continues to
grow, with stacked petroleum systems, emerging new plays and deeper
hydrocarbons confirming the upside potential within this prolific
basin. During the last twelve months ExxonMobil and partners on the
Stabroek Block have reported five additional light oil discoveries
(Tripletail-1, Mako-1, Uaru-1, Yellowtail-2, and Redtail-1) with
the discovered Stabroek resource inventory now standing at
approximately 9 Bn Boe. This brings the total number of
discoveries, to date, on the Stabroek Block to 18 from the 20
exploration wells drilled since 2015 (a prodigious success rate of
90%).
In January 2020 Apache and Total reported a substantial,
stacked-pay, hydrocarbon discovery (Maka Central-1) which extended
the Upper Cretaceous play fairways to the southeast into Block 58,
Suriname. This discovery well has been followed up by two further
significant stacked-pay discoveries, to the southeast of Maka
Central-1, at Sapakara West-1 and Kwaskwasi-1. All three
discoveries reported light oil and gas-condensate pay in the
shallower Campanian reservoirs overlying light oil pay in deeper
Santonian reservoirs. These deeper Santonian pools on Block 58, in
conjunction with the deeper hydrocarbons reported at Tripletail-1
and Yellowtail-2, on the Stabroek Block, suggest an extensive
emerging deeper play fairway within the basin.
These drilling results continue to support the presence of
quality reservoirs, multiple source rocks and multiple phases of
hydrocarbon expulsion - indicating the potential for stacked-pay
drilling opportunities within the basin. A total of 5 plays have
now been proven though the Upper Cretaceous Liza play dominates in
terms of number of discoveries and discovered volumes to date.
COVID 19
The COVID 19 pandemic continues to cause significant disruption
to global health security and economies - as governments seek to
find a balance between addressing public health concerns via
restrictions on movement of people versus preservation of economic
activity through the injection of economic stimuli. While the
immediate impact of the pandemic on the sector resulted in a sharp
drop in demand for oil, the reopening of economies has allowed oil
prices to recover to around $40-$45 per barrel (Brent) from the
record lows earlier this year. Nevertheless, uncertainty remains
the order of the day as a second wave of the virus has the
potential to retard economic recovery through ad hoc travel
restrictions, quarantine and local lockdowns. It is hoped that
these temporary measures will 'bridge the gap' and help find the
correct balance while we await the arrival of effective
therapeutics and a vaccine.
Notwithstanding some initial COVID 19 related disruptions,
during the March-May 2020 period, exploration drilling has
continued in the Guyana-Suriname Basin. Currently, there are five
drillships operating within the basin between development and
exploration drilling operations, with four of these drillships
operating offshore Guyana. The Tanager-1 well was spudded on the
11th August 2020, using the Stena Carron drillship, and will be the
deepest well drilled in the basin to date, with an estimated target
total depth of circa 8,000 metres. Continuing drilling activity in
the basin is likely to be driven by the industry's focus on
'advantaged barrels' as a result of the unique combination of
prospect sizes, reservoir quality, low carbon intensity and low
breakeven metrics, available offshore Guyana. These characteristics
offer the potential to sustain Guyana as an investment growth area
in spite of COVID 19 related issues and general industry
headwinds.
JHI Associates Inc ("JHI")
Over the past 6 months Westmount Energy Ltd. ("WTE") has
increased its stake in JHI from 3% to 6.9% of the issued share
capital through the execution of two JHI-WTE share swap
transactions at an implied WTE share price of 14.745 pence.
Firstly, during the period, your Company announced, on 13th May
2020, that it had increased its equity position in JHI from
approximately 3% to 4.8% via the purchase of 1,350,000 common
shares in JHI Associates Inc., by way of the issue of 15,930,000
new ordinary shares of no par value in Westmount. Post the
financial year end, on September 10, 2020 Westmount announced that
it had purchased a further 1,550,000 common shares in JHI
Associates Inc. by way of the issue of 18,290,000 new ordinary
shares of no par value in Westmount which brought our holding in
JHI to 5,113,770 shares, representing approximately 6.9% of the
issued common shares in JHI. As a result of the above transactions,
JHI is now our largest investment constituting approximately 61% of
Company's portfolio based on the current balance sheet(1) .
As previously reported, JHI is a private, Ontario-registered,
company established in 2014 and focused on oil exploration
opportunities in the emerging Guyana-Suriname Basin. The company's
main asset is a 17.5% carried interest in the Canje Block covering
over 4,800 square kilometres, offshore Guyana. This block is
located adjacent to and in the same geologic basin as the Stabroek
Block which has delivered eighteen substantial oil discoveries
since 2015, with reported discovered recoverable resources of
approximately 9 billion oil-equivalent barrels to date.
ExxonMobil, which is the operator of both blocks, acquired in
excess of 6,100 km2 of 3D seismic on the Canje Block in 2016.
Subsequent processing and interpretation of this dataset has been
used to define a substantial prospect inventory on the Block with
three prospects (Bulletwood, Jabillo, and Sapote) high-graded as
potential targets for the initial drilling campaign. A 2018
DeGoyler McNaughton Competent Persons Report on the Canje Block
remains unpublished. However, the block is reported by JHI(2) to
contain more than a dozen prospects in the Canje portion of the
Liza play fairway, representing more than 10 billion barrels of
prospective recoverable oil resources, with a number of the
prospects exhibiting the same DHI (Direct Hydrocarbon Indicator)
characteristics as the neighbouring Stabroek discoveries. As a
result of a 2018 farm-out to Total, JHI is carried for the drilling
of up to four wells and is funded for the drilling of additional
wells.
It is anticipated that the first well on the Canje Block,
Bulletwood-1, will be spudded in November/December 2020.The
Bulletwood-1 prospect is reported to be a 'Liza look-alike'
confined channel complex and will target prospective resources of
circa 500 MMbbls(3) of oil. The second well on the Canje Block will
target either Sapote-1 in the east of the block or Jabillo-1, in
the northwest of the block, which is reported as a billion-barrel
class basin floor turbidite fan.
(1) Percentage of current Guyana-Suriname portfolio NAV using
financial values reported on Balance Sheet date 30(th) June 2020
(with post balance sheet share purchases referenced to that date)
(2) JHI Published Interview - 121Oil & Gas Investment
Conference, London, 2018
(3) JHI Website - www.jhiassociates.com
Cataleya Energy Corporation ("CEC")
During the financial reporting period Westmount acquired an
additional 313,500 common shares in Cataleya Energy Corporation
("CEC") for total consideration of US$3,135,000 (equivalent to GBP
GBP2,574,321) including transaction costs. Westmount currently
holds a total of 567,185 common shares in CEC, representing
approximately 5.35% of the fully diluted share capital of CEC, as
of the 30th August 2019.
As previously reported CEC is a private, Canadian registered
company established in 2015 and focused on oil exploration
opportunities in the emerging Guyana-Suriname Basin. CEC's main
asset is a 25% participating interest in the Kaieteur Block, which
it holds through its wholly owned subsidiary Cataleya Energy
Limited ("CEL"). The 13,500 km2 Kaieteur Block is located outboard
of, and adjacent to, the Ranger Oil Discovery which is located on
the Stabroek Block, offshore Guyana.
A Netherland, Sewell & Associates Inc.("NSAI") CPR,
published in May 2019, provides estimates of the unrisked
prospective oil resources in 9 prospects located on the 5,750 km2
3D seismic survey acquired in the southern part of the Kaieteur
Block in 2017. This 3D survey covers circa 42% of the total area of
the Kaieteur Block. 'Best Estimate' of Unrisked Gross Prospective
Oil Resources for individual prospects ranges from 76.1 MMBBLs
(Towa-Towa Prospect) to 702.7 MMBBLs (Toucan Prospect). Aggregate
'Best Estimate' Gross Unrisked Prospective Resources for these 9
prospects is 2.1 BnBBLs (Aggregate Low to High Estimates 694 MMBBLs
to 5.85 BnBBLs) implying Net (25%) 525 MMBBLs to CEC across the
area of the Kaieteur 3D seismic survey.
On 11th August 2020, the Stena Carron drillship commenced
operations on location at the Tanager-1 wellsite- the first well
selected for drilling on the Kaieteur Block, offshore Guyana.
The Kaieteur Block is currently operated by an ExxonMobil
subsidiary, Esso Production & Exploration Guyana Limited (35%),
with CEL (25%), Ratio Guyana Limited (25%) and a subsidiary of Hess
Corporation (15%) as partners.
Ratio Petroleum Energy Limited Partnership ("Ratio
Petroleum")
Your company holds 1,200,000 units in Ratio Petroleum,
representing a c .0.7% interest in the issued share capital of
Ratio Petroleum which holds a 25% participating interest in the
Kaieteur Block, offshore Guyana.
The Tanager-1 well which was spudded on the 11th August 2020,
has a target total depth of 8,000 metres and will take an estimated
90 days to drill. It will be the deepest well drilled in the
Guyana-Suriname Basin to date. The May 2019 Netherland, Sewell
& Associates Inc. ("NSAI") report on the Kaieteur Block
describes the Tanager Prospect as a stacked reservoir prospect
(Maastrichtian to Turonian reservoir intervals) and assigns a 'Best
Estimate' Unrisked Gross (100%) Prospective Oil Resource of 256.2
MMBBLs to the prospect (Low to High Estimates 135.6 MMBBLs to 451.6
MMBBLs), with an aggregate Probability of Geologic Success (POSg)
of 72%.
Ratio Petroleum also holds a 20% interest in Block 47 offshore
Suriname where operator Tullow is planning to use the Stena Forth
drillship to drill the Goliathberg-Voltzberg North-1 ("GVN-1")
well, in Q1 2021.The GVN-1 well has a target total depth of 5,400
metres and will take an estimated 60 days to drill. The NSAI report
on Block 47, published in June 2019, indicates that the GVN
Prospect is a stacked reservoir prospect (Turonian to Cenomanian
reservoir intervals) and assigns a 'Best Estimate' Unrisked Gross
(100%) Prospective Oil Resource of 234.7 MMBBLs to the prospect
(Low to High Estimates 35 MMBBLs to 937.9 MMBBLs), with an
aggregate Probability of Geologic Success (POSg) of 34%.
Eco (Atlantic) Oil & Gas ("EOG")
Westmount holds 1,500,000 common shares in EOG representing c
0.8% of the common shares in issue. In addition to a portfolio of
Namibian interests, EOG hold a 15% interest in the Orinduik Block
offshore Guyana, which is adjacent to the Stabroek Block.
During August and September 2019, Tullow and the Orinduik Block
partners reported two heavy oil discoveries (Jethro-1 and Joe-1
respectively) in separate Tertiary age reservoirs. Subsequently, in
January 2020, Tullow reported a light oil discovery (Carapa-1), in
Upper Cretaceous reservoirs, on the neighbouring Kanuku Block. The
commercial potential of these discoveries remains to be fully
evaluated.
Westmount originally invested in EOG to gain exposure to the
drilling outcomes of the substantial Upper Cretaceous targets on
the Orinduik block. The Gustavson Associates CPR, published in
February 2020 indicates the presence of at least four Upper
Cretaceous prospects on the Orinduik Block that are assessed to
individually contain Gross Unrisked Prospective Resources (P50) in
excess of 500 MMboe. Tullow and the Orinduik block partners are
currently reported to be reprocessing 3D seismic and updating their
geologic models by integrating the results of the Jethro-1, Joe-1
and Carapa-1 wells. EOG reported in its mid-year results that it
remains fully funded for its pro-rata share of up to 3 wells
costing USD $40M each.
Financials
The financial results show an operating loss of GBP111,493 for
the year. As previously announced, in August 2019, GBP5.573M was
raised by way of placings with new and existing shareholders at 13
pence per share. In November 2019 we announced the repayment of
GBP327K of the 2021 10% Convertible Loan Notes ('CLNs') capital and
interest by way of the issue of new shares at 14.93P per share. At
year end, the outstanding CLNs amounted to GBP400K. The company
remains well capitalised with a low-cost base and had strong cash
balances of GBP2.435M at the year end. The Board continues to be
focused on opportunistic deployment of capital to gain additional
exposure for our shareholders to the Guyana-Suriname offshore
exploration space. We continue to seek a range of opportunities
including the scaling of our existing investments where opportunity
and price discipline allow.
Summary/Outlook
Westmount is currently well positioned with a focused investment
portfolio providing exposure to large Upper Cretaceous prospects
and near-term ExxonMobil operated drilling outcomes, in this
prolific basin. Results of the Tanager 1 well are expected in
November. It is anticipated that drilling operations at
Bulletwood-1, the first of two exploration wells on the Canje
Block, will follow shortly thereafter. (Given that our investment
portfolio is currently weighted towards JHI, our largest
investment, the drilling outcomes of these two ExxonMobil operated
wells on Canje will be particularly significant for Westmount
shareholders). The Tullow operated Goliathberg-Voltzberg North-1
well is scheduled for drilling in Q1 2021. With exposure to the
drilling outcomes of this four well portfolio and potential
additional exploration drilling dependent on the above well
results, the following 6 to 12 months should provide lots of
excitement for shareholders. We are hopeful that our strategy of a
portfolio approach - with large Upper Cretaceous prospects,
independent geological risks and a compressed timeframe for
drilling - offers the potential for significant value changes,
during the next year, in the success case.
As the only AIM quoted company offering exposure to the
ExxonMobil operated drilling programmes on Canje and Kaieteur,
Westmount shareholders are uniquely positioned.
We will update shareholders when we have received drilling
results from our investee companies and in the interim I wish all
shareholders and stakeholders the best of luck.
GERARD WALSH
Chairman
29 October 2020
For further information, please contact:
Westmount Energy Limited www.westmountenergy.com
David King, Director Tel: +44 (0) 1534 823059
Anita Weaver
Cenkos Securities plc ( Nomad and Broker) Tel: +44 (0) 20 7397 8900
Nicholas Wells/Harry Hargreaves (Corporate Finance)
DIRECTORS' REPORT
FOR THE YEARED 30 JUNE 2020
The Directors present their annual report and the audited financial
statements of Westmount Energy Limited (the "Company") for the
year ended 30 June 2020.
PRINCIPAL ACTIVITIES
The principal activity of the Company is, and continues to be,
an energy investment company. Development of the Company's activities
and its prospects are reviewed in the Chairman's Review on pages
3 to 6.
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").
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the
date of this report were as follows:
10% pa. Unsecured Shares held Options held
Loan Notes at at
30 June 2020 30 June 2020 30 June 2020
G Walsh (Chairman) GBP400,000 11,933,565 1,000,000
D R King - - 500,000
T P O'Gorman - 4,650,000 750,000
D Corcoran - 5,250,000 1,000,000
Since 30 June 2020 Mr Corcoran has been granted a further 750,000
options and at the date of this report holds beneficial interest
in 1,750,000 options. See note 19 - Subsequent Events.
RESULTS AND DIVIDS
The result for the year is set out on page 16 in the Statement
of Comprehensive Income. The Directors do not recommend the payment
of a dividend in respect of these financial statements (2019:
GBPNil).
CHARITABLE DONATION
During the year the Company made a charitable donation to the
Guyana Cancer Prevention Society ("the Society") of USD10,000.
The donation was used to co-fund Phase 1 of the Society's pilot
HPV Virus/Cervical Cancer screening study .
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman , age 57, a Swiss resident, is a member
of the Chartered Institute of Management Accountants and has been
involved in financing oil and gas companies for over 20 years.
Mr Walsh maintains his knowledge and skills via direct contact
with senior industry investors and other operators, and via monitoring
of significant market activities within the global energy sector.
David R King , age 62, a Jersey resident, is a Fellow of the
Institute of Chartered Accountants in England and Wales and has
over 25 years' experience in capital markets and cross border
structuring gained from senior positions in a number of offshore
jurisdictions, notably the Cayman Islands, Hong Kong, Luxembourg
and Jersey. He is an experienced professional Non-Executive Director
and is regulated personally by the Jersey Financial Services Commission.
He maintains his knowledge and skills via fulfilment of regular
continuing professional development obligations and by close monitoring
of significant market activities within the sector. Mr King acts
as an independent director and oversees the efficient operation
of Company Secretarial, Registrar and Administrative operations
of the Company.
Thomas P O'Gorman , age 68, a Northern Ireland resident, is a
long term investor in the resource sector and is the former Chairman
of Cove Energy Plc (formerly Lapp Platts Plc) who has been involved
in financing oil and gas companies for over 40 years. Mr O'Gorman
maintains his knowledge and skills via direct contact with senior
industry investors and other operators, and via monitoring of
significant market activities within the global energy sector.
DIRECTORS' REPORT (continued)
FOR THE YEARED 30 JUNE 2020
Dermot Corcoran , age 61, a Republic of Ireland resident, is
a petroleum geologist and geophysicist, with more than 30 years'
experience working with both major and minor hydrocarbon exploration
companies globally. Mr Corcoran has wide experience in technical
and commercial aspects of petroleum exploration and production,
gained from employment and investment experience in Europe, North
Africa, West Africa, Kurdistan, Syria, Pakistan and the USA. Mr
Corcoran maintains his knowledge and skills via direct contact
with senior industry investors and other operators, attendance
and engagement at industry conferences and seminars and via monitoring
of significant market activities within the global energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate Services
Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey) Limited,
has indicated its willingness to continue in office, and a resolution
that it is re-appointed will be proposed at the next annual general
meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the Directors' Report
and the financial statements in accordance with applicable law
and regulations.
Jersey Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance
with International Financial Reporting Standards as adopted by
the European Union (IFRS) and applicable law. Under Company law
the Directors must prepare financial statements that give a true
and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. In preparing these
financial statements, the Directors are required to:
* select suitable accounting policies and then apply
them consistently;
* make judgements and accounting estimates that are
reasonable and prudent;
* state whether the financial statements have been
prepared in accordance with IFRS as adopted by the
European Union; and
* prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper accounting records
that are sufficient to show and explain the Company's transactions
and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial
statements comply with the Companies (Jersey) Law 1991. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit information
of which the Company's auditor is unaware and each Director has
taken all the steps that he ought to have undertaken as a director
in order to make himself aware of any relevant audit information
and to establish that the Company's auditor is aware of that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's
website. The Company's website is maintained in compliance with
AIM Rule 26.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with all of the
above requirements in preparing these financial statements.
On behalf of the Board
D R KING
Director
29 October 2020
CORPORATE GOVERNANCE
The Board have adopted the Quoted Companies Alliance Corporate
Governance Code ("the QCA Code") following the London Stock
Exchange's requirement for AIM listed companies to adopt and comply
with a recognised corporate governance code.
Strategy and Business Model
The strategy of the Company is to invest in and provide follow
on capital to small and medium sized companies which have
significant growth possibilities operating in the oil and gas
sector. Members of the Board have specialist knowledge and
experience in the upstream sector of the oil and gas industry
(gained from extensive investing activity over a number of decades)
allowing them to identify projects and growth companies with
potentially higher returns, commensurate with acceptable levels of
risk. The Company undertakes extensive due diligence on potential
investment opportunities and monitors performance of its
investments via close contact with the companies concerned and
analysis of their public announcements and presentations. In common
with other investment companies in this sector, access as a
minority shareholder to projects and valuable investments is
challenging but the Board is confident of its ability to continue
to source attractive investment opportunities given close
relationships with a number of companies and their management
teams, and recognition of the Board's experience and strong
network.
Shareholder Relations
The Company engages closely with its principal shareholders, a
number of whom are Directors of the Company, primarily via
face-to-face meetings and publishes announcements of significant
activity consistent with market requirements. Shareholders receive
annual and half-year financial statements and are invited to the
Company's Annual General Meeting. Contact details for the Company
are maintained on the website and on Regulatory News Service
announcements. The Board seeks to build strong relationships with
its institutional shareholders which are managed by the Chairman
and supported by other members of the Board.
Gerard Walsh, Chairman, and Dermot Corcoran, Director, are
primarily responsible for shareholder liaison, and can be contacted
via the Contact Page on the Company's website.
Stakeholder and Social Responsibilities
The Board has identified its key stakeholders as being its
shareholders and investee companies, given it has no employees and
a small range of contracted service providers. It maintains contact
with shareholders, of whom a significant proportion are Directors,
via Regulatory News Service and periodic feedback from these
parties. Contact with investee companies is operated via the
Chairman and individual Board directors responsible for the
relevant investment recommendation, and is geared to key
operational, project and transactional cycles identified for the
company concerned.
Risk Management
The Company actively monitors and manages risk in its
activities, principally through oversight and operation of its
investment portfolio. The Company identifies key risks in all of
its investments during the selection and due diligence cycle, and
subsequent recommendations for investment by the Company consider
for each proposal a range of risks and mitigating factors.
Identification of these risks is achieved by direct engagement with
the companies in which Westmount seeks to invest, close analysis of
their market opportunities and threats, combined with detailed
knowledge of the market sector where they operate and their
competitors.
Board Composition, Evaluation and Decision Making
The Board comprises three shareholder Directors (including the
Chairman Gerard Walsh) and one Non-Executive Director (David King)
resident in Jersey, who is considered to be independent.
The Company deviates from the requirements of the QCA Code in
that it has only one independent non-executive director. The
Directors consider that the structure of the Board is appropriate
and proportionate for the business at this stage of the Company's
growth, and that the Independent Director, in conjunction with the
Company's Nominated Adviser, provides appropriate challenge to the
executive directors on all corporate governance matters. The Board
intends to keep all aspects of its corporate governance -
independence and the balance of executive and non-executive roles
in particular - under review going forward.
CORPORATE GOVERNANCE (continued)
Board Composition, Evaluation and Decision Making
(continued)
Each of the four directors has considerable experience in their
respective fields and act collectively in all decision making of
the Company. The Board is satisfied that it has a suitable balance
between independence on the one hand and knowledge of the Company's
activities, to allow it to properly discharge its responsibilities
and duties. Directors are expected to use their judgement and
experience to challenge and assess the appropriateness of
operations and decision making at all times.
The Board has met 8 times this financial year and Directors each
dedicate between 12 and 150 days time to the Company per annum.
The Board regularly takes advice from its Nominated Advisor,
Cenkos Securities plc, and other external advisors (principally its
external lawyers) in relation to periodic investment opportunities
and fund raising.
The Board completes an annual self-evaluation of its performance
based on externally determined guidelines appropriate to the
composition of the Board and the Company's operation, including
Board Sub Committees. The scope of the self-evaluation exercise
will be re-assessed each year to ensure appropriate depth and
coverage of the Board's activities consistent with corporate best
practice. The Board has adopted a board effectiveness
questionnaire, which assesses the composition, processes,
behaviours and activities of the board through a range of criteria,
including board size and independence, mix of skills and
experience, and general corporate governance considerations in line
with the QCA code.
Given the stage of the business' maturity, the responsibilities
of a nomination committee are delegated to the Board, and there are
no formal succession planning processes in place. The Board intends
to keep this under review as the business develops.
Corporate Culture
Westmount Energy supports the growing awareness of social,
environmental and ethical matters when considering business
practices. These statements provide an outline of the policies in
place that guide the Company and its employees when dealing with
social, environmental and ethical matters in the workplace.
Code of Conduct
Westmount Energy maintains and requires the highest ethical
standards in carrying out its business activities in regard to
dealing with gifts, hospitality, corruption, fraud, the use of
inside information and whistle-blowing.
Westmount Energy maintains a zero-tolerance policy towards
bribery and corruption.
Equal Opportunity and Diversity
Westmount Energy promotes and supports the rights and
opportunities of all people to seek, obtain and hold employment
without discrimination.
It is our policy to make every effort to provide a working
environment free from bullying, harassment, intimidation and
discrimination on the basis of disability, nationality, race, sex,
sexual orientation, religion or belief.
Joint Venture Partners, Contractors and Suppliers
Westmount Energy is committed to being honest and fair in all
its dealings with partners, contractors and suppliers.
Procedures are in place to ensure that any form of bribery or
improper behaviour is prevented from being conducted on Westmount
Energy's behalf by joint venture partners, contractors and
suppliers. Westmount Energy also closely guards information
entrusted to it by joint venture partners, contractors and
suppliers, and seeks to ensure that it is never used
improperly.
CORPORATE GOVERNANCE (continued)
Operating Responsibility and Continuous Improvement
Westmount Energy adopts an environmental policy which sets
standards that meet or exceed industry guidelines and host
government regulations. This is reviewed on a regular basis.
Wherever we operate we will develop, implement and maintain
management systems for sustainable development that will strive for
continual improvement.
Westmount Energy is committed to maintaining and regularly
reviewing its Health and Safety and Environmental Policies.
Periodic feedback from stakeholders, as described in relation to
Stakeholder and Social Responsibilities (above), allows the Board
to monitor the culture of the Company, as well as its ethical
values and behaviours.
Governance Structures
The Board operates to manage and direct the affairs of the
Company via close contact between Board members and through both
regular scheduled and ad-hoc Board meetings. The Board aims to meet
at least quarterly with a timetable set by the external Company
Secretary with formal agendas and papers delivered in advance
supporting key matters for consideration or approval. Additionally,
contact is maintained between the directors via email and telephone
given the geographic separation of the Board.
Mr Walsh as Chairman is responsible for setting the strategy of
the Company and maintaining performance of the Board in line with
the broad objectives set in that strategy. He is responsible for
liaison with key stakeholders, including shareholders and
prospective investee companies, and also with advisers and
regulatory authorities.
Mr King, as a Jersey resident, maintains close contact with the
Company Secretary and other contracted service providers from
Jersey. The Board does not operate separate sub-committees (Audit,
Remuneration or Nomination) given its small size and close contact
for key decisions. The Company does not plan to establish new
sub-committees for the foreseeable future.
The Board retains full authority for the Company such that all
decisions on behalf of the Company are reserved for the Board.
Communication with Stakeholders
The Company communicates with shareholders through the Annual
Report and Audited Financial Statements, annual and half year
results announcements, the Annual General Meeting, and periodic
meetings with significant institutional shareholders and
analysts.
Corporate information (including all Company publications and
announcements) is available to all shareholders, prospective
investors and the public and is maintained on the Company's
website, www.westmountenergy.com .
In the last 12 months there were no votes of shareholders where
a significant proportion voted against a resolution.
INDEPENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF WESTMOUNT ENERGY LIMITED
Opinion
We have audited the financial statements of Westmount Energy
Limited (the 'Company') as at and for the year ended 30 June 2020
which comprise the Statement of Comprehensive Income, the Statement
of Financial Position , the Statement of Changes in Equity, the
Statement of Cash Flows and the notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is International Financial Reporting Standards ('IFRS')
as adopted by the European Union and the requirements of the
Companies (Jersey) Law 1991.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 June 2020 and of its result for the year then
ended;
-- have been properly prepared in accordance with IFRS as
adopted by the European Union; and
-- have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ('ISAs (UK)'). Our responsibilities
under those standards are further described in the Auditor's
responsibilities for the audit of the financial statements section
of our report. We are independent of the Company in accordance with
the ethical requirements that are relevant to our audit of the
financial statements, including the FRC's Ethical Standard as
applied to listed entities, and we have fulfilled our ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Emphasis of matter
We draw your attention to note 8 and note 15 of the financial
statements, which include unlisted investments held by the Company
and carried at GBP10,943,867 (2019: GBP4,655,621) based on
Directors' valuations. These are Level III investments and have
been valued based on the recent sales price of the investments
and/or using relevant market proxies where available. The Directors
have also considered market expectations of future performance of
the entity's industry sector, in particular known interest in the
area of current exploration, in arriving at their valuations. Our
audit opinion is not modified in respect of this matter.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
which ISAs (UK) require us to report to you where:
-- the Directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate,
or
-- the Directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
-- Valuation of Investments. The valuation of the Company's
investments is a key driver of the Company's investment return and
investments represent a material proportion of the Company's
financial and total assets. The relevant accounting policies and
investment composition are disclosed in note 2 and note 8,
respectively, to the financial statements.
The investments represent listed and unlisted equity instruments
amounting to GBP1.1 million and
GBP10.9 million respectively as at 30 June 2020. The identified
risk predominantly related to the unquoted investment the valuation
of which entails a greater degree of judgement being applied by the
Directors. It has been valued based upon the price of recent
investments which is a valuation basis included in the
International Private Equity and Venture Capital Guidelines (IPEVC
Guidelines).
Our main audit procedures undertaken to address the identified
risk in respect of the unlisted investment were (a) we discussed
with management their unlisted investment valuation methodology,
and assessed the recognition and measurement of the unlisted
investment held for compliance with IFRSs, and determined whether
it had been accounted for in accordance with the
stated accounting policy and with IPEVC Guidelines; and (b) we
substantiated the nature and background of recent transactions
which had been used as the basis of the valuation.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of misstatements
on our audit and on the financial statements. For the purposes of
determining whether the financial statements are free from material
misstatement we define materiality as the level of misstatement
that would probably influence the economic decisions of a
reasonably knowledgeable person.
The materiality used is based on approximately 2% of gross
assets rounded down, or GBP270,000 (2019: GBP276,000) which
reflects the fact that this is an investment company where its
market value is determined predominantly by its net asset
value.
An overview of the scope of our audit
During our audit planning, we determined materiality and
assessed the risks of material misstatement in the financial
statements including the consideration of where Directors made
subjective judgements, for example, in respect of the assumptions
that underlie significant accounting estimates and their assessment
of future events that are inherently uncertain. We tailored the
scope of our audit in order to perform sufficient work to enable us
to provide an opinion on the financial statements as a whole taking
into account the Company, its accounting processes and controls and
the industry in which it operates.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Chairman's review or
the Directors' report.
We have nothing to report in respect of the following matters
where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or
-- returns adequate for our audit have not been received from
branches not visited by us; or
-- the financial statements are not in agreement with the
accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities with regard to the financial statements set out on
page 8, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's shareholders as a
body, in accordance with Article 113A of the Companies (Jersey) Law
1991. Our audit work has been undertaken so that we might state to
the Company's shareholders those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
shareholders as a body, for our audit work, for this report, or for
the opinions we have formed.
Jeff Vincent
For and on behalf of Moore Stephens Audit & Assurance
(Jersey) Limited
1 Waverley Place
Union Street St Helier Jersey
Channel Islands JE4 8SG
29 October 2020
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2020
Year ended Year ended
30 June 30 June
2020 2019
Notes GBP GBP
Net fair value gains on financial
assets held at fair value through
profit or loss 8 201,252 2,654,137
Net fair value gains/(losses) on
financial liabilities held at fair
value through profit or loss
Impairment of intangible assets 75,419 (183,753)
Finance costs 6 (33,333) (66,667)
Administrative expenses 7 (54,575) (79,987)
4 (301,309) (229,462)
Share options credit/expense 14 1,053 (80,853)
Operating (loss)/profit (111,493) 2,013,415
(Loss)/profit before tax (111,493) 2,013,415
Tax 3 - -
(Loss)/profit after tax (111,493) 2,013,415
Other comprehensive income - -
------------ ------------
Total comprehensive (loss)/profit
for the year (111,493) 2,013,415
============ ============
Basic earnings per share (pence)
continuing and total operations 5 (0.11) 3.83
------------ ------------
Diluted earnings per share (pence)
continuing and total operations 5 (0.11) 3.51
------------ ------------
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
As at As at
30 June 30 June 2019
2020
Notes GBP GBP
ASSETS
Non-current assets
Intangible assets 6 - 33,333
Financial assets held at fair value
through profit or loss 8 12,079,736 6,745,797
----------- -------------
12,079,736 6,779,130
----------- -------------
Current assets
Receivables 9 - 7,001
Cash and cash equivalents 10 2,435,664 63,374
----------- -------------
2,435,664 70,375
----------- -------------
Total assets 14,515,400 6,849,505
=========== =============
LIABILITIES AND EQUITY
Non-current liabilities
Derivative financial instruments 11 - 221,411
Borrowings 11 - 598,375
----------- -------------
- 819,786
----------- -------------
Current liabilities
Trade and other payables 12 46,406 45,422
Derivative financial instruments 11 133,333 3,592
Borrowings 11 392,718 50,967
----------- -------------
572,457 99,981
----------- -------------
Total Liabilities 572,457 919,767
----------- -------------
EQUITY
Stated capital 13 13,955,623 5,829,872
Share based payment reserve 14 443,793 444,846
Retained earnings (456,473) (344,980)
----------- -------------
Total equity 13,942,943 5,929,738
----------- -------------
Total liabilities and equity 14,515,400 6,849,505
=========== =============
These financial statements were approved and authorised for issue
by the Board of Directors on 29 October 2020 and were signed on
its behalf by:
D R King
Director
29 October 2020
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2020
Stated Share-based Retained Total
Notes capital payment reserve earnings equity
GBP GBP GBP GBP
As at 1 July 2018 4,244,166 363,993 (2,358,395) 2,249,764
Comprehensive income
Total Comprehensive income
for the year ended 30 June
2019 - - 2,013,415 2,013,415
Share issue 13 1,585,706 - - 1,585,706
Transactions with owners
Share options expense 14 - 80,853 - 80,853
As at 30 June 2019 5,829,872 444,846 (344,980) 5,929,738
----------- ---------------- ------------ -----------
Comprehensive income
Total Comprehensive loss
for the year ended 30 June
2020 - - (111,493) (111,493)
Share issue 13 8,125,751 - - 8,125,751
Transactions with owners
Share options credit 14 - (1,053) - (1,053)
As at 30 June 2020 13,955,623 443,793 (456,473) 13,942,943
----------- ---------------- ------------ -----------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2020
Year ended Year ended
30 June 30 June
2020 2019
Notes GBP GBP
Cash flows from operating activities
(Loss)/profit for the year (111,493) 2,013,415
Adjustments for:
Net gain on financial assets at fair
value through profit or loss (201,252) (2,654,137)
Net (loss)/gain on financial liabilities
at fair value through profit or loss (75,419) 183,753
Impairment of intangible assets 6 33,333 66,667
Interest on borrowings 54,575 79,987
Share options credit/expense 14 (1,053) 80,853
Movement in other receivables 7,001 1,212
Movement in trade and other payables 984 2,252
Proceeds from sale of investments - 1,499,100
Purchase of investments (5,132,689) (3,317,515)
------------ ------------
Net cash used in operating activities (5,426,013) (2,044,413)
------------ ------------
Cash flows from financing activities
Proceeds from borrowings 11 - 1,600,000
Interest and charges on borrowings 11 - (49,395)
Proceeds from issue of ordinary shares 13 7,798,303 -
Net cash generated from financing
activities 7,798,303 1,550,605
Net increase/(decrease) in cash and
cash equivalents 2,372,290 (493,808)
------------ ------------
Cash and cash equivalents at beginning
of year 63,374 557,182
Cash and cash equivalents at end
of year 10 2,435,664 63,374
------------ ------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
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
invest in and provide follow on capital to small and medium sized
companies that have 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.
The financial statements have been prepared on a going-concern basis
as, in the opinion of the Directors, the Company has adequate resources
to continue for the foreseeable future and while the COVID-19 pandemic
caused a drop in oil prices towards the end of the financial year,
the sector is recovering well and going forward is not anticipated
to have a material impact on the exploration drilling the Company
invests in.
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 effective and have been adopted by the Company
The Company has applied the following standards and amendments for
the first time for their annual reporting period commencing 1 July
2019:
- Amendments to IFRS 9 Financial Instruments
- Annual improvements to IFRS standards 2015-2017 cycle
IFRS 16 Leases is not applicable as the Company has not entered
into any lease arrangements.
The adoption of the new standard and revisions to the requirements
of IFRSs did not result in material changes to the Company's accounting
policies or financial statements.
New 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 there
are no other standards that are not yet effective and that would
be expected to have a material impact on the Company in the current
or future reporting periods and on foreseeable future transactions.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of accounting estimates and the exercise of judgement
by management while applying the Company's accounting policies in
relation to the impairment of intangible assets, value of options
issued and derivative financial instruments, as set out in notes
6, 11 and 15. Derivative financial instruments, which are embedded
in the convertible loan notes issued by the Company, have been presented
separately from the host contract. The bifurcation of the embedded
derivative financial instruments requires judgement by management
to estimate the fair value of the derivatives on initial recognition
of the financial instrument. The valuation and subsequent impairment
reviews of the Company's intangible assets requires the use
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
2. ACCOUNTING POLICIES (continued)
Use of estimates and judgements (continued)
of accounting estimates and judgement by the management. 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 Pounds
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 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 instruments
Financial assets and financial liabilities are recognised when the
Company becomes party to the contractual provisions of the instrument.
(a) Classification
The Company classifies its financial assets in the following measurement
categories:
* those to be measured subsequently at fair value
(either through other comprehensive income or through
profit or loss); and
- those to be measured at amortised cost.
The classification depends on the entity's business model for managing
the financial assets and the contractual terms of the cash flows.
The Company determines the classification of its financial assets
and financial liabilities at initial recognition.
Financial liabilities which are not financial liabilities held at
fair value through profit or loss are classified as other financial
liabilities and held at amortised cost.
(b) Recognition and measurement
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate,
on initial recognition. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognised immediately
in the statement of comprehensive income.
Subsequent to initial recognition, financial assets at fair value
through profit or loss are re-measured at fair value. 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. Gains or losses arising from changes in the
fair value of financial assets at fair value through profit or loss
are presented in the statement of comprehensive income in the period
in which they arise.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
2. ACCOUNTING POLICIES (continued)
(b) Recognition and measurement (continued)
Subsequent measurement of the Company's debt instruments depends
on the model for managing the asset and the cash flow characteristics
of the asset.
The Company measures debt instruments at amortised cost if they
are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured
at amortised cost. The Company recognises any impairment loss on
initial recognition and any subsequent movement in the impairment
provision in the statement of comprehensive income, see Note 6.
Debt instruments which do not represent solely payments of principal
and interest are measured at fair value through profit or loss.
Financial liabilities, which includes borrowings, are measured at
amortised cost using the effective interest method. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability
or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
Financial liabilities at fair value through profit or loss are re-measured
at fair value. The fair value of the derivative financial instruments
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 incurred by the Company on realisation
of the liability, see note 11. Gains or losses arising from changes
in fair value of financial liabilities at fair value through profit
or loss are presented in the statement of comprehensive income in
the period in which they arise.
(c) Impairment
Under IFRS 9, the new impairment model requires the recognition
of impairment provisions based on expected credit losses ("ECL")
rather than only incurred credit losses as was the case under IAS
39. IFRS 9 permits a simplified approach to trade and other receivables
which allows the Company to recognise the loss allowance at initial
recognition and throughout its life at an amount equal to lifetime
ECL. ECL are a probability-weighted estimate of credit losses. A
credit loss is the difference between the cash flows that are due
to an entity in accordance with the contract and the cash flows
that the entity expects to receive discounted at the original effective
interest rate. ECL consider the amount and timing of payments, thus
a credit loss arises even if the entity expects to be paid in full
but later than when contractually due.
The historical default rate has been considered by the Directors
and there is no history of bad debt. Under IFRS 9 ECL Model as well,
which is forward looking, all factors that could contribute to expected
future losses have been considered by the Directors and there is
no expectation of credit loss in the future. As such the Directors
concluded that there is no material impact on the financial statements.
(d) Derecognition
A financial asset or part of a financial asset is derecognised when
the rights to receive cash flows from the asset have expired and
substantially all risks and rewards of the asset have been transferred.
The Company derecognises a financial liability when the obligation
under the liability is discharged, cancelled or expired.
Intangible assets
Separately acquired Net Profit Interest licences ("NPI licences")
are classified as intangible assets and are shown at historical
cost. Such NPI licences, which are not subject to amortisation,
allow the Company to benefit from exploration and extraction of
energy resources, if successful, from investee companies granting
such NPI licences.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
2. ACCOUNTING POLICIES (continued)
Intangible assets (continued)
The value of the NPI licences are assessed periodically for possible
impairment when events indicate that the fair value of the intangible
asset may be below the Company's carrying value. When such a condition
is deemed to be other than temporary, the carrying value of the
investment is written down to its fair value, and the amount of
the write-down is included in net profit or loss on financial assets
held at fair value through profit or loss. In making the determination
as to whether a decline is other than temporary, the Company considers
such factors as the duration and extent of the decline, the investee
company's financial performance, and the Company's ability and intention
to retain its investment for a period that will be sufficient to
allow for any anticipated recovery in the NPI licences' market 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 15. 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 2020 2019
GBP GBP
Administration and consultancy fees 95,952 47,439
Advisory fees 25,550 25,275
Audit fees 17,500 13,344
Directors' fees 60,000 15,000
Foreign exchange (gains)/losses (17,988) 25,814
Legal and professional fees 44,357 32,890
Printing and stationery 11,101 10,200
Registered agent's fees 7,265 16,726
Other expenses 57,572 42,774
301,309 229,462
--------- --------
5. EARNINGS PER SHARE Basic earnings per share (pence) (0.11) 3.83
Diluted earnings per share (pence) (0.11) 3.51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
5. EARNINGS PER SHARE (continued)
Current year loss
The calculation of diluted earnings per share is not required
this year as a loss for the year is not diluted. The calculations
have been left in for information.
The table below presents information on the profit attributable
to the shareholders and the weighted average number of shares
used in the calculating the basic and diluted earnings per
share.
2020 2019
Basic earnings per share GBP GBP
(Loss)/profit attributable to the shareholders
of the Company (111,493) 2,013,415
Diluted earnings per share
(Loss)/profit attributable to the shareholders
of the Company:
Used in calculating basic earnings per
share (111,493) 2,013,415
Add interest expense 54,575 79,987
Less fair value of share options not expensed
during the period - (3,000)
----------- ----------
(Loss)/profit attributable to the shareholders
of the Company used in calculating diluted
earnings per share (56,918) 2,090,402
----------- ----------
No. of
shares No. of shares
Weighted average number of ordinary shares
used as the denominator in calculating basic
earnings per share 103,708,120 52,561,113
Adjustments for calculating of diluted earnings
per share:
Share options 1,094,178 687,786
Convertible loan notes 4,044,477 4,032,549
------------ --------------
Weighted average number of ordinary shares
and potential ordinary shares used as the
denominator in calculating diluted earnings
per share 108,846,775 57,281,448
------------ --------------
Share options
The share options have been included in the determination of
the comparative diluted earnings per share to the extent to
which they are dilutive. The share options granted prior to
30 June 2018 did not have an impact on diluted earnings per
share as the option price was above the average share price.
The 1,500,000 options granted in April 2019 will not be included
in the calculation of diluted earnings per share because they
are antidilutive as at 30 June 2019. These potentially dilute
earnings per share in the future as these may not be exercised
before their expiration date.
No share options were issued during the year ended 30 June
2020.
Convertible loan notes
Conversion options over convertible loan notes are considered
to be potential ordinary shares and have been included in the
determination of comparative diluted earnings per share from
their date of issue. Interest accrued on the convertible loan
notes, which may be converted to ordinary shares, is also considered
to be dilutive and is included in the comparative diluted earnings
per share.
6. INTANGIBLE ASSETS
2020 2019
GBP GBP
At 1 July 33,333 -
Acquisition - 100,000
Impairment (33,333) (66,667)
--------- ---------
At 30 June - 33,333
--------- ---------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
6 . INTANGIBLE ASSETS (continued)
The Company acquired Net Profit Interest licences ("NPI") in three
offshore UK blocks for GBP100,000. The NPI licences allow the Company
to benefit from near term exploration and appraisal drilling targets,
with independent prospect risks, if such exploration and drilling
is successful. The NPI licences require no additional investment
from the Company. The licences are initially recorded in the books
of the Company at cost. An impairment test is performed on an annual
basis by the Directors and they are subsequently measured at cost
less any adjustments for impairment losses. All of the licences
were deemed to be fully impaired by the Directors, as the underlying
operating licences had been relinquished by the company granting
each NPI licence at the date of this report.
7. FINANCE COSTS
The Company has issued 10% convertible loan notes as set out in
note 11. Interest is payable to each of the relevant Noteholders
on the principal amount of the Loan Note for the time being outstanding
at a rate calculated in accordance with the Instrument. The interest
payable at 10% per annum on the Loan Notes held by any Noteholder
can be converted into a corresponding number of new fully paid
Ordinary Shares at the Noteholder Conversion Price when certain
conditions within the Instrument are met.
To date GBP1.2 million of the principal has been repaid early leaving
a residual balance of GBP400,000 advanced at 30 June 2020.
The interest charge through the statement of comprehensive income
during the year was GBP54,575 (2019: GBP79,987).
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 2020 2019
GBP GBP
Equity investments
Argos Resources Ltd ("Argos") 24,800 26,300
Cataleya Energy Corporation ("Cataleya") 4,590,523 1,993,317
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 359,250 1,050,000
JHI Associates Inc ("JHI") 6,353,344 2,662,304
Ratio Petroleum Energy Limited Partnership
("Ratio") 643,446 1,013,876
Ratio Petroleum Energy Limited Partnership 108,373 -
Warrants ("Ratio Warrants")
Total investments 12,079,736 6,745,797
----------- ----------
Net changes in fair value of financial assets designated at
fair value through profit or loss
2020 2019
GBP GBP
Opening Balance 2,032,684 (621,453)
Net movement in fair value gains 201,252 2,654,137
Net fair value gain on financial assets
at fair value through profit or loss 2,233,936 2,032,684
---------- ----------
On 30 June 2020, the fair value of the Company's holding of 1,000,000
(2019: 1,000,000) ordinary fully paid shares in Argos, representing
0.45% (2019: 0.46%) of the issued share capital of the company,
was GBP24,800 (2019: GBP26,300) (2.48p per share (2019: 2.63p per
share)). No shares were disposed of in the current or prior year.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (continued)
On 30 June 2020, the fair value of the Company's holding of 1,500,000
(2019: 1,500,000) ordinary fully paid shares in Eco Atlantic, representing
0.81% (2019: 0.94%) of the issued share capital of the
company, was GBP359,250 (2019: GBP1,050,000) (23.95p per share
(2019: 70.00p per share)). No shares were disposed of in the current
year (2019: 1,625,000).
On 30 June 2020, the fair value of the Company's holding of 1,200,000
(2019: 1,200,000) ordinary fully paid shares in Ratio, representing
0.70% (2019: 0.70%) of the issued share capital of the
company, was GBP643,446 (2019: GBP1,013,876) (53.62p per share
(2019: 84.49p per share)). No shares were disposed of in the current
year (2019: 18,381).
During the year the Company purchased 389,653 warrants in Ratio
for GBP209,489 (53.76p per warrant). On 30 June 2020, the fair
value of the Company's holding of 389,653 warrants in Ratio, representing
0.68% of the issued warrants of the company was GBP108,373 (27.81p
per warrant).
During the year the Company purchased 313,500 ordinary fully paid
shares in Cataleya for GBP2,574,321 (GBP8.21 per share). On 30
June 2020, the Directors' estimate of the fair value of the Company's
holding of 567,185 (2019: 253,685) shares in Cataleya was GBP4,590,523
(2019: GBP1,993,317) (GBP8.09 per share (2019: GBP7.86)).
During the year the Company purchased 1,350,000 (2019: 2,053,770)
ordinary fully paid shares in JHI for GBP2,348,879 (2019: GBP1,908,369)
(GBP1.74 per share (2019 :GBP0.93 per share)) which includes a
share issue by the Company of 15,930,000 (2019: 7,145,505) new
nil par value ordinary shares as part consideration for JHI shares
received during the year (see note 13). On 30 June 2020, 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 3,463,770 shares (2019: 100,000
units plus 2,113,770 shares) in JHI was GBP6,353,344 (2019: GBP2,662,304)
GBP1.78 per share (2019: GBP1.20 per share). No shares were disposed
of in the current or prior year.
9. OTHER RECEIVABLES AND PREPAYMENTS 2020 2019
GBP GBP
Prepayments - 7,001
------- ------
10. CASH AND CASH EQUIVALENTS 2020 2019
GBP GBP
Cash at bank 2,223,801 62,362
Cash at broker 211,863 12
2,435,664 63,374
---------- -------
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS
The Company issued GBP1,600,000 10% convertible loan notes on 24
October 2018. The notes are convertible into ordinary shares of
the Company, at the option of the holder, or repayable on 31 March
2021. The conversion price is the higher of GBP0.08 per share or
a 25% discount on the volume weighted average price ("VWAP") 5
days prior to the repayment date. Interest accrued up to and payable
on 31 October 2019 may be converted into shares, at the option
of the Company, at a conversion price of a 10% discount of VWAP
5 days prior to the payment date. Interest accrued up to and payable
on 31 October 2020 may be converted into shares, at the option
of the holder, at a conversion price of the higher of GBP0.08 per
share or a 25% discount of VWAP 5 days prior to the payment date.
On 31 October 2019 both the 1(st) interest payment due (GBP67,447)
and the early repayment of GBP260,000 principal of the residual
GBP660,000 of 10% p.a. convertible unsecured loan notes was made.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
On 18 March 2019 the Company repaid GBP940,000 of the principal
of the convertible loan notes, the interest accrued on the repaid
portion of the convertible loan note was waived by the holder.
Interest Principal Total
GBP GBP GBP
Face value of notes issued - 1,600,000 1,600,000
Value of conversion rights - (100,000) (100,000)
Issue costs - (49,395) (49,395)
- 1,450,605 1,450,605
--------- ---------- ----------
Repayment of convertible loan
notes - (852,230) (852,230)
Interest expense 50,967 - 50,967
Interest paid - - -
--------- ---------- ----------
Total borrowings at 30 June
2019 50,967 598,375 649,342
Repayment of convertible loan
notes - (235,724) (235,724)
Interest expense 49,848 - 49,848
Interest paid (70,748) - (70,748)
--------- ---------- ----------
Total borrowings at 30 June
2020 30,067 362,651 392,718
--------- ---------- ----------
Interest Principal Total
GBP GBP GBP
Conversion rights measured
at fair value through profit
or loss
Opening balance at 1 July 2019 3,592 221,411 225,003
Initial recognition of conversion
rights from issue of convertible
loan notes - - -
Repayment of convertible loan
notes (cancellation of conversion
rights) - - -
Movement in fair value 5,284 (96,954) (91,670)
--------- ---------- ---------
Total derivative financial
instruments at 30 June 2020 8,876 124,457 133,333
--------- ---------- ---------
Conversion rights measured
at fair value through profit
or loss
Opening balance at 1 July 2018 - - -
Initial recognition of conversion
rights from issue of convertible
loan notes - 100,000 100,000
Repayment of convertible loan
notes (cancellation of conversion
rights) - (58,750) (58,750)
Movement in fair value 3,592 180,161 183,753
------ --------- ---------
Total derivative financial
instruments at 30 June 2019 3,592 221,411 225,003
------ --------- ---------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
11. DERIVATIVE FINANCIAL INSTRUMENTS AND BORROWINGS (Continued)
The initial fair value of the derivative portion of the convertible
loan notes was determined by the potential loss on ordinary shares
if converted on the date the convertible loan notes were issued.
The derivative financial instruments are recognised as a financial
liability measured at fair value through profit or loss. The remainder
of the proceeds is allocated to the liability which is subsequently
recognised on an amortised cost basis until extinguished on conversion
or maturity of the convertible loan notes.
12. TRADE AND OTHER PAYABLES 2020 2019
GBP GBP
Accrued expenses 46,406 45,422
------- -------
13. STATED CAPITAL
Allotted, called up and fully Ordinary shares Ordinary
paid: shares
No. GBP
1 July 2018 47,147,796 4,244,166
Additions 17,618,949 1,585,706
---------------- -----------
1 July 2019 64,766,745 5,829,872
Additions 60,994,741 8,125,751
---------------- -----------
At 30 June 2020 125,761,486 13,955,623
---------------- -----------
On 27 August 2019 the Company issued a total of 38,461,532 new
nil par value ordinary shares for a total of GBP5,000,000, before
issue expenses. On 2 September 2019 a further 4,409,999 new nil
par value ordinary shares were issued for a total of GBP573,300.
On 31 October 2019 the Company issued 2,193,210 new nil par value
ordinary shares for a total of GBP327,447 to make both the 1(st)
interest payment due (GBP67,447) and the early repayment of GBP260,000
principal of the residual GBP660,000 of 10% p.a. convertible unsecured
loan notes
On 27 May 2020, in accordance with the terms of the JHI share purchase
agreements, the Company issued a total of 15,930,000 new nil par
value ordinary shares for 1,350,000 JHI shares. The total valuation
of the Company's share issue was GBP2,348,879.
There were no share redemptions during the year ended 30 June 2020
(2019: GBPNil).
14. SHARE-BASED PAYMENT RESERVE
2020 2019
GBP GBP
At 1 July 444,846 363,993
Share options credit/expense (1,053) 80,853
At 30 June 443,793 444,846
-------- --------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
14. SHARE-BASED PAYMENT RESERVE (Continued)
No options have been issued and none have vested in the year ended
30 June 2020. The options issued on 3 January 2017 were extended
on 1 November 2019 with a new expiry date of 31 December 2021.
As no new share options have been issued in the year there are
no additional assumptions.
The following assumptions were used to determine the fair value
of the options for 2019 and 2020:
Weighted average share price at grant date (pence) 13.75
Exercise price (pence) 14.0
Expected volatility (%) 42.2%
Average option life (years) 5.0
Risk free interest rate (%) 0.380%
The expected volatility is based on the historic volatility of
the Company's share prices over the last five years.
The number and weighted average exercise price of share options
are as follows:
2020 2020 2019 2019
Weighted Number Weighted Number
average of options average of options
exercise exercise
price price
(p) (p)
Outstanding at start
of the year 10.10 3,750,000 7.5 2,250,000
Granted during the
year - - 14.0 1,500,000
Exercised during the - - - -
year
Outstanding at end
of the year 10.10 3,750,000 10.10 3,750,000
---------- ------------ ---------- ------------
Exercisable at end
of the year 10.10 3,750,000 10.10 3,750,000
---------- ------------ ---------- ------------
15. 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 Cataleya, JHI and Ratio. The directors have not hedged this
exposure.
Currency exposure as at 30 June: Assets and Assets and
net exposure net exposure
2020 2019
Currency GBP GBP
US Dollars 5,786,083 2,113,578
Canadian Dollars 6,175,069 2,542,043
Israeli Shekel 751,819 1,013,876
Total 12,712,971 5,669,497
------------------------- -------------------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
15. FINANCIAL RISK (continued)
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 GBP635,649 (2019: GBP283,475).
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
GBP
Fair Value Through Profit or Loss,
as at 30 June 2020 12,079,736
Fair Value Through Profit or Loss,
as at 30 June 2019 6,745,797
With the exception of JHI and Cataleya, the Company's investments
are all publicly traded and listed on either the AIM 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 GBP340,761 (2019: GBP627,053). 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 and Cataleya would increase
the pre-tax profit for the year and the net assets attributable
to ordinary shareholders by GBP3,283,160 (2019: GBP1,396,686).
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 and Cataleya 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 the interest rate on borrowings is fixed and the Company's
cash deposits do not currently earn interest.
b) 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: 2020 2019
GBP GBP
Cash and cash equivalents 2,435,664 63,374
---------- -------
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
15. FINANCIAL RISK (continued)
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 those financial assets which are
publicly traded and held at fair value through profit or loss and
which are deemed highly liquid.
The following table details the contractual, undiscounted cash flows
of the Company's financial liabilities
As at 30 June 2020 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Borrowings (1) - 426,630 - 426,630
Trade and other payables 46,406 - - 46,406
--------------- ------------- ------------ --------
46,406 426,630 - 473,036
--------------- ------------- ------------ --------
As at 30 June 2019 Up to 3 months Up to 1 year Over 1 year Total
GBP GBP GBP GBP
Financial liabilities
Borrowings (1) - 45,205 660,000 705,205
Trade and other payables 45,422 - - 45,422
45,422 45,205 660,000 750,627
--------------- ------------- ------------ --------
(1) Borrowings are presented in the above tables at their nominal
value which represents the undiscounted cash flow amount of the convertible
loan notes. The amount may differ from the discounted cash flow amount
included in the statement of financial position.
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).
Fair Value Estimation (continued)
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 (see note 11).
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.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. FINANCIAL RISK (continued)
The following table shows the classification of the Company's financial
assets and liabilities:
Level I Level II Level III Total
GBP GBP GBP GBP
At 30 June 2020 1,135,869 (133,333) 10,943,867 11,964,403
At 30 June 2019 2,090,176 (225,003) 4,655,621 6,547,268
The Company has classified quoted investments as Level I, derivative
financial instruments as Level II and unquoted investments as Level
III. The Level III investment is at an early stage of development
and therefore has been valued based on the recent price of the investment.
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 recent price of the investment in Cataleya and JHI fairly
reflects the value of the investments as at 30 June 2020.
A reconciliation of the movements in Level III investments is shown
below:
2020 2019
GBP GBP
At start of the year 4,655,621 110,555
Purchases 4,923,200 3,852,263
Change in fair value 1,365,046 692,803
At end of the year 10,943,867 4,655,621
----------- ----------
16. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2020 2019 2020 2019
Directors' Directors' Options Options
fees fees outstanding outstanding
GBP GBP
D R King 20,000 15,000 500,000 500,000
D Corcoran - - 1,000,000 1,000,000
G Walsh 20,000 - 1,000,000 1,000,000
T O'Gorman 20,000 - 750,000 750,000
M Bradlow
(resigned 11 April
2017) - - 500,000 500,000
60,000 15,000 3,750,000 3,750,000
----------- ----------- ------------- -------------
At the year end the Company owed GBP10,000 (2019: GBPnil) in outstanding
directors' fees.
During the year the Company increased Directors fees payable to D
R King from GBP15,000 p.a. to GBP20,000 p.a. and agreed to pay Directors
fees of GBP20,000 p.a. each to T O'Gorman and G Walsh. D Corcoran
continues to be paid on a consultancy fee basis. During the year
consultancy fees of GBP21,551 (2019: GBP12,185) were paid to D Corcoran.
Nil share options were issued during the year ended 30 June 2020
(2019: 1,500,000) and nil (2019: nil) options were exercised during
the year.
The 1,500,000 options issued during the year ended 30 June 2019 are
due to expire on 31 March 2024.
The expiry date for remaining 2,250,000 outstanding options, issued
during the years ended 30 June 2017 and 30 June 2018 is 31 December
2021, with the term having been extended in November 2019.
The shares held by the Directors are declared in the Directors' report.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
16. DIRECTORS' REMUNERATION AND SHARE OPTIONS (continued)
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.
17. RELATED PARTIES
Fees paid to the Directors are disclosed in note 16.
Gerard Walsh, a director of the Company, subscribed for GBP500,000
of the convertible loan notes issued on 24 October 2018. The total
loan payable to Gerard Walsh as at 30 June 2020 was GBP392,718 (2019:
GBP491,925) which includes GBP30,067 (2019: GBP34,110) of accrued
interest and the fair value of the conversion rights attributable
to Mr Walsh is GBP133,333 (2019: GBP170,457). Details of the convertible
loan notes are disclosed in note 11.
On 31 October 2019 GBP100,000 of the principal, and GBP51,096 of
the interest, payable to Mr Walsh under the terms of the Convertible
Loan Notes was converted into 1,012,027 nil par value shares of the
Company.
Mr Walsh subscribed GBP292,050 for 2,246,538 nil par value shares
as part of the share placing that occurred on 27 August 2019.
Canaccord Genuity as a significant shareholder of the Company is
considered a related party under AIM rules.
Canaccord Genuity subscribed GBP1,356,000 for 10,430,769 nil par
value shares as part of the share placing that occurred on 27 August
2019.
On 31 October 2019 GBP60,000 of the principal, and GBP6,131 of the
interest, payable to Canaccord Genuity under the terms of the Convertible
Loan Notes was converted into 442,944 nil par value shares of the
Company.
At year end Canaccord Genuity held 28,468,640 Nil Par Value shares
in the Company.
As detailed in Note 19 - Subsequent Events (below) the Company announced
a grant of 750,000 options over nil par value ordinary shares to
Dermot Corcoran after the year end.
The shares held by the Directors are declared in the Directors' report.
18. CONTROLLING PARTY
In the opinion of the Directors, the Company does not have a controlling
party.
19. SUBSEQUENT EVENTS
Grant of Options
On 6 August 2020 the Company announced a grant of 750,000 options
over nil par value ordinary shares to Dermot Corcoran. The Exercise
Price was 17.0 pence per share and the Expiration Date is 31 July
2023. Following this grant Dermot Corcoran's beneficial interests
in Share Options was 1,750,000.
Additional investment in JHI
On 10 September 2020 the Company acquired an additional
1,550,000 common shares in JHI by way of the issue of 18,290,000
new ordinary shares of no par value in the Company.
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(END) Dow Jones Newswires
October 30, 2020 03:00 ET (07:00 GMT)
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