TIDMNUOG

RNS Number : 8302H

Nu-Oil and Gas PLC

07 December 2020

7 December 2020

Nu-Oil and Gas plc

("Nu-Oil" or "the Company")

Audited Results for the year ended 30 June 2020 and notice of Annual General Meeting

The Company today announces its audited results for the year ended 30 June 2020 and that it has posted its notice of Annual General Meeting

Highlights

-- On 2 October 2019, the Company announced a critical restructuring which included: Board changes, debt restructuring, a GBP500,000 placing and the sale of the Company's joint venture MFDevCo. This restructuring was approved by Shareholders at the General Meeting 4 November 2019, following which the Company was designated an AIM Rule 15 Cash Shell

-- On 21 October 2019, Nu-Oil announced it had returned the equity it held in Enegi Oil Inc. ("Enegi") with immediate effect. This was donated at nil cost to Enegi. The consequence was that Nu-Oil would have no further claim or call on Enegi and, furthermore, any recourse to Nu-Oil of potential claims made against Enegi would be restricted.

   --      On 6 January 2020, the Company completed a GBP420,000 placing of new ordinary shares 

-- On 17 March 2020, a strategy update was announced in which the Company confirmed its acquisition efforts and focus was on the environmental industries sector

-- On 14 April 2020, a potential RTO target announcement triggered the suspension of the Company's shares from trading on AIM. Despite efforts to the contrary, it was not possible to find mutually agreeable terms and the potential transaction did not proceed.

-- On 9 September, in line with the guidance issued in Inside AIM: Coronavirus - Temporary Measures 20 March 2020, the Company was granted an extension to the deadline by which it must complete a reverse takeover.

Annual General Meeting

The Company also announces that its Annual General Meeting of shareholders ("AGM") will be held at Audley House, 13 Palace Street, London, SW1E 5HX on Wednesday 30 December 2020 at 10:00 a.m. Due to Covid-19 restrictions, all resolutions will be voted on by way of a poll. Shareholders will not be permitted to attend the AGM in person and are strongly encouraged to submit their form of proxy in advance of the meeting to ensure their votes are registered.

Financial Statements

Included with this announcement is a summary of the Company's Annual Accounts for the year ended 30 June 2019 as extracted from the Annual Report, being:

   --      Chairman's Statement 
   --      Strategic Report 
   --      Consolidated Income Statement 
   --      Consolidated Statement of Comprehensive Income 
   --      Consolidated Statement of Financial Position 
   --      Consolidated Statement of Changes in Equity 
   --      Consolidated Statement of Cashflows 
   --      Notes to the Financial Statements 

The full Annual Report and Financial Statements for the year ended 30 June 2020 and the notice of AGM are available to download from the Company's website at www.nu-oilandgas.com. Those shareholders who have elected to receive paper copies of all communications will receive a copy of both documents in addition to the AGM Letters and proxy forms, which have been sent to all shareholders today. Shareholders can change their chosen method of communication in Shareview at the following address: https://portfolio.shareview.co.uk/7/Portfolio/Default/en/Anonymous/Pages/Login.aspx .

 
 Enquiries 
 Nu-Oil and Gas Plc                    Tel: +44 (0)330 895 
                                        7988 
 
 Strand Hanson 
 Rory Murphy / Ritchie Balmer / Jack   Tel: +44 (0)20 7409 
  Botros                                3494 
 
 Novum Securities Limited 
 Jon Bellis                            Tel: +44 (0) 20 7399 
                                        9425 
 

Disclaimer

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

Chairman's Statement

Dear Shareholders,

2020 has been a notable year for many reasons not least because of Covid-19 disruptions which have reached every part of society. In spite of the difficult backdrop of Covid-19, the Company has taken necessary steps to survive. The Board remains confident it will find shareholders a value accretive transaction from which it can rebuild.

As many of the long-term shareholders will know the Company's difficulties long pre-dated 4 November 2019 when the Company became an AIM Rule 15 Cash Shell. The Company began the financial year with negligible cash, several related party and third-party liabilities which it did not have the means to settle and continued to incur costs it did not have the means to pay for. The restructuring, first announced in October 2019, proved vital in avoiding liquidation and the total loss of shareholder value. That restructuring was approved by you as shareholders in November 2019 and during the period which followed the Board and I have worked to find the right transaction from which to platform the Company's turnaround.

Finding a suitable transaction has been slower than we would have anticipated and has been inevitably hindered by external disruptions. Notwithstanding those challenges, the Board has taken a commercial but very disciplined approach to its evaluation of opportunities and has been laser focused on expenditure, including deferring payments to directors until a transaction is completed. Over the year we have succeeded in getting many of the legacy liabilities which carried over from before the restructuring under control and the cost saving initiatives implemented have allowed the cash balance to stretch significantly further than would otherwise have been feasible. This disciplined approach, which is uncomfortable in the short-term we believe will inevitably be beneficial in securing a more financially resilient foundation from which to grow shareholder value.

As of the date of this letter the Company is actively engaged with several opportunities and hopes to make an announcement of one of these in due course.

I would like to take this moment to thank you for your continued support during this uncertain phase in the Company's evolution. The Company is in a perilous situation at the moment, but your Directors are taking prudent measures to work towards building a business that has a sustainable value growth trajectory.

Jay Bhattacherjee, Non-Executive Chairman, 7 December 2020

Strategic Report

Principal activities

Following the divestment of the Company's joint venture, MFDevCo, which was approved at the General Meeting held on 4 November 2019, the Company was designated an AIM Rule 15 Cash Shell. Currently, the Company has until 4 May 2021 to complete an acquisition or acquisitions constituting a reverse takeover to maintain its listing.

Nu Oil and Gas plc was incorporated in the United Kingdom and the current Group head office is at Audley House, 13 Palace Street, London, SW1E 5HX, United Kingdom.

Financial Review

The Consolidated Financial Statements and notes on pages 24 through to 44 should be read in conjunction with this review which has been included to assist in the understanding of the Group's financial position at 30 June 2020.

Loss before tax

Loss for the period was GBP650,000 (2019: GBP2,799,000 loss), comprising administrative expenses of GBP739,000 (2019: GBP2,011,000), GBP7,000 in respect of furloughed employees shown separately as other income, finance costs of GBP306,000 (2019: GBP788,000) and a net gain on disposal of discontinued operations and restructuring of GBP388,000.

The loss included depreciation, amortisation and impairments of GBP2,000 in the period (2019: GBP1,000,000).

Statement of Financial Position

The consolidated statement of financial position for the Group is shown on page 25 . Net liabilities at 30 June 2020 were GBP1,466,000 (2019: net liabilities of GBP3,419,000). The change in net liabilities reflected a combination of several items including: the divestment of non-core and legacy assets and investments as a part of the essential restructuring announced in October 2019; the settlement of several legacy liabilities and the refinancing of the Group's loan position.

In addition, fundraising activities undertaken in the period raised GBP920,000 in gross proceeds through the issue of new ordinary shares.

The majority of the Group's liabilities at the year-end related to the loans and creditor and accrued balances. On 2 October 2019, the Company announced that it had agreed to settle related party liabilities by transferring ownership of its 50% interest in MFDevCo. In addition, following the sale of the Shard Loan to C4 Energy Ltd, the debt was refinanced and restructured. Although the Balance Sheet records a liability of GBP966,000 in relation to the C4 loan as a non-current liability, the balance reflects the Company's compliance with International Accounting Standards on financial instruments. Notwithstanding this, the Company remains contractually obligated to settle the full GBP2,500,000 which remains outstanding until settled per terms announced 2 October 2019.

At 30 June 2020, the Group had cash balances of GBP230,000 compared to GBP58,000 at 30 June 2019. The Group had trade and other payables of GBP655,000 at 30 June 2020 (2019: GBP1,440,000). Post period cash as of November 2020 is approximately GBP190,000.

Cash flows

Net cash inflow for the year was GBP172,000 compared with a net outflow of GBP803,000 in 2019. The change in net cash flow year on year being mainly due to the increased level of funds raised in the market and the reduction in the overall cost base of the business.

Cash Shell Status

On 4 November 2019, with the approval of the resolutions at the Company's General Meeting and the sale of the Company's 50% interest in MFDevCo to RMRI, the Company was designated an AIM Rule 15 cash shell. This requires the Company to make an acquisition (or acquisitions) which would constitute a reverse takeover under AIM Rule 14 within a prescribed timetable. On 14 April 2020, the Company announced a proposed reverse takeover transaction and suspension of trading. Following a period of due diligence, on 8 July, the Company announced the proposed transaction was no longer proceeding despite efforts to agree mutually acceptable terms. On 9 September 2020, the Company announced that, in line with the guidance issued in Inside AIM: Coronavirus - Temporary Measures 20 March 2020, the Company has been granted a six month extension bringing the deadline by which a reverse takeover must complete to 4 May 2021. Should the Company be unsuccessful in making an acquisition by that date then the Company's admission to trading on AIM would be cancelled unless a further extension is granted of which there is no guarantee.

Going Concern

The Directors judge it appropriate to adopt the going concern basis in preparing the Consolidated and Company Financial Statements.

In forming this judgement, the Directors reviewed the Group's funding, budget and business plan for the twelve months from signing the financial statements. The Directors have relied upon the critical assumption that the Group will be able to achieve the key milestones of the business plan, notably with regard to securing an acquisition or acquisitions which will constitute a reverse takeover, which they believe will result in the availability of adequate additional funding.

The Directors have concluded that to the extent that these assumptions are not valid, there exists a material uncertainty that casts significant doubt upon the Group's and the Company's ability to continue as a going concern.

Nevertheless, having stress-tested several forecast scenario assumptions and based on the knowledge that the Company is actively in negotiations with several targets, the Company is now assessing the implications of such acquisitions under AIM Rules. The Company has until 4 May 2021 to complete an acquisition which will constitute a reverse takeover, failing which the Company's admission to AIM could be cancelled, should this occur there would be no external market for shareholders to trade their shares in the Company.

The Directors therefore consider the assumptions as valid and consequently continue to adopt the going concern basis in preparing the financial statements.

Other events during the financial year

On 21 October 2019 the Company announced the return of the equity interest it held in Enegi Oil Inc. ("EOI") back to EOI in accordance with the applicable laws in Newfoundland, Canada. Although the investment value at the end of 2019 had been fully impaired in the financial statements, as at the start of this financial year the Company and prior to 21 October 2019, was a shareholder of EOI. Following the return of equity EOI will no longer be consolidated in the Group accounts.

On 4 November 2019, the Company convened a General Meeting where all resolutions relating to the restructuring announced on 2 October 2019 were carried. The passing of these resolutions resulted in the Company announcing its designation as an AIM Rule 15 Cash Shell.

The restructuring gave rise to the following and largely inter-conditional key events: the sale of the Company's 50% interest in MFDevCo to RMRI and settlement of all associated related party balances; refinancing of the Company's main loan balance; the raising of GBP500,000 through the placing of new ordinary shares; the sub-division of the Company's share capital; and the reconstitution of the Company's Board of directors. The reconstituted Board of directors saw the appointment of Mr. Jay Bhattacherjee as Non-Executive Chairman, the appointment of Mr. Andrew Dennan as Non-Executive Director alongside the continuation of Mr. Frank Jackson and Mr. Graham Scotton as Non-Executive Directors. On 13 November 2019, the Company announced the resignation, with immediate effect, of Mr. Graham Scotton.

On 6 January 2020, the Company announced an additional fundraise of GBP420,000. Subsequently, at the Company's Annual General Meeting held on 24 January 2020, all resolutions were passed.

On 17 March 2020, the Company announced that potential RTO targets were being evaluated across all sectors. Following this, on 14 April 2020 the Company's shares were suspended from trading following the announcement that it had signed Heads of Terms on a proposed RTO transaction within the circular economy industry. Unfortunately, following due diligence and despite efforts to agree mutually acceptable terms, the proposed transaction was not progressed.

Principal Risks and Uncertainties

Risk recognition and management are viewed as integral to the Group's objectives of creating and maintaining shareholder value. In spite of its designation as a cash shell, this remains true.

The Board, as a whole, is responsible for oversight of the processes by which risk is considered for both ongoing operations and prospective actions. In specific areas, it is assisted by the Audit and the Risk Committees. Management is responsible for establishing procedures which provide assurance that major business risks are identified, consistently assessed and appropriately addressed.

Cash Shell Status

The Directors consider the following of particular relevance given the Company's designation as a cash shell:

Ability to maintain AIM listing : As noted the Company has until 4 May 2021 to complete an acquisition which will constitute a reverse takeover, failing which the Company's admission to AIM could be cancelled, should this occur there would be no external market for shareholders to trade their shares in the Company.

Ability of the Company to continue as a going concern : As detailed in note 1, the ability of the Company to continue as a going concern is dependent on its ability to raise adequate finance in support of its acquisition objectives and working capital requirements over the upcoming period. However, in the event that the Company fails to raise sufficient funding to meet its objectives, it may not be able to continue as a going concern.

Ability of the Company to attract and close an RTO : There remains uncertainty as to closing of an transaction that qualifies as an RTO as well as the risk that should such RTO transaction be identified whether it attracts investment capital needed and/or is voted through at a future general meeting.

Financial Risk Management:

In addition, the following risks can arise in the normal course of business, and therefore considered relevant for the Company:

Currency risk: The Group may be exposed to changes in the exchange rate between the British pound (i.e. its reporting currency) and foreign currencies. Such movements could impact the financial performance of the Company. During the reporting year, the Group's held interests in Canadian Dollars via its subsidiary, Enegi Oil Inc. At each period end, assets and liabilities that are held in a currency other than the Group's reporting currency are translated into sterling. The resultant foreign currency gain or loss arising is reflected in the consolidated statement of comprehensive income (SOCI) in the period in which it arises.

Liquidity risk: The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due and to not undertake commitments which it is unable to meet, under both normal and stressed conditions. The Company has access to funding via capital markets (debt and equity) and these are considered sufficient to meet the anticipated funding requirements. Cash flow forecasts of the Company's liquidity requirements are monitored to ensure it has sufficient cash to meet operational needs over the next twelve months.

Financing risk: As the Group does not yet produce revenues it needs to continue to raise finance to implement its business strategy. The Board regularly monitors the availability of finance to ensure that it has sufficient confidence it can fund the actions that the Group needs to take to implement its strategy.

Section 172(1) Statement

Nu-Oil considers a collaborative engagement with its stakeholders to be an important component of developing a successful business and those stakeholders include not only shareholders, lenders, but also suppliers, employees and regulatory bodies where appropriate. Set out below is a description of the way in which Directors of the Company have regard for the matters set out in Section 172(1) of the Companies Act 2006, namely:

   a)   the likely consequences of any decision in the long term 
   b)   the interests of the company's employees, 
   c)   the need to foster the company's business relationships with suppliers, customers and others, 
   d)   the impact of the company's operations on the community and the environment, 

e) the desirability of the company maintaining a reputation for high standards of business conduct, and

   f)    the need to act fairly as between members of the company. 

Shareholders

The current Board of the Company seeks to develop and retain a shareholder base of long-term shareholders who are aligned with the Group's strategy. The Board seeks to communicate the reasons behind the structural and essential changes which were approved by shareholders and initiated in the last quarter of 2019. These included the reasons why changes in senior leadership in the Group were necessary, the reasons why the refinancing the balance sheet was essential, the reasons for the Company's designation as a cash shell and the reasons behind the change in the Company's strategy. It has done so through market updates when appropriate, through multimedia engagement via the website and through direct shareholder engagement via email and telephone as well as at shareholder meetings. Whilst the Board would prefer to engage more regularly with the Company's shareholder base, the commercially sensitive nature of corporate transaction negotiations and findings during due diligence often restricts fuller market communication due to the confidential nature of relevant discussions and matters.

Lenders, advisors, and suppliers

The current Board has taken a proactive approach in its engagement with lenders and suppliers. The support of lenders and suppliers throughout the financial year has been crucial in the Board's ability to maintain cost discipline whilst settling and resolving many of the legacy liability exposures, thereby allowing the Company to attempt to turn around from its past performance.

Employees

The Company's future success and current stability has required a supportive, committed and adaptive team. Creating the right environment which is commercially opportunistic an innovative as well as disciplined has proven key in the Company's ability to tightly manage its cash position whilst the Company has not had access to capital markets for funding purposes.

Regulators

The Company has sought to engage in a respectful, positive and collaborative way with its NOMAD and the London Stock Exchange whilst pursuing its objective to complete a transaction which will constitute a reverse takeover.

The Board of directors of Nu-Oil and Gas Plc consider, both individually and together, that they have acted in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s172(1) (a)-(f) of the Act) in the decisions taken during the year ended 30 June 2020.

Key Performance Indicators (KPI)

Given the Company's designated status as an AIM Rule 15 Cash Shell, the Board does not consider key performance indicators are appropriate to measure the performance of the business. The Board does, however, continue to closely monitor administrative expenses and cash position. The critical non-financial KPI, at this stage, is the ability to complete an acquisition or acquisitions which would constitute a reverse takeover (RTO). The Directors expect further KPIs will become relevant and reported following an RTO acquisition.

On behalf of the Board

Jay Bhattacherjee, Non-Executive Chairman, 7 December 2020

Consolidated and Parent Company Financial Statements

Consolidated Income Statement

For the year ended 30 June 2020

 
  GBP'000                                          Note     2020     2019 
-------------------------------------------------  ----  -------  ------- 
  Revenue                                                      -        - 
  Cost of sales                                                -        - 
-------------------------------------------------  ----  -------  ------- 
  Gross profit / (loss)                                        -        - 
  Administrative expenses                                  (739)  (1,441) 
  Other income                                        4        7        - 
-------------------------------------------------  ----  -------  ------- 
  Loss from operating activities                           (732)  (1,441) 
  Finance expense                                     7    (306)    (788) 
-------------------------------------------------  ----  -------  ------- 
  Loss before tax                                        (1,038)  (2,229) 
  Discontinued operations 
  Profit / (loss) from discontinued 
   operations                                         6        -    (570) 
  Gain on disposal of subsidiaries joint-venture 
   and related party initiatives                      6      388        - 
  Tax                                                 8        -        - 
-------------------------------------------------  ----  -------  ------- 
  Loss for the period                                      (650)  (2,799) 
-------------------------------------------------  ----  -------  ------- 
 
  Loss per share (pence per share) 
  Basic                                               9  (0.03p)  (0.20p) 
  Diluted                                             9  (0.03p)  (0.20p) 
 
  Loss per share (pence per share) continuing 
   operations 
  Basic                                               9  (0.04p)  (0.16p) 
  Diluted                                             9  (0.04p)  (0.16p) 
-------------------------------------------------  ----  -------  ------- 
 

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2020

 
  GBP'000                                   Note     2020     2019 
------------------------------------------  ------  -----  ------- 
  Loss for the period                               (650)  (2,799) 
  Other comprehensive income / (expense) 
  Currency translation differences                      -        6 
--------------------------------------------------  -----  ------- 
  Total comprehensive loss for the period 
   attributable to owners of the parent             (650)  (2,793) 
--------------------------------------------------  -----  ------- 
 
 

Consolidated and Parent Company Financial Statements (continued)

Consolidated Statement of Financial Position, as at 30 June 2020

 
  GBP'000                          Note      2020      2019 
--------------------------------   ----  --------  -------- 
  Non-current assets 
  Property, plant and equipment     10          3         8 
  Intangible assets                 10          -         - 
  Other long-term assets                        -       500 
---------------------------------  ----  --------  -------- 
                                                3       508 
  Current assets 
  Trade and other receivables       13        122     1,165 
  Cash and cash equivalents                   230        58 
---------------------------------  ----  --------  -------- 
                                              352     1,223 
 --------------------------------  ----  --------  -------- 
  Total assets                                355     1,731 
 
  Current liabilities 
  Loans                             16      (200)   (2,562) 
  Trade and other payables          17      (655)   (1,440) 
  Due to related parties            14          -     (657) 
---------------------------------  ----  --------  -------- 
                                            (855)   (4,659) 
  Non-current liabilities 
  Provisions                        11          -     (491) 
  Loans                             16      (966)         - 
---------------------------------  ----  --------  -------- 
  Total liabilities                       (1,821)   (5,150) 
  Net liabilities                         (1,466)   (3,419) 
---------------------------------  ----  --------  -------- 
 
  Equity 
  Ordinary share capital                      193     3,207 
  Share premium account                    32,266    31,359 
  Reverse acquisition reserve                   -     9,364 
  Warrant reserves                            415       404 
  Other reserves                            3,016   (2,487) 
  C4 Loan Reserve                           1,682 
  Accumulated losses                     (39,038)  (45,266) 
---------------------------------  ----  --------  -------- 
  Total equity                            (1,466)   (3,419) 
---------------------------------  ----  --------  -------- 
 

The financial statements together with the notes to the financial statements were approved by the Board

Jay Bhattacherjee, Non-Executive Chairman, 7 December 2020

Consolidated and Parent Company Financial Statements (continued)

Company Statement of Financial Position, as at 30 June 2020

 
  GBP'000                         Note               2020           2019 
--------------------------------  ----  -----------------  ------------- 
  Non-current assets 
  Property, plant and equipment    10                   3              5 
                                                        3              5 
  Current assets 
  Trade and other receivables      13                 122          1,165 
  Cash and cash equivalents                           230             58 
--------------------------------  ----  -----------------  ------------- 
                                                      352          1,223 
  Total assets                                        355          1,228 
 
  Current liabilities 
  Loans                            16               (200)        (2,562) 
  Trade and other payables         17               (655)        (1,193) 
  Due to related parties           14                   -          (464) 
--------------------------------  ----  -----------------  ------------- 
                                                    (855)        (4,219) 
  Non-current liabilities 
  Provisions 
  Loans                           16                (966)              - 
--------------------------------  ----  -----------------  ------------- 
  Total liabilities                               (1,821)        (4,219) 
  Net liabilities                                 (1,466)        (2,991) 
--------------------------------  ----  -----------------  ------------- 
 
  Equity 
  Ordinary share capital                              193          3,207 
  Share premium account                            32,266         31,359 
  Merger relief reserve                                 -          7,548 
  Warrant reserve                                     415            404 
  Other reserves                                    3,016        (2,487) 
  C4 Loan Reserve                                   1,682              - 
  Accumulated losses                             (39,038)       (43,022) 
  Total equity                                    (1,466)        (2,991) 
--------------------------------  ----  -----------------  ------------- 
 

The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Parent Company income statement or statement of comprehensive income. The loss for the Parent Company for the year to 30 June 2020 was GBP1,078,000 (2019: GBP2,698,000).

The financial statements together with the notes to the financial statements were approved by the Board

Jay Bhattacherjee, Non-Executive Chairman, 7 December 2020

Consolidated and Parent Company Financial Statements (continued)

Consolidated Statement of Changes in Equity, for the year ended 30 June 2020

 
                            Ordinary     Share    Merger               Warrant 
                               Share   Premium    Relief   C4 Loan   and Other     Accum    Total 
  GBP'000                    Capital   Account   Reserve   Reserve    Reserves    Losses   Equity 
--------------------------  --------  --------  --------  --------  ----------  --------  ------- 
  Balance, 30 June 
   2018                        3,072    31,062     9,364         -     (2,078)  (42,473)  (1,053) 
  Loss for the period              -         -         -         -           -   (2,799)  (2,799) 
  Currency translation 
   differences                     -         -         -         -           -         6        6 
--------------------------  --------  --------  --------  --------  ----------  --------  ------- 
  Comprehensive loss               -         -         -         -           -   (2,793)  (2,793) 
  Equity fundraise               135       297         -         -         (5)         -      427 
--------------------------  --------  --------  --------  --------  ----------  --------  ------- 
  Balance, 30 June 
   2019                        3,207    31,359     9,364         -     (2,083)  (45,266)  (3,419) 
  Comprehensive loss 
   in period                       -         -         -         -           -     (650)    (650) 
  Discontinued operations          -         -   (9,364)         -           -     9,364        - 
  Fundraising & Loan 
   Refinancing                     2       918         -     1,682           -         -    2,602 
  Share Subdivision          (3,016)         -         -         -       3,016         -        - 
  Other reserves & 
   warrants                        -      (11)         -         -       2,498   (2,486)        - 
--------------------------  --------  --------  --------  --------  ----------  --------  ------- 
  Balance, 30 June 
   2020                          193    32,266         -     1,682       3,431  (39,038)    1,466 
--------------------------  --------  --------  --------  --------  ----------  --------  ------- 
 

Company Statement of Changes in Equity, for the year ended 30 June 2020

 
                            Ordinary     Share       Reverse               Warrant 
                               Share   Premium   Acquisition   C4 Loan   and Other     Accum      Total 
  GBP'000                    Capital   Account       Reserve   Reserve    Reserves    Losses     Equity 
--------------------------  --------  --------  ------------  --------  ----------  --------  --------- 
  Balance, 30 June 
   2018                        3,072    31,062         7,548         -     (2,078)  (40,324)    (720) 
  Loss for the period              -         -             -         -           -   (2,698)  (2,698) 
  Currency translation 
   differences                     -         -             -         -           -         -        - 
--------------------------  --------  --------  ------------  --------  ----------  --------  ------- 
  Comprehensive loss           3,072    31,062         7,548         -           -   (2,698)  (2,698) 
  Equity fundraise               135       297             -         -         (5)         -      427 
--------------------------  --------  --------  ------------  --------  ----------  --------  ------- 
  Balance, 30 June 
   2019                        3,207    31,359         7,548         -     (2,083)  (43,022)  (2,991) 
  Comprehensive loss 
   in period                       -         -             -         -           -   (1,078)  (1,078) 
  Discontinued operations          -         -       (7,548)         -           -     7,548        - 
  Fundraising & Loan 
   Refinancing                     2       918             -     1,682           -         -    2,602 
  Share Subdivision          (3,016)         -             -         -       3,016         -        - 
  Other reserves & 
   warrants                        -      (11)             -         -       2,498   (2,486)        - 
--------------------------  --------  --------  ------------  --------  ----------  --------  ------- 
  Balance, 30 June 
   2020                          193    32,266             -     1,682       3,431  (39,038)    1,466 
--------------------------  --------  --------  ------------  --------  ----------  --------  ------- 
 
 

Warrants and other reserves comprises: a warrant reserve of GBP415,000, reflecting the total cost of warrants issued pre and post IPO; and a deferred shares reserve of GBP3,016,000 which arose following the share sub-division in November 2019.

.

Consolidated Cash Flow

For the year ended 30 June 2020

 
  GBP'000                                  Note   2020     2019 
-----------------------------------------  ----  -----  ------- 
  Cash flow from operating activities 
  Cash used in operating activities        18    (728)  (1,130) 
  Net cash used in operating activities          (728)  (1,130) 
 
  Cash flow from financing activities 
  Share capital issued for cash                    920      380 
  Loan repayments                          16     (20)     (53) 
  Net cash from financing activities               900      327 
 
  Net (decrease)/increase in cash in 
   the period                                      172    (803) 
-----------------------------------------  ----  -----  ------- 
 
  Cash and cash equivalents at the start 
   of the period                                    58      861 
-----------------------------------------  ----  -----  ------- 
  Cash and cash equivalents at the end 
   of the period                                   230       58 
-----------------------------------------  ----  -----  ------- 
 

Company Cash Flow

 
  GBP'000                                  Note   2020     2019 
-----------------------------------------  ----  -----  ------- 
  Cash flow from operating activities 
  Cash used in operating activities        18    (728)  (1,130) 
-----------------------------------------  ----  -----  ------- 
  Net cash used in operating activities          (728)  (1,130) 
 
  Cash flow from financing activities 
  Share capital issued for cash                    920      380 
  Loan repayments                          16     (20)     (53) 
  Net cash from financing activities               900      327 
 
  Net (decrease)/increase in cash in 
   the period                                      172    (803) 
-----------------------------------------  ----  -----  ------- 
 
  Cash and cash equivalents at the start 
   of the period                                    58      861 
-----------------------------------------  ----  -----  ------- 
  Cash and cash equivalents at the end 
   of the period                                   230       58 
-----------------------------------------  ----  -----  ------- 
 

Notes to the Financial Statements

Corporate Information

Nu-Oil and Gas Plc (the 'Company' and together with its subsidiaries, the 'Group') is a company incorporated in England on 13 September 2007 and has registered address of Audley House, 13 Palace Street, London, SW1E 5HX. The Group is domiciled in the UK for tax purposes and its shares are quoted on the Alternative Investments Market ('AIM') of the London Stock Exchange.

The Company is designated as an AIM Rule 15 Cash Shell.

   1.   Basis of Preparation 

The consolidated financial statements of the Group and the financial statements of the parent Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), the Companies Act 2006 that applies to companies reporting under IFRS, and IFRS-IC interpretations. The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 2.

Changes in accounting principles and adoption of new and revised standards

In the year ended 30 June 2020, the Directors have reviewed all the new and revised Standards. The only relevant new standard that is effective for this year's financial statements is IFRS 16 'Leases'. This standard does not have a material impact on the financial statements. Furthermore, at the reporting date, the Group's only lease arrangement is for a period of 12 months. Consequently, the Group intends to use the exemptions provided by the accounting standards for short-term leases (less than a year).

There are no standards in issue but not yet effective which could have a material impact on the financial statements.

Going concern

The Directors judge it appropriate to adopt the going concern basis in preparing the Consolidated and Company Financial Statements.

In forming this judgement, the Directors reviewed the Group's funding, budget and business plan for the twelve months from signing the financial statements. The Directors have relied upon the critical assumption that the Group will be able to achieve the key milestones of the business plan, notably with regard to securing an acquisition or acquisitions which will constitute a reverse takeover, which they believe will result in the availability of adequate additional funding.

The Directors have concluded that to the extent that these assumptions are not valid, there exists a material uncertainty that casts significant doubt upon the Group's and the Company's ability to continue as a going concern.

Nevertheless, having stress-tested several forecast scenario assumptions and based on the knowledge that the Company is actively in negotiations with several targets, the Company is now assessing the implications of such acquisitions under AIM Rules. The Company has until 4 May 2021 to complete an acquisition which will constitute a reverse takeover, failing which the Company's admission to AIM could be cancelled, should this occur there would be no external market for shareholders to trade their shares in the Company.

The Directors therefore consider the assumptions as valid and consequently continue to adopt the going concern basis in preparing the financial statements.

Basis of consolidation

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments in Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying value is increased or decreased to recognise the investor's share of the change in net assets of the investee after the date of acquisition.

The Group's share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. Distributions received from an associate reduce the carrying amount of the investment.

The Group formerly held a 50% interest in the Marginal Field Development (MFDevCo) Ltd. The Directors deem that the Group had significant influence but not control over this entity. In accordance with IAS 28 this investment was accounted for using the equity method of accounting. At the year end the investment balance is held at GBPnil following the reorganisation approved by shareholders in November 2019, MFDevCo has been disposed.

   2.   Significant Accounting Policies 

The principal accounting policies have been applied consistently throughout the year.

Segment Reporting

IFRS 8 Operating Segments requires that the segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision-maker. The Group adopts this policy and the chief operating decision-maker has been identified as the Board of Directors of the Company.

Accounting policies

In historical periods, the focus in the Oil and Gas industry has given rise to it implementing several industry specific accounting policies relating to, interalia, oil and gas properties, intangible capitalised development costs and licenses. Following the divestment of its interests in MFDevCo and EOI these policies are no longer relevant.

Fixtures and fittings, equipment

Office furniture, fittings and equipment is stated at cost less accumulated depreciation and any impairment losses. The initial cost of an asset comprises its purchase price, any costs directly attributable to bringing the asset into operation, the initial estimate of any decommissioning obligation, if any, and, for qualifying assets, borrowing costs.

Office furniture, fittings and equipment is depreciated on a straight-line basis over its expected useful life. The useful life of the Company's office furniture, fittings and equipment is as follows:

 
Office equipment                3 to 15 years 
Office furniture, fixtures and  5 to 15 years 
 fittings 
 

Other long-term assets

Long term assets usually in the form of deposits or investments, are recognised initially at fair value and subsequently measured at amortised cost less any provisions for impairment. A provision for impairment is established when there is objective evidence that the Company will not benefit from cash flows of an amount at least equal to the carrying value of the asset.

Government grant

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Grants received in the period were for the Coronavirus Job retention scheme and are included in other income. There are no unfulfilled conditions or other contingencies attaching to these grants. The group did not benefit directly from any other forms of government assistance. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.

Financial instruments

Financial assets

All of the Group's financial assets are held within a business model whose objective is to collect contractual cash flows which are solely payments of principals and interest and therefore classified as subsequently measured at amortised cost. The Group's and Company's financial assets include cash and cash equivalents and trade and other receivables.

The Group assesses, on a forward-looking basis, any expected credit loss, defined as the difference between the contractual cash flows and the cash flows that are expected to be received.

Financial liabilities and equity

Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions, in accordance with IAS 32:

-- They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and

-- Where the instrument will or may be settled in the Group's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments. To the extent that this definition is not met, the financial instrument is classified as a financial liability.

As such, financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest of the assets of the Group after deducting all of its liabilities.

Borrowings

Borrowings are recognised initially at the fair value of the proceeds received which is determined using a discount rate which reflects the cost of borrowing to the Group. In subsequent periods borrowings are recognised at amortised costs, using an effective interest rate method. Any difference between the fair value of the proceeds costs and the redemption amount is recognised as a finance cost over the period of the borrowings.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders' equity, net of income tax effects.

Trade and other payables

Trade payables are non-interest bearing and are stated initially at fair value and then amortised cost.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Employee Benefit Trust

The Group has closed the Employee Benefit Trust as it had expired by the reporting date. Prior to its closure, the assets and liabilities of the Employee Benefit Trust were brought onto the Statement of Financial Position of the Company. Shares held by the trust were consolidated as a deduction from equity. This policy applied to both the Company and the Group.

Performance Share Plan costs

The fair value of awards granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date, using an appropriate pricing model taking into account the terms and conditions upon which the award was granted, and is spread over the period during which the awards vest. The amount recognised as an expense is adjusted to reflect the actual number of share awards that vest in the same period. At each reporting date, the Company revises its estimates of the number of options that are expected to vest. The Company recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

Foreign currency translation

The Company's functional currency is sterling. Both Enegi Oil Inc. and Enegi Finance Limited (both subsidiaries at the prior year's reporting date) had a functional currency in Canadian dollars. The Group's presentation currency is sterling.

In preparing the financial statements of the individual companies, transactions in foreign currencies other than the functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.

Exchange rate differences arising on the settlement of monetary items and on the retranslation of monetary items are included in profit or loss for the period. Exchange rate differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

On consolidation, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the rate at the date of the transaction is used.

Exchange differences that arise on long term intra-Group loans are recognised in the income statement in the individual financial statements of each Group company.

Income taxes

Current income tax assets and liabilities for the current and prior period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Share capital

Issued share capital is recorded in the Statement of Financial Position at nominal value with any premium at the date of issue being credited to the share premium account.

Share-based transactions

From time to time, the Company may pay for goods or services through the issue of new shares. The cost of such equity-settled transactions is recognised in the income statement, together with a corresponding increase in equity, in the period during which the goods or services are received.

The value of such share based payments is measured by reference to the fair value of the goods or services received or the market value of the shares issued, whichever value is more readily determinable.

Warrants

From time to time, the Company may issue warrants to suppliers as partial payment for goods or services or to investors or advisers in relation to the raising of new equity finance. When warrants are issued as partial payment for goods or services related to operations, the fair value of those warrants is recognised as a cost in the income statement. When warrants are issued in relation to the raising of new equity finance, the fair value of those warrants is set off against share premium. Warrants issued but not exercised are held in a warrant reserve within equity.

Investment in subsidiary undertakings

Investments in subsidiary undertakings are recorded at cost plus incidental expenses less any provision for impairment. Impairment reviews are performed by the Directors when there has been an indication of potential impairment.

Critical accounting judgements and estimates in applying the Group's accounting policies

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements and estimates that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. In the process of applying the Group's accounting policies, management have made the following estimates that may have a significant effect on the amounts recognised in the financial statements:

Estimates and Judgements

Going Concern: The financial information has been prepared assuming the Group will continue as a going concern. The basis to which the Directors have formed this critical accounting judgement is further outlined in note 1 of the Group's accounts.

Determination of Discount Rates: Where settlement of the liability component of a compound financial instrument is deferred, the amounts payable in the future are discounted to their present value as at the date of initial recognition. The discount rate used is generally judged to be the entity's incremental borrowing rate, being the rate at which a similar borrowing might be obtained from an independent financier under comparable terms and conditions; in other words, a similar liability (including any embedded non-equity derivative features) that does not have an associated equity component.

   3.   Segmental Information 

Prior to the Group's restructuring in 2019, the Group complied with IFRS 8 Operating Segments which requires that the segments should be reported on the same basis as the internal reporting information that is provided to the chief operating decision-maker. The Group adopts this policy and the chief operating decision-maker has been identified as the Board of Directors of the Company. Historically, the Directors considered there to be two operating and reportable segments, being that of the development of the non-Canadian based Oil and Gas opportunities and the operations in western Newfoundland. Following the Company's divesting of interests in both these segments and its designation as an AIM Rule 15 Cash Shell, these segments no longer apply.

Over the past year, given the state of the Group's operations, the chief operating decision maker relies primarily on an understanding of the cash requirements of the business to make decisions about how resources are to be allocated across the business. The decision to not commit further investment into Enegi Oil Inc. together with an assessment as to the potential future economic benefit from the portfolio held by Enegi Oil Inc gave rise to the full impairment of intangible assets held in Enegi Oil Inc in the prior period.

Excluding intercompany balances, the net assets of Enegi Oil Inc. at 30 June 2020 are as follows

 
  GBP'000                       Note   2020     2019 
------------------------------  -----  ----  ------- 
  Non-current assets 
  Tangible assets                         -        3 
  Other long-term assets                  -      500 
-------------------------------------  ----  ------- 
                                          -      503 
  Current assets 
  Trade and other receivables             -        - 
  Cash and cash equivalents               -        - 
------------------------------  -----  ----  ------- 
  Total assets                            -      503 
 
  Current liabilities 
  Trade and other payables                -    (247) 
  Due to related parties                  -    (343) 
-------------------------------------  ----  ------- 
                                          -    (590) 
  Non-current liabilities 
  Provisions                              -    (491) 
-------------------------------------  ----  ------- 
  Total liabilities                       -  (1,081) 
 
  Net liabilities                         -    (578) 
-------------------------------------  ----  ------- 
 

Subsequent to the reporting date, the Company returned the equity interest held in Enegi Oil Inc. further information is set out in Discontinued Operations.

   4.   Grant income 

The Company has availed of government initiatives designed to support businesses impacted by Covid-19. Regarding the job retention scheme support initiatives, the Company has recognised GBP7,000 in respect of grant income for employees furloughed during the year.

   5.   Operating Loss 

Operating loss is after charging:

 
  GBP'000                                     Note   2020   2019 
--------------------------------------------  -----  ----  ----- 
  Depreciation, amortisation and impairment             2  1,000 
  Directors' fees                                     216    345 
  Debt provisions and recharge to MFDevCo               -  (151) 
---------------------------------------------------  ----  ----- 
 

During the year, the Group obtained various services from its auditors, the costs of which are set out below:

 
  GBP'000          Note            2020           2019 
-----------------  -----  -------------  ------------- 
  Audit fees                         19             30 
  Other services                      -              - 
  Tax compliance                      4             10 
------------------------  -------------  ------------- 
                                     23             40 
 -----------------------  -------------  ------------- 
 

The tax compliance fees are payable in respect of the previous auditor.

   6.   Discontinued Operations 

On 21 October 2019, the Company announced the returning of the interest held in Enegi Oil Inc.('Enegi') to Enegi with immediate effect. The returning of equity to Enegi was done as per the applicable laws in Newfoundland, Canada. As a result of that action, Nu-Oil and Gas held no further claim or call on Enegi.

On 4 November 2019, shareholders approved the resolutions put to a General Meeting which included the divestment of MFDevCo as a part of the wider and essential restructuring initiatives announced in early October 2019.

The consequence of this was the Company's formal designation as an AIM Rule 15 Cash Shell, which was announced by the Company on 4 November 2019.

The Company's interest in Enegi Finance Ltd. a dormant company originally established for finance and structuring purposes to support the development of the Group's interests in the Canadian oil and gas assets commenced the process of being wound-up. It was officially struck off the register of companies in October 2020.

The reversal of balances held in the consolidated and parent company accounts gave rise to non-cash net gain in the year of GBP388,000 in relation to the disposal of subsidiaries, joint-venture and related party initiatives. The performance results of discontinued operations are presented below:

 
  GBP'000                           Note   2020   2019 
----------------------------------  -----  ----  ----- 
  Revenue                                     -      - 
  Operating expenses                          -      - 
  Administrative expenses                     -  (238) 
  Impairment of intangible assets                (332) 
-----------------------------------------  ----  ----- 
  Loss from operating activities              -  (570) 
  Finance expense                             -      - 
----------------------------------  -----  ----  ----- 
  Loss before tax                             -  (570) 
  Tax                                         -      - 
----------------------------------  -----  ----  ----- 
  Loss for the period                         -  (570) 
-----------------------------------------  ----  ----- 
 

The operations in western Newfoundland were conducted by Enegi Oil Inc. No operational financial activity was reported during the period 1 July 2019 and 21 October 2019. For the financial year ended 2019, Enegi Oil Inc reported a loss of GBP570,000. No interest revenue or expense was generated or incurred. Given the trading losses, no income tax expense has been incurred.

   7.   Finance costs 
 
  GBP'000            Note   2020  2019 
-------------------  -----  ----  ---- 
  Interest expense           306   788 
--------------------------  ----  ---- 
 

In 2020, the Company refinanced the loan it formerly held with Shard. The loan, refinanced with C4 Energy is detailed further in Note 16

   8.   Taxation 

The Group has no current or deferred tax charge in the current or previous financial year. The Group has a net unrecognised deferred income tax asset. Differences were accounted for as follows:

 
                                 Note          2020           2019 
-------------------------------  -----  -----------  ------------- 
  Statutory income tax rate                     19%            19% 
  GBP'000 
-------------------------------  -----  -----------  ------------- 
  Loss for the period                         (650)        (2,229) 
  Expected income tax recovery                (124)          (532) 
  Effect of overseas tax rates                    -           (55) 
  Permanent difference                            -             55 
  Transferred to losses                         124            532 
  Total tax                                       -              - 
--------------------------------------  -----------  ------------- 
 

The deferred income tax asset not recognised at 30 June 2020 is comprised of the following:

 
  GBP'000                            Note     2020    2019 
-----------------------------------  -----  ------  ------ 
  Non-capital loss carried forward          11,245   8,866 
  Canadian Pool Assets                           -   1,830 
  Total tax losses                          11,245  10,696 
------------------------------------------  ------  ------ 
 

Subsequent to the reporting date, the Company returned the equity interest held in Enegi Oil Inc as previously described.

   9.   Loss per Share (Expressed in Pence) 

Loss per share amounts are calculated by dividing the loss for the year by the weighted average number of common shares in issue during the year.

 
  Group, including discontinued operations               2020           2019 
----------------------------------------------  -------------  ------------- 
  Loss attributable to shareholders (GBP'000)           (650)        (2,799) 
  Weighted average number of shares in 
   issue                                        2,596,306,459  1,393,255,721 
  Fully diluted weighted average number 
   of shares in issue                           2,596,306,459  1,393,255,721 
  Basic loss per share (expressed in pence 
   per share)                                         (0.03p)        (0.20p) 
  Diluted loss per share (expressed in 
   pence per share)                                   (0.03p)        (0.20p) 
----------------------------------------------  -------------  ------------- 
 
  Company, excluding discontinued operations             2020           2019 
----------------------------------------------  -------------  ------------- 
  Loss attributable to shareholders (GBP'000)         (1,038)        (2,229) 
  Weighted average number of shares in 
   issue                                        2,596,306,459  1,393,255,721 
  Fully diluted weighted average number 
   of shares in issue                           2,596,306,459  1,393,255,721 
  Basic loss per share (expressed in pence 
   per share)                                         (0.04p)        (0.16p) 
  Diluted loss per share (expressed in 
   pence per share)                                   (0.04p)        (0.16p) 
----------------------------------------------  -------------  ------------- 
 

There were 192,000,000 (2019: 53,000,000) share options issued which are anti-dilutive as at 30 June 2020.

10. Tangible and Intangible Assets

Tangible assets

 
                                   Fixtures,                   Tangible 
                                    fittings          O&G   capitalised            Group 
  GBP'000                      and equipment   properties     dev costs    ARO     Total 
----------------------------  --------------  -----------  ------------  -----  -------- 
  Cost 
  1 July 18                              429        3,823        14,007    810    19,069 
  Net additions / disposals                -            -             -      -         - 
  Currency exchange 
   movement                                           106           388     22       516 
----------------------------  --------------  -----------  ------------  -----  -------- 
  30 June 19                             429        3,929        14,395    832    19,585 
  Net additions / disposals                -            -             -      -         - 
  Currency exchange 
   movement                                -         (42)         (154)    (9)     (205) 
  Discontinued operations              (429)      (3,887)      (14,241)  (823)  (19,380) 
----------------------------  --------------  -----------  ------------  -----  -------- 
  30 June 20                               -            -             -      -         - 
 
  Charge / impairment 
  1 July 19                            (242)      (3,823)      (14,007)  (802)  (18,874) 
  Charge and impairments               (182)                               (5)     (187) 
  Currency exchange 
   movement                                         (106)         (388)   (22)     (516) 
----------------------------  --------------  -----------  ------------  -----  -------- 
  30 June 19                           (424)      (3,929)      (14,395)  (829)  (19,577) 
  Charge and impairments                 (2)            -             -      -       (2) 
  Currency exchange 
   movement                                -           42           154      9       205 
  Discontinued operations                426        3,887        14,241    820    19,377 
----------------------------  --------------  -----------  ------------  -----  -------- 
  30 June 20                               -            -             -      -         3 
 
  Carrying value 
  30 June 19                               5            -             -      3         8 
  30 June 20                               3            -             -      -         3 
----------------------------  --------------  -----------  ------------  -----  -------- 
 

At the reporting date, the Company had tangible assets with a carrying value of GBP3,000 (30 June 2019 GBP5,000). These are shown as fixtures, fittings and equipment in the above table. All other tangible assets have been removed as a part of discontinued operations.

Intangible assets - Group

 
                                 Intangible   Capitalised 
                                capitalised   exploration              Group 
  GBP'000                         dev costs         costs  Licenses    Total 
-----------------------------  ------------  ------------  --------  ------- 
  Cost 
  1 July 18                             899         1,919       470    3,288 
  Net additions / disposals 
  Currency exchange movement                           53        13       66 
-----------------------------  ------------  ------------  --------  ------- 
  30 June 19                            899         1,972       483    3,354 
  Net additions / disposals               -             -         -        - 
  Currency exchange movement              -          (21)       (5)     (26) 
  Discontinued operations             (899)        (1951)     (478)  (3,328) 
-----------------------------  ------------  ------------  --------  ------- 
  30 June 20                              -             -         -        - 
 
  Charge / impairment 
  1 July 18                           (408)       (1,597)     (470)  (2,475) 
  Charge and impairments              (491)         (322)              (813) 
  Currency exchange movement                         (53)      (13)     (66) 
-----------------------------  ------------  ------------  --------  ------- 
  30 June 19                          (899)       (1,972)     (483)  (3,354) 
  Charge and impairments                  -             -         -        - 
  Currency exchange movement              -            21         5       26 
  Discontinued operations               899          1951       478    3,328 
-----------------------------  ------------  ------------  --------  ------- 
  30 June 20                              -             -         -        - 
 
  Carrying value 
  30 June 19                              -             -         -        - 
  30 June 20                              -             -         -        - 
-----------------------------  ------------  ------------  --------  ------- 
 

In 2019, the Directors conducted a review of the carrying value of the Group's tangible and intangible fixed assets and concluded there was nil recoverable economic value from its intangible assets. Following the divestment of the oil and gas portfolio, the costs and accumulated impairment and charges have been removed and shown as discontinued operations

11. Provisions

 
  GBP'000                            Note          2020       2019 
-----------------------------------  -----  -----------  --------- 
  Balance at start of year                          491        470 
  Currency translation differences                    -         25 
  Discontinued operations                         (491) 
  Unwinding of discount rate                          -        (4) 
------------------------------------------  -----------  --------- 
  Balance at end of year                              -        491 
------------------------------------------  -----------  --------- 
 

Under the terms of the lease and licence, Enegi Oil Inc, had an obligation to comply with the provincial laws of abandonment. That obligation involved closing in any wells and removing the well-head equipment, removing any buildings, engineering structures, materials and waste from the site and then replanting the land to restore it to its original condition. Following the return of equity in Enegi Oil Inc., Nu-Oil and Gas has no further interest in Enegi Oil Inc and is no longer required to account for its interests.

12. Other Long-Term Assets and Investments

 
  GBP'000                   Note    2020  2019 
--------------------------  -----  -----  ---- 
  License deposits                   500   500 
  Discontinued operations          (500)     - 
  Balance at end of year               -   500 
---------------------------------  -----  ---- 
 

The licence deposits are held by the relevant regulatory body. They were paid over when Enegi Oil Inc acquired its stakes in the lease and licence. The terms provided that the deposits would either be returned at the expiry of the lease and licence or set off against royalty payments if and when they become due.

Following the returning of the Group's interest in Enegi Oil Inc. these balances are no longer carried as a receivable and have been removed as a part of discontinued operations.

Company investments

 
  GBP'000                                  Note                  2020   2019 
-----------------------------------------  -----  -------------------  ----- 
  Investment in Group companies at start 
   of year                                                          -    326 
  Impairment                                                        -  (326) 
  Investment in Group companies at end                              -      - 
   of year 
------------------------------------------------  -------------------  ----- 
 

In 2019, the Directors conducted a review of the carrying value of the Company's other long-term assets, which consisted of investments in Group companies and in MFDevCo. The balance represented the carrying value of the investment in Enegi Oil Inc. The impairment in the prior period reflected the application of the Group's accounting policy with respect to the amortisation of Enegi Oil Inc.'s capitalised exploration costs.

The Group held a 50% interest in MFDevCo in which it has invested as part of its marginal or stranded field strategy. Its investment had been accounted for using the equity method and was deemed to have zero value as the cumulative losses in MFDevCo exceeded the investment that had been made by the Group.

13. Trade and Other Receivables

Trade and other receivables

 
  GBP'000                             Note   2020   2019 
------------------------------------  -----  ----  ----- 
  Sales taxes receivables                      85      - 
  Prepayments and other receivables            37  1,165 
                                              122  1,165 
 ------------------------------------------  ----  ----- 
 

The trade and other receivables showing in the Company's statement of financial position relate to sales taxes receivable of GBP81,000 (2019: GBPnil) and prepayments and other receivables of GBP27,000 (2019: GBP1,165,000). Other receivables in 2019 related to services provided to MFDevCo as part of the former marginal field strategy. These amounts are no longer recoverable following the divestment of the interest in MFDevCo in November 2019.

14. Related Party Transactions

Group

All of the Group's related party balances were settled as a part of the November 2019 restructuring and removed as a part of discontinued operations.

 
  GBP'000                   Note      2020   2019 
--------------------------  -----  -------  ----- 
  RMRI Group                           367    367 
  RMRI Group (UK)                      464    464 
  RMRI Canada Inc.                     193    193 
  Discontinued operations          (1,024)      - 
                                         -  1,024 
 --------------------------------  -------  ----- 
 

In addition to the above, in 2019 GBP556,000 was recorded in the Company's accruals as Applications for Payment but not yet invoiced. These too have been discharged as a part of discontinued operations.

Company

In 2019 the Company was owed an additional GBP151,000 by its principal trading subsidiary, Enegi Oil Inc. As a result of the trading performance of Enegi Oil Inc. the Company has provided in full against this receivable and as such the amount carried at 30 June 2019 was GBPnil.

Amounts owed by the Company to the companies listed above in 2019 totalled GBP469,000. During the year no charges were incurred.

15. Ordinary Share Capital and Share Premium Account

In October 2015, the Company undertook a reorganisation of its share capital. Under the Companies Act 2006 a company is unable to issue shares at a subscription price which is lower than the nominal value. Therefore, in order to raise additional funding a reorganisation of the Company's share capital was performed.

The reorganisation subdivided existing shares into new ordinary shares with a nominal value of GBP0.001 and deferred shares with a nominal value of GBP0.009. The deferred shares, amongst other things, are not traded, do not receive dividends and do not have voting rights. The issue of new ordinary shares will not require the issuance of deferred shares to new subscribers. At the time of the reorganisation 189,792,348 shares were in circulation.

During the year the Company again undertook a reorganisation of its share capital for similar reasons to those noted above. The reorganisation subdivided shares into new ordinary shares with a nominal value of GBP0.000001 and deferred shares with a nominal value of GBP0.000999. The deferred shares, amongst other things, are not traded, do not receive dividends and do not have voting rights. The issue of new ordinary shares will not require the issuance of deferred shares to new subscribers. Following the reorganisation, the placing and the issue of the settlement shares approved by shareholders on 04 November 2019, 2,590,393,217 shares were in circulation.

 
                                             Number of        Ordinary 
                                                shares   Share capital 
                                      Note       000's             GBP 
------------------------------------  -----  ---------  -------------- 
  Issued ordinary shares of 0.0001p 
   each                                      3,390,393           3,390 
  Issued deferred shares of 0.0999p 
   each                                        189,792         189,603 
-------------------------------------------  ---------  -------------- 
 

The weighted average number of ordinary shares in issue during the year was 2,596,306,459 (2019: 1,393,255,721).

The movement in share capital and share premium in the current is as follows:

 
                                                        Deferred  Ord. Share     Share 
                                           Ord. Shares    Shares     Capital   Premium     Total 
                                    Note         000's     000's     GBP'000   GBP'000   GBP'000 
---------------------------------  ------  -----------  --------  ----------  --------  -------- 
  Balance, 1 July 2019                       1,498,727   189,792       3,207    31,359    34,566 
  Effect of share reorganisation                     -         -     (3,016)         -   (3,016) 
  Effect of warrants                                 -         -           -      (11)      (11) 
  Share issue                                1,891,667         -           2       918       920 
  Balance, 30 June 2020                      1,498,727   189,792         193    32,266    32,459 
-----------------------------------------  -----------  --------  ----------  --------  -------- 
 

At 30 June 2020, the warrants relating to the Company's ordinary share capital had been issued:

 
                                            Exercise Price 
                                Ord.Shares         GBP GBP           Expiry 
-----------------------------  -----------  --------------  --------------- 
  Warrants: Company's Nomad      9,416,885          0.0063  6 November 2021 
  Warrants: Company's Broker    13,043,478         0.01150    28 March 2021 
  Warrants: Company's Broker     8,333,333         0.00030     3 April 2024 
  Warrants: Company's former 
   Broker                       10,000,000         0.01100     26 July 2022 
  Warrants: Various            110,000,000        0.000625  19 January 2024 
-----------------------------  -----------  --------------  --------------- 
 

16. Net debt

 
                                 YA Global  Shard Loan   C4 Loan    Total 
-------------------------------  ---------  ----------  --------  ------- 
 Balance 1 July 2018                 (183)     (1,643)         -  (1,826) 
 Cash flows - repayments                15          38         -       53 
 Movements in accrued interest        (13)       (776)         -    (789) 
-------------------------------  ---------  ----------  --------  ------- 
 Balance 30 June 2019                (181)     (2,381)         -  (2,562) 
 Movement in accrued interest         (39)       (119)         -    (158) 
 Refinancing                             -       2,500   (2,500)        - 
 Cash flows - repayments                20           -         -       20 
 Movement in accrued interest            -           -     (148)    (148) 
 Transfer to equity loan 
  reserve                                -           -     1,682    1,682 
 Balance 30 June 2020                (200)           -     (966)  (1,166) 
-------------------------------  ---------  ----------  --------  ------- 
 

In October 2019, Shard Capital Management Limited ('Shard') sold its interest in the Shard Loan to C4 Energy Limited ('C4'). Following the novation of the loan, the Company agreed refinancing terms with C4 and entered into a convertible loan note instrument resulting in the issuance of loan notes with a par value of GBP2,500,000. The notes are convertible into ordinary shares at a fixed price of 0.05p per share at the option of the lender, are freely transferable and have a maturity date in October 2024. The notes are unsecured and carry a nil interest coupon.

In accordance with IAS 32, judgement is requirement when determining the classification of financial instruments in terms of liability or equity. These judgements include an assessment of whether the financial instrument includes any embedded derivative features, whether it includes contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party, and whether that obligation will be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

Under the terms of accounting standard IAS 32, the C4 loan note instrument is assessed to be a non-derivative compound financial instrument and as such the Company is required to recognise separately the components of the financial instrument that (a) creates a financial liability and (b) grants an option to the holder of the instrument to convert it into an equity instrument of the entity. In establishing the value of these components, an effective interest rate must be used. The value of the liability component is determined by discounting the par value at the effective interest rate upon initial recognition. The discount rate used for this purpose has been assessed to be 25%. By reference, the cost of capital of the Shard loan was used as a start point in forming this judgement; a sensitivity of +/- 5% in the interest rate would result in a decrease/increase in the value of the liability component as at the reporting date of GBP146,000/GBP185,000 and an increase in the finance expense of GBP3,000/GBP2,000. The discount is then unwound over the remaining life of the loan. The value attributable to equity component represents the residual interest in the instrument upon initial recognition. Consequently, at the point of initial recognition, the sum of the carrying amounts assigned to the liability and equity components is always equal to the value of the instrument as a whole, namely GBP2,500,000.

The Company remains contractually obligated to settle the full GBP2,500,000 which remains outstanding until it is extinguished through conversion, maturity of the instrument, or some other transaction.

The Company also has a loan with YA Global. In March 2020, the Group reached a settlement agreement with YA Global regarding amounts owing to them upon satisfactory completion of a transaction constituting a reverse takeover. YA Global has indicated it may accept settlement via newly issued ordinary shares.

17. Trade and Other Payables

 
  GBP'000                        Note   2020   2019 
-------------------------------  -----  ----  ----- 
  Trade payables                         473    512 
  Accruals                               157    752 
  Taxation and social security             6    115 
  Other payables                           -     50 
  Pension                                 19     11 
                                         655  1,440 
 -------------------------------------  ----  ----- 
 

The trade and other payables shown in the Company's statement of financial position relate to trade payables and accruals of GBP651,000 (2019: GBP1,132,000).

   18.   Cash Used in Operations 

Consolidated

 
  GBP'000                                      Note            2020       2019 
---------------------------------------------  -----  -------------  --------- 
  Loss before income tax - continuing 
   operations                                               (1,038)    (2,229) 
  Loss before income tax - discontinued 
   operations                                                   388      (570) 
----------------------------------------------------  -------------  --------- 
  Loss before income tax                                      (650)    (2,799) 
  Related party and global settlement 
   agreement                                                  (388)        117 
  Increase/(decrease) in trade and 
   other payables                                               122       (64) 
  Depreciation, amortisation and impairment                       2      1,000 
  Decrease/(increase) in receivables                          (120)      (172) 
  Other non-cash movements                                        -          - 
  Financing activities increase / (decrease)                    306        788 
  Cash flows used in operating activities                     (728)    (1,130) 
----------------------------------------------------  -------------  --------- 
 

Company

 
  GBP'000                                     Note            2020       2019 
--------------------------------------------  -----  -------------  --------- 
  Loss before income tax - continuing 
   operations                                              (1,038)    (2,698) 
  Loss before income tax - discontinued 
   operations                                                 (40)          - 
---------------------------------------------------  -------------  --------- 
  Loss before income tax                                   (1,078)    (2,698) 
  Decrease in related party payable                             40        105 
  Increase/(decrease) in trade and 
   other payables                                              123      (114) 
  Depreciation, amortisation and impairment                      2        996 
  Decrease in receivables                                    (121)      (207) 
  Other non-cash movements                                       -          - 
  Financing activities increase / decrease)                    306        788 
  Cash flows used in operating activities                    (728)    (1,130) 
---------------------------------------------------  -------------  --------- 
 

19. Employees and Directors

 
  GBP'000                            Note   2020  2019 
-----------------------------------  -----  ----  ---- 
  Employees                                  168   222 
  Directors                                  216   345 
  Social Security Costs and Taxes             20    45 
------------------------------------------  ----  ---- 
                                             404   612 
 -----------------------------------------  ----  ---- 
 
  Average monthly number of people 
   employed                                    3     5 
------------------------------------------  ----  ---- 
 

Excluding settlement and termination costs, the largest Director emoluments for the year were GBP88,500 (2019: GBP120,000).

20. Financial Instruments

The Company's principal financial instruments comprise cash, trade and other receivables, trade and other payables and accruals and loan amounts owed, which are set out in the Statement of Financial Position. The carrying values of the Company's financial instruments approximate their fair values due to the short-term maturity and normal trade credit terms of these instruments.

Financial instruments issued by the Group are treated as equity only to the extent they meet the relevant conditions in accordance with IAS 32. Specifically, the Company's loan with C4 is the only such instrument issued by the Company, refer Note 16 .

For the other financial instruments referred to above, credit and liquidity risks are noted.

Credit risk on liquid funds is considered limited because the Group counterparty exposure is to a UK and international bank with an investment grade credit rating. Liquidity risk implies maintaining sufficient funds to meet the Company's liabilities when they fall due. The Board has been disciplined in managing the Company's cash and commitment positions actively engaging with creditors and advisors to ensure committed credit lines are agreed and reasonable and through its regular review of the Company's cash forecast. The liquidity risk associated with the C4 loan is considered negligible.

21. Subsidiary Companies and Investments

Principal Group investments

Following the reorganisation in November 2019, the Group had just one subsidiary at the year end, namely Enegi Finance Limited, which was wholly owned. Enegi Finance Limited was a dormant entity and has since been wound-up and was officially struck off the register of companies in October 2020. Its former registered office was at 5th Floor, Castlefield House, Liverpool Road, Manchester, England, M3 4SB.

22. Post balance sheet events

Subsequent to the year end, on 8 July 2020, the Company updated the market to confirm that the transaction announced 14 April 2020 was no longer proceeding despite efforts to agree mutually acceptable terms.

On 9 September 2020, the Company announced that in line with the guidance issued in Inside AIM: Coronavirus Temporary Measures 20 March 2020, the Company has been granted an extension to the deadline by which it must complete a reverse takeover (as set out in AIM Rule 15) ("RTO") by six months from 4 November 2020.

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END

FR EAXAXEFNEFFA

(END) Dow Jones Newswires

December 07, 2020 12:30 ET (17:30 GMT)

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