REG - UK Oil & Gas Inv PLC - Final Results <Origin Href="QuoteRef">UKOGa.L</Origin> - Part 2
18/11/2014 10:40
- Part 2: For the preceding part double click ID:nRSR3086Xa
comprises the following:
"Share capital" representing the nominal value of equity shares.
"Share premium" representing the excess over nominal value of the fair value
of consideration received for equity shares, net of expenses of the share
issue.
"Share based payment reserve" represents the value of equity benefits provided
to employees and directors as part of their remuneration and provided to
consultants and advisors hired by the Company from time to time as part of the
consideration paid.
"Revaluation reserve" represents the unrealised gain or loss on fair/market
value movement on available for sale investments, derivative financial
instruments and other assets which are valued at their fair value at the
balance sheet date.
"Retained earnings" represents retained profits and (losses).
Foreign Currencies
Transactions in foreign currencies are translated at the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Non-monetary items that are measured at historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined. Any exchange differences arising on the settlement of monetary
items or on translating monetary items at rates different from those at which
they were initially recorded are recognised in the profit or loss in the
period in which they arise. Exchange differences on non-monetary items are
recognised in other comprehensive income to the extent that they relate to a
gain or loss on that non-monetary item taken to other comprehensive income,
otherwise such gains and losses are recognised in the income statement.
The Company's functional currency and presentational currency is Sterling.
Going Concern
The company is therefore deemed to be an investing company. It now has a low
cost base and no borrowings. The Directors have prepared cash flow forecasts
and budgets that show that for a period of at least twelve months from the
date of these Financial Statements, the Company has sufficient resources to
continue in business, and will seek to raise additional funds through a
placing as conditions require for working capital or further investment
opportunities. Accordingly, the Directors believe that it is appropriate to
prepare the Financial Statements on a going concern basis.
2. Segment Reporting
The Company is now operating as a single UK based segment with a single
primary activity to invest in businesses so as to generate a return for the
shareholders. The revenue from this segment, generated from management
services in the UK, was £7,000 (2013 - nil).
Subject to further acquisitions and disposals, the Company expects to further
review its segmental information during the forthcoming financial year, as it
begins to see the full impact of its acquisitions and/or disposals.
3. Operating Loss
Operating loss is stated after charging:
2014 2013
£'000 £'000
Directors remuneration 472 38
Employee Benefit Trust charge 13 -
Auditor's fees:
Audit 14 32
Other compliance services - 5
Tax compliance - 6
4. Directors and Employees
The company employs the services of 3 Directors (2013: 6).
Remuneration in respect of these executive and non-executive Directors was:
2014 2013
£000 £000
Employment costs, including Directors, during the year:
Wages and salaries 52 18
Consultancy fees 188 20
Social security costs - 2
Share based payments 232 -
472 40
Average number of persons, including executive Directors employed No. No.
Administration 3 3
3 3
Directors' remuneration £000 £000
Emoluments 470 20
No. No.
Number of Directors in money purchase pension schemes - -
The amounts set out above include remuneration in respect of the directors'
are as follows:
2014 2013
£'000 £'000
David Lenigas 142 -
Donald Strang 142 -
Jason Berry 118 -
Geoff Shingles - 20
David Wither 70 -
Dr Oliver Leisten - -
Nicola Malyon - -
John Uttley - 8
Philip David - 10
Total Directors Emoluments 472 38
5. Tax on Profit on Ordinary Activities
There is no tax credit on the loss for the current or prior period. The tax
assessed for the period differs from the standard rate of corporation tax in
the UK as follows:
2014 2013
£000 £000
Loss for the year before tax (907) (2,479)
Tax rate 21/23% 23/24%
Expected tax credit (200) (582)
Differences between capital allowances and depreciation - -
Expenses not deductible for tax purposes 77 4
Future income tax benefit not brought to account 123 578
Actual tax expense - -
No deferred tax asset has been recognised because there is uncertainty of the timing of suitable future profits against which they can be recovered.
6. Loss per Share
The calculation of the basic loss per share is calculated by dividing the
consolidated loss attributable to the equity holders of the Company by the
weighted average number of ordinary shares in issue during the year.
2014 2013
£'000 £'000
(Loss) attributable to ordinary shareholders (907) (2,479)
Number Number
Weighted average number of ordinary shares for calculating basic loss per share 841,904,149 (*) 966,992,986
Pence Pence
Basic and diluted loss per share (0.11) (0.26)
(*) Pre 25 November 2013 capital re-organisation.
As inclusion of the potential ordinary shares would result in a decrease in
the earnings per share they are considered to be anti-dilutive, as such, a
diluted earnings per share is not included..
7. Investment in Subsidiaries
2014 2013
£'000 £'000
Cost and net book amount
At 1 October - 2,076
Increase in share scheme reserve - 18
Disposal/Impairment - (2,094)
At 30 September - -
Losses on disposal of subsidiary: 2014 2013
£'000 £'000
Investment in subsidiary undertaking written off - 2,094
Loan to subsidiary undertaking written off - 136
Total losses charged to income statement - 2,230
At 30 September 2013, the Company no longer had control of its subsidiary
undertaking, Sarantel Ltd. Consequently, the carrying value had been treated
as fully impaired and subsequently disposed of in the year ended 30 September
2013.
On 13 June 2013, the Board of the Company, announced that it had appointed an
administrator to Sarantel Ltd, the operating subsidiary of the Company, after
a demand for the repayment of the secured £2,000,000 HSBC loan facility. This
resulted in the disposal of the Company's entire interest in the subsidiary,
and operating business, with no recovery of loans to/or investment in the
subsidiary for the Company, thus the entire value of the investment in, and
loan to were fully written-off in the year ended 30 September 2013.
The Company was formerly released from the secured £2,000,000 liability, noted
above, on 18 December 2013.
The Company as at 30 September 2014 had no interest in any subsidiary
companies.
8. Available for Sale Investments
2014 2013
£'000 £'000
Investment in unlisted securities
Valuation at 1 October - -
Additions at cost 1,568 -
Disposal/Impairment - -
Valuation at 30 September 1,568 -
On 19 December 2013, the Company completed the acquisition of a 7.5%
shareholding in Horse Hill Development Ltd.("Horse Hill") , a company
incorporated and resident in the UK, with farm in interests in the Weald Basin
UK, for exploration and production of petroleum under licence within the Horse
Field , for a cash consideration of £450,000.
On 12 August 2014, the Company acquired an additional 12.5% interest in Horse
Hill for a further cash consideration of £750,000, thus increasing the
Company's holding to 20%.
On 16 May 2014, the Company completed the acquisition of a strategic 6%
shareholding in Angus Energy Ltd, a company incorporated in Scotland and
resident in the UK, for a consideration of £368,000, payable by the issue of
46million shares in the Company.
Horse Hill Development Ltd and Angus Energy Ltd are not listed on any stock
exchange.
9. Trade and Other Receivables
2014 2013
Current trade and other receivables £'000 £'000
Trade debtors 6 -
Other debtors 787 -
Loans to related parties (see Note 17) 370 -
Prepayments and accrued income 251 -
Total 1,414 -
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
10. Trade and Other Payables
2014 2013
Current trade and other payables £'000 £'000
Trade creditors 102 107
Other taxation and social security - 1
Accruals and deferred income 394 13
Total 496 121
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
11. Derivative Financial Instrument
2014 2013
Equity Swap Agreement £'000 £'000
Fair value at 1 October - -
Cost of equity swap arrangement 250 -
Settled during the year (92) -
(Loss) on settled instalments (18) -
Fair value adjustment at 30 September 44 -
Fair value carried forward at 30 September 184 -
On 13 December 2013 the Company announced that it had entered into an equity
swap agreement ("the Equity Swap Agreement") with YAGM over 62,499,996 of the
Subscription Shares ("the Swap Shares"). In return for a payment by the
Company to YAGM of £250,000, twelve monthly settlement payments in respect of
such payment were to be made by YAGM to the Company, or by the Company to
YAGM, based on a formula related to the difference between the prevailing
market price (as defined in the Equity Swap Agreement) of the Company's
ordinary shares in any month and a 'benchmark price' that is 10% above the
Subscription Price of 0.8p. Thus the funds received by the Company in respect
of the Swap Shares are dependent on the future price performance of the
Company's ordinary shares.
YAGM may elect to terminate the Equity Swap Agreement and accelerate the
payments due under it in certain circumstances. The Company may pause a
monthly payment under the Equity Swap Agreement once in each six month
period.
YAGM has agreed that it and its affiliates will refrain from holding any net
short position in respect of the Company's ordinary shares and has agreed
restrictions on the volume of ordinary shares in the Company that it can trade
from time to time until the expiry or if earlier termination of the Equity
Swap Agreement.
By 30 September 2014, 26,041,665 shares had been closed out for net proceeds
of £92,000 which resulted in a loss of £18,000 against the benchmark price,
taken to the income statement. The remaining balance has been fair valued at
30 September 2014, resulting in a fair uplift adjustment based on the
benchmark price and formula of the arrangement, with the unrealised gain
credited to revaluation reserve and highlighted in other comprehensive
income.
After the year end, the Company agreed to close out the equity swap agreement
on 27 October 2014, for a single final payment of £201,250, resulting in a
gain above the benchmark price of £61,250.
12. SHARE CAPITAL
Ordinary Shares Number of ordinary shares Nominal Value£ Total Value£'000
Issued at 30 September 2012 829,439,991 0.001 829
On 3 April 2013, placing for cash at 0.1p per share 276,825,440 0.001 277
On 23 April 2013, conversion of B ordinary shares at a price of 0.1p per share 852,438 0.001 1
Issued at 30 September 2013 1,107,117,869 0.001 1,107
Capital Reorganisation on 25 November 2013 (see (1) below);
- Sub-division into deferred shares of 0.001p 109,604,669,031 0.00001 1,096,047
- Sub-division into ordinary shares of 0.001p 1,107,117,869 0.00001 11
Consolidation on 10:1 basis, A ordinary shares of 0.01p each 110,711,787 0.0001 11
A Ordinary shares carried forward at 25 November 2013 110,711,787 0.0001 11
On 25 November 2013, placing for cash at 0.03p per share 500,000,000 0.0001 50
On 5 December 2013, placing for cash at 0.3p per share 66,666,666 0.0001 7
On 16 December 2013, placing for cash at 0.8p per share 130,000,000 0.0001 13
On 6 January 2014, conversion of B ordinary shares at 0.01p per share 18,390 0.0001 -
On 3 February 2014, issue of shares at 0.8p per share for acquisition 46,000,000 0.0001 4
On 28 May 2014, placing for cash at 0.3p per share 233,333,333 0.0001 23
On 27 June 2014, warrants exercised at 0.35p per share 6,499,999 0.0001 1
On 25 July 2014, placing for cash at 1p per share 200,000,000 0.0001 20
On 13 August 2014, warrants exercised at 0.35p per share 833,333 0.0001 -
On 29 September 2014, issue for cash at 0.01p per share 129,000,000 0.0001 13
Issued at 30 September 2014 1,423,063,508 0.0001 142
(1) On 25 November 2013, at a General Meeting the shareholders approved a
capital reorganisation. The existing ordinary shares of 0.1p were subdivided
into one A ordinary share of 0.001p each and 99 deferred shares of 0.001p.
These 0.001p A ordinary shares were then each consolidated into 0.01p A
ordinary shares on an 10:1 basis. The rights attached to the new A ordinary
shares are in all material aspects the same as the rights attaching to the
existing A ordinary shares. In addition the B ordinary shares were also
subdivided and consolidated on the same basis as the A ordinary shares into
0.01p B Ordinary shares and deferred shares of 0.001p.
(2) On 31 March 2014, A ordinary shares were re-designated as Ordinary
shares from that date, and remained in all material aspects the same as the
rights which previously attached to the A ordinary shares.
B Ordinary Shares
At 1 October 2013, there were 183,902 B ordinary shares in issue, post the
General Meeting of 25 November 2013 capital reorganisation, there were 18,390
B ordinary shares in issue, which were converted to A ordinary shares on 6
January 2014. After the conversion this class of share was subsequently
cancelled.
Deferred shares
At 1 October 2013, there were 10,487,624,769 deferred shares of 0.1p in issue.
Post the General Meeting of 25 November 2013 capital reorganisation, and the
resultant conversion and subdivisions by way of relating to the A ordinary and
B ordinary shares, the existing 0.1p deferred shares were subdivided into
0.001p deferred shares totalling 1,048,762,476,900. As a result of the
reorganisation of the A and B ordinary shares, a further 109,604,669,031 and
18,206,298 deferred shares of 0.001p were issued. These deferred shares do
not carry voting rights.
Total Ordinary and Deferred Shares
The issued share capital as at 30 September 2014 is as follows:
Number of shares Nominal Value£ Total Value£'000
Ordinary shares 1,423,063,508 0.0001 142
Deferred shares 1,158,385,352,229 0.00001 11,584
11,726
Share Options
During the year 70 million options were granted (2013: nil).
As at 30 September 2014 the options in issue were:
Exercise price Expiry date Options in issue
30 September 2014
0.4p 28 November 2020 60,000,000
1.15p 22 August 2019 10,000,000
70,000,000
No options were exercised or cancelled during the year (2013: nil).
82,970,045 options lapsed during the year (2013: nil).
Warrants
5 million warrants lapsed during the year. (2013: 1,776,029).
On 6 December 2013, 66,666,666 warrants with an exercise price of 0.35p were
issued. During the year 7,333,332 of these warrants were exercised. As at 30
September 2014, 59,333,334 of these warrants remain in issue. These warrants
expire on 31 December 2014.
Employee Benefit Trust
The Company established on 29 September 2014, an employee benefit trust called
the UK Oil & Gas Employee Benefit Trust ("EBT") to implement the use of the
Company's existing share incentive plan over 10% of the Company's issued share
capital from time to time in as efficient a manner as possible for the
beneficiaries of that plan. The EBT is a discretionary trust for the benefit
of directors, employees and consultants of the Company.
Accordingly, the trustees of the EBT subscribed for 129,000,000 new ordinary
shares of 0.01p each in the Company, at par value per share at an aggregate
cost to the Company of £12,900, such shares representing 9.07% of the existing
issued share capital of the Company (at that date). The shares held in the
EBT are intended to be used to satisfy future awards made by the Company's
Remuneration Committee under the share incentive scheme.
13. Share-based Payments
Details of share options and warrants granted to Directors over the ordinary
shares are as follows:
At Issued Cancelled At Exercise Date from
1 October during during 30 September price which Expiry
2013 the year the year 2014 exercisable date
No. No. No. No. £
Share options '000 '000 '000 '000
Donald Strang - 10,000 - 10,000 0.0040 28/11/2013 28/11/2020
David Lenigas - 10,000 - 10,000 0.0040 28/11/2013 28/11/2020
David Withers - 10,000 - 10,000 0.0040 28/11/2013 28/11/2020
Jason Berry - 10,000 - 10,000 0.0115 22/08/2014 22/08/2019
- 40,000 - 40,000
Consultants - 30,000 - 30,000 0.0040 28/11/2013 28/11/2020
- 30,000 - 30,000
The share price range during the year was £0.0006 to £0.0170 (2013 - £0.0006
to £0.0033).
The disclosure of Weighted Average Exercise Prices, and Weighted Average
Contractual Life analysis is not viewed as informative because of the minimal
variation of options currently in issue, and has accordingly not been
disclosed.
For those options granted where IFRS 2 "Share-Based Payment" is applicable,
the fair values were calculated using the Black-Scholes model. The inputs
into the model were as follows:
Risk free rate Share price volatility Expected life Share price at date of grant
28 November 2013 2.3% 248.6% 7 years £0.0040
22 August 2014 2.3% 248.6% 5 years £0.0112
Expected volatility was determined by calculating the historical volatility of
the Company's share price for 12 months prior to the date of grant. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
The Company recognised total expenses of £351,000 (2013: £18,000) relating to
equity-settled share-based payment transactions during the year, and £866,000
was transferred via equity to retained earnings on the lapse of options during
the year (2013: nil).
14. Financial Instruments and Risk Analysis
Financial Assets by Category
The IAS 39 categories of financial asset included in the balance sheet and the
headings in which they are included are as follows:
Current assets 2014 2013
£000 £000
Loans and receivables 1,414 -
Derivative financial instrument 184 -
Cash and cash equivalents 982 -
2,580 -
Financial Liabilities by Category
The IAS 39 categories of financial liability included in the balance sheet and
the headings in which they are included are as follows:
Current liabilities
Financial liabilities measured at amortised cost 496 121
The Company is exposed to market risk through its use of financial instruments
and specifically to credit risk, and liquidity risk which result from both its
operating and investing activities. The Company's risk management is
coordinated at its headquarters, in close co-operation with the board of
Directors, and focuses on actively securing the Company's short to medium term
cash flows by minimising the exposure to financial markets. Long term
financial investments are managed to generate lasting returns. The Company
does not actively engage in the trading of financial assets for speculative
purposes nor does it write options. The most significant financial risks to
which the Company is exposed to are described below.
Interest Rate Sensitivity
The Company is not substantially exposed to interest rate sensitivity, other
than in relation to interest bearing bank accounts.
Credit Risk Analysis
The Company's exposure to credit risk is limited to the carrying amount of
trade receivables. The Company continuously monitors defaults of customers and
other counterparties, identified either individually or by Company, and
incorporates this information into its credit risk controls. Where available
at reasonable cost, external credit ratings and/or reports on customers and
other counterparties are obtained and used. Company's policy is to deal only
with creditworthy counterparties. Company management considers that trade
receivables that are not impaired for each of the reporting dates under review
are of good credit quality, including those that are past due.
None of the Company's financial assets are secured by collateral or other
credit enhancements.
The credit risk for liquid funds and other short-term financial assets is
considered negligible, since the counterparties are reputable banks with high
quality external credit ratings.
Liquidity risk analysis
The Company's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share capital. The
Directors are confident that adequate funding will be forthcoming with which
to finance operations. Controls over expenditure are carefully managed.
Capital Management Policies
The Company's capital management objectives are to:
· Ensure the Company's ability to continue as a going concern; and
· Provide a return to shareholders
The Company monitors capital on the basis of the carrying amount of equity
less cash and cash equivalents.
15. Events after the Reporting Date
On 8 October 2014, the Company completed a placing of 166,666,667 ordinary
shares at 1.2p per share, raising gross proceeds of £2 million.
On 20 October 2014, the Company announced the completion of the acquisition of
Northern Petroleum Plc's ("Northern Petroleum") UK production and exploration
oil and gas licence interests for a total consideration of £1.5 million. As
previously announced on 24 July 2014, the transaction was structured as the
acquisition by UKOG of Northern Petroleum's three UK subsidiary companies,
Northern Petroleum (GB) Limited ("NPGBL"), NP Solent Limited ("NPSL") and NP
Weald Limited ("NPWL"), subject to the completion of certain conditions. The
base consideration paid by the Company in cash for each of NPGBL, NPSL and
NPWL, was £1,311,999, £1 and £188,000 respectively.
On 27 October 2014, the Company agreed the closure and settlement of the YAGM
equity swap as detailed in note 11.
On 29 October 2014, the Company announced it had entered into an unsecured
US$10million debt facility with YA Global Master SPV Ltd ("YAGM"), and has
drawn down US$1 million under the YAGM Facility, which is repayable at the
rate of US$83,333 per month on or before 1 November 2015, together with
accrued interest.
16. Capital Commitments & Contingent Liabilities
There were no capital commitments nor any contingent liabilities at 30
September 2014 or at 30 September 2013.
17. Related Party Transactions
The company had the following amounts outstanding from its investee companies
(Note 8) at the year end:
2014£'000 2013£'000
Horse Hill Development Ltd ("Horse Hill") 260 -
Angus Energy Ltd ("Angus") 110 -
370 -
The above loans outstanding are included within trade and other receivables,
Note 9. The loan to Horse Hill has been made in accordance with the terms of
the investment agreement whereby it accrues interest daily at the Bank of
England base rate and is repayable out of future cashflows. The loan to Angus
is a short term loan repayable on demand.
Remuneration of Key Management Personnel
The remuneration of the directors, and other key management personnel of the Company, is set out below in aggregate for each of the categories specified in IAS24 Related party Disclosures
2014 2013
£'000 £'000
Short-term employee benefits 240 38
Share-based payments 232 -
472 38
18. Ultimate Controlling Party
In the opinion of the directors there is no controlling party.
19. Explanation of Transition to IFRSs
For all periods up to and including the year ended 30 September 2013, the
Company prepared its financial statements in accordance with UK GAAP. These
financial statements for the year ended 30 September 2014, are the first the
Company has opted to prepare in accordance with IFRSs as adopted by the
European Union (EU).
Accordingly, the Company has prepared financial statements which comply with
IFRSs applicable for all periods since 30 September 2012 and the significant
accounting policies meeting those requirements are described in note 1. In
preparing these financial statements, the Company has started from 1 October
2012, the Company's date of transition to IFRSs, and made those changes in
accounting policies and other restatements required by IFRS 1 for the first
time adoption of IFRSs. This note explains the principal adjustments made by
the Company in restating its previously published UK GAAP financial statements
for the year ended 30 September 2013.
Exemptions Applied
IFRS 1 allows first time adopters certain exemptions from the general
requirement to apply IFRSs as effective for 30 September 2012 years there
ending retrospectively. The Company has taken the following exemptions:
• IFRS 3 'Business Combinations' has not been applied to acquisitions of
subsidiaries or interests in associates or joint ventures that occurred before
1 October 2012.
Adjustments to Balances on the Transition to IFRS
The have been no changes deemed necessary to the assets, liabilities, equity,
or losses of the Company in the transition to IFRS. The previously reported
financial statements under UK GAAP have not been adjusted on the transitional
process.
Cashflow Statement
As a result of the transition to IFRS, there were no material differences
between the cashflow statement presented under IFRS and that presented under
UK GAAP.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2014 or 2013. The
financial information for the year ended 30 September 2013 is derived from the
statutory accounts for that year. The audit of statutory accounts for the
year ended 30 September 2014 is complete. The auditors reported on those
accounts, their report was unqualified and did not include references to any
matters to which the auditors drew attention to by way of emphasis without
qualifying their report.
This information is provided by RNS
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