REG - UK Oil & Gas Inv PLC - Final Results <Origin Href="QuoteRef">UKOGa.L</Origin> - Part 3
26/02/2016 07:10
- Part 3: For the preceding part double click ID:nRSZ2303Qb
Cash and cash equivalents 19 - - 19
Trade and other receivables 78 1 14 93
Other current assets 1 - - 1
Trade and Other Payables (101) - (46) (147)
Provisions (282) (77) - (359)
Net identifiable assets/(liabilities) acquired at fair value 1,324 188 - 1,512
Goodwill on purchase - - - -
Total consideration 1,324 188 - 1,512
Total cash outflow on the acquisition is as follows:
Cash paid 1,512
Net cash acquired with the subsidiaries (19)
Net consolidated cash flow 1,493
2. Segment Reporting
All of the Group's assets and operations are located in the United Kingdom.
For management purposes, the Group is organised into business units based on
the main types of activities and has three reportable segments, as follows:
· Oil exploration and production segment: includes producing business
activities
· Oil exploration and evaluation: includes non-producing activities.
· Head Office, corporate and administrative, including parent company
activities.
The Board of Directors monitors the operating results of its business units
separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on operating
profit or loss and is measured consistently with operating profit or loss in
the consolidated financial statements. However, the Group's financing
(including finance costs and finance income) and income taxes are managed on a
group basis and are not allocated to operating segments.
The accounting policies used by the Group in reporting segments internally are
the same as those used in the financial statements.
In the previous year to 30 September 2014, the Company was 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 during that
year. As such no comparative segment information is considered useful to
disclose.
Subject to further acquisitions and/or disposals, the Group 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.
Group Oil production & exploration Oil exploration & evaluation Corporate & Administrative Consolidated
Year ended 30 September 2015 £'000 £'000 £'000 £'000
Revenue
External Customers 240 - - 240
Total revenue 240 - - 240
Results
Depletion & impairment (82) - - (82)
Share of associates loss - (69) - (69)
Profit/(loss) before& after taxation 37 (84) (1,648) (1,695)
Segment assets 1,907 4,078 5,596 11,581
Segment liabilities (297) (78) (424) (799)
Other disclosures;
Investment in associate - 352 - 352
Investment in available for sale investments - 580 - 580
Capital expenditure (1) 251 802 - 1,053
(1) Capital expenditure consists of capitalised exploration expenditure,
development expenditure, additions to oil & gas properties and to other
intangible assets including expenditure on assets from the acquisition of
subsidiaries.
3. Operating Loss
2015 2014
Group £'000 £'000
Operating (loss) is stated after charging:
- Directors remuneration 628 472
- Employee Benefit Trust charge - 13
- Auditors' remuneration
Audit-related assurance services 25 14
Other compliance services - -
Tax compliance - -
- Depletion & impairment of oil & gas properties 82 -
4. Directors and Employees
The Company employs the services of 3 Directors (2014: 3).
Remuneration in respect of these executive and non-executive Directors was:
2015 2014
Group £000 £000
Employment costs, including Directors, during the year:
Wages and salaries 34 52
Consultancy fees 594 188
Share based payments - 232
628 472
Average number of persons, including executive Directors employed No. No.
Administration 3 3
3 3
Directors' remuneration £000 £000
Emoluments 628 470
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:
2015 2014
£'000 £'000
David Lenigas (resigned 8 July 2015) 170 142
Donald Strang 245 142
Jason Berry 162 118
Stephen Sanderson (appointed 8 July 2015) 51 -
David Wither (resigned 30 June 2014) - 70
Total Directors Emoluments 628 472
5. Finance costs
2015 2014
Group £'000 £'000
Loan interest 35 -
Loan arrangement fee 46 -
Total finance costs 81 -
6. Income Tax
There is no tax credit on the loss for the current or prior year. The tax
assessed for the year differs from the standard rate of corporation tax in the
UK as follows:
2015 2014
Group £'000 £'000
Loss for the year before tax (1,695) (907)
Tax rate 20/21% 21/23%
Expected tax credit (348) (200)
Differences between capital allowances and depreciation - -
Expenses not deductible for tax purposes 78 77
Future income tax benefit not brought to account 270 123
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.
7. 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.
2015 2014
Group £'000 £'000
(Loss) attributable to ordinary shareholders (1,695) (907)
Number Number
Weighted average number of ordinary shares for calculating basic loss per share 1,770,767,449 841,904,149
Pence Pence
Basic and diluted loss per share (0.10) (0.11)
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.
8. Exploration & evaluation assets
Group Company
£'000 £'000
Cost & Net Book Value
At 1 October 2013 & at 30 September 2014 - -
On Acquisition of Northern Petroleum Companies 296 -
Additions 1,013 662
Net Book Value At 30 September 2015 1,309 662
During the year, there has been no impairment charged, or required to be. The
Directors have assessed the fair value of the exploration & evaluation assets
as at 30 September 2015, and have concluded at this time there is no
requirement to impair and reduce the carrying value whilst they continue to
explore and assess these licence areas, further to the detail below.
Exploration and evaluation activity involves the search for hydrocarbon
resources, the determination of technical feasibility and the assessment of
commercial viability of an identified resource. The additions during the year
reflect the multiple acquisitions and associated exploration and evaluation
activities. As this point the Company is still assessing the potential of
these assets, and will continue to develop and evaluate these assets in the
coming year. Since the acquisition date there has been no material changes to
the Licence areas. The directors therefore consider that no impairment is
required at 30 September 2015.
9. Oil & gas properties
Group
£'000
Cost
At 1 October 2013 & at 30 September 2014 -
On Acquisition of Northern Petroleum Companies 1,608
Additions 40
At 30 September 2015 1,648
Depletion & impairment
At 1 October 2013 & at 30 September 2014 -
Depletion charge (82)
At 30 September 2015 (82)
Net Book Value
At 30 September 2014 -
At 30 September 2015 1,566
Impairment review
The Oil & Gas properties comprise the assets acquired as a result of the
acquisition of the Northern Petroleum Companies, in particular the Horndean
and Avington oil fields. The Directors have carried out an impairment review
as at 30 September 2015, and determined that an impairment charge is not
currently required. The Directors based this assessment on continuing
production from Horndean and in the case of Avington the operational
optimisation that is ongoing to improve operational efficiencies.
10. Investment in Subsidiaries
Company 2015 2014
£'000 £'000
Cost and net book amount
At 1 October - -
Additions in the year 1,512 -
At 30 September 1,512 -
The Company as at 30 September 2014 had no interest in any subsidiary
companies. The Company acquired on 19 October 2014, the following subsidiary
companies, as detailed in the Business Combination Note 2, and hold more than
50 per cent of the share capital of the following companies as at 30 September
2015:
Company Country of Registration Proportion held Functional Currency Nature of business
UKOG (GB) Limited UK 100% GB£ Oil production
UKOG Solent Limited UK 100% GB£ Oil exploration
UKOG Weald Limited UK 100% GB£ Oil exploration
11. Investment in Associate
Group & Company 2015 2014
£'000 £'000
Carrying Value as at 1 October - -
Re-classification from available for sale investments 1,780
Equity additions at cost 352 -
Share of associates loss for the year (69) -
Carrying value as at 30 September 2,063 -
On 19 December 2013, the Company completed the acquisition of a 7.5%
shareholding in Horse Hill Developments 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 6 March 2015, the Company acquired a further 8% interest in Horse Hill for
a cash consideration of £580,000, thus increasing the Company's holding to
28%. At this point the interest was deemed to qualify as that of an associate
company and the investment re-classified from this date. A further 2% holding
was acquired on 12 March 2015, for £352,000 payable by the issue of 44million
Ordinary Shares in UK Oil & Gas Investments PLC, at a price of 0.8pence per
share. This acquisition took the Company's interest in Horse Hill to a 30%
shareholding.
Details of the Group & Company's associate at 30 September 2015 are as follows:
Name Place of Incorporation Proportion held Date associate interest acquired Reporting Date of associate Principal activities
Horse Hill Developments Ltd UK 30.0% 06/03/15 31/12/15 Oil exploration
Summarised financial information for the Group & Company's associate, where made publicly available, as at 30 September 2015 is given below:
For the period ended 30 September 2015 As at 30 September 2015
Revenue£'000 (Loss)£'000 Total other comprehensive income£'000 Assets£'000 Liabilities£'000
Horse Hill Developments Ltd - (300) - 6,861 (3,589)
12. Available for Sale Investments
Group & Company 2015 2014
£'000 £'000
Investment in unlisted securities
Valuation at 1 October 1,568 -
Additions at cost 580 1,568
Re-classification of investment to associate (1,780) -
Valuation at 30 September 368 1,568
On 19 December 2013, the Company completed the acquisition of a 7.5%
shareholding in Horse Hill Developments 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.
On 6 March 2015, the Company acquired a further 8% interest in Horse Hill for
a cash consideration of £580,000, thus increasing the Company's holding to
28%. At this point the interest was deemed to qualify as that of an associate
company and the investment re-classified from this date
Horse Hill Development Ltd and Angus Energy Ltd are not listed on any stock
exchange.
13. Inventory
2015 2014
Group £'000 £'000
Inventories - Crude Oil 2 -
Total 2 -
14. Trade and Other Receivables
Group Company
2015 2014 2015 2014
Current trade and other receivables £'000 £'000 £'000 £'000
Trade debtors 26 6 26 6
Other debtors 609 787 609 787
Loans to related parties (see Note 26) 901 370 901 370
Loans to subsidiary companies - - 452 -
Prepayments and accrued income 147 251 132 251
Total 1,683 1,414 2,120 1,414
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
16. Derivative Financial Instrument
Group & Company 2015 2014
Equity Swap Agreement £'000 £'000
Fair value at 1 October 184 -
Cost of equity swap arrangement - 250
Settled during the year (201) (92)
Gain/(loss) on settled instalments 61 (18)
Transfer to income statement (44) -
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.
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 was 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.
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. No further equity swap arrangements were made
during the year to 30 September 2015.
17. Cash and Cash Equivalents
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Cash at bank and in hand 4,590 982 4,461 982
Total 4,590 982 4,461 982
18. Trade and Other Payables
Group Company
2015 2014 2015 2014
Current trade and other payables £'000 £'000 £'000 £'000
Trade creditors 117 102 101 102
Accruals and deferred income 212 394 212 394
Total 329 496 313 496
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
19. Borrowings
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
YAGM Debt facility 111 - 111 -
Total 111 - 111 -
The Company entered into an unsecured US$10 million debt facility to be
provided by YA Global Master SPV Ltd ("YAGM") on 28 October 2014 to fund
further investment in the UK oil and gas sector in accordance with the
Company's investing policy (the "YAGM Facility") The facility is available to
the Company for three years from the date of the agreement. Any drawdowns by
the Company under the YAGM Facility are to be repaid in twelve equal monthly
amounts ("Monthly Repayment Amount") and carry an annual interest rate of 10
per cent.
UKOG is entitled to pay the Monthly Repayments Amounts either in cash, or at
the Company's sole election, by means of conversion of the Monthly Repayment
Amount into new ordinary shares, to be issued at a conversion price equal to
95% of the average of the lowest 5 daily volume weighted average prices
("VWAP") during the 15 trading days prior to the scheduled repayment date. All
drawdowns under the YAGM Facility are subject to the prior approval of YAGM.
The Company drew down US$1 million under the YAGM Facility on signing the
agreement, which is repayable at the rate of US$83,333 per month on or before
1 November 2015, together with accrued interest. This drawdown has been repaid
in full after the year end.
20. Provisions - Decommissioning
2015 2014
Group £'000 £'000
As at 1 October - -
Acquired on acquisition of subsidiaries 359 -
As at 30 September 359 -
The amount provided at 30 September 2015 represents the Group's share of
decommissioning liabilities in respect of the producing Horndean and Avington
fields, and the Markwell's Wood and Havant drilling sites.
The Company makes full provision for the future cost of decommissioning oil
production facilities and pipelines on a discounted basis on the installation
of those facilities. The decommissioning provision represents the present
value of decommissioning costs relating to oil and gas properties. At this
point in time it is uncertain as to when some of these decommissioning costs
will occur given current plans by the Company which may change when operations
cease. Therefore the Directors have taken a conservative approach and not
discounted these values. These provisions have been created based on the
Company's internal estimates. Assumptions based on the current economic
environment have been made, which management believes are a reasonable basis
upon which to estimate the future liability. These estimates are reviewed
regularly to take into account any material changes to the assumptions.
However, actual decommissioning costs will ultimately depend upon future
market prices for the necessary decommissioning works required that will
reflect market conditions at the relevant time. Furthermore, the timing of
decommissioning is likely to depend on when the fields cease to produce at
economically viable rates. This, in turn, will depend upon future oil and gas
prices, which are inherently uncertain.
21. Share Capital
Ordinary Shares Number of ordinary shares Nominal Value£ Total Value£'000
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
On 15 October 2014, placing for cash at 1.2p per share 166,666,667 0.0001 17
On 28 November 2014, warrants exercised at 0.35p per share 59,333,334 0.0001 6
On 13 March 2015, issue of shares at 0.8p per share for acquisition 44,000,000 0.0001 4
On 17 April 2015, exercise of warrants and options at 0.4p, & 1.48p per share 70,553,844 0.0001 7
On 10 June 2015, placing for cash at 2.25p per share 266,666,667 0.0001 27
Issued at 30 September 2015 2,030,284,020 0.0001 203
(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 2015 is as follows:
Number of shares Nominal Value£ Total Value£'000
Ordinary shares 2,030,284,020 0.0001 203
Deferred shares 1,158,385,352,229 0.00001 11,584
11,787
Share Options
During the year 100 million options were granted (2014: 70 million).
As at 30 September 2015 the options in issue were:
Exercise price Expiry date Options in issue
30 September 2015
0.4p 31 December 2017 100,000,000
0.4p 28 November 2020 42,500,000
1.15p 22 August 2019 10,000,000
152,500,000
17.5 million options were exercised and no options were cancelled during the
year (2014: nil).
No options lapsed during the year (2014: 82,970,045 options).
Warrants
As at 30 September 2014, 59,333,334 warrants were in issue, all of these
warrants were exercised on 28 November 2014, at 0.35p per share.
No warrants lapsed during the year. (2014: 5 million warrants).
On 28 October 2014, 13,053,844 warrants with an exercise price of 1.48p were
issued, and on 20 November 2014, 40,000,000 warrants with an exercise price of
0.4p were issued. All of these warrants issued during the year were exercised
on 17 April 2015.
A further 26,666,667 warrants were issued on 10 June 2015, with an exercise
price of 2.25p and expiry date of 10 June 2018. These warrants remain the
only warrants outstanding as at 30 September 2015.
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.
No further issue of ordinary shares was made to the EBT during the year ended
30 September 2015.
22. Share-Based Payments
Details of share options and warrants granted during the year to Directors &
consultants over the ordinary shares are as follows:
At Issued Exercised At Exercise Date from
1 October during during 30 September price which Expiry
2014 the year the year 2015 exercisable date
No. No. No. No. £
Share options millions millions millions millions
Donald Strang 10 - - 10 0.0040 28/11/2013 28/11/2020
David Lenigas 10 - - 10 0.0040 28/11/2013 28/11/2020
Jason Berry 10 - - 10 0.0115 22/08/2014 22/08/2019
Stephen Sanderson - 25 - 25 0.0040 21/01/2015 31/12/2017
30 - - 30
Consultants 40 - (17.5) 22.5 0.0040 28/11/2013 28/11/2020
Consultants - 75 - 75 0.0040 21/01/2015 31/12/2017
70 100 (17.5) 152.5
The share price range during the year was £0.0035 to £0.0310 (2014 - £0.0006
to £0.0170).
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 therefore 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
21 January 2015 2.3% 251.4% 2.95 years £0.0039
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 £378,000 (2014: £351,000) relating to
equity-settled share-based payment transactions during the year, and £70,000
(2014: £866,000) was transferred via equity to retained earnings on the
exercising or lapse of options during the year.
23. 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 - Group 2015 2014
£000 £000
Inventory 2 -
Loans and receivables 1,683 1,414
Derivative financial instrument - 184
Cash and cash equivalents 4,590 982
6,275 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 - Group
Financial liabilities measured at amortised cost 440 496
The group 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 group's risk management is
coordinated at its head office, in close co-operation with the board of
Directors, and focuses on actively securing the group'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 group 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 group is exposed to are described below.
Interest Rate Sensitivity
The group is not substantially exposed to interest rate sensitivity, other
than in relation to interest bearing bank accounts. The group does have a
debt facility as described in Note 19, which incurs interest at a fixed rate.
Credit Risk Analysis
The group's exposure to credit risk is limited to the carrying amount of trade
receivables. The group 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. Group's policy is to deal only with
creditworthy counterparties. Group 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 group'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 group'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. The
group also has at its disposal a Debt Facility as detailed in Note 19, on
which the Group repaid in full after the year end. No further drawdowns in
relation to this facility have been made.
Capital Management Policies
The group's capital management objectives are to:
· Ensure the group's ability to continue as a going concern; and
· Provide a return to shareholders
The group monitors capital on the basis of the carrying amount of equity less
cash and cash equivalents.
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market
commodity prices on the mix of oil and gas products it produces. The Group's
policy is to manage these risks through the use of contract-based prices with
customers.
Commodity price sensitivity
The table below summarises the impact on profit before tax for changes in
commodity prices. The analysis is based on the assumption that the crude oil
price moves 10% resulting in a change of US$4.50/bbl (2014: N/A), with all
other variables held constant. Reasonably possible movements in commodity
prices were determined based on a review of the last two years' historical
prices and economic forecasters' expectations.
Increase/decrease in crude oil prices Effect on profit before tax for the year ended 30 September 2015Increase/(Decrease) Effect on profit before tax for the year ended 30 September 2014Increase/(Decrease)
£'000 £'000
Increase US$4.50/bbl (2014: N/A) 20 -
Decrease US$4.50/bbl (2014: N/A) (20) -
23. Commitments & Contingent Liabilities
As at 30 September 2015, the Group had the following material commitments;
Ongoing exploration expenditure is required to maintain title to the Group's
exploration permits. No provision has been made in the financial statements
for these amounts as the expenditure is expected to be fulfilled in the normal
course of the operations of the Group.
There were no contingent liabilities at 30 September 2015.
24. Events after the Reporting Date
On 21 October 2015, the Company appointed Kiran Morzaria as an Executive
Director, and Donald Strang resigned as a Director.
On 12 November 2015, the Company's Ordinary Shares were admitted for trading
to the ISDX Growth Market.
On 18 November 2015, the Company announced that it has received final
regulatory consent from the Oil and Gas Authority ("OGA") to acquire a 20%
interest in UK onshore Weald Basin licence PEDL143, via the previously
announced farm-in with Egdon Resources U.K. Limited. The Company will pay a
40% share of the Holmwood-1
explorationdrilling
costs
in
order
to
acquire
a
full
20%
working
interest
in
PEDL143
from
Egdon.
On 18 December 2015, the Company announced that it has received final
regulatory consent from the Oil and Gas Authority ("OGA") to acquire a further
10% interest in UK onshore Weald Basin licence PEDL143, via the previously
announced farm-in with Warwick Energy Exploration and Production Limited. The
Company will pay a consideration of £25,000 and a 20% share of the Holmwood-1
exploration drilling costs in order to acquire a full 10% working interest in
PEDL143 from Warwick.
On the 23 February Regency Mines Plc acquired a 5% interest in Horse Hill
Development Ltd ("HHDL") from Angus Energy PLC ("Angus") for a consideration
of £400,000. This has reduced Angus's stake in HHDL to 12%. UKOG has a 6%
equity holding in Angus which is held at a carrying value of £368,000, As a
result of this transaction UKOG indirect equity stake in HHDL will have
decreased 19.96%.
25. Related Party Transactions
The company had the following amounts outstanding from its investee companies
(Note 15) at 30 September:
2015£'000 2014£'000
Horse Hill Development Ltd ("Horse Hill") 901 260
Angus Energy Ltd ("Angus") - 110
901 370
The above loans outstanding are included within trade and other receivables,
Note 15. 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.
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
2015 2014
£'000 £'000
Short-term employee benefits 728 240
Share-based payments 132 232
860 472
26. Ultimate Controlling Party
In the opinion of the directors there is no controlling party.
27. Profit and loss account of the parent company
As permitted by section 408 of the Companies Act 2006, the profit and loss
account of the parent company has not been separately presented in these
accounts. The parent company loss for the year was £1,715,000 (2014: loss
£906,000).
This information is provided by RNS
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